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A History of Socially Responsible Business, c. 1600–1950. Edited byWilliam A. Pettigrew andDavid Chan Smith. New York: Palgrave Macmillan, 2017. xv + 313 pp. Figures, tables, references, notes, index. Cloth, $169.00. ISBN: 978-3-319-60145-8.

Published online by Cambridge University Press:  16 November 2018

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Abstract

Type
Book Reviews
Copyright
Copyright © The President and Fellows of Harvard College 2018 

Social responsibility has become mainstream in large global corporations. Yet as William Pettigrew and David Chan Smith's A History of Socially Responsible Business, c. 1600–1950 demonstrates, the identification of social and economic interests that characterizes modern social responsibility hails back to a time when the precursors of these corporations were naturally conceived to have joint economic and social purposes. In twelve well-written essays, this edited volume examines these origins and the eventual demarcation of social and economic interests in the corporation, necessitating the eventual emergence of modern corporate social responsibility (CSR). The basic theme connecting these essays is the familiar idea that socially responsible business is a function of the specific institutional context within which it operates. As the institutional context changes, so too does the business response to that context. Not so familiar are the details of those responses, to which this volume adds many. Given the relative scarcity of business history focused on social responsibility, this volume provides welcome relief.

A first set of essays examines the joint-stock trading companies chartered in England beginning with the Muscovy Company in 1555 through to such companies as the East India Company. These first four chapters establish that the trading company was created with a social mandate as well as an economic one. These trading companies carried distinct responsibilities because they often enjoyed special privileges related to their monopoly status. Smith and Pettigrew begin by describing how these first trading companies were established with the purpose of contributing to the public good. The trading companies were chartered in order to meet the challenges of trade with distant markets, which was seen as the key to national wealth. This was the age of mercantilism, and the powers to protect trade and even to govern were meant to ensure that each nation competed successfully in the world arena.

With these powers came responsibilities to care for the needs of the company's constituents and neighbors. As Pettigrew and Aske Laursen Brock demonstrate, the merchants were the greatest philanthropists in London. In the case of the East India Company, Smith explains how it responded to local community needs by creating an open-door policy whereby employees and neighbors brought specific petitions requesting assistance for health issues, resolving nuisances, and other needs. Philanthropy not only provided a way to share benefits with communities, but also a means for merchant elites to network with one another.

Michael Wagner continues the study of the joint-stock trading company, but foreshadows its decline in the nineteenth century as competition increased and trading companies needed less support from the government. At the same time, the Industrial Revolution brought with it the creation of new companies without the same protections as the trading companies. As a result, companies focused more attention on their commercial mission than their responsibilities to promote the general welfare.

The second set of essays examines the subsequent period and expands the book's focus to joint-stock companies in the United States as well as Britain, particularly multinationals. Robert E. Wright discusses the chartering of the Bank of North America in 1781—the first charter with no ostensible social purpose. The burden on state legislatures for chartering more and more companies was relieved with the enactment of general-incorporation statutes. Since these new companies were divested of their social purpose and focused on making profits, the need arose for a new kind of organization still focused on social purposes—the nonprofit organization.

Still, businesses were subject to expectations for socially responsible behavior, even if they were not required by law to work for the general welfare. Emily Buchnea describes the Anglo-American multinationals, which tended to be more concerned about social responsibilities at home than abroad—a situation that persists today. Political activism in these firms was focused on home-country issues, except for significant interest in the abolition of the slave trade, which constituted the first global social issue. Similarly, Janette Rutterford explains how the new middle-class stockholders focused philanthropy locally, showing little interest in operations abroad, except in a few cases where their friends and families were affected by conditions in the host country, usually the colonies.

The final set of essays covers the twentieth century, when trust-based relations between business and society were giving way to greater regulation. Jon Mackay describes how elite networks in Canada had close ties to the elites in Montreal and Toronto, except for the German-dominated area of Berlin (now Kitchener), Ontario, which was more inwardly focused. This inward focus resulted in a very local political and philanthropic orientation for the Berlin business elite. Leslie Hannah describes how trust also played an important role in the fledgling securities markets, with the exception of Germany, where these networks of trust provided a substitute for formal securities regulation. Jason Russell, Andrew Smith, and Kevin D. Tennent draw attention to a new stage in business-government relations where the U.S. government decided to forego the establishment of colonies in favor of close trading relationships, especially with Latin America. Adolf Berle's role in developing this new policy was central. However, replacing the role of the military in protecting U.S. commercial interests with a “Good Neighbor” policy meant that multinationals were essentially on their own in dealing with the vagaries of volatile Latin American governments. Finally, Philip Scranton describes socialist firms in central Europe, which, like the early trading companies, had social purposes explicitly embedded in their very existence.

Although the volume provides great rewards to the patient reader, the editors and authors could have helped the reader to make connections to current conversations in the field regarding social enterprise, hybrid organizations, social impact, historical CSR, and others. At points it is not even clear what the authors mean by “socially responsible business.” As a nonhistorian, I would have liked a more clearly articulated framework within which to understand the relationship between institutional context and responsible business practice. Still, it represents an important resource for historians and CSR scholars by providing countless examples of how business firms attempted to relate responsibly (or irresponsibly) to their social context.