Corporate social responsibility and sustainability: insights from Boulding and Luhmann

Abstract

The modern discourse on corporate social responsibility is framed by ideas many of which have important parallels in the literature on the general and social systems theory. Particularly the conceptions of the interdependence between business and society, and of the societal embeddedness of business, revolve around the theme of system–environment interaction that is potentially unsustainable. The paper draws upon the systems-theoretic arguments of Luhmann and Boulding in order to explain how sustainability is enhanced by corporate social responsibility practices. Systems are shown to risk becoming unsustainable if they develop their complexity to the point of overstraining the carrying capacity of the environment. To forestall this scenario, systems can improve their sensitivity to the environment and constrain their own complexity. These sustainability strategies reveal the systems-theoretic meaning of corporate social responsibility. Explained in this way, corporate social responsibility turns out to be a functional equivalent of vertical integration seen from the perspective of Williamson's transaction cost economics.

Keywords:

• corporate social responsibility
• sustainability
• transaction cost economics
• Niklas Luhmann
• Kenneth Boulding
• Ludwig von Bertalanffy

Acknowledgments

The author is grateful to anonymous reviewers for their helpful comments. This research has been supported by the Volkswagen Foundation.