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  • Print publication year: 2012
  • Online publication date: November 2012

Chapter 4 - The Corporation's Case for Social Responsibility (1918–1929)


Ideas about business responsibility before the 1920s, as shown in the previous chapter, had primarily revolved around labor issues, and business–government relations, for the responsibility of industry was defined largely by its impact on the economy and by its treatment of employees (and by extension, their families). Progressive reformers had succeeded in bringing social issues created by or impacted by industry to public attention. But it was not until the 1920s that the idea of business's broader social responsibility began to take hold – in the public sphere, in industry, and in newly established professional business schools. This new understanding was driven, in part, by a growing wave of discontent with capitalism and the world tumult described in the previous chapter as communism advanced in Russia and labor unrest broke out across the United States. Throughout the 1920s, labor was increasingly considered more seriously as a corporate stakeholder, and the idea of social responsibility grew beyond labor questions, to include a broader concept of business responsibility that would include, for example, considerations of public health, education, and the environment. New levels of organization, efficiency, and professionalism were brought to bear to improve productivity and profits, but also to bring wider social benefits. Leading these efforts were the nation's largest corporations, which in the 1920s became the main force behind this new agenda of business responsibility.

Bringing in labor

In 1918, the labor question still loomed the largest on the new corporate responsibility agenda. Capitalists began to recognize that they had to take positive action on the labor front if they wanted to turn back the growing sentiment toward socialism. Laissez-faire would no longer do, and the early, paternalistic welfare policies of the previous decades were too weak. Following the violence in Ludlow, Colorado, John D. Rockefeller, Jr. had penned an article that appeared in Atlantic Monthly, setting down new principles enlightened firms should follow. It began to outline a position much different from his father's when it came to the rights and responsibilities of corporations. Three years later, in 1919, at President Wilson's National Industrial Conference, the younger Rockefeller declared “Representation is a principle which is fundamentally just and vital to the successful conduct of industry . . . Surely it is not consistent for us as Americans to demand democracy in government and practice autocracy in industry.”

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Corporate Responsibility
  • Online ISBN: 9781139108041
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