Corporate responsibility involves the search for an effective "fit" between businesses and the societies in which they operate. The notion of "fit" recognises the mutual dependence of business and society -- a business sector cannot prosper if the society in which it operates is failing and a failing business sector inevitably detracts from general well-being. "Corporate responsibility" refers to the actions taken by businesses to nurture and enhance this symbiotic relationship. Of course, societies can also act to nurture this relationship by providing such services as law enforcement, investment in the many public goods used by business and appropriate regulation and by financing these activities via a well designed, disciplined system of public finance. If the actions of both business sectors and societies are successful, then the "fit" between the two helps to foster an atmosphere of mutual trust and predictability that facilitates the conduct of business and enhances economic, social and environmental welfare.
The core element of corporate responsibility concerns business activity itself -- the function of business in society is to yield adequate returns to owners of capital by identifying and developing promising investment opportunities and, in the process, to provide jobs and to produce goods and services that consumers want to buy. Economic history attests to the power of business sectors operating in effective environments of private and public governance to raise general welfare and living standards.
However, corporate responsibility goes beyond the core function of conducting business. Businesses are expected to obey the various laws which are applicable to them and, as a practical matter, often have to respond to societal expectations that are not written down as formal law. Since many enterprises now straddle numerous legal, regulatory, cultural and business environments, the challenge of legal and ethical compliance has become more complex.