A LevelBusinessAQARevision NotesBusiness & SocietyCorporate Social Responsibility (CSR)Models of Corporate Social Responsibility (CSR)

Models of Corporate Social Responsibility (CSR) (AQA A Level Business): Revision Note

Syllabus Edition

First teaching 2026

First exams 2028

Exam code: 7132

Lisa Eades

Written by: Lisa Eades

Reviewed by: Bridgette Barrett

Updated on

Shareholder vs stakeholder approach

  • Businesses can approach their wider responsibilities from two contrasting starting points

    1. Prioritising the owners (shareholders) of the business

    2. Prioritising everyone affected by it (stakeholders)

Approach

Explanation

Shareholder

  • The shareholder approach holds that a business's main responsibility is to maximise returns for its shareholders, within the law

    • Social or ethical considerations are to be addressed only where they support this goal

  • It is most associated with the economist Milton Friedman

  • He argued that focusing purely on profit ultimately benefits society, as it drives efficient use of resources, wealth creation and employment

  • A shareholder approach can lead to faster decision-making and clearer priorities, as success is measured mainly by the financial return generated

Stakeholder

  • The stakeholder approach holds that a business has responsibilities to all groups affected by its activities, not just shareholders

    • These include employees, customers, suppliers, the community and the environment

  • Businesses depend on good relationships with a wide range of groups to succeed in the long term

  • Ignoring stakeholders can create risks that eventually harm shareholders too

  • A stakeholder approach can build stronger long-term relationships

  • It may involve more complex, sometimes conflicting, decision-making, since different stakeholder groups often have competing priorities

  • Many modern businesses adopt elements of both approaches

    • They recognise that shareholder returns and stakeholder wellbeing are connected over the long term, rather than being mutually exclusive

Example

John Lewis Partnership, owned entirely by its employees, is an example of a stakeholder approach, balancing staff wellbeing alongside financial performance as part of its core purpose

Carroll's Corporate Social Responsibility Pyramid

  • Carroll’s Corporate Social Responsibility (CSR) Pyramid is a framework that outlines the four levels of responsibility a business should fulfil to be socially responsible

    • It is used to analyse how firms balance profit-making with ethical and social responsibilities

Four-level pyramid diagram displaying responsibilities: Philanthropic at the top, followed by Ethical, Legal, and Economic at the base.
Carroll's CSR pyramid outlines the different possible aspects of social responsibility for a business

1. Economic responsibility (base of the pyramid)

  • Be profitable

    • This is the foundation of the pyramid

    • Businesses must be financially viable to survive and support all other responsibilities

  • It involves producing goods or services that customers want at a profit in such a way that the business

    • Pays employees

    • Provides returns to shareholders

    • Creates jobs and wealth

  • Obey the law

    • Businesses must operate within the framework of laws and regulations set by governments

  • These include:

    • Employment laws

    • Consumer protection laws

    • Health and safety regulations

    • Environmental laws

3. Ethical responsibility

  • Do what is right, just, and fair

    • This goes beyond legal obligations

    • Ethical responsibilities involve doing the right thing, even when not legally required

  • It includes:

    • Fair treatment of employees

    • Ethical sourcing and marketing

    • Respecting human rights and the environment

4. Philanthropic responsibility

  • Be a good corporate citizen

    • This is about giving back to society through voluntary actions

  • Examples include:

    • Charitable donations

    • Community initiatives

    • Supporting education or healthcare projects

    • Sponsorships

Uses and limitations of the model

Uses

Limitations

  • The model provides a clear structure for managers to think about business duties, from making profits to helping society

  • Real business actions often overlap these levels, but the pyramid separates them too neatly

  • Businesses can show investors and customers how they balance profit with doing good

  • Assumes profit always comes first, whereas some stakeholders expect social goals to match profit

  • Shows that profit underpins all other duties

    • A business must be stable before obeying laws and helping communities

  • There is a potential cultural bias, as the model was developed in the US and might not match laws or values in all countries

Case Study

Cresta Motors logo with stylised grey and green letter C symbol on the left and the company name in bold grey text on the right

Cresta Motors

Cresta Motors is a car dealership chain selling new and used vehicles across the UK.

For several years, the business was highly profitable, meeting its economic responsibilities comfortably, and it consistently followed vehicle safety and consumer credit regulations, satisfying its legal responsibilities too.

However, an internal review found that some sales staff had been encouraging customers to take out finance deals with higher interest rates than necessary, without clearly explaining cheaper alternatives, technically legal but widely seen as unfair once details became public.

Facing criticism, Cresta retrained its sales staff and introduced a new policy requiring every customer to be shown the full range of finance options available, addressing its ethical responsibilities.

The following year, the business launched a programme donating a share of profits to fund free car maintenance workshops for low-income families, meeting the philanthropic level of Carroll's pyramid

Customer trust in Cresta improved noticeably after these changes, and complaints about mis-sold finance fell sharply.

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Author
Reviewer
Lisa Eades

Author: Lisa Eades

Expertise: Curriculum Expert

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

Bridgette Barrett

Reviewer: Bridgette Barrett

Expertise: Development Editor

After graduating with a degree in Geography, Bridgette completed a PGCE over 30 years ago. She later gained an MA Learning, Technology and Education from the University of Nottingham focussing on online learning. At a time when the study of geography has never been more important, Bridgette is passionate about creating content which supports students in achieving their potential in geography and builds their confidence.