Economic Rationality and Corporate Social Irresponsibility: An Illustrative Review of Social Capital Theory

Purpose – The purpose of this chapter is to argue that utility maximisation, taken from a narrow economic understanding of rationality, frames contemporary business school pedagogy and management theory. The chapter will illustrate this observation by detailing the rational framing assumptions in social capital literature. The chapter will argue that these framing rational notions foster a perspective that inclines towards excessive self-interest as well as a concomitant lack of fellow feeling or morality. Methodology – Literature review of Social Capital theory. Findings – The chapter demonstrates that the narrow economic understanding of rationality that predominates as the framing notion in management theory tends towards amorality as it privileges individual self-interest. In consequence, the significance of ethics and cooperation are under-reported and under-emphasised which leads to Corporate Social Irresponsibility (CSI). These observations are discussed with reference to social capital theory. Research implications – To consider the significance of the under-acknowledged rational background or framing perspectives in distorting theory and empirical research in social capital literature, and more generally in contemporary management literatures and business school pedagogy. Social implication – There is a need to re-examine and challenge the validity and application of rational notions in contemporary management literatures and pedagogy. Originality – The chapter identifies that a narrow utility maximising understanding of rationality frames and therefore inhibits current management literatures and pedagogy, including social capital literature.