Carroll’s Pyramid of Corporate Social Responsibility

Carroll’s Pyramid of Corporate Social Responsibility (CSR) is a model developed by Archie B. Carroll that outlines four levels of a business’s social responsibilities. At the base are economic responsibilities, emphasizing profitability and survival. Above that are legal responsibilities, requiring businesses to obey laws and regulations. The third level is ethical responsibilities, which involve doing what is right, just, and fair beyond legal obligations. At the top are philanthropic responsibilities, which include voluntary efforts to improve society, such as charitable donations and community involvement. The pyramid illustrates how businesses can balance profit-making with broader social and ethical commitments.

Levels of Carroll’s Pyramid of Corporate Social Responsibility:

Carroll’s Pyramid of CSR, proposed by Archie B. Carroll in 1991, provides a structured framework for understanding the various responsibilities businesses have toward society. The model consists of four levels: Economic, Legal, Ethical, and Philanthropic responsibilities. These levels are arranged in a pyramid to signify their relative importance and interdependence, beginning with the foundational economic role and building up to voluntary contributions toward society. This model helps businesses align their operations with societal expectations while maintaining long-term sustainability and stakeholder trust.

• Economic Responsibility

At the base of the pyramid lies the economic responsibility, which is the fundamental obligation of a business to be profitable and financially viable. A company must generate enough revenue to sustain operations, provide employment, pay taxes, and reward investors. Profitability is essential because it supports all other levels of responsibility. Without financial success, a business cannot invest in legal compliance, ethical practices, or philanthropic activities. Economic responsibility includes producing goods and services that meet consumer needs at fair prices while maintaining efficiency and competitiveness. In essence, being economically responsible ensures that a company fulfills its core role in society—creating value and wealth while remaining sustainable over time.

• Legal Responsibility

The second level of the pyramid is legal responsibility, which requires businesses to comply with the laws and regulations of the land. Society expects companies to operate within legal frameworks established by governments, such as labor laws, environmental regulations, and corporate governance rules. Legal responsibility acts as the “rules of the game” that businesses must follow to operate ethically and fairly. Fulfilling this responsibility ensures accountability and protects the rights of stakeholders, including employees, customers, and the community. Ignoring legal obligations can result in penalties, lawsuits, reputational damage, and loss of trust. Therefore, observing legal standards is not only a moral duty but also essential for a company’s long-term success and public legitimacy.

• Ethical Responsibility

Beyond legal obligations, ethical responsibility refers to doing what is right, just, and fair, even when not mandated by law. It involves practices that align with societal values and expectations, such as honesty in advertising, fair treatment of workers, responsible sourcing, and environmental stewardship. Ethical businesses consider the impact of their decisions on all stakeholders, including vulnerable groups, and strive to avoid harm. They also establish internal ethical codes and encourage transparency and integrity across all levels. Ethical responsibility helps companies build credibility, avoid public backlash, and create a positive organizational culture. In today’s globalized and socially conscious world, ethical behavior has become a key differentiator and driver of stakeholder loyalty and trust.

• Philanthropic Responsibility

At the top of Carroll’s pyramid is philanthropic responsibility, which involves voluntary actions by businesses to contribute to the welfare of society. This includes charitable donations, supporting education, healthcare, environmental initiatives, employee volunteering, and community development. While not legally or ethically required, philanthropic activities reflect a company’s commitment to being a good corporate citizen. These efforts improve the company’s public image, enhance employee morale, and foster goodwill among stakeholders. Importantly, philanthropy should be strategic and aligned with the company’s values and capabilities to create meaningful and lasting impact. Businesses engaging in philanthropy demonstrate that they recognize their broader role in society beyond profit-making and compliance.