Dealing With Uncertainties When Governing CSR Policies

It is by now widely accepted that the concept of Corporate Social Responsibility (CSR) requires a business engagement that goes beyond its mere economic and legal obligations. Rather, it is associated with the adage that businesses take the broader social and environmental effects of their actions into account on a voluntary basis. From a government’s perspective, however, relying on business’s voluntary initiative for dealing with society’s environmental and social objectives imposes a considerable challenge. Indeed, policymakers cannot rely on unilateral command-and-controlling policies as far as the voluntary dimensions of CSR are concerned, which leaves them with three types of uncertainty. First, the many meanings and interpretations on the content of CSR result in substantive uncertainty. Second, governments face strategic uncertainty about whether companies will voluntarily take up their responsibilities and how far. Third, the various institutional backgrounds that businesses and governments have result in institutional uncertainty on how the interaction and change processes between them will evolve. Borrowing from the New Governance public policy paradigm, we discuss these uncertainties and propose strategies for their management. This paper demonstrates that there are meaningful, and even necessary courses of governmental action to further the voluntary dimensions of CSR.