The limits of CSR goals according to Drucker

He suggested that while business has responsibilities in relation to social problems, there are also limits to social responsibility in this regard.

Fast food firms

In answer to the question “when to say no?,” or the limits of corporate responsibility, Drucker suggested that an organisation resist any demands for social responsibility as a response to social problems when this would impair the business’s performance capability, exceed its competence and usurp legitimate authority (such as that of government) or would involve illegitimate authority.

For example, fast food companies certainly appear to have a responsibility to help eliminate the negative social impact of their products’ contribution to childhood obesity.

Make donations

By contrast, pharmaceutical companies that are asked to donate life-saving drugs to all who need them are responding to social problems rather than social impacts.

They are not responsible for the limited health care budgets of developing countries that preclude purchasing drugs at developed country prices, but they might choose to act on making essential medicines more accessible nonetheless.

Immense light

Drucker’s writing sheds immense light on the management of business and other institutions, remaining as fresh and relevant today as it did decades ago.

This is no less true of his writing on social responsibility.

In some respects, his insights might be taken for granted and they are far from a complete understanding of social responsibility as it is conceived today.

However, Drucker’s distinction between social impacts and social problems remains a key consideration, and his three limits on corporate social responsibility in response to social problems (performance of the firm’s specific mission, competence and authority) are still valid even if they only provide a foundational understanding and don’t sufficiently answer the question, “how much is enough?”

Smith is a professor at INSEAD.