Professional Documents
Culture Documents
CORPORATE CITIZENSHIP
Handbook of Research on
Global Corporate Citizenship
Edited by
Guido Palazzo
Professor of Business Ethics, School of Business and
Economics, University of Lausanne, Switzerland
Edward Elgar
Cheltenham, UK Northampton, MA, USA
Contents
viii
xx
List of contributors
Preface
1 Introduction: corporate citizenship in a globalized world
Andreas Georg Scherer and Guido Palazzo
PART I
137
166
185
208
vi
Contents
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249
273
293
315
343
374
405
430
454
476
Contents
PART VI
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CRITICAL PERSPECTIVES
501
527
552
577
Index
591
Contributors
Nancy J. Adler holds the S. Bronfman Chair in Management at McGill
University. She received her doctorate from UCLA. Dr Adler conducts
research and consults on global leadership, cross-cultural management,
and women as global leaders. She has authored over 100 articles, produced
a lm, and published four books. She is a Fellow of the Academy of
Management, the Academy of International Business and the Royal
Society of Canada. She was named a 3M Fellow, recognizing her as one of
the top university-level teachers, among all disciplines, in Canada. Nancy
is also an artist working primarily in watercolor and ink.
Subhabrata Bobby Banerjee is Professor of Management and Associate
Dean of Research at the College of Business, University of Western
Sydney. His research interests include sustainability, corporate social
responsibility, postcolonialism and indigenous ecology. His rst book,
Corporate Social Responsibility: The Good, The Bad and The Ugly, was published by Edward Elgar in November 2007. He has published widely in
international scholarly journals and his work has appeared in the Journal
of Marketing, the Journal of Management Studies, Organization, Human
Relations, Organization Studies, Management Learning, the Journal of
Business Research and Organization and Environment.
David M. Boj holds the Bank of America Endowed Professorship of
Management (awarded September 2006), and is past Arthur Owens
Professorship in Business Administration (June 2003June 2006) in the
Management Department at New Mexico State University. His focus is on
the study of ethics, critical theory feminism, and power of language, discourse and stories in organizations. Recent books include Storytelling
Organization (Sage, 2007), Critical Theory of Business and Public
Administration (Information Age Press, 2007), and The Passion of
Organizing (with J. Brewis, S. Lindstead and A. OShea, Liber &
Copenhagen Business School Press, 2006). His book, Narrative Research
Methods for Communication Studies (Sage, 2001) is a widely used text in
teaching qualitative methods to PhD students.
Andrew Crane is Professor of Policy and holds the George R. Gardiner
Chair in Business Ethics at the Schulich School of Business, York
University, Toronto. He is interested in various aspects of business ethics,
viii
Contributors
ix
including the role of morality in marketing and consumption; the contribution of evolutionary narratives to environmental management; the
implementation of fair trade policies; and the contribution of Foucauldian
thought to business ethics. Recent work appeared in the Academy of
Management Review, the Journal of Business Research, Organization
Studies, the Journal of Business Ethics and Business Ethics Quarterly. He
holds a BSc from Warwick University and a PhD in Business Studies from
Nottingham University. Previously, he was Professor of Business Ethics
and Director of the MBA in CSR at Nottingham University Business
School, UK.
Jonathan P. Doh holds the Herbert G. Rammrath Chair in International
Business, is founding Director of the Center for Global Leadership, and
Associate Professor of Management at the Villanova School of Business,
Pennsylvania, USA. Jonathan is the author or co-author of more than 35
refereed articles, 20 chapters and ve books. His work has appeared in the
Academy of Management Review, California Management Review, the
Journal of International Business Studies, Organization Science, Sloan
Management Review and the Strategic Management Journal. He is
presently completing work on two books: Multinationals and Development
(Yale University Press) and Corporations and NGOs: Conict and
Collaboration (Cambridge University Press). He is a member of ve editorial boards and is an associate editor of Business and Society. He received
his PhD in Strategic and International Management from George
Washington University
Peter Edward is currently a PhD student at the Judge Business School,
University of Cambridge (UK). He has over 20 years experience as a chartered engineer and as a management consultant, the latter predominantly
in programme management of business transformations and business startups and mergers. His research interests are in using poststructural and critical theory to investigate the role of business at the intersection of Third
World development, business ethics, sustainability and global growth. His
work on global inequality, ethics of poverty and micronance has appeared
in World Development, Third World Quarterly and Perspectives on Global
Development and Technology. He is also convener for the CSR study group
of the UK and Ireland Development Studies Association.
Timothy L. Fort is the Lindner-Gambal Professor of Business Ethics,
Executive Director of the Institute for Corporate Responsibility and
Coordinator of the Peace Through Commerce Initiative at George
Washington University (Washington, DC). His research interests include
Contributors
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activism as a tactic by labor unions, the rise and fall of American middle
management as an occupation, and the redenition of business ethics and
corporate social responsibility during the 1980s. He has published in a
variety of journals, including Business Ethics Quarterly, Business and
Society, the Journal of Business Ethics, the Journal of Academic Ethics, the
Journal of Management Inquiry, Organization, the Journal of Management
History and the Journal of Business and Management. He serves on the editorial board of Organization and Management History.
Dirk Matten holds the Hewlett-Packard Chair in Corporate Social
Responsibility and is a Professor of Policy at the Schulich School of
Business, York University, Toronto. His doctoral degree and his
Habilitation are from Heinrich-Heine-University Dsseldorf in Germany.
He is interested in CSR, business ethics and international business. Dirk
has taught and done research at academic institutions in Australia,
Belgium, Britain, Canada, the Czech Republic, France, Germany, Italy and
the US. He has published 10 books and some 80 articles and book chapters, including papers in journals such as the Academy of Management
Review, the Journal of Management Studies, Organization Studies, the
British Journal of Management, Human Relations and Business Ethics
Quarterly. Recently, he co-edited the Oxford Handbook of CSR (with
Jeremy Moon, Oxford University Press, 2008) and co-authored
Corporations and Citizenship (with Jeremy Moon, Cambridge University
Press, 2008). Previously, he held a Chair in Business Ethics and was
Director of the Centre for Research into Sustainability at the University of
London/UK (Royal Holloway).
Abagail McWilliams is Executive Associate Dean and Professor of
Management in the College of Business Administration of the University
of Illinois at Chicago. Since 2002 she has also been a Visiting Professor in
the International Centre for Corporate Social Responsibility at the
University of Nottingham. Her research interests include strategic management, corporate social responsibility and research methodology. Her
work has appeared in the Academy of Management Journal, the Academy
of Management Review, the Strategic Management Journal, the Journal of
Management Studies, the Journal of Management and Organizational
Research Methods, as well as in several edited volumes and other journals.
Ali Mir is an Associate Professor of Management at the College of
Business, William Paterson University, New Jersey, USA. His research
interests center around the changing nature of work in late capitalism. His
recent work includes the examination of transnational labor migration, the
Contributors
xiii
transformation of labor processes and markets under economic globalization, and the issues surrounding business process outsourcing.
Raza Mir is an Associate Professor of Management at the College of
Business, William Paterson University, New Jersey, USA. His research
mainly concerns the transfer of knowledge across national boundaries in
multinational corporations, and issues relating to power and resistance in
organizations. He has published in journals from a variety of disciplines,
including the Academy of Management Learning and Education, Cultural
Dynamics, the Journal of Business Communication, Organizational
Research Methods and the Strategic Management Journal. He is a member
of the editorial boards of Organization, Group and Organization
Management and Critical Perspectives on International Business.
Vilmos F. Misangyi is an Assistant Professor in the Department of Business
Administration in the Alfred Lerner College of Business and Economics at
the University of Delaware. His research interests include CEO charisma,
institutional entrepreneurship, corruption and managerial discretion. His
work has appeared in several journals including the Academy of
Management Review, the Strategic Management Journal, the Journal of
Applied Psychology, Organizational Research Methods and Leadership
Quarterly. He serves as an ad hoc reviewer for the Academy of Management
Review, the Academy of Management Journal, Organization Science, the
Journal of Management and Business Ethics Quarterly.
Jeremy Moon is Professor and founding Director of the International
Centre for Corporate Social Responsibility at the University of
Nottingham, UK. He won a Beyond Grey Pinstripes European Faculty
award for preparing MBAs for social and environmental stewardship in
2005. He is a Fellow of the Royal Society for the Arts. He is the author or
editor of seven books and two special issues, and author of over 80 journal
articles and book chapters. He is co-editor of The Oxford Handbook of
CSR (with Dirk Matten, Oxford University Press, forthcoming) and coauthor of Corporations and Citizenship (with Dirk Matten, Cambridge
University Press, forthcoming). Journal publications on CSR include the
Academy of Management Review, the British Journal of Management, the
Journal of Management Studies, the Journal of Business Ethics, Business
Ethics Quarterly and Business and Society Review.
Justine Nolan is the Deputy Director of the Australian Human Rights
Centre and lectures in international human rights law at the University of
NSW, Australia (UNSW). Her research interests are in human rights,
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Contributors
corporate accountability and labour rights. She has worked closely with a
broad range of representatives from NGOs, government, companies and
the UN in consulting on business and human rights issues. Prior to her
appointment at UNSW she was the Director of the Business and Human
Rights Program at the Lawyers Committee for Human Rights (now
Human Rights First) in the United States. She is an editor of the Human
Rights Defender.
Guido Palazzo is Professor of Business Ethics at the University of
Lausanne (Switzerland). His research interests are in ethical decisionmaking, global governance and corporate social responsibility. His work
has appeared in the Academy of Management Review, Business Ethics
Quarterly, the Journal of Business Ethics and in numerous volumes and
other journals. He is a member of the editorial board of Business Ethics
Quarterly and Business & Society. He has worked with numerous companies and NGOs on projects in organizational ethics and CSR.
Robert A. Phillips is on the faculty of the University of Richmonds Robins
School of Business, Richmond, Virginia, USA. His work has appeared in
Business Ethics Quarterly, the Journal of Business Ethics and Business and
Society Review among others. He is also author of Stakeholder Theory and
Organizational Ethics (Berrett-Koehler, 2003). His research interests
include organizational ethics and the eects of managerial discretion on
stakeholder management, ethics in network organizations and the commercial use of private military contractors. He currently serves on the
Board of Directors of the Society for Business Ethics. He holds a PhD from
the Darden School at the University of Virginia and also MBA and BS
degrees from the University of South Carolina and Appalachian State
University, respectively.
Nicola M. Pless is Research Director and Assistant Professor in
Responsible Leadership at the University of St Gallen in Switzerland. She
is also a Visiting Senior Research Fellow in INSEAD (France) where she
co-directs the INSEAD-PwC research stream on Developing Responsible
Leadership. She holds an MBA from the University of Bayreuth, a PhD in
organizational theory from the University of St Gallen and a diploma in
clinical organizational psychology from INSEAD. Prior to joining these
faculties, she worked as a vice president in the nancial services industry
and served at the World Bank Group in Washington, DC. Her research,
writing and teaching focuses on international management, responsible
leadership and leadership development. She has delivered training and consulting services for the International Finance Corporation, Deutsche
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and Pittsburgh. He was the author or editor of more than 40 books in the
domains of business ethics, history of philosophy, philosophical psychology (with a focus on emotions). His books on business ethics include Above
the Bottom Line, Ethics and Excellence, Its Good Business, A Better Way
to Think about Business and Building Trust. Robert Solomon died on
2 January 2007.
Grahame F. Thompson is Professor of Political Economy at the Open
University. Long-term research interests are in the nature of network forms
of governance and the international system. He is currently engaged in
researching the fate of the categories of borders, territories and jurisdictions in debates about globalization, and the meaning of global corporate
citizenship. Recent book publications have included: Between Hierarchies
and Markets: The Logic and Limits of Network Forms of Organization
(Oxford University Press, 2003) and Globalization in Question (3rd edition,
Polity Press, 2008).
Sandra Waddock is Professor of Management at the Boston College
Carroll School of Management and Senior Research Fellow at BCs Center
for Corporate Citizenship, and for 200607 a visiting scholar in the CSR
initiative at the Kennedy School of Government at Harvard University. She
holds MBA and DBA degrees from Boston University and has published
widely on issues related to corporate responsibility/citizenship, multisector
collaboration and related topics. She received the Aspen Institutes 2005
Faculty Pioneer Award for External Impact.
Gary R. Weaver is Professor of Management at the University of Delaware
and editor in chief of Business Ethics Quarterly. His research focuses on psychological, sociological and philosophical aspects of ethics in business and
society. He is co-author of Managing Ethics in Business Organizations:
Social Scientic Perspectives (Stanford University Press, 2003). He also
serves on the editorial boards of the Academy of Management Review and
the Journal of Management, and his research has appeared in the Academy
of Management Journal, the Academy of Management Review, Organization
Studies, Business Ethics Quarterly, Human Relations, the Journal of
Management, Business and Society, California Management Review and
other scholarly journals.
Gerhard Willke is Professor of Economics at the University of Applied
Sciences at Nuertingen, Germany. He has published six books and numerous articles. His research areas are economic theory, the theory of capitalism, political economy and employment policy.
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Contributors
Helmut Willke is Professor for State Theory and Global Governance at the
University of Bielefeld, Germany. His research activities are in the elds of
systems theory, systems governance, state theory, global governance and
governance of functional world systems. He has published 18 books and
some 150 articles in all relevant German journals. He is a member of the
editoral board of Jahrbuch fr Managementforschung.
Hugh Willmott is Research Professor in Organization Studies, Cardi
Business School. He has previously held professorial positions at the universities of Cambridge and Manchester and visiting appointments at the
universities of Copenhagen, Lund and Craneld. He has a strong interest
in the application of social theory, especially poststructuralist thinking, to
the eld of management and business. He has published 20 books including Managing Knowledge (2000); Management Lives (1999), Studying
Management Critically (2003) and Fragmenting Work (2004). He has also
published widely in social science and management journals, including the
Academy of Management Review, the Administrative Science Quarterly,
Sociological Review and Sociology.
Klaus Dieter Wolf is Professor of Political Science at Darmstadt University
of Technology and Deputy Director at the Peace Research Institute,
Frankfurt (PRIF). His current research areas are governance beyond the
state and the role of private actors in international relations. Among his
recent books are Macht und Ohnmacht internationaler Institutionen (2007,
co-edited with Andreas Hasenclever and Michael Zrn) and Staat und
Gesellschaft fhig zur Reform? (2007).
Iris Marion Young was Professor of Political Science at the University of
Chicago. Her research covered contemporary political theory, feminist
social theory and normative analysis of public policy. She was one of the
most inuential political philosophers of our time. Her writings have a
huge impact in a broad eld of domains, including theories of justice,
democracy and dierence, deliberative democracy, ethics and international
aairs. Iris Marion Young died on 1 August 2006.
Michael Zrn is Director of the Social Science Research Center Berlin
(WZB) and founding Dean of the Hertie School of Governance. In 1993 he
was appointed Professor of Political Science at the University of Bremen.
Since 1995 he has been Co-Director of the Institute for Intercultural and
International Studies (InIIS) concentrating on issues concerning globalization and global governance. From 1997 to 2000 he was Co-Director of
the Centre for European Law and Politics at the University of Bremen,
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Preface
The development of this book began in summer 2005 when we started to
approach authors to contribute to the Handbook of Research on Global
Corporate Citizenship. We were gratied that so many eminent scholars
from various disciplines were interested in this topic. We should like to
thank all the contributors for their hard work and timely cooperation. Also,
we should like to thank Francine OSullivan and the Edward Elgar sta for
their kind and reliable help. Christian Vgtlin prepared all the les for the
publisher and helped enormously with the editing of the chapters and the
preparation of the Handbook.
During the preparation, two scholars passed away soon after they had
sent us their papers. We were very sad to learn that Iris Marion Young died
on 1 August 2006, and that Robert Solomon passed away on 2 January
2007. We remember both these scholars as insightful thinkers and eminent
scholars in their disciplines.
Andreas Georg Scherer
Guido Palazzo
Zurich and Lausanne
December 2007
xx
Introduction
Wood and Logsdon 2008). While some scholars suggest that corporations
and business rms should be considered equivalent to citizens (Carroll
1998), others hold that the citizenship concept cannot easily be transferred
to corporations (Norman and Nron 2008). Rather, business rms should
be regarded as state-like agencies and not so much as citizens (Matten and
Crane 2005). This suggestion is based on the observation that often business rms adopt a state-like role and protect citizens rights in cases where
governments are neither able nor willing to perform this function.
Corporate citizenship as an interdisciplinary topic
The task of this volume is to discuss the consequences of the social and
political power and engagement of business rms and to examine the implications for the theory of the rm and the role of business rms in society.
Various disciplines such as political philosophy, political science, sociology,
legal studies, management studies and economics recently have begun to
reconsider the role of business in society in light of the ongoing process of
globalization.
In political philosophy, scholars have started to deconstruct the traditional nation-state-based concept of democracy (Habermas 1998, 2001),
examining the challenges of the current erosion of political power over economic actors and processes. Others have proposed to reconceptualize the
meaning of responsibility in a global context, drawing consequences for the
power balance and interaction between governmental, business and civil
society actors (for example, Dryzek 1999; Young 2004). In political science
and international relations, globalization has provoked discussions on
policy networks (Kenis and Schneider 1991), privatepublic partnerships
(Grimsey and Lewis 2004), global governance (Held 2004), the various
forms of governance without government (Zrn 2002) and the role and
legitimacy of private authority (Risse 2002; Fung 2003; Ruggie 2004;
Frynas 2005; Wolf 2005). In sociology, students have studied the inuence
of globalization on topics such as nationhood, culture, identity, communication, industrial relations, and social and economic institutions (for an
overview, see Cohen and Kennedy 2000). In particular, they have analyzed
the changing role of politics, economics and civil society groups such as
non-governmental organizations (NGOs) and social movements (Beck
2000; Davis et al. 2005). In legal studies, scholars have started to analyze the
challenge of holding MNCs accountable for issues that take place beyond
the territoriality of nation-states. They study, for example, the responsibilities of business rms for being involved in human rights violations abroad
(Kinley and Tadaki 2004; Taylor 2004; Clapham 2006; Kinley and
Chambers 2006). This is dicult within a framework of international law
that is traditionally targeting nation-states only, but does not directly
Introduction
theory and contributing to the most urgent questions that relate to corporate
citizenship.
Structure of the book
This volume contains original contributions that help us to better understand global corporate citizenship and the role of business in world
society.2 The chapters argue across relevant disciplines (for example,
organization studies, business ethics and corporate social responsibility,
legal studies, political theory and so on). The Handbook is structured in
seven parts, dealing with the phenomenon of corporate citizenship along
various topics or sub-dimensions and with the help of the involved disciplinary perspectives. After this introductory chapter, the book is structured as follows.
Part I History and conceptual groundwork
This part deals with the history and conceptual grounding of corporate
citizenship. The chapters also distinguish corporate citizenship from
related concepts such as corporate responsibility, corporate social performance or corporate reputation and consider the similarities and dierences
between corporate citizenship and established theories such as stakeholder
theory or business ethics. Chapters in Part I address questions such as the
following: what does corporate citizenship mean in a postnational world?
How did the concept emerge and what alternative perspectives are discussed in the literature? What are the future trends in corporate responsibility, corporate social responsibility, corporate social performance and
corporate reputation? How is corporate citizenship related to these concepts? Do companies have a political responsibility and if so how can it be
dened? How can economic rationality and political responsibility be reconciled in a globalized world? How are these issues treated in stakeholder
theory or business ethics? How do these schools of thought relate to corporate citizenship?
Part II Contemporary issues and challenges
This part deals with the contemporary challenges of global business regulation and the provision of global public goods. Each chapter addresses a
particular issue and discusses how responsible corporate citizens might
respond to the questions of regulation and production of public goods.
Authors emphasize possible achievements and limitations of corporate citizenship. Topics include the following: what are the human rights controversies in global business today and how can corporate citizenship
contribute to the resolution of these issues? What are the most important
environmental challenges and how can corporate citizenship contribute to
Introduction
Introduction
10
Introduction
11
corrupt behavior. The authors highlight certain potential corruptiondisabling roles for corporations. However, they also consider various obstacles that may dampen optimism that many corporations would engage in
wide-ranging citizen-like behavior against corruption.
Charles Koerber and Timothy Fort (Chapter 10) discuss some of the possible contributions and potential limitations of corporate citizenship to
peace through commerce. The notions of peace through commerce and
corporate citizenship are relatively new concepts which are distinct but
related. They both try to address the changing world in which we live and
highlight the various and complex shifts in global commerce and societal
interaction, including the decrease in power of nation-states and the
increase in power of MNCs. These concepts, as used in the business literature, are a reection of the struggle that practitioners and academics are
having with the changing relationships and interactions among businesses,
communities, governments and NGOs. These are not the only attempts by
academics and the business community to deal with our changing world
but they are both promising conceptions that deserve further thought and
research. Koerber and Fort, therefore, explore possible areas for future
research into the relationship between these two concepts.
Klaus Dieter Wolf (Chapter 11) deals with the emergence of the new
political forms of publicprivate governance patterns beyond the state. In
many ways the new interplay between the state, business and civil society in
global governance resembles the process of political modernization
changes which could be observed in the domestic sphere and is associated
with terms such as de-hierarchization or de-governmentalization that are
discussed in the political sciences. Wolf analyzes the implications of the
new modes of governance on the actors involved. Compared to its predecessors such as treaty-based intergovernmentalism, global governance is a
patchwork of dierent modes of governance, consisting of actors from
dierent environments who are equipped with very dierent resources, and
who are used to quite dierent compliance mechanisms. Wolf discusses
some of these mechanisms which presume that actors follow the interestbased logic of consequences. He also points to alternative mechanisms that
are based on the assumption that political actors follow the logic of appropriateness. In order to achieve a better understanding of these new modes
of governance, the author explores the various conditions under which
these dierent modes will emerge. Finally, Wolf covers some of the normative problems of the privatization of world politics and points to the
regulatory potential as well as limits of the new governing relations.
Stephen Kobrin (Chapter 12) suggests that we are in the midst of a transition from an international to a post-Westphalian politicaleconomic
system. He holds that we have not yet developed the modes of cooperation,
12
Introduction
13
14
Introduction
15
16
Introduction
17
corporate citizenship has emerged. Finally, they highlight ways in which the
marginalized actors in this debate around corporate citizenship can make
their presence felt in the political as well as in the theoretical realm.
Helmut Willke and Gerhard Willke (Chapter 24) advance a rigorous critique of CC and CSR and emphasize the relations between economy and
politics. They hold that the debate on corporate citizenship features a new
type of imbrication between the two spheres by trying to transplant ethical
and political obligations (responsibilities) into the mentalities of economic
actors. The authors focus on the separation of nation-state politics and
private economy as it has developed during the process of modernization.
Willke and Willke suggest that in the discourse on corporate citizenship there
is a fundamental misunderstanding of this process and the architecture of
modern democratic societies. They argue that the CSR/CC approach is fundamentally mistaken about the role of enterprise in modern market societies.
Their argument is based on the distinction between the goals of individual
actors and the systemic outcomes of their actions. Finally, the authors oer
some insights into a system-theoretical approach to global governance and
what they claim is a more complex coupling of economy and politics. This
leads to a model of governance that is related to the knowledge society.
In the concluding chapter, Guido Palazzo and Andreas George Scherer
point to future research directions on corporate citizenship. They outline
topics that emerge from the discussions in the handbook and address the
open questions that are still to be solved. For example, the meaning and the
limits of responsibility for the corporation, the questions evolving around
a new concept of corporate politics, or the self-regulation of the corporation as seen in the debate on governance without government. Further, the
future debate on corporate citizenship needs to address the role of leadership in this context, as well as the question of the dark sides of responsibility. In this chapter, the authors summarize new challenges and point to
interesting directions for future research.
Notes
1. See also the volume edited by Goldstein et al. (2001) which enhances dialogue between
political scientists and legal scholars but does not consider the political role of business
rms.
2. The chapters of this volume are original contributions with two exceptions the papers
by Sandra Waddock and by Iris Young are modications of texts that have been published
elsewhere.
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Introduction
21
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PART I
HISTORY AND
CONCEPTUAL
GROUNDWORK
Introduction
In this chapter we provide an overview of the advent, rise, current use and
future perspectives of corporate citizenship in the management literature.
The purpose of our chapter is to map out the territory of research on corporate citizenship and outline the major contestations, debates and the
potential of using citizenship as a metaphor for businesssociety relationships. After providing a brief overview about how corporate citizenship
entered the agenda in business and academia, we shall analyze and critically
categorize the extant use of the terminology. Based on this literature survey
we shall then proceed to focus on the potential for using the citizenship
metaphor to provide a more expansive analysis of the political role of the
corporation. This will pave the way to mapping out three fundamental
approaches to apply citizenship to corporations. We argue, however, that
such an application has to be cognizant of the facts that citizenship in itself
is a dynamic concept and, moreover, that corporations play quite a substantial role in transforming contemporary notions of citizenship. We conclude our foray into corporate citizenship with a discussion of these themes
and a review of future perspectives.
Corporate citizenship a new terminology in businesssociety relationships
Corporate citizenship (CC) has emerged as a prominent term in the management literature dealing with the social role of business. While the terminology of CC has been around for many years and was occasionally used
here and there prior to the 1980s (for example, Gossett 1957) we can witness
a massive growth in usage of CC mainly during the last two decades. This
occurred, rst of all, in the realm of management practice; having gained
momentum in US business circles in the 1980s (Altman and Vidaver-Cohen
2000), it has since begun to enter the language of the global business community. A landmark in this process has been the joint statement on Global
Corporate Citizenship The Leadership Challenge for CEOs and Boards,
signed during the World Economic Forum in New York in January 2002 by
CEOs from 34 of the worlds largest multinational corporations (MNCs),
25
26
including the Coca-Cola Company, Deutsche Bank, Diageo, Merck & Co.,
McDonalds Corporation, Philips and UBS (World Economic Forum
2002). Moreover, as a further indicator of the proliferation of citizenship
language in business, we would highlight the fact that in 2006, major global
companies such as Citigroup, Diageo, ExxonMobil, Hewlett-Packard,
Microsoft, Panasonic, Pzer or Xerox all labeled their annual non-nancial
reporting document as a citizenship report, a gobal citizenship report or
similar versions of the terminology.
However, the proliferation of the term is not conned to the corporate
sphere. There has been an escalating body of academic work specically
dedicated to CC issues (see Andriof and McIntosh 2001b for an
overview); there is now a dedicated Journal of Corporate Citizenship; and
a number of research centers framed explicitly around CC have emerged,
including those at Boston College in the US, Warwick University in
the UK, Deakin University in Australia and Eichsttt University in
Germany. Likewise, many consultants and business publications have
adopted the terminology of CC in reference to the rms social and environmental policies (Miller 1998; Wagner 2001; Roberts et al. 2002). This
cozy consensus around CC (Norman and Nron 2008) is also manifest
in a growing number of government units, consultancies and think-tanks
specically dedicated to CC, such as the US Chamber of Commerce
Center for Corporate Citizenship, the African Institute for Corporate
Citizenship, the Copenhagen Center and the London-based Corporate
Citizenship Company. In a similar vein, the inuential US magazine
Corporate Responsibility Ocer2 previously titled Business Ethics conspicuously labels its annual ranking of the 100 most socially responsible
companies as the list of the 100 Best Corporate Citizens in many ways
symbolizing a trend in current usage of terminology in the business
society eld.
Table 2.1 provides a avor of the usage of CC terminology by corporations. First, it is interesting to note that citizenship is often referred to by
a number of attributes, of which good corporate citizenship or global citizenship are by far the most popular ones. Furthermore, the overwhelming
gist of these statements focuses on the embedding of the corporation into
its direct local community and evokes notions of being a good neighbor
(BHP Billiton) with mutually benecial relations between companies and
their stakeholders (Microsoft). This includes compliance with local laws
(Toyota) and contributions to the ourishing of local communities, most
notably in developing countries (Manulife). Citizenship seems to be a
desired metaphor in the corporate world to counter notions of impersonal,
bureaucratic and inhumane power-players and replace those by the image
of the good guy next door who cares for you and looks after the interests
27
Industry and
country of
origin
Mining,
Australia
Insurance
and Financial
Services,
Canada
Software,
USA
Automobiles,
Japan
BHP Billiton
Manulife
Microsoft
Total
Toyota
CC statement
Company
Table 2.1
Sustainability Report
2006
Corporate Social
Responsibility
Report 2005
Citizenship Report
2005
2006 Public
Accountability
Statement
Sustainability Report
2006
Source
28
of those with whom, as it were, it rubs shoulders. CC can be said to highlight the fact that the corporation sees or recaptures its rightful place
in society, next to other citizens, with whom the corporation forms a community. Citizenship then focuses on rights and responsibilities of all
members of the community, which are mutually interlinked and dependent
upon each other (Waddell 2000).
In some cases, however, as the example of Total shows, citizenship is also
used to describe the corporate role in key debates in society and in
inuencing public decision making on contested political issues, such as in
this case, global warming. These political references, however, are relatively
scarce and the key orientation seems to be the local community. Toyota, for
instance, prides itself on an 80-employee Corporate Citizenship Division
whose primary focus is to coordinate corporate contributions to local communities in the worldwide operations of the company (Toyota 2007, p. 66).
It is evident, however, that in the management literature the usage of the
term CC has been far from consistent, and, we might suggest, not at all clear.
Indeed, we would suggest that there has yet to be a clear, specic and widely
accepted denition of CC. In the following subsections, we shall therefore
examine current usage of the term, and in so doing, delineate three dierent
perspectives on CC evident in the extant management literature.
Limited view of corporate citizenship3
Initially, CC was, and in many respects still is, used to identify the philanthropic role and responsibilities the rm voluntarily undertakes in the local
community, such as charitable donations. Carroll (1991), for example,
identies being a good corporate citizen with a specic element of corporate social responsibility (CSR), philanthropic responsibilities, his fourth
level of CSR. Accordingly, Carroll (1991) places CC at the top level of his
CSR pyramid, suggesting that it is a discretionary activity beyond that
which is expected of business. CC in this respect is regarded as a choice to
put something back into the community, but since it is merely desired by
the community it is, according to Carroll (1991, p. 42), less important than
the other three categories.
This limited view tends to present the specically new contribution of
CC to the debate on corporate philanthropy as its strategic focus. As
opposed to corporations engaging in charity simply for the sake of it, CC
presents a case for strategic philanthropy. For the rm, CC is generally
seen therefore as fueled by issues of self-interest including the insight that
a stable social, environmental and political environment ensures protable
business (Windsor 2001; Wood and Logsdon 2001). This understanding is
reected in most of the corporate examples given in Table 2.1, which is
typical for the limited view of CC in so far as it focuses mainly on the direct
29
30
Andriof and McIntosh (2001a) talk of CC as corporate societal responsibility but use it synonymously with CSR. Similarly, in a number of papers,
Maignan and colleagues (Maignan et al. 1999; Maignan and Ferrell 2000)
dene CC as the extent to which businesses meet the economic, legal,
ethical and discretionary responsibilities imposed on them by their stakeholders (Maignan and Ferrell 2000, p. 284). This is largely synonymous
with the Carroll (1991) denition of CSR. Much of the CC literature currently uses the concept in this sense, stressing various aspects of CSR, such
as sustainability (Marsden 2000), the stewardship role of business (Reilly
and Kyj 1994) or drawing conceptual lines toward the stakeholder
approach (Davenport 2000).
One of the problems in conceptualizing CC in this way is that many
authors present a certain view of the debate in business and society relations so far and then attribute certain new issues and developments to the
new label of CC. Thus, CC just functions as a new way of presenting existing concepts, but applied to a wider range, or perhaps a dierent set, of
issues. Again, there tends to be little, if any, serious reection on the notion
of citizenship and its potential for surfacing new meaning. So, for
instance, Birch (2001) regards CC as an innovation to the CSR concept in
that CC causes business to see itself as part of the public culture, whereas
CSR is according to his perception more concerned with social responsibility as an external aair (Logan et al. 1997; McIntosh et al. 2003). CC,
from the perspective of these authors, is an extension to a very selectively
dened view of CSR, as exemplied in particular by Sundar (2000) from
an Indian perspective. Here, the CC label is simply used to rebrand and
relaunch existing ideas about businesssociety relations, probably to make
them more accessible and attractive to business audiences.
While this marketing of academic ideas is, in many respects, an important task, it is also in danger of raising skepticism about CC, CSR and so
on, on account of them being perceived as no more than ephemeral management fads and fashions. Furthermore, although in our interpretation,
the authors referring to CC in this way appear to be conating CC with
CSR, this body of literature is notably lacking a clear, direct and unambiguous denition of CC. Again, the terminology of CC is also taken up
without referring explicitly to the political notion of citizenship and
explaining the reasons for its usage in this context.
Extended view of corporate citizenship
A third view has also begun to emerge in the academic literature in recent
years, one that we initially referred to as an extended view of CC (Matten
et al. 2003) to indicate how it also extended to responsibilities beyond those
of philanthropy and CSR. The extended view, we suggest, takes seriously
31
32
33
pinned by a view that citizenship autonomy and choice are being directly
structured by corporations and their agendas. Alternatively, there is the
view that human citizenship is being reshaped because the key institutional
representatives of citizens, democratic governments, are being superseded
by corporate power (Ikeda 2004). Yet more broadly, there is concern that
the contemporary forces of globalization and the weakening of national
governments are also inimical to eective citizenship (Schneiderman 2004;
Isin and Turner 2007). Although this last point does not necessarily directly
relate to corporations, by virtue of their role as agents of globalization they
are implicated in broader political debates about citizenship.
Fourth, the uniting of corporations with citizenship should not be seen
only as a one-way street where citizenship is simply used to help us understand certain facets of the corporation. Rather, the corporation can also be
used to examine the theory and practice of citizenship. At a time when our
ideas of citizenship are in ux and where scholars of political science and
sociology have become increasingly interested in the role of markets, multinationals and other economic factors in the transformation of citizenship
(Kymlicka and Norman 1994; Isin and Turner 2002a; Isin and Turner
2007), the time is ripe for a focused examination of the nature and impacts
of corporate actors on citizenship. Of course, to even begin this endeavor,
we need to identify at least some starting-points for what we mean by citizenship in this context, as we now discuss.
What is citizenship?
Ideas of citizenship form the bedrock of our political identity, yet the very
concept of citizenship is both uid and open to question. Indeed, the
meaning of citizenship within political debates has been transformed in the
space of the 20th century alone. This has been due to, for example, womens
enfranchisement, growth in multiculturalism and changes in political
boundaries and institutions. Thus, as Parry (1991, p. 168) notes, [a] totally
uncontested and uncontestable concept of citizenship appears to be particularly problematic.
Within the debate on citizenship there are, however, some underlying
themes that provide some common ground on what the subject of citizenship is about even if there is disagreement about the various manifestations of these themes. For the purposes of this chapter, we refer to these
themes as status, entitlements and process. These, we contend, are the
main issues around which mainstream debates about citizenship have taken
place.
Status is the basic dening characteristic of what it means to be a citizen.
Asking the question of who is or is not a citizen, or what it takes to become
a citizen, are essentially questions about how the status of citizenship is
34
35
Corporations as citizens
The rst conception focuses on the idea outlined in the rst part of the
chapter that corporations can be regarded as citizens. The idea that corporations are (not), or are (not) like, human citizens has been examined in
a number of recent works (Wood and Logsdon 2001; Schrader 2003;
Palacios 2004; Moon et al. 2005; Thompson 2006; Norman and Nron
2008). In this conception, corporations are examined on a similar horizontal relationship with other corporate citizens and human citizens (Figure
2.1). Like human citizens, corporate citizens are also examined on a vertical relationship of power with government in which the citizens author the
authority of government. Corporations can be considered as if they were
citizens in as much as they work with and participate in society and in
bringing their concerns to government and reacting to government legislation and executive action. The focus here, then, is particularly on how corporations share status and process elements of citizenship.
Arguments about corporations being like citizens can have a number of
sources, though these are not necessarily mutually consistent (Norman and
Nron 2008). Since medieval times, European businesspeople have engaged
in citizenship-like ways through their membership of and participation in
their guilds, the forerunners of business associations, which provided
systems of governance within individual trades and forms of mutual
support. In early phases of representative politics, business ownership
enabled people to meet a property franchise. Second, corporations could be
considered as part of society in that their members, be they owners, managers or employees, are human members of societies. Relatedly, traditions
of industrial paternalism or industrial philanthropy speak of the social face
of business. Theories of business legitimacy are often premised on the need
for corporations to win the approval of society for their individual and collective existence and success (Crane et al. 2008). See Figure 2.1.
The idea that corporations could be considered as if they were citizens
can also draw on the slightly dierent sort of argument, that corporations
have a distinct functional and legal identity: they are praised or blamed,
they make deals, enter into contracts and develop internal decision-making
systems and structures independent of the people within the company.
Businesses can enter into legal agreements, own property, employ workers,
sue and be sued. As a result, a company can be treated in the eyes of the
law as if it is an articial person. More generally, the application of the
citizen metaphor to corporations can draw on the argument that every
large corporation should be thought of as a social enterprise; that is, as an
entity whose existence and decisions can be justied only in so far as they
serve public or social purposes (Dahl 1985, p. 17, original emphasis).
Although there are clearly limits to the application of the citizenship
36
Governments
Citizens
Corporations
Figure 2.1
Corporations as citizens
Governments
37
Corporations
Citizens
Political community as
the arena of citizenship
Figure 2.2
Corporations as governments
for the allocation, denition and administration of rights. While this owes
much to popular chronicles of business power (for example, Korten 1995;
Hertz 2001), academic treatments of these relationships have also been
emerging (for example, Sellers 2003; Matten and Crane 2005).
In such a conception, the corporation shares a horizontal dimension
with government and is vertically aligned with human citizens within a
political community (Figure 2.2). The focus here, then, is how corporations
inform the status, processes and entitlements of people as citizens.
First, corporations might become involved in governing citizenship
where government ceases to do so. This situation mostly occurs as a result
of institutional failure and new political ideology in liberal democracies,
and in the shift from communist to capitalist systems in transitional
economies. This may happen either when corporations have opportunities
to step in where once only governments acted or where corporations are
already active but their role becomes more pronounced if governments
retreat. For example, corporations can become more responsible for providing (or not) citizen entitlements formerly the preserve of public organizations. Thus, we see corporations increasingly active in former public
services, such as public transport, postal services, healthcare, water, power
and education.
Second, corporations become active in the citizenship arena where government has not as yet assumed the task of governing. Historically, this was
the situation that gave rise to paternalistic employee welfare programs by
wealthy industrialists in the 19th century. More recently, exposure to this
situation for multinationals has arisen due to a lack of local governance in
developing countries, which presents corporations with a choice as to
38
39
Governing body of
the corporation
Customers
Employees
Civil society
Shareholders
Government
Suppliers
Corporation as the
arena of citizenship
Figure 2.3
Stakeholders as citizens
customers and societal groups, and also among national business systems,
and dierent models of the rm. However, the issue of rights has been
central to normative variants of stakeholder theory (Donaldson and
Preston 1995). In a similar vein, the debate on stakeholder democracy has
evoked the notion of understanding the rm and its stakeholder as an
arena governed by principles akin to the political sphere (Matten and
Crane 2005). More broadly, advocates of the political model of the rm
(Parkinson 2003) apply the norms of liberal democracy to stakeholder
rights and participation, suggesting that the corporation should be seen not
as a strictly private institution, but as a social and ultimately political one.
The import of citizenship terminology and concepts into various stakeholder relations may or may not be a conscious decision on the part of
those who are writing about them. Where it is conscious, the reasoning is
typically of the kind: if stakeholders are thought of as citizens of the corporation, then this would mean that they should have particular rights and
responsibilities commensurate with the status of citizens. Similarly,
authors might think along the following lines: a suitable model of workplace democracy can be found in models of political democracy. Hence,
the citizenship literature might be used as a source of inspiration for devising forms and norms of employee participation.
This type of deliberate incorporation of citizenship concepts and models
has started to feature in the burgeoning literature on CSR and stakeholder
management, not least because of greater attention in recent years to the
40
41
42
43
44
45
46
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Corporate responsibility/corporate
citizenship: the development of a
construct1
Sandra Waddock
51
Spar oil rig in the North Sea. The company subsequently made eorts to
engage stakeholders and gain a reputation as a good corporate citizen by
publishing a new type of report focused on People, Planet and Prots,
which came to be known as a triple-bottom-line report (Elkington 1998).
By the late 1990s, a number of publications coming out of Europe had
begun to call these new company behaviors, not just corporate social
responsibility as the US terminology would have it, but corporate citizenship, implying a much broader set of responsibilities related not just to the
deliberate (and largely voluntary) eorts by companies to improve societies, but also to the way business was actually practiced (for example,
Logan et al. 1997; McIntosh et al. 1998; Murphy and Coleman 1999; also
Andriof and McIntosh 2001).
Although it would seem that corporate responsibility is simply good
management practice (see Waddock and Graves 1997; Waddock 2002
[2006]), there seems to be enormous resistance to putting it into practice
fully. Perhaps this resistance comes in part because particularly since the
ReaganThatcher revolution of the early 1980s, shareholders interests
have dominated much of the thinking about business. Concurrently the
world has experienced a revolution similar to the one that Alfred Chandler
(1962) described as the managerial revolution, which was fostered by
improved transportation and communication technologies. Since the mid1990s in particular, the rapid evolution of the internet has permitted a new
revolution toward highly networked transnational companies (TNCs) with
global reach and clout. Globalization and outsourced manufacturing have
created signicant labor and human rights issues in developing countries,
where labor, human rights and environmental standards are weak or
nonexistent, simultaneously weakening the economies of local (home)
communities and taking advantage of the disadvantaged systematically.
Companies in the US now broadly participate in politics through contributions to political action committees that at least have the appearance of
signicant and somewhat problematic inuence, while others are said to be
in certain respects taking over governmental responsibilities (for example,
Matten and Crane 2005; Scherer et al. 2006).
On the other hand, companies throughout the world, more than 3700 of
them, have become signatories to the UN Global Compact, with more than
300 being de-listed for inactivity in 2006. Some 180 of the worlds largest
global companies have joined the World Council for Sustainable
Development, and in 2006, some of the largest institutional investors in
16 nations of the world signed on to the Principles for Responsible
Investment. Simultaneously, even CEOs have begun to acknowledge the
need for shifting the focus of the nancial community away from the shortterm orientation that has characterized it in recent times. And these signs
52
2.
3.
4.
53
Figure 3.1
Descriptive
(Narrative)
Instrumental
Normative
Reputation
Spirituality/Meaning
CSR 5 Corporate
Stakeholder Responsibility
CR 4+ . . . Reputation,
Relationships, Religion
(Spirituality/Meaning)
Business Ethics
Macro
Public Policy
Micro . . .
Boundary Spanning
Functions
CCR
Corporate Community
Relations
Corporate Social
Performance
Corporate (Social)
Rectitude (Ethics, Values)
CSR2
Corporate Social
Responsiveness
Corporate
(Social)
Performance
(Assessment)
Stakeholder
Theory and
Practice
Corporate
Citizenship
Corporate
Responsibility
Guiding Vision
and Values
Root
Concepts
CSR1
Corporate Social
Responsibility
Corporate
Stakeholder
Codes, Values,
Principles
Corporate Citizen as
Policy Maker
Stakeholder
Engagement
Philanthropy, Volunteerism,
Multisector or -stakeholder
Collaboration
54
5.
6.
Other denitions that will be useful for dierentiating among key constructs follow:
1.
2.
55
56
57
58
(Frederick 1987, p. 157) that would put values and ethics at the center of a
companys concerns, its policies, and its major decisions (ibid.).
Unfortunately, in practice little of the sort happened, and as Liedtka (1998,
1999) pointed out, the eld of business ethics has had little demonstrable
eect on business practice, despite the common values across many management systems and approaches that she identied in that seminal but
undercited or acknowledged paper.
The broader focus on values, however, has had some impact on practice,
as is made clear in the work not only of Liedtka (1998, 1999) and Wicks
(2001), but also in the seminal management research of Collins and Porras
(1996, 1997) and Senge (1990), as both theorists and progressive practitioners began to recognize the power in articulating and deploying inspirational vision and values within companies.
CSP: corporate social performance
Another stream emerged around 1991 when Wood (1991), building on the
work of Wartick and Cochran (1985), drew up an integrated framework
CSP that linked the major streams to date using principles, processes and
outcomes as the guiding framework. The CSP framework focused dominantly on the social (versus broader stakeholder and environmental)
impacts of corporate performance and rightly belongs in the CSR1 and
CSR2 streams as identied by Frederick (1987). However, it largely ignores
(except for a bow to stakeholder management) the integral responsibilities
of companies associated with impacts on stakeholders that began to
surface with the evolution of stakeholder theory and emergence of the language of corporate citizenship in the late 1990s.
As Swanson (1995) pointed out, the CSP approach fails to integrate
ethical/value processes and the moral foundation for managerial and corporate action with the economic rationale that is notable in the economic
paradigm. In reorienting the CSP model, Swanson argued for an interactive orientation focused at four levels of analysis: CSR macro principles,
CSR micro principles, corporate culture and social impacts. Swanson
argues for integration of both the normative and descriptive approaches to
business in society through the concepts of value neglect (which highlights
the problems of lack of integration) and value attunement to bring the
responsibility and responsiveness streams together (Swanson 1999),
thereby attempting to overcome what Freeman (1994) has called the separation thesis (the separation of ethics and business practice).
CSR4: cosmos, science, religion (spirituality)
In a late 1990s keynote address to the Social Issues in Management (SIM)
division of the Academy of Management, claiming that scholars had
59
60
61
2002b). Others, however, focused on the relational aspects of the stakeholder, emphasizing stakeholder engagement as a long-term process of
mutual interaction (for example, Freeman and Gilbert 1988; Harrison and
St. John 1996; Svendsen 1998) and recognizing that stakeholder relationships are the foundation of the perceptions that make up corporations
themselves (see also, Clarkson 1995).
Stakeholder relationship management frequently morphs into stakeholder management, with the attendant (and largely mistaken) implication
that all stakeholders can (should), in fact, be managed by companies (see
Andriof and Waddock 2002). The implicit power dynamic of this language,
however, makes it problematic for external stakeholders who are attempting to inuence corporate practice not to be under the dominance of the
company, and fails to recognize the inherent mutuality of stakeholder relationships, in more of a network structure that does not necessarily place the
interests of the rm at the center, but may sometimes place societys (or
other stakeholders or natures) interests rst. The most widely cited framework of stakeholder management is that of Mitchell et al. (1997), which
makes explicit the one-way operationalization of stakeholder dynamics, as
well as the power implications. The alternative language is stakeholder
relationships and stakeholder responsibility (Waddock 2002 [2006];
Freeman et al. 2007), which is related to the practices that many companies
have evolved to actually engage with stakeholders in a variety of ways.
Stakeholder engagement processes partially grew out of attention to
publicprivate partnerships, which have evolved into multistakeholder collaboration and dialogue (for example, Waddell and Brown 1997; Payne and
Calton 2002; Calton and Payne 2003) to bring multiple interests together
around important social, political and economic development issues.
Engagement on a relatively equal footing means power sharing, interaction
and partnership and is highlighted in emerging multistakeholder dialogues
being sponsored, for example, by the UNs Global Compacts Learning
Forum among numerous others.
Corporate responsibility (CR)
By the mid-to-late 1990s, new terminology and thinking about what we
shall from here on call corporate responsibility (CR or, more accurately,
CR1) began to emerge.
Corporate responsibility (CR1)
The term corporate responsibility drops the word social so popular in
previous terminology, to reect the emerging sense that responsibilities are
integral to corporate actions, decisions, behaviors and impacts and cannot
be separated even conceptually (Waddock 2001, 2002; see also Freeman
62
63
The Boston College Center for Corporate Citizenship denes the term
as: Corporate citizenship is the business strategy that shapes the values
underpinning a companys mission and the choices made each day by its
executives, managers and employees as they engage with society. This
strategy is, in the Centers view, underpinned by four principles: minimize
harm, maximize benet, be accountable and responsive to key stakeholders, and support strong nancial results.4
The terms corporate responsibility and corporate citizenship integrate
stakeholder relationships into their operationalization, uniting the two
dominant streams in the business in society eld, because in addition to
focusing on the social implications of business activities, they also incorporate issues related to companies performance with respect to specic
stakeholders and the natural environment. This integration makes stakeholder- and environment-related performance central to CR (for example,
Marsden and Andriof 1998; McIntosh et al. 1998; Marsden 2000;
Waddock 2002). Mutual, holistic relationship-based interactions are part
of the core foundation of corporate citizenship. In addition, more recent
thinking suggests that because of the lack of a global governance structure
and the reality that some companies are more powerful than some governments, some MNCs are actually undertaking responsibilities previously
associated solely with governmental actors and that in that respect, the
term corporate citizen may be reasonable (for example, Scherer et al. 2006;
Scherer and Palazzo 2007).
Important work in the business ethics arena also typies the early emergence of corporate citizenship and responsibility terminology, particularly
Donaldson and Dunfees integrative social contracts theory (Donaldson
and Dunfee 1994; Donaldson 1996). Donaldson and Dunfee argue for the
existence of foundational values that they call hypernorms that are global
in scope and that can be applied in any context. Picking up on this term in
our study of responsibility management systems in corporate practice,
Charles Bodwell and I have argued for what we term foundational values
64
(Waddock and Bodwell 2002; Waddock et al. 2002; Waddock 2004), based
on internationally agreed treaties, as the basis for developing comparable
codes of conduct and stakeholder/ecological practices across companies in
dierent contexts.
Corporation as citizen
Criticism has arisen around the term corporate citizenship because
although they are considered to be persons in law (at least in some countries), corporations are not persons in actuality, and therefore cannot participate actively in democratic processes. It is clear that corporations are not
structured as democracies, nor do they vote as do individual citizens, even
though in the law they are treated as persons with certain rights and obligations. They simultaneously command many more resources than do most
individual citizens. Hence controversy and new thinking have arisen around
the term (Matten and Crane 2005; Moon et al. 2005).
Wood and Logsdon (2001; Logsdon and Wood 2002; Wood et al. 2006)
have attempted to develop a denition of what they call business citizenship in which they claim that a good business citizen is a responsible play
in its local environment [with an] [e]mphasis on volunteerism and charity,
as well as on the organizations rights and duties in and for the community
(Logsdon and Wood 2002, p. 156), though their book (Wood et al. 2006)
broadens the denition to be comparable to that of CC or CR as dened
above. As noted by Moon et al. (2005), however, the original denition is
very similar to CSR, and does not really address either the broader and
more integral responsibilities associated with companies business models,
strategies and practices that other denitions do, or the essentially political
nature of the term citizen.
The narrow denition of CC is typical of the early usage of CC; however,
recent scholarship deals seriously with the concept of citizenship (Matten
and Crane 2005), and also may reect some of the stages that appear to
occur in CC (see below). In their critique of CC, Moon et al. (2005, p. 434)
note that incorporation by its nature creates a legal entity that has rights and
responsibilities, typically associated with particular nations. As participants
in societies, however, Moon et al. and Scherer and colleagues (Scherer and
Palazzo 2005, 2007; Scherer et al. 2006) point out cogently that because of
the relative weakening of governments and strengthening of multinationals,
corporations today can and do participate in social governance structures
outside of the rm that actually serve at least some of the same functions as
governments traditionally have served. They do this collaboratively with
institutions in other sectors, including governments, NGOs and CSOs.
Matten and Crane (2005) and Moon et al. (2005) further make the claim
that corporations sometimes administer rights within the rm as well.
65
Generally Moon et al. conclude that corporations do not meet minimal criteria for citizenship under minimalist criteria, but under a more deliberative frame that uses citizenship more metaphorically, and when they
participate in collaborative processes with governments and NGOs, they
are sharing in the doing of government like citizens (Moon et al. 2005,
p. 446, original emphasis). Following along with this argument, Matten and
Crane (2005, p. 173) provide a tentative denition of CC: CC describes the
role of the corporation in administering citizenship rights for individuals,
even though it could readily be argued that few companies are actually
doing this today.
Another current conceptualization of CC is that weakened governments
have resulted in a vacuum of power that some corporations have stepped
in to ll, as argued by Scherer and colleagues (Scherer and Palazzo 2005,
2007; Scherer et al. 2006). But this participation in an emerging global governance structure is a shared governance responsibility, and it is shared with
governments and NGOs (and CSOs), and not undertaken solely by corporations, whose predominant interests remain economic or as Frederick
(1995) indicates, economizing. The result is a process that is explained
using a perspective from Jrgen Habermas where the public interest is
dened as an outcome of a communication process that helps individuals
form their preferences (Scherer et al. 2006, p. 516) and works through multisector, multistakeholder collaborative processes that co-create the new
governance structure, a structure that Waddell calls global action networks (see also Waddell 2003).
A note on stages of development
Some of the conceptual development that has occurred around corporate
responsibility is the result of scholarship reecting shifts in the ways that
companies themselves are responding to external and stakeholder pressures. A framework for stages of corporate citizenship has been proposed
by Mirvis and Googins (2006), which encompasses ve stages: elementary,
engaged, innovative, integrated and transforming. Mirvis and Googins
suggest that some laggard companies are at the elementary stage, in a
compliance-driven modality that is actually probably pre-CSR1 in the
Frederick framing, while correspondingly few companies have reached the
transforming stage, which is about changing the game entirely. Most companies are engaged, which could be seen as a reactive (Preston and Post
1975) CSR1 (Frederick 2006) modality, or a more proactive CSR2 innovative stage, where they understand the business case for corporate responsibility and act on it. Some more progressive rms have entered an interactive
(Preston and Post 1975) CSR3, integrated stage in which they focus on sustainability, integrate CR across functions and into practices throughout the
66
2.
b.
c.
67
Generally (globally) accepted foundational principles and standards promulgated by credible institutions, such as the UN Global
Compacts 10 principles, the Caux Roundtable Principles, and the
OECD Guidelines for Multinational Corporations.
Globally accepted and credible reporting standards and guidelines
encompassing ecological, societal and governance (ESG) impacts
by companies, which resemble generally accepted accounting principles (GAAP) for these ESG aspects of business, of which the
leading institution is the Global Reporting Initiative (GRI).
Credible external verication, monitoring and certication systems,
which provide assurance that what is being reported by companies
is valid and truthful, for which leading institutions are SAI
International (SA 8000 labor standards, which are helpful for companies with long global supply chains), AA 1000 ESG standards
and the ISO 26 000 standards on corporate responsibility, due in
2008. Also included in this group might be organizations such as
Rugmark, Transfair, the Forest Stewardship Council, the Fair Trade
Labeling Organization and similar entities that create marks that
attest to the validity of no sweat, no child labor, ecological sustainability or fair trade claims made by companies.
Other institutional architecture today supports this responsibility assurance infrastructure and adds dierent pressures onto businesses for greater
responsibility. This institutional architecture has been rapidly evolving
since the last decade of the 21st century and has created a new landscape
around the issue of corporate responsibility that could barely have been
conceived of by early scholars who hoped to generate greater corporate
responsibility through their attention to CSR, CR and CC in their various
iterations.
This still-evolving responsibility assurance system has relatively limited
reach into the business community to this point, and is quite new, which
means that there are ample opportunities for scholarly pursuits in understanding both how these developments have emerged and their impact, in
particular because that reach is growing quickly. For example, there are as
of this writing some 5000 signatories to the UN Global Compact and about
1000 companies formally using the GRI framework (and many more
adopting it informally). This rapid evolution is complemented and supported by another whole set of institutions that are dealing with dierent
aspects of corporate accountability and responsibility and a host of new
institutions and coalitions that create wholly new networks of organizations focused on these issues (for details, see Waddock 2006a). For example,
numerous NGObusiness coalitions, networks and dialogues have been
68
established. Some, such as the World Economic Forum, the Ethical Trading
Initiative and the World Social Forum are focused on specic issues. Others,
such as Corporation 20/20 in the US and Tomorrows Company in the UK,
are focused on asking what tomorrows corporation should look and be
like.
Companies have been pushed by the need to demonstrate their responsibility into new kinds of activities, assessments and communications. As a
result, wholly new consulting enterprises have been established to help companies cope with the plethora of social, ecological and governance
demands that they are now facing. Such consultancies include the Innovest
Strategic Advisors, and SmithOBrien, to name only a couple.
The socially responsible investment (SRI) movement alone constitutes
not only another whole set of pressures around responsible practices
facing modern corporations, but also another whole and rapidly evolving
set of institutions. Not only are there now according to the Social
Investment Forum some 173 socially responsible mutual funds (in 2007),
but there are numerous stock indices that specically track the nancial
and social performance of companies included on their lists (the most
notable of these are the Domini Index, FTSE4Good in the UK, and the
Dow Jones Sustainability Index). So quickly has SRI grown that since
1990, when the USs KLD Research and Analytics became the rst independent social research entity, there are now at least 11 countries with
research organizations that track the ESG performance of companies
domestically, all of which share data with the SIRI Group (Sustainable
Investment Research International) on a global basis. KLD and SIRI
Group planned to merge as of early 2008. SRI has spawned numerous professional organizations as well, including the Social Investment Forum
(both in the US and the UK) and the European Social Investment Forum,
among others. Other organizations exist, too, which help shape opinions
about responsible investment (for example, the Institute for Responsible
Investment), and foster activism (for example, the Interfaith Center on
Corporate Responsibility, which has been around for 35 years at this
writing and was one of the earliest such enterprises) and responsible
venture capital (Social Venture Network).
Much corporate, as well as activist, attention has gone to attempting to
determine whether there is in fact a fortune at the bottom of the pyramid
as Stuart Hart (2005) and C.K. Prahalad (2005) have argued together and
separately. This focus has been given reality in practice since the development of micro nancing by Mohammed Yunass Grameen Bank (see
Bornstein 1996) in the 1970s. Now not only has the United Nations
endorsed micro nance as an appropriate approach to some of the issues
associated with poverty but literally dozens of micro-nance organizations
69
have sprung up around the world. The micro-nance model may prove
useful as more large and particularly small and medium-sized enterprises
attempt to tap into the potential of bottom-of-the-pyramid markets, or,
more realistically perhaps, attempt to create micro entrepreneurs who will
then have the capacity to both produce and consume, hopefully, as Hart
(2005) points out, in an ecologically sustainable way.
Other developments that highlight the rapid evolution of the business in
society eld include a proliferation of journals, handbooks, books and
popular press magazines and articles. Where scholars once complained
about locating places to publish their work, now mainstream academic
publications are publishing special issues on CSR and related topics (for
example, the Academy of Management Journal, the Journal of International
Business, the Journal of Management Studies) and journals, including the
Journal of Corporate Citizenship, Business and Society, Business Ethics
Quarterly and the Journal of Business Ethics, are devoted to the topic. All
of this activity had in 2005 created something of a backlash, with The
Economist publishing an anti-CSR cover story (more or less retracted in
2008), but in the main, such backlash attests to the growing popularity of
the emphasis on CR.
Complement all of this development with a proliferation of ratings and
rankings devoted to one aspect or other of CR, the establishment of
numerous academic institutes, centers and programs (including specialized
management education programs) on CR, and activities and actions by a
wide variety of both general and specialized watchdog and activist groups.
Add in the emergence of numerous multisector forums where business
leaders can interact with actors from NGOs, CSOs and governmental
bodies, and it will become clear that the landscape of CR has evolved dramatically since the mid-1970s, and particularly since the mid-1990s. Despite
the explosion of scholarly work that has accompanied that shifting landscape, it is clear there is still a need to determine whether CR is in fact integrated into corporate practices or remains, as much of the early CSR
activity was called, window dressing. It is likely these will remain open
question for scholars for many years to come.
Notes
1. This chapter is based on Sandra Waddock (2004), Parallel universes: companies, academics, and the progress of corporate citizenship, Business and Society Review, Autumn,
109 (1), 542. I would like to thank Robert Frederick, editor, for permission to use the
framework of the earlier paper for this Handbook and for permission to reprint large sections of that paper in this chapter.
2. David Grayson, personal communication, 2006.
3. Ironically, using this biological reference brings us to Fredericks (1995) more recent work
on the linkages between biology/nature and business ethics/responsibility.
70
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Introduction
Concerns about the proper role of business institutions in society have been
an ever-present phenomenon across all ages and cultures. At a cerebral
level, these concerns reveal themselves in the notions of possession of economic power and the rights of those who exercise such power. At a more
visceral level, economic institutions are evaluated in terms of the fairness
with which they acquire a societys resources, that is, factors of production,
the way they distribute the resultant output and the exchange values they
seek from those who consume this output. Although both these concepts
are interrelated, the former views the social role of the corporation in terms
of ones notion of a just society, that is, the role of corporate power, while
the latter focuses on what might be called distributive justice, that is, how
corporate power is exercised in exchange relationships with the corporations stakeholders (Sethi and Sama 1998).
In the period following the Second World War and the rising global
power and economic prosperity of the United States, the popular vision of
a good corporation that emerged was that of a nancially successful and
economically ecient company that would marry prot making with social
responsibility; provide stable and well-paid jobs with generous benets;
support culture and the arts; encourage employees to become involved in
their communities; and be a good corporate citizen. In a word, the good
corporation or the socially responsible corporation was synonymous with
large, highly successful and paternalistic corporations that may have done
business globally, but had their roots in local communities. The archetypes
of these corporations could be found in IBM and General Motors in the
US, Sony in Japan, the Tata Group in India and Siemens in Germany, to
name a few. They all shared a common rationale for doing well by the communities where they were domiciled and were considered pillars of their
societies.
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all possible worlds. This archetype of the good corporation holds whether
we use Western societies as our frame of reference or seek refuge in the
Asian values of the newly industrializing economies of the Pacic Rim
countries.
In Western societies, where competitive markets do not expect corporations to distribute their largesse to others not associated with the company
in a business relationship, we seek refuge in the notion of enlightened selfinterest and even go so far as to assert that one can only do well by doing
good. Or that good ethics is good business. In Asian societies, the justication comes from the notion of community as family, where group values
predominate over individual self-interest. Ergo, the most successful individuals or corporations could not have achieved their success without
support from their group (Sethi 1996).
Altered expectations of good corporate citizenship
It would, however, have been unrealistic to assume that our proverbial
good corporation would succeed under dierent economic and marketcompetitive conditions, or that our underlying ethical values and a sense
of social equity would prevail under dierent economic, and marketcompetitive conditions.
When confronted by a dierent set of competitive market conditions, the
change in the conduct of our large corporations was not long in coming.
Companies were quick to disavow their traditional persona of a socially
responsible corporation. It would seem that our hitherto good corporate
citizens were no longer able or willing to provide the wherewithal of a good
life to their various constituencies while going through the wrenching
experience of downsizing to meet the new realities of market competition
and develop a new set of priorities for the allocation of corporate resources.
Otherwise, how might one justify the conduct of large corporations over
the recent past where they have cumulatively laid o thousands of workers,
quite often unilaterally reduced their pensions and healthcare benets,
while at the same time managed to increase nancial returns to the
companys shareholders and enormous increases in executive salaries and
other forms of compensation. The situation was aptly described by Robert
Samuelson in a 1993 Newsweek article, in which, using the trials and travails of IBM as an example, he poignantly describes the demise of the
good corporation and the terrible loss and hurt this demise inicted on
hundreds and thousands of people and scores of institutions (Samuelson
1993). One could just as easily ask the same question from a dierent perspective, that is, whether IBM is now more or less good but whether IBM
has the luxury to be anything else. Those who put their naive faith in the
idea that corporations can do well by doing good, that is, good ethics is
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always good business, are either assuming away the market advantages that
these companies hold, or refusing to accept history as it exists and instead
substituting their perception of reality as it ought to be.
These altered circumstances provided the companies with an opportunity to redene their social responsibility and good corporate citizenship primarily in the arena of philanthropy, which required a miniscule amount of
monetary resources and did not call for any commitment toward achieving
a certain level of outcome or remediation of the underlying societal problems. At the same time, the corporation removed itself from taking any
responsibility toward the welfare of its traditional stakeholders, that is, customers, employees and the community, beyond what the market forces
would necessitate and regulatory regimes would require.
The changes in the corporate conduct and the resulting social and economic upheaval in large segments of the population also gave rise to a new
form of social activism in the United States and other Western countries.
The new social activism sought to nd ways by which to justify nonmarket-related and non-government-mandated responses from the business community to redress societys ills, both those that could be directly
related to corporate conduct and those where a small part of corporate
resources could be used to generate greater public good. These eorts, and
the rationale for their justication, underpin the contemporary movement
of CSR that has occupied scholarly attention and the public debate over
the last two decades.
Theoretical postulations for rationalizing post-paternalistic notions of CSR
and corporate citizenship
The uncoupling of corporate paternalism from CSR called for a
redenition of what constitutes CSR and good corporate citizenship.
It also required a new theoretical rationale be it philosophical or
pragmatic to justify changes in corporate conduct. The denition for what
would or should constitute CSR was easily forthcoming from all types of
constituencies who sought a share of corporate largesse and also a role in
the decision-making process that would be responsible for distributing the
corporate largesse.
To cite one example, a few years ago the editors of Business and Society
Review, a leading scholarly journal in the area of CSR, solicited the views
of a selected group of scholars, activists and government leaders on what
would be a future good corporation (Chappell 1993a; Kanter 1993;
Moskowitz 1993; Reich 1993). Their views ranged all over the map.
Professor Rosabeth Moss Kanter of Harvard Business School conjures up
a corporation committed to its workers, investing in human resources via a
continuous process of training and development, and developing a pool of
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thus be benecial both for the business institutions and society at large.
When challenged as to why business institutions needed to be cajoled to do
something which was in their own self-interest, enlightened or otherwise,
escape was found in oblique references to short-term orientation of the
business leaders or structural aws in the system that would deter business
leaders from taking a long-term perspective of business operations and
their social consequences that would be inimical both to the corporations
and vital societal interests (Sethi 2003b). Such a determination is hard to
accept at face value when it is the same corporate leaders who would risk
billions of dollars on projects that would come to fruition long into the
future and with varying risks of technological, nancial and political
uncertainties attached to them.
In their excellent paper, Toward a political conception of corporate
responsibility: business and society seen from a Habermasian perspective,
Andreas Georg Scherer and Guido Palazzo (2007) oer a good literature
review summarizing various approaches and theoretical rationale to analyzing post-paternalistic CSR. Their review and analysis conclude that
post-paternalistic CSR rationalizations have not suciently integrated
various aspects of corporate conduct; individual and institutional motivations toward certain types of conduct; normal and value-oriented notions
of right and wrong in the context of a just and fair society; economic and
competitive forces that would exert dierent types of pressure on individual and institutional conduct; and the proclivities of those individuals and
institutions that would dierentiate their responses to given external
pressures.
In our analysis of this literature, we have combined them into two intellectual streams. The rst one considers the rationalizations for postpaternalistic CSR from the perspective of normative values and beliefs held
by individuals and institutions in a society. These values are embedded in a
societys psyche and commonly shared by all participants. We characterize
this approach as window out wherein a corporation shapes its conduct in
response to societal concerns in a manner that is primarily based on its
beliefs in ethical and social values. A more common nomenclature for this
intellectual stream would be the business ethics approach.
The second intellectual stream considers the source and relevance of
external pressures, that is, societal needs and the strength however
dened of the individuals and groups seeking corporate responses to their
preferred choices. This approach suggests a recognition on the part of the
corporation that certain socioeconomic considerations have adversely
impacted the economic and social well-being of these groups. Furthermore,
a voluntary and proactive response on the part of the corporation would
be preferable in order to minimize potentially more negative consequences
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2.
3.
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85
2.
The competitive rights of stakeholders in terms of (a) fair access to information and (b) fair bargaining power. This competitive factor is an issue
of both procedural fairness (justice) as well as eciency. It clearly aects
all those usually classied as primary or direct stakeholders those
dealing with a company on the basis of explicit or implied contract
(owners, consumers, workers, suppliers). Asymmetries in information
and bargaining power between parties inhibit legitimate stakeholder
interests and provide a basis for just claims against oending parties and
for remedial action, either by the parties themselves (stakeholder management) or through public policy.
Externalities rights of stakeholders. As noted above, in market theory
third parties to either property ownership or contracts have rights as to
use the claims and an obligation to protect the commons. The second
major grouping of stakeholders (often called secondary or indirect
stakeholders) assert their claims based upon either positive or negative
externalities.
86
2.
3.
4.
5.
6.
7.
87
None of these issues is currently addressed in the CSR models of stakeholder theory. Furthermore, as we shall discuss in the next section on globalization, the challenges of dening stakeholders, their stake and their
relative ability to protect their legitimate interests become innitely more
complex and intractable (Krauss 1997; Banerjee 2003; Sethi 2003b).
Impact of globalization on the changing notions of CSR
The growing trend in globalization has shattered our idyllic world of the
good corporation. It has forced us to examine our assumptions as to what
would make these corporations more socially responsible and what would
be the parameters that would dene the notion of a socially responsible
corporation. A strong argument can be made that globalization and the
unrestricted ow of capital, goods and services lead to the creation of
wealth and prosperity among all participating nations. Comparative
advantage allows both the industrially advanced nations and developing
countries to maximize their gains from trade. Globalization also leads to
economic integration and convergence in economic policies around the
world. Multinational corporations (MNCs) have become an engine of
change through their injection of technology, organizational skills and a
competitive environment in foreign markets. They not only bring with them
new technologies and management systems, they also bring a dierent kind
of corporate culture and assumptions about the national governments and
the countrys economic and sociopolitical institutions (Dicken 1992; Orts
1995; Belloore 1999; Sercovich et al. 1999; Beck 2000; Hay and Marsh
2000; Batterson and Weidenbaum 2001; Sethi 2002b; Christmann 2004).
But there are costs as well. Globalization has led to greater income disparities and unequal sharing of the gains of globalization between countries and among dierent groups within individual countries. It has caused
a dislocation or dismantling of the social safety net. For the benets of
free trade to be distributed equitably, according to standard trade theory, it
is important that both capital and labor have maximum mobility, so that
each may maximize the rewards from its eorts. MNCs currently enjoy all
of the advantages of moving capital between dierent sectors and nations
in order to maximize their returns on investment. Workers, however, lack
such mobility. They cannot migrate easily, if at all, to countries of labor
shortages. The imbalance between the mobility of capital and goods, and
the immobility of labor are more characteristic of neo-mercantilism than
of truly free markets. MNCs use both the fact and threat of capital mobility to extract maximum productivity gains from cheap and abundant labor.
The control of overseas markets provides the MNCs with monopoly-like
power, which they use on local manufacturers to extract the lowest prices
possible and thus put extreme downward pressure on local wage rates. An
88
abundance of cheap labor leaves little incentive for MNCs to improve technology and thereby enhance labor productivity (Sachs and Warner 1995;
Strange 1996; Braithwaite and Drahos 2000; Sethi 2003a; Stiglitz 2003;
Stiglitz and Charlton 2005).
The mobility of capital has rendered an important segment of the local
governments tax base footloose, leaving governments with the unappetizing option of imposing disproportionately high taxes on income from
labor, agricultural products from even poorer rural areas, household consumption, and taxes on local property (Rodrik 1997, p. 7). Short of
resources, host country governments have been unwilling and unable to
exercise regulatory oversight, or to enforce the already rudimentary local
labor and environmental protection laws a practice that multinationals
nd quite agreeable (Steinmann and Scherer 1998, 2000; Varley 1998; Chan
2001; Moran 2002; Sethi 2003a; Young 2004).
MNCs responses to criticism a sea of red herrings
MNCs responses to public concern and criticism about their role in the
current phase of globalization can be grouped into two categories
(Bhagwati 1998; Rugman 2000): justications for their conduct, and proposals for institutionalizing changes in their conduct. MNCs contend that
they adhere to local laws and regulations in their own operations and insist
that their suppliers also adhere to similar standards of compliance. They
put the blame for poor working conditions largely on the shoulders of local
manufacturers and local labor authorities. At the same time, they condone
laxity in compliance as a necessary evil because developing countries
cannot aord the luxury of enforcing labor and environmental standards
similar to those that prevail in industrially advanced countries (Cohen
1998; Berry 2000; Rondinelli and Behrman 2000; Batterson and
Weidenbaum 2001; Bearak 2001; Kastein 2001; Sethi 2003a).
The second aspect of MNCs response to public criticism is more proactive. Recognizing that some allegations of poor and unfair working conditions may indeed be valid, individual companies and industry groups have
promulgated voluntary codes of conduct to govern their overseas operations and those of their local manufacturers and suppliers. However, both
the MNCs and their local partners refuse to publicly disclose the result of
their compliance eorts. Instead, they argue that disclosure would discourage local partners to cooperate in the MNCs eorts. An evaluation of
the substance and adequacy of their proactive responses toward improving
the lot of workers in developing countries, however, shows that MNCs
pledges toward reforms through code adoption are more rhetorical than
substantive. Most independent research by non-governmental organizations have demonstrated that in most cases these eorts have largely been
89
public relations exercises to the extent that MNC eorts in code creation
and implementation are dismissed by informed observers as empty rhetoric
and meaningless exercises (Orts 1995; Beck 2000; Rondinelli 2002; Sethi
2003a; Young 2004).
Societal expectations of good corporate conduct in the era of increased
globalization
Emerging trends in globalization and their future direction make the following abundantly clear:
1.
2.
3.
90
information imbalance: the amount and quality of information available to the two parties prior to entering into a transaction or exchange;
bargaining and negotiating power imbalance: the relative bargaining
leverage of the opposing groups during negotiations; and
adjudication, remedy and relief imbalance: the ability of each group to
seek proper adjudication of disputes and gain restitution for harm
done when a transaction fails to yield desired and mutually satisfactory
results.
91
These three imbalances are the principal means through which corporations exploit their external environment to gain above-average prots.
Therefore, we must nd ways to curb the corporate proclivity in these areas
if we are to make corporations more socially accountable for their conduct.
Information imbalance Corporations prot from information imbalance
because lack of accurate information induces customers to pay higher
prices, accept products of lower quality or choose dierent products/brands
altogether. The criteria for evaluating the good corporation in this case
would be:
1.
the extent to which a corporation provides its customers with information along the dimensions that he/she would need to make informed
choices; and
the degree to which the rm renders the customer able to evaluate postpurchase eects in terms of his/her expectations and the producers
claims.
2.
The industry level Eorts should be made to create uniform standards of product usage, labeling and performance claims that
could be compared by the customer in making buying decisions. This
should be done through a cooperative eort among industry
members, government agencies and responsible consumer organizations. There are a number of problems that must be overcome if this
approach is to work. These include: the right of free speech, the sheer
enormity of the task in terms of products and brands, the cost of carrying out such a program and the diculty in persuading all
signicant stakeholders to participate in the process. Nevertheless, a
92
good start can be made by creating standards of accuracy and transparency, which the companies in the industry may be encouraged to
follow. In this case, the degree of progress measured against the
potential for progress would be one measure of the industrys social
responsiveness and accountability.
The rm level Companies should regularly survey consumers to
objectively assess their information needs and devise means to communicate such information to the consumer. The objective would be
to provide the consumer with the information that he/she would
want, in addition to the information that the rm would like the customer to have so as to make a pro-rm purchase decision. The
measure of the good corporation would be the extent to which this
information is provided voluntarily and the gap between the availability of such information and its importance to the customer.
93
94
2.
3.
95
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Introduction
It is fair to say that the concept of corporate citizenship has witnessed a
meteoric rise in terms of scholarly attention since Logsdon and Wood presented their original paper (Wood and Logsdon 2001, 2002; Logsdon and
Wood 2002). Some elaborations and extensions of corporate citizenship
make reference to earlier scholarship, others do not. Stipulating that work
on corporate citizenship is intended to add to the conversation around the
role of business in society, it is reasonable to assume that scholars adopting (and adapting) the language of corporate citizenship nd something
there that allows for better description, analysis and synthesis of this role.
Though what better may mean here remains an open question, a sensible
place to begin considering the question is to compare and contrast corporate citizenship with more established ways of conceiving businesss role in
society such as, in the case of this chapter, stakeholder theory.
Among the challenges of comparing corporate citizenship and stakeholder theory is the fact that neither theory can currently claim a dening
consensus regarding the content and limits of their respective domains. To
diering degrees, both are less monolithic concepts than ways of conceiving of and arranging the complex relationships between business organizations and other social actors. A further diculty shared by both
corporate citizenship and stakeholder theory is that summarizing the literature may, or may not, include writings that unreectively use the terminology of citizenship or stakeholders without reference to any particularly
deep thoughtful or coherent conceptual foundations. Much of the heavy
lifting in numerous treatises on corporate citizenship is done by merely
inserting the word citizenship and assuming that author and reader have
the same understanding of what this denotes and implies. The identity of
the citizens, the basis of this status, and the rights, duties and obligations
of such status are only a few of the matters on which such agreement is
assumed, but often not made explicit. Logsdon and Wood (2002) pioneers
in the area of corporate citizenship recognize this ambiguity in the use of
citizen and briey address it; though Moon et al. (2005) have criticized the
suciency of these eorts and oer their own elaboration.
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Financiers
G
L
O
B
A
L
Suppliers
Organization
Customers
Community
C
I
T
I
Z
E
N
S
H
I
P
Employees
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contention here that corporate citizenship begins to diverge from stakeholder theory as it begins to move into the conical extension of community.
Indeed, much of the writing on corporate citizenship we would place well
into the space labeled global citizenship. At this point, we argue that corporate citizenship bears little overlap with stakeholder theory and begins to
more closely resemble its CSR predecessors. Employing the language of
stakeholder theory to defend the idea of global citizenship runs contrary
to our understanding of stakeholder theory as limited to the core valueadding functions of the organization.
Corporate citizenship, stakeholder theory and philanthropy
As with the predecessor literature on CSR, corporate citizenship scholarship makes extensive reference to a rms charitable activities often as
a gauge of the quality of a rms citizenship behaviors. While in many
cases a laudable endeavor, we believe that philanthropy not related to the
rms core value-adding function lies outside the sphere of stakeholder
theorys concern. We should point out that philanthropy related to the
rms core business is more amenable to stakeholder analysis. When a
pharmaceutical company faces a decision regarding the provision of
free or discounted medicines which such companies may be specically
or uniquely qualied to provide (Hsieh 2004; Dunfee 2006), or if a microprocessor company conducts research on how to make a $100 laptop
computer, stakeholder theory may yield insight; or when a business
working in a lesser developed area provides social services for employees
and local citizens (Matten and Crane 2005, p. 166); or when philanthropy
relates directly to core stakeholder interests (for example, donation
matching programs, time o for employee charitable work, and so on),
stakeholder theory may be of some assistance. However, in the normal
course of events, corporate donations to groups lying outside of such core
rmstakeholder obligations are supererogatory that is, potentially
praiseworthy, but not obligatory.
That said, such donations are not always particularly praiseworthy.
Often such donations also have little impact on the nature and quality of
relationships between the rm and its stakeholders. Philanthropy unrelated
to the core business often has a limited, even negligible, impact on the
culture and character of the rm making such donations (we discuss in
more detail below the issue of who and what an organization would like to
be). Here we are talking about what we shall call checkbook citizenship.
Cash donations to some or other unrelated philanthropy have little eect
on the rm or its core stakeholders such donations generally have only a
tangential impact. It is tantamount to organizational values as an afterthought an appendage tacked on to what the rm really does.
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are all suggestive of where the line between stakeholder obligation and global
corporate citizenship may be drawn in networked value chains, the line is
neither a bright nor a static one. The standards applied by local communities and other stakeholders create a line that moves around in the gray area,
often dramatically. Work remains for scholars and managers in better
dening these obligations and community expectations. With these points in
mind, we turn now to a discussion of the possible ways an organization
might engage with its relevant stakeholder communities.
A typology of community engagement
If the above is correct, there are many ways for companies to engage their
communities. We propose ve strategic postures that a company may take
with respect to a community. A strategic posture is like Porters (1980)
notion of generic strategy. It is a predisposition to act in a particular way
(Freeman and Gilbert 1987).
Companies may deal with communities as:
1.
2.
3.
4.
5.
community creators;
community builders;
community good citizens;
community apathetic citizens; and
community exploiters or destroyers.
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More often today companies create communities of interest and communities of practice (recall the earlier discussion of Dunham et al.s (2006)
taxonomy of communities). Silicon Valley companies have created a community of interest around computer technology. Particular companies contribute to that community in a way that all may benet. Particular
companies such as eBay in eect create communities of interest by the very
nature of their services. A person can use eBay to nd other like-minded
actors to trade with. Of course, internet service providers, as well as companies such as YouTube, FaceBook and MySpace, create communities of
interest. Wikipedia creates a community of practice where stakeholders are
all engaged in a common task. Likewise, Linux and others create communities of practice where the lines between traditional stakeholder roles
become radically ambiguous.
Community builders
Community builders are like community creators. Perhaps they did not
have the original idea of creating the community, but their strategic posture is to try to maintain and improve the communities that they nd.
Community builders see healthy communities as places where their
employees, customers and other stakeholders live. Vibrant communities are
good for the company and its stakeholders. Community builders ask, what
can we do to make this community better for its citizens, and therefore ultimately, better for our company and its stakeholders as well?.
Community of practice builders try to nd places where stakeholder
interests are joint, where there is unrealized value to be created. They try to
nd places where the interests of employees, customers, suppliers and communities go in the same direction but this fact has gone unrecognized or
underemphasized. A classic example here is the Ronald McDonald House.
Here, McDonalds supports the administrative costs of taking donations
from customers and creating facilities to help families dealing with illness,
especially children. The actual funding comes from McDonalds customers.
McDonalds is helping their customers build better communities through
this coordination function. McDonalds facilitation role is an example
aligning the interests of local communities and customers. This activity
bears similarity to the better-known example of companies who match
employee contributions to charity. With such a strategy they work with
their employees to contribute to areas that the employees believe will build
a better community.
Community good citizens
Being a good citizen means obeying the law and doing what one is asked
to do if it is reasonable. However, community good citizens would take a
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against another for the best regulatory environment, tax breaks or the one
willing to make the biggest investment in infrastructure. These companies
are not content to live within the letter of the law, but actively lobby to
change the laws in order to make their exploitation more eective.
If the rmcommunity relationship always favors the company and
exploits the community, it is likely that (in a relatively free society) the community will turn against the company. Indeed, independent of the presence
of actual destruction or exploitation, in todays world it is enough for there
to be the perception of exploitation to negatively aect a companys bottom
line. Companies such as Wal-Mart have been charged (with wide disparities in the power and persuasiveness of the arguments presented) with
exploiting communities and have incurred massive costs to reduce that
perception.
Environmental issues are another area where many companies are seen
as community exploiters or destroyers. Although not unique to them, rms
in extractive industries in lesser developed countries are especially susceptible to such perceptions (again, with better and worse underlying bases for
such perceptions).
Often, being a community exploiter or destroyer is a logical devolution
from being a good citizen or apathetic citizen. Each of these postures views
the community stakeholder as secondary to the process of value creation.
And, when this happens, customers and employees, and those groups who
see themselves as advocates, often non-governmental organizations, rise to
speak for the community. Firms perceiving of the community in this
afterthought fashion are missing the reciprocal, value-adding possibilities
of closer community relationships such as those found among community
creator and community builder companies. Furthermore, we submit, the
failure to delimit core stakeholder relationships from concepts like global
corporate citizenship catalyze this perception of the community as secondary by overextending managerial and organizational decision-making
resources.
Conclusion
We have suggested that some aspects of corporate citizenship are part and
parcel of a nuanced view of stakeholder theory, with particular emphasis
on community stakeholders. Obviously our analysis does not do full justice
to the idea. It focuses only on the managerial aspect of corporate citizenship, especially in the private sector. While the United Nations may well be
able to delve into the meaning of global citizenship and its implications,
most managers simply want to understand how to deal with specic communities in the value-creation process. By thinking about creating, building, exploiting and so on, communities, they can begin to see communities
114
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What is a corporation?
In the recent lm, The Corporation, one of the most evident entities in contemporary society, the corporation, is treated as something of a Frankenstein
monster, a benign creation of local governments that grew and grew, became
not only self-conscious but megalomaniac, and now threatens to take over
the world, destroying both nature and human beings in its pursuit of domination. Frankensteins monster, however, was recognizably human. Indeed,
in Mary Shelleys original version, he was quite a sympathetic creature, misunderstood and persecuted by the townspeople who were so terried of him.
Defenders of the corporation would no doubt leap to this extended comparison, insisting that the corporation, like the monster, has been greatly
misunderstood and wrongly persecuted. Mark Achbar and Jennifer Abbott,
who made this very successful documentary, chose to emphasize a very
dierent sense in which the corporation became a person, not by displaying
sympathetic human traits but rather by way of a legal sleight of hand. Taking
advantage of an Amendment to the American Constitution intended to
protect the rights of freed slaves in the South, clever corporate lawyers
managed to have the corporation declared a person, making it eligible to
sue for those same rights. But what kind of a person is the corporation,
Achbar and Abbott ask in the lm? Their answer is, a psychopath (that is,
someone with Antisocial Personality Disorder or APD), as dened by the
standard DSM-IV (The Diagnostic and Statistical Manual of Mental
Disorders). Thus the Frankenstein monster, who refuses to conform to social
norms, who is deceitful, impulsive, aggressive, who shows reckless disregard
for the safety of others, and is incapable of sustaining relationships.
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implication is quite clear. Corporations (and the people who run them)
think of themselves as the law dictates as prot-making machines. From
this seemingly obvious idea, all the rest of it the pathology, the destruction of the environment, the amoral behavior quickly follows. It is not
unlike the dimmer students I teach in business classes when I ask them to
what do you aspire?. They respond, to make a lot of money. In so far as
a corporation thinks of itself as a prot-making machine, albeit in the guise
of a ctional person, we can continue to expect social irresponsibility on
a devastating scale.
Adam Smith on prots (its not what you think)
Adam Smith never used the phrase the prot motive. He probably would
have considered it nonsensical. The phrase was invented in the 19th century
(long after Smiths death) by social critics of the new economics who
wanted to caricature what they saw as the one-dimensional greed of the
new capitalists (another word Smith did not use). In fact, what Smith did
nd to be basic in human nature was the very opposite of what his later
defenders insisted was the sole human motive, self-interest or greed
(according to Gordon Gekko in Oliver Stones Wall Street, alias Ivan
Boesky in real life). Smith, au contraire, insisted that what was basic in
human nature was the moral sentiment of sympathy, a sense of fellow
feeling and community. That, in turn, was basic to the new economy. Smith
(of course) did not deny the importance of self-interest and the desire to
make a prot (accordingly his classic statement about the grocer). But commercial activity had as its precondition a civilized society, requiring a
modicum of trust and mutual understanding. In fact, I have argued that
one of the great historical virtues of the free market is the psychological
fact that people are required to care about what other people want as potential customers. Sympathy is not just a nice complement to self-interest in
the market. It is as much of a precondition of commercial life as muchtouted self-interest.
In so far as corporations are persons, what if we were to deny the implication that corporations are prot-making machines? I have all too often
heard the complaint that immediately follows: Are you against prots? Do
you suppose that a corporation can even survive without making a prot?
(well yes, they can and do: universities, charities, hospitals, governments
and many non-governmental organizations survive and have even thrived
for years without making a prot, but that is not the point to make with
these hysterical critics). What I tell them is that one need not attack prots
or deny the need to make a prot to understand that the purpose of business, and consequently the purpose of corporations, is something larger
than the bottom line. It has to do with making society a better place,
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providing jobs, useful products and services. That does not mean that one
needs to deny or demean the bottom line. What I say is this: every discipline
or profession has its own self-glorifying vocabulary. It is how they justify
themselves. It is how they sell themselves. It is how they think of themselves
and what they do. Business and corporations are no exception:
1.
2.
3.
4.
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hand and the theory that individual self-interest yields collective prosperity, but it does not follow that we should describe what we do in business
merely as making money. Corporations and business in general make possible most of the comforts and advantages of modern civilized life, and it is
an act of unspeakable cynicism to think that all of this is due to the unintended consequences of mere prot-making machines.
The social responsibility of business, writes Milton Friedman in a
famous polemical article, is to increase prots (Friedman 1970). He does
not include the word only, but it is clearly implied. Friedman argues that
the managers of a company have a duciary responsibility to the owners
(in a publicly held company, the stockholders), which is certainly true. But
note that Friedmans argument, although it is headlined in terms of prots,
is in fact concerned with the notion of responsibility, not a prot concept
at all. Managers and executives may make prots, but not (as such) for
themselves.
The most dangerous metaphors are those that present themselves not as
metaphors but as straight matter-of-fact description about the ways of the
world. Foremost among these is the idea that business at its very essence is
driven by a basic human urge called the prot motive. It is such talk of the
prot motive, I want to suggest, that causes more damage than any amount
of sleaziness or dishonest dealings on the part of the business community.
It is the narrow-minded language of the prot motive that gives rise to
public suspicion. Peter Drucker, in his magnum opus, Management, writes
of managers that it is their own rhetoric that is one of the main reasons for
hostility . . . There is only the prot motive [but] why that desire should be
indulged in by society any more than bigamy, for instance, is never
explained (Drucker 1974).
A better way to think about business
In the spirit of Adam Smith, I have developed a theoretical framework
which I call an Aristotelian approach to business. As Aristotle is famous
largely as the enemy of business, some justication of this approach would
seem to be in order. True, he was the rst economist (twenty centuries
before Smith), and he had much to say about the ethics of exchange. He
might well be the rst (known) business ethicist as well. But Aristotle distinguished two dierent senses of what we call economics, one of them
oecinomicus or household trading, which he approved of and thought
essential to the working of any even modestly complex society, and chrematisike, which is trade for prot. Aristotle declared the latter activity
wholly devoid of virtue. Aristotle despised the nancial community and,
more generally, all of what we would call prot seeking. He argued that
goods should be exchanged for their real value, their costs, including a
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fair wage for those who produced them, but he then concluded, mistakenly, that any prot (that is, over and above costs) required some sort of
theft (for where else would that surplus value come from).
Consequently, Aristotle called those who engaged in commerce parasites and had special disdain for money-lenders and the illicit, unproductive practice of usury, which until only a few centuries ago was still a crime
(usury did not originally mean excessive interest; it referred to any charge
over and above cost). Only outsiders at the fringe of society, not respectable
citizens, engaged in such practices (Shakespeares Shylock, in The Merchant
of Venice, was such an outsider and a usurer, though his idea of a forfeit
was a bit unusual). All trade, Aristotle believed, was a kind of exploitation.
Such was his view of what we call business. Aristotles greatest medieval
disciple, St Thomas Aquinas, shared the Philosophers disdain for commerce, even while he struggled to permit limited usury (never by that term,
of course) among his business patrons. (A charge for lost use of loaned
funds was not the same as charging interest, he argued.) Even Martin
Luther, at the door to modern times, insisted that usury was a sin and a
protable business was (at best) suspicious. Aristotles inuence on business, it could be argued, has been long-lasting and nothing less than
disastrous.
In particular, it can be argued that Aristotle had too little sense of the
importance of production and based his views wholly on the aristocratically proper urge for acquisition, thus introducing an unwarranted zerosum thinking into his economics. And, of course, it can be charged that
Aristotle, like his teacher Plato, was too much the spokesman for the aristocratic class and quite unfair to the commerce and livelihoods of foreigners and commoners. It is Aristotle who initiates so much of the history of
business ethics as the wholesale attack on business and its practices.
Aristotelian prejudices underlie much of business criticism and the contempt for nance that preoccupies so much of Christian ethics even to this
day, avaricious evangelicals notwithstanding. Even defenders of business
often end up presupposing Aristotelian prejudices in such Pyrrhonian
arguments as business is akin to poker and apart from the ethics of everyday life (Carr 1968) and the [only] social responsibility of business is to
increase it prots (Friedman 1970). But if it is just this schism between
business and the rest of life that so infuriated Aristotle, for whom life was
supposed to t together in a coherent whole, it is the same holistic idea
that businesspeople and corporations are rst of all part of a larger community, that drives business ethics today.
We can no longer accept the amoral idea that business is business (not
really a tautology but an excuse for being socially irresponsible and personally insensitive). According to Aristotle, one has to think of oneself as
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a member of the larger community the polis for him, the corporation, the
neighborhood, the city or the country (and the world) for us and strive to
excel, to bring out what was best in ourselves and our shared enterprise.
What is best in us our virtues are in turn dened by that larger community, and there is therefore no ultimate split or antagonism between individual self-interest and the greater public good. Of course, there were no
corporations in those days, but Aristotle would certainly know what I mean
when I say that most people in business now identify themselves if
tenuously in terms of their companies, and corporate policies, much less
corporate codes of ethics, are not by themselves enough to constitute an
ethics. But corporations are not isolated city-states, not even the biggest
and most powerful of the multinationals (contrast the image of the sovereign state of ITT). They are part and parcel of a larger global community.
The people who work for corporations are thus citizens of (at least) two
communities at once, and one might think of business ethics as getting
straight about that dual citizenship. What we need to cultivate is a certain
way of thinking about ourselves in and out of the corporate context, and
this is the aim of ethical theory in business, as I understand it. It is not, let
me insist, anti-individualistic in any sense of individualism that is worth
defending. The Aristotelian approach to business ethics rather begins with
the two-pronged idea that it is individual virtue and integrity that counts,
but good corporate and social policy encourage and nourish individual
virtue and integrity. It is this picture of community, with reference to business and the corporation, that I want to explore here. One might speak of
communitarianism here, but it is not at all evident that one must give up, at
the same time, a robust sense of individuality (as opposed to self-interested
individualism). Community and virtue will form the core of the thesis I
want to defend here.
To call the approach Aristotelian is to emphasize the importance of
community, the business community as such (I want to consider corporations as, rst of all, communities) but also the larger community, even all
of humanity and, perhaps, much of nature too. This emphasis on community, however, should not be taken to eclipse the importance of the individual and individual responsibility. In fact, the contrary is true, it is only
within the context of community that individuality is developed and
dened, and our all-important sense of individual integrity is dependent
upon and not opposed to the community in which integrity gets both its
meaning and its chance to prove itself.
One of the most important aspects of the Aristotelian approach is the
emphasis on the purposiveness (or teleology) that denes every human
enterprise, including business. But that purposiveness transcends the realm
of business and denes its place in the larger society, though the popular
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term social responsibility makes this sound too much like an extraneous
concern rather than the purpose of business as such. On both an individual
and the corporate levels, the importance of the concept of excellence is
intricately tied to this overall teleology, for what counts as excellence is
dened both by its superiority in the practice and its role in serving larger
social purposes. Aristotelian too is a strong emphasis on individual character and the virtues (where a virtue is all-round personal excellence),
embedded in and of service to the larger community. It is the role of the
individual in the corporation (and of the corporation in society) that concerns me, not the individual alone, not the structure of the corporation
abstracted from the individuals that are its members (and not the nature of
capitalism, abstracted from the character of particular corporations and
the communities they serve). That is why the idea of business as a practice
is absolutely central to this approach: it views business as a human institution in service to humans and not as a prot-making machine or in terms
of the mysterious magic of the market.
Finally, it may be theoretically least interesting but it is polemically,
perhaps, most important, I prefer the name Aristotelian just because it
makes no pretensions of presenting something very new, the latest cuttingedge theory or technique of management but rather reminds us of something very, very old, a perspective and a debate that go all the way back to
ancient times. What Aristotle gives us, I want to suggest, is a set of doctrines that both conforms to and goes beyond historicism, namely, the
incessant appeal of ethics (including business ethics) to the standards of a
particular community but at the same time the standards of community as
such, that is, the very possibility of human beings living and working
together. What the Aristotelian approach promises is not something novel
and scientic but an approach that is very staid and above all very human.
The idea is not to infuse corporate life with one more excuse for brutal
changes, a new wave of experts and seminars and yet another downsizing
bloodbath. It is to emphasize the enduring importance of continuity and
stability, clearness of vision and constancy of purpose, corporate loyalty
and individual integrity for both nancial success and (more important) a
decent life.
The corporation as community
The Aristotelian approach begins with the idea that we are, rst of all,
members of organized groups, with shared histories and established practices governing everything from eating and working to worshipping. We are
not, as our favorite folklore would have it, rst of all individuals, that is,
autonomous, self-sustaining, self-dening creatures who, ideally, think
entirely for ourselves and determine what we are. The self-made man (or
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our thoughts and feelings are, it is obvious, for the most part dened and
delineated by our society, in our conversations and confrontations with
other people. Princeton anthropologist Cliord Geertz once wrote that a
human being all alone in nature would not be a noble, autonomous being
but a pathetic, quivering creature with no identity and few defenses or
means of support. Our heroic conception of the individual often
exemplied by the lone (usually male) hero is a bit of bad but self-serving
anthropology. There are exceptional individuals, to be sure, but they are
social creations and become exceptional just because they serve the needs
of their society, more often than not by exemplifying precisely those forms
of excellence most essential to that society.2
We nd our identities and our meanings only within communities, and
for most of us that means at work in a company or an institution.
However we might prefer to think of ourselves, however important we
(rightly) insist on the importance of family and friends, however much we
might complain about our particular jobs or professional paths, we dene
ourselves largely in terms of them, even if, in desperation, in opposition to
them. Whether a person likes or hates his or her job will almost always turn
on relationships with the people one works for and works with, whether
there is mutual respect or animosity and callousness or indierence. Even
the lone entrepreneur the sidewalk jeweler or the nancial wizard will
succeed only if he or she has social skills, and enjoys (or seems to) his or
her customers or clients.
The philosophical myth that has grown almost cancerous in many business circles, the neo-Hobbesian view that business is every man [sic] for
himself and the Darwinian view that its a jungle out there are direct
denials of the Aristotelian view that we are rst of all members of a community and our self-interest is for the most part identical to the larger interests of the group. Competition presumes, it does not replace, an underlying
assumption of mutual interest and cooperation. Whether we do well,
whether we like ourselves, whether we live happy productive lives, depends
to a large extent on the companies we choose. As the Greeks used to say,
to live the good life one must live in a great city. To my business students
today, who are all too prone to choose a job on the basis of salary and startup bonus alone, I always say, to live a decent life choose the right
company. In business ethics the corporation becomes ones immediate
community and, for better or worse, the institution that denes the values
and the conicts of values within which one lives much of ones life. A corporation that encourages mutual cooperation and encourages individual
excellence as an essential part of teamwork is a very dierent place to work
and live from a corporation that incites either/or competition, antagonism
and continuous jostling for status and recognition. There is nothing more
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no one is more eective in determining ones actions) than ones competitors. Good sportsmanship and fair play are essential obligations in business ethics. And yet it seems odd to say that the competition has a stake
in the company. The idea of community thus goes beyond the idea of particular responsibilities and obligations although it embraces the same
impetus toward larger thinking and citizenship endorsed by stakeholder
analysis.
What is a corporate community? To begin with, it is a heterogeneous conglomerate riddled with personality clashes, competing aims and methodologies, cliques and rivalries and criss-crossed loyalties. The very fact that
a corporation requires specialization and the division of labor makes
inevitable such heterogenity. Two young men working in a garage, pooling
their resources and their knowledge to produce a successful commodity
may, in the throes and thrills of development and struggle, experience an
uninterrupted sense of one-ness that would impress even a Buddhist. But
once the product is launched and marketing people and managers are
brought in to do the job, that primeval corporate unity is shattered and, as
in the most famous recent case of this kind, one or both of the founders of
the company may nd themselves displaced or even red by the assistants
they brought in to help them. There is an intrinsic antagonism to be
explained in terms of social class rather than economics and in terms of our
mythologies of work rather than the nature of the work itself between the
shop oor and the managerial oce, just as there is an obvious opposition
(not entirely nancial) between those divisions of the corporation that
always need to spend more money (advertising and research and development teams, for example) and those whose job it is to save it. Add to this
the many dierent characters and personalities who populate even the most
seemingly homogeneous company (although these dierences too are
already pre-established in the social types and classes who tend to one or
the other position or profession) and one can appreciate the foolishness in
our popular treatment of corporations as monolithic entities with a single
mind and a single motive.
And yet, there is an emergent phenomenon that does often speak with a
single voice and deserves to be treated (and not just by the law) as a singular entity, the corporation. Groups have personalities just as individuals
do, and heterogeneous, even fragmented groups can nevertheless have a singular character just as conicted people do. What this means, in terms of
collective responsibility, for example, is that it is a mistake to speak of corporations as only collections of individuals, both because the individuals
in question are themselves the creatures of the corporation and because the
corporation is one of those sums that is nevertheless greater than its many
constituent parts. Aristotelian ethics takes both the corporation and the
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before that, in some of the ancient civilizations of the Middle East. The
concept of the bureaucracy was extensively promoted and popularized
(though with considerable misgivings) by the great German sociologist
Max Weber at the turn of the last century. The imagery of the bureaucracy
provided something of a compromise between the juggernaut and machine
imagery of the 18th-century enlightenment on the one hand and the
Renaissance and romantic demands for humanization on the other.
(Indeed the whole of the Western enlightenment was something of an odd
mix of machine metaphors and humanism, but that is another story; for
example, see Toulmin, 1989.)
Since Weber, bureaucracy has become something of a dirty word for
us, suggesting ineciency instead of the model of eciency it was once
intended to be. It calls up images of Soviet ineectiveness and Kafkaesque
catacombs. Even Weber charged that the bureaucracy had only instrumental rationality and was detrimental to human spirituality. And yet,
modern corporations are in large part bureaucracies, and this is not necessarily to say something against them. But what is important and progressive about bureaucracies is not just their traditional and now largely
discredited emphasis on eciency or even their still essential emphasis on
meritocracy. It is rather the humanization of the bureaucracy as culture
and the all-important shift of emphasis from machine-like eciency to
interpersonal cooperation and human productivity.
Bureaucracies, like cultures and unlike machines, are made up of people,
not parts. Bureaucracies have purposes. Bureaucracies involve people in
making judgments, employing their skills, working together in an organized way to produce results. Those results may be the maintenance of the
status quo, no easy trick in modern societies. For all of the obsessive talk
about innovation and competition, the essential function of most corporate bureaucracies that is, the larger part of the corporation by far is
just this maintenance of the status quo. One can understand and sympathize with the fear and uncertainty about the future that is part of most
markets without joining the myth-making chorus of future shocks and
megatrends. To be sure, change these days is both very real and very fast.
Maintaining the status quo in a fast-changing society requires being adaptive and organically tuned to the times, but it also requires a durable structure and a stable organization. Overemphasis on change and the sacrice
of stability as evidenced in so many corporate shake-ups and restructurings today weakens the corporation and makes it a far less ecient
competitor.
The idea of a corporate culture is an improvement over the more staid
image and impersonal nature of the bureaucracy in several respects, but in
one respect in particular. A culture is rst of all a structured community
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than a quarter billion in the USA, more than a billion in both India and
China). So, too, we need to ask whether the Aristotelian model, no matter
how attractive it may be, will survive the disruption of corporations by
virtue of globalization and conglomeration, in other words, mergers and
acquisitions and frequent downsizing. The Aristotelian model presumes a
stable corporate community, but as operations as well as capital are shifted
overseas and the site of the corporation is split and scattered around the
globe, there is a real question whether any humanistic model can stand up
to the more abstract and impersonal legal conception of a corporation.
But, then again, the global legal framework for business is by no means
settled either, and so one wonders what will remain of the very idea of the
corporation, over and above the brute fact of organized global power,
power which (it is often noted) equals or betters the power of most of the
governments in the world. Our answer, it seems to me, is that we must hold
onto something like the Aristotelian model. The nancial world may be
rapidly changing but peoples basic needs do not change, whatever the new
technology and our new and constantly shifting communities. We need
other people. We need security, predictability, and some sense of familiarity. It is true that there is a breed of humans who manage to exist seemingly
without such needs (and do very well in the new cultureless corporations as
a result), but the question that presses itself forward is the central question
of The Corporation, whether such a character is really a psychopath rather
than a new model for how to be human. So the challenge is how or
whether we can maintain our humanity in the face of globalization.
This is much the same challenge, often on a domestic level, as that following the disruption of corporations due to mergers and acquisitions and
frequent downsizing. Good companies such as IBM or VW, for instance,
went through the equivalent of hell when they were forced to re tens of
thousands of loyal employees, many of them lifelong employees. The
trauma was extreme. At IBM, for instance, there were suicides. But even for
those who survived the cuts, community life was radically dislocated as fear
and paranoia replaced camaraderie and the sense of joint person and
shared identity. The very idea of employment, accordingly, has changed in
the United States. The presumption of security and continuance has been
replaced by the concept of employment at will, with no assurances, much
less guarantees. This is made quite explicit as jobs are outsourced (often
to the same person who used to work in and for the corporation). But our
response should be the same. Without denying the necessity of corporations improving their eciency and eectiveness (which is not just to be
equated with improving the return to the shareholders), we need community, security, predictability and familiarity. A good corporation (the best
100 companies to work for) is not only a successful corporation but also a
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References
Carr, Alfred (1968), Is business blung ethical?, Harvard Business Review, 46 (1), 14353.
Drucker, Peter (1974), Management, New York: Harper & Row.
Evan, William and R. Edward Freeman (1983), A stakeholder theory of the modern corporation, reprinted in T. Beauchamp and N. Bowie (eds), Ethical Theory and Business,
Englewood Clis, NJ: Prentice-Hall, 4th edition, pp. 7584.
Freeman, R.E. and J. Liedtka (1991), Corporate social responsibility: a critical approach,
Business Horizons, 34 (4), 928.
Friedman, Milton (1970), The social responsibility of business is to increase its prots, New
York Times Magazine, 13 September.
MacIntyre, Alastair (1985), After Virtue, London: Duckworth, 2nd edition.
Pastin, Mark (1986), The Hard Problems of Management, San Francisco, CA: Jossey-Bass.
Solomon, Robert C. (1991), Ethics and Excellence, Oxford: Oxford University Press.
Toulmin, Stephen (1989), Cosmopolis: The Agenda of Modernity, New York: Free Press.
Turnbull, Colin M. (1972), The Mountain People, New York: Simon & Schuster.
PART II
CONTEMPORARY ISSUES
AND CHALLENGES
Introduction
In this chapter I clarify the status of claims about global justice and injustice that are increasingly voiced and accepted in our world.2 Such claims
present a problem for political philosophy because until recently most
philosophical approaches to justice assumed that obligations of justice
hold only between those living under a common constitution within a
single political community. I shall argue that obligations of justice arise
between persons by virtue of the social processes that connect them; political institutions are the response to these obligations rather than their basis.
I develop an account of some such social processes as structural, and argue
that some harms come to people as a result of structural social injustice.
Claims that obligations of justice extend globally for some issues, then, are
grounded in the fact that some structural social processes connect people
across the world without regard to political boundaries.
The second and more central project of this chapter is to theorize the
responsibilities that moral agents may be said to have in relation to such
global social processes. How ought moral agents, whether individual or
institutional, conceptualize their responsibilities in relation to global injustice? I propose a model of responsibility from social connection as an interpretation of obligations of justice arising from structural social processes.
I use the example of justice in transnational processes of the production,
distribution and marketing of clothing to illustrate operations of structural
social processes that extend widely across regions of the world.3
The social connection model of responsibility says that all agents who
contribute by their actions to the structural processes that produce injustice have responsibilities to work to remedy these injustices. I distinguish
this model from a more standard model of responsibility, which I call a
liability model. I specify ve features of the social connection model
of responsibility that distinguish it from the liability model: it does not
isolate perpetrators; it judges background conditions of action; it is
more forward than backward looking; its responsibility is essentially
shared; and it can be discharged only through collective action. The nal
section of the chapter begins to articulate parameters of reasoning that
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138
agents can use for thinking about their own action in relation to structural
injustice.
Global connections and obligations of justice
A widely accepted philosophical view continues to hold that the scope of
obligations of justice is dened by membership in a common political community. On this account, people have obligations of justice only to other
people with whom they live together under a common constitution, or
whom they recognize as belonging to the same nation as themselves. In all
of his writing on justice, for example, Rawls assumes that the scope of those
who have obligations of justice to one another is a single relatively closed
society (Rawls 1971 [1999], pp. 78). The members of each such society are
mutually bound by obligations of justice that they do not have to outsiders.
This is not to say that insiders have no moral obligations to outsiders. There
are some moral obligations that human beings have to one another as
humans; these are cosmopolitan obligations or obligations to respect
human rights. In The Law of Peoples, Rawls (1999) reiterates that principles of justice as fairness mutually oblige members of distinct societies to
one another, yet do not apply to the moral relationships among people
between societies across the globe. The law of peoples is broader and
thinner than justice as fairness (ibid., pp. 1122).
David Miller also conceives principles of justice as having in their scope
only relations among those persons who dwell together within the same
nation-state. Obligations to organize coercive institutions to ensure distributive fairness according to need, desert and equal respect obtain only
between persons who belong together in the same nation-state and who live
under a single political constitution (Miller 1995). Miller worries that a
globalizing world is making state sovereignty more porous and liable to
being aected by and aecting persons and circumstances outside these
nation-state borders. He concludes from this undeniable fact not that principles of justice should follow these globalizing trends, but rather that social
justice itself may be a historically specic idea and set of practices whose
time is past (Miller 1999, ch. 1).
As I understand the logic of this position, it holds that obligations of
justice presuppose the existence of shared political institutions. It is incoherent to say that relationships between people are unjust or just, on this
interpretation, in the absence of shared institutions for adjudicating such
claims or regulating their relations. Some more general and less stringent
obligations obtain between persons across political jurisdictions just
because they are human. But these are not obligations of justice.
A contrary position about moral obligation I shall call cosmopolitan
utilitarian. On this view, nation-state membership or any other sort of
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profoundly. A social contract theory like that of John Locke argues that the
need and desire for political institutions arises because socially connected
persons with multiple and sometimes conicting institutional commitments recognize that their relationships are liable to conict and inequalities of power that can lead to mistrust, violence, exploitation and
domination. The moral status of political institutions arises from the obligations of justice generated by social connection, as some of the instruments
through which these obligations can be discharged.
In his landmark work, Political Theory and International Relations,
Charles Beitz (1979) challenged Rawlss assumption that the scope of obligations of justice extends only between members of a single political community by arguing that there exists an international society even in the
absence of a comprehensive political constitution to regulate it. Ongoing
economic processes of production, investment and trade connect people in
diverse regions of the world, and these relationships are often unequal in
power and material resources. People move across borders, and institutions
of expression and communication are increasingly global in their reach. The
activities of many religious, artistic, scientic, legal and service-providing
institutions and networks extend to many parts of the world without too
much regard for nation-state membership and boundaries. Beitz concludes
that principles of justice like those Rawls argues for apply globally because
there are dense global social and economic relationships (Beitz 1979). A
need for political institutions suciently wide in scope and strong to regulate these relationships to ensure their fairness follows from the global scope
of obligations of justice, rather than grounding the obligations.
Onora ONeill argues somewhat dierently to a similar conclusion. The
scope of an agents moral obligation extends to all those whom the agent
assumes in conducting her or his activity. Each of us pursues our interests
and goals within the frame of specic institutions and practices, and within
which we know others do the same. Our actions are partly based on the
actions of others, in so far as we depend on them to carry out certain tasks,
and/or in so far as our general knowledge of what other people are doing
enable us to formulate expectations and predictions about events and institutional outcomes that aects us or condition our actions. In todays world
of globalized markets, interdependent states, rapid and dense communication, the scope of the actors we implicitly assume in many of our actions is
often global. The social relations that connect us to others are not restricted
to nation-state borders. Our actions are conditioned by and contribute to
institutions that aect distant others, and their actions contribute to the
operation of institutions that aect us. Because our actions assume these
others as condition for our own actions, ONeill argues, we have made practical moral commitments to them by virtue of our actions. That is, even
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those stores is made under sweatshop conditions, and calling upon consumers to take responsibility for those conditions.
Not a few institutions and individuals nd absurd the idea that consumers and retailers bear responsibility for working conditions in far away
factories, often in other countries. Not unreasonably, they say that even if
the workers producing items they buy suer wrongful exploitation and
injustice, we here have nothing to do with it. It is, rather, the owners and
managers of the factories who are to blame. Despite the apparent reasonableness of this dissociation, the claims of the anti-sweatshop movement
seem to have struck a chord with many individuals and institutions. I think
that it is important to understand why we need a conception of responsibility dierent from a standard notion of blame or liability.
What, then, are sweatshops? Much of the clothing, shoes and other
small consumer items whose production is labor intensive, are produced in
relatively small manufacturing centers in less developed countries, which
operate at the bottom of a chain of specication, distribution and marketing that often involves hundreds of distinct companies. Research on the
global apparel industry has brought to light that sweatshops abound in
North America and Europe (Bonacich and Appelbaum 2002; Kwong
2002). The vast majority of sweatshops, however, operate in less developed
countries. In 2000, 85 per cent of US consumption of footwear, and 50 per
cent of apparel, was imported (see Elliott and Freeman 2004, p. 55).
Conditions in such manufacturing facilities vary of course, but the following are typical. The vast majority of workers are female, and often as
young as 13 or 14. They are often treated in dominative and abusive ways
by bosses, and sexual harassment is common. Typically they work 1016hour days in peak seasons; if the manufacturer is behind on order the
workers may be forced to work through the night. They have few bathroom
breaks or other opportunities for rest during their long working day. Sick
leave or vacation time are generally unavailable; a worker too ill to work is
often red. Violations of the most basic health and safety standards are
normal. Factories are often excessively hot with no ventilation, insucient
lighting, excessive noise, little re equipment, blocked exists, poor sanitation, unhygienic canteens and bathrooms, and no access to clean drinking
water. Typically workers in these facilities have no freedom to organize
unions to bargain collectively with employers. Workers who complain and
try to organize are typically threatened, red, blacklisted, beaten, and even
killed. Local governments often actively or passively support such antiunion activity.6
There should be little doubt that conditions such as these violate basic
human rights. Many international agreements and conventions prohibit
violence and intimidation in the workplace as elsewhere, and stipulate that
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workers not labor under conditions that threaten their basic health and
physical safety. The meaning of such rights, moreover, ought to vary little
with local culture or level of industrial development. Exhaustion and the
need to pee are cross-cultural experiences. The right to assemble and organize ought to be recognized everywhere, and it is everywhere wrong to
intimidate and beat people who try to exercise this right. To say these are
rights is to say precisely that there is no valid moral argument for trading
them o against prots, or policies designed to foster economic growth, or
the earnings of the workers. If many workers endure these violations
without complaint because they desperately need those earnings, this is a
measure of the coercive pressures of their circumstances rather than of
their consent.
But what of their earnings? Economists argue that wage levels for the
same kind of work appropriately vary with the local cost of living and labor
market conditions, and they are right. Those who argue that the standard
of living for workers in sweatshops is often higher than in the countryside
from which many of them have moved may be correct. The wage levels of
workers in the apparel industry is nevertheless often far below the legal
minimum wage.7 Employers too often renege, moreover, in paying even
these meager wages (Women Working World Wide 2007). The workers generally have no recourse when employers underpay them, because they often
have no formal employment contracts, and the employers keep poor or no
records of the hours employees have worked. It may be true that under
normal market conditions a rise in wages for some workers will mean loss
of jobs of others; where the wages of a massive number of workers are
below subsistence level, as they often are, this is more an argument against
accepting normal market conditions than against paying living wages.
Thus far I have cited typical conditions for garment workers in factories.
A signicant portion of the people who put garments together, however,
work from their home. Employers often prefer putting out to homeworkers because there they do not have to pay for facilities and overheads and
they are not legally responsible for working conditions. Workers, especially
women workers, often prefer home work to factory work even when it pays
less, because they can avoid long and potentially harassing travel to work,
stay with their children, and save face for their husbands who can pretend
that their wives are not working (Khattak 2002). Homeworkers are often
the poorest paid, however, and work the longest self-imposed hours. The
children or old people with whom the worker wants to stay home, moreover, are often enlisted to help with the work (Ross 2004, especially ch. 2).
The subject of this chapter is responsibility in relation to injustice. The
structure of the global apparel industry diuses responsibility for sweatshop conditions. Big-name retailers in North America or Europe rarely
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themselves own and operate factories in which clothes made to their order
are manufactured. Instead, there is a complex chain of production and distribution involving dozens or thousands of contractually distinct entities
that bring the clothes manufactured in one place to the store in which
people buy them. In this system, each of the layers in the chain believes
itself to be operating close to the margin in a highly competitive environment, and usually is under heavy pressure to meet orders at low cost by
rms higher up the chain. The rms higher up the chain, however, often
have no legal responsibility for the policies and operations of the other
rms below with which they contract.
Facilities where garments and other items are manufactured are typically
small. Their activities are dicult to regulate or monitor because their
operations frequently shut down in one place and open up in another. The
export processing zone policies of many developing countries encourage
investment in such rms and generally turn a blind eye to the extent to
which they comply with local labor law.
Elliott and Freeman present the structure of one US retailer, J.C. Penny,
with its subcontracting relations in one developing country, the Philippines.
J.C. Penny purchases nished goods through a US importer, Renzo. Renzo
conveys J.C. Pennys specications to Robillard Resources, a Philippino
exporter, who contracts with a Philippino clothing contractor that organizes a production chain that includes numerous subcontracting factories.
These subcontractors in turn not only organize and supervise factory production of apparel parts, but also organize a system of putting out to
workers in their homes (Elliott and Freeman 2004, pp. 5054). According
to Elliott and Freeman, J.C. Penny alone contracts with over 2000 suppliers in more than 80 countries. Nordstrom has over 50 000 contractors and
subcontractors, and Disney licenses products in over 30 000 factories
around the world.
Another aspect of the structure of this industry relevant for issues of
assigning responsibility has to do with the way that the positions of
employer and employee are often blurred in this system. In some factories,
production line leaders act as subcontracting agents for home workers, with
the permission and assistance of management. Line and home workers
rarely receive written contracts; they are encouraged to think of themselves
as self-employed (Prugl and Tinker 1997; Women Working World Wide
2007).
In this complex system of production and distribution, the workers who
make garments are at the bottom of the chain. The wages they earn generally amount to a small portion of the retail price of an item, often under 6
per cent (see Miller 2003; Pollin et al. 2004). Each layer of subcontracting
that runs between the manufacturer and the store in which the consumer
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buys items adds to the cost of items. Major logo retailers usually make
handsome prots from this system; as one moves down the chain of production and distribution, rms operate in more-competitive environments.
Small subcontractors in developing countries frequently operate at just the
edge of solvency.
Anti-sweatshop activists argue that the workers at the bottom of this
system suer injustice in the form of domination, coercion and need deprivation within a global system of vast inequalities. Because of the complexity of the system that brings items from production to sale, and the manner
in which it constrains the options of many of the actors within it, this is an
example of structural injustice. I shall now articulate that concept more
generally.
Structural injustice8
In A Theory of Justice, John Rawls (1971, p.7) says that the subject of
justice is the basic structure of society, which concerns the way in which
the major social institutions distribute fundamental rights and duties and
determine the division of advantages from social cooperation. Major institutions include, he says, the legal systems denition of basic rights and
duties, market relations, the system of property in the mean of production,
and family organization. To these I would add the basic kinds of positions
in the social division of labor.
Rawls says little more about what the concept of structure refers to,
however. Social theorists use the term in many ways, and I shall not review
them here.9 As I understand the concept, structures denote the conuence
of institutional rules and interactive routines, mobilization of resources, as
well as the built environment. These constitute the historical givens in relation to which individuals act, and which are relatively stable over time.
Social structures serve as background conditions for individual actions by
presenting actors with options; they provide channels that both enable
and constrain.10
I shall build up an account of structure and structural processes using
elements derived from several theorists. Peter Blau oers the following
denition: A social structure can be dened as a multidimensional space of
dierentiated social positions among which a population is distributed.
The social associations of people provide both the criterion for distinguishing social positions and the connections among them that make them
elements of a single social structure (Blau 1977, p. 4). Blau exploits the
spatial metaphor implied by the concept of structure. Individual people
occupy varying positions in the social space, and their positions stand in
determinate relation to other positions. Although Pierre Bourdieu uses very
dierent language and concepts for theorizing social structures, he too
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constraints are produced by the ideas that people have about it and the
actions they take presuming those ideas.
Dening structures in terms of the rules and resources brought to actions
and interactions, however, makes the emergence of structures sound too
much like the product of individual and intentional action. The concept of
social structure must also include conditions under which actors act, a collective outcome of action which is often impressed onto the physical environment. Jean-Paul Sartre calls this aspect of social structuration the
practico-inert (Sartre 1976, ch. 3). Most of the conditions under which
people act are socio-historical: they are the products of previous actions,
usually products of many coordinated and uncoordinated but mutually
inuencing actions. Those collective actions have left determinate eects on
the physical and cultural environment which condition future action in
specic ways. The gradual consolidation of landholdings by large rms has
left many peasants with poor or no land from which they can eke out subsistence, so many of them move in search of work, erecting shanty towns
at the edge of cities. The export processing zones many governments have
established where some of these migrants nd work are consequences of a
history of structural adjustment programs that many indebted governments have been pressured to implement by international nancial institutions. The background conditions of the lives of these young workers today
are structural consequences of decisions and aggregated economic
processes beginning more than three decades ago.
This leads us to a nal aspect of the concept of social structure. The
actions and interactions of dierently positioned persons drawing on the
rules and resources the structures oer take place not only on the basis of
past actions whose collective eects mark the physical conditions of action.
They also often have future eects beyond the immediate purposes and
intentions of the actors. Structured social action and interaction often have
collective results that no one intends and which may even be counter to the
best intentions of the actors. Sartre (1976, pp. 27792) calls such eects
counter-nalities. When a large number of investors make a speculative run
on currencies in anticipation of their devaluation, for example, they often
unintentionally but predictably produce a nancial crisis which throws some
people out of work and ruins the fortunes of others (see Stiglitz 2002, ch. 4).
Structural injustice exists when social processes put large categories of
persons under a systematic threat of domination or deprivation of the
means to develop and exercise their capacities, at the same time as they
enable others to dominate or have a wide range of opportunities for developing and exercising capacities. Structural injustice is a kind of moral wrong
distinct from the wrongful action of an individual agent or the willfully
repressive policies of a state. Structural injustice occurs as a consequence of
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blame model in that it holds an agent liable for a harm even if the agent did
not intend or was unable to control the outcome, such as when one persons
property accidentally causes damage to another persons property (see, for
example, Honore 1999). I include such non-blame conceptions of liability
together with blame or fault-based conceptions in one category of responsibility, because they share the conceptual and functional features I detail
below.
A liability model of responsibility for human rights violations in apparel
factories and subcontracting in the home is certainly appropriate to apply
in many situations. When factory owners and managers violate local labor
law, for example, as they often do, they ought to be punished.12 If states in
which factories operate fail to nd oenders and punish them, as they often
do, they ought morally to be blamed for this failure and the international
community should perhaps nd ways to apply sanctions to them. Bosses
who harass and intimidate workers, managers who put productivity above
workers health, and so on, certainly should be held responsible in a liability sense for wrongful harms that these workers suer.
As I have discussed, however, particular workers in particular facilities in
particular places stand within an extensive system of structural social
processes that connect the making of garments to those who wear them.
Within this system, it is often plausible for the rst-line agents of harm to
try to mitigate their responsibility by appeal to factors outside their control.
They may claim that they have little choice about the wages they pay, and
cannot aord to give workers time o or invest in better ventilation and
equipment. They operate in a highly competitive environment, they say,
where other operators constantly try to undercut them. They themselves
are operating at the edge of solvency and are not exactly making huge
prots. They can stay in business only by selling goods at or below the prices
of worldwide competitors, and they can do that only by keeping labor and
other production costs to a minimum.13 They are under heavy pressure
from the exporters who place orders with them to deliver, and the exporters
in turn are under heavy pressure from the big-name companies that have
placed orders with them. The factory owners and managers in which the
workers toil are small actors with relatively little power in this global
system.
A typical justication for state-enforced labor standards appeals to
the need to maintain a level playing eld among competitors. If there is a
human rights oor below which wages and working conditions should
not be allowed to fall, the state is the proper agent to guarantee such a
oor through regulation. In this way those employers who wish to be
decent to workers need not fear being undersold by less scrupulous
employers.
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any interaction with those who are most harmed in it. While it is usually
inappropriate to blame those agents who are connected to but removed
from the harm, it is also inappropriate, I suggest, to allow them (us) to say
that they (we) have nothing to do with it. Thus I suggest that we need a
dierent conception of responsibility to refer to the obligations that agents
who participate in structural social processes with unjust outcomes have. I
call this a social connection model.
Social connection model
In ordinary language we use the term responsible in several ways. One I have
already discussed as paradigmatic of the liability model: to be responsible is
to be guilty or at fault for having caused a harm and without valid excuses.
We also say, however, that people have certain responsibilities by virtue of
their social roles or positions, as when we say a teacher has specic responsibilities, or we appeal to our responsibilities as citizens. In this meaning,
nding responsible does not imply nding at fault or liable for a past wrong,
but rather refers to agents carrying out activities in a morally appropriate
way and aiming for certain outcomes (see Goodin 1996; Richardson 1999).
What I propose as a social connection model of responsibility draws more
on the latter usage of the term responsibility than on the liability usage. It
does share with the liability usage, however, a reference to causes of wrongs,
here the form of structural processes that produce injustice.
The social connection model of responsibility says that individuals bear
responsibility for structural injustice because they contribute by their
actions to the processes that produce unjust outcomes. Our responsibility
derives from belonging together with others in a system of interdependent
processes of cooperation and competition through which we seek benets
and aim to realize projects. Even though we cannot trace the outcome we
may regret to our own particular actions in a direct causal chain, we bear
responsibility because we are part of the process. Within this scheme of
social cooperation, each of us expects justice toward ourselves, and others
can legitimately make claims on us. Responsibility in relation to injustice
thus derives not from living under a common constitution, but rather from
participation in the diverse institutional processes that produce structural
injustice. In todays world, as I suggested above, many of these structural
processes extend beyond nation-state boundaries to include globally dispersed persons. The structure and relationships of the global apparel industry illustrate starkly and concretely such transnational social connections.
I shall detail ve main features of the social connection model of responsibility by contrasting it with the liability model.
The rst feature is not isolating. The liability model of responsibility
seeks to mark out and isolate those responsible, thereby distinguishing
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them from others, who by implication are not responsible. Such isolation
of the one or ones liable from the others is an important aspect of legal
responsibility, both in criminal and in tort law. Social practices of nding
guilty or nding faulty, or holding strictly liable, focus on particular agents
in order to sanction or demand compensation from them and them alone.
A system of moral rules and legal accountability should make clear that
agents who violate the rule may face accusation as individual agents.
When harms result from the participation of thousands or millions of
people in institutions and practices that produce unjust results, however,
such an isolating concept of responsibility is inadequate. Where there is
structural injustice, nding some people guilty of perpetrating specic
wrongful actions does not absolve others whose actions contribute to the
outcomes from bearing responsibility. Hired thugs who beat workers in
horribly equipped factories are personally guilty of crimes, as are the
factory managers who hire them and target particular workers. Finding
them guilty, however, does not absolve the multinational corporations from
responsibility for the widespread nature of poor working conditions in the
factories producing goods they market. Nor does it absolve those of us who
purchase the goods from some kind of responsibility to the workers who
make them.
The second feature is judging background conditions. In a liability
concept of responsibility, what counts as a wrong for which we seek a perpetrator and for which he or she might be required to compensate, we generally conceive as a deviation from a baseline. Implicitly we assume a
normal background situation that is morally acceptable, if not ideal. A
crime or an actionable harm consists in a morally and often legally unacceptable deviation from this background structure.15 The liability model
considers the process that brought about the harm as a discrete, bounded
event that breaks away from the ongoing normal ow. Punishment, redress
or compensation aims to restore normality or to make whole in relation
to the baseline circumstance.
A model of responsibility deriving from understanding the mediated connection that agents have to structural injustices, on the other hand, evaluates not harm that deviates from the normal and acceptable, but rather often
brings into question precisely the background conditions that ascriptions of
blame or fault assume as normal. When we judge that structural injustice
exists, we mean that at least some of the normal and accepted background
conditions of action are not morally acceptable. Most of us contribute to a
greater or lesser degree to the production and reproduction of structural
injustice precisely because we follow the accepted and expected rules and
conventions of the communities and institutions in which we act. Usually
we enact these conventions and practices in a habitual way, without explicit
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Thousands or even millions of agents contribute by our actions in particular institutional contexts to the processes that produce unjust outcomes.
Our forward-looking responsibility consists in changing the institutions
and processes so that their outcomes will be less unjust. Not one of us can
do this on our own. Even if it were possible to do so, a single shopper would
not change the working conditions of those toiling in sweatshops by refusing to buy all items she had reason to believe were produced under unjust
conditions. The structural processes can be altered only if many actors in
diverse social positions work together to intervene in them to produce
dierent outcomes.
Responsibility from social connection, then, is ultimately political
responsibility. Taking responsibility in a forward-looking sense under this
model involves joining with others to organize collective action to reform
the structures. Most fundamentally what I mean by politics here is public
communicative engagement with others for the sake of organizing our relationships and coordinating our actions most justly. Discharging my responsibility in relation to sweatshop workers might involve, then, that I try to
persuade others that these wrongs are unacceptable and that collectively we
can alter social practices and institutional rules and priorities to prevent
them. Our working through state institutions is often an eective means of
such collective action to change structural processes, but states are not the
only tools of eective collective action.17 In the next section I shall discuss
and evaluate some of the activities of the anti-sweatshop movement.
An important corollary of this feature of political responsibility is that
many of those properly thought to be victims of harm or injustice may nevertheless share such political responsibility in relation to it. On the liability
model of responsibility, blaming those who claim to be victims of injustice
usually functions to absolve others of responsibility for their plight. In the
social connection model, however, those who can properly be argued to be
victims of structural injustice can be called to a responsibility they share
with others in the structures in engage in actions directed at transforming
the structures.
This point certainly applies in anti-sweatshop activity. Workers themselves have the strongest interest in combating sweatshop conditions. They
also have information and relationships with one another useful in order to
mobilize productively to try to alter the structures that perpetuate their
exploitation. According to some researchers, employer-sponsored monitoring systems that aim to reform sweatshop conditions but fail to involve
workers in a meaningful way are often ineective or actually harm workers
(Esbenshade 2004). Even when they do not they tend toward parternalism
rather than empowerment of the workers. The workers share responsibility
for combating sweatshop conditions, and ought to be organized in order to
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these structural injustices involve people widely dispersed across the globe,
and are by no means limited to processes within single nation-states.
What I have done so far is only to oer a way of thinking about responsibility in general. One might well object that the conception of responsibility as social connection raises as many questions as it answers. For
example, the model says that all who participate by their actions in
processes that produce injustice share responsibility for remedy. Does this
mean that all participants bear responsibility in the same way and to the
same degree? If not, then what are the bases of dierentiating kinds and
degrees of responsibility? Most of us participate in many structural
processes, moreover, that arguably have disadvantaging, harmful or unjust
consequences for others. It is asking too much for most of us to work
actively to restructure each and all of the structural injustices for which we
arguably share responsibility. How, then, shall we reason about the best
ways to use our limited time, resources and creative energy to respond to
structural injustice?
Adequately responding to questions like these would take at least
another full essay. Thus I shall only sketch answers here, and illustrate
the responses once again through the example of the anti-sweatshop
movement.
Some moral theorists argue that responsibility names a form of obligation distinct from duty. Joel Feinberg (1980), for example, distinguishes
between an ethic that focuses on obligation or duty and an ethic that
focuses on responsibility. A duty species a rule of action or delineates the
substance of what actions count as performing the duty. A responsibility,
on the other hand, while no less obligatory, is more open as to what counts
as carrying it out (Feinberg 1980, pp. 13540; May 1996, ch. 5). A person
with responsibilities is obliged to attend to outcomes the responsibilities
call for, and to orient her or his actions in ways demonstrably intended to
contribute to bringing about those outcomes. Because a person may face
many moral demands on his or her actions, and because changes in circumstances are often unpredictable, just how a person goes about discharging her or his responsibilities is a matter with considerable discretion
(see Goodin 1996; Richardson 1999). Given that a combination of responsibilities may be overdemanding, and given that agents have discretion in
how they choose to discharge them, it is reasonable to say that it is up to
each agent to decide what he or she can and should do under the circumstances, and how she should order her moral priorities. Others have the
right to question and criticize our decisions and actions, however, especially
when we depend on one another to perform eective collective action. Part
of what it means to be responsible on the social connection model is to be
accountable to others with whom one shares responsibility for what one has
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161
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Conclusion
Obviously each of these parameters for reasoning about the ways in which
individual persons or institutions might meet their responsibilities under a
social connection model power, privilege, interest and collective ability
needs further elaboration. This sketch should indicate how being positioned dierently in the structures that produce injustices suggests dierent
kinds of issues and directions for action by various agents. It also gives
more concreteness to the notion that under a social connection model
agents share responsibility with others dierently situated, with whom they
usually must cooperate in order to eect change. As the anti-sweatshop
movement example illustrates, however, such need for cooperation does not
mean that agents have no conicts or interest and no need for struggling
with one another. Sharing responsibility partly means that agents challenge
one another and call one another to account for what they are doing or not
doing. Global social and economic processes bring individuals and institutions into ongoing structural connection with one another across national
jurisdictions. Adopting a conception of responsibility that recognizes this
connection is an important element to theorizing global justice.
Notes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
This chapter is a reprint of the article from Iris Marion Young (2006), Responsibility
and global justice: a social connection model, Social Philosophy and Policy, 23 (1),
10230. Permission was granted by Cambridge University Press.
Thanks to David Alexander, Daniel Drezner, David Owen and Ellen Frankel Paul for
comments on an earlier version of this chapter. Thanks to David Newstone for research
assistance.
I have begun analysis of global labor justice focusing on the anti-sweatshop movement
in two previous papers: Young (2003, 2004).
Compare also Robert Goodin (1985) and Thomas Pogge (2002), especially Chapters 1,
2 and 4.
In April 2003, for example, the Milwaukee Common Council voted unanimously for an
ordinance requiring the procurement of apparel for city sta from manufacturers that
meet several labor rights conditions; see Sweatfree Communities Gain Ground,
Campaign for Labor Rights, clr@clrlabor.org, accessed 21 November 2007.
For an account of working conditions, see Naomi Klein (1999, especially ch. 9); Ellen
Israel Rosen (2002, ch. 2).
Most of the countries in which factories like those I am describing operate do have
minimum wage laws, as well as regulation of other labor conditions. In many cases these
laws could be more comprehensive and stronger, of course. For a comprehensive
country-by-country survey of labor regulation, see the Industrial Labor Organization,
www.ilo.org (accessed 21 November 2007). The primary problem with labor regulation
in much of the world, however, including arguably the United States, is lack of enforcement rather than lack of standards.
In previous work I have begun developing an account of structural injustice. See Young
(2000, especially ch. 3, 2001, 2002).
For one catalog of uses by English language theorists through the mid-1970s, see Peter
Blau (1975).
Jerey Reiman, among others, uses this channel metaphor (see Reiman 1989, p. 213).
See Fletcher (1999) for a clear statement of this model of responsibility.
163
12. As I discussed in a previous note, in most cases there are labor laws, and sweatshop conditions are often violating them. Sometimes this is because the host countries make
exceptions to their labor regulation standards in special manufacturing zones. In many
other cases, the problem is that factory operators, distributors, retailers and others
are able to ignore labor law with impunity. See Bonacich and Appelbaum (2002, chs 2
and 8).
13. For an account of the constraints on actors in the global apparel industry, see Rosen
(2002, ch. 11); see also Bonacich and Appelbaum (2002, chs 2 and 5).
14. See Jill Esbenshades (2004, ch. 1) discussion of sweatshops in the United States and
Department of Labor reports concerning these conditions.
15. See George Fletchers discussion of the way that the assignment of criminal liability
must distinguish between foregrounded deviations from background conditions
assumed as normal, and the background conditions themselves (Fletcher 1999,
pp. 6970).
16. Larry May (1993), Sharing Responsibility, ch. 2. As formulated in this book, Mays
theory of shared responsibility remains backward looking; he is concerned to assign a
responsibility for harms that have occurred and reached a terminus. Thus his theory is
more continuous with a liability model of responsibility than the theory I am developing here. May also focuses more on subjective states such as attitudes for linking persons
to responsibility for a wrong, and says little about more objective social structures that
connect persons to moral wrong or injustice. See my paper, Responsibility and global
labor justice (Young 2004).
17. Melanie Beth Oliviero and Adele Simmons recommend uses of civil society organizations for addressing issues of labor standards; see Oliviero and Simmons (2002). John
Braithwaite and Peter Drahos argue that as transnational social structures impinge on
state sovereignty, civil society organization gains increased ability to inuence labor and
other business practices; see Braithwaite and Drahos (2000, chs 5, 6 and 26).
18. William Connolly makes a similar distinction between responsibility as blame and a
more politically oriented responsibility. For him the resentment and counter-accusation
dialectic that accompanies blame in a discourse of public aairs makes political identity
overly rigid and paralyzes action. Thus he recommends a notion of political responsibility without blame and with a more uid and ambiguous understanding of the sources
of wrong than the implicitly Christian identication of the sinner (see Connolly 1993,
especially ch. 4). Melissa Orlie also distinguishes between a sentiment of resentment
exhibited in blaming and holding oneself and others politically responsible (see Orlie
1997, pp. 16973).
19. Liam Murphy (2000) develops a useful theory of moral responsibility under conditions
of injustice.
20. See Pollin et al. (2004). They nd that the amount that retail prices would need to rise to
bring workers a living wage raise is small, and consistent with increases that North
American consumers say they would be willing to pay if they could be assured of sweatfree conditions.
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Introduction
The Earths continuing degradation due to human activities is now a global
concern. For the past three decades, both governments and corporations around the world have struggled with contemporary challenges of
businessenvironmental regulation and the provision of global environmental public goods. Over 150 treaties have been proposed, signed and
implemented, the Montreal Protocol, the Kyoto Treaty, and numerous
Earth summits among them.
We are making good progress on some aspects of understanding and
controlling environmental degradation. For example, today as compared to
three or even two decades ago, we have much better scientic understanding of natural environmental assets, climate changes, and the impact of
human activities on them. We have better national and international policies and standards guiding ecological sustainability (Dowell et al. 2000).
There is better inspection surveillance and monitoring of environmental
pollution and natural resources than in the past, and there is better environmental regulation of corporations in most countries. Corporations have
acknowledged the importance of dealing with ecological sustainability
within the logic of their traditional business models. And there are calls to
adopt the triple-bottom-line model that argues for judging corporate performance on nancial, social and ecological performance measures (Savitz
and Weber 2006).
Corporate eorts focus on a wide range of issues, such as reducing the use
of virgin materials, using production methods that are more ecologically
ecient, preventing pollution, designing eco-friendly products and packaging, and managing waste in an ecologically sound way. Companies are
adopting environmental management programs that are technologically
easy, save costs and help improve revenues (harvesting the low-hanging
fruit). Many companies are also making deeper systemic changes by adopting ISO 14000 environmental management systems (Green et al. 2001). The
World Business Council on Sustainable Development (www.wbcsd.org) lists
numerous ecological sustainability programs adopted by the worlds largest
corporations (Sharma and Starik 2002).
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companies to treat the environment as simply another of the many stakeholders that they are acknowledging responsibility toward, the same way
they are responsible to employees, customers, business associates, the government and community groups. Since the environment as a stakeholder is
an impersonal public good, it receives a lower priority than the other stakeholders, which are personalized, human entities.
Some researchers propose corporate citizenship to extend the concept
of corporate social responsibility (CSR) and combat the risk challenges
facing corporations (Matten and Crane 2005). The argument is that
modern corporations mediate many of the political and social rights of citizens, and may be considered citizens themselves. Corporate citizens
provide economic and social rights, enable civil rights and are channels for
political rights. Implicit in this concept of corporate citizenship is the
notion that corporations can voluntarily become enlightened stewards of
the natural environment (Livesey 2002). As members of society, they can
shoulder citizenship responsibilities, and at the same time continue to be
economically productive to the extent required by competitive and investor
pressures, while still preventing ecological harm or keeping it to long-term
sustainable levels. These expectations need better specication. What
exactly is meant by this type of corporate citizenship? In this chapter I
open a new discussion of how responsible corporate citizens might conceive environmental risks and how they may approach the provision of
environmental public goods.
Historically, corporate citizenship expectations regarding the natural
environment have focused on corporate operations and valuing nature as
an economic asset. Consider the following examples of environmental citizenship from leading international companies (Box 8.1).
Most statements of corporate citizenship acknowledge some responsibilities for maintaining balanced and sustainable use of the natural
environment. The concept sustainable development seeks to moderate
economic growth globally to levels that avoid jeopardizing future generations ability to meet their needs. It is a big concept with great promise, and
one that is hard to argue against. But translating sustainability into specic
corporate responsibilities and then creating the economic, legal and political conditions to implement it at the corporate and industry levels has
simply not happened yet. To become a driving concept, sustainable development will need to address inherent conicts between the North and the
South, between capital and labor, and between corporate responsibilities
toward investors and other societal stakeholders. While rhetorically, companies embrace sustainability and pro-environmental values, operationally
their environmental commitments remain limited, and subjugated to competitive pressures and investor demands for protability (Beder 2000).
BOX 8.1
169
EXAMPLES OF ENVIRONMENTAL
CITIZENSHIP
170
responsibilities of business in a global society. But most of these discussions treat corporations as disembodied abstract legal persons. When
corporations are deemed to be abstractions, their responsibilities are conceptual. This oers a skewed picture of their materiality and their impacts
on humans and the material environment. In the spirit of stretching our
thinking deeper into material manifestations and bodily impacts of corporations, this chapter seeks to develop the concept of embodied corporate
environmental citizenship. It focuses on the contemporary challenges of
providing global environmental public goods.
Most major environmental problems, such as ozone depletion, global
warming, species extinction, environmental pollution and waste disposal,
are transnational and global. Corporate rights and responsibilities for
dealing with these problems using past approaches have proven to be inadequate. We need to begin rethinking corporate environmental citizenship
from what this chapter loosely calls an embodiment perspective. This perspective sees human body and the physicality/materiality of nature as
central to corporate social analysis. It articulates new corporate responsibilities toward nature, the whole person, natural and fabricated spaces and
the community. The chapter oers some suggestions for practical implementation of these responsibilities and identies several issues that deserve
further research.
An embodiment perspective
Embodiment philosophy is about the relationship between the world of
substance and the world of spirit or culture (intentional objects). The core
idea views the body not as a vessel but as the being itself. The mind and
spirit are simply a method with which the body works. Thus body and mind
are fused into a single being. A key distinction between matter and person
is the way of observing the being. In this view a single process binds the
mind to its body, family and language, dissolving the subjective/objective
distinction. The mind extends beyond body and family, to its environment,
society, species and the planet (Bateson 1980). Even if we accept only some
limited biological aspects of embodiment as useful theory, it is easy to see
a more general application of it as an analytical approach in psychology,
sociology and the behavioral sciences.
In the eld of psychology, embodied analysis is a new approach seeking to
understand the social as the embodiment of sensate experience. It also refers
to the view that human mind/thoughts are a function of the brain and physiology. It seeks to understand the inherently embodied character of all psychological processes and social practices, including discursive practices. This
orientation was largely ignored in the dominant discourse of psychology.
Psychological research had spawned the understanding that universal
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result in the human performance in corporations, and consequently corporate performance. The embodiment perspective acknowledges the mind,
body and emotional aspects of work. It accepts the fact that corporations
employ the whole person and not some part of him/her. In the case of
senior managerial positions such as CEOs and presidents, the employment
may even impose expectations and requirements on the persons spouse,
family and lifestyle.
A third justication of the embodiment perspective comes from the need
to consider the whole person because modern corporate work deploys the
whole person. In the early years of industrialization, corporations assumed
that they were buying and using largely physical skills. Up until the middle
of the 21st century, physical labor (in construction and factory settings)
remained the primary basis of performance. With conversion of work from
factory and industrial production, to services and the information economy,
the primacy of physical eort was lost. Work did not necessarily lose the
physical exertion, but it certainly gained added dimensions of cognitive performance (judgment, analysis, decision making) and emotional performance
(customer care, social engagement, cultural nuances). Corporate work utilizes complete human beings with their physical performances, mental decision processes, and their emotional energies. A holistic conception of
employees is therefore fundamental to constituting embodied corporate
citizenship.
Corporations are a collection of humans supplemented with material
and nancial resources. What makes corporations successful is their full
engagement of people and their natural and social environments in performing work. For work to occur eectively, corporations must engage and
manage all elements that impact on their long-term performance. For pragmatic reasons it is compelling to conceive of corporate social and environmental inuences and responsibilities to include all relevant types of stakes
and stakeholders. The more complete the set of stakeholders the higher is
the probability of satisfying them and gaining long-term success.
Conceptualizing corporate citizenship responsibilities in a comprehensive way is a pragmatic imperative. Responsibilities toward more stakeholders and for more types of stakes are also imbued with moral power
under democratic norms. The customs of our democratic society give us the
obligation to accept responsibilities toward these stakes and stakeholders.
This is consistent with Bourdieus social analysis of collective action which
elucidates the pragmatic force of catering to the majority (Bourdieu and
Wacquant 1992). It should be acknowledged that currently such expanded
responsibilities are not mandated by codes of law in any country. From an
embodiment perspective, corporate citizenship responsibilities include the
welfare of (whole) human employees and other human stakeholders,
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fabricated spaces for corporate activities and the broader natural environment. These responsibilities are elaborated upon in the next section.
Corporate citizens human and environmental responsibilities
The schematic diagram in Figure 8.1 identies four sets of corporate
responsibilities that ow from our conception of corporate citizenship. It
depicts the interrelationships between them. These responsibilities include
responsibilities toward whole persons (physical, cognitive, emotional),
responsibilities toward communities, responsibilities toward fabricated
spaces, and responsibilities toward the natural environment. This model
implies a collective holistic responsibility at a new and higher level of comprehensiveness. The arrows linking the elements indicate that they are
mutually reinforcing and best understood as a network rather than as independent and isolated responsibilities.
Corporate whole-person responsibilities
Corporations as citizens are persons and they use and deal with people
including employees, customers and business associates. Articulating personcentered responsibilities begins by acknowledging the physical, cognitive and
emotional sides of people, and providing for the well-being of each. Physical
health and stamina both directly impact on work productivity and absenteeism. Providing for physical well-being in the form of wellness and preventive health services and medical care is a primary corporate responsibility.
Nature
Fabricated
spaces
Whole
person
Community
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A few rst steps are delineated below to encourage managers and policy
makers to think about their new responsibilities in practical terms.
Managing personal and organizational ecological footprints
Embodied corporate citizenship cannot be simply a collective concept. At
some level it must be translated to personal responsibilities of individual
employees, managers, owners, directors and other key stakeholders. Each
person must understand his or her own ecological footprint. This footprint
refers to the amount of land and water area a human population needs to
support itself and to absorb its wastes using prevailing technology. Ones
personal ecological footprint measures the ecological resources a person
uses in global hectares (gha) per capita. For example, the average footprint
in the USA is 9.5 gha per capita, in Switzerland 4 gha per capita, and in
China 1.5 gha per capita. Numerous web resources allow people to estimate
their own or their organizations ecological footprint (http://ecofoot.org).
They provide suggestions for reducing or changing consumption patterns to
design more ecologically sustainable personal lifestyles and organizations.
Humanizing employment contracts
Current employment contracts commoditize labor and make the
relationship between companies and employees narrowly economistic.
Employment is reduced to hours of labor. Financial compensation (wages,
bonuses, prot sharing, stock options and so on) denes the limits of the
employers responsibilities. These contracts need to be amended to recognize that labor time, does not capture the deep emotional and intellectual
engagement necessary in todays workplace. Contracts should be improved
to incorporate work expectations from employees, and to take into account
the whole-person skills and performances necessary for each job. This
means employers accepting contractual responsibilities for the holistic
(physical, mental and emotional) health of employees. To encourage holistic work environments, individual work spaces, employee benets, contracts and work areas should be designed in an eco and health conscious
manner. For example, this could include work-integrated childcare, tness
services, ergonomic and creativity inducing work spaces, paternity/maternity leave and employer support for family and community involvement of
employees.
Ecologizing corporate policies
The broader view of corporate citizenship should be embedded in all corporate policies including corporate vision, strategies, products and operations. Every aspect of the company needs to be infused with a uniform
sense of environmental and social responsibility. This is best done by
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This chapter began the process of re-conceptualizing corporate citizenship from an embodiment perspective. By centering the body and materiality of nature in our analysis, we gain a fresh perspective on corporate
citizenship. This embodiment approach anchors the discourse on corporate
responsibility and citizenship in a dierent place the human body and
ecological materiality, instead of in economic and political concepts of
human labor and environmental resources. This allows us to access bodily
and material consequences of corporate activities in a more direct way. By
making direct links we avoid obfuscations made by some economic and
political arguments that mediate our understandings of humanenvironmental relationships. The embodiment approach supplements the insights
provided by economic and political concepts of CSR, and focuses centrally
on the health of human beings and the ecosystem.
This chapter represents a rst and largely denitional step toward an
embodied concept of CSR. More robust re-conceptualization and theory
development are needed to esh out the deeper sense of responsibility
implicit in this approach. Research is needed into all key elements of CSR
and citizenship. We need to understand how corporations and the work
within them relate to, shape and inuence whole persons and their personal, social and emotional lives. We need to uncover the deep links
between corporations and the communities they serve.
This does not mean giving more control to corporations over dierent
aspects of our lives. Corporate control of the community, polity and public
discourse, have been widely criticized in the literature, including some of
the chapters in this volume. The embodiment approach can restore humanized control over emotional and physical work into the hands of employees if it is rst acknowledged openly.
Embodiment implies that material changes are central to social analysis.
Corporations change the material world indelibly, continually and in many
instances irreversibly. We need much more research on corporate fabricated
spaces and corporate-nature impacts to understand the full material impact
of corporate activities. In management literature the focus of study has
been material changes within corporations in terms of production
processes. There are entire functional areas and elds of study devoted to
production and operations management. The preoccupation with internal
material transformation has led to ignoring external material changes from
corporate activities changes in landscape, buildings, logistics infrastructures and building materials. There is a major opportunity for researching
corporate landscaping of communities and society.
Another area of fruitful research is methodology. For traditional organizational scholars there is a need to develop new measures and scales
that allow us to quantify changes and carry out longitudinal studies of
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corporate-induced changes over time. However, the embodiment perspective denies the subjectiveobjective split that runs through current methodologies used in the elds of management and business studies. It seeks to
synthesize concepts and experiences into an incarnate understanding.
Therefore, the more useful methodological opportunity lies in expanding
our research methods so that we can focus on studying embodied experiences, feeling and emotions in a corporate work context.
While this chapters eort at re-conceptualizing CSR and corporate citizenship is a useful start, I do not believe that conceptual development
alone will resolve the grave global environmental problems we face today.
Making an impact on real problems requires action. The embodiment perspective is partial to action and practice. It is a theory of practice and
change. It supports advocacy of eco-centric values. Eco-centrism fosters
corporate engagement in environmental problems. While advocacy may be
anathema to traditional notions of scientic inquiry, it is a critical aspect
of the embodiment perspective.
References
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London: Sage.
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Its Social and Political Consequences, London: Sage.
Beder, S. (2000), Hijacking sustainable development: a critique of corporate environmentalism, Chain Reaction, 81, 810.
Bourdieu, P. and L.J.D. Wacquant (1992), An Invitation to Sociology, Chicago, IL: University
of Chicago Press.
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Dowell, G., S.L. Hart and B. Yeung (2000), Do corporate global environmental standards
create or destroy market value?, Management Science, 46 (8), 105974.
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Conict, Cambridge, MA: Harvard Business School Press.
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Introduction
The wide-ranging and negative impacts of corruption (Mauro 1996;
Kaufmann 1997; Doh et al. 2003) have led many observers and policy
makers to regard it as one of the worlds greatest challenges (Errath et al.
2005). In addressing corruption, multiple anti-corruption agencies (for
example, the Organization for Economic Cooperation and Development
(OECD), the UN, Transparency International (TI), the World Bank)
increasingly have directed their attention beyond a conventional focus on
governmental anti-corruption programs to consider as well the role of corporations in the mitigation of corruption. For example, in a speech to
French business leaders, OECD Secretary-General Angel Gurria recently
asserted that the cessation of bribery will only happen if companies put in
place their own rules and controls against bribery. You are on the front line.
You have to decide whether to give in to solicitation or whether to try to
match or beat the bribe that your competitor may be willing to pay (Gurria
2006). Meanwhile, the World Banks Business, Competitiveness and
Development program involves the corporate sector actively in ghting corruption; the UN now includes ghting corruption as the 10th principle
within its Global Compact (UN Global Compact 2007); and nongovernmental organizations (NGOs) such as TI focus on the potential role
of the corporate sector in alleviating problems of corruption, advocating,
for example, eective controls and greater transparency in corporate
actions (TI 2007). Most parties to international discussions of corruption
also grant that the potential role of the corporate sector in ghting corruption is greater in societies with weak, ineective or seriously corrupted political systems. In such circumstances, corporations might be the only entities
with the capacity to address both individual and systemic corruption.
If corporations are to exercise a citizenship role, then, it seems reasonable to consider anti-corruption work as a potential element of that role. In
a narrow sense, the call for corporations to be good citizens regarding corruption might simply mean that corporations should more carefully
control their own actions vis--vis corruption, taking action to prevent
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employees from committing corrupt acts or violating the law and fostering
an ethical, corruption-preventing organizational culture. But could corporate citizenship regarding corruption mean more than this, such that corporations become active agents of corruption-disabling change in society? If
so, just what might a broader notion of corporate anti-corruption work
involve? Can corporations act as citizens against systemic corruption?
Much research has examined how corporations can foster non-corrupt
behavior internally, on the part of their employees and managers (for
example, Trevio and Weaver 2003). But little has considered an outward
focus by which corporations function as sociopolitical actors working
against entrenched societal corruption.
We address this topic in this chapter. After briey reviewing the concepts
of corruption and corporate citizenship, we summarize conventional
approaches to corruption and their limits. In the light of these limits, we
present a more expansive understanding of corruption, treating it as
embedded in the cognitive and behavioral components of an overarching
institutional logic, which in turn can be sustained or changed by social
actors in possession of economic, cultural, social and symbolic resources.
Based on this alternative account of corruption (developed in greater detail
in Misangyi et al. 2008), we oer proposals as to how corporations might
engage in anti-corruption eorts that spread beyond their own (admittedly
porous) boundaries. In this, corporations function as citizens in the sense
of taking on social and political responsibilities and as entrepreneurs intent
on changing an institutional framework that enables corrupt behavior. But
although we highlight certain potential corruption-disabling roles for corporations, we also consider the potentially quixotic nature of any expectation that corporations can or would engage in wide-ranging citizen-like
behavior against corruption.
Corporate citizenship and corruption: basic concepts
Denitions of both corporate citizenship and corruption involve some controversy, and so it is useful to rst establish what we mean by each of these
concepts. For our purposes, we embrace what is at the root of most perspectives on corruption: (i) a social actor is entrusted within a social system
with the allocation of resources or benets (and costs) and (ii) the social
actor has some level of discretion over this allocation and uses it to increase
the social actors (or its patrons) welfare at the expense of overall system
welfare or the actors legally, contractually, socially or morally dened role
expectations.2
Several contentious perspectives on corporate citizenship exist within
practitioner and academic literatures (Logsdon and Wood 2002; Moon
et al. 2005; Crane and Matten 2008; DeGeorge 2008; Norman and Nron
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2008a, 2008b; Wood and Logsdon 2008). Some scholars reject the plausibility of the concept in any form (for example, van Oosterhout 2008).
Minimalist views of corporate citizenship conne it to philanthropic activity and/or behavior in conformity to law and morality (Saiia 2001; Matten
and Crane 2005; Norman and Nron 2008a). More generally, in this private
actor approach the corporation is a citizen in the sense of dutifully fullling
formal and informal societal expectations, but not in any sense stronger
than that. In other words, corporations are not acting as sociopolitical
actors in their citizenship role; only others (for example, governments,
NGOs, inuential individuals) act in that capacity. Corporations merely are
entities that follow societal rules and otherwise dispose of their property
and contract with others as they please (within the constraints of market
forces).
More expansive views treat corporations as sociopolitical actors responsible (with others) for maintaining or developing the overall framework of
society (Scherer et al. 2006; see also Matten and Crane 2005). Here, corporations take on an active, republican (that is, civic virtue-oriented) identity
(in contrast to a more private and reactive bourgeois liberal notion of citizenship; Scherer et al. 2006). Scholars working within this political actor
perspective of corporate citizenship put the corporation in the public
sphere and assume a state-like role of the corporation with regard to its corporate citizenship behavior (Scherer et al. 2006, pp. 51415, original
emphasis). For example, corporations might step into a breach vacated by
other institutions, as in situations of failed states. Corporations also raise
questions about their active sociopolitical role in so far as globalized,
transnational business activity creates new venues of collective action and
power that exceed the reach of traditional nation-states. But because corporations are not elected to administer political rights and obligations in
lieu of conventional forms of political governance, questions arise as to the
democratic legitimacy of corporate citizenship understood in this expansive way (Palazzo and Scherer 2006). Thus, Scherer et al. (2006) suggest that
corporate citizenship behavior must be informed by a republican (rather
than private, classically bourgeois liberal) political model of citizenship
(see Steinmann and Scherer 2000; Ulrich 2002; Moon et al. 2005), wherein
the corporation, as both a private citizen as well as a citizen of the community (Habermas 1998), takes on politically administrative functions
while guided by an inherent responsibility and capacity to benet the
commonwealth.
Applied to corporate action regarding corruption, a minimalist, corporation-as-law-abiding-and-moral-citizen (hereafter, private-actor) perspective on corporate citizenship suggests attention to intra-organizational
corporate practices aimed against corruption such as eorts to prevent
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thus commitment to) ethical modes of behavior (Weaver and Trevio 1999;
Weaver et al. 1999a; Trevio and Weaver 2003). Although these
approaches may succeed in changing individual behavior within organizations, they do not address enabling conditions for corruption that reside in
extra-organizational contexts.
An institutional approach to corruption and its mitigation
Economic perspectives on corruption lack attention to the complex role of
normative and cognitive processes; it is assumed that people act (deliberatively) based upon xed preferences (Fligstein and Mara-Drita 1996) and
thus questions of identity, roles, depersonalization and related phenomena
have no place in such accounts (Friedland and Alford 1991). Although
organizational behavioral accounts address normative and cognitive
processes, these approaches are limited by a primary focus on organizations
as the context for action, and consequent inattention to the institutional
environments within which both individuals and organizations are embedded (Granovetter 1985). This is important, because large-scale cultural and
institutional factors inuence behavior, cognition and aect in ways relevant to ethics in organizations (Weaver 2006).
Thus a more eective approach to mitigating widespread corruption
must move beyond conventional economic and organizational approaches
to consider the process by which institutional frameworks or, as we shall
describe them, institutional logics constituted by the identities, cognitive
frameworks and practices of people are formed and sustained, how those
logics enable corruption, and how they might be changed by social actors
(such as corporations) using the resources available to them (Misangyi et
al. 2008). This broader foundation for understanding societal corruption in
turn can inform thinking about how corporations might exercise citizenship roles by using their often vast resources to bring about institutional
change regarding corruption.
Institutional logics An institutional logic (Friedland and Alford 1991) is a
socially constructed, historical pattern of material practices, assumptions,
values, beliefs, and rules by which individuals produce and reproduce their
material substance, organize time and space, and provide meaning to their
social reality (Thornton and Ocasio 1999, p. 804). Institutional logics
provide a sense of meaning, coherence and order, as they incorporate social
identities and cognitive schemas and role expectations which in turn delineate and guide behavior (Berger and Luckman 1966; Scott 1995). Identities,
understood as cognitive self-schemas, motivate and guide behavior through
specic role expectations within social settings (see Ashforth 2001) and
through social categorization processes (for example, prototypical behavior,
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see Hogg and Terry 2000). Schemas, in turn, provide mental frameworks of
how relations occur within any particular situation (DiMaggio 1997) and
related cognitive scripts provide a ready stock of appropriate behavioral
routines for a situation (Barley and Tolbert 1997), thereby promoting
eciency and facilitating interaction. Taken together, these elements of an
institutional logic frame the way people understand their place in the world,
including their relationship to others, and provide them with a repertoire of
ways to act, think and feel.
The recursive relationships among identities, schemas/roles and practices
within institutional logics opens up the possibility of purposive institutional change: just as the symbolic realm (that is, identities and their attendant schemas and roles) inuences the substantive (that is, practices and
actions), so the latter realm also inuences the former (that is, practices help
to dene and shape identities, schemas and roles) (Giddens, 1976;
Friedland and Alford 1991; Barley and Tolbert 1997). Thus the actions of
individuals and organizations can aect the continued existence and
inuence of an institutional logic. Persistence of an institutional logic is not
inevitable (Giddens 1984; Sewell 1992), and change is more likely in situations that trigger the kind of self-conscious, deliberative thinking by
people that can make them aware of the logic and its inuence on thought
and action (Clemens and Cook 1999; Stinchcombe 1978). Such thinking
might be encouraged by a serious challenge to the normal workings and
outcomes of an institutional logic, such as a severe economic crisis
(Fligstein and Mara-Drita 1996). But it might also be prompted by social
actors within an institutional eld who articulate and propagate an alternative institutional logic (or an alternative interpretation of the reigning
logic), such that the established institutional logic no longer functions as a
brute fact, but rather as something to be evaluated or even replaced
(Friedland and Alford 1991; Sewell 1992; Barley and Tolbert 1997;
Emirbayer and Mische 1998; Seo and Creed 2002).
Social actors and their resources Institutional logics such as those that
enable or disable corruption cannot exist apart from the social actors that
embody, practice and change them (Zilber 2002). Social actors who attempt
to change institutional logics are, in eect, institutional entrepreneurs
(DiMaggio 1988; Seo and Creed 2002; Maguire et al. 2004). Their success
depends in part upon whether they have adequate resources for the change
eort (DiMaggio 1988; further discussed below) and on whether they can
infuse new beliefs, norms, and values into social structures (Rao et al.
2000, p. 240; see also Fligstein 1997). But institutional logics also have their
defenders, persons who, for whatever reason, use their resources, positions and inuence to maintain an existing institutional order, in part by
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and role expectations embedded in institutional logics. Identities understood cognitively incorporate sets of role expectations and scripted
behaviors. However, conict can arise among dierent sets of role expectations, and persons sometimes choose among multiple available behavioral
scripts in their responses to situations (Ashforth and Johnson 2001; Weaver
and Agle 2002).
Through their impact on organizational and societal cultures, corporations generate behavioral scripts and role expectations. This is particularly
true in the light of the increasing extent to which individuals interactions
are with large, relatively abstract and impersonal corporate systems (for
example, a call-center on a dierent continent) rather than with entities of
a more local scale (for example, a local service provider). In such situations,
high visibility actors (including large corporations and their executives) take
on increasing signicance as models and arbiters of behavior by their capacity to dene, propagate and embody behavioral scripts. Thus (for
example) celebrity chief executives foster scripts for management behavior
(for example, lean and mean); the design of products and commerce helps
to structure peoples lives; corporate involvement in land-use planning
processes ultimately inuences social interaction, with implications for the
kinds of role expectations that get developed out of such interaction
(because land-use decisions can inuence social network development).
Regarding corruption specically, the structure of work and careers is
highly subject to inuence by corporations, and thus corporations have the
potential to build corruption-relevant elements into the scripts, role expectations and schemas that constitute popular senses of career and work (for
example, so that reporting on corruption is seen as an in-role rather than
extra-role behavior). In addition, corporations can carve out certain areas
of social and economic life as guided by corruption-free scripts. Thus some
Indian corporations Infosys and the Tata group, for example by an incessant refusal to cooperate in traditional forms of corruption, have in eect
generated new company-specic scripts in the minds of public servants, such
that ocials typically dont even bother asking Tata executives for bribes
(Wehrfritz and Moreau 2005, p. 36). Such actions create a zone of economic
activity free of corruption-fostering scripts, and also legitimate corruption
reduction as a viable option within an overall institutional logic.
Corporations and their resources Resources are crucial for institutional
change, and so successful anti-corruption entrepreneurs must possess or
create the kinds of resources needed to bring about a change in institutional
logic (Misangyi et al. 2008). With regard to conventional anti-corruption
eorts, many of these resources are obvious: legal authority and enforcement
power; the ability to compel business partners to sign legally enforceable
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of key corporate decision makers, and to give policy makers and others
concerned with corruption some degree of entry into those networks.
Moreover, the adoption of an anti-corruption institutional entrepreneurship role by some corporations serves to put a competing institutional logic
in play in society, making it at least slightly more likely that other actors
will recognize and adopt that new logic (Friedland and Alford 1991).
Innovations spread when inuential or institutionally skilled organizations
adopt them; thus if policy makers and NGOs want to spur corporate anticorruption institutional entrepreneurship, they might target key decision
makers within potentially inuential corporations.
Conclusion
Our purpose in this chapter has been to examine the potential of corporations to exercise a citizenship role as institutional entrepreneurs in the mitigation of corruption. Corporations are increasingly being called to take on
such tasks, and whether we like it or not, in some cases they may be the only
social actors in the position to do so. For the most part, corporate citizens
are well equipped to take part in institutional entrepreneurial activities
aimed at mitigating corruption: they have the resources and social skills
(Fligstein 1997, p. 398) required for fostering the identities and institutional
logics that might encourage good behavior and undermine institutional
logics that support corruption. We have attempted to shed light upon some
of the ways that they can bring this capacity into action. But we have not
done so with blinders on, as it always is fair to question the legitimacy of a
corporate citizen in taking on a role such as this. This is not just an abstract
matter of cognitive or moral legitimacy (Suchman 1995), but a very practical question as well (Scherer et al. 2006): can individual citizens expect
corporate citizens to exercise their skills, power and discretion as institutional entrepreneurs in a manner that will benet the civic order? And
should individual citizens entrust such a task to corporations, and submit
to it? However, unless the power and inuence of conventional political
institutions parallels that of TNCs (that is, both strong or both weak), so
as to compel appropriate and relevant corporate action against corruption,
reliance on corporations as sociopolitical actors regarding corruption
might be not only possible but inevitable provided that corporations and
their decision makers are willing to take on the task.
Notes
1. Both authors contributed equally to this chapter.
2. In general, we use the term social actor to cover individuals, individuals acting as agents
of other social actors or collective actors such as corporations. However, our primary
focus here is on corporations as social actors in their larger economic and social contexts,
and therefore, although we typically refer just to corporations, we do so without denying
204
decision-making behavioral roles for the persons who individually or collectively act on
behalf of a corporation.
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Introduction
In a 2006 Foreign Aairs article, anthropologist Robert Sapolsky related the
story of the Forest Troop. The Forest Troop was a community of baboons
living on the edge of a tourist camp. The Troop feasted on the leftover food
of campers. In particular, the alpha males splurged, gorging themselves on
food and competing ercely for it. The Forest Troop was violent and competitive; it was not noted for sharing.
Then tuberculosis swept through the camp, killing the alpha males.
The Forest Troop survivors were the females and the less aggressive
males. With the alpha males gone, the culture of the baboons changed.
Rather than being competitive and violent, the group became less violent
and far more sharing. This would not be too surprising, but what followed was.
Baboon males circulate. They go from troop to troop, one might say, so
that there is a regular, new inux of new males into the group. Those new
males were also aggressive alpha males and so one would expect that when
they arrived on the scene, the Forest Troop would return to its violent ways.
It didnt. Instead, the alpha males changed their behavior so that they too
joined in the sharing and nurturing of the troop. In short, through successive generations, the entire culture of the Forest Troop changed.
Sapolsky compares this event to modern nation-states. He argues that
countries have changed too. Countries once violent have made conscious
decisions to eschew violence and develop new cultures. Germany and Japan
are very dierent compared to 70 years ago. Switzerland and Sweden are
dierent compared to a few centuries ago. What were once violent countries have become far more peaceful.
Just how baboons and how countries make this change may well be the
topic of several volumes. We introduce our chapter with Sapolskys story
not because we want to make a denitive argument as to how such change
occurs, but to suggest, impressionistically, that there is a provocative comparison. One can pose the learning of these examples to corporations too.
Corporations may be thought of as competitive and having little regard to
social conditions. That includes peace. Thinking of the contributions that
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businesses can make to peace has not been part of their corporate culture.
Yet, if baboons can change, why cant corporations?
The rise of peace through commerce and corporate citizenship
In recent decades multinational corporations (MNCs) have emerged as
signicant actors in world aairs with the power to inuence and impact
on global economic, social and environmental systems (Korten 1995;
Bakan 2004; Chua 2004). Some MNCs are larger than the small countries
in which they operate. For example, ExxonMobils 2006 revenue of over
$377 billion is estimated to be larger than the gross domestic product of all
but 25 nations (Mufson 2007). In discussing businesses relatively recent
focus on corporate social responsibility, Andriof and McIntosh (2001,
p. 17) argue that consumers and employees now acknowledge the corporation as the most powerful social construct in the present era. Along with
a shift in power from governments to corporations over time, many of the
services, protections and institutions once provided by governments or
social service groups (for example, training workers, maintaining environmental standards, providing healthcare to workers) have been transitioned
to MNCs (Matten and Crane 2005; Waddock 2005; Palazzo and Scherer
2006). A recent New York Times article highlights the recent dramatic
increase in the US governments use of contract workers (many of whom
are employed by large corporations) and the increased scope of contracted
activities which now include activities traditionally done by governments
such as tax collection, intelligence analysis and disaster relief (Shane and
Nixon 2007). Total US government contracting expenditures were approximately $400 billion in 2006 compared to approximately $207 billion in 2000
(ibid.).
Globalization is a signicant factor in the changing relationship between
business, individuals and social groups and in the rise of MNCs. Barriers
to trade and communication are diminishing at an astonishing rate and
individuals, societies, cultures, corporations and non-governmental organizations (NGOs) are interconnected now more than ever. Labor, technology, products and ideas ow with relative ease from country to country
(Friedman 2005). However, not everyone has embraced globalization and
the associated intended and unintended consequences. The protests accompanying the World Trade Organization meetings in Seattle in 1999 highlighted the concerns many diverse groups have with the apparent eects of
globalization and trends in international commerce. For example, an oftencited concern is that developed nations are beneting disproportionately
from the globalization of commerce and that rules promulgated by the
World Trade Organization lead to the economic and environmental
exploitation of developing countries. As the power of corporations grows,
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time it might have seemed like a strange topic for an interdisciplinary conference. At that point the events of September 11th had yet to change the
way many of us think about terrorism, violence and globalization. Over the
last six years, a number of scholars in diverse disciplines such as law, nance
and business have been advancing the notion that business can play a meaningful role in fostering peace.
The term peace has various meanings and uses. Perhaps most fundamentally, peace can be dened as the absence of violence. Sustainable
peace refers to an absence of violence coupled with an ongoing sense of
stability (Dunfee and Fort 2003). More expansive notions of the term, especially sustainable peace, are associated with the protection of basic and
civic rights, participatory government, equality and justice (for example,
Peck 1998). In order to narrow our arguments we primarily refer to the
notion of peace in its most basic form the absence of violence. Our focus
on this fundamental meaning does not suggest in any way that businesses
do not have the potential to play a positive role in the creation of just, equitable and participatory societies.
Since that rst peace through commerce conference at the University of
Michigan there have been a number of other conferences (for example,
follow-up conferences at the William Davidson Institute at the University
of Michigan, a 2006 conference at George Washington Universitys
Institute for Corporate Responsibility Program on Peace Through
Commerce and a 2006 conference at the University of Notre Dame held in
conjunction with the United Nations), journal special issues (for example,
of the Vanderbilt Journal of Transnational Law, the America Business Law
Journal and the Journal of Corporate Citizenship) and books (Fort and
Schipani 2004; Fort 2007). Recently the Association to Advance Collegiate
Schools of Business created a Peace Through Commerce Task Force and
issued a report titled A World of Good: Business, Business Schools, and
Peace illustrating how schools of business could contribute to furthering
the idea of peace through commerce (AACSB International 2006).
It may seem strange that so much activity would surround business and
peace. Throughout history business has often been associated with violence not peace. The history of commerce is often tied with colonialism
and mercantilism where businesses were used as tools of government and
engaged in violent conict to advance their interests and the interests of
their nation-states. For example, the British South Africa Company used
less than peaceful means to advance its commercial interests and the interests of its chartering country (Great Britain) in Africa. Cecil Rhodes, who
founded the British South Africa Company, used the rms paramilitary
forces to take over diamond mines in Africa as it extended its territorial and
economic reach over much of the southern portion of the continent
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218
Peace and stability are crucial to the eective and ecient operation of
human societies and markets for goods and services. Businesses need stability in order to prosper (ibid., p. 20). The group of Sri Lankan business
leaders that created Sri Lanka First recognized this and used their collective resources to bring citizens and businesses together, to foster a sense of
community and to promote the notion of a peace dividend. In sum, as
Bennett (2002, p. 714) notes, the case for business to join local and international NGOs and governments in conict prevention is simple and compelling. Most of these business sectors have a vested interest in stability and
peace.
Will the connection between business and stability be enough to motivate a manager to make the suggested contributions to sustainable peace?
The answer is likely to be mixed and be so because of a myriad of psychological and societal variables. Some managers may nd the connection so
compelling as to transform their company. The reasons for that attitude
may range from the arguments connecting with religious belief to a personal experience to something entirely dierent. On the other hand, other
managers may simply eschew any responsibility for engagement. Given the
embryonic nature of peace through commerce research, what we can say is
that the connection may give rise to some consideration by managers as to
what they might do to contribute to sustainable peace. However, it would
take a major socialpsychological study to pinpoint the determinative variables that would move individuals positively or negatively. This is a scholarly project we heartily recommend for future work, but is far beyond the
scope of this particular chapter.
To the extent that corporate citizenship leads to more ethical behavior by
businesses, it has the potential to have a positive impact on the creation of
sustainable peace. However, there are certainly limits to the impact that
corporate citizenship could have on reducing violence. The origins of
violent conict are often deep-seated and dicult for those outside the
conict to understand. It would be unrealistic to think that by incorporating certain behaviors (for example, treating employees well, operating in a
transparent manner) businesses would be able to single-handedly bring
about world peace. There is also the potential risk that the language of corporate citizenship and peace through commerce (which are currently far
from being dominant global management paradigms) could be co-opted by
business interests satised with the status quo and indierent to the changing roles, responsibilities and opportunities for business. Wood and
Logsdon (2002) worry that more robust notions of business responsibility
(for example, corporate social responsibility which considers issues at the
societal level) might be replaced by a more narrowly focused and voluntary
version of corporate citizenship. Despite the limitations there is likely a role
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PART III
ACTORS, INSTITUTIONS
AND GLOBAL
GOVERNANCE
Introduction
According to the traditional distinction between domestic and international politics, governing within the state was conceived as a hierarchical
command and control process. Only governments were authorized to take
collectively binding decisions. In contrast, the political space beyond the
state lacked the central political authority of a world government and was
consequently described either as an anarchical system (Waltz 1977) governed by self-help and power politics, or as a society of states (Bull 1977)
governed by horizontal arrangements, such as treaty-based relationships
which regulated the peaceful coexistence between nation-states. In both
spheres, the national and the international, governing functions were
reserved to public actors, that is to national governments or the intergovernmental institutions created by them. The main dierence existed in the
prevalence of a one-way or an interactive model of governing.
This traditional domesticinternational distinction has been completely
overthrown by the growing governance demands. In the interdependent
world of today, collective action problems cover an ever-increasing
number of issue areas other than national security, such as environmental
matters, social and economic human rights. These problems straddle the
existing territorial boundaries of political units and call for the extension
of public policy beyond the state. Economic globalization creates challenges for political steering which exceed the capabilities of any single
state. It has produced a growing need (and claim) to make use of the
problem-solving potential of non-state actors in order to master these
challenges more eectively. As a consequence, these new demands have
also blurred the dividing lines between the national and the international
sphere, and, increasingly so, those between the public and the private
sectors. They call for socialpolitical governance in the sense of arrangements in which public as well as private actors aim at solving societal problems or create opportunities, and aim at the care for the societal
institutions within which these governing activities take place (Kooiman
2000, p. 139).
225
226
227
228
Table 11.1 Changing forms of political regulation within the state: from
government to governance
Organizational form
Pluralist
Corporatist
Partnership
Relationship of the
state with business
and civil society
Dierent societal
lobbies compete
to influence
public policy
decisions taken
by the state
Institutionalized
(incorporated)
participation by
major associations
in consensual
formulation and
implementation of
public policy
decisions
Various forms of
horizontal
deliberative
cooperation in
governance
networks
Source:
own translation). In the domestic context the traditional notion of hierarchical statesociety relations gave way to the idea of the negotiating, enabling
or cooperative state. Even this stage of political modernization in the domestic context still counts and depends on the state, but it does so in terms
of a new functional division of labour and authority between public and
non-state actors from which additional problem-solving resources are
expected (Ronit and Schneider 2000). Table 11.1 summarizes the emergence
of the new governing relations within the state.
The limitations of hierarchical governing mechanisms become particularly obvious when we employ Jan Kooimans (2000, pp. 15461) distinction between rst-, second- and third-order or meta governing.4 The
demand for such a new division of labour is strongest at the levels of meta
and rst-order governing. With regard to the creation of normative standards (meta governing), the command-and-control approach is unlikely to
meet the high demand of normative consensus which can only be achieved
in the public exchange of good reasons; with regard to nding solutions for
concrete day-to-day problems (rst-order governing), it cannot provide
resources, such as factual knowledge, which depend on the involvement of
professional expertise.
International governance
In the political space beyond the state, horizontal governance however as
a purely intergovernmental enterprise had always been the rule because
of the lack of the central authority of a world state. The world of states
took its rst step out of its original stage of anarchy when national governments entered into voluntary self-commitments as sovereign subjects of
229
international law. By institutionalizing international relations with the creation of international organizations and regimes, they transferred sectoral
governance functions from the domestic to the intergovernmental public
sphere. In terms of political modernization, the treaty-based institutionalization of the society of states is a remarkable achievement because it established the rule of law against the original right of self-help, which included
the arbitrary use of violence. While this process of legalization was more
or less eective in civilizing the interaction among states, its problemsolving capacity came under severe criticism in the face of challenges that
did not originate from the world of states. On the one hand, the legitimacy
of internationalizing political decision-making processes was questioned
because it strengthened the role of the national executives vis--vis parliamentary control (Wolf 1999); on the other hand, the economic, social and
environmental challenges of globalization resulted in regulatory and implementation gaps which individual governments, as well as the intergovernmental institutions created by them, were unwilling or unable to close
eectively. In the face of growing world market competition, for example,
neither the International Labour Organization nor the World Trade
Organization had succeeded in generating, proliferating and enforcing
minimum legal standards eectively with regard to business activities
involving abuses of human rights, compulsory labour or child labour. In a
similar fashion, the change of the global climate raised the challenge of reprogramming economic systems in accordance with excessive demands of
sustainable economic development which the heads of the leading industrial nations who coordinate their policies in the G-8 are reluctant or unable
to meet. As a consequence, private actors increasingly engaged in authoritative decision-making that was previously the prerogative of sovereign
states (Cutler et al. 1999b, p. 16), thus reecting the transition of the
society of states into a world society.
Beyond international governance
Domestic de-regulation and the delegation of authority to non-state actors
is increasingly . . . creeping into the international sphere (ibid., p. 15).
Today there seems to be a general belief that very similar to what had previously been experienced in the national realm intergovernmental regimes
and organizations are inadequate political instruments for solving the collective action problems emanating from de-nationalized economic, social
and environmental processes. To regard states as the sole providers of public
goods has become an increasingly inappropriate over-simplication because
technological and commercial forces, notably the market-driven diusion of
information technology, alter the relative capabilities of dierent types of
actors to solve . . . collective action problems, in particular increasing the
230
capacity of non-state actors relative to states (Florini 2000, pp. 15, 21). The
former Secretary-General of the United Nations, Ko Annan, accurately
described the need to overcome the limits of international governance in
order to cope with the fundamental problems in world society when he stated
that peace and prosperity cannot be achieved without partnerships involving Governments, international organisations, the business community and
civil society. In todays world, we depend on each other (Annan 1998).
Following this course, the political modernization of international governance has given rise to various new kinds of transnational governance
arrangements in which public and private actors pool resources, share
responsibilities and re-dene themselves.
Shifting roles: new identities of states, business and civil society as political
agents
Statehood in transition
The traditional role of the state is most severely aected by its interplay with
private actors in governing processes. However, it is generally more appropriate to speak of shifting roles of government rather than of shrinking roles
of government as part of such changing relationships (Kooiman 2000,
p. 139, original emphasis). Governmental retreat from the classical
command-and-control governing mechanism in the course of the de-hierarchization of statesociety relations may of course not only be described as
political modernization, as I did in the previous section. This description
follows what may be called a policy-for-problem-solving paradigm of political steering and governance. From the perspective of political realism, for
instance, the role shift of governments would rather be conceptualized as a
power shift, as a relative decline of states and the rise of nonstate actors
(Mathews 1997, p. 51; see also Strange 1996; Reinalda and Verbeek 2001).
However, sharing powers does not necessarily make the state weaker as a
provider of public goods than its interventionist elder brother. The shadow
of hierarchy is still present; the whip is still in the window. But the negotiating, enabling or cooperative state is less keen on running things from above
than on regulating and monitoring self-regulation. The new regulatory state
is interested in reducing its governance contributions to functions which can
exclusively, or most eectively, be provided by the public sector: establishing
operational meta rules, setting the legal framework for private governance
contributions and regulating externalities. Political modernization thus still
counts and depends on the state, but it does so in terms of a new functional division of labour and authority between public and non-state actors.
With regard to domestic governance, Christoph Knill and Dirk
Lehmkuhl (2002) have distinguished certain circumstances under which
231
232
233
234
outgrown the regulatory capabilities of each individual state, their regulatory potential and the limits to it are investigated once again (Cutler et al.
1999a; Graz and Nlke 2007). Corporate responsibility, corporate social
responsibility, or corporate citizenship (see, among others, Ruggie 2002;
Matten and Crane 2005; Scherer and Palazzo 2007) are used as concepts to
re-dene the role of business vis--vis the state and civil society and to readjust the distribution of rights and obligations among the three sectors in the
face of state failure as well as market failure. Notions associated with these
concepts may vary widely, but they all go beyond the traditional understanding of corporations as actors who are private in form and private, that
is commercial, in purpose. Understandings are quite dierent, however,
with regard to the voluntary nature of corporate contributions to the provision of public goods. The philantropic charity view of doing good after
work diers substantially from the self-commitments expected by the UN
Global Compact from corporate citizens (Global Compact Oce 2004)
as part of their core business activities. Even more far-reaching is the
understanding of corporate responsibility as norm entrepreneurship in the
sense of commitments not only to support and enact certain core values
when doing their business, which would only blur the traditional boundaries between business and civil society, but also to actively engage in selfregulatory activities of norm generation and implementation, which of
course also blurs the boundaries between the private sector and the state.
All of these notions seem to contradict conventional wisdom, which
starts out from the actor-centred assumption that the prime motivation for
business actors is, and has to be, prot maximization. Survival in the marketplace rules out norm-oriented behaviour, and whenever companies enter
into individual or collective self-commitments, no such codes of conduct
would ultimately be capable of setting constraining limits to this logic of
action. However, this assumption and the consequences derived from it are
an inappropriate oversimplication. They neglect the fact that the marketplace is not the only environment which makes demands on business.
Rational business actors have to take into account the challenges posed by
globalized markets, but also those emanating from the world of states and
transnational civil society. The interaction of the three worlds of market,
state and civil society makes up a normatively enriched environment, so
that market rationalism may acquire a dierent meaning under these
altering context conditions. In the face of public pressure or the threat of
state regulation, doing good may even be the most rational strategy to
evade the risks associated with adverse campaigning or public regulation
(Conzelmann and Wolf 2007).
Such rationalist conceptualizations still rely on fear of coercion and selfinterest as the only drivers for business contributions to global governance.
235
236
Business
Civil society
Resources
Legal authority
Coercive power
Money
Moral and
Technical expertise factual authority
Sphere
Public discourse
Bargaining
Information,
arguing
Compliance
mechanism
Self-interest
Belief in
appropriateness
Fear of coercion
237
2.
3.
238
Corruption and
organized crime
With public
sector
participation
Global Compact
Kimberley Process
United Nations
Convention
Against
Corruption
Multistakeholder
governance
initiatives
Forest
Stewardship
Council
Voluntary
Principles on
Security and
Human Rights
Business
Principles for
Countering
Bribery
Private
self-regulation
Responsible Care
Antwerp Resolution
of the World
Diamond Council
Wolfsberg
Principles
of governance. However, this traditional hierarchical mode of public governance by government, has lost part of its signicance in the course of the
domestic political modernization processes discussed above. For governance beyond the state, it was never appropriate as a model. Global governance institutions very much like the above-mentioned intergovernmental
institutions characteristic of the period of international governance are
typically based on compromise or consent rather than on fear of coercion,
simply because there is no Leviathan available in an international system
consisting of sovereign territorial states. Given these conditions, in the
international sphere even national governments perform their regulatory
functions best, not if they can impose norms, but because of consent, that
is, if the norms and rules they generate and try to implement are regarded
as legitimate and/or as serving the self-interest of those who are subject to
those rules (see also Buchanan and Keohane 2006, pp. 40910). In that
sense, it becomes important to go beyond the fear of coercion as compliance mechanism and to discuss alternative conduits by which non-state
actors may contribute to the provision of public goods.
Fear of public regulation
In the context of transnational private self-regulation, even the potential
threat of governments imposing binding legal regulation in the case of voluntary self-commitments failing to show the expected eects may improve
the robustness, reliability and sustainability of self-regulation among private
actors. This expectation rests on the assumption that private self-regulation,
239
which typically falls into the category of soft and voluntary modes of norm
generation and implementation, is driven by business intention to avoid
state intervention in the market. In order to achieve this goal, they are
doomed to success. But this embeddedness in pending public regulation
could have yet another impact on private eorts trying to anticipate them:
even if, at a later stage, public regulation would follow, its substance would
already be pre-shaped by the norms and rules of private self-regulation.
These expectations as to the potential impact of a pending fear of coercion
on private self-regulation go along with the suspicion that in the absence of
this whip in the window the reliability of voluntary self-commitments
would suer. Private self-regulation, in order to meet certain demands on
political regulation, would therefore always depend on the capability and the
willingness of public actors to intervene.
Material market incentives
How far can private self-regulation contribute to the provision of public
goods, if market forces are the only mechanism to secure compliance? In
this case, in a narrow costbenet calculation, doing good is only rational
if and as long as it helps companies to do well, for example, by improving
the image of a certain brand in relation to competitors. This causal mechanism rests on a rationalist background according to which rules are
obeyed when they are in line with the self-interest of rule followers to
maximize individual benets and to minimize individual costs. However,
as Buchanan and Keohane (2006, p. 410) rightly point out, support
for an institution based on reasons other than self-interest or the fear of
coercion . . . may be more stable.
Social costs by public shaming
The threat of intervention by legally binding public regulation is not the
only environmental factor which can potentially raise the quality of the
contributions that private self-regulation can make to the provision of
public goods. Another factor originates from the embeddedness of selfregulation in a societal environment in which civic groups are vigilant and
strong enough to raise public attention concerning the conduct of businesses. In this case, the underlying assumption is that the reputational costs
associated with public shaming will increase the likelihood that voluntary
unilateral or multilateral self-commitments of companies come into existence and that their rules are actually implemented. Even if companies proclaim normative self-commitments only for strategic reasons, without
actually being convinced of their appropriateness, the importance of the
societal environment lies in securing rule-consistent behaviour by helping
the logic of rhetorical self-entrapment to unfold.9 This consideration leads
240
us to a fourth causal mechanism with which we leave the theoretical background of rationalism behind and employ basic assumptions of social
constructivism.
Legitimacy assumptions and moral obligations
Apart from fear of coercion and self-interest (in its narrow and its more
complex meaning), rule following may also be caused by the legitimacy
assumptions which the subjects of regulation attribute to global governance institutions and by the sense of appropriateness attached to their
rules. Such legitimacy assumptions can grow on the basis of moral reasons,
but also on factual knowledge about how an institution works and about
the degree to which it contributes to the provision of public goods without
committing serious injustices, such as violating human rights (Buchanan
and Keohane 2006, p. 420). As the author of this chapter has pointed out
elsewhere (Conzelmann and Wolf 2007), any public order, domestic or
beyond the state that rested exclusively on sanctions and deterrence of
potential transgressors would demand enormous resources. Therefore, the
weight on these hard compliance mechanisms is usually sought to be lightened by creating moral obligations to follow norms, for example, by appealing to collective identities or by highlighting the legitimacy of these norms.
As a consequence, the binding force of regulations may actually originate from several sources: the sense of obligation created by the norms and
rules on which they are based; actors rational calculation of the gains they
can expect from rule compliance; and the subordination by the threat or use
of force. With regard to global governance arrangements which are characterized by the interplay among states, business and civic groups, the political challenge is not necessarily to increase the regulatory and sanctioning
capacity of public bodies at the international level, but rather to increase
the legitimacy of global governance institutions so that compliance with
their rules can also count as appropriate conduct.
All institutional designs and compliance mechanisms discussed in this
section have their specic strengths and weaknesses as far as their
eectiveness, the likelihood of operating in the general interest and the
validity of assumptions made about the motives of actors are concerned.
As most of the governance arrangements which are already based on role
shifts of the participating actors are still new, we do not have enough empirical evidence to substantiate generalizing judgements. In so far, and unlike
regulatory initiatives that rely exclusively on the logic of sanctions and
deterrence or material market incentives, they have the privilege of not yet
having had the opportunity to reveal their weaknesses. However, some
general remarks can be made that are based on the compatibility of certain
compliance mechanisms with the dierent regulatory challenges that have
241
242
maximum legitimacy. In his search for a political constitution for a pluralist world society, Habermas, for example, allocates juridical functions to the
supranational level and political functions to the level of horizontal selfcoordination (Habermas 2005). Lastly, the publicprivate axis of distinction picks out as a central theme of the implications of the new interplay
among the state, international institutions and private actors for the legitimacy of governance. Obviously these are of particular interest here. In
what follows I shall therefore concentrate on the publicprivate dimension
of the legitimacy issue by linking it with Kooimans (2000) functional distinction between rst-order, second-order and meta governing which has
already been introduced.
Despite the general lack of a commonly agreed-upon set of positive normative criteria for the legitimacy of global governance institutions, there is
at least some agreement on the unrealistic view that legitimacy for these
institutions requires the same democratic standards that are now applied to
states (Buchanan and Keohane 2006, p. 405). Rather, institutional designs
should take the specic contexts of governance beyond the state more seriously and venture into context-adequate standards of legitimacy (Wolf
2002, 2006). With regard to the inclusion of private actors, in particular,
there seems to be no fundamental contradiction between the privatization
of governance beyond the state and the provision of public goods, because
none of the three types of actors dealt with above pursues a genuine public
interest in this sphere. In fact, the boundaries between what is public and
what is private, and hence which actors act in the public interest, are much
less clear in the political space beyond the state. In this context even
(national) governments follow private, that is particularistic, purposes of
their own (namely, their national interest). Public and private actors turn
out to be much more similar units in the international sphere than this
general distinction would suggest. In fact, some (private) actors from civil
society may be the most likely candidates as protagonists of what is generally perceived to be the common good.
How far does the new interplay between the state, business and civil
society aect legitimacy, and what kind of legitimacy standards should be
applied to transnational global governance? A rst answer to these questions could be the objection against applying any legitimacy standards to
this sphere which go beyond certain demands of output eectiveness with
regard to the provision of public goods in the general interest. This argument could be based on the voluntary nature of self-regulation which does
not produce any necessity for maintaining self-determination, nor for
checks and balances to control power and maintain the rule of law. Where
no one exerts power, there is no need to control it. Following Max Webers
(1921 [1976]) concept of legitimacy as the legitimate authority to use power
243
244
245
2.
3.
4.
5.
6.
7.
8.
9.
10.
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Introduction
Globalization is still very partial and incomplete. While the world economy
may be global, law, regulation, politics and society are still largely national,
only slowly emerging from bounds imposed by the modern international or
Westphalian states system. There is a governance gap as politics lags behind
markets which extend beyond the reach of nation-states (Habermas 2001);
global markets have grown rapidly without the parallel development of
economic and social institutions necessary for their smooth and equitable
functioning (World Commission on the Social Dimension of Globalization
2004, p. xi).
We are in the midst of a transition from an international to a transnational or post-Westphalian politicaleconomic system and have not yet
developed the modes of cooperation, institutions or even the language
necessary to govern an integrated world economy eectively. My concerns
in this chapter are the implications of this asymmetry and of the emergence
of a transnational world order, for problems of economic governance. I
shall focus on problems rather than solutions, on the changing parameters
of a new governance regime rather than its precise denition. My objective
is to frame the problems that systemic evolution poses for societal control
of the economy and economic actors.
The post-Westphalian transition
The modern Westphalian international order was a coherent system with a
well-dened structure. First, it was state-centric: states were the only actors
in international politics and the only subjects of public international law.
There was a clear distinction between the public sphere of politics and government and the private sphere of markets and economic transactions.
Second, it was inherently geographic, based on borders, mutually exclusive
territorial jurisdiction and sovereignty. Last, it was anarchic, lacking any
central authority.
The sovereign, territorial state, which was the primary container of politics, provided a territorially bounded space in which the struggles for
democracy, the nurturing of social solidarities, and constitutional forms of
249
250
252
In this speech, Tony Blair recognized the fundamental change that has
taken place in the political role of the corporation. Traditional multinational rms are products of the Westphalian international system, corporations which have their home in one country but which operate and live
under the laws and customs of other countries as well (Lilienthal 1960,
p. 119). Each unit of a multinational corporation (MNC) lives within a
state, it owes its very existence as a legal entity to the government of the
national territory in which it is incorporated. [F]or private business enterprises operating transnationally, legal personality is conferred under
national and municipal laws, and corporate rights, duties, and remedies
remain a function of national law (Cutler 2001, p. 141).
The multinational rm exercised economic rather than political power.
It reected the relatively clear separation of the private and public spheres,
of markets and economic activity on the one hand and politics, law and
regulation on the other.
That has changed, in practice if not in theory, with the emergence of a
postmodern system, the fragmentation of political authority, the rise of
signicant non-state actors and the blurring of the line between the private
and public spheres. A growing number of non-state actors have political
authority in the international system: [w]hile these new actors are not
states, are not state-based, and do not rely exclusively on the actions or
explicit support of states in the international arena, they often convey
and/or appear to have been accorded some form of legitimate authority
(Hall and Biersteker 2002, p. 4). Cutler et al. (1999) argue that private
authority involves an organization not associated with government institutions exerting decision-making power which is regarded as legitimate in a
particular issue area. Private institutions can become authoritative, and
thus be perceived as legitimate, because of perceived expertise, historical
practice or an explicit or implicit grant of power by states.
254
The fragmentation of political authority and the rise of signicant nonstate actors complicate the problem of economic governance in a transnational world order in a number of ways. First, governance is no longer
synonymous with government, in terms of either individual governments
or relations among them in the interstate system. Multiple actors provide
public goods and exert signicant, legitimate authority in international politics. Any system of governance must reect this fragmentation
of authority: it must involve multiple actors in rule making and rule
enforcing.
Second, we are in the midst of a transition to a transnational world
system, and the political order or society in which the market is to be
embedded is far from clear. While I argued above that the Westphalian
states system collectively constituted a political order or community in
which to embed markets at least in a metaphorical sense that no longer
will suce. In fact, given the blurring of the line between public and private,
between politics and markets, the concept itself may require reformulation.
Markets require a supporting structure that they cannot generate. The institution or institutions that will provide this supporting structure in a
transnational world order is a critical and unresolved question.
256
258
260
Fragmented: multiple
authorities
Parallel universes
Transnational
transformation
State-centric
AUTHORITY
International states
system
Transgovernmental
relations
Mutually exclusive
territorial jurisdiction
Space as relational:
territoriality compromised
TERRITORIALITY
Figure 12.1
262
264
The ISO engages in what has been termed a form of private lawmaking.
It broadened its reach considerably with its 9000 quality control standards
in 1987 and is blurring the line between the private and public spheres with
its 14000 environmental standards now under consideration. Increasingly,
the ISO sets industry standards in conjunction with or in addition to those
set by domestic regulators (Spiro 1996, p. 967).
Cashore (2002) describes the Forest Stewardship Council which involves
both industry and civil society groups and uses eco-labeling to identify
forest companies and landowners who practice sustainable forestry. He
describes the program as a non-state market-driven entity, as an example
of transnational private governance systems that derive their policy
making authority not from the state, but from the manipulation of global
markets and attention to consumer preferences (ibid., p. 504).
The idea of governance does not imply that government is irrelevant:
while state power has certainly eroded as markets have become global, it has
not disappeared. There are still a large number of economic transactions
266
268
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Baldwin, Richard (2006), Globalization: The Great Unbundling, Helsinki: Economic Council
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Transnational Solution, Boston, MA: Harvard Business School Press.
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Davos, Switzerland.
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new theoretical directions, Academy of Management Review, 20 (2), 397413.
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Introduction
This book is concerned with the process and impact of corporate citizenship. It seeks to identify and analyze antecedents, actions and outcomes of
corporate citizenship behaviors. One important set of institutional actors
that have had a substantial inuence on corporate citizenship are civil
society and non-governmental organizations (CSOs or NGOs).1 According
to Matten and Crane (2005, p. 171), probably the most important transition raising the prospect of corporate involvement in citizenship rights is
the failure of nation-states to be the sole guarantor of these (citizenship)
rights any longer. This same reality has resulted in increasing involvement
of NGOs in helping to redene the citizenship obligations of companies,
and the mechanisms through which rms respond to those obligations.
In this chapter, two primary mechanisms by which NGOs inuence corporate citizenship are explored. The rst might be termed NGO activism
or advocacy. NGOs have been among the most vocal and inuential
critics of the inuence of corporations on society. These criticisms have
ranged from broad indictments of the negative inuence of globalization
and multinational corporations (MNEs) on the social and environmental
fabric of societies, to specic assertions regarding workplace practices of
companies doing business in the developing world. NGOs have thus advocated for changes in corporate behavior and of laws regulating corporations by protesting, boycotting, targeting and otherwise communicating
their displeasure. These actions have had real and tangible eects.
More recently, some NGOs have taken a dierent tack. Rather than
target companies through various types of advocacy campaigns, these
NGOs have developed cooperative relationships with companies through
which they collaborate on solutions to some of the negative consequences
of corporate behavior and more broadly, assist companies in developing
corporate citizenship initiatives.
In this chapter, I discuss the emerging role of NGOs as important institutional actors in global businesssociety relationships and corporate citizenship. I begin with some basic denitions and classications to position
NGOs among the other institutional actors in business citizenship. I then
273
274
275
276
investor actions. In these ways, NGOs give voice and provide access to institutions to promote social gain or mitigate negative spillovers from other
economic activity.
Operational (or programmatic or service-oriented) NGOs provide
goods and services to clients with unmet needs. NGOs have long stepped in
to serve as critical safety nets, where politically challenged, indebted or
corrupt states are unable or unwilling to provide for unmet needs, and
where global problems defy neat nation-state responsibilities. Examples of
such operational activities include relief eorts provided by the Red Cross
or Red Crescent, environmental monitoring and programming by the
World Wide Fund for Nature (WWF), and the distribution of medicinal
drugs by Doctors without Borders.
Although some NGOs focus primarily on advocacy or operational
service delivery, many pursue both sets of activities simultaneously, or
evolve from one to the other. For example, Oxfam, the global development
and poverty relief organization, advocates for changes in public policy that
would provide greater support to its eorts while also contributing directly
to health, education and food security in the developing countries in which
it operates. Similarly, Doctors without Borders and WWF are active on the
ground, delivering services in their respective domains, but also simultaneously lobby in the political and regulatory arenas.
A brief example illustrates the relationship among civil society, social
movements and the emergence (and convergence) of dierent types of
NGOs. Environmental conservation has long been of concern to civil
society in North America. A strong and ongoing conservation movement
gave rise to two service-oriented environmental organizations, the Nature
Conservancy, founded in 1951, and the World Wildlife Fund, founded in
1961. This longstanding movement, in conjunction with a growing social
movement and related activism over civil rights and the Vietnam War in the
early and mid-1960s, gave rise to the environmental movement of the 1960s.
This movement gained momentum after the publication of Rachel
Carsons Silent Spring (1962) which exposed the hazards of the pesticide
DDT, eloquently questioned humanitys faith in technological progress
and helped set the stage for the environmental movement. This movement, in turn, paved the way for the creation of a number of environmental advocacy organizations, such as the Environmental Defense Fund
(founded in 1967) and the National Resource Defense Council (founded
in 1970). Over time, many environmental advocacy organizations developed more of a service focus, and many service NGOs began to take positions on environmental policy issues, creating some convergence in these
organizations and their missions. Figure 13.1 presents a stylized depiction
of this evolution.
277
Civil Society
Social
Movement
(1960s Civil Rights/
Advocacy)
Social
Movement
(Environmental
Movement)
Advocacy NGOs
(Environmental
Defense Fund,
National Resources
Defense Council)
Social
Movement
(Conservation
Movement)
Operation NGOs
(World Wildlife
Fund,
The Nature
Conservancy)
278
279
280
281
282
(Waddock 1988; Pearce and Doh 2005). For NGOs, partnerships with corporation may yield nancial, human resources and reputation benets. For
corporate partners, relationships with NGOs provide access to skills, competencies and capabilities that support their corporate social responsibility
eorts and are otherwise unavailable within their organization or from
alliances with for-prot rms. These combinative capabilities have the
potential to provide both partners with discernible benets (Kogut and
Zander 1992). One challenge in reviewing literature and contributions on
corporateNGO engagement, especially that involving collaborative or
cooperative relations, is that studies of CSSPs [cross-sectoral social partnerships, corporateNGO relationships] emerge from various disciplines
such as organization studies, public policy and administration, economics,
nonprot management, healthcare, education, and the natural environment (Selsky and Parker 2005, p. 850).
Within the business and society/social issues in management literature,
this type of collaboration has been dened as a temporary social arrangement in which two or more social actors work together toward a single
common end requiring the transmutation of materials, ideas, and/or social
relations to achieve that end (Roberts and Bradley 1991, p. 212, as quoted
in Parker and Selsky 2004, p. 460). Hess et al. (2002, p. 110) report that
many of these new corporate social initiatives are taking on aspects more
commonly associated with corporate strategy than community relations;
they are grounded in the core competencies of the rm and related to the
rms long-term strategy. As Selsky and Parker note in their review of
literature on CSSPs, the terminology for these relationships vary, and
include social partnerships (Waddock 1988, 1991), intersectoral partnerships (Waddell 2000), social alliances (Berger et al. 2004), issues management alliances (Austrom and Lad 1989), and strategic partnerships
(Ashman 2001).
BusinessNGO cooperation may also be viewed within the realm of
network theory, an extension of the resource-dependency perspective.
From this vantage, relationships among corporations and NGOs may comprise an exchange of complementary resources not unlike those that occur
in other types of alliances among private sector rms (Eisenhardt and
Schoonhoven 1996). Alliances involve resource complementarities among
rms (Harrison et al. 2001), some of which include social eects, including
legitimacy (Eisenhardt and Schoonhoven 1996; Das and Teng 1998) which
appears to be a principal goal of corporations in their cooperative behavior toward NGOs. Argenti (2004), for example, details Starbucks ongoing
relationship with Conservation International and other NGOs.
More broadly, perceived mutual dependencies have been shown to motivate potential partners to come together. Resource dependence theorists
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284
Suspicion
Interaction
Philanthropy
Transactional
Integrative
Figure 13.2
cultural practices among themselves. In their review of literature on corporate, not-for-prot and public sector relationships, Selsky and Parker
(2005) suggest that project-based CSSPs occur in four arenas: businessnonprot, businessgovernment, governmentnonprot and trisector. They argue that demands for corporate social responsibility encourage
businesses to partner, nonprots are motivated by demands for improved
eciency and accountability, and governments are encouraged to provide
more benets and services while being both less intrusive and more transparent (ibid., pp. 85051).
There is some evidence that direct and ongoing engagement with NGOs
is more likely in the more advanced stages in development of corporate citizenship policies and that companies in earlier stages are less equipped to
take on the challenges associated with close collaborations (Mirvis and
Googins 2006). Although there have been limited attempts to provide
generic classications of corporate approaches to these relationships (for
example, proactive versus reactive, see Rondinelli and London 2003),
there have been few systematic eorts to locate these relationships within
the broader relationships among stakeholders in business and society, with
some exceptions (Doh and Teegen 2003; Spar and La Mure 2003; Yaziji
2004).
It is important to note that engagement in a cross-sector alliance presents
challenges for both corporate and NGO participants. Corporations and
NGOs have fundamentally dierent structures and values (Rondinelli and
London 2003). Relations between corporations and NGOs have often been
characterized by hostility and mistrust. Cross-sector alliances face an additional challenge because organizational learning generally requires some
level of common experience, a condition that is often weak or missing in
alliances between prot-making and nonprot organizations (ibid.). This
lack of common experience, trust and communication can sometimes result
in conict, even when partnerships have been established that appear to
signal shared values and commitments. Indeed, partnerships with NGOs
may sometimes open a path to escalating (and potentially unrealistic)
demands for rms to upgrade their commitment to social development,
placing greater, not lesser, regulatory pressure on the rm.
285
286
However, it is likely that by the end of the next decade, more extensive
transactional and integrative partnerships will be in evidence.
NGOs also have reason to be concerned about the net benets that may
be accrue to them from relations with corporations. Indeed, according to
one study, costs appear to outweigh the benets. Ashman (2001) examined
ten cases of collaboration between CSOs (NGOs) engaged in development
and businesses in Brazil, India and South Africa. Her ndings suggest a
sobering view of the benets that civil society organizations and their constituencies can expect from collaboration (ibid., p. 1097). Somewhat paralleling Pearce and Dohs (2005) observations on the corporate side,
Ashman nds that development impacts are more likely in sectors related
to business interests, such as education and employment generation. She
also nds that capacity-building objectives are more likely to be realized
than are those of citizen empowerment. Finally, NGOs tend to absorb the
bulk of the costs of collaboration while businesses often dominate decision
making.
Illustrations of corporateNGO interactions
Starbucks relationships with NGOs have been the subject of a number of
cases and research eorts. Lindenberg (2001), for example, documents
Starbucks long-standing relationship with CARE, one of the leading
humanitarian organizations ghting global poverty, working alone and
through partners in 66 countries. Beginning in 1991, one of CAREs managers in the northwest region approached a Starbucks sta member regarding CARE programs and development seminars. Starbucks had already
carved out a strong social responsibility position, and given that Starbucks
sourced coee from regions where CARE was active, some kind of relationship seemed logical and appropriate (ibid.). Thus, the relationship
began as a philanthropic one in which CARE received $2 from the sale of
coee samplers. Subsequently, reports Lindenberg, the relationship became
more transactional with Starbucks donating resources directly to CARE
projects. By the late 1990s, the relationship moved from the transactional
to more integrative stage in which CARE sta members were oered opportunities for training and sabbaticals in Starbucks corporate units, such as
human resources and marketing (ibid., p. 605). Ultimately, Starbucks
began to consult CARE on issues related to codes of conduct and standards
regarding its overseas business practices, including Starbucks decision to
move into sale of Fair Trade coee. By 2001, Starbucks had contributed
more than $1.8 million to CARE (Argenti 2004).
Since 1998, Starbucks has also had a close alliance with Conservation
International (CI), one of the big 3 global conservation organizations.
Through this alliance, Starbucks and CI have worked on a range of
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288
None the less, Oxfam has recently worked more closely with corporations in areas that include its Making Trade Fair campaign and related initiatives regarding Fair Trade certied coee. According to an article
published in 1999 and co-authored by Oxfam Americas President, the
most innovative international NGOs of the future will have moved from the
hands-on operational style of the 1960s to a highly complex and diverse set
of institutional partnerships, joint ventures, and networking relationships
(Oenheiser et al. 1999, p. 137).
In the case of Starbucks and CARE, the relationship appears to have
begun as philanthropic and progressed to a more transactional one. In the
case of Starbucks interactions with Conservation International and
Oxfam, the interactions began as transactional, and progressed to more
integrative, at least with CI. Oxfams engagement with corporations tends
to be transactional by design, because Oxfam is especially sensitive to the
appearance of inuence by its corporate partners.
The future of NGOs in corporate citizenship
The role of NGOs in businesssociety relationships and in corporate citizenship behavior is neither rmly established nor widely understood. The
theoretical and case illustrations presented here highlight a number of critical issues in the examination of NGOrm relationships to the eld of corporate citizenship. Hence, much more research on these relationships is
both necessary and desirable. Below I briey review a few of these, each of
which has interesting implications for future research.
First, the role of NGOs within the broader businesssociety context is
complex and evolving. Figure 13.3 illustrates some of the challenges
facing NGOs as a result of the changing private, public and NGO roles in
society (Lindenberg and Dobel 1999). It locates corporateNGO interactions within the broader context of businesssociety relationships and
captures the dynamic interactions among the three sectors, public,
private and nonprot. It also points up both the challenges and opportunities presented as a result of the decline of the state sector and the emergence of business, NGO and rmNGO partnerships as a way to meet
these challenges. The emergent role of NGOs is underscored by the questions posed at the bottom of the gure which are further elaborated on
here.
Second, NGO collaborations with rms may signal to governments that
they can continue extracting themselves from pressing social problems, yet
many NGOs continue to believe that governments should have a role
often the primary role in meeting these social needs. How, then, can
NGOs demonstrate their competence and utility in responding to these
problems while preventing a further erosion of the state?
Shrinking
Public Sector
289
Expanding
NGO Sector
Eroding trust in
government
Growth of
markets
Cutbacks in public
resources
Growth and
change in
NGO sector
Privatization
Economic
globalization
Declining state
capacity
Some Consequences
New forms of wealth and poverty
in many parts of the world (new rich
in Soviet Union, homelessness in US
and Europe)
Source:
Figure 13.3 Changing private, public, NGO roles and dilemmas for
expanding NGO sector
Third, as NGOs take on greater responsibilities alone or in consort
with other organizations they also invite greater scrutiny, as was recently
evidenced by a Russian law that would appear to limit their ability to mobilize. In front of an audience made up of Russian civil society leaders,
President Vladimir Putin said that Russia would not tolerate foreign money
being used to nance the political activities of NGOs. Putin said, we are
against overseas funding for the political activities [of NGOs] in Russia. I
categorically object (Medetsky 2005, p. 1).
This example also points out how variations in national context can challenge NGOs (Hsia and White 2002; Wiktorowicz 2002) and create global
asymmetries in terms of where and how NGOs are able to operate.
Fourth, NGOs are facing criticism and pressures over the perception that
they are often less accountable for their actions than their government and
business counterparts. Specically, the corporate governance scandals in
290
the United States and around the world have resulted in increasing attention to the role of boards, interlocking board directorates and the overlapping board membership among corporations and nonprot NGOs. The
American Enterprise Institute, in cooperation with the Federalist Society
for Law and Public Policy Studies, has launched a program initiative
called NGO Watch whose mission is to highlight issues of transparency
and accountability in the operations of non-governmental organizations
(NGOs) and international organization (IOs) (AEI, 2006). This is an area
that will certainly see more research and practical investigation.
Finally, NGOs are becoming more multinational and multidimensional,
a reality pointed out by Teegen et al. (2004). Further exploration of the
range of organizational, managerial and individual challenges associated
with the evolution of NGO organizations themselves should provide rich
terrain for management scholars for years to come.
Note
1. I shall use the term non-governmental organizations (or NGOs) throughout this chapter
as it is the more widely accepted term.
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Introduction
In the course of economic denationalization and in the specic context of
post-industrial society, some of the standard instruments for political intervention in market processes by the hierarchically organized nation-state
emerge as precarious. As a rst consequence of this, new regulatory instruments which are more compatible with the logic of markets have gained in
signicance. These instruments include incentive systems created by the
state, private-public partnerships and corporate social responsibility
(CSR). Second, a strong trend can be observed that aspires to international
regulations which, likewise, must largely renounce hierarchical implementation mechanisms, irrespective of whether such mechanisms are based on
intergovernmental or transnational sponsorship. Thus hierarchically conceived control by the democratic nation-state is becoming less important,
relatively speaking; conversely, market-compatible governance, frequently
implemented by non-state actors, is becoming more prominent.
This is not the end of the story, however. The outcome of this process
leads neither to a powerless state nor to depoliticization. The state remains
an integral and necessary component of almost all new arrangements. It no
longer acts unilaterally, but nevertheless it remains central in its signicance.
And according to the central thesis of this chapter this gradual replacement of hierarchical governance by market-compatible non-state governance does not lead to depoliticization, even in cases where the new
regulatory instruments have largely replaced traditional and nation-state
policies. On the contrary, both international institutions and the actions of
large corporations are becoming increasingly politicized. Thus, governance
with and without government is subject to the same normative claims as
governance by government. Or, to put it more directly: as the market gains
ground on politics, the market becomes politicized.
The democratic interventionist state
Politics and economics emerge as dierent social spheres in the course
of the dierentiation of modern societies. The object of economics is the
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294
generation of prosperity. The market is the most ecient means of achieving this because, under the right conditions, it transforms the self-serving
endeavors of all actors into a general gain in welfare. The aim of politics,
on the other hand, is to maintain peace, provide security and uphold justice.
The best means to achieve these ends has traditionally been seen as the
democratic form of the nation-state with a division of powers, which successfully channels the real power ambitions of individual political actors
and can, therefore, promote the common good. What is decisive in our
context is that, in this model, a formal hierarchy (at least an imagined one)
is established between politics and the market. Politics produces binding
regulation with which market actors must comply (see Lindblom 1977).
Politics therefore sets the rules for the market. This imagined hierarchy does
not in any way exclude the possibility of market actors playing an
inuential role in, or even dominating, the political process. Formally,
however, the primacy of politics applies. Even the most powerful economic
actor must resort to politics to organize rule setting in line with his/her
interests. On this point of view, the market does not dier from the other
spheres of society such as culture and science: all societal spheres are
subject to political regulation.
In the democratic interventionist state of the 21st century, politics is
assigned three substantial tasks in relation to the market.1 First, it should
create the preconditions necessary for the smoothest possible running of
transactions within the market. In a typology of policies, such measures
can be described as market making (Windho-Heritier 1987). The best
example of such a measure is the removal of trade barriers, be they tari
related or not. Second, the negative externalities of the market, which can
be classied as self-threatening, should be curbed. Thus, for example,
environmental policy measures must ensure that the natural resources on
which the economy is based are not overgrazed, and banking-related measures should ensure that the nancing of companies remains secure, even
in times of crisis. What are involved here are market-stabilizing or marketbraking policies. Finally, politics should correct socially undesired
market outcomes. In other words, it should take measures that correct the
market. An example of such a market-correcting measure would be the
imposition of a wealth tax for the purpose of increasing social security
benets.
The fully developed democratic constitutional interventionist state
fullled these three tasks relatively well (Leibfried and Zrn 2005, ch. 1). In
the case of the highly developed countries at the center of the OECD world
today, it is possible to identify three dierent phases during which a particular type of policy predominated: (i) creation of the market, (ii) market stabilization, and (iii) market correction:2
2.
3.
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298
300
302
attained for many products. In our brand-name society, as the retail price
of products becomes dissociated from the material and labor values
involved in their production, aspects of brands, which have nothing to do
with the actual product, are gaining in signicance child labor and largescale environmental destruction, for instance, are a turn-o for most
potential purchasers.
On the other hand, the explanation for this apparent surge in codes of
conduct may relate to the emergence of an altered self-image on the part of
multinational companies which, owing to their size, can withdraw at least
partly from direct competitive pressures. This altered self-image hypothesis
is supported above all by the fact that some companies are no longer
content with the formula of corporate social responsibility and now
(re)dene themselves as corporate citizens. ExxonMobil writes on its
website: ExxonMobil applies a rigorous approach to corporate citizenship
in all aspects of our business, everywhere we operate (ExxonMobil 2006).
Almost identical statements have also been issued, for example, by Ford,
Toyota, Nike and Nokia (Matten and Crane 2005, p. 167). This has
prompted a debate on the use of the term corporate citizen (Moon et al.
2005) and the political legitimation of private actors in such processes
(Palazzo and Scherer 2006).
An altered self-image alone would indicate pure ethicization of companies. CSR activities can certainly to some extent be explained as a reaction
to altered information situations and demand structures and, therefore, can
be interpreted as an expression of well-understood self-interest. Irrespective,
however, of the appropriate explanation for the rise of CSR, it points to a
mechanism which, it is hoped, will compensate for the decits of traditional,
state-based political regulation. This would involve the adoption of state
functions (see Matten and Crane 2005, p. 174) and the lling of regulatory
gaps left by the international institutions (Kolk and van Tulder 2005, p. 2).
Doubts remain, however, as to whether the declared governance objectives can actually be achieved through ethicization of corporate behavior.
In terms of strategies for corporate self-commitment, the collective action
problematique always arises, whereby no actor can be sure that all competitors take on and, above all, comply with the same obligations. It is precisely this problem that points to a changed self-image of companies as
corporate citizens with deliberative obligations which attempt to supersede
the inherent voluntarism of the codes of conduct (Scherer et al. 2006). The
problem persists nevertheless. For good reasons, the eective control of a
bourgeois society always falls back on compulsory mechanisms which
should ensure that the understanding of the roles of the citoyen and the
bourgeois cannot be arbitrarily exchanged. Dissolution of the problem of
voluntarism could be sought in corporate associations acting as private
304
duties on goods shall not be increased appears very simple in many ways. In
contrast, the obligation to achieve substantial reductions in the emissions of
certain pollutants is proving far more challenging. Because the ultimate
target group of this regulation is not the state but societal actors (that is,
industrial operations and car drivers), the reduction, for instance, of CO2
emissions does not merely represent an executive matter of will. Unlike the
situation that exists with regard to most other international regulations,
failure is also possible in this case if the governments that sign the agreement
fully intend to reduce CO2 emissions. Signicant nancial, administrative
and technological resources are required to fulll such an obligation.
Similarly serious is the fact that, in the case of behind-the-border issues like
global warming, regulatory compliance is signicantly more dicult to
monitor than it is in the case of border or interface problems. Moreover, the
problem itself is so complicated that the discussions regarding a suitable
form of regulation are repeatedly overshadowed by questions concerning
the real causes and actual extent of global warming.
Thus, supranationalization (Moravcsik 1999) and transnationalization
(Risse 2002) can be understood as a form of institutional reaction to the
new regulatory problems. Supranationalization refers to a process whereby
institutional components and procedures that facilitate the decisions of
autonomous international institutions increase even against the will of an
aected government. It is characterized by the fact that the Westphalian
principle of consensus in intergovernmental politics has been superseded in
many areas by majority decision-making or quasi-legal processes, for
example, those of dispute settlement bodies. Supranationalization is in no
way limited to the European Union even if it is particularly prominent in
this case but also nds application in other institutions. In addition to the
International Monetary Fund (IMF) and the World Bank, other examples
of decision-making procedures of this kind can be found in the special UN
organizations, the International Criminal Court, the World Trade
Organizations (WTO) Dispute Settlement Body and Mercosurs Tribunal
Permanente de Revisin.
Along with the establishment of supranational institutions, the emergence of transnational governance, whereby at least one regulatory body is
a non-state actor, may increasingly be observed as a reaction to the declining ecacy of state action. With these new forms of governance, political
denationalization combines with the use of new market-compatible and soft
instruments. This can also take the form of purely private regulation at the
transnational level. Most codes of conduct which are valid throughout a
sector are actually transnational in nature. In this case, transnational corporations cooperate in private sector regimes, or private sector actors join
forces with civil society actors in networks. Examples of such private forms
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308
theories, conrms this insight some 20 years later, indicating that the excessive adoption of state functions by companies would lead to a problematic
politicization of the corporation. An analysis from the eld of management studies goes a step further: Legitimacy has become one of the most
critical business issues, especially for those companies who operate globally (Kostova and Zaheer 1999, p. 74). Thus, the corporate citizen is now
subject to an inherent legitimation pressure; together with investors they
must take the interests of customers and the political public into account.
Whether the primacy of politics over the market can be regained through
such politicization remains clearly questionable. Nevertheless, the demonstrated changes are not in any way indicative of a process of depoliticization. On the contrary, both international institutions and the actions of
corporations are becoming increasingly politicized. Governance with and
without government is subject, therefore, to the same normative claims as
governance by government. Or, to put it more directly: as the market gains
ground on politics, the market becomes politicized.
This diagnosis does indeed raise some questions that will need to be
answered by further research. Through which mechanisms can transnational actors be connected to public procedures of decision making? Are
transnational and international institutions capable of developing redistributive mechanisms or will they remain in the regulative realm? What role
does education and information play in global politics? How is it possible
to distinguish good from bad companies? How do political actors respond
to the politicization of international and transnational institutions? Does
this lead to a revival of the nation-state or to a golden age of constitutionalization? Which role will the most powerful nation-state, the United States,
play with respect to these questions in the future?
Notes
1. For more on the emergence and functioning of the democratic constitutional interventionist state and its perspectives for development in the light of current challenges, see
Leibfried and Zrn (2005).
2. See Zrn (1998, pp. 4154) as an overview. For important contributions, see Polanyi
(1957), Marshall (1975) and North (1981).
3. See http://www.bundesregierung.de/Content/DE/Artikel/2006/12/Anlagen/2006-12-20
mitbestimmungskommission,property=publicationFile.pdf, accessed 21 November 2007.
4. See, for example, Miller and Staord (2005) and Lowe et al. (2006).
5. The change of consumer behavior serves here as an explanation for the change in practice of companies. This is a related, but dierent notion than consumer education as an
instrument of state policies.
6. There are two sides to the concept of legitimacy. From a normative perspective it refers to
the validity of political decisions and political order, and their claim to legitimacy. From
a descriptive perspective, in contrast, the focus is on the societal acceptance of political
decisions and political orders as well as the belief of the subjects of rule in legitimacy. The
next section focuses on this descriptive aspect of legitimacy. The normative legitimacy of
transnational and international institutions is double-edged. On the one hand, institu-
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310
PART IV
DISCIPLINARY
PERSPECTIVES ON
CORPORATE
CITIZENSHIP
Introduction
Corporate citizenship (CC) is broader than existing concepts in the business and society literature, such as corporate social responsibility (CSR)
and corporate social performance (CSP). CC considers the role of corporations as social institutions and their ability to respond to non-market
pressures, especially in a global context. Consistent with its roots in political and critical theory, CC extends the concept of corporate accountability
beyond the economic dimension to include the environmental and social
realms.
The term citizenship itself invites a dierent type of ethical justication
compared to that evoked by the term social responsibility. Citizens are
members of society who have rights, benets and responsibilities. They are
expected to abide by societys laws and norms, and may incur penalties for
violating those laws and norms. At an individual level, good citizenship
denotes the assumption of non-mandated responsibilities to advance the
welfare of society. These distinctions can be mapped onto the concept of
corporate citizenship. Firms are legal entities, which can be regarded as
citizens, to the extent that society grants them rights and privileges. In
exchange for the benets of citizenship, corporations must abide by
societys laws and norms. However, good CC requires that rms also exercise additional responsibilities to society. CSR, on the other hand, typically does not denote such a broad or inclusive commitment. Corporations
can be socially responsible merely by satisfying certain stakeholder
demands.
Locating CC in corporate involvement with civil society, rather than
merely with individual (rm) stakeholder groups, constitutes its chief
source of dierentiation from CSR, and ultimately, makes CC a broader
concept. In this chapter, we present a neoclassical economic perspective on
CC, which extends the research of McWilliams and Siegel (2001;
McWilliams et al. 2006) on the economic and strategic implications of CSR
to incorporate these additional dimensions. Our aim is to present the economic case for CC, and to show that various ethical objections raised by
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320
managers support of CSR. Freemans stakeholder theory asserts that managers must satisfy a variety of constituents (for example, workers, customers, suppliers, local communities) who can inuence rm outcomes.
According to this view, it is not sucient for managers to focus exclusively
on the needs of stockholders or the owners of the corporation, even if their
goal is to maximize wealth for owners. Stakeholder theory implies that it
can be benecial for the rms wealth objectives to engage in certain CSR
activities that non-nancial stakeholders perceive to be important, because,
without CSR, these groups might withdraw their support for the rm.
Stakeholder theory was expanded by Donaldson and Preston (1995), who
stressed the ethical justications for CSR, as well as the business case for
engaging in such activity.
Goodpaster (1991) has argued that there is an essential tension in the
stakeholder literature between those who advocate the advancement of
stakeholder interests as a means to shareholders ends of wealth maximization and those who argue for the extension of ethical obligations to all
stakeholders in the form of a duciary duty. He refers to the former as a
strategic and the latter as the multiduciary approach to stakeholder management and argues that both approaches to stakeholder engagement
present ethical problems. Put in Suchmans (1995) terms, managers can
approach stakeholder engagement for the purposes of securing either pragmatic or ethical legitimacy. In Goodpasters view, the strategic approach
fails to recognize the entitlement of stakeholders to ethical consideration,
while the multiduciary approach fails to recognize the primacy of shareholder entitlements in a rm and the signicance of shareholder entitlements to the capitalist system. In other words, the former places economic
considerations above ethical ones and the latter does the reverse. There is
an apparent trade-o between economics and ethics in Goodpasters socalled stakeholder paradox.
Another economic perspective applied to CSR is the theory of the rm.
Unlike the earlier agency theory models provided by Friedman and Jensen
and Meckling, a theory of the rm approach can be applied to illuminate
the alignment between CSR activities and prot. Although Goodpaster
might regard this sort of CSR as strategic stakeholder management, we
advance a view that transcends his ethical characterization. When understood in its economic complexity, CSR can be seen to advance the interests
of shareholders, other stakeholders, and society at large. Ergo, there is no
necessary tension between economic and ethical considerations.
Jones (1995) introduced a theory of the rm to study the benets of CSR
and concluded that companies involved in repeated transactions with
stakeholders on the basis of trust and cooperation are motivated to be
honest, trustworthy and ethical because the returns on such behavior are
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330
332
Table 15.1
CC
Motivation
Outcomes
for firms
Aected
groups
Firm stakeholders
(shareholders, investors,
consumers, employees,
suppliers, communities,
managers)
Outcomes
for aected
groups
Theories
applied
(selected
authors)
Theoretical
justifications
is deemed relevant to civil society organizations (CSOs) and not just to customers and other rm stakeholders, as we have dened CSR. The focus of
CIVICUSs agenda is furthering a mutually supporting relationship
between corporations and society generally. In their view, government, corporations and civil society constitute the primary institutional actors on the
global stage. Given the dwindling role of the nation-state in the global era
334
similar lines to the way we have. CC is a broader concept than CSR and has
a more global reach.
Possible issues to be addressed under Matten and Cranes rubric include
sweatshops and child labor, corruption, legal compliance, pollution and
climate change. As to the motivation for such CC, Matten and Crane (2005,
p. 173) suggest that a range of motivations might be evident, from altruism to enlightened self-interest or plain self-interest. For instance, corporations may choose to pay much higher wages at a plant in Indonesia
because they take it as their mission to provide all workers with a living
wage, because they want to generate goodwill at home and abroad for the
sake of gaining repeat business over the long run or because they want to
attract the best workers away from a local competitor. Societies in the developing world may potentially derive considerable gains from CC as Matten
and Crane construe it.
However, the benets to society of such an expanded corporate role are
dubious. As we indicated in our discussion of the ethical legitimacy of CC,
both Levitt and Friedman rejected CSR for the reason that corporations
should not be regarded as governments. Corporations are designed to
advance the wealth objectives of investors via ecient production of goods
and services, not advance the interests of society, although the private
responsibility of pursuing prot might resemble a public responsibility in
the sense that it enhances welfare through ecient production, product
dierentiation, and the creation of positive externalities and public goods.
Nevertheless, the generation of such socially benecial outcomes depends,
in part, on the ethical preferences of shareholders, stakeholders and civil
society, along with the ability of those groups to punish and reward the corporation for its ethically relevant actions. If preferences are more selfinterested than ethical and/or if capacity to punish and reward companies
nancially for unethical or ethical conduct is limited, then corporations will
not necessarily enhance public welfare.
Another problem with the proposed governmental role of global corporations lies in the inadequacy of current corporate governance structures to
serve a democratic role in society. Matten and Crane refer to this problem
as that of inadequate corporate accountability and lack of participatory
mechanisms. Ideally, governments are established to represent the views of
their citizens via democratic processes that respect a set of basic rights that
are codied in a constitution. Corporate motivation to act as governments
would have to be interpreted in light of rm nancial objectives, unless the
prevailing theory of the rm were supplanted by an alternative that tied
rm objectives more explicitly to groups other than investors and that
secured democratic representation for such groups. Although CC begins to
resemble such a theory of the rm, it has yet to demand democratic
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338
itself demands that we ask the question of what sort of citizen corporations
should be. The answer, in part, has to include the economic contributions
made by corporations to society and the environment through the production of goods and services, creation of jobs, ecient use of resources
and innovations. Whether truly good corporate citizenship involves the
assumption of non-legally mandated obligations in the form of philanthropy, expanded protection of rights and environmentally conscious activity, is a further question. In other words, whether or not corporations are
being good corporate citizens just by serving their economic function well
is an open question. Our analysis targets the skeptic of corporate capitalism by favoring a method that advertises corporate engagement with civil
society for the strategic purpose of advancing long-term corporate prot
objectives. In so doing, this analysis bypasses the concerns raised by CSR
skeptics such as Levitt, Friedman, Sternberg, Jensen and The Economist.
However, the real value to society of corporate pursuit of prot deserves a
more just hearing. CC provides corporations with the opportunity to establish the ethical legitimacy of the wealth-creating function in securing the
public welfare, thus legitimating the corporate form.
The issue of how corporations benet society is reminiscent of the topic
of public goods and externalities, broached in our CSR discussion. Where
CSR can constitute the provision of public goods through the sale of private
goods and the elimination of negative externalities such as pollution, CC
goes further in clarifying the rms role as a public good and its generation
of positive externalities. Amartya Sen (1993) suggests that rms themselves
be regarded as public goods in so far as they depend on cooperative eort
that yields benets not easily attainable by the private costbenet analyses
of rm participants. We suggest that this model of the corporation as a
public good be extended to include the benets to society of its prot function. In other words, society not only benets from the ecient production
of goods and services that may or may not satisfy the ethical preferences of
consumers, but also from the creation of jobs, wealth for investors and innovation that the corporate pursuit of prots yields. If the corporate form constitutes a superior model of business, then it follows that its continued
existence and ourishing in society is of value to society. This view implies
that corporations deserve legitimacy as citizens just by virtue of their economic function. Put another way, our analysis posits that corporations are
a public good because of the positive externalities that the private pursuit of
prot generates. This account in no way contradicts our earlier ndings
about the importance of satisfying ethical demand for the provision of
public goods such as a clean environment. Rather it illustrates the seamless
connection between economically self-interested activity and the good of
society, which is the ultimate ethical stance of neoclassical economics.
340
complexity for decision making that such issues pose for managers of companies operating in a global economy. In conclusion, we briey tease out
some of the unresolved issues for managerial decision making that are
raised by our economic analysis of CC.
There are numerous unresolved theoretical and empirical issues relating
to the economic implications of CC. These include identifying institutional
dierences in CC across countries, determining the motivations for CC,
describing CC strategies, modeling the eects of CC on the rm and stakeholder groups, empirically assessing the eect of CC on the rm and stakeholder groups, measuring the demand for CC, measuring the costs of CC
and assessing the current knowledge base. Because CC is a broader concept
than CSR and applies more denitely to the global society, a more integrated understanding of these theoretical and empirical issues will be
necessary.
Other unanswered questions include the following: are all corporations
global citizens? What standards dene good global citizenship? Should the
same standards apply equally to all corporations? What sorts of analytic
devices and empirical studies will ensure corporate accountability? How
should corporations reconcile diering value systems? Should corporations be regarded as state actors rather than citizens? What theory of the
rm would justify statehood for corporations? How should dialogue
between civil society and corporations proceed so as to determine the
proper role of corporations in society and ensure their ethical legitimacy?
As the literature on CC evolves, we expect that many of these questions
will be addressed by scholars in a wide variety of business and social
science disciplines.
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Earthscan.
Introduction
The many and various features of the global economy and the centrality of
corporations within it, have a direct and enduring impact on the quest to
better protect and promote human rights. That impact, of course, cuts both
ways. Consider, for instance, such recent events as the United Nations
appointment of a Special Representative to the Secretary-General on
human rights and corporations;2 the World Banks proclamation that
human rights are the very essence of the Banks work;3 and the entreaties
made of the worlds principal trading nations at the last World Trade
Organization (WTO) ministerial meeting in Hong Kong of the sclerotic
Doha Round (which, at the time of writing, limps on still),4 to leverage
global trade for the benet of securing basic human rights of the poor,5 all
of which bear testimony to the two dimensions of this debate an appreciation of the global economys great potential not only to help but also to
hamper the objects of human rights.
What is striking about this potential is the extent to which it relies upon
indeed, to a signicant degree, is driven by private non-state actors,
namely corporations. Transnational corporations (TNCs) in particular, are
the engines of the global economy; they have become the Behemoths as
Noreena Hertz calls them, whose power has been propelled by government
policies of privatisation, deregulation and trade liberalisation, and the
advances of communications technologies of the past twenty years (Hertz
2001, p. 8). Aid agencies, furthermore, no longer shun private enterprise as
either merely incidental, or possibly even antithetical, to the goals of
poverty reduction, but rather embrace it as a sister in arms in the struggle
to help the poor. Thus, the United Nations Development Programme
(UNDP) established the Commission on Private Sector Development in
whose report in 2004 it declared its mission to be about acknowledging
that the private sector is already central to the lives of the poor, and has the
power to make those lives better [and] about using the managerial organization and technological innovation that resides in the private sector to
improve the lives of the poor (UNDP Commission on Private Sector
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generally. Such greater wealth may also assist in the attainment of other
rights such as the civil and political rights to freedom of expression, political and religious beliefs, movement and association, participation in government and privacy. But the key question is whether that potential is borne
out in practice. For even if the worlds wealth, or a countrys wealth, is
markedly increased that does not necessarily mean that all will benet
equally, or that disadvantaged groups will even benet at all. Indeed, it is
notoriously dicult to say with certainty what is the impact of increased
prosperity on human rights enjoyment, beyond mere platitudes (such as for
some people they are clearly better respected). Thus, for example, in respect
of the circumstantial links between increased foreign direct investment
(FDI) and human rights protections, one can only make fairly tentative,
general conclusions in this regard such as, that there is some apparent
benet (Letnes 2004, pp. 26970).
The principal conduits of this new wealth are corporations, in particular TNCs, largely through FDI. Questions regarding the ambit of corporate responsibility and whether there are mechanisms in law (or policy) for
enforcing such responsibility has a direct impact on how increased wealth,
and the benets that go with it, are distributed, whether by public (state) or
private (corporate) actors. And it is this question of distribution and the
gap between theory and practice that really matters for the realization of
human rights; whether that be in respect of the distribution between rich
and poor countries, or between rich and poor communities within countries
(both in developed and developing states). The issue of elite capture that
is, the notion that the elite few, internationally and domestically, take a
hugely disproportionate slice of the economic pie, leaving the many with
little (Darrow and Tomas 2005, pp. 4747) is a concern in all states,
though certainly it is a greater concern in some than in others. From the
human rights perspective this is particularly signicant because often the
reasons for the inequality are based on illegitimately discriminating factors
such as gender, social class, race, religion, physical and mental disabilities,
existing wealth, political beliefs or even geographical location all of
which are human rights infringements (UNDP 2005, p. 5). Furthermore,
inequitable distribution of wealth often exacerbates existing inequality,
places additional power in private hands and deprives the community of
their ability to make positive human rights advances.
Human rights perspectives of the global economy
There are three dimensions of the global economy generally, and the role
of corporations in particular, that have attracted the attention of those concerned with human rights namely, commercial enterprise, trade and
investment, and aid-based development.
347
Commercial enterprise
The phenomenon of transnational corporations is not new, but the continually increasing levels of power and inuence of TNCs within the global
economy of today is unprecedented. It has been calculated, for example,
that of the top 100 economies in the world today, 51 are corporations and
only 49 states (Anderson and Cavanagh 2000). With such massive economic power at their disposal, TNCs therefore have capability to do great
harm as well as good for human rights, at both the global and domestic
levels. It has been on this basis that calls for corporations to be made
responsible for the human rights consequences of their actions have
increasingly been made, especially over the past 10 to 15 years.
The role that corporations play in domestic and international economies
is fundamental. Their impact on human rights is equally important.
Through commercial activity driven by corporations, jobs and wages are
made available, goods and services are provided and taxes are paid enabling
governments to provide further goods and services. Thereby, directly or
indirectly, a vast array of human rights may be supported from rights to
work, welfare, food and shelter, health and education, and freedoms to
speech, association and movement. In short, not only are corporations
central to the provision of many of the things that make human life more
tolerable, enjoyable and fullling, the work and wages that corporate enterprise brings to all communities are key elements to the establishment and
maintenance of individual human dignity to which end human rights strive
to meet. The value of employment cannot be underestimated: it was the
number one response to the question what do you need to improve your
life?, as posed to more than 60 000 poor people from countries all over the
world (Narayan et al. 2000).
However, the inuence of corporations on human rights is not all benign.
Corporations, both local and multinational, have been and continue to be
minor and major abusers of human rights. Some corporations are guilty of
treating workers badly in terms of pay, conditions and working environments; some do pollute the environment in ways that have dramatic and
serious eects far beyond their immediate surroundings; some do discriminate against indigenous peoples, or certain ethnic or religious groups, or
against women, or people with disabilities, or on grounds of sexuality; and
some do work alongside (or inside) governments that perpetrate gross
human rights abuses, such as in Nazi Germany, apartheid South Africa,
and in the many authoritarian and repressive states in the world today
(Stephens 2002).
At the domestic level, both sides of this relationship are relatively well recognized, even if the consequences are not necessarily adequately dealt with.
In all Western states and increasingly so in developing nations there are laws
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of a states legal obligation with respect to the ICCPR armed that the
obligation will only be fully discharged if individuals are protected by the
state, not just against violations of Covenant rights by its agents, but also
against acts committed by private persons or entities (UN Human Rights
Committee 2004, para. 8), thus acknowledging a growing need to include
corporations within the rubric of the human rights protection framework.
However, the vision of human rights protection is not always commensurate with the practice and it is evident that some states while welcoming
the investment oered by TNCs have been unwilling or unable to react to
corporate human rights abuses. Compounding the problem is the crucially
unresolved legal issue of whether a states obligations that may ow from
international human rights law generally to protect against corporate
related human rights abuses extend beyond its jurisdiction (that is, extraterritorially or internationally). In a report by the Special Representative of the
Secretary-General (SRSG) submitted to the UN Human Rights Council in
2007, he suggests that international human rights law is more ambiguous in
this regard. The Report suggests that while human rights treaties do not
require states to exercise extraterritorial jurisdiction over corporate human
rights abuses, neither do they prohibit a state from doing so (Ruggie 2007,
para. 15; Ruggie and OHCHR 2007a, 2007b). That is, a state may choose to
require corporations (domiciled in their jurisdiction) to abide by certain
standards regardless of the country in which they are operating. For
example, the antibribery provisions of the US Foreign Corrupt Practices
Act of 1977 make it unlawful for a US person, and certain foreign issuers of
securities, to make a payment to a foreign ocial for the purpose of obtaining or retaining business for or with, or directing business to, any person
whether such action occurs within or outside of the United States. However,
the basis for exercising such jurisdiction over human rights standards generally and the nature of the subject matter which might justify such action
(for example, is protection justied for all corporate human rights abuses?)
is still a matter of debate. It is this ambiguity which is central to the creation
of the permissive international human rights free environment in which
some corporations seem to now operate (de Schutter 2006).
The inability of the international legal framework to keep pace with the
rise of the corporation as a signicant non-state actor has resulted in the
emergence of a multiplicity of approaches which aim, in signicantly
varying degrees, to impose some such level of responsibility on corporations
(OHCHR 2005b). There now exist a great number of voluntary codes of
conduct devised or adopted by individual corporations, industry groups or
international organizations, such as the UNs Global Compact, and the
OECDs Guidelines for Multinational Enterprises (Leipziger 2003). Many
of these initiatives have a very broad coverage with only brief references to
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353
However, the key questions for many human rights advocates are rst
whether the reliance on the operation of the notion of comparative advantage in the open market to yield such advances in economic development
always (or even often) delivers on its promise; and second, even when it
does, does that necessarily translate into the equitable and widespread
improvement of social circumstances generally, and human rights in particular? At the national level, the standard answers to these twin questions
are that the market, given time, will deliver on the rst, and that the market
as appropriately tempered (usually meaning lightly so)11 by state regulation
and intervention, will yield the second, or at least as best as is possible.12
The variety of ways in which states formulate and pursue their market
interventions is as great as are their relative successes. What we are concerned with here is both the international and corporate dimensions of the
balance that is, to what extent do the institutions and mechanisms of
international trade promote or retard human rights, and whatever the
extent and direction, what role is played by corporations?
The broad historical context in which the brave new world of global
trade exists today is as important to answering these questions as are the
specics of certain initiatives, approaches and proposals that might bring
human rights and trade rules together. For what can be said with certainty
about the mixing of trade and human rights is that the single most important bone of contention between the old free trading countries of the West
and the new free trading countries in the developing world, is that the
former were able to build their economies on the back of very strong protectionist policies, which policies are now being largely denied to developing countries, just at the time when they are seeking to expand their
economies (Pogge 2002, pp. 1720). And what is more, some of those old
barriers still exist in the West, especially in the areas of agriculture. The
combination of these two factors is seen as providing a grossly unfair
advantage to often monumentally powerful agribusinesses in developed
nations as they compete on a supposedly level playing eld with the smallscale farmers (collectives, cooperatives or corporations) in much of the
developing world.13 And further, as a direct consequence, it is claimed,
nations of the developing world especially those whose economies are
agrarian based are less able to deliver the promised economic and welfare
benets to their peoples and are therefore hampered in their eorts to guarantee their human rights (UNCTAD 2004, pp. 179217). However politically intractable this problem is for the Western governments and one can
deny neither its depth nor the extent of the power wielded by the agribusiness lobbies in the US and Europe in particular14 the resultant inequity
of circumstance is felt keenly by developing state governments. Boil-overs
such as the manner in which a number of the larger developing states
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357
358
359
This explicit recognition by the former Secretary-General of the powerful role played by corporations within the broad mission of the United
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particularly with respect to the nance industry. The outcry for change is
partly a result of the policies of the 1980s when international nance institutions such as the World Bank and the IMF actively encouraged developing countries to pursue export-led growth, liberalize their trade and
investment regimes and privatize state enterprises. During, and following
on from this period, the role and impact of TNCs in developing countries
expanded, some argue for the better (providing investment, employment,
taxation and so on) and some for the worse (because the TNCs were implicated in promoting a particular style of development that prioritized economic development over the people and the environment). 37
In accordance with the pursuit of such policies, international nancial
institutions are often perceived to be acting outside any global governance
regime for the protection of rights or those aected by their policies.
However now, in some cases, there is evidence of reformed attitudes that
acknowledge, at least in theory, the growing inuence (positive and negative)
of corporations in the development sphere and the need for guidance (if not
regulation) in the protection of human rights. In 2002, with the backing of
the World Bank Groups International Finance Corporation (IFC), a
number of banks working in the project nance sector met to develop a
common set of environmental and social policies and guidelines that could
be applied globally and across all industry sectors. This led to the drafting
of the rst set of Equator Principles launched in 2003.38 This notion of
extending both culpability and responsibility in order to promote, respect
and protect human rights to the traditional silent investment partners,
illustrates the ever-increasing relevance and acceptance of human rights
responsibilities to business. The adoption of the Equator Principles reects
the increasing scrutiny that project sponsors and lenders face in dealing with
environmental and social issues which surround projects in emerging
markets, and can be seen as a direct response, by the adopting banks (and
the international nancial institutions which encouraged such adoption), to
criticism from NGOs and others relating to their past lending practices.
Corporations and their nancial backers are urged to consider the full
impact of their practices on development and adopt a preventive approach
to investment. The IFC has also instituted performance standards that companies are required to meet in return for IFC investment funds which
include several human rights elements such as labour rights, the rights of
indigenous people and the surrounding community and the protection of
cultural heritage (IFC 2006). Despite being criticized by some as not going
far enough, the standards are yet another step in the right direction of solidifying the connection between human rights and corporations and the
intrinsic role each plays in the development sphere (Ruggie 2007, para. 51).
The World Banks Corporate Social Responsibility Practice, set up to advise
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clean water, shelter, healthcare, education and the protection and welfare of
children; others more indirectly so, through the provision of power and
telecommunication services, and the building of transport infrastructure.
Furthermore, in this latter respect, aid is increasingly concerned with the
promotion of institutional capacity and individual skills in such areas as
the judiciary, government ocials, police forces and civil society organizations. Here, aid seeks to support such rights as the right to a fair trial,
freedom of expression and association, non-discrimination (on grounds of
gender, race, disability, sexuality and so on), and political participation.
In analysing the extent to which corporations can and will play a role in
modern development thinking and practice and the ensuing intrinsic connection business has with human rights, it is important to recognize that
there are certain controversial features of the relationship between human
rights and aid. In fact, when discussion is focused specically on what role
human rights do and ought to play within aid, much discontent is apparent. The concern comes largely from two sources. The rst is represented
by many of the multilateral and Western aid agencies themselves, who resist
calls for them to adopt a so-called human rights approach to aid and
development (Darrow and Tomas 2005), as, they argue, this would deect
them from their primary economic concerns and thrust them into political
issues. This is despite the fact as demonstrated above that the development programmes of such agencies are already deeply involved with human
rights matters. The Human Rights Council of Australia, for example,
claims that development should in fact be properly seen as a subset of
human rights (HRCA 1995, p. 26).
The second source of discontent gives rise to the neo-colonial concerns
held by the developing countries who are the recipients of Western and multilateral aid.39 The argument here is that the nature of many of the past and
present aid programmes is such that they are exporting particular political
agendas. Specically, by making aid conditional (whether explicitly or
implicitly) on the recipient states adherence to certain human rights standards, the donor states are forcing their (typically) liberal, capitalist democratic philosophies onto developing countries. An especially unambiguous
example of this approach is the Bush administrations establishment in 2004
of the Millennium Challenge Account administered by the Millennium
Challenge Corporation. Initially, up to $5 billion per year was earmarked
for distribution to developing countries over the initial three years of the
programme (though far less has been appropriated by Congress each year
and still less actually divested)40 to developing countries under the programme based on the principle that aid is most eective when it reinforces
good governance, economic freedom and investments in people.41
Applicant states are measured according to 16 specic criteria that cover
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much we must be very careful to harness, but the bad must be acknowledged and attended to as well. And that challenge is one that falls to human
rights advocates as well as the corporate sector to meet.
The part then that human rights plays in the corporate world must be
strengthened if we are to ensure the wider distribution, and the deeper penetration of increasing wealth and protection of the disadvantaged from the
worst excesses of economic globalization; a quest to humanise globalization, as Pascal Lamy rather grandly puts it (Lamy 2006). The voluntary
adoption of sector-specic human rights standards by corporations
whether relevant to commercial enterprise, trade and investment or development is but a temporary brace that supports but will not alone sustain
long-term human rights protections. With power comes responsibility and
not only corporations, but also many states and intergovernmental institutions now recognize the need to more formally protect human rights within
the juggernaut of the global economy.
The task is not only one that cries out for strengthening the ties of international cooperation, but is also a task that has important implications for
the ways in which countries treat their own citizens. This is as true for the
developed economies of the Western countries as it is for countries whose
economies and structure of governance are still developing. The former
cannot aord to be complacent by relying on the fact that capitalism and
democracy have brought relative economic comfort to many of its peoples.
For there still exist too many who are disadvantaged and deprived, and
whose powerlessness and minority status are too often allowed to blind the
majority to their fate (Beetham 1999, pp. 1067). But equally, where the
latter (developing countries) relegate respect for human rights to second
place behind the pursuit of the economic growth through autocratic governance and as pushed by both domestic and foreign corporate interests,
they do so at the peril of their peoples welfare and their governments legitimacy. Rights and liberties are, as Amartya Sen argues, instrumental and
integral to the attainment of development, not merely add-ons to be
pursued at some later date (Sen 1999, pp. 3640).
Notes
1.
The origins of this chapter lie in research undertaken while the rst-named author was a
Senior Fulbright Scholar in late 2004 at Washington College of Law, American
University. The research was also enabled by two Australian Research Council grants (on
corporations and human rights, and human rights and international trade, respectively).
The themes herein have been aired in graduate classes in the global economy and human
rights taught over the last four years in both Australia and the United States, and in a
series of papers at workshops conducted by the author at the Institute of Human Rights
of the Ho Chi Minh National Political Academy in Hanoi, Vietnam, in November 2005.
Finally, we would like to thank Gillian Moon for her insightful comments on an earlier
draft and both Jessie Connell and Odette Murray for their editorial assistance.
366
2.
Which followed consideration in 2005 (for the second time) by the then Commission on
Human Rights of the Norms on the Responsibilities of Transnational Corporations
and Other Business Enterprises with Regard to Human Rights, UN Doc. E/CN.4/
Sub.2/2003/12/Rev.2 (2003), available at http://www1.umn.edu/humanrts/links/normsAug 2003.html, accessed 26 August 2007 (hereinafter Norms 2003) (Kinley and
Chambers 2006).
3. Roberto Daino, (the then) Senior Vice President and General Counsel, the World Bank
Group, in a speech delivered at the World Bank Legal Forum: Law, Equity and
Development, 1 December 2005 (Daino 2005a); and see further Daino (2005b).
Dainos successor, Ana Palacio, has also endorsed this interpretation (Palacio 2006). It
must be said, however, that such high-level rhetoric is neither repeated, nor borne out at
the level of the Banks practice (Darrow 2006).
4. Pascal Lamy, in his report on the Doha Round to the WTO General Council on 27 July
2007, noted that some good progress has been made across the board over the last few
months, but there are some signicant dierences which remain to be resolved (Lamy
2007, p. 1).
5. Thus, for example, the Preamble to the Marrakesh Agreement establishing the World
Trade Organisation 1994 declares the parties concern with no less than the following:
raising standards of living, ensuring full employment, advancing real income levels,
expanding production and trade in goods and services, respecting the precepts of sustainable development and the protection and preservation of the environment, all in a
manner consistent with the respect for the dierent levels of economic development
between states (Marrakesh Agreement, preamble, rst paragraph). Further, see
UNCTADs statement that: international trade can play a major role in reducing
poverty in the LDCs [least developed countries] (UNCTAD 2004, p. 123); and see the
Statement of the Human Rights Caucus on the Occasion of the Sixth Ministerial
Conference of the WTO on 10 December 2005, at p. 1, which proclaims that international trade can undoubtedly serve as one means for the realization of human rights
. . . but it does not automatically or necessarily do so.
6. The term transnational corporation refers to an economic entity operating in more
than one country or a cluster of economic entities operating in two or more countries
whatever their legal form, whether in their home country or country of activity, and
whether taken individually or collectively (Norms 2003, Article I).
7. As noted by Andrew Clapham, much of the focus is on large TNCs but there is no reason
to exclude national companies from the realm of human rights obligations (Clapham
2006, p. 201).
8. For example, the American retailer, Wal-Mart, is one of the worlds largest companies
with revenues over US$287 billion in 2005 (see www.money.cnn.com/magazines/fortune/
global500/2005/index.html, accessed 26 August 2007). By contrast, the IMF estimates
Cambodias GDP in 2005 to be approximately US$4.5 billion (IMF 2005).
9. While the notion of direct responsibility being placed on corporations appears radical,
it is not the rst time duties have been placed on them in international law. It
has been noted that TNCs also have direct duties under some multilateral conventions. For example, both the International Convention on Civil Liability for Oil
Pollution Damage 1969 and the Convention on Civil Liability for Damage resulting
from Activities Dangerous to the Environment 1993 directly impose liability on legal
persons including corporations (Ratner 2001, p. 480 .; Kinley and Tadaki 2004,
pp. 9467).
10. Convention on the Rights of Persons with Disabilities opened for signature 30 March
2007, UN Doc. A/RES/61/106 (not yet in force), Art 4(e).
11. Because, it is argued, the main civilising inuence on the otherwise crude capitalist
quest for prot is the market itself, which turns capitalism into an engine of social
progress (Cox 2006, p. 6).
12. See Floris van Heess excellent canvassing of both sides of the debate in Protection v protectionism: the use of human rights arguments in the debate for and against the liberalisation of trade (van Hees 2004).
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368
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
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Let us choose to unite the power of markets with the strength of universal ideals.
(United Nations Secretary-General Ko Annan, 199720071)
Introduction
The relationship between global business and society including businesss
search for mutually benecial advances that address the worlds most pressing needs has become one of the dening issues of the 21st century.
Throughout the world, immense entrepreneurial energy is nding expression, energy whose converging force is in direct proportion to the turbulence, crises and the call of our times. One-by-one positive disruptions are
erasing the false dichotomy embedded in the great trade-o illusion the
belief that rms must sacrice outstanding nancial performance if they
choose to strategically address societal challenges. Could it be that with a
global perspective and the right mix of innovative leadership and scholarship the creation of a sustainable society and planet could become the
international business opportunity of the 21st century?2
The 21st-century challenge
The success of global society is increasingly inuenced, if not dened, by
the behavior of multinational corporations (MNCs). More than half of the
worlds hundred largest economic entities today are corporations; only 47
are countries (UNCTAD 2005). ExxonMobil, for example, with 2005 revenues of over $341 billion and prots of $36 billion, is larger than twothirds (125) of the 184 countries whose economies are ranked by the World
Bank (ibid.). Similarly, Wal-Mart is the nineteenth largest economy in the
world, with sales exceeding $250 billion (Mau et al. 2004, p. 128); its singleday revenue is larger than the annual GDP of 36 independent countries.3 If
it were a country, Wal-Mart would be Chinas eighth largest trading partner
(Friedman 2005, 2006). With over 1.8 million employees worldwide, WalMart has more people in uniform than the entire United States Army
(www.walmartfacts.com; Mau et al. 2004, p. 128). What global companies
such as ExxonMobil and Wal-Mart do, individually and collectively,
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matters, not only to their own customers, employees and suppliers, but also
to the larger global economy and society.
The crucial question for the 21st century is not a traditional academic
question How can we best describe what most global companies do and
why they do it?. Similarly, it is not an equally traditional, yet more narrowly focused, economic question How do global companies achieve the
best nancial performance through the most ecient and eective use of
resources (Molz 2006, p.1)? Rather, both from societys and companies
perspectives, the crucial questions are: How can companies and society
simultaneously benet from the ways in which multinational rms
operate? and How might companies operate in the future so as to increasingly contribute to societys well-being while simultaneously enhancing
their own nancial performance?.
Questioning the potential for private sector-created positive outcomes is
particularly important, given that the behavior of companies such as
ExxonMobil and Wal-Mart toward their own employees, other stakeholder
groups and the broader social and physical environment has frequently (and
often accurately) been severely criticized in the courts, the popular press and
academic publications (see, for example, Cascio 2006; Fishman 2006;
Freeman 2006; Ghemawat 2006). Scherer and Palazzo (2008) point out that
prior discussions of the relationship of rms to the social and physical
environment presupposed that responsible rms operated within a system
of primarily government-dened rules and regulations. With globalization,
however, this assumption is no longer valid: The global framework of rules
is fragile and incomplete. Therefore business rms [today] have an additional political responsibility to contribute to the development and proper
working of global governance (ibid., p. 3) to the proper working of the
world (also see Palazzo and Scherer 2006; Scherer et al. 2006).
Whereas we have learned a substantial amount about the social, economic and political inuences of MNCs, what we know is disproportionately negative and narrowly focused on economic outcomes. From the
perspective of anticipatory scholarship (Botkin et al. 1979), perhaps the
most important question facing business scholars today is: What can we
learn about the positive, and potentially positive, impacts of multinational
business? What can we learn about global corporations ability to simultaneously do good and do well?.4
Business repositioning itself clearly and convincingly as a part of society
Speaking in Davos, Switzerland at the opening of the 21st century, Klaus
Schwab (2003, p. 10), President of the World Economic Forum, challenged
the worlds most senior business leaders to examine and take responsibility
for their companies impacts:
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During the 21st century, many business leaders believed that their companies should be detached from society. Reecting their sentiment, leading
economist Milton Friedman (1970, p. 122) expressed his strongly held
opinion that the only social responsibility of business is to increase its
prots. Today, going beyond 20th-century logic, prominent CEOs from all
continents are expressing their belief that the relationship between business
and society including businesss search for mutually benecial advances
that address the worlds most pressing global needs has become a dening
issue for the 21st century.
What does it mean for global business to take the lead in repositioning
itself as a part of society? What might such a repositioning imply for scholars of international business? Ko Annan, while he Secretary-General of
the United Nations, addressed the World Economic Forum in Davos,
Switzerland, inviting the business community to rise to the challenge:
Let us choose to unite the power of markets with the strength of universal ideals.
Let us choose to reconcile the creative forces of private entrepreneurship with
the needs of the disadvantaged and the requirements of future generations.5
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asserts that to the extent that there are any international goals, they are the
Millennium Development Goals (Eviatar 2004; also see Sachs 2005).
At the Global Compacts Leaders Summit held at the United Nations
in 2004 just four years after the Compacts founding, one overarching
theme emerged from the corporate leaders deliberations (Cooperrider
2004). It was a call for more and better knowledge, learning and management tools for advancing innovation at the intersection of business and
society.
As members of the global business community rise to Klaus Schwabs
and Ko Annans challenge, how will scholars of international business
address the same challenge? What are the implications for international
business scholarship in a century in which:
1.
2.
3.
4.
5.
6.
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3.
4.
BOX 17.1
INTERNATIONAL BUSINESS
SCHOLARSHIP
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A key insight of IB research is that MNCs face a substantial liability of foreignness, which leads to nontrivial costs. To overcome such a liability [transaction cost] (Buckley & Casson,
1976; Caves, 1996) and eclectic (Dunning, 1993) perspectives
stress that MNCs need to equip their overseas subsidiaries with
certain firm-specific advantages. The . . . [resource-based view]
extends these perspectives by specifying the nature of these
resources and capabilities, such as administrative heritage
(Bartlett & Ghoshal 1989; Collis, 1991), organizational practices
(Tallman, 1991, 1992; Zaheer, 1995; Zaheer & Mosakowski,
1997), and bargaining power (Moon & Lado, 2000).
Resource-based theories have been used, for example, to investigate the resources underlying different types of diversification. To
address big questions, resource-based theorists might study the
types of resources and capabilities, including, but not limited to
administrative heritage, organizational practices and bargaining
power, that most consistently lead to exceptional performance by
multinational firms in simultaneously doing good and doing well.
John Dunning, a leading IB scholar, has most recently contributed
to this discussion with his edited volume, Making Globalization
Good (Dunning 2003).
Institutional theory
According to IB scholar and sociologist Eleanor Westney (2005a,
p. 47):
Institutional Theory begins with the premise that organizations
are social as well as technical phenomena, and that their structures and processes are not shaped purely by technical rationality. But whereas earlier critics of technically deterministic
approaches to organization tried to explain departures from technical rationality by looking inside the organization (to factors such
as informal social structures or power relationships within the
organization), institutional theory looks first to the social context
and focuses on isomorphism within the institutional environment
(Zucker 1987: 443), whereby organizations adopt patterns that
are externally defined as appropriate to their environments, and
that are reinforced in their interactions with organizations. . . .
One basic premise of institutional theory is that the environment
is itself socially organized: that is, it is populated by organizations
that have relationships, not simply transactions, and it is the
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relatively few insights into normal behavior, let alone outstanding behavior.
In the Forward to the Handbook of Positive Psychology (Snyder and Lopez
2002, p. vii), Sir John Templeton questioned the value in that history and
highlighted the omissions, by asking: Why is it we know so little about the
human spirit?. Why is it that until the recent work of the positive psychologists, we have known next to nothing about what supports joy, happiness,
wisdom, courage, hope, generosity or love?
In the last ve years, positive organizational scholarship has begun to initiate a similar transformation in management research; a shift away from
problem-focused decit paradigms and toward strength-based approaches
(among others, see Luthans 2002, 2007; Bernstein 2003; Cameron et al.
2003; Peterson and Seligman 2003; Wright 2003; Cameron and Caza 2004;
Luthans and Youssef 2004; Dutton and Ragins 2007; and Luthans et al.
2007). Positive organizational scholars have begun to understand organizational phenomena that dramatically and surprisingly outperform the
norm. Using strength-based perspectives, scholars are beginning to investigate why certain systems succeed in contributing to the public good while
others do not.9 In particular, business and corporate social responsibility
scholars are beginning to investigate why certain companies outperform
their cohort in simultaneously beneting the world and increasing their
own nancial performance.10
Similar to other disciplines, the IB eld is also being challenged to reposition itself vis--vis this centurys unique challenges (see Box 17.1). The
central question that previously dened IB which theories best explain the
behavior of MNCs? is no longer sucient to address the challenges articulated by societal leaders such as Klaus Schwab and Ko Annan. The challenges of the 21st century demand that international business, like its sister
disciplines of psychology and organizational studies, create and increasingly embrace strength-based, positive scholarship. The challenges that
business and society face demand that international business scholars
investigate how best to understand the most eective and admirable behavior literally, the outstanding behavior of specic, frequently unique
companies. Drawing on the work of colleagues in positive psychology and
positive organizational studies, perhaps more international business scholars can investigate the possibilities inherent in global businesses acting as
agents of world benet.
Positive deviance: exceptional, benecial and rare
Traditional scholarship has venerated the mean. Methodologists have developed endless analytical techniques for discovering what is central and/or
most frequent in a given population. We have therefore become experts at
identifying that which is common that which is average and/or that which
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is central. At times, however, we confuse our labels and present the mean
(the average) as normal, instead of just as central or common. In the book,
What Does It Mean To Be Human?, Chittister (1998, p. 193) cautions against
misunderstanding, and therefore mislabeling, that which is common:
The problem with trying to dene what it means to be human is that we now take
so much of the inhuman for granted. We confuse the meaning of the words
natural and human, and make synonyms of them. We act as if one is the other.
We allow one to be the other. We rip to shreds the ideas each of them masks, forgetting one and surrendering to the other. We call the natural human and in
one ash of the pen presume we have made it so. We wander in a philosophical
maze and never even realize that we are lost.
War is natural, they tell us. Violence is natural, they argue. Selfaggrandizement is natural, they maintain. What they do not say is that just
because something is natural does not make it human.
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succeed in the 21st century by hiring the second or third tier. No society can
succeed without broadly educating its population, including the best of the
best. Blecher, the founder and CEO of CIDA University, ts in neither with
expectations nor with current institutional elds; his aspirational set and
skills defy current reality. Would our traditional research methodologies
recognize CIDAs organizational strategy, or would its unique position far
outside the norm relegate it to invisibility? In an era of severe global challenges, does regression toward the mean reduce scholarship to irrelevance?
Transcending 20th-century research assumptions
As we consider the challenges facing the world today including war and
peace, environmental sustainability, equitable income distribution, human
rights and similarly complex issues it is easy to strip ourselves of scholarly and practical relevance by relying unquestioningly on the conventional, often implicit, assumptions underlying our research; that is, by
assuming that:
1.
2.
3.
4.
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(i) detecting the most positive systems and situations, (ii) ascertaining what
allowed those particular systems to outperform other systems and situations, and (iii) investigating how such outstanding success could be replicated on a broader scale. One methodology for such investigations is David
Cooperriders appreciative inquiry (Cooperrider et al. 2003). From the perspective of implementation, appreciative inquiry forces an important shift:
from taking an analytical problem-solving approach focused on documenting what is (primarily by identifying problems in average and belowaverage systems and then attempting to solve the problems), to taking a
design approach (Boland and Collopy 2004) that focuses on identifying the
strengths in the best-performing systems (the outliers) in order to magnify
them. At present, all such approaches (appreciative inquiry included) are
confounded by the fact that there is, as yet, no widely agreed-upon method
or criteria for determining performance to be outstanding, and therefore
no way to state denitively that a particular system or organization has outperformed its cohort.16
Anticipatory scholarship
Given the gap today between our aspirations for the world and its current
state, we need approaches that do more than simply amplify positive
deviance. We need to legitimize and to develop skills at creating and supporting systems that are better than anything that currently exists. How do
we study that which could be? How do we create that which we wish to be?
How do we create peace? How do we replace poverty with prosperity? How
do we restore our environment to vibrant, sustainable health? How do we
research that which cannot be predicted but is desired?
Anticipatory scholarship, by denition, violates one of the mainstays of
traditional research; it violates the assumption of objectivity it is biased
toward nding exceptionally positive outcomes. Rather than objectivity,
anticipatory scholarship relies primarily on the wisdom, courage and hope
that scholars bring to their investigations. Wisdom is knowledge of what
is true and right coupled with just judgment as to action (Stein 1969,
p. 1639). Courage transforms wisdom knowledge of what is true and
right into meaningful action. Hope inspires people to aspire toward
dreams (even when others judge those very dreams to be unattainable)
dreams that others are no longer capable of dreaming. Founder and CEO
emeritus of VISA International, Dee Hock, regularly reminds businesspeople and scholars alike that, it is no failure to fall short of realizing all
that we might dream the failure is to fall short of dreaming all that we
might realize (Hock 1997).
While still evidence based, anticipatory scholars question what traditional science considers as evidence and what it rejects as not evidence.
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inhabitants. The percentage of infected children fell from more than 90 per
cent to less than 20 per cent in the region of BHP Billitons smelter.
Absenteeism at Mozal went down from more than 20 per cent to less than
1 per cent. At the same time, BHP Billitons Mozambique operations
became a nancial success. In just three years, BHP Billiton expanded and
more than doubled its production in Mozambique. BHP Billiton not only
rose to Ko Annans challenge; they far exceeded anything the company or
the community had ever previously thought possible. Foreign investment is
up, prots are up, employment is up, the number of children able to attend
school is up, and the number of people in hospitals and dying is down.
Rising to the challenge
The question for scholars of international business is: Do we believe that
rising to Ko Annans challenge is possible? Not just for BHP Billiton in
Mozambique vis--vis malaria eradication, but for business in general?
Moreover, do we believe, as scholars and as educators, that we have a critical role to play in shaping societys future? In shaping the 21st centurys
success or demise? As we face the array of world crises, do we believe that
what we do matters?
I do; I believe we matter. Think, for a moment, about our role as management educators. Management is chosen as a college major by more students than any other area of study (Were number 1!). The more than one
million management students we teach each year will be making the billions of decisions that will, in fact, shape the future.
Yet do we believe we make a dierence? Stanford management professor
Jerey Pfeer revealed that students entering management and economics
faculties are the only students who do not become more compassionate
toward others, including people from the rest of the world, during their
time at university.18 In fact, on average they become narrower and more
self-centered. Yes, we make a dierence, but up until now we have either
denied our impact or made the wrong kind of dierence. As we accept our
impact and the huge responsibility that comes with it, we must ask ourselves several questions.
First, do we believe that what we do matters?
Second, do we believe that the quality of the worlds leadership depends
on the quality of the learning environments we create? In Croatia, an executive I spoke with echoed what everyone else seemed to know, but no one was
saying out loud: We wont survive another generation of leaders like those
we have had in the past. What would each of us research and teach if we
knew that the future of our country and the world depended on it?
Third, do we have the courage to see reality as it is? Can we see the world
with our own eyes, or will we allow ourselves to continue to repeat what the
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industrial training, fostering new indigenous industries, and showcasing art and
culture. To these ends, the [industrial] parks in Israel, Jordan, and Turkey all have
incubator spaces, educational and training facilities, museums, and sculpture
gardens. (Wertheimer 2002)19
Using the Tefen Model within Israel, Wertheimer has already built a
series of industrial parks that bring together Arab, Druze and Jewish
Israelis and are nancially successful (Fast 50 2003 Winners: Meet the
Winners 2003). By 2002 the four Israeli industrial parks had already
launched 150 new rms and had created 5000 new jobs (Wertheimer 2002).
By 2004 the same four industrial parks accounted for more than $2 billion
in annual revenue, representing 10 per cent of Israels total industrial
exports (Fast 50 2003 Winners: Meet the Winners 2003).
Will Wertheimers network of industrial parks ultimately become a
major factor in bringing peace to the Middle East? It is too early to tell, but
there are already ten industrial parks either built or planned throughout the
eastern Mediterranean, including sites in Israel, Jordan, Lebanon, Turkey
and Gaza. Many people are optimistic about their current and future
success. Wertheimer believes that industry is the engine of economic stability; and that without economic stability, there can be no peace
(Wertheimer 2002).
In the documentary, Wertheimer compellingly explains to the United
States Congress, The Middle East has a way of besmirching the entire
world with its conicts. It is of global interest to quiet this area (ibid.). An
industrial development plan for this region, based on the Tefen Model,
would produce a variety of benets, perhaps the most important of which
would be:
a reduction of terrorism worldwide. The majority of the worlds terrorists hail
from [the Middle East]. . . . Terrorism thrives in areas of poverty. Narrowing the
gap between the nancial status of neighboring countries and enhancing a
populations standard of living automatically changes attitudes. Job opportunities and a higher standard of living for people in this area will reduce the power
that terrorist groups oer to the deprived masses. (Ibid.)
After viewing the Tefen documentary, the rst reaction from a seminar
participant was: But it could never happen! It would never work!. Luckily,
I was so surprised by his response, I remained silent. After a minute or so,
a second participant spoke up, But Tefen already exists and it is already
working. The rst ve times I showed the Tefen documentary, the participants rst reaction was the same: Its nice, but not possible. Even with the
data in front of them, the managers could not see a positive reality, especially between Arabs and Israelis in the Middle East, even when given the
facts of the situation.
394
Notes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
395
Professor David Cooperrider, and is the name of his center at Case Western Reserve
University. The ideas for the chapter were developed originally as a part of the Global
Forum on Business as An Agent of World Benet: Management Knowledge Leading
Positive Change, co-sponsored by the Academy of Management and the United Nations
Global Compact, and co-chaired by Nancy J. Adler, David Cooperrider and Manuel
Escabar.
Wal-Marts 2002 revenue on the day after US Thanksgiving was almost $1.5 billion
(Mau et al. 2004, p. 128).
Scherer and Palazzo (2007) cogently review alternative dominant discourses on corporate social responsibility including a positivist perspective (which is reliant on
scientically observable cause-and-eect relationships, but they contend is overly instrumental and normatively vacuous), post-positivist perspective (which is based on philosophy but, they contend, is overly relative, normative and utopian), and Habermasian
(which focuses on the political role of companies in globalizing society, and the authors
recommend). For an understanding of the rich scholarly conversation taking place
about businesss impact and potential impact on the broader society, see, among others,
Hawken et al. (1999); Lovins et al. (2000); Laszlo (2003); Paine (2003); Young (2003);
Fort and Schipani (2004); Hart (2005); Prahalad (2005); Savitz and Weber (2006);
Aguilera et al. (2007); Barnett (2007); Bies et al. (2007); Brickson (2007); Den Hond and
De Bakker (2007); King (2007); Mackey and Barney (2007); Marquis et al. (2007);
Perrini (2007); and Terlaak (2007). Perhaps one of the most important, but, to date, least
discussed aspects of MNC relationships to the broader society is their potentially positive impact on peace-making. For an discussion of the topic, see, among others, Adler
(2006a) and the special issue of the Journal of Corporate Citizenship (Issue 26, 2007)
edited by Malcolm MacIntosh, Sandra Waddock and Georg Kell, including the article
by Fort (2007).
Speech given by UN Secretary-General Ko Annan on 1 February 1999 at the World
Economic Forum in Davos, Switzerland.
For other, broad denitions, see Buckley (2005), Ghoshal and Westney (2005) and
Westney (2005b), among others.
For additional classic studies, see Teece (1977), Rugman (1981, 1996), Williamson (1975,
1981) and Hennart (1982, 2001).
Buckley and Casson (1976), as cited by Rugman and Verbeke (2003) recognized the contribution of several scholarly studies, both conceptual and empirical, to the development
of their particular view on the MNE, including, Coase (1937), Penrose (1959), Vernon
(1966, 1971), Hirsch (1967), Johnson (1970), Wells (1971), Dunning (1973) and Dunning
and Pearce (1975), among others.
According to the University of Michigans Center for Positive Organization Scholarship
(http://www.bus.umich.edu/Positive/PDF/POS%20Essence.pdf, accessed 14 November
2007), positive organizational scholarship focuses on the dynamics in organizations that
lead to developing human strengths, producing resilience and restoration, fostering vitality, and cultivating extraordinary individuals. Positive Organization Scholarship is based
on the premise that understanding how to enable human excellence in organizations will
unlock potential, reveal possibilities, and facilitate a more positive course of human and
organizational welfare. POS . . . draws from a full spectrum of organizational theories
to understand, explain, and predict the occurrence, cases, and consequences of positivism. . . . At its core, POS investigates positive deviance, or the ways in which individuals and organizations ourish and prosper in extra ordinary ways.
See the work of David Cooperrider at his center at Case Western Reserve University on
Business as an Agent of World Benet, along with the work of scholars attempting to
measure the impacts of doing good and doing well on various stakeholders (for example,
Barnett 2007, Mackey and Barney 2007 and Terlaak 2007). Also see the work of corporate social responsibility researchers, including Matten and Crane (2005) and Scherer
and Palazzo, (2007), among others.
CIDA stands for Community and Individual Development Association. For further
information, see CIDA University City Campus website at: http://www.cida.co.za/,
396
12.
13.
14.
15.
16.
17.
18.
19.
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PART V
IMPLICATIONS FOR
MANAGEMENT THEORY
BUILDING
Being a good corporate citizen starts with hiring lots of good citizens.
Whats a good corporate citizen? Its not just about awards or mission statements or press releases. Its about people. People who care about what they do
and how they do it. And at Toyota, we know these people pretty well, because
we hire them every chance we get.
You see it in every vehicle we build here [in the USA]. Our over 32 000 team
members take pride in everything they do. Quality, teamwork and dependability, thats what theyre all about.
Our team members care about doing whats right; at work as well as in their
local communities. They really are good citizens. Which in turn makes Toyota a
better corporate citizen. Isnt it nice when things work out?
(Toyota advertisement, The Week magazine, 15 September 2006, rear cover.)
Introduction
What does it mean to be a good corporate citizen? It is a question that permeates contemporary discussions of business in society and it is a central
theme of this Handbook. Is it, as the Toyota advert above suggests, about
recruiting particular, deserving employees who care about what they do
and how they do it? If corporations like Toyota develop the structures
the procedures for recruiting, selecting and training employees with the
characteristics of good citizens have they begun to earn the badge of
corporate citizenship? And is the employee who faithfully complies with
corporate demands for quality, teamwork and dependability a model of
the good corporate citizen?
Consider another example. Ms Sayaka Kobayashi, a Toyota employee,
recently blew the whistle on the companys North American CEO, claiming that she had been repeatedly sexually propositioned by him and that
when she raised the issue with the senior vice-president in charge of human
resources nothing was done to investigate her complaint (Business Week
2006). Ms Kobayashi was advised by the vice-president to resolve the
matter privately with Mr Otaka. When she refused because, reportedly,
she regarded it as a corporate issue, not a personal one Ms Kobayashi was
told that she could either leave the rm or cease being an assistant to
Mr Otaka (The Guardian 2006).
405
406
407
408
consensus. Such a view is absent from radical democracy where any consensus is understood to be partial and always constructed in systems of
power. Deliberative democracys urge to facilitate stable consensus is symptomatic of an inclination to value more highly the prospect of homogenization than dislocatory heterogeneity a prospect that we associate with
a risk of excluding the comparatively powerless and the underdog. Radical
democracy does not rely upon this troublesome movement as it is derived
from a focus on conict (antagonism) that strives to achieve an always unattainable consensus. From the standpoint of radical democracy, deliberative
democracy is seen to think backwards from the unrealistic fantasy of a realized consensus. If deliberative democracy is allowed to stand without the
radical corrective that highlights its limitations, it is vulnerable to becoming trapped in a closed loop in which reliance upon deliberative consensus
building about the nature of a system, among actors whose identities are
constructed within that system, risks closing out more radical options. In
short, we detect a (small c) conservative drift in Habermass deliberative
democracy for which Laclaus social theory of hegemony, including its conception of radical democracy, can provide a corrective.
The next section expands upon the idea of structure as an articulation of
processes of identication and outlines our interest in aligning the meaning
of corporate citizenship to a more radical understanding of participation
in the polity. We then go on to consider attempts to extend the meaning of
corporate citizenship by incorporating notions from citizenship theory,
notably Habermass deliberative democracy, and to consider whether such
notions are likely to achieve grip, and hence be part of a resurgent notion
of corporate citizenship. Our focus on identication and structure leads us
to propose that for this movement to occur, the notion of democracy reinscribed into corporate citizenship needs to have a more radical element
than is currently envisaged by proponents of deliberative democracy.
Accordingly, we then review an example where lack of attention to this
dimension can occlude the potentially undemocratic nature of deliberative
democracy. Finally, we conclude by considering what it would mean
to introduce a more radical understanding of democracy into corporate
citizenship.
Structures, identities and politics
In this section, we begin by elaborating our practice-centred conception of
structure and the importance that we attach to processes of identication.
We then expand upon the idea of corporate citizenship as involving the
development of a polity in which full participation is actively encouraged,
as contrasted with the mere establishment of procedures that provide for
the deliberative production of consensus.
409
410
Vibbert 1987). Since we are concerned to problematize this hegemonic discourse, we readily acknowledge the dominance of, but do not want to
restrict our discussion to, an impersonal, design-centric concept of structure. Instead, we are drawn to a (poststructuralist) conception of structure
that incorporates an understanding of how establishing, reproducing and
transforming elements conventionally attributed to structure such as policies and procedures is accomplished through processes of identication.
Accordingly, with regard to corporate citizenship, the term structure
in the title of this chapter does not refer to a set of rules, codes or obligations such as those that might be introduced into a company to manage its
economic, social and environmental relationships, as well as those with
dierent stakeholders (World Economic Forum 2003; cited in Gardberg
and Fombrun 2006, p. 329; for an example see Accenture 2005). Instead we
mean by structure the discursive formation(s) in and through which
(varied) notions of corporate citizenship are intersubjectively articulated
and invoked through processes of identication. For example, testimonies
at the Hearing on the Employment Non-Discrimination Act (1996)
repeatedly invoked the argument that responsible corporate citizens are
willing to go beyond what the law itself demands because of the fundamental belief that all people have the right to be treated with dignity and
respect (Creed et al. 2002, p. 484, emphasis added). Civil rights discourse
was invoked by gay, lesbian, bisexual and transgender (GLBT) employees
and other advocates of nondiscriminatory workplace legislation as they
successfully asserted their identity as citizens entitled to, but currently
denied, equal protection under the law. This example demonstrates how the
meaning of citizenship is not a pre-given concept. Rather, in the moment
of discursive articulation illustrated in very dierent ways by the Toyota
advert and Ms Kobayashis whistleblowing a particular notion of citizenship can act to bring itself into being as part of the intersubjective structuring of the moment.
Participation in a polity
In common with other concepts, including structure, corporate citizenship admits of diverse meanings (Bovens 1998). In comparison with corporate social responsibility (CSR) or sustainability for example, its
meaning is distinctively complexied by a dominant meaning of citizenship as suggestive of participation in a polity as well as loyalty to, and protection by, the polity. When citizenship is associated with corporation,
interdiscursivity occurs where inter alia discourses of democracy and social
justice, in addition to those of environmentalism and neoclassical economics, intersect (Parsons 2005). This interdiscursivity may be contained
within a (currently hegemonic) discourse that downplays the citizenship
411
in corporations and thereby depoliticizes corporate citizenship as equivalent to corporate investments of time and money in pro bono work, philanthropy, support for community education and health, and protection of
the environment (Gardberg and Fombrun 2006, p. 329). Such containment
is problematized, however, by conceptualizations that draw more directly,
deeply and insistently on notions of citizenship.
When informed by a liberal concept of citizenship,4 the extended
meaning of corporate citizenship is attentive to how corporations are
increasingly involved in the administration of aspects of citizenship formerly placed principally upon governments (Matten and Crane 2005, especially pp. 171 .), such as the provision of education and healthcare. When
extended to a more radical concept of democracy, the focus shifts to an
emphasis upon collective self-determination. Radical democrats are critical of liberal contentment with limited forms of communication, participation and dissent that eectively bestow legitimacy on a social order where
plural forms of domination (for example, of class, gender, ethnicity and so
on) are institutionalized such that reform occurs predominantly within a
framework of equality of opportunity to work within and reproduce the
established system. A sticking point for radical democrats, then, is the
acceptance of, or vulnerability to, established practices by other deliberative as well as liberal forms of democracy.
Noting that proponents of radical democracy are critical of the
instrumental character of liberalism, Norval (2004, p. 151) summarizes
the core ideas of radical democracy. First, central importance is given to
the political which means that consensus, for example, is regarded as a
political (hegemonic) accomplishment, rather than the outcome of a
rational process in which agreement, rather than an uneasy accommodation, is reached. Second, and relatedly, there is an emphasis on the construction and articulation, rather than mere aggregation, of interests and
identities (ibid.) through processes of discursive struggle. Social interaction and communication, including democratic modes of social formation, do not simply reveal pre-given interests and identities. Rather, such
interaction creates and transforms interests and identities. Third, and
relatedly, there is the attention given to the process of subject formation
in general, and the constitution of democratic identities in particular
(ibid.), as contrasted with a focus upon procedures that are deemed or
intended to demonstrate or guarantee the democratic development of
society. While it may be arguable that none of these elements is per se
incongruent with Habermasian deliberative democracy, radical democracy avoids deliberative democracys reliance upon idealized counterfactuals and pays much greater attention to the constitution of democratic
identities.
412
An understanding of citizenship that incorporates participation to radically change the polity is conspicuously absent from the catalogue of features attributed to corporate citizenship in liberal as well as managerialist
literatures. Without this radical dimension, however, proclamations of corporate citizenship may amount to little more than a slogan that restores
some legitimacy to the status quo of corporate practice or provides a smokescreen for dubious corporate practices.
413
414
415
416
417
climate change, for example. We anticipate that such debates make it more
likely that questions about the position of business in society will be raised
with increasing frequency and intensity in ways that can lend grip to a reinscription of the corporate citizenship signier. The combination of ideas of
process, morality, inclusion, participation and openness within deliberative
democracy provides numerous hooks into which specic concerns and
demands can be linked. Deliberative democracy may therefore become an
appealing and fruitful way to open up corporate actions to greater scrutiny
and public debate as it provides a universalizable content, one around
which a large number of particular issues and claims may be articulated.
Our reading of Laclau and Moue is that they would be in broad agreement with Scherer and Palazzos assessment of a looming crisis of legitimacy and identity for corporations; and they would particularly emphasize
how contemporary events and developments are leading to a reactivation
of what had become rather widely sedimented in advanced capitalist societies that is, the taken-for-granted legitimacy enjoyed by corporations
over the past several decades. The dierence resides in how Habermas and
Laclau, respectively, interpret politicization and, relatedly, how their
respective forms of theorization suggest that it be addressed. Following
Habermass lead, Palazzo and Scherer (2006, pp. 789) contend that moral
legitimacy has become the core source of societal acceptance; and that in
a context where normative conicts can no longer be solved by referring to
a shared background of values and traditions, communication becomes the
sole source of peaceful interaction and mutual recognition (ibid., pp. 789,
our emphasis). Laclau and Moue do not take issue with the importance
of communication but question whether becoming the sole source of
peaceful interaction and mutual recognition is consistent with advancing
and preserving the ethos of (radical) democracy.
Achieving grip
If deliberative democracy is to play a universalizing role that is, if
Habermasian deliberative democracy is to be identied (articulated) as the
hegemonic content of a resurgent notion of corporate citizenship then it
will have to achieve grip so as to become a de facto practice of the polity.
That, after all, is a condition of becoming hegemonic. A key issue then is
whether deliberative democracy can achieve the required grip when at the
core of this approach is a reliance upon the purication or tighter
specication of processes of deliberation through an attentiveness to procedures notably, through the use of law. Where deliberative democracy
falls back on communication procedures and institutionalization of consensus building, radical democracy repeatedly worries away at the suturing
of any emergent consensus in order to keep alive the subversive ame, or
418
energy, of openness. However, while deliberative democracy undertheorizes how open communication can accommodate antagonistic dierences
in identication, radical democracy struggles to theorize how antagonistic
relations between mutually negating enemies can be transformed into agonistic relations between respectful adversaries.
As Norval (2006, p. 230) notes, there is a failure of both deliberative and
poststructuralist (radical) models of democracy to address the question of
how democratic norms and values come to grip subject-citizens. This
failure is most acute in deliberative democracy where a focus upon proceduralism marginalizes consideration of the question of the identityforming ethos of democracy (ibid., p. 239, added emphasis). In the case of
poststructuralist radical democracy, attention is paid to the formation
of the subject (for example, through a Lacanian understanding of
identication) but, as Norval acknowledges, the construction of democratic subject positions is often relegated to the domain of mere contextual
political articulation (ibid., p. 230). Arguably, the democratizing process of
transforming antagonisms into agonistic relations requires relevant channels, yet very little guidance for the formation and institutionalization of
agonistic democracy can be found in Laclau and/or Moues writings. In
principle, then, there may be considerable merit in exploring how the
respective strengths of deliberative and radical formulations of democracy
may complement each other without demanding that they can be fused.
In so far as deliberative democracy is able to secure and develop an institutional framework capable of defending and deepening liberal democracy
by encouraging a greater democratization of private and public administration, it may serve to compensate for a decit in radical democracy.
Specically, it may make a valuable contribution to the process of regulating democratic politics by developing institutions and practices through
which the potential antagonism can be played out in an agonistic way
(Moue 2005, p. 21). Without such an input, there is a dicult-to-justify
risk that the lack of procedures will weaken the prospects for democratic
politics, though Habermass framework oers no guarantees. As Habermas
(1996, p. 7 note 8; cited in Kapoor 2002, p. 474) makes the argument, deliberative democracy depends not on a collectively acting citizenry but on the
institutionalization of the corresponding procedures and conditions of
communication. This strength of Habermass position is, however, also a
weakness to the extent that its focus is not upon the demands articulated
by a plurality of (passionate) citizens but, rather, upon procedures that are
intended to produce a deliberated consensus. It is here that the agonistic critique of deliberative democracy comes into play, defending the openness of
political life and thereby recognizing what is excluded and occluded in the
representation of legitimate politics as dialogue (Schaap 2007, p. 72).
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420
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redress from the FSC as a consequence of a cumbersome complaints procedure (notably similar to Ms Kobayashis experience at Toyota described
earlier).
Silence on the RF ndings allows Scherer and Palazzo to oer the
unqualied view that the FSC can be considered one of the most advanced
concepts in the sense of our proposed political CSR (Scherer and Palazzo
2007, p. 1110). Of course, no organization is going to be without signicant
imperfections. But to identify the FSC as a model of political CSR and to
claim that the FSC demonstrates the corporate embeddedness in processes
of democratic will-formation and problem solving in a transnational
context of political governance (ibid.) does fuel some concern about the
value and/or application of Habermass deliberative democracy. What the
RF report communicates to us is a triumph of system over lifeworld legitimized by a discourse of deliberative democracy where it is claimed, for
example, The FSC is designed around deliberative criteria such as broad
participation, the attempt to exclude corporate power as a decision criterion . . . (ibid.).12
If the ndings of the RF report are accepted as a reliable indicator of the
operation of corporate citizenship at the FSC, then it illustrates our earlier
points about the importance of buy-in to the principles of citizenship and,
more specically, the likely consequences if mere lip-service is paid to commitments to develop skilful processes that transform and democratize corporate practices. More specically, there is a risk that formal principles and
structures are established that approximate to ideals of deliberative democracy but that the everyday practices of organizing fail to embody and
nurture such lofty ideals. While a supercial tick-box audit might show that
the relevant procedures are in place, it is only when attention is given to
the outcomes of specic practices that signicant doubt is cast, for
example, upon the claim that the FSC demonstrates the corporate embeddedness in processes of democratic will-formation and problem solving in
a transnational context of political governance (ibid.).
Conclusion
Radical corporate citizenship?
Scherer and Palazzos use of the FSC case gives us pause for thought about
how ideas of deliberative democracy are vulnerable to appropriation, especially in a situation where the lifeworld has become penetrated and heavily
contaminated by the system. When dissociated from concepts of
identication and emancipation, civil society risks becoming incorporated
into the system as a third subsystem alongside the economic and administrative systems. It is then a short step just mere commonsense we might
422
say to taking a sectoral perspective where corporate citizenship is theorized exclusively in relation to the subsystems of business (money), government (power) and civil society (see, for example, Waddell 2000).13 In this
commonsense or pragmatic recasting of lifeworld, processes of emancipation which, arguably, are central to the project of critical theory can
become diluted, marginalized and/or reconstructed to the point of invisibility. The signier civil society comes to embody the mere trace of these
emancipatory processes. That is to say, it comes to serve as the means of
controlling them by defusing their antagonism within the systemic discourse of sectors. How else can we explain that when, in the context of corporate citizenship, citizenship is taken to mean democracy, the move can be
made without immediately raising an impassioned cry that it is not enough
to think only of corporations in a democracy without also thinking about
democracy in corporations?
Consideration of the FSC case reinforced our scepticism about the
capacity of a Habermasian approach to corporate citizenship to open up
substantively new modes of participation for the polity. Specically, we are
uneasy about the prospect of the problematic underpinnings of
Habermass theory becoming normalized and silenced behind a commonsense that assumes that open deliberation will generate a role for business
in society that is better grounded in morality and ethics. Is this morality
likely to be a new start, a way to ground new social identities for a changing world order? Or is it more likely to produce a re-legitimation of the
existing system old wine in new bottles? To put it into Laclauian wording,
does the introduction of deliberative democracy suciently disrupt established equivalent, limited and even extended views of corporate citizenship so as to yield the best chance of transforming them into a radically
new logic?
A specic concern and practical implication of our analysis is that a critical dimension of citizenship that is, participation in a polity is vulnerable to being formalized and blunted in Habermass pragmatic conception of
deliberative democracy, even to the point that it seems self-evident and
uncontentious to assert that it is dicult, if not impossible to implement
concepts of radical democracy (i.e., all citizens participate in all public decisions) in modern societies (Scherer and Palazzo 2007, p. 1107; see also
Habermas 1998). By viewing radical democracy through an instrumental
lens, it becomes reduced to a particular demand for the participation of all
in all decisions that is plainly impractical when understood within an
instrumental discourse. The rejection of a more radical conception of
democracy in the name of pragmatism (that being the commonsense
of instrumentalist discourse) occurs precisely at the point where the limits of
instrumentalist discourse the impossibility of its closure are encountered.
423
424
425
relevance for corporate citizenship. Its dismissal would, in our view, run
counter to the spirit of openness that radical democracy prizes most highly.
An approach which neglects the role of law and/or the importance of communitarian deliberation in supporting processes of radical democracy risks
jeopardizing the gains of liberal democracy (Laclau 2004, especially
p. 298). That said, there is also a risk that translations of Habermass ideas
about deliberative democracy into the domain of corporate citizenship
become excessively preoccupied with the institutionalization of representation as a means of ordering the world. Deliberative democracy is too
readily appropriated in the service of corporatist liberal democracy in
which the forced nature of agreements is glossed over, as illustrated in the
example of the RF report on the operation of the FSC. Radical democracy
invites us to think more in terms of ways of being in the world; and to foster
and preserve an awareness of the unavoidable tensions that arise from the
necessity, yet impossibility, of suturing openness, as manifested in opposition and dissent. We anticipate that some readers may associate the stance
of radical democracy with being overly romantic or insuciently pragmatic. Our response has been to show how the advocacy and pursuit of
deliberative democracy per se can be excessively pragmatic and conservative. From a radical democratic standpoint, traversing the tensions learning to live with them and to appreciate them as constitutive necessities of
the social world is considered to be endemic to the puzzles and possibilities of citizenship. So, while we support the intent of deliberative democracy, our support is qualied by a concern to highlight and correct what we
assess to be the vulnerability of deliberative democracy to co-option and
formalization.
Notes
1.
2.
3.
4.
5.
To clarify the terminology that runs through this chapter, identity is identication with
a subject position or multiple positions in a discursive structure. Discourse includes all
activities in the social realm, including therefore not only linguistic practices but also all
other symbolic and material practices. Since identity is discursively constructed it is
changeable, contingent, fragmented and never fully complete or xed. For an introduction to these terms, see Jrgensen and Phillips (2002).
The term is used by Glynos (2001) to mean the way that a concept attracts an emotional
investment in, and hence an identication with, the concept.
As Butler (1997, p. 13; cited in Swanson 2005, pp. 1045) puts it, for some social formation to appear as structured is for it to have covered over in some way the contingency
of its own installation (original emphasis).
By a liberal concept of citizenship we mean citizenship in a system of representative
democracy where rights and freedoms of individuals are protected by law while state
power is exercised by elected representatives who are themselves subject to the law.
Here we signal a key dierence between radical democracy and (Habermasian) deliberative democracy. Both approaches envisage that more participation will produce more
democratic dispositions. However, while deliberative democracy seeks to promote procedures and practices of participation and consensus forming, radical democracy is
426
6.
7.
8.
9.
10.
11.
12.
13.
427
words, for Habermas the transcendental procedure of discourse ethics is used to validate
universal moral hypotheses by testing them in lifeworld situations from which are derived
practical ethics as contingent values.
Our concerns are not allayed when visiting the FSC website where we came across an
endorsement quote from the Business Manager of B&Q, a market-leading hardware
store. In this quote which, it should be recalled, is selected and showcased by the FSC,
comment is passed only on the benet of FSC membership as being able to secure a competitive advantage by demonstrating to B&Q customers that its wood products are traceable from the store right back to the forest. There is no mention of this being an integral
part of any broader commitment to educating either its employees or its customers about
sustainable forestry, and thereby to reducing detrimental impacts on the environment
(see http://www.fsc.org/en/whats_new/news/news/30, accessed 24 October 2007).
Habermass lifeworldsystem division was originally predicated on the system as the
locus of the economic and administrative (sub)systems which are considered to be separate systems that together comprise the System. The lifeworld comprises the public
and private spheres and is not conceived as a system. Interactions between the lifeworld
and the system are through the media of power and money (Habermas 1987, p. 320).
This separation is a necessary construct for the idealized thought experiment underpinning the theory of communicative action. In more recent, and allegedly more pragmatic,
work on models of democracy, Habermas sees civil society as merely distinct from
(rather than of a dierent type to) the economic and administrative systems (Habermas
1998, p. 249). What we are asserting is that putting civil society on this level of commensurability with the economic and administrative systems risks reducing the lifeworld
to another subsystem of the system. By introducing the medium of solidarity he reinforces the idea that there is a tripartite system of economy (with its medium money),
administration (power) and civil society (solidarity). The fact that solidarity tends to
take us in the direction of ordering and consensus, rather than emancipation and
identication, only seems to reinforce this move towards civil society as part of the
system. We recognize that this may not be the intent of Habermas here, but we believe it
is the eect.
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contested values (Diermeier 2006) in which how they address the social,
moral and environmental aspects of their business decides on both their
success and legitimacy. In the end, then, balancing economic demands on
the one hand and social, moral and environmental demands on the other,
may turn out to be the ultimate leadership challenge, that is, reconciling the
world of prot and the world of purpose.
Responsible leadership
In the light of these leadership challenges we dene responsible leadership
as a values-based and principle-driven relationship between leaders and
stakeholders who are connected through a shared sense of meaning and
purpose through which they raise one another to higher levels of motivation and commitment for achieving sustainable values creation and responsible change (Maak and Pless 2006b; Pless 2007).
What do we mean by this denition? What are its key elements? First, as
we have argued elsewhere (Maak and Pless 2006a), following Burns (1978)
and Ciulla (1998), it is important to understand that leadership is a social
and normative phenomenon that is based on values and driven by ethical
principles. Yet, to acknowledge that leadership is a normative phenomenon
in which the values of both leaders and followers count is a necessary condition, but not a sucient one. To qualify as responsible, leadership needs
to be based on the right values; values that enable both leader and followers to nd a common meaning and purpose, such as contributing to a
sustainable future; values that leaders live and incorporate in authentic
ways (George 2003). In fact, as John Gardner notes (1990, p. 77): We must
hope that our leaders will help us keep alive values that are not so easy to
embed in laws our feeling about individual responsibility, about caring for
others, about honor and integrity, about tolerance and mutual respect, and
about fullment within a framework of values.
Second, leadership occurs in interaction between leaders and followers.
Yet, as obvious as this may sound, in a stakeholder society followers are not
necessarily subordinates but also other internal or external constituencies
(Freeman et al. 2006; Maak and Pless 2006b, p. 106), who have a stake in
the leadership project. Broadening the view from a leadersubordinate relationship to a leaderstakeholder relationship challenges some of the basic
assumptions in traditional leadership theory which to date understands the
leaderfollower relationship as an unequal relationship with the leader in
charge (Bennis and Nanus 1985) and followers being dedicated to doing
the leaders wishes (Rost 1991, p. 70). This understanding is based on the
assumption that leadership authority comes with status and position power
inherent to dyadic, hierarchical relationships. Yet, it is unable to explain
leadership success in vertical network structures where leaders mobilize
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436
2.
3.
4.
Connected to these roles are the more operational ones of being the
architect of inclusive systems, processes and a moral infrastructure; change
agent and transforming leader; coach by supporting followers; and storyteller, that is the creator and communicator of moral experience and
437
enabler of shared systems of meaning. In addition, leaders ought to consider themselves weavers of relationships; building and sustaining trustful
relationships to all stakeholders.
As indicated in the beginning, it is the purpose of this chapter to discuss
in more detail the particularly important role of a leader as citizen in a
globalized world. We ask what it means to be a leader and citizen in a global
business environment and what it takes to act as one. Corporate citizenship
arguably depends on how corporate leaders think, act and behave in terms
of citizenship. Put dierently, corporate citizenship depends signicantly
on the self-image and -understanding of leaders as citizens. If leaders see
and think of themselves as concerned citizens it is more than likely that they
will make sure that their organization acts as a corporate one. If, however,
the leaders in charge do not care about communities at home and abroad,
if they do not think about social, environmental and political challenges
and the state of the world, it will impact on the existence, sense and scope
of corporate citizenship.
Let us therefore assume that leaders are concerned about civic health
(Schudson 1998) as they are about business matters. This means that they
are committed to a greater common good and will engage in activities to
further the well-being of the communities in which they operate both at
home and abroad. Citizens know that they need to balance various
responsibilities, especially with respect to integrating business and civil
duties. Citizens value political, economical and intellectual freedom as
well as their moral free space (Donaldson and Dunfee 1999). These freedoms, however, are conditional, secured by, and cultivated in, a healthy
community in which civic virtues like mutual respect and recognition, tolerance, fairness and inclusion are valued (Dagger 1997). Such republican
civility (Ulrich 1997; Barber 1999; Maak 1999) commonality, deliberation, inclusiveness, listening, learning and development (Barber 1999,
pp. 423) is not only morally desirable; it is also key for a leader if he/she
is to be and stay connected to multiple stakeholders. The responsible
leader knows that business legitimacy depends on an inclusive stakeholder approach and that overcoming the discursive deciency (Scherer
and Palazzo 2007) in matters of corporate responsibility is important.
Ultimately, the leader, too, is a member of civil society and thus looks at
stakeholders not as aliens but as equally integrated members of the
(political) community in the pursuit of both individual freedom and
ourishing and the common good. Thus, in contrast to dominating liberal
notions of citizenship, our conceptualization draws on civic republicanism as a more balanced and thicker notion of citizenship (Walzer 1994);
guiding responsible leaders both at home and at home in the world as
cosmopolitan citizens.
438
Pless (2007) has recently shown how the late Dame Anita Roddick,
founder and former leader of the Body Shop, as a concerned and committed citizen, created a culture of citizenship, communicated that citizenship
is an integral part of doing principled business at the Body Shop (and elsewhere) and used her inuence as a leader to mobilize dierent stakeholders
to take coordinated action for the common good (for example, gaining
support from NGOs to become alliance partners, mobilizing sta to run
the campaigns and inspire customers to support them). Roddick, as a
citizen and leader, helped to set standards in the business world (fair trade
business practice) and contributed to awareness raising on social, environmental and human rights issues in business, academia and society. In fact,
her notion of being an active and activist citizen can be understood as
transforming leadership (Burns 1978), with the leader acting as a responsible change agent. Roddick implicitly embodies many of the hallmarks of
a cosmopolitan citizen. Yet, to better understand what these are, let us
turn more explicitly to cosmopolitanism as a source of responsible global
leadership.
Cosmopolitanism
What does it mean to think and act as a cosmopolitan citizen? What do we
mean by cosmopolitanism? Are we not all cosmopolitans, citizens of the
world? Why should we engage in cosmopolitanism? As Martha Nussbaum
argues in the quote that started o this chapter:
If our world is to be a decent world in the future, we must acknowledge right
now that we are citizens of one interdependent world, held together by mutual
fellowship as well as the pursuit of mutual advantage, by compassion as well as
self-interest, by a love of human dignity in all people, even when there is nothing
we have to gain from cooperating with them. (2005, pp. 21718)
439
sociologist Ulrich Beck (2006) uses the term risk-cosmopolitanism in presenting his argument for a global risk society. Ironically, then, and to a
certain extent, 21st-century cosmopolitanism is triggered by a collective
risk experience. In other words, the fragility of the human condition on this
planet has led to a revitalized sense for the importance of a more active cosmopolitanization socially, environmentally and politically.
At the same time it can be argued that the world is getting more cosmopolitan every day. Economic globalization, the internet, a rapid increase
in air travel, an emerging class of cosmopolitan managers, and the active
experience of other cultures and consumption of cultural dierences (in
music, food, style and so on) have led to a lifeworld which appears to be
increasingly cosmopolitan. Yet, as Beck (ibid., p. 19) argues, these are sideeects of global trade, travel and consumption, most of which happens
rather unconsciously; it is passive or banal cosmopolitanism. Given this
argument, real cosmopolitanism apparently needs to reect much more
than aesthetic and cross-cultural experience: namely ambition, commitment, action and vision to be at home in the world and make this world a
better place. Put dierently, globally savvy and mobile people are not necessarily cosmopolitans (Hannerz 1990).
What makes cosmopolitanism a key word of our time (Benhabib 2006,
p. 17) is obviously something dierent. Aside from a somewhat collective,
growing sense of risk and urgency, nurtured by an active global civil
society (including supranational bodies and NGOs), we nd a revitalized
sense of cosmopolitanism that in fact has a long history of thought and
action. There is widespread agreement that it goes back to the Stoics in
ancient Greece; Diogenes is supposed to have said, when asked which city
he belonged to: I am a citizen of the world. It was a bold statement at
that time and reected a rejection of the communitarian connes of the
Greek city republics. The brilliant Immanuel Kant, who in his lifetime
apparently never travelled farther than 30 miles from his home town of
Knigsberg, made cosmopolitanism part of the Enlightenment and is
arguably the father of modern-day, rights-based cosmopolitanism. In
his Perpetual peace Kant (1795) imagined a cosmopolitan right
(Weltbrgerrecht) that ought to govern the global relations of citizens
worldwide; a right that belongs to all human beings as potential participants in a world republic. Kants pioneering work may be seen as a key
reference for mid-20th-century cosmopolitanism, as reected by the UN
Declaration of Human Rights, but also in the work of Hannah Arendt,
in particular her discussion of the atrocities of Nazi Germany in the
context of the Eichmann trial (1963). Following Kant, Arendt likewise
argues that crimes against humanity are not violations of moral norms
alone, but violations of the rights of humanity in our person (Benhabib
440
2006, p. 22), and thus need a special frame and treatment on a global,
human scale.
Last but not least, since the mid-1990s, that is with globalization becoming a ubiquitous phenomenon, we witness an intensied discussion on
promises and perspectives of cosmopolitanism in a globalized world, for
example, with respect to national attachment and patriotism (Nussbaum
1996), multicultural citizenship (Kymlicka 1995), global governance (Held
1995), and philosophical world-views (Bohman and Lutz-Bachmann
1997), a discussion that lately has intensied (Vertovec and Cohen 2002;
Brock and Brighouse 2005; Appiah 2006; Beck 2006; Benhabib 2006), not
least in the light of world poverty and the Rawlsian (Rawls 1999) inspired
duty of assistance (Pogge 2002; Chatterjee 2004).
Against this historical backdrop, cosmopolitanism may be divided into
four connected streams: political cosmopolitanism, ethical cosmopolitanism, a cosmopolitan world-view and cosmopolitan practice. Political
cosmopolitanism is concerned with questions of global governance, political agency and citizenship in a globalized, at world (Friedman 2005).
Ethical cosmopolitanism captures the discussion on legal and moral principles in contemporary cosmopolitanism: cosmopolitan justice and thus
human rights issues; cosmopolitan duties and principles (respect, recognition of dierence, assistance and so on).
When Diogenes said I am a citizen of the world, his statement symbolized a specic cosmopolitan attitude and view of the world. This specic
mindset is equally important since cosmopolitanism depends on how we
think about cosmopolitanism: if we consider ourselves as cosmopolitans,
if we aspire to be and act as cosmopolitans and if we reect about the state
of the world and our role in contributing to its betterment then we shall
likely act accordingly, reconciling our duties and obligations both private
and public.
However, it is important not only to think as a cosmopolitan citizen, but
also to act as one. What distinguishes 21st-century cosmopolitanism from
earlier forms in history, it might be argued, is the emerging cosmopolitan
practice in an active global civil society, supported by web technologies and
rapid economic convergence, and its potential to improve the state of our
globalized world.
Concluding our tour dhorizon we contend that all four variations of cosmopolitanism are needed. In fact, all of them are part of what may be
termed the 21st-century cosmopolitan project. In this sense, cosmopolitanism is a project of mediations and integration, not of reductions or of
totalizations (Benhabib 2006, p. 20). It is not about the ultimate global
ethic, or the ultimate set of universalizable norms and values; nor is it
equivalent to nding a mere modus vivendi among cultures. Rather, in the
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442
self-aware and reective leaders are in determining their place in the (business) world and thus to a considerable extent on the leaders cognition.
Accordingly, a cosmopolitan mindset would certainly need to include the
following (these are exemplary key features and are not intended to provide
an exhaustive list):
1.
2.
3.
4.
5.
6.
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445
those close to us, or do we care about others, for example, the distant needy,
in equal ways?
Empathy towards others, especially those in need, based on mutually
shared feelings of human ourishing and vulnerability, is a fundamental
moral hallmark of the human condition, laid out eloquently for example,
in Adam Smiths Theory of Moral Sentiments (1759). It implies in the cosmopolitan context that we recognize others, contemplate the lives of others
(Sen 1999, p. 283) and take seriously the value not just of human life [in
general] but of particular human lives, which means taking an interest in
the practices and beliefs that lend them signicance (Appiah 2006, p. xv)
and in the conditions of their freedoms and livelihood. The cosmopolitan
citizen cares not only about his/her own kin, but also about strangers.
Leaders in particular have both potential and means (especially in large
corporations) to contribute to social betterment, to assist others in need, to
further human capabilities and foster human ourishing. Accordingly, such
commitment can reasonably be expected. The responsible leader as a cosmopolitan citizen cares about the needs of others, followers and nonfollowers alike. In fact, as a citizen of the world the leader has a moral
obligation to care for others, especially the less powerful and privileged.
This is not the place to discuss the limits of such a caring attitude. Each
and every leader has limited resources at his/her disposal, personally and
organizationally. How these resources should be allocated is an important
question that ought to be addressed in reective processes both individually (as part of a leaders discretion) and interactively (as part of stakeholder will formation). We contend at this point merely that a caring
attitude is key to cosmopolitan ethics, but do not consider how this attitude
may be transferred into practice.
Ethics of assistance In The Law of Peoples (1999) John Rawls develops
principles of global justice. His suggestions have received considerable
attention among philosophers and legal thinkers (see, for example, Pogge
2002; Chatterjee 2004), most notably his eighth principle of justice:
Peoples have a duty to assist other peoples living under unfavourable conditions that prevent their just or decent political and social regime (1999,
p. 37).
Rawls considers his suggestions to assist burdened societies a part of a
liberal ideal theory, which explains that his formulation is thin or weak
in the sense that it aims targets as Rawls puts it to create conditions
under which a people or society is able to help itself. In Rawlss view this
requires rst and foremost a minimal amount of justice and a decent political regime. However, the aim is to realize and preserve just (or decent)
institutions, and not simply to increase, much less to maximize indenitely,
446
the average level of wealth, or the wealth of any society (ibid., p. 107).
Thus, while Rawls recognizes a duty to assist those in need, he insists on
setting clear targets to create basic decent conditions that may (or may not)
enable them increase their level of wealth.
Pogge (2002), Nussbaum (2005) and others have criticized Rawls for the
thinness of the principle, arguing for a thicker conception (Walzer 1994)
of the duty to assist. In fact, Pogge contends that we, the more advantaged
citizens of the auent countries, are actively responsible for most of the
life-threatening poverty in the world (Pogge 2005, p. 92) and thus have the
moral duty to help and assist people in less favourable conditions. He suggests a global resources dividend, which would amount to roughly $4 per
person and year, to redistribute resources in a more decent way. Nussbaum
(2005, pp. 214 .) is less concrete but equally convinced that we have the
responsibility to help poorer nations. In fact, she argues that prosperous
nations have a responsibility to give a substantial portion of their GDP to
poorer nations, that the main structures of the global economic system
must be designed to be fair to the poor and developing countries and that
multinational corporations have responsibilities for promoting human
capabilities in the regions in which they operate.
While we can discuss neither Rawlss principle, nor Pogges or Nussbaums
suggestions in more detail here, we agree with these authors that privileged
cosmopolitan citizens have a moral duty to assist others, especially those in
need. Yet, while Rawlss suggestion is arguably too thin to help leaders in
fullling this duty, it is equally questionable if large-scale, substantial redistribution eorts can help to eliminate poverty and indecent disparities. We
agree with Nussbaum, however, that we need fair structures and a more
active responsibility from corporate citizens (MNCs and others) to assist
poorer regions and nations in building human capabilities. What Nussbaum
stresses is the cosmopolitan principle of active agency in assisting fellow
humans and citizens in securing the basic needs and in acquiring human
capabilities (Nussbaum and Sen 1993) to lead a decent and ultimately
ourishing life.
In this sense we posit that business leaders as (powerful and privileged)
cosmopolitan citizens have the moral duty to assist others in much less
favourable conditions, and the responsibility to ensure that their organizations act in the spirit of this principle as good corporate citizens around the
world.
Before we conclude our discussion of cosmopolitan ethics we need to
address two areas of concern, namely the question whether business leaders
should, or are allowed to act in matters of global justice; and whether our
moral point of view is indeed cosmopolitan enough, that is whether it is
cross- and interculturally sound.
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448
unethical to interfere with the political aairs of a country. The Shell leadership admitted later that they were wrong on all counts and initiated a fundamental organizational learning process towards becoming a responsible
and sustainable corporation (see Wade 2006). Others, such as the sports
apparel maker Reebok with its Human Rights Campaign (see the
companys website at www.reebok.com), have taken the high road more
proactively and thus recognize that being part of the global community
means being part of a common moral universe and that allegiance is owed,
rst and foremost, to this universe of reasoning citizens of equal worth and
dignity, not to shareholders.
Layered cosmopolitanism The perspective sketched out as cosmopolitan
ethics reects at heart very basic, universal human needs the need(s) for
emotional, political and social recognition. Whatever religious, spiritual, or
belief system the other has, I cannot reasonably question his/her basic needs
to be loved, appreciated, to be a full citizen, or to be recognized at work and
in his/her community. That is why the ethics of recognition is both thin
enough to be universally valid and enable the inclusion and recognition of
pluralist perspectives (as long as they do not violate the basic principles),
and thick, that is tangible enough, to guide the moral reality of crosscultural relationships (Walzer 1994). Thus, we nd some true unity in diversity. Yet, it will not be achieved unchallenged: one of the key challenges in
cross-cultural contexts is to determine when dierent is just dierent and
when dierent is wrong (Donaldson 1996, p. 48). In other words, even if
the guiding moral principles are clear, leaders, or followers, may encounter
situations when they need moral imagination (Johnson 1993) to reconcile
moral conicts or dilemmas.
The principles of care and assistance complement the cosmopolitan
moral point of view and emphasize the need for active agency, responsibility and accountability in global matters. What we nd, then, are dierent
layers of principles, both fundamental and practical, that require interpretative activity depending on the context and the moral challenges at hand.
We agree with David Held (2005, p. 18) that it needs such layered cosmopolitanism, a mix of regulative principles (that all citizens could reasonably assent to while respecting plurality and dierence) and
interpretative activity, to bring the cosmopolitan vision to life.
Conclusion: cosmopolitan business leaders as agents of world benet
In this chapter we have argued that given todays global leadership challenges business leaders should see themselves as cosmopolitan citizens.
Most business leaders, in particular those in MNCs, have the means, the
power and the potential to contribute to the betterment of the world to
449
act as agents of world benet. Business leaders are key actors and agents
in realizing globalization with a human face and a more decent globalized
world.
In fact, at the time of writing we are witnessing a growing number of
business leaders acting as cosmopolitan citizens. Franck Riboud, CEO of
the worlds largest dairy and food company, Danone, for example, has initiated, in collaboration with the Nobel laureate Muhammad Yunus of
Grameen Bank, the GrameenDanone Food Co., a non-loss, non-prot
venture in Bangladesh, to produce safe and aordable dairy products to be
sold at no prot in one of the most impoverished countries in Asia
(Brinkbumer and Fichtner 2007, p. 51; Danone 2006). Patrick Cescau,
Group Chief Executive of Unilever, is working hard to lead the British
Dutch food giant into new waters to establish responsible and sustainable
business practices in developing countries. Among the ventures is Shakti,
an initiative by Hindustan Lever Ltd that enables Indian women in rural
areas to become micro entrepreneurs, selling specically designed hygiene
and household products in rural villages. Shakti enables not only people in
remote areas to satisfy certain basic needs, but also to build human capabilities in women to become independent micro entrepreneurs (Shakti
2007). There is Celso Grecco, a former Brazilian advertising executive, who
founded a Social Stock Exchange to connect social enterprises and initiatives in more ecient ways to generate larger dividends in order to nance
social and environmental projects (Brinkbumer and Fichtner 2007,
pp. 489); and there are leaders like Bill Gates or Richard Branson, bornagain large-scale philanthropists and cosmopolitan citizens, whose eorts
to ght diseases, poverty and global warming have arguably more impact
than many traditional eorts to aid people in the developing world.
The challenge is, however, to make these laudable eorts sustainable. The
cosmopolitan challenges and problems at hand are too important to be a
fashion fad. This requires as demonstrated an appropriate mindset, a rm
understanding of cosmopolitan ethics, as well as the moral motivation to
bring it to life, to help establish a cosmopolitan business practice in the connected world of ours,
where a host of complex relationships link people across national borders, and
the accident of birth in any given nation now looks in some ways as morally arbitrary as the accidents of race, class, and sex . . . We need to devote ourselves to
working out new theories that will prove more fully adequate to this world.
(Nussbaum 2004, p. 171)
We understand our eort to present key features of a cosmopolitan business ethic as an attempt to contribute to a better understanding of the
responsibilities of business leaders in a connected world and hope that it
450
proves to be helpful for others researchers who agree with us that the global
business world needs cosmopolitan, rather then mere global business principles, and that business leaders ought to act as agents of world benet
rather than world misery.
As Benhabib (2006, p. 72) notes, such norms and principles are morally
constructive; they create a universe of meaning, values and social relations
that had not existed before, at least not in this way, and may change the normative constituents and evaluative principles of the (business) world. Thus,
they are to a signicant extent unprecedented. Yet, the emerging cosmopolitan business practice is reason enough to believe that the unprecedented, once it has appeared, may become a precedent for the future
(Arendt 1963, p. 273). In the end it is not so much a matter of having exact
rules about how precisely we ought to behave, as of recognizing the relevance of our shared humanity in making the choices we face (Sen 1999,
p. 283) as leaders and cosmopolitan citizens.
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Introduction
This chapter contributes to the literature by developing a critical theoretical lens on business and politics to view the political economy of corporate
social responsibility. Drawing on theoretical perspectives from economic
sociology and political economics I discuss how relationships between governments and multinational enterprises (MNEs) discursively produce particular forms of social arrangements of various actors, institutions and
networks, and examine the inclusions and exclusions that result. This political approach problematizes some of the key assumptions underlying politics and corporate social responsibility by shifting the level of analysis
from the individual corporation to the political economy to reveal the discursive and material eects produced by interactions between dierent
actors. The chapter also discusses a critical research agenda for future
research corporate social responsibility in an attempt to broaden our
understanding of what corporations can or cannot do to solve the worlds
social problems.
The chapter is organized as follows: rst, I discuss received knowledge
about businesssociety relationships by discussing the literature on corporate political activity. Second, I outline a politicalcultural approach to our
understanding of institutions and markets as developed by Fligstein (2001).
Drawing on institutional theory I start from the presumption that corporations are one of several groups of actors in institutional elds, domains or
organized social spaces (Bourdieu 1977; DiMaggio 1985; Scott 1995) that
attempt to produce a system of domination. Third, I apply this theoretical
framework to understand how particular forms of social arrangements of
various actors, institutions and networks produce a particular corporate
form and rationality. I discuss the limits of corporate social responsibility
generated by this rationality and the inclusions and exclusions that result. I
conclude by discussing some directions for future research.
Business and politics
Business political behavior refers to the acquisition, development, securing, and use of power in relation to other entities (Boddewyn and Brewer
454
455
456
457
458
459
460
World Trade Organization (WTO), the World Bank, as well as bilateral and
multilateral trade agreements attempt to promote consistency in property
rights, governance structures and rules of exchange.
Thus, a politicalcultural approach to the study of market and rm
behavior is concerned with relations between states and rms as opposed
to the neoclassical view of perfectly competitive markets. Governments all
over the world have been involved in providing infrastructure for markets
and rms to operate. The literature on governmentrm relations views
government intervention either as an exogenous variable, as typied by
population ecologists (Ranger-Moore et al. 1991) or as a coercive force
(Scott and Meyer 1994). In the elds of organizational economics, transaction costs and agency theory governments are classied as nonmarket
phenomena (Boddewyn and Brewer 1994), which stand in direct contrast
to the politicalcultural approach. As Fligstein (2001) points out, market
stability is dependent on rmgovernment relationships because rms rely
on governments and citizens for making markets. A politicalcultural
approach will examine the outcomes of these relationships, both positive
and negative, for all segments of society. This approach provides a normative basis for policy making that either allows or disallows certain relationships to exist. In the next section I shall discuss the power politics of market
and nonmarket actors in institutional elds of the global political economy.
The question of power
Power of actors in institutional elds inuences the outcomes of interactions as well as sets rules and norms. For example, there is some empirical
research on changing societal and institutional norms and shifts in institutional power resulting from heightened environmental concerns all over the
world (Newell and Paterson 1998; Homan 1999; Banerjee et al. 2003; Levy
and Egan 2003). In her analysis of the global environmental movement,
McAfee (1999) describes three types of power that shaped meanings,
practices and knowledge of concepts such as nature, the environment
and biological diversity. She describes how the institutional power of the
World Bank and multilateral environmental institutions, the economic
power of the advanced capitalist states and transnational corporations and the discursive power (Foucault 1980) of the environmental
economic paradigm constructed particular notions of biological diversity
that permitted the international trade of biological diversity as a commodity as well as the control, accumulation and exchange of biological
diversity (McAfee 1999, p. 135).
Discursive power also creates a particular kind of rationality that
inuences macro social developmental issues, policies of institutions such
as the World Bank, the International Monetary Fund and the WTO, as well
461
as micro level activity of corporations, NGOs and other agencies. The consolidation of a market system in the global economy produces a particular
kind of discursive corporate rationality. The same rationality is also a hallmark of what is commonly referred to as the neoliberal agenda (Boggs
1986; Gills 2000; Fine 2001; Taylor 2002). One could argue that the dominant economic view of the world, which is a hallmark of neoliberal economic policies, reects a particular ideology that results in a preoccupation
with the economic organization of society. Neoliberal ideology assumes
that markets are a better mechanism to organize society than governments
(Fligstein 2001). The main tenets of the neoliberal school of thought are
(i) protection of private capital interests and expansion of the process of
capital accumulation; (ii) primary reliance on market forces to achieve economic and social goals through the homogenization of state policies; and
(iii) development of a system of transnational institutional authority above
and beyond the authority of the state (Boggs 1986; Gills 2000). Noted proponents of neoliberalism such as Friedrich von Hayek (1944), Milton
Friedman (1962), and Robert Nozick (1974) argue that economic policies
of deregulation, privatization and tax cuts have positive consequences for
society and represents a spontaneous order of social life based on an individuals freedom to choose.
The rationality of neoliberal thinking is an outcome of power relations
that have discursively produced a particular way of looking at the world,
which in turn has material eects on government policy, international trade
agreements, institutional norms and rules, and corporate strategies. For
example, the last 20 years have seen a signicant transformation in governmentMNE relations, especially among developing countries. Between
1986 and 1995, more than 80 countries liberalized their policies toward
MNEs in terms of welcoming inward foreign direct investment (FDI) and
relaxing rules on outward FDI (Dunning 1998). Supranational institutions
such as the UN also encouraged these policies in 1996 and 1997 the
United Nations Conference on Trade and Development (UNCTAD)
released two reports on encouraging Best Practice in Investment
Promotion which called for developing countries to provide a favorable
climate for investment through scal and other incentives. This marked a
fundamental shift from UNCTAD policies of the 1970s, when the now
defunct United Nations Center on Transnational Corporations attempted
unsuccessfully to develop a universal code of conduct for MNEs designed
at maximizing benets of inward FDI for developing countries and to contribute to development policies of domestic governments (ibid.).
So far I have attempted to develop a critical theoretical framework by
discussing a politicalcultural approach to markets, governments, institutions and corporations as well as the discursive eects of power in dierent
462
institutional elds. Let us now attempt to employ this framework to understand how particular social arrangements of actors, institutions and networks produce particular forms of organization and the kinds of inclusions
and exclusions that result.
The modern corporation as a politicalcultural formation
The emergence and dominance of the shareholder-value-maximizing rm
can be explained using a politicalcultural lens (Fligstein 2001; Perrow
2002). In his excellent historical analysis of the emergence of the modern
American corporation, Perrow described how a legal revolution transformed the nature of corporations. Early 19th-century business rms were
chartered by states to serve specic public purposes and states could, and
routinely did, revoke corporate charters if rms failed to serve the public
interest. Several banks lost their charters due to fraudulent trading, as did
turnpike companies for failing to keep public roads in good repair (Derber
1998). The states role in 19th-century America was to place restrictions
around the incorporation of companies to ensure that the publics interest
was served. However, by the end of the 19th century, restrictions around
incorporation had all but disappeared. As Perrow (2002, p. 41) argues, this
was not a mistake, an inadvertence, a happenstance in history, but a welldesigned plan devised by particular interests who needed a ruling that
would allow for a particular form of organization.
The particular form of organization that emerged was the modern corporation which was given a legal personality, declared by the courts as
being an articial, invisible, intangible being that could enjoy property
rights (ibid.). Establishing the legitimacy of a ctitious legal person or an
articial legal entity distinct from its owners and ocers (Hessen 1979,
p. xiv) had two eects: rst, it eectively put an end to the argument that
the corporation was a creature of the state thus limiting public representation and second, by conferring private rights on corporations, rights normally held by individuals, the court automatically guaranteed a system that
would protect those rights. Thus, an articial legal entity such as a corporation became entitled to protection under the 14th Amendment of the US
Constitution because it was a ctitious person. The legal personality of
the modern corporation was created by certain interests to deliver specic
outcomes that needed a particular form of organization, and a strong state
presence was inimical to these interests. What was originally intended as a
public body now became a private person with its property rights guaranteed by law but its social responsibilities, which were initially mandated by
law, now made discretionary.
As the legal personality of the modern corporation evolved in the 1800s,
contestations in the public, political and legal spheres revolved around the
463
conict between public and private interests. Now that the corporation was
dened as an entity that could enjoy property rights, the focus shifted to
developing systems of enforcement and mechanisms that protected these
rights. Gaining legally enforceable property rights gave more power to corporations in a post-charter era and set in motion the process of devising
new forms of corporate control, beginning with consolidation and mergers
of competitive rms in the late 19th and early 20th centuries, oligopolistic
manufacturing concepts of control in the 1920s, followed by the nance
concepts of control in the 1960s and the nancial reorganization of
American corporations in the 1980s and 1990s through mega mergers
(Fligstein 2001). Throughout this period corporate interests, which
inuenced several key legal rulings about the function of a corporation,
reinforced the idea of a rm as a maximizer of shareholder value. Problems
were dened and solutions were applied with this primary concept of the
rm in mind. Any reference to social good was at best symbolic and derivative in that the economic function provided the social good. The separation of the economic from the social in dening corporate identity, in itself
an outcome of power relations between political and economic actors and
institutions, was also discursively produced by disciplinary power reected
by the tenets of economic theories of the time the notion of externalities, for instance, where governments and other agencies, not economic
actors, were responsible for managing the negative social and environmental eects of economic growth.
New laws were created in the United States that allowed states to allocate
property to private corporations. Perrow (2002) describes how powerful
private interests in the railroad industry in the 1800s were able to obtain
rights of way on public land at virtually no cost. Public legal actions in most
cases were decided in favor of corporations in a socioeconomic climate
where public purpose was dened so broadly that eminent domain and corporate privileges could always be justied in the name of prosperity and
growth; and in general for the freedom to externalize costs (ibid., p. 45). For
instance, a court decision on a petition by Louisville residents protesting the
companys decision to lay rail lines across their neighborhood declared:
A railroad will be allowed to run its locomotives into the heart of Louisville
despite the noise and pollution from its smokestacks (the externality), because
so necessary are the agents of transportation in a populous and prospering
country that private injury and personal damage must be expected. (1839
Kentucky court decision, cited in ibid., p. 141)
464
465
466
467
468
The measures to mitigate climate change currently being negotiated are based
on a worldview of territory that reduces forests, lands, seas and sacred sites to
only their carbon absorption capacity. This worldview and its practices adversely
aect the lives of Indigenous Peoples and violate our fundamental rights and
liberties, particularly, our right to recuperate, maintain, control and administer
our territories which are consecrated and established in instruments of the
United Nations. (IIFC 2000)
469
470
471
2.
3.
4.
5.
6.
472
and accountability. Governance arrangements include legal (national legislation, international laws, treaties and agreements) and extra-legal (voluntary codes of conduct, standards, processes and guidelines) mechanisms.
Increasing NGO and public pressure in a variety of arenas may not yet have
been translated into legal mechanisms, but corporations do change their
strategies based on these external pressures. There are also useful insights to
be gained by investigating alternative forms of organizations, perhaps
hybrid forms of organization similar to the quasi-NGOs (or quangos as
they are called in the UK) or social enterprises that are funded out of corporate prots whose purpose is to implement projects promoting social
welfare (Bertelli 2006).
Markets and corporations are created out of a set of arrangements
between governments, citizens, rms, employees, shareholders and other
stakeholders. Stable markets allow for specic forms of wealth creation,
and market stability is a result of societal and governmental investments
(Fligstein 2001). The MNC is a product that was created by a specic historical process and was granted property rights by governments and citizens. Thus, it is reasonable to expect that these parties can also make claims
on corporations, not just shareholders of corporations. The problem is to
develop a legally enforceable system by which stakeholder claims can be
negotiated. Ultimately the notion of eciency needs to be critiqued from a
social, cultural and political perspective if any alternative social arrangements are to be imagined.
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Introduction
According to the United Nations Conference on Trade and Development
(UNCTAD) in 2006 there were upwards of 77 000 multinational corporations (MNCs) (UNCTAD 2006, p. 10). Of these, some 57 000 were from
the developed countries. In all, these MNCs involved about 770 000
foreign aliates. The rise of the MNC is often associated with the development of globalization indeed it is taken to be one of its prime indicators. However, quite whether these MNCs are truly global is another
matter. In fact, most of them are conned to a home base with only one
or two overseas operations or aliates abroad. And even the largest
MNCs tend to be supranationally regional in their operations rather than
global (Rugman 2005). They still mainly operate on their home territories, with key foreign activities conned to close regional markets and
sources.
Nevertheless, the development of internationalized companies poses
new problems for both their internal corporate governance and their external regulation. This chapter seeks to explore the relationship between
several features of such regulation and governance. First the relationship
between internal governance and stakeholding is explored. This inevitably
involves some discussion of corporate social responsibility (CSR) since it
is the pressures put upon companies through the CSR movement that has
served to raise issues about the expansion of stakeholder interests within
company governance structures. In part this also relates to the particular
legal form of the limited liability company. The common conception in
respect to companies is that they are there to serve the shareholder interest
only. But stakeholding breaks the exclusive focus on shareholders. So on
what basis can such a wider conception of corporate governance be
founded? The argument is that companies are legal subjects in their own
right, ones that, in fact, own themselves. Once this is recognized other than
a simple shareholder interest in respect to their governance becomes apparent. However, there are many problems associated with stakeholding, particularly as companies have internationalized.
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478
the capital intact, and so on. Obviously a dierent set of legal conditions
hold if the company is in liquidation, creditors having a prior interest over
shareholders in this instance. But even under these circumstances, creditors
or shareholders cannot seize the companys assets at will, so nor do they
own it in this sense. Here both shareholders and creditors are similarly
constituted as claimants with only a contingent title in respect to the
companys assets (Kraakman et al. 2004; see also Hohfeld 1919).
In addition, claimants must act in accordance with due legal process.
What this means is that legal rights in respect to any company are always
highly specic and contingent, and what they impart to dierent agents are
dierential capacities and capabilities to undertake actions or engage in
litigation. Legal rights do not exclusively or unconditionally guarantee
access to ownership or anything else but only arrange possibilities for
undertaking litigation or initiating actionable endeavour in the courts.
This point is important in several respects, particularly in the debates
about property rights. These do not impart an exclusive, unconstrained or
unconditional possession to a denite subject or agent. It is not the case,
then, that any attenuation of those rights involving a circumscription or
restraint on their exercise, usually thought to be imposed by the political
process or the state necessarily represents an unwarranted challenge to
those rights of possession. Property rights attribute no more (or no less)
than a capacity or capability to initiate something (like a claim on the assets
of a rm). But that guarantees nothing in terms of outcomes. It only contingently and conditionally arranges a series of possibilities for legal disputation and action.
So with this conception there is no general public or private privileged possession of, or exclusion from, ownership. In principle the law could thus
establish a set of rights that impart capacities and capabilities to any number
of constituent stakeholders without this necessarily undermining a deeper or
more fundamental ownership relation because, as agued above, rights in law
are never rendered with respect to an exclusive possession, but only in respect
to a claim. Here we see the way a discussion of the nature of company law
can establish the principles for the wider notion of stakeholder democracy.
Philosophical arguments for stakeholding
But we could buttress these legal arguments for stakeholder democracy with
some philosophical ones. Any discussion of economic democracy must confront the classic triptych: democracy, liberty, equality (Dahl 1985). Why is
there such a political sensitivity surrounding issues of economic democracy?
The classic arguments here involve whether economic democracy threatens
individual liberty, or whether it is absolutely essential for its eective exercise (Berlin 1958).
480
(Suchman 1995; Wolf 2005; Palazzo and Scherer 2006) . In general terms,
the concept expresses the way in which norms, rules and (particularly) laws
are accepted as valid willingly obeyed and respected because they have
the backing of authority or are authorized in accordance with generally
accepted values and expectations. This encourages consent to the power
relation that is embodied in authority.
In the business world, legitimacy is often thought necessary and, indeed,
a precondition for corporate survival. It secures the continual ow of
resources and the support from external constituencies. In making the
actions of corporations seem to be proper and appropriate within generally
accepted, recognized and authorized social norms and expectations, management secures the continued legitimacy of their organizations. An
obvious way in which such legitimacy is advanced is via both an address to
the concerns of external stakeholders and the possible welcoming of
greater internal corporate democracy to embed that legitimacy.
While these philosophical considerations could certainly serve to inform
the debates about shareholder and stakeholder governance (Clark 2004),
as we have seen, the modern corporation is a very specic instrument of
economic and legal organization in advanced capitalism. The next two
sections explore some implications of the practical nature of the modern
corporation.
Economic arguments for stakeholding
The classic statement for an exclusive shareholder focus for corporate governance was given by Milton Friedman (1970). As might be expected from
the author of a book called Capitalism and Freedom (Friedman 1962), this
essentially reiterates the negative freedom argument as outlined above. The
role of business is to maximize the return to the shareholder who is the
unambiguous owner of the business. Any deviation from this undermines
freedom since it substitutes the wishes of the unaccountable agent (the
manager) for those of the principal (the proprietary owner). In eect, this
undermines the market system and replaces it with an ultimately coercive,
political and social(ist) decision-making procedure.
Ever since this proclamation by Friedman there have been attempts to
provide a clear and rigorous economic argument for the extension of governance to include other stakeholders, one that does not undermine the
incentives for the maximization of value by weakening the overall production of welfare. One of the most successful of these is the hold-up argument. Given that contracts cannot ever be completely comprehensive this
gives rise to the possibility of opportunism. If agents cannot be committed
to keep to an agreement, relationship-specic investment will be curbed and
a hold-up produced (Blair 1995). Ordinary market-based transactions
482
Creditors
Political
groups
Government
The
environment
Suppliers
FIRM
Customers
Trade
associations
Communities
Employees
Figure 21.1
The
unemployed
Corporate constituencies
BOX 21.1
484
BOX 21.2
1.
Acts citizenship
a)
b)
c)
d)
e)
2.
Status citizenship
a)
b)
c)
d)
486
BOX 21.3
3.
4.
488
Financial and
business rewards
Strong
Energy
Corporations
Extractive industries
Wal-Mart
McDonalds
Bottom
feeders
Weak
Figure 21.2
Ryanair
Hedge & Private Equity Funds
New Corp
Monsanto
Halliburton
Essential
True
believers
Novo Nordisk
Lefrage
BP
GlaxoSmithKline
Ethical
producers
Fair trade corporations
Organic producers
Small cooperative banks
490
Political objective
Communitarian
(closed borders)
OECD/WB
WEF
ICGN
WBCSD
UNGLOBAL COMPACT
(I)NGOs
Democratic
sovereignty
Social
justice
Cosmopolitan
(open borders)
Figure 21.3
492
only moral suasion. The NCPs can, however, call for arbitration, and such
meetings are conducted in a quasi-legal manner, though lawyers are not
directly involved in the actual process. Information suggests, however, that
lawyers are involved in the run-up to any arbitration, providing advice and
suggestions for strategy and tactics.
The point about these and other mechanisms that could be discussed
here is that they smack of constitutionalization by the back door. They
would seem to involve, at least in part, an evolving semi-formal system of
customary commercial law, addressing issues traditionally associated with
GCC. They might thus be viewed as acts that are thereby conferring statuses that were neither initially intended, nor for which there is a proper
legitimate authority to sanction.
Problems with stakeholder democracy in an internationalized corporate
environment
The discussion above has concentrated on the external governance environment or regime designed to encourage companies to take their social and
ethical responsibilities seriously and to monitor whether what companies
say they are doing they are actually fullling. This section returns to the
more internal constitution of corporate governance by returning to the
ideas of stakeholding.
In respect to company governance there have been many voluntary initiatives that are designed to enhance the role of the shareholder; to stimulate shareholder activism, trim the power of CEOs and raise the prole of
non-executive directors. In this they may have been at least partially successful. On the other hand, large sections of the INGO community and
those arguing for wider CSR/GCC stakeholder reforms leave the implementation of their concerns rather vague somehow it will be within the
context of national law or regulation that reform will have to take place. An
explicit address to the role for other stakeholders directly in corporate decision making remains the missing link here. This used to be termed corporate democracy but this term has somewhat fallen out of favour. Even the
most progressive of companies that have embraced the full CSR agenda
enthusiastically do not talk much about corporate democracy. In large part,
then, CSR is a substitute process and a less threatening one for corporate
reform than corporate democracy, hence, to some extent at least, its enthusiastic embrace by the corporate world. And this is another dimension that
could allow us to dierentiate between CSR and GCC. Hard denitions of
citizenship require a status recognition to be a legitimate actor in a political community and at a minimum this also requires democratic credentials to sustain that legitimacy (see the discussion of legitimacy, earlier).
Thus on this basis, it would only be if there were genuine moves towards
494
496
2.
3.
4.
5.
6.
necessarily natural persons. However, these tend to be marginal cases, ones either of a historical anomaly with little real power, or arrangements designed to deal with limited and
unusual situations.
The FTSE4Good (see: http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp,
accessed 20 October 2007) along with the Dow Jones Sustainability Index, are the main
stock exchange based scrutiny mechanisms for CSR companies. As of April 2004 there
were 869 companies listed on the set of FTSE4Good indices (the full constituent list).
This list can be supplemented by the companies reporting to the Global Reporting
Initiative (GRI), which is probably the most widely supported CSR reporting framework.
For all these bodies, rms are required to meet extensive business nancial, environmental
and social reporting requirements. These are comprehensive and transparent, and they are
policed in several ways. As of October 2006 there were 821 companies registered with the
GRI, not all of which were MNCs. What this demonstrates, however, is that those companies that take CSR seriously are in a minority (as stated above, there are approximately
77 000 MNCs alone).
It should be noted that this gure pertains to the possible eects on performance and
bottom-line nancial considerations of attitudes towards S&EV only. It does not illustrate
the overall nancial performance of companies. For instance, Ryanair is a highly
protable company despite it appearing as a bottom feeder here.
A task for future reection would be to add further examples to this gure so as to build
a robust picture of the importance of each cell and the types of bodies that t into them.
This would also involve drawing a clearer distinction between those organizations of
advocacy and those of monitoring, which are rather run together here.
This is an attempt to operationalize what Paul Hirst has termed Associationalism see
Hirst (1994).
To address this issue would require the building of a broad-based alliance between the progressive managers of CSR companies with the ethical investment movement and ethical
consumerism. Only such a broad-based essentially political alliance could hope to delay or
divert the current one which marries voracious managers/CEOs with the elite nancial
institutions, supported by lawyers, consultants and other nancial intermediaries. This is
a formidable alliance and one that underpins the current corporate governance regime.
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PART VI
CRITICAL PERSPECTIVES
Introduction
Nowadays, corporate citizenship and corporate social responsibility are
key expressions in matters of corporate governance. Sometimes they are
supposed to denote something dierent. For example, corporate citizenship as referring to a companys local context, to a civil society to which
companies are also supposed to contribute, going beyond their own direct
business activities (sponsoring, societal aid and so on). If so, then corporate social responsibility refers more to business-related issues (for
example, human capital, environment, stakeholders, sustainability), even
on a global scale. However, sometimes this distinction is not made, and
both expressions are used almost synonymously. This is understandable,
especially when companies have worldwide operations and act in the
global society (Zadek 2007, p. 41).
Dierent languages are used in discussing and evaluating matters of governance. Some of them refer to the company as an actor, others to it being
an instrument. Among the rst are, for example, moral subject, personhood, citizen and homo economicus; among the second are shareholder
value, brand and money making. Of course, we should not make a
dichotomy of this, because a brand can be an important aspect of a
companys identity, co-constituting its actorship and giving content to corporate governance.
Governance always has a general as well as a particular side.
Constraints, standards and duties, sometimes set by law, make up a general
structure with which companies will have to comply.1 This leaves room for
individual dierences, related to actorship, which is emphasized by some
of the expressions mentioned in the preceding paragraph. Nowadays, the
call for transparency is widespread, especially concerning standards,
auditing and control. A concept widely used in connection with actorship
is integrity. Companies themselves often have both concepts in their
vocabulary when speaking about their own views of good governance. The
pharmaceutical company Novartis, for example, claims the following: we
strive for high performance with integrity, corporate citizenship is a top
priority [and we] aspire to responsible and conscientious citizenship based
501
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transparency, and its current use is much the same. We shall now explore
these connotations further.
As in Oresme, material things are nowadays said to be transparent when
light passes through them with no or only minor absorption. This gives
these objects a visual un-presence, a quality often made use of sense-fully.
Sometimes, this un-presence is (partly) cancelled out for safety reasons
(stickers on glass doors preventing collisions). The second connotation, on
the other hand, denotes presence. Music, for example, is considered as
more or less transparent, depending on whether all voices are clearly
audible, and melodies, rhythm and compositorial structure are evident a
meaning of the concept we can also see in the example of Shakespeare
the limit being their complete presence. Hence, romantic music is not a
paradigm of transparency. Sometimes, as in the plastic and visual arts, both
meanings of transparency are played with, creating tensions of presence
and un-presence. People sometimes speak of organizations transparent
decision and wage systems, that is, systems which are clear and manifest in
all their operations; this is transparency in the sense of presence, as it is
when the EU Round Table talks about ensuring the transparency of corporate social responsibility instruments (for example, tax rules). In all this,
transparency indicates a non-normative quality of something, attributed
while considering subject matters from an outside position.
However, what is said thus far is not the whole story. Throughout history,
transparency has also been linked to a particular epistemic and societal4
ideal. The rst is involved when people seek theories as completely coherent systems of clearly dened concepts and statements, without any hidden
knowledge claims. If so, then realities, referred to by the theories, would
become manifest and understandable for the human mind (almost) automatically. Further, there is also talk of transparent mental maps, systems
of concepts making possible a clear understanding of things as they are.
One could of course question the naive realist epistemology involved here.
What at least remains, however, is the transparency of concepts and knowledge claims, that is, complete presence of meaning and absence of hidden
presuppositions, as a valuable epistemic aim.
With regard to society, the Enlightenment period is widely known for
associating transparency with a so-called modernist ideal of rationality
and knowledge: with no dark areas, rationally unjustied traditions,
(power) mechanisms, privileges, hidden agendas or other unclear structures
and institutions a society liberated by real knowledge. Jean Starobinsky
(1971) draws our attention to Jean-Jacques Rousseau as inspiring this view
(see also Foucault 1980, p. 152). Starobinsky notes especially the following
thoughts of Rousseau: once upon a time, the world, including ones own
consciousness, was transparent, present, everywhere and it would be crucial
504
for the future to rediscover this happy reality. Hence, there is a paradise
lost (Starobinsky 1971, p. 19; our translation) and a task that lies ahead:
to realize the ideal of transparency (ibid., p. 39; our translation). In this
ideal world one celebrates transparencys accession to the throne
(Starobinsky 1964, p. 101; our translation).5 In Rousseau, the possibility of
this ideal society is eventually founded on the original reciprocal transparency of human souls and the self-transparency of the human heart:
transparent like a crystal (Rousseau, quoted in Burgelin 1952, p. 294; our
translation).6 Note that this original transparency is spontaneous, simply
existing of its own and not forced at all.
In the introduction we mentioned transparency as an instrument of
power. Foucault in particular has made this link in connection with Jeremy
Benthams panoptical design of prisons. He rightly remarks that
Rousseauean transparency is much dierent from the visibility of everything prisoners are doing, created by this panopticum with its overseeing
gaze: a visibility aimed at establishing power through transparency
(Foucault 1980, p.154).7 We see here the (conceptual) opposition of (i) a
society in which transparency breaks down power and control, and (ii) a
society in which transparency establishes power and control. Note that the
meaning of transparency in both societies is the same: presence. The other
connotation, un-presence, is not absent, however. In Rousseau, all culture
should be transparent, diaphanous, in the sense of not disturbing original
reality, and the gaze mentioned by Foucault is eective only when it is not
seen as such.
For a long time the concept of transparency had two dierent meanings,
which can be qualied in terms of presence and un-presence. The double
meaning denotes two possible kinds of value-neutral properties of various
entities. Now, thanks to this neutrality, the concept of transparency can be
connected to dierent ideals, for instance epistemic, societal, moral and
aesthetical ones. At the same time it is obvious that things can be transparent without being of a high value, considered from the ideal involved: a
crystal vase can have minor aesthetical value; the reward system of a particular organization, including rules of giving shares to personnel, may be
clear to outside observers without being morally justiable. Also Sir Adrian
Gadbury, in his discussion of business dilemmas, has noted that transparent decisions do not necessarily have a moral quality (Gadbury 2002, p. 20).
However, a company, knowing that decisions have to be transparent, can
decide dierently, changing their content, if not the motives, relating them
to a moral point of view. Take, for example, ExxonMobil: our involvement
with transparency initiatives is an extension of our commitment to ethical
behaviour. These transparency initiatives are designed to increase disclosure of nancial information and are fundamental for good governance.8
505
Here, transparency has its two meanings: (i) the means of disclosure and
structuring the indicated information having an un-present presence, correctly representing the nancial state of the company; and (ii) giving this
state of the company a presence to the outside world.
The commandment of transparency
Transparency contrasts ambiguity and complexity; lack of overview negatively inuences it, making proper judgements and evaluations rather puzzling. These situations can be coped with in dierent ways.9 Concerning
organizations and the wider society, strategies of demarcation and hierarchization are used. An example of the latter is organizational culture considered as an overarching determiner of human behaviour. So-called
Chinese walls in banking companies, preventing share price-sensitive
information leaking from one part of the organization to another, are
examples of demarcation. Moreover, the widespread practice of auditing is
also directed to the attainment of transparency.
These strategies all have a double aim: (i) making transparent unclear
organizational networks, and (ii) making available unscattered and distinct
streams of reliable information. Of course, it cannot be excluded that
implementing them will meet resistance, leading to eorts to keep things in
the dark or creating ambiguity. Yet, the use of these strategies always aims
at creating or restoring transparency. In the light of the quite recent crisis
of condence, due to nancial manipulations in some rms, it is striking
that people often speak of the commandment of transparency (CT).
Obeying CT involves particular rules and strategies, such as Chinese walls.
Ultimately, however, the result will be an imposed transparency, very
dierent from the direct natural transparency (transparence naturelle,
Starobinsky 1971, p. 37) referred to by Rousseau. Indeed it is more in line
with the Foucaultian idea. However, it is immaterial whether CT is introduced by self-regulation, forced by stakeholder activism or a matter of law.
What is more, imposing transparency strategies on organizational matters
always introduces new elements. Indeed, this may increase the complexity,
thereby inducing new possibilities of confusion and ambiguity. That something is added is also clear from the extra costs of implementing the new
strategies.
In particular, external auditing matches CT. Internal auditing is only
conditional, never sucient, for obeying CT. Auditing adds new elements,
too, and CT can now also involve this practice itself. Recent discussions on
the necessity to split audit rms auditing and consulting actually becoming more and more intertwined are examples of this shift.10 Further,
David Flint, in his still important book Philosophy and the Principles of
Auditing, makes it clear that auditing always has an intuitive component:
506
In every profession . . . there is an element of art and inspiration. These qualities have an indispensable and invaluable part to play in identifying the uniquely
relevant evidence which an auditor should look for in the nal analytical and
judgemental review in the process of formulating an audit opinion or report.
(Flint 1988, p. 115)
If Flint is right, and we think he is, then this unavoidably limits the possibility of attaining complete transparency through auditing. Besides, measures taken on behalf of the organization, the transparency of which is not
always self-evident, are involved too. A more cynical reading of this situation can also be found. An example is Auret van Heerden (CEO of the Fair
Labor Association, a coalition of 20 apparel and sporting goods makers
and retailers,including Nike and the Adidas Group) saying that for many
retailers, audits are a way of covering themselves (Roberts and Engardio
2006).
In connection with monitoring and the audit society, John Roberts
remarks that the powerful accountability mechanisms, created by contemporary society in order to conrm CT, are nothing but systems of visibility. In his view, they consist of concepts functioning as lenses for
making companies and other organizations visible. At the same time, a selfdisciplining logic, leading to preoccupation with imposed transparency,
also shaping organizational reality, becomes active. We see here reminiscences of Foucaultian ideas. According to Roberts, the following side-eect
is likely: becoming indierent to everything not required by CT (Roberts
2003). Although obeying CT and self-discipline, which might result from
this, do not themselves need to be irresponsible and insensitive, this sideeect will limit responsibility and sensitivity to what is required by actual
applications of CT.11 If so, then a wider organizational responsibility and
moral sensibility are put under pressure. Consequently, a narrow, sometimes even mindless, imposed transparency, by which elements lying
beyond are not being considered at all, could come into being. Also openness (see below) will be in jeopardy, in particular in circumstances where it
is most relevant.12
Openness and integrity
Now that we have gained some understanding of transparency we shall
turn our attention to openness and integrity (see also Schipper 2007). Later
on, both concepts are related to transparency.
Openness Companies often use the term openness when expressing their
views. NASDAQ corporation Cisco, for instance, comments: Ciscos
approach to corporate citizenship is based on our values of openness,
integrity, and generosity.13 In the same vein, the Dutch agricultural
507
company Frieslandfood advocates: openness and trust are the keys to successful collaboration.14
People are called open when they are, unforced and positively, sensitive
to what is going on in the world and in themselves (feelings, concerns), not
swayed by preoccupations and prejudices:15 being open to. Such persons
have world-openness and self-openness. Both expressions indicate a
benecial relationship, dierent from mere opportunism. But is being open
always positive? This is a dicult question, and one can imagine situations
in which imperturbability is appropriate. A second quality of open people
is that they tend to speak of themselves on their own initiative as being
open about. This has some limitations too, because putting everything on
the table is sometimes unwise, risky, or considered as not done or even as
pathological. Sometimes people suggest that they are open, while actually
they are not. Although not easy to verify, in such a case they have pseudoopenness.
Analogously, it is also possible to speak of open organizations. They are
sensitive to important, even unexpected, situations, externally as well as
internally. Importance requires one or more criteria for judging situations:
you cannot simply be open to everything, and opportunism is also better
avoided.16 However, the ability to move beyond prejudice is always crucial.
Simon Zadek (2007, p. 298) gives several examples (Nike, Shell) of corporations being, at a particular time, uncritical about their own preconceptions. Maybe Cisco and Frieslandfood are open in the indicated sense at
least their own statements suggest this; however, Shell, at the time of the
Brent Spar incident, and Nike, in connection with labour standards in
their supply chain, very likely were not. Openness limits internal bureaucracy, which always involves a kind of closure, and also there is less urgency
for whistleblowers to make their tune heard in the outside world. Moreover,
openness is important because it can soften the risks to CT mentioned
earlier. Besides, open organizations, for example, communicate their
intentions, making them public, without heightening or downplaying
current issues. Shell, when publishing its view of the triple bottom line as
crucial assuming that they are honest can be said to be open in this sense.
Also this kind of openness has potential limitations. Because of competition, companies cannot be open about everything. Neither aspect of openness implies the other, however. It is, for instance, always possible that
companies are open about themselves, without the sensitivity that is
involved by the rst quality. All in all, openness is, therefore, a normative,
relational category and the initiative to be receptive and communicative lies
with the open actor (person, organization) involved.
The rst aspect of openness, that is, being sensitive to the outside world
as well as to matters inside, is very dierent from transparency. For
508
example, we can say that, in the years before the Second World War, Philips
N.V. was indeed open to some societal needs without transparency, the
management being rather paternalistic. The second quality implied seems
to be nearer the mark, in the sense that under particular conditions
something, that is the intentions of the organization, will be present.
However, because openness depends on the initiative of the entity involved,
this presence does not coincide with the one connected with transparency.
Especially when CT is active, there can be transparency without openness.
Of course, an organization may deliberately claim to be open, when this is
not really the case. In such a situation we can, analogously to persons,
speak of pseudo-openness.
Integrity The concept of integrity is widespread, whether it concerns
personnel, companies as actors, or special subject matters, such as how to
build a culture of integrity, the integrity of audits or a brands integrity.
Integrity can be invoked for dierent reasons, some recent ones relating to
the management of compliance risks. Others, more removed from the daily
pressure of doing business, refer to the growing attention to virtue ethics,
which has taken place in philosophy during the last decade.
Integrity comes from the Latin integer which means whole, complete, unbroken or in one piece. It is used in many dierent contexts such
as medicine, technology, ethics and so on. Integrity always involves a
highly valued property, condition or situation, considered in terms of
wholeness. Acting with integrity means acting in one piece: actions are
taken because of what has been said, not from blind obedience or following rules; or having a hidden agenda; or saying or acting at a certain
moment A, and the next time, without any specic reason, not-A. Taken
in this sense, integrity and pseudo-openness, mentioned above, are not
equivalent. Moreover, having integrity exludes others having to face
unpleasant surprises or being focused on private interests. As such, it
involves openness and trustworthiness.
In professional and organizational contexts all this counts too. Auditors,
for example, need professional integrity because not everything they do can
be reduced to following strict rules.17 In sociology, it is not uncommon to
speak of role integrity, pointing to the variety of possible roles and loyalties an actor can have, including conicts between them. Solomon, defending an Aristotelian, virtue ethical, perspective on business ethics, speaks of
integrity as a kind of super-virtue, saying that it is the essential virtue to
a decent life . . . getting it all together (Solomon 1993, p. 174). Dierent
roles involve partial integrities, with the possibility of attending to only
one of them. In that case, it is not unlikely that there will be negative eects.
Companies and other organizations may be seen as:
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All three inuence the image of integrity. In connection with the rst
point, integrity means unbrokenness and proper functioning of the
instrument, with a focus on structure, internal coordination, internal stability and so on. However, the second point deals with integrity of personnel and organizational aspects, culture for example, that inuence this. The
third point considers organizations themselves in terms of actor integrity,
without reducing it to those of people it involves; notions such as corporate citizenship or personhood or even legal person cater to this. It goes
without saying that in the second point issues, such as organizational obstacles, negative incentives, as well as potential positive measures, cultivating
integrity, become important. Therefore, being aware of integrity risks, especially in connection with complexities and ambiguities of work is highly
relevant. Today, advocating a kind of integrity management is quite
common. In so far as this implies making an inventory of integrity hazards,
creating real opportunities for personnel to deal with them responsibly and
the management not merely paying lip-service, this is positive. Also, bringing an organizations self-image in line with that of a moral actor is noteworthy. However, if this kind of management ultimately means nothing
but controlling people by other means, then integrity itself comes under
pressure.
There is also a relevant epistemological theme. Another actors integrity
cannot be proven objectively, by means of a valid and clear method. If
people or organizations attribute integrity to themselves in public, then
how do we value this? Nevertheless, judgements of integrity concerning
people or organizations, a key aspect of reputation, are being made and
communicated. Unavoidably, such judgements can only mean something if
based on close contact. In situations where integrity is openly doubted, it
is very dicult to defend oneself against such doubts on the basis of knowledge. As said above, there is no clear methodology; (knowing about)
integrity is vulnerable. Indeed, in connection with integrity, epistemic transparency eventually fails. In a more metaphysical language: every person or
organization has its own mystery, inaccessible from the outside. Saying this
does not exclude the possibility of actors, whether humans or organizations, making themselves known over time in concrete actions involving
particular situations. Generally speaking, saying that they have integrity
is pointing to a fallible, particular kind of knowledge of the other, which
can be grasped only receptively, involving a kind of empathy based on real
510
511
never absent. Nike, for example, seems to be aware of these problems (Nike
2005, pp. 3944). Besides transparency risks, there are, generally speaking,
also hazards of integrity. In situations of strong temptation or high pressure it is seductive to give in, following only partial interests without others
knowing it, thereby triing with integrity and forgetting about the wholeness of persons and the organization involved.
Transparency, integrity and openness do not have a simple relationship.
Following CT can bring risks for integrity and openness, putting corporate
citizenship and corporate social responsibility under pressure. Moreover,
achieving transparency requires integrity, and the same applies if pseudoopenness is to be avoided. On the other hand, as we indicated above, there
could also be situations in which, apart from the negative inuence of
overemphasizing transparency, integrity is in jeopardy. Especially in the
latter kind of situations, seeking transparency can be helpful, as we showed
at the beginning of this section. We think of cases in which, from a wider
societal perspective and in a particular period of time, it is important that
issues are open to independent, external judgement and evaluation.
Nowadays one can, for example, think of global issues with local interests:
environment, safety, origin of products and labour circumstances (see comments on supply chains, above); giving of loans and moving of capital; relations between public and private organizations, in order to avoid (the
appearance of) favouritism; and the idea of market transparency. The last
has to be strived for when the receptive knowledge, related to integrity, does
not suce in order to deal responsibly with market parties and the goods
they oer. Therefore, one should realize that it could make sense to
demand a higher degree of transparency, reducing hazards of integrity.
Transparency in the context of corporate governance is more of a
Foucaultian than a Rousseauean kind. Allowing ourselves some conceptual
liberties, we could perhaps say that openness and integrity show some similarity to what Rousseau had in mind when he talked about transparency.
All in all, what has been said thus far implies that, despite tensions and
risks, integrity, transparency and openness are important. How to handle
this when governing companies and other organizations can never be a
matter of applying recipes. Above, we pointed to a free space of action
needed by every enterprise. Good governance requires this space to be
coloured by integrity, which is beyond transparency. How to deal with
this? At the risk of simplication, it can be said that all parties involved
should keep in mind the following maxim: openness if suitable, transparency when necessary, and integrity always.
The implication of this maxim is that we should be on the alert at any
time. The actual content of corporate governance very much depends on
how integrity, openness and transparency are given their due and how they
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513
it is often very dicult to grasp in which businesses they invest their money
in the last resort), have rhizomatic traits. The economy can also be looked
at from the perspective of rhizomatism. Enterprises keep changing, moving
and rearranging the landscape by acts of innovation in unpatterned ways,
not following xed trails, avoiding becoming sedentary. All this is done by
creatively destroying old ways of production, and nding new terrain
where entrepreneurial ways maximize protable results. This is why the
Schumpeterian creative destruction and Deleuzian nomadism can be considered as having something in common. Nomadic multinational enterprises proceed by capturing production factors into supply chains, based on
ever-changing contracts.19
Branding an image From a rhizomatic perspective visible reality, symbols
and images are not what they seem to be. In connection with the last,
Deleuze and Guattari express this by saying that the black hole is on the
white wall (Deleuze and Guattari 1987, p. 182). Although images may be
painted on the white wall of innocence, being completely present, they are
never without black holes, pointing to hidden realities which the image does
not make visible. Hence, an image is accompanied by black holes, in which
it lodges its . . . redundancies (ibid., p. 167). Nomadism notwithstanding,
global entrepreneurial activity often involves branding, that is, creating an
enduring image of what the enterprise is about, using stories, (heroic) narratives about its origin (founding narratives), logos, or whatever. In ocial
branding nothing happens accidentally; it involves story control, creating
an image that is intended to be experienced as completely present, that is
transparent. In politics, for example, spin doctors may create the image of
a candidate as an unselsh person, seeking only the interests of the people,
saying that this is all there is, that there is nothing hidden. However, from
a Deleuzean, rhizomatic, perspective this cannot be. A branded image is
accompanied by black holes, in which redundancies are lodged. Therefore,
when controversy or scandal erupt in the case of corporations one can
think of sweatshop-related events out of a black hole, this is not accidental but as a result of what is behind the image.
Economy as a rhizome is lacking transparency, integrity and openness,
and one of its outgrowths is nomadic multinational corporations striving
for continuity of their brands. Branded images are accompanied by black
holes, and pretended transparency is nonexistent. Moreover, speaking
about the integrity of corporations would give only a very supercial
understanding of what is going on. Branding, intended to protect images
and related stories, is all about keeping up appearances. This means that
openness is also very dicult to achieve, if not impossible. If this is so, then
the whole idea of corporations as responsible actors, being hand in glove
514
with integrity and openness, would be an illusion, and maintaining the pretense is keeping up appearances once again.
The example of Nike
Nike, the well-known sports footwear and apparel company, manufactures
its products in more than 800 factories, employing over 600 000 workers in
51 countries. It has about 24 000 direct employees, most of them working
in the US. Although primarily known as a footwear company (its original
line of business), only 70 out of the more than 800 suppliers are currently
producing shoes (Locke et al. 2006). We shall rst provide some historical highlights (see also Zadek 2004), then examine Nikes Corporate
Responsibility Report and assess to what extent the situation ts in with the
rhizomatic perspective.
Historical overview
In 1962, Phil Knight wrote a paper in his Stanford University small business course asserting that low-priced shoe exports from Japan could replace
Germanys domination over the US running-shoe industry. In 1963 he
began importing Tiger brand shoes from Japan, selling them at local track
meets from the back of his truck. Knight teamed up with University of
Oregon track coach Bill Bowerman to form Blue Ribbon Sports, selling
shoes sourced in Japan. In 1971, he paid Caroline Davidson (a student at
Portland State University) $35 for the Swoosh logo, representing the wing
of the Greek goddess Nike. Since then, its value has been estimated to be
in excess of $2 billion (Ballinger and Olsson 1997, p. 15). In the early 1970s,
Nike moved, changing its sourcing from Japan to South Korea and Taiwan.
Branding took a turn in 1985, when the company signed Michael Jordan to
endorse its products. When wages in Korea hit a dollar a day, Nike incentivized Korean and Taiwan-based contractors to relocate to Indonesia.
Controversies Controversies over working conditions and payment of
poverty wages began with the move to Indonesia, when Indonesian newspapers began to highlight the situation. Nikes response was one of distancing, claiming were just the buyers and therefore not responsible .20
By 1989, workers were conducting protests at the Tae Hwa and Pratama
Abadi factories. Charges were corroborated by a USAID-funded study on
minimum wage non-compliance by Nike and other shoe contractors in
Indonesia. By 1990 more workers protested at the Tae Hwa factory and at
Sung Hwa (in response to workers killed when an overcrowded contractor
bus crashed). News expos articles proliferated through 1992.
The US State Department issued its Human Rights 1992 report
to Congress, claiming shoe factories in Indonesia to be out-of-control
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pernicious inuences. Nikes response was to craft its rst Code of Ethical
Conduct and promise responsible corporate oversight of contractor practices. Sadisah, a worker in a Nike factory was featured in Harpers
Magazine, where it was estimated that it would take her 44 700 years to
make what Michael Jordan was paid in Nike endorsements for 1991. An
Oregon newspaper published reports on Indonesia factory unrest; the articles were denounced by Phil Knight, who glossed over injustices and
inequities and blamed the contractors. In 1993, Ed Bradley in a CBS
episode of Street Stories warned viewers prepare yourself for a shock . . .
workers cant make a living while making Nike shoes (Ballinger and
Olsson 1997, p. 15). More CBS News reports appeared, plus critical reports
in the New York Times, the International Herald Tribune, The Economist
and the Jakarta Post.
In 1994, the situation in Indonesia demanded a reply from Nike. Nikes
response was to produce a lm, distributed to news media outlets, putting
a positive spin on the Indonesian protests, but also admitting the lowest
waged being paid were below the poverty line in Indonesia (ibid., p. 20).
By 1995, Nike began to move into China and Vietnam. The cycle of abuse
reported in Korea and Taiwan, replicated in Indonesia, was now being
reported in Vietnam and China. For example, the Nike subcontractor
manager at Pratama Abadi lined up and slapped 15 women from the
quality control section in Vietnam. The year 1996 brought further escalation and international attention, when the National Labour Committee
(NLC) accused Kathie Lee Giord of operating sweatshops. Life Magazine
published an article on Pakistan soccer ball stitching by child labour,
employed by Nike, Reebok and Adidas contractors. By this time, Nikes
South Korean and Taiwanese contractors had moved a signicant portion
of factory production from Indonesia to Vietnam and China. Thuyen
Nguyen organized Vietnam Labor Watch, based in New York, and Nike
formed its own Labor Practices Department to monitor the situation in its
war room. On 17 October 1996, the controversy ared up when CBS News
48 Hours reporter Roberta Baskins made an on-site visit to Nike in
Vietnam. This was the rst interview with Nguyen Thi Lap, a team leader
in Nikes Sam Yang (Korean-owned) sneaker factory in Ku Chi, Vietnam.21
She was subsequently demoted and forced to leave her employment.
During the 1990s, sacked Nike workers from Indonesia toured the US,
giving testimonials at universities and other sites.
In 1997, Nguyen (Vietnam Labor Watch) had a prearranged tour of
Nikes contractor factory in Vietnam. But Nguyen also travelled to factories o the ocial tour. He collected pay stubs and interview reports alleging wage cheating. On 8 March 1997, International Womens Day in
Vietnam, 56 women were forced to run around the Nike factory in the
516
Dong Nai province because they did not wear regulation shoes. A dozen
women collapsed of heat exhaustion and spent the day in the emergency
room. A joint report on Nike contractors in China by the Hong Kong
Christian Industrial Committee and the Asia Monitor Resource Center
brought serious charges of abuse. For example, Wellco, a subcontractor in
China, paid workers half their regular wage. Workers who went on strike
were red.22
In August 1996, President Bill Clinton brought a diverse group of corporations (among them Nike), labour and human rights leaders to the
White House to discuss industry conditions. This resulted in the 14 April
1997 presentation at the White House of the Apparel Industry Partnership
(AIP) agreement, dealing with the acutely embarrassing issue of US companies involved in labour rights violations. However, it is said that a worker
red by Nikes contractor in Indonesia was denied the chance to speak at
the AIPs founding conference in Washington.
In 1997, Nike contacted Ernst & Young to audit Indonesian footwear
contractors for compliance to the Code of Conduct and former US
Ambassador to the UN Andrew Young to investigate Vietnamese, Chinese
and Indonesian contractors. In his 22 September 1997 address to the shareholders, Nike founder and CEO Phil Knight mentioned both as examples
of independent monitoring. He especially praises Andrew Young as a man
of great intellect . . . and unquestioned integrity. He adds that the Young
report found that basically Nike is acting as a good citizen in those communities and that the incidences that you hear about and that have gotten
so many headlines are just that.23 It is noteworthy that Knight seems to
consider the incidences referred to as mere incidents. However, negative
news and academic study reports proliferated, putting doubt on the quality
of the monitoring (for example, ORourke 1997). Nike also increased its
advertising budget by 22 per cent in order to protect its brand image.
Doonesbury did a series of cartoons damaging to Nikes brand image as
well as to Youngs reputation.24 In October 1997, Nike paid rst-year MBA
students at Dartmouths Amos Tuck Business School to tour Nike factories in Vietnam and Indonesia, and conduct local interviews with nonworkers. The Tuck study reported similar ndings as Young, that is, the
situation was not that bad.
In 1998 the state of aairs continued. On 2 April, ESPNs Outside the
Lines ran an hour-long show on Nike and Reebok sweatshop abuse in
Vietnam. Former assistant coach of the soccer team, Jim Keady, claims
that the head coach insisted he wore a jacket with the Nike Swoosh if he
wanted to continue coaching. Vietnam was still a hotbed. Joseph Ha, a
top adviser to Phil Knight exacerbated the situation. He sent a letter
(11 January 1999) to the highest-ranking labour ocial in Vietnam
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519
The issue Wang raises is that, while Nike and the FLA hold the contractors feet to the re to obey labour codes, Nike does not provide them with
any more money to ensure compliance. These problems are similar to those
Wal-Mart, Dell, Hewlett-Packard and other multinational rms are
involved in. Labour activists documenting labour conditions are continuing to expose poor conditions surfacing in China. Nike, though, believes
that the problems are far less severe than 15 years ago. In connection with
this, the report shows reective consciousness: with regard to monitoring
and auditing, employers have very subtle methods of misleading and concealing; cultural barriers also exist, for example, diculties in talking
openly of sexual harassment; in some cases workers are taught how to
mislead auditors (Nike 2005, pp. 3944, 87). Similar issues are raised by
520
Roberts and Engardio (2006), quoting the FLA: factory personnel have
become sophisticated in concealing non-compliance related to wages. They
often hide original documents and show monitors falsied books. Nike
recognizes that overtime is a widespread and persistent problem in China
(Nike 2005, p. 43). However, it is less so in the footwear industry, because
the company is often the sole buyer and can inuence matters (Nike 2005).
In connection with wages, Nike underlines the role of market forces, if possible, in connection with industry changes: lowering the price on entry into
corporate responsibility is crucial, because more can and must join and
commit (p. 11). If wages are to be set by non-market mechanisms, Nike
believes that this should be done by those having the power to do so on a
broad scale, that is governments, industrial relations bodies . . . and
employers federations (p. 44).
We shall close this section by considering (dis-)contracting suppliers.
The report mentions placing orders in 122 new factories, and discontinuing them in 34 companies during Fiscal Year 2004. The rst reason given
for these were shifts in consumer demand and trends. Other reasons were:
performance of companies with respect to quality, price and corporate
responsibility (p. 16). Nike has developed the so-called factory compliance life cycle, which, at a general level, formalizes exit procedures and the
way new companies are to be contracted into a decision-tree model (p. 17).
The exit procedure is meant to be applied when a reduction of orders from
Nike aects a signicant number of workers. In the case of subcontracting, however, this may not always be clearly visible (p. 19). In both procedures the items that play a role in the decision cycle are quality, delivery,
price and compliance with corporate responsibility demands. Information
concerning the last is gained through multifaced auditing, the results of
which are presented in a four-category rating system. The idea is that when
a company has a low score, a remediation trajectory will be started. All this
is said to be quite new and part of a learning process (p. 26). In order to
integrate compliance into the business, the report presents a balance
scorecard by which cost, delivery, quality and compliance have to be balanced (see also introduction p. 7). However, there is always the diculty
of nding a common metrics and Nike recognizes that the metrics of compliance is more subjective, whereas for the rst three the numbers are
easy to track in real time (p. 27). Another diculty remains the mutual
weighting of the four factors. However, the report does not mention how
this might be solved. The only comment made is that Nike does not report
on factories dropped for compliance reasons because it is often dicult to
isolate poor performance on compliance as the sole reason for terminating a business relationship (p. 26). In our view, integrating performance
on compliance also remains a serious problem: there is a lack of rigorous
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performance with business performance, creating integrity risks. In connection with the intention of changing the whole industry, this is a problem
not only for Nike. The term transparency is widely used in the report. Its
meaning is not dened explicitly, though. The impression one gets from
what is being said, is that transparency concerns information, facts, not
perceptions, on the basis of standardized reporting regarding a companys
performance (p. 89). The report considers transparency as a risk as well as
an opportunity. The latter is its function as a strategic tool, which is supposed to have potential for changing a whole business; it is also expected
practice for industry leaders (introduction p. 9). The risk is expressed by
Nike as: what we say can be taken out of context; and the rst hard lesson
of transparency is that bad news trumps good news. This is dierent from
what we have discussed as risks of the commandment of transparency.
According to Nike, the best response is focus . . . on more and better transparency, and by the latter, as noticed above, the company understands
monitoring and reporting on the basis of uniform standards (p. 89). Now,
uniform standards have a force, but they also run the risk of becoming
insensitive to matters outside their scope. Openness and things related are
mentioned explicitly by Nike only twice: (i) in the already quoted belief
that, concerning the problem of freedom of association, a policy of direct
engagement and openness is the best path to reform China (p. 86); and (ii)
in the view that engagement with NGOs and other stakeholders has
opened our eyes to new issues and viewpoints and . . . enabled us to draw
on their experience and expertise (p. 89). Both connotations, that is being
open to and open about, not because of reasons of compliance but by a corporations own initiative, are present here. Other issues, involving openness
implicitly, are, for example, the cooperation with other companies, the
intended going beyond the law concerning toxic substances (p. 62), the
emphasis on the stakeholder forum and the will to learn from our keenest
critics (p. 89). All this is completely in line with the remark that corporate
responsibility can be a radar for the future (p. 86). However, when Mark
Parker and Charlie Denson, co-presidents of Nike, in their accompanying
letter write we understand that a well managed company must reect [our
emphasis] the society in which it operates (introduction p. 7), this seems,
because of its passive subtone, to somewhat contrast with the proactivity
involved in these issues.
Hence, the relevance of openness, integrity and transparency is clear. We
also think that the future of Nikes corporate citizenship might benet from
a conscious, reective linking of the proposed maxim with its engagements.
The risk of transparency, of obedience to CT, for example, might be softened by paying conscious attention to openness. The same applies to situations that readily put integrity in jeopardy. In particular, cooperation and
524
Important questions such as how far should we go by setting uniform standards? and
what is the exact role of governments? will not be addressed in this contribution.
See their Business Principles: www.abnamro.com/beyondmakingmoney, accessed 5
November 2007.
The original French reads as follows: autre corps sont dyaphane ou transparenz ou
clers . . . la lumire et perce et pass tout oultre (Oresme 1968, p. 456).
One could also speak of moral or aesthetic ideals.
The original French is as follows: lon clbre lavnement dune transparence: les curs
nont plut de secrets, la communication ne rencontre plus dobstacle.
In the original: son cur, transparente comme le cristal, ne peut rien cacher de ce qui
sy passe. Here, both meanings, presence and unpresence, are meeting in one.
Big Brother is watching you! is expressing the same.
See www.exxonmobil.com/corporate/citizenship, accessed September 2007.
525
9.
For instance, in quantum mechanics a lack of clarity in the wave/particle dualism leads
to the introduction of the principle of complementarity.
10. It is not impossible that this split is experienced as dichotomizing professional life.
How this should be estimated depends on the meaning given to the professional
practice involved. This, however, is not a matter of personal taste but a philosophical
issue.
11. Sensitivity mentioned here is related to the notion of openness discussed in the next
section.
12. See also Steinmanns idea of the sensitive organisation (Steinmann 2002, p. 17).
13. See
http://www.cisco.com/web/about/ac227/ac111/cisco_and_citizenship/corporate_
culture.html, accessed September 2007.
14. See http://www.frieslandfoods.com/en/frieslandfoods/environmentsociety/socialrespon
sibility/Pages/default.aspx, accessed September 2007.
15. Philosopher Gadamer distinguishes between two kinds of prejudices, that is, those necessary for hermeneutic understanding and those hindering it.
16. We shall not discuss the important issue of dening and selecting the criteria, nor will
we pay attention to their validity base. For the moment it is sucient to say that companies have no complete autonomy in this.
17. In the philosophy of auditing, expressions such as the integrity of nancial information, the integrity of the audit function, the integrity of internal control and capacity for integrity of the auditors are fairly ommon (see Flint 1988).
18. Some people, that is stakeholder activists, make themselves responsible.
19. We know, of course, that long-term relationships also exist. They do not t comfortably
into nomadism.
20. Everything 2 website summary, http://www.everything 2.com/index.pl?node=nike,
accessed 30 October 2007. For similar support on this, see Nguyens site http://
thangthecolumnist.blogspot.com/2007/08/just-do-it-instead-of-playing-blame.html.
21. Boj, D.M. (2000), Timeline for Lap Nguyen, http://business.nmsu.edu/~dboje/nike/
vietnam.html, accessed 30 October 2007.
22. Ibid., accessed 30 October 2007.
23. See http://business.nmsu/~dboje/NIKknightmeetingse2297.html, accessed September
2007.
24. Global Exchanges Nike Chronology, http://www.globalexchange.org/campaigns/sweat
shops/nike/chronology.html, accessed 30 October 2007.
25. See Nike (2007).
26. See http://www.nike.com/nikebiz/news/pressrelease.jhtml, accessed September 2007.
27. Later on in the report it says that consumers may not yet understand sustainability as a
purchasing incentive (Nike 2005, p. 60).
28. In this text, we shall pay no attention to Nikes stakeholder denition because substantial discussion would require at least another paper.
29. Perhaps its importance is thought to be so obvious that such attention is supposed not
to be necessary.
References
Ballinger, J. and C. Olsson (eds) (1997), Behind the Swoosh: the Struggle of Indonesians Making
Nike Shoes, Uppsala, Sweden: Global Publications Foundation and International
Coalition for Development Action.
Boj, D.M. (2001), Narrative Methods for Organizational and Communication Research,
London: Sage.
Burgelin, P. (1952), La Philosophie de lexistence de J.J. Rousseau (J.J. Rousseaus philosophy
of existence), Paris: Presse Universitaires de France.
Deleuze, G. and F. Guattari (1987), A Thousand Plateaus: Capitalism and Schizophrenia, trans.
and foreword by Brian Massumi, London and Minneapolis, MN: University of Minneapolis
Press.
526
The conquest of the earth, which mostly means the taking it away from those
who have a dierent complexion or slightly atter noses than ourselves, is not a
pretty thing when you look into it too much. What redeems it is the idea only.
An idea at the back of it; not a sentimental pretence but an idea; and an unselsh
belief in the idea something you can set up, and bow down before, and oer a
sacrice to . . .
(Joseph Conrad 1899 [2001], p. 65)
Introduction
The role of corporations in the process of colonialism and imperialism has
been well documented, from the sugar plantations in 16th-century Haiti
(Ahluwalia et al. 1999) to the East India Company in 18th-century India
(Guha 1989), and from allegations about the dubious role played by oil
companies in 19th-century Middle East (Prashad 2007) to concerns about
carpetbagger corporations in 21st-century Iraq (Tappan 2004). Accounts
of corporate behavior in poorer nations have suggested a pattern of malfeasance, often in coordination with colonial and imperial states.
In this chapter, however, we are less concerned with unearthing and cataloguing these oenses than we are with exploring the ways in which organizational theory has been deployed to naturalize these actions, to render
them unremarkable or in some cases, liberatory. In light of the epigraph to
this chapter, we are attempting to highlight (and historicize) the idea that
has been deployed to legitimize global corporate accumulation. Our
specic focus here is the nebulous, ill-articulated concept of corporate citizenship, which has intrigued corporations as well as researchers over the
past two decades, as a possible tool to legitimize corporate presence in an
increasingly deterritorialized economic space. Our contention is that any
hegemonic denition of corporate citizenship is predicated upon an
antecedent homogenization of the concept of the corporation itself. Such
an interlocked set of denitions of rm and rm behavior leaves out a
variety of actors in the shadows of theoretical debates on corporate behavior. We term these actors the fragments of the corporation (following
Chatterjee 1992, who had done a similar analysis of the concept of the
527
528
529
state will eventually produce its own emotive connections. The demands of
liberal citizenship therefore involve a separation of the institution from the
individual, with the corollary demand that the individual subsume some or
most of their group aliation to this particular mode of identication
(Walzer 1984, p. 325).
The spatial boundaries of citizenship have constantly been challenged,
particularly as diasporic communities from various states traveled, migrated
from or sometimes sought refuge from their homelands. Citizenships were
renounced, changed, or sometimes dually held. Around the same time,
debates around the construct of nationalism, which carried a much
more complex and emotionally anchored identication than citizenship
(Hobsbawm 1990) began to intensify. The notion of a nation-state was proposed to encompass the emotive pulls of nationalism and the bureaucratic
governmentality of the state, but nationalism continued to spill beyond the
cognitive boundaries of citizenship. The nation lived in empty homogenous
time (Anderson 1991), and produced an imagined community that transcended geographic boundaries. Be it British citizens of Pakistani origin,
German-Turks, French-Canadians or displaced Palestinians in Lebanon,
people all over the world began to reimagine their citizenship aliations in
creative ways.
In the midst of such a chaotic attitude to citizenship, corporations also
staked a claim to the term, albeit in dierent ways. For instance, they sometimes sought to represent the corporation as an entity in global space and
cast its corporate social responsibility initiatives as evidence of its citizenship behavior. For example, Microsoft articulates its global citizenship initiative thus: Our Global Citizenship Initiative combines innovative
technology, partnerships, and programs to create economic, educational,
and social opportunities in local communities worldwide, and to help foster
a more secure computing experience for people everywhere.1 At other
times, corporations aligned themselves with initiatives aimed at helping
people from disadvantaged backgrounds have a greater say in their lives,
thereby claiming to facilitate citizenship behavior. For example, Wal-Mart
successfully publicized its 2005 eorts to help the victims of Hurricane
Katrina in the United States as a facilitation of the civil rights of poor
Americans.2 Finally, corporations can become crucibles of citizenship
themselves, by attempting to align all their spatially displaced workers into
a single corporate identity through a variety of identity-reinforcing actions.
Christina Garsten, in an ethnography of Apple Corporation, illuminated
the dierent strategies used by this spatially dispersed organization to foster
a collective culture among its employees (Garsten 1994). All these three initiatives of corporations can be theorized as attempts to wrest legitimacy by
leveraging the corporation into the interstices of the concept of citizenship,
530
which had itself been fractured by the relative incompatibilities between the
nation and the state.
In light of the above, the concept of corporate citizenship (both in terms
of active corporate initiatives and public perceptions of rm behavior) can
be parsed along three dimensions, which we have termed the responsive,
the facilitative and the internal-democratic elements. The responsive
element of corporate citizenship is the most traditional conceptualization,
where the rm is presented as a citizen in global society, and its behavior is
evaluated along several dimensions such as philanthropy, engagement with
local communities, environmentalism and compliance with local and global
laws (Wood and Logsdon 2001). The facilitative element of corporate citizenship relates to its increasing duciary responsibility to world citizens at
a time when institutions of governance have become deterritorialized. In
other words, corporations, like governments, have a role to play in ensuring
that the people they encounter enjoy citizenship rights (Matten and Crane
2005). Finally, the relatively undertheorized internal-democratic element
considers the corporation as a vessel of citizenship rights. In other words, in
a world of fracturing identities, one may think of people as being, to varying
degrees, citizens of corporations. While many theorists have alluded to
this aspect of corporate behavior (Derber 1998; Saari 1999), it has not
been examined seriously in the context of corporate citizenship. We argue
that the manner in which an organization denes its citizens, includes and
excludes various constituencies from citizenship privileges and treats
dierent classes of citizens will provide an insight into its own citizenship
behavior.
As Table 23.1 shows, a corporation can be judged to have shown responsive citizenship behavior if it engages in actions that may temporarily go
against its prot motive, to help constituencies to which it is not transactionally linked. For example, the intensication of the HIV epidemic in
Africa in the 1990s presented a unique challenge (and opportunity) to pharmaceutical corporations who held patents on anti-retroviral drugs, to
sacrice some of their rent-generating capability in favor of ameliorating a
crisis that arguably represented the greatest human rights and human
capital challenge to an entire continent (Bond 1999). It is a dierent matter
that these corporations did not rise to this challenge in any substantive
manner (Lewis 2001).
Similarly, consider a country where a regime has been known to oppress
its people and deny them their democratic rights and civil liberties. If the
economy of such a state had substantial corporate exposure, corporations
acting individually or in coordination could use the threat to exit to force
the state to stop oppressing its citizens. The incipient moves toward a corporate boycott of the apartheid regime in South Africa (Franck et al. 1982)
531
Types of
citizenship
behavior
Responsive
citizenship
Facilitative
citizenship
Internal-democratic
citizenship
Role of
corporation
As a citizen in
global society
(engaging in
socially responsive
behavior)
As a facilitator of
citizenship rights of
disadvantaged
people
As a crucible of
citizenship (people
are citizens of the
corporation)
Hypothetical
example of
citizenship
behavior
A pharmaceutical
company gives up
intellectual property
privileges to
facilitate access to
medicines by the
aicted poor
A corporation
threatens exit from
a lucrative market
unless local
government
recognizes human
rights
A corporation
grants contract
workers access to
its internal
procedures
regarding
harassment and
wage-fairness
Hypothetical
example of
violations of
citizenship
compacts
A chemical
company deploys
a defective plant in
the Third World,
which malfunctions.
Thousands die
A sneakermanufacturing
firm outsources
production to
vendors who abuse
workers. Disclaims
responsibility for
contract employees
Possible
recourse
against
corporations
by
fragments
(political
society)
Protest corporate
behavior at local
headquarters of the
corporation, as well
as international
venues, such as the
WTO ministerial
meetings
Through global
solidarity
movements,
attempt
embarrassing
boycotts of
violating
corporation in key
markets
Democratic
pressure on local
governments to
enact minimum
wage and labor
oversight laws, to
cover domestic as
well as foreign
organizations
532
domestic contexts, they need to ensure that their employees who toil in the
lower levels of the corporate hierarchy earn a living wage and have access
to basic benets such as healthcare. It is a matter of some surprise and disappointment that companies such as Nike and Wal-Mart choose to risk
delegitimizing challenges to their corporate image rather than oer this
courtesy to their employees and contract laborers. They are truly squandering an opportunity to exhibit internal-democratic citizenship behavior,
which could also have a valuable signaling eect in the corporate space,
given the status of these rms as market leaders in their product markets.
In the next section, we attempt to theorize a dierent approach to corporate citizenship behavior using a framework from political theory.
Theorizing the fragment: from the nation to the corporation
What denes a citizen? As we discussed in the earlier section, the
citizenship-conferring state derived its legitimacy from a claim to nationhood, which presumed a high level of cultural legitimacy. Even multiethnic state formations like the Soviet Union chose to articulate a concept of
national culture (Brubaker 1994), while nationalists in states that had cultural continuities with their neighbors (such as East and West Germany, or
India and Pakistan) sought to distance their state culturally from their
neighbors (Blank and Schmidt 2003). As can be imagined, this form of
homogenized nationalism is based on an ocialized narrative of history
and culture. This version of the nation has always had its share of detractors, such as those minorities whose cultural aspirations were erased or
marginalized in the ocial discourse of nationhood.
In an inuential book titled Nationalist Thought and the Colonial World,
the political theorist Partha Chatterjee claimed that nationalism of the type
that a colonial power bequeathed to a colony at the moment of independence was a derivative discourse. According to Chatterjee, a Western
concept of secular nationalism, which was suggested as a mode of governance and popular solidarity by departing colonial regimes in Asia and
Africa, had been politically derived from a particular ideology of
Enlightenment (Chatterjee 1986). Despite their universalistic claims,
Enlightenment-related approaches use an intrinsically European experience as a referent (as was pointed out by European theorists such as
Theodore Adorno and Max Horkheimer, and subsequently by Michel
Foucault). African and Asian populations are unable to develop any
organic connection with this ocial narrative of their nationhood (for an
anti-imperialist critique of Enlightenment ideology, see Muthu 2003).
Thus, the nation-state in the Third World forever exists in peril of fracture
by other nationalisms, based on religion, caste, or other aspects of culture.
Building further on this concept, Chatterjee (1992) subsequently argued in
533
a book titled The Nation and its Fragments that in order for nationalism to
be an eective force, nationalist discourse would have to incorporate the
concerns of the fragments, of the nation, dened as those subjectivities
whose interests and aspirations had been sacriced at the altar of homogenized nationalism (Pandey 1991). Thus, Chatterjee cautioned against
compressing the history or culture of the nation into any model, speaking
instead of ways in which nationalism can honor the fragmentary, the local,
and the subjugated in order to unmask the will to power that lies at the very
heart of modern rationality and to decenter its epistemological and
moral subject (Chatterjee 1992, p. xi). In his analysis of Indian nationhood, Chatterjee invokes fragments such as outcastes, women, peasants
and others, and suggests that instead of traditional binaries such as
laborcapital, we need to deal with more complex oppositions such as
communitycapital.
A nuanced analysis of Chatterjees ideas is beyond the scope of this
chapter (see Sarkar 2002 for a critique of some of his positions). Here, we
attempt to visualize the fragments of the corporation in the context of a
broad acceptance of his premise. This includes the acceptance that just like
nations, corporations have attempted to oer a homogenized version of
their role in societies, as citizens, as facilitators of citizenship and as crucibles of citizenship, which is ideological in character. Such a concept of citizenship is predicated upon an epistemological focus that is not universally
shared, and that people from dierent parts of the world nd these assumptions and their consequences bewildering and exclusionary. For example,
corporations enact their citizenship rights as demanded by the legal framework of the nation, but also demand citizenship privileges such as property
rights, recourse to a legal system that protects intellectual property, the
ability to purchase land and to use market forces in their hiring and compensation policies. However, power dierentials between nations and corporations lead to situations where such privileges, while conceptually
unremarkable, end up as a serious threat to the civil rights of other subjectivities. The interesting theoretical dierence between these two entities is
that while nations begin with an implied universality of inclusion, corporations begin with a more limited vision. And while fragments of the
nation are entities that nd themselves left out of its epistemic self-concept,
the fragments of the corporation are those entities that nd that their citizenship rights are systemically compromised by the growing reach of
corporations.
For example, regimes of intellectual property rights are incompatible in
agrarian societies where seeds are constantly replanted. Monsatos development of a terminator seed to prevent replanting of agrarian product
not only puts nancial burdens on farming communities, but interrupts a
534
way of life that has existed for millennia (Pendleton 2004). Similarly, the
privatization of water by companies such as Coca-Cola (Barlow and Clarke
2002) goes against the instincts of people who have never believed that
water was a commodity, and suddenly nd that streams and lakes that had
been available to them for generations were being fenced o and protected
by gun-toting security guards. The fact that such actions carry the imprimatur of the law is of scarce consolation to these people. Likewise, the
mistreatment of workers by contractors in the sneaker industry is directly
related to the stresses of job deadlines that originate thousands of miles
away and are not well understood by them (Klein 2000). The mechanized
rhythms of capitalist life are of course alien to these workers, who may have
been farmers less than a decade ago, but were forced into the industrial
workforce by a variety of corporate actions, including the elimination of
farm subsidies by local governments who diverted their spending to factories (Breman 1996).
In eect, the scenario plays itself out in the following manner.
Corporations enter poorer nations with a promise that they will bring in
investments and foreign technology, so necessary for the nations progress
in the globalized economy. National governments, in order to encourage
investments, oer them a variety of inducements, such as subsidies and
immunity from local laws (Baker et al. 1998). Corporations are allowed by
such laws to acquire a variety of assets, including some that had hitherto
been assumed (in light of past practices) to be community assets. They are
occasionally allowed to dictate the way of life in the spaces where they
operate, such as interfering in local customs, practices and celebrations
(Ong 2005). The nation-state accepts the corporation as a citizen, and in
eect relegates some of the residents of the nation from the status of citizen
to that of fragment. In general, the homogenized representation of the corporation and corporate behavior is designed to ignore the suering of these
fragments, or to theorize their plight as the consequence of some
Schumpeterian creative destruction.
Also, just as the discourse of liberal nationalism in ex-colonies was not
universally opposed, since it suited the agenda of a variety of national
elites, so too does the discourse of a homogenized corporation and its citizenship behavior nd circumscribed acceptance in some elite segments of
Third-World society. What we are attempting to do in this chapter is to
disrupt the homogenized discourse of corporate citizenship and visualize a
more inclusive approach that values the fragments of the corporation.
These fragments include labor (both employees and contractors working in
the globalized production space) (Munck 2002), communities aected by
corporations (Breman 1996), and those people whose lifestyles are displaced by the violence unleashed by capitalism in their living and working
535
536
have recently read of the Halliburton Corporation (of which Vice President
Richard Cheney is an ex-CEO) charging the US exchequer $28 for a plastic
plate.6
Finally, and perhaps most troubling is the reality that in the current legal
framework of corporate governance, there exists no framework under
which Blackwater can be adequately tried and prosecuted. The corporation
and its actors cannot be sued for murder or any other human rights violations. They do not fall under Iraqi law (because of a specic contract
between the US and the Iraqi government). They do not fall under US law
(because the events under question occurred outside the US, in Iraq) and
they do not fall under international law because the latter is made for
nation-states and not non-state actors.7 In eect, the corporation can
occupy the twilight zone of international governance, where no citizenship
laws apply.
What makes it so easy for a corporation like Blackwater to ride
roughshod over the will of the US people (not to mention the lives of the
Iraqi people)? Perhaps the answer to this question lies in observations made
in the aftermath of the Great Depression in the United States, when Berle
and Means (1932, p. 357) predicted: the future may see the economic
organization now typied by the corporation, not only on an equal plane
with the state, but possibly even superseding it as the dominant form of
social organization. The defense contractor is yet another example of how
corporations are now legally backed by imperial governments (USA) more
powerfully than sovereign nations (Iraq).
In a bleak if prescient analysis of corporate behavior, Banerjee (2006)
has argued that contemporary forms of organizational accumulation
increasingly involve dispossession and the subjugation of life to the power
of death. Drawing on the works of Mbembe (2003) and Agamben (2005),
Banerjee suggests that some contemporary capitalist practices contribute
to the subjugation of life in a variety of contexts. He too analyzes the role
of private military contractors in Iraq, often connected to large public corporations or private rms. Privatized military rms (PMFs) now oer a
variety of military-related services including combat operations, strategic
planning, asset protection, support and training. It is a global industry
operating in every continent except Antarctica. While the Third World
often marks the theater of operations for PMFs, their corporate head
oces are, not surprisingly, based in metropolitan centers of London,
Paris, Berlin and New York (Singer 2004, quoted in Banerjee 2006).
The idea of linking corporations to death, war and torture is an important
device to decenter the discourse of the corporation as a citizen and represents
them instead as mercenaries as well as merchants. While the mercenary
image is not necessarily a default image to represent the corporation, it helps
537
538
539
540
It was during the USA of this generation of double hegemony that the
idea of CSR was rst explicitly developed in line with a prosperity-regulated post-war consensus that valued a pluralist polity. In the early years of
this period, Howard Bowen published a book-length study, The Social
Responsibilities of the Businessman (1953), written on behalf of the organizational precursor of the National Council of Churches, a good bellwether of mainstream establishment moral views. This book is generally
regarded as the pioneering work on corporate social responsibility (Carroll
1999), but Bowens eort was soon joined by contemporaries such as
Harvard Business School Professor Benjamin Selekman, Whartons Ernest
Dale and Columbias Neil Chamberlain (Heald 1970; Windsor 2001).
Inuenced by parallel exposure to Keynesian economics and industrial
relations theory, and sharing similar experiences with depression, graduate
school, world war, cold war and government service (Bowen, for one, had
worked for both houses of Congress), these scholars advocated:
labormanagement cooperation, an equitable distribution of income, a
balance of countervailing power among important institutions, and a state
suciently independent of all of these narrower interests to serve as referee
(Marens 2004).
A generation later, these hopes for the evolution of benevolent, guided
capitalism within the American hegemonic core were wearing thin even
among its advocates. During the late 1970s, a time of stagation and building political reaction, Bowen himself announced: I have come to the view,
however, that corporate power is so potent and so pervasive that voluntary
social responsibility can not be relied on as a signicant form of control of
business (Bowen 1978, p. 129). By and large, however, Bowens disenchantment was either not noticed or not seen as important enough for a
new generation of CSR theorists to acknowledge, during these rst years
of declining economic hegemony. As American executives began to
respond to a weakening economy and the resulting political challenges, the
institutions and policies that the original cohort of business ethicists had
advocated with regard to government, unions and the egalitarian distribution of wealth were precisely the kinds of arrangements that American
executives were increasingly organizing to prevent, or even roll back
(Clawson et al. 1998).
These eorts did not stop with pressuring the political system. Executives
also turned their attention to the American intellectual community
(Callahan 1999). During a generation of American hegemony in both production and nance, it was argued that a degree of power sharing and economic egalitarianism within the core could win some degree of tolerance or
even approval among the more liberal members of the corporate elite, especially by those who saw it as a weapon in the competition with communism
541
and social democracy. By contrast, however, the 1970s rise of foreign competition and the increase of general economic uncertainty allowed little
space for these challenges to the legitimacy of corporate decision making,
more specically the right of businesses to act with the same autonomy in
the core as they had been doing all along in more peripheral regions, especially with regard to the treatment of employees (Marens 2004).
The Committee for Economic Development, for example, a mildly
Keynesian think-tank that generally proposed policies consistent with the
principles espoused by Bowen, Selekman and the others, was literally
purged during the mid-1970s. The Committee was founded and supported
by contributions from various businesses and executives, many of whom
had worked in government during the Second World War or after
(Schriftgiesser 1967). This small group of businessmen, however, which
Bowen (1953, p. 64) identied as understanding the need for public policies which will make the economic system work better from the point of
view of all classes not merely from the point of view of business, had
largely disappeared a generation later, and so did support for the
Committees traditional policies. As one of the Committees administrators
explained it, In the early [post-Second World War] days the trustees were
men who saw a need for some more government intervention. Now some
of the trustees believe the intervention has gone far enough (Clark 1976,
p. 38). As a result, an organization which had historically advocated regulations and mild subsidies, ended up employing an almost entirely new
Research and Drafting Committee for its 1979 study, Redening
Governments Role in the Market System, which called for tax cuts and a
reduced regulatory burden on business (Frederick 1981).
Not surprisingly, business executives patrons of American business
schools and employers of their graduates were also taking a closer look
at what universities were teaching, especially in business schools. In an
article candidly titled Corporate support of education: some strings
attached, a CEO of a major defense contractor argued without any conscious irony, that corporate support should be channeled to those [academics] who speak out for limited government and those who stress the
importance of individual liberties (Malott 1978, p. 134). He also called for
restoring a balance away from what he implied was an anti-business academic bias, which he exemplied by arguing that professors needed to teach
Milton Friedman along with John Kenneth Galbraith. What he regarded
as bias, however, reveals the change regarding what executives found intellectually tolerable since Bowens day. Friedman was already taught in all
standard economics texts, and Galbraith, while a skeptic and a pluralist,
was hardly an ideological opponent of capitalism: his then most recent best
seller had even been labeled by one left-wing economist a new streamlined
542
apologetic for monopoly capitalism (Sweezy 1973, p. 3). For the CEO who
authored the piece, the pluralism and mild government interventions once
advocated by Bowen and his cohorts were now synonymous with an inherently anti-business perspective.
There was no shortage of candidates waiting to provide a view of the corporation more palatable to business executives. In 1956, Selekman and
Selekman, working in Americas leading business school, could publish a
book titled Power and Morality in a Business Society without generating
serious controversy. Sixteen years later, at the dawn of a new era of organized corporate power, two highly respected economists would argue that
power was not even an issue with regard to understanding corporations.
They claimed, with no apparent irony, that the business rm has no power
of at, no authority, no disciplinary action any dierent in the slightest
degree from ordinary market contracting between any two people (Alchian
and Demsetz 1972, p. 780). That the authors oered no empirical support
for the articles studied, almost Orwellian, naivety has not prevented it from
becoming among the most cited pieces in modern economic scholarship,
says much about the intellectual climate that emerged in American economics departments and business schools (Lazonick 1991).
A second, related intellectual trend made the traditional approach to
business and society even less tenable. Not long after a large portion of
business executives were mobilizing to resist or prevent perceived attacks
from what they regarded as the left or liberal critics, they faced a new challenge from another direction that only reinforced this hostility. A new line
of criticism began emanating from economics and nance departments
that argued that corporate managers were paying too much attention to the
interest of non-shareholder groups, or, worse, pretending to do so as an
excuse for self-dealing, and thus avoiding or at least distracting themselves
from their duty to promote protability and shareholder value (Friedman
1970; Jensen 1988).
Furthermore, corporate executives working in previously oligopolistic
industries, who were now facing heightened competition and renewed
shareholder pressure, were less likely to have felt insuciently secure to
keep the big picture of societys interests in mind. Under siege by the
nancial community and their academic allies for allegedly being too deferential to other groups, executives were not likely to be sympathetic to the
view promoted by Bowen and others that assumed that they themselves
were potentially irresponsible tyrants requiring the constraints imposed by
countervailing power and additional governmental regulation.
As a result, business academics interested in social responsibility not
only faced potential career risks by advocating unionization, countervailing power and additional regulation, they also faced the question as to
543
whether there was any practical benet of advocating these in an era characterized by weak unions, mobilized shareholders and cautious politicians
(Clawson et al. 1998). Ultimately, CSR scholars responded to the new business and academic environments by implicitly conceding the right of corporate executives to retain a high level of autonomy so as to explicitly try
to inuence this autonomy by oering credible arguments to counter those
of agency theorists in favor of the hegemony of shareholder interests.
Much of this new focus was devoted to direct responses to Milton
Friedmans (1970) widely read New York Times article which argued that
protability (within the rules of the game) was the sole measure of a businesss social responsibility (Donaldson and Dunfee 1995).
Furthermore, while, in keeping with declining economic hegemony, the
United States began an unprecedented era of long-term wage stagnation
and an increasing concentration of wealth (Picketty and Saez 2003;
Economic Report of the President 2005). Not a trend that anyone wishing
to gain the attention of business executives would wish to point out, this
new generation of business ethicists rarely took the risk of measuring
ethical principles against economic consequences and they ignored the
warnings of the earlier cohort regarding over-reliance on the voluntary
constraint of executives. Instead, virtually the entire eld turned to two new
paradigms of voluntary ethics: stakeholder theory and social contracting
(Gerde and Wokutch 1998).
In eect, stakeholder management and social contracting became functional substitutes for countervailing power and government regulation,
substitutes more suitable to an era in which discussing the restraint or
coercion of corporate behavior was disfavored. According to the stakeholder perspective, managers need to consider the interests and goals of
other groups connected to the corporation, not because these groups are
themselves powerful institutions formed to compel such consideration
through countervailing power, but because managers should accept the
Kantian notion that other people are not merely means, but ends in themselves (Evan and Freeman 1993). While undoubtedly a worthwhile sentiment, leaving such evaluations up to executives mirrors Kants own
approval of the enlightened despotism of Frederick the Great, whom Kant
preferred to republican government (Kant 1784). While concepts derived
from stakeholder scholarship have diused throughout management education in the United States, there is little evidence that corporate executives
actually practice a measurable degree of Kantian stakeholder management (Marens 2004). This result would hardly have surprised Bowen and
the rst generation of CSR scholars, given their skepticism regarding the
eectiveness of relying on managers to consider and mediate the interest
of other groups.
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546
more than the closed association of modern elite groups, sequestered from
the wider popular life of the communities, walled up within enclaves of
civic freedom and rational law (ibid., p. 4). In contrast, political society
includes large sections of the fragments of the nation, who do not relate to
the nation in the same way that the middle classes do. They lack the citizenship rights that are the hallmark of civil society, but make their claims
on nations through unstable arrangements arrived at through direct political negotiations. Political society is the realm of populations, of instrumental alliances between marginalized groups, and an attempt to wrest
some concessions from a society where the status of its constituents is
beyond the pale of legality (the attempts by illegal immigrants in the US
to secure human rights for themselves in a context where they have no
formal access to the constitution represent the best possible exemplar from
the Western world).
As organizational theorists, perhaps this is our best entry into the
chaotic world of engagement between local groups and corporations.
Consider, for example, a criminal event such as the burning down of the
oces of Cargill Seeds oce in Bangalore, India by a group of irate
farmers. On the face of it, this is a disruptive act, which may be described
(depending on ones sympathies) as either vandalistic in character or a sign
of an insurgency against the dominant order. However, theorizations of
political society help us understand these things in a more nuanced
manner. What we are seeing here is the emergence of mobilizations among
political society, who believe that institutions of civil society have been
hegemonically usurped by corporate capital. The moral and political hegemony of capitalism over civil society, however, leaves political society with
no option but to disrupt the functioning of the state and use the ensuing
discussion to negotiate some space for its own existence and livelihood.
Theoretically, members of civil society are dened through regimes of
liberal citizenship, while members of political society are determined more
by regimes of empirically described characteristics, related to regimes of
governmentality, which may be dened as the quotidian administrative
reality that oers a counterpoint to the images of sovereignty (Foucault
1991; Chatterjee 2007). Corporations are already very well acquainted
with these subtle distinctions. They constantly make concessions to political society (even when they have the power of local law on their side). Be
it Coca-Cola paying compensation to people who have been deprived of
water, Monsanto withdrawing its terminator seed program in the short
run, or Shell re-negotiating with Ogoni leaders in Nigeria, corporations
produce ad hoc arrangements to negotiate with fragments to the extent
they nd such negotiations necessary for maintaining their conditions for
surplus appropriation. Such negotiations not only end up legitimizing
547
corporations, they end up, in some fashion, as the legitimizing agents for
the fragments, in an arena far removed from civil societys idealized realm.
Organizational theory is only beginning to catch up in its analysis of the
extra-legal negotiations between corporate citizens and politicalsociety
fragments. Alas, initial eorts to understand political society such as
Prahalads studies of the bottom of the pyramid (Prahalad 2005) seem
designed only to let corporations extract surplus from the fragment.
Organizational theory needs to theorize resistive acts from the political
society as well (Mir and Mir 2002), and we hope this chapter marks a
modest beginning in that direction.
On the level of praxis, this leads to important conclusions and imperatives for organizational theorists. We need to theorize and publicize those
acts by which an assertive political society takes on global capital. In India,
organized farmers groups have begun to resist primitive accumulation
practices by corporations in the name of special economic zones. The
state encourages corporations to acquire peasant land, and most peasant
struggles against such acquisition are deemed illegal. However, theorists
and journalists need to band together to provide analysis of these events in
a manner that confers legitimacy on the struggles (Pandey 2006).
Aihwa Ong, writing in 1987, had theorized the periodic seizures and
spirit possessions suered by Malay women working on the shopoors of
modern factories as a form of resistance to capitalist discipline (Ong 1987).
We need similar theories to understand why South Korean farmers picket
the WTO in Hong Kong, Nigerians disrupt Shell corporation, French
farmers attack McDonalds, or US citizens demand accountability of
Countrywide Financial in the aftermath of the recent crisis in sub-prime
mortgages. Political society represents the last gasp of the fragments to
assert themselves against the hegemonic dominance of the state and civil
society by corporations, and we as organizational theorists will ignore it at
our own peril.
Notes
1. See http://www.microsoft.com/about/corporatecitizenship/citizenship/default.mspx, accessed 1 November 2007.
2. See http://www.thenation.com/doc/20050926/featherstone, accessed 1 November 2007.
3. See http://www.nytimes.com/2007/10/02/washington/02blackwater.html, accessed 1 November 2007.
4. See http://content.hamptonroads.com/story.cfm?story=108057&ran=56149, accessed 1
November 2007.
5. See http://www.nytimes.com/2007/10/01/, accessed 1 November 2007.
6. See http://www.thenation.com/doc/20060626/mccarthy, accessed 1 November 2007.
7. We are grateful to Guido Palazzo for helping us clarify this important point.
8. In this section, we have relied on material that has been accepted for publication from a
journal article by one of the co-authors: see Marens (2008).
548
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Introduction
The concept of corporate citizenship (CC) has been proposed by some
strands of the consulting and management literature and has been picked
up eagerly by corporations as a preemptive strategy to cope with allegedly
societal demands for expanding the social role of business. The third
group of actors in this msallance are social scientists who in retrospect discover a presumably new corporate social responsibility (CSR) and its
derivatives, including a political role of the corporation.
To some degree this reinventing the past is baing. Since the days of
Jean-Jacques Rousseau, Locke, John Stuart Mill and Karl Marx, political
economy has been a central part of economic and political theorizing.
Reecting on the political roles and implications of business is as old as
business itself, and it certainly is a valid and legitimate endeavor aimed at
clarifying the relationship between economy and politics. So there is little
new in discussing the political role, implications and consequences of business, and it is equally obvious that there can be no denite answer to the
problem of the relationship between economy and politics in general and
to the problem of social or political responsibilities of corporations in particular. Each historical epoch will have to nd its own answers according to
the specics of its constellation, its opportunities and its risks.
Looking at various conceptualizations of the problmatique of political
economy we nd two ideal-type solutions. On the one hand this is Marxs
theoretical and socialisms practical solution the antagonism of economy
and politics is resolved by conating both spheres of society under the prerogative of politics. In the socialist concept the political system not only sets
the rules of the game but also tells the players what to do. On the other hand
this is the solution of liberal democracy economy and polity are functionally separated, and their relations are governed by the principles of
autonomy, restraint, non-interference and subsidiarity. Needless to say that
in theory these ideal types represent normative models which become
muddled and fuzzy in reality and in the praxis of specic societies.
Our own discussion of the relations between corporations/economy
and politics/state is designed as a critique of the CSR/CC approach that
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553
554
Without going into details here, it can be said that by removing all political self-restraint regarding the governance of the economy and subjugating politics under the collective will of the proletariat, Marx hoped to
extend democracy and self-determination into the area of industrial labor
and the economy at large, thus subjecting entrepreneurial decisions to
political directions and in eect creating a politicized economy.
The preceding brief reminder of some of the historical background of
political economy should not be misunderstood as representative of a
complex and multifaceted discourse; it is not intended to insinuate any
vicinity of CC or CSR with socialist thinking. Instead, the deviation to
Marx is intended to undergird a critical understanding of the notion of the
politicized corporation. A politicized rm is not an entity which reacts to
political circumstances this notion would be a mere truism since no
organization within the context of modern democratic societies can avoid
doing this, for example, by obliging to the laws and regulations of a democratic legislative. If the notion of a politicized corporation is to have any
signicance at all, it is an organization which having political responsibilities is subject to political directives, implements political goals, is
politically accountable in some way and in return participates directly and
explicitly in political decision making.
555
In this sense of the word, Palazzo and Scherer, for example, apply the
term. In a rst step they postulate: in our view, the politicization of the corporation is an unavoidable result of the changing interplay of economy,
government and civil society in a globalizing world (Palazzo and Scherer
2006, p. 76), referring to a later text, in which, however, there is again no
sucient argument: For a corporation to deal with changing societal
demands in a reasonable way, it must replace implicit compliance with
assumed societal norms and expectations with an explicit participation in
public processes of political will formation. We consider this shift the politicization of the corporation (Scherer and Palazzo 2007, p. 1108, emphasis
omitted). Although Scherer and Palazzo in other parts of their text (2007)
have delineated careful arguments for a politicization of corporations, the
crucial problem remains that they underestimate the harmful consequences
of undermining liberal societys separation of the spheres of economy and
polity. To underline the core dierence: explicit participation of corporations, in particular transnational corporations (TNCs) and other actors,
has always been an accepted part of lobbying, interest articulation, public
opinion and so on. These kinds of inuence need to be mediated and transformed into a political logic by convincing actors within the political
system, that is, party members, members of parliament or members of
administrations and governments. The politicization of rms, however, circumvents this mediation and instead puts economic/corporate actors
directly in charge of political tasks such as running schools, implementing
health programs or providing infrastructures. This evokes the illusion of a
shortcut solution of social problems. However, the only legitimate
guardians of the public interests are governments, which are accountable
to all their citizens.
If one were to take this kind of politicization of the corporation seriously, it would entail a fundamental reconguration of democracy.
Modern democracy rests on the basic rule of one person, one vote and on
interest aggregation through political parties which compete with each
other for a majority in the legislative body. If corporations as citizens had
a vote of any sort and what else could be the end result of politicization?
this would raise the voting power of some people, that is, the masters of the
corporations, above that of ordinary people. It would in fact reintroduce a
weighted two-class voting system, elevating the managing class to the position of a new nobility. A result not exactly to look forward to.
This aspect of the politicization of the corporation is aptly expressed by
the notion of corporate citizenship. CC indeed insinuates an understanding of the role of corporations as citizens, implying membership in a territorially dened community, constituting a political legal entity with rights
and duties. Since the right to vote is the core privilege of a citizen, it would
556
557
capacity to decide on the specics and terms of social services. Quite obviously, we are not talking about citizenship any more; we are talking about
governance. Strangely enough though, Matten and Crane disregard this
consequence and mutter something about corporate involvement in citizenship which, they surmise, clearly justies a shift toward the terminology of CC (ibid., p. 171).
This is perplexing. Why would involvement in citizenship at the other
side of the relation citizen/government justify the terminology of CC in
describing the role of corporations? It clearly calls for a terminology of
governance, and indeed the role of corporations in global governance is discussed in this sense (Willke 2006, 2007). It remains a mystery why Matten
and Crane stick with the terminology of CC when they shift their focus
away from the citizenship storyline in favor of a governance storyline, being
predominantly concerned with corporations lling in the gaps of defunct
or nonexistent governments.
Even if we accept for arguments sake this idea to stick to a CC frame of
reference we have to voice disagreement with Matten and Cranes reasoning for a governance role of corporations. We shall do this in detail later in
this chapter. Suce here to state that Matten and Crane run the risk of
legitimizing or even inviting the classical institutions of government, in particular the nation-states, to disregard their obligations and simply refer the
citizens to some corporations for the provision of public goods, for
example, safety, healthcare, schooling or an ecologically sound environment. CC then describes the role of the corporation in administering citizenship rights for individuals (Matten and Crane, p. 173) without
answering the crucial question of how to construct a position of rights or
legitimate demands of citizens toward the corporation. By force of logic
the citizen would have to be a citizen of the corporation, that is, being
somehow miraculously included in the respective corporate kingdoms.
Before we get back to this point, we would like to address an even more
intricate problem. CC reinforces and invigorates the concept of a politicized corporation, inheriting all the awkward insuciencies of a politicized economy. One usually quite underestimated aspect of these
insuciencies concerns the problem of distributed knowledge. Friedrich
von Hayek bases the possibility of a modern rational economic order on
the fact that the knowledge of the circumstances of which we must make
use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which
all the separate individuals possess (Hayek 1945, p. 519). Above all it is
neither the corporations in general nor one particular rm that possess
some sort of superior knowledge about the needs or wants of that abstract
entity citizen let alone society in general. It is the market and its price
558
system which in the case of the economy combine the distributed knowledge of innumerable actors in order to generate systemic eects, variously
labeled as the working of the invisible hand or as the tendency toward
general equilibrium. To repeat the crucial point: there is super-institution,
no absolute knowledge or any superior decision maker but instead an intelligent combination of distributed areas of expertise or knowledge: The
whole acts as one market, not because any of its members survey the whole
eld, but because their limited individual elds of vision suciently overlap
so that through many intermediaries the relevant information is communicated to all (ibid., p. 526).
The reverse process with a similar architecture but a dierent logic applies
to the political will formation process. Here the communications of all concerned or interested citizens are organized through many federal and functional intermediaries into propositions which reduce the complexities of
individual political preferences into the simple dichotomies (for or against)
of democratic decision making, suitable for winning a majority. Again, the
decentered and distributed knowledge of myriads of citizens is transformed
by mutual incremental adaptation into propositions which can be decided
by majority vote, thus establishing the famous intelligence of democracy
(Lindblom 1965). Democratic procedures establish a market for public
goods, and political entrepreneurs (political parties) compete for votes and
ultimately for a majority in political decision making. In this process of
political will formation corporations have no privileged role to play.
A nal argument against a politicized economy and politicized corporations, following from this line of reasoning, is surprisingly simple: from
the point of view of democracy the entire endeavor of politicizing corporations is simply superuous. Politics is the one subsystem of modern
society whose specic societal function is to provide collectively binding
decisions. It enjoys the privilege of the competence to dene competencies
(competencecompetence). By political decision the sovereign may dene
the limits and constraints of economic activity by imposing rules and regulations on corporations at (majority) will. In this sense all economic activity is subjected to political discretion and supervision. It is obvious in areas
of safety, high risks or ordre public but it has been extended in many areas
of public interest, including provisions for ecology, health, old age, protection of children and so on. The crucial point is that as soon as any proposition from within society gains enough political support and is being
processed in the logic of politics, and nally is able to achieve a legislative
majority, it may become the law of the land. It is, therefore, politics which
denes the limits and obligations of all other arenas of society. Malkin and
Wildavsky have concluded from this argument that any good can be considered a public good and that all public goods are public because and only
559
because society chooses to put the goods in the public sector instead of the
private sector (Malkin and Wildavsky 1991, p. 355, emphasis omitted).
Historical evidence and experience suggest that the performance of
democratic governance depends on smart self-restraint, restricting politics
to genuinely political questions, that is, problems which denitely demand
collectively binding decisions. Whenever political systems have ventured to
govern non-political arenas of society they have invoked havoc and at times
even totalitarian regimes. For these reasons it is almost common sense
today that a political domination or direction of the economy is counterproductive and detrimental to the innovativeness and competitiveness of
an economy. However, as we shall point out in the next section, there are
intermediate options between a politicized economy and laisser faire.
Liberal economy and the de-politicized corporation
A major achievement of liberal market reforms against mercantilist (that
is, political) control of business has been to disentangle the two arenas of
economy and polity. The purpose of this early exercise in de-politicization
was to strengthen the functional autonomy of business in order to boost
productivity, innovation and welfare. It worked, generally speaking.
Politics remained in charge of the constitutional arrangements such as
securing the legal and monetary order and keeping markets competitive
(independent courts, independent central banks, antitrust agencies and so
on). In the liberal paradigm, legislatures and governments set the rules and
maintain the framework for the economy, whereas private enterprises are
free to take advantage of market opportunities.
Whenever this liberal division of labor was violated, either by the state
interfering with entrepreneurial decision making or by corporations
assuming political functions, the result has been a collapse of economic
performance if not worse (see the fate of socialist countries or, even worse,
the economic conditions of North Korea). The recent propagation of a
politicized corporation is oblivious of this historical experience.
According to the CSR/CC narrative, globalization and global corporations
are aggravating worldwide social and environmental problems. With the
nation-states unable to reach out into the global sphere and global governance institutions still edgling, global corporations are called upon to
solve the problems which governments and international organizations are
unable or unwilling to tackle. But should private enterprise really act as
substitute government? Is politicization of corporations the solution to
the rules gap in the world economy?
The CSR/CC approach refers to a number of empirical observations
from which far-reaching conclusions concerning moralization and politicization of corporations are drawn:
560
1.
2.
3.
4.
These observations are subsequently linked to an array of world problems allegedly associated with the activities of TNCs (for example,
exploitation, poverty, child labor, environmental degradation, poor healthcare, HIV, global crime, gender and racial discrimination, and so on).
Corporations proting from low standards regarding labor costs, work
safety, sanitary conditions, environment and so on, are indicted for causing
(or at least contributing to) these problems on the grounds that they desist
from applying the same high standards wherever they operate that is, on
the grounds of failing to act morally.
Accepting (for the sake of argument) this diagnosis and evaluation
what can be done about redressing the (perceived) ills of a globalizing world
economy? To remedy undesired outcomes of socioeconomic systems, three
main options come to mind:
1.
2.
3.
The rst option has lost appeal with the bankruptcy of socialism. As a
consequence, the capitalist system is usually accepted in the CSR/CC
debate, although some of its participants aspire to some sort of new ethical
capitalism. The second option assumes that mental changes can be
imposed on actors from outside (by moral pressure, if need be). This seems
561
562
1.
2.
563
ethical stance and political positions? Or should we rather rely on improvements in governance, that is, in the constitutional framework of the world
economy, with mentalities, ethics and morals remaining a private aair of
individual actors?
If business strategy is the specication of characteristics to which the
activities of business are required to conform (Moss 1981, p. 1), then corporate strategy can specify the characteristics either of making prots or of
doing the morally good and politically correct thing. Only if these two
strategic orientations do not conict that is, when doing good adds to
prots does the CSR/CC approach conform to the market setting of a
liberal economic system. CSR/CC will become a competitive strategy if
and only if the related business activities sustain adequate returns on
investment. If they do, however, pressuring corporations into ethical mentalities and behavior can be called o. It would seem far more imperative
to educate the mentalities of consumers and citizens so that they understand the working of the market system, and understand, above all, that it
is their actions which translate into market eects to which corporations
are bound to react if they show up in their bottom line. To reiterate this
point: it seems to us a fundamental misunderstanding of the market mechanism and of liberal democracy and also an expression of misplaced
paternalism to try to turn business leaders into good shepherds of the
common weal and thereby implicitly assigning the subjects of economic
and political processes, consumers and citizens, to the role of sheep. On
the contrary, it would seem appropriate to encourage the sheep to become
enlightened, rational and, if they like, moral subjects aware of their potential to inuence the course of events in the economic and political subsystems of society. It is the self-determined individuals who are the true and
only citizens in the realms of economy and polity nobody else.
In the economy, prots and losses function as instruments like carrots
and sticks for pulling the cart. From a systems perspective, investors in productive capacities are useful idiots pursuing their selsh prot goals and
thereby generating private and public wealth, with the invisible hand
taking care of the system as a whole to achieve results which nobody has
intended or planned: that is the way in which each actor participates in producing an end which was no part of his intention (Adam Smith 1776,
p. IV.ii.9). Competition induces and commands agents and rms to put
in the extra eorts needed to stay in business and remain competitive; exerting these extra eorts to gain a competitive advantage in the market creates
wealth by enhancing productivity, innovation and structural change. The
outcomes of a market system are the results of human action but not of
human design (Ferguson 1767, Part 3.2; Hayek 1967). Markets eectively
coordinate investment, production, consumption and saving, generating
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warning (of 1776, p. 421) in mind: I have never known much good done by
those who aected to trade for the public good.
Functional dierentiation and global contexts
Until now our reasoning largely has remained within the traditional
connes of the nation-state and its functional subsystems, for example, politics and economy perceived as nationally dened arenas. We realize that
the most pertinent arguments for CC are related to globalization and to the
changing role of the nation-states and their national polities. When
dening CC as a concept describing the role of the corporation in administering citizenship rights for individuals, adding that of course, this does
not mean that corporations are citizens, or that they have citizenship,
but they are certainly active in citizenship and exhibit citizenship behaviors
(Matten and Crane 2005, pp. 173, 175, original emphasis), Matten and
Crane rely on one main argument the deterioration of the role of the
nation-state by a pervasive deterritorialization of social, political, and economical interaction and by the failure of the nation-states to be the sole
guarantor of these rights any longer (ibid., p. 171). This argument is to be
taken seriously.
Clearly, a many-faceted globalization is widening the gap between the
competences (in both senses of formal competences and capabilities) and
the reach of the nation-states which are in essence limited to their respective territories on the one hand, and the transnational extension of many
of the most pressing social problems on the other from poverty, ecology,
health (that is, pandemics), migration and organized crime to education
deciencies, technological risks, insucient economic growth and other
global systemic risks (Willke 2007, ch. 6). A world that has been dominated by nation-states for some centuries does not all of a sudden switch
into a global community. Even when it is undeniable that profound
processes of globalization are taking place, it is equally undeniable that
nation-states still have an important role to play.
New powers are entering the world stage, among them TNCs, international non-governmental organizations (INGOs), transnational institutions and policy networks. These global players and decision-making
centers cannot and do not abrogate the sovereignty of the nation-states
since they have no formal legitimacy whatsoever to do so. As actors in
policy-making constellations they nevertheless diuse the idea of sovereignty in a factual way. And they are being helped by the fact that the
Westphalian model of state sovereignty has come under scrutiny from
inside, too. In a lucid article, John Agnew has deconstructed two crucial elements of the idea of state sovereignty: that of territoriality and that of
stateness (Agnew 2005). It all amounts to realizing that the notion of
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and the advent of the knowledge society enlarge the governance problem to
proportions that may actually help to clarify it.
The basic problem-solving ideas and models can be copied from the level
of modern nation-states. Subsidiarity and federalism are successful
models of coping with societal complexity and functional autonomies.
Both models rely on the subsystems capacity of self-regulation and selfgovernance in matters pertaining to the space of the subsystem and excluding major externalities. At the global level the task now is to describe
patterns of self-governance that evolve within lateral world systems, to point
out achievements and limits of existing governance regimes, and to juxtapose these factual developments with theoretically grounded considerations
about governing complex social systems. In this perspective it becomes
visible that a multitude of lateral world systems have succeeded in establishing a surprising degree of self-organization and self-governance. They
build global institutions, often originally created by international treaties
between nation-states, which become procient in setting global rules, standards, regulations and other norms sanctioned mainly by the (mounting)
costs of breaking contracts and leaving treaty organizations for example,
the World Trade Organization for the world trade system, the Bank for
International Settlements, the World Bank and the International Monetary
Fund for the world nancial system, the International Olympic Committee
for world sports, the International Red Cross for the world system of disaster relief, the International Atomic Energy Agency for atomic energy safety,
the International Labour Organization for the world labor system, and so
on. Concerning these global institutions it is obvious that they are lacking,
to various degrees, in legitimacy, representativeness and accountability
(Keohane 2003; Held 2004). All claims for a political role of corporations,
then, should be exposed at least to the same critique and scrutiny.
The prime reason for the self-governance of lateral world systems is dire
necessity: there is no world government. This is why global arenas of coordinated activities such as the global nancial system or the global health
system have to do the job themselves. In order to understand the intricate
interdependencies of lateral world systems and nation-states, an extended
view of the traditional forms of subsidiarity and federalism as core elements
of governance is called for. The standard form of vertical subsidiarity is a
tried and proven way of organizing hierarchical complexity. Nothing should
be managed at a higher level if it can be taken care of at a lower one. For
transferring a task to a higher level of governance convincing reasons must
be given and value added must clearly be discernible. If these reasons or the
value added are lacking, the task is to remain at the lower level.
For social systems with a predominantly hierarchical structure, vertical
subsidiarity is sucient to counteract excessive centralization. However,
569
the structures of modern societies and organizations are mainly characterized by functional dierentiation. There still is hierarchy of a sort but it
operates mainly within the functional subsystems. The dominant relation
between the functional subsystems is not hierarchy but interdependence.
For the overall system, say a society, the governance problem is not hierarchy but organizing the interdependence of autonomous and operationally
closed subsystems. Vertical subsidiarity is not sucient for this task. It
needs to be complemented with horizontal subsidiarity, that is, by the
principle of subsidiarity extended to the relations between functionally specialized subsystems.
The specialized subsystems of modern societies are not organized hierarchically but interact in relations of interdependent coordination. If one
subsystem, say the political system or the economy, assumes the role of a
primary system trying to organize society at large, it falls prey to the fallacy
of overextension. Ungovernability in modern complex societies means
that they cannot be governed in their entirety by one subsystem alone.
Governance has to become distributed and decentralized. Any governing
institution has to heed the principles of vertical and horizontal subsidiarity to escape the trap of overload and destructive centralization.
In a similar vein, and strictly complementary to subsidiarity, the idea of
federalism has to be extended to meet the challenge of highly complex
global contexts. Federalism is not a panacea for the woes of globalization
but it is an indispensable basic principle of global governance. In a global
perspective, federalism denotes a space of precarious balance between
anarchy and Leviathan (the subtitle of Buchanan 1975) under conditions
of impossible unity and equally impossible particularism. Global unity in
the sense of a unitary global government will remain impossible for a long
time to come because there are no mechanisms and institutions for a viable
global democracy whatsoever. Global particularism is certainly possible
but not advisable since problems, risks and tasks of global reach abound.
Therefore, an approach to global governance based on subsidiarity and
federalism might be a way to avoid anarchy as well as a new Leviathan:
Federalism is an old idea, but its time may have come again because it
matches paradox with paradox (Handy 1995, p. 110).
In a systems theory view, extended models of subsidiarity and federalism make it superuous to refer to corporations to amend or substitute
democracy. Corporations are by their very design and rationality very
unlikely proponents of democracy and citizen participation. They are, to
be sure, indispensable for the self-organization and self-governance of the
economy, but they fail to qualify as legitimate and accountable political
actors. Instead, they become part of a growing number of politically
active intermediaries, including other collective actors such as associations,
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have to come from new actors, new perspectives and new modes of
accountability.
In this view it makes perfect sense to include corporations, and in particular TNCs, in new modes of governance regimes as it makes sense to
include other transnational actors such as NGOs, policy networks, communities of expertise, private associations and social movements, and so
on. The crucial point here is not to mistake political actors in governance
regimes as parts of or substitutes for government and as formal components of democracy, conveying on them rights and duties which are none
of their business. The multifaceted processes of globalization create new
contingencies and uncertainties for governance because they add an additional level of concatenated and sophisticated problems while the necessary structures, processes and rule systems for an adequate problem-solving
architecture are still in their infancy. In this respect it is almost political
business as usual. There always seems to be a lag between emerging problems and problem-solving mechanisms, but eventually the coping mechanisms catch up at least to some more or less satisfactory degree. If this
were an adequate description of the global constellation of uncertainty
there would be no reason for extended concern.
But it is not. The problem of contingency is more fundamental because
it is tied to the new role of knowledge in an emerging global knowledge
society. Governance ceases to be a matter of common sense. It inexorably
demands professional expertise in handling sophisticated expertise. It
demands prociency in monitoring, facilitating, coordinating and moderating diverse competence elds and professional interests, all of which
surpass in their specic elds the competence level of governance. The
point of governance, then, is not to stage a heroic struggle in order to nally
reach the necessary level of expertise. This endeavor would be in vain and
misdirected. The point of global governance rather seems to be to cultivate
moderation in political intervention, tempered by principles of subsidiarity, federalism, political restraint and decentralized, distributed intelligence.
The concept of CRS/CC confounds the roles of corporations and of politics, confusing their logics and rationalities to an amalgam which does
justice neither to economics nor to politics. A systems theory view, in contrast, builds on functional dierentiation and a clear separation of the
operational modes of the specialized subsystems of society, thereby sustaining a classical liberal architecture of modern societies that grants
autonomy and self-governance to the subsystems under the auspices of vertical and horizontal subsidiarity. Systemic thinking takes account of the
increasing interdependence and imbrications of societal spheres not by
fusing (and confusing) them but by elaborating forms of structural
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coupling which respect the autonomy of the subsystems and at the same
time allow for highly selective contextual relations between them.
In practical terms this means that the interplay between corporations
(and other global societal actors) and politics will become more intense,
combining forms of public and private authority in establishing new modes
of governance. Whereas CC invites a substitution of politics and government by business and corporations, a systems view treats the dignity of
democracy as a given which cannot be substituted by economic actors but
only ameliorated, eventually transforming the rules of formal government
into modes of smart governance.
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574
PART VII
THE FUTURE OF
GLOBAL CORPORATE
CITIZENSHIP
Introduction
What is the responsibility of business in society? The potential answers to
that question depend on the specic cultural, political and economic constellation of the society in which corporations operate. Whenever the constellations will change the answers will change. During the second half of
the 20th century, business operations were framed by relatively stable legal
and moral parameters imposed by national governments and homogeneous social communities. The 21st century has started with the rise of
the transnational corporation (TNC) and the erosion of both the national
regulatory power and the clearness and homogeneity of moral custom
(Palazzo and Scherer 2006; Scherer and Palazzo 2008). As a result, the traditional taken-for-granted division of labor between business and politics
is blurred. Business activities are politicized because of the growing global
problems with unintended social and environmental side-eects, the
growing power of business actors on the global playing eld and the selfregulatory activities of some of them (Scherer and Palazzo 2007).
The debate on corporate social responsibility (CSR) has started to reect
upon the theoretical and practical consequences of globalization only
recently. However, the faster the societal context changes, the less useful the
established concepts of corporate responsibility become. In the highly
inuential CSR pyramid of Carroll (1991), for instance, there seems to be
no place for the privatization of human rights violations. Carrolls concept
is implicitly building on the idea of the intact nation-state in which human
right violations are sanctioned by the government. Respecting these rights
is thus rather a taken-for-granted element of legal requirements. Ethics has
more to do with fairness or honesty toward customers or employees, and it
is dicult to categorize the avoidance of slave labor in ones supply chain
merely as expected. However, given the lack of legal governance on the
global playing eld, the avoidance of slave labor does not belong in
Carrolls category of legal responsibility, because there is yet no global legal
framework that can be applied directly to non-state actors: [t]he statecentric framework of international human rights law and attendant
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diabetes pandemic. Third, corporations are joining the ght against key
global challenges such as AIDS or global warming. Fourth, the global
knowledge society is reintroducing the question of historical responsibility
on the agenda of many companies: the role of corporations such as IBM,
Volkswagen or Unilever in the Third Reich is being examined again (see, for
example, Forbes 2007). The war in Vietnam and the business activities in
apartheid South Africa are additional historical responsibility frontiers.
Some corporations such as Volkswagen have started to deal with their past
and are considering it a key element of their CC responsibilities (Grieger
2007). Others hesitate to open that Pandoras box.
These examples show the dilemma of a social connectedness model of
corporate responsibility. The ever-enlarging societal expectations toward
corporations have led to a multiplicity of citizenship activities that downstream, upstream and sidestream the supply chain. Where do these activities stop? Are corporations, for instance, responsible for their rst-tier
suppliers or should they control for the human rights performance of their
second- and third-tier suppliers as well? This is not only a theoretical question, because some corporations already do go that deep. And if we
assume that corporate responsibility has to go that deep, what does that
mean for corporations such as Wal-Mart with its more than 60 000 suppliers? What should the role of McDonalds be in the ght against obesity
and where does that ght risk the corporations existence? Where are the
limits of responsibility and how can it be managed along highly complex
supply chain networks? What does it mean to be a good (global) corporate
citizen within the context of a social connectedness model of responsibility? These questions are not limited to the supply chain problematic.
Rather it appears that there is a growing uncertainty both in practice and
in scholarly debates on where the limits of responsibility may be for companies operating in an increasingly competitive environment. Finally, corporations cannot be responsible for any social misery or environmental
disaster (Scherer and Smid 2000; Margolis and Walsh 2003; Scherer et al.
2006).
Toward a new concept of corporate politics
In the managerial literature, politics is dened as power in action (Pfeer
1981, p. 7; Hollingsworth 1998, p. 491). Corporate politics is usually understood as a power game, in which self-interested corporations ght for scarce
resources, and try to avoid regulation or to inuence public opinion in
their favor (Keim 2001; Bonardi et al. 2005; Bonardi and Keim 2005).
Consequently, corporations are not political actors in a strict sense. They
are not obliged to legitimize their activities as long as they stay within the
limits of laws and moral custom. The emphasis in economic theory on
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corporations align their CSR communication and their lobbyism activities? What are the required mechanisms of control and accountability?
Governance without government
One of the key insights of many contributions to our Handbook is that
under the postnational constellation, corporations create more negative
side-eects for society, are under more public pressure due to their sometimes doubtful impact, and have started to increase their eorts to solve the
problems to which they are connected. When under pressure, corporations
often start to engage in self-regulatory activities. They formulate a code of
conduct and communicate it to their suppliers. However, these measures
are often highly ineective because they are not linked to enforcement
mechanisms and thus provoke even more pressure from civil society. A
much more promising engagement emerges where corporations collaborate
with civil society actors and transnational or national political bodies in
order to solve the social and environmental problems in which they hold a
stake (Zadek 2004). We have described this as the corporate embeddedness
in processes of democratic will-formation and problem solving in a
transnational context of political governance (Scherer and Palazzo 2007,
p. 1110). Obviously, by participating in multistakeholder initatives of rule
setting and enforcement, private rms have started to become an actor in
global regulatory processes. In contrast to a national regulatory context,
under the postnational constellation, non-state actors play an active role in
what has been described as governance with and without government (see,
for instance, the contributions of Wolf, Kobrin, Doh and Zrn, Chapters
1114, respectively). Self-regulatory initiatives with standards, monitoring
processes and labels are, for instance, progressing in the global garment
industry (MacDonald and MacDonald 2006) and in forest products
(Bartley 2003).
On the one hand, these emerging governance standards, frameworks and
control mechanisms might help to ll the global legal vacuum for multinational business activities. On the other, they suer from a democratic
decit in all their dimensions (Koenig-Archibugi 2004; Wolf 2005). The formulation and enforcement of laws has been under the control of elected
governments in the national context. In that tradition, our understanding of
democracy includes at least three elements that are problematized by the
governance without government logic. First, it shifts regulatory power from
elected bodies to private actors. Second, it replaces hard law by soft law.
Third, it challenges the democratic ideal of civic sovereignty and representativity. As a result, both, the actors, and the processes they start to develop
and control rules, provoke legitimacy problems (Palazzo and Scherer 2006;
see also Boddewyn 1995). Habermas (2006, p. 176) reminds us that:
583
only states can draw on the resources of law and legitimate power. Even if nongovernmental actors can satisfy the initial regulatory needs of cross-border functional systems through private forms of legislation . . . these regulations will not
count as law if they are not implemented by nation-states, or at least by agencies of politically constituted international organizations.
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the order of society. We hope that our Handbook will make a contribution
to that debate.
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Index
3M Pollution Prevention Pays Program
178
AA 1000 ESG standards 67
Aarup, K. 396
Abbott, Jennifer 116
Abbott, Kenneth W. 263
Abdelal, Rawi 254
accountability 945
Achbar, Mark 116
Ackerman, R.W. 57
activism, NGOs 273
acts citizenship 484
adjudication, remedy and relief
imbalance 90, 93
Adler, N.J. 377, 3945
advertising
CC (corporate citizenship) 3367
CSR (corporate social
responsibility) 3234
advocacy NGOs 2756
see also activism, NGOs
AES 197, 201
Agamben, G. 536
agency theory 3823
Aggarwal, R. 86
Agle, B. 189, 195, 198
Aglietta, M. 539
Agnew, John 5656
Aguilera, R.V. 395
Ahluwalia, D. 527
AIDS, battle against 254
Akdeniz, Yaman 257
Albert, Matthias 298
Albrow, Martin 298
Alchian, A.A. 542
Alegria, F. 537
Alford, R.R. 19092, 194, 203
Alien Torts Claims Act 1789 (ATCA)
348, 350
Aligada, R.A. 4856
Altman, Barbara W. 25, 29, 3312
Ames, R.E. 396
Amoco 213
591
592
Index
Bercusson, B. 81
Bergenstein, S. 455
Berger, I.E. 282
Berger, P.L. 190
Berle, A. 536
Berlin, I. 478
Berman, Paul Schiff 265
Bernstein, S.D. 384
Berry, J.M. 88
Bertelli, A.M. 472
Best Practice in Investment Promotion
(UNCTAD) 461
Bhagwati, J. 88, 367
BHP Billiton 39091
Biersteker, Thomas J. 231, 253, 263,
305
Bies, R.J. 2, 395, 583
Billenness, S. 213
Binstein, M. 81
Birch, David 30
BITC (Business in the Community)
50, 55
Bittner, E. 409
Black, J. Stewart 431
Blackman, S.A.B. 5
Blackwater USA 5356
Blair, M.M. 480
Blair, Tony 253, 280
Blank, T. 532
Blau, Peter 145, 162
Blecher, Taddy 3878
Block, Peter 435
Blood Diamond (2006 film) 32
Blowfield, M. 585
Boatright, John R. 40, 333
Boddewyn, J. 267, 394, 454, 456, 460,
578, 582
Bodwell, Charles 63, 64
Body Shop 438
Boesky, Ivan 81, 118
Boggs, C. 461, 4656
Bohman, James 440
Boj, D.M. 525
Boland, R. 389, 394
Bonacich, Edna 142, 163
Bonardi, J.P. 455, 458, 580
Bond, P. 530
borders, significance of 2567
Bornstein, D. 68
Bosch, Robert 307
Index 593
Bossone, Andrew 360
Boston College Center for Corporate
Citizenship 63
Botkin, J.W. 375
bottom feeders 488, 495
boundary-spanning functions 567
Bourdieu, P. 1456, 171, 174, 192, 454,
458
Bovens, M. 410
Bowden, C. 81
Bowen, H.R. 78, 54041
Bowerman, Bill 514
Bowie, N.E. 78, 80
BP
CSR 330
overthrow of democratically elected
government in Iran 537
Bradley, Ed 515
Bradley, R. 282
Braithwaite, J. 23, 5, 88, 163, 352, 586
Branco, Manuel 553
branding, images 51314
Branson, Richard 449
Braun, Rainer 161
Braungart, M. 177
Breitmeier, Helmut 245
Breman, J. 534
Brenner, R. 539
Brenner, S.N. 60, 86
Brent Spar 5051, 507
Bressel, Nina 228
Brewer, T.L. 267, 454, 456, 460, 578
Brickson, S.L. 395
Brief, A.P. 189
Brighouse, Harry 440
Brinkbumer, K. 449
British South Africa Company 212
Brock, Gillian 440
Brock, Lothar 298
Brody, William R. 259
Brook, D. 535
Brown, L.D. 61, 66, 285
Brown, M.E. 202
Brubaker, R. 532
Brunder, Christopher M. 254
Bruno, K. 471
Buchanan, Allen 141, 232, 23840,
242, 245
Buchanan, James 569
Buchholz, R. 318
594
Index
Caza, A. 384
CBPs (cause-based partnerships)
2834
CC see corporate citizenship
CCI (corporate community
involvement) 545
CCR (corporate community relations)
545
Celebration, Florida 110
CEPCO (Oaxaca State Coffee
Producers Network) 287
Cerny, Philip G. 298
Cescau, Patrick 449
Chamberlain, Neil 540
Chambers, R. 4, 366
Chan, A. 88, 367
Chandler, A. 51
Chandler, A.D. 3, 586
Chandler, David 297
Chandra, A. 86
Chappell, Tom 778, 78
charity, duty of 108
Charlton, A. 88, 367
Chatterjee, Deen K. 440, 445
Chatterjee, P. 527, 5323, 5456
checkbook citizenship 1056
Cheney, Richard 536
Chevron 330
Chittister, J. 385
Christmann, P. 87
Chua, A. 209
CI (Conservation International) 2868
CIA, overthrow of democratically
elected government in Iran 537
Cialdini, R.B. 106
CIDA University 3878
Cisco 5067
Citigroup 26
citizenship
applied to corporations 3440
contemporary notions of 4044
definitions 334, 315
emotive connections 5289
ethical analysis 3335
as organizing principle 32
and stakeholders 4828
see also fragments, theorization
Ciulla, Joanne 431, 4345
CIVICUS (World Alliance for Citizen
Participation) 3312
civil society
definitions 274
global governance roles 2313
new centrality of 3356
Clapham, A. 4, 301, 366
Clark, L.H. 541
Clark, T. 480
Clarke, T. 534
Clarkson, M.B.E. 59, 61, 562
Clawson, D. 540, 543
Clemens, E.S. 191
Clinton, Bill 516
club NGOs 275
Coase, R.H. 395
Cobb, J.B., Jr 80
Coca-Cola Company 26, 169, 534, 579
Cochran, P.L. 578, 60, 81, 86
codes of conduct 188
see also governance instruments,
ethicization of corporate
behavior
cognitive legitimacy 317
cognitive schemas 1967
cognitive work 176
Cohen, D. 88
Cohen, Joshua 265
Cohen, R. 4, 440
Coleman, G. 51
Coll, S. 81
Collaborative Continuum 283
Collins, Denis 40
Collins, J.C. 58
Collis, D. 381
Collopy, F. 389, 394
commandment of transparency (CT)
5056
Commission on Co-determination
(Mitbestimmungskommission) 299
Committee for Economic
Development 541
Communist Manifesto (Marx) 554
communities of interest 101
community apathetic citizens 112
community builders 111
community creators 11011
community engagement, typology
11013
community exploiters/destroyers
11213
community good citizens 11112
Index 595
community stakeholders, and
corporate citizenship 1002
Compa, Lance 161
competitive markets, and stakeholders
847
competitive rights of stakeholders 85
compliance verification 945
complicity 350
Congo, Democratic Republic of 214,
217
Connolly, William 163
Conrad, Joseph 527
Conservation International (CI) 2868
Constant Gardener, The (2005 film)
32
Convention on the Rights of Persons
with Disabilities 348
Conzelmann, Thomas 234, 237, 240,
245
Cook, F.J. 81
Cook, J.M. 191
Cooper, Cynthia 413
Cooperrider, D.L. 377, 389
corporate citizenship (CC)
advertising 3367
concept development
concept stages 5565
concept stages framework 656
context 5052
history 3313
root concepts 525
and corruption mitigation 192200
definitions 52, 624, 75, 168, 1867,
21011, 31618, 331, 410
emergence of 446
environmental responsibilities 1758
facets/elements 52832
gaining employee buy-in 4058
as interdisciplinary topic 46
as participation in a polity 41013
and peace 21619
strategic 33940
as synonymous with political CSR 3
use of terminology by business
equivalent view 2930, 414
extended view 3031, 41319
limited view 289, 414
overview 258
violations of 5358
corporate communities 1278
596
Index
Index 597
CSR (corporate social responsibility)
corporate attitude classification
4889
CSR1 (corporate social responsibility)
56
CSR2 (corporate social responsiveness)
567
CSR3 (corporate social rectitude) 58
CSR4 (cosmos, science,
religion/spirituality) 589
CSR5 (corporate stakeholder
responsibility) 5960
CSSPs (cross-sectoral social
partnerships) 282, 284
CT (commandment of transparency)
5056
Curtin, Deane 42
Curwen, P. 81
Cutler, A. Claire 229, 234, 243, 253,
255, 263, 2667, 305, 570
cynics 4889
Dagger, Richard 437
Dahl, R. 35, 478
Daimler 579
Dale, Ernest 540
Dalton, Maxine A. 431
Daly, H.E. 80
Daniels, J. 544
Daino, Roberto 366
Danone 449
Darrow, Mac 346, 363, 366
Das, T.K. 282
Davenport, Kim 30
Davidson, Caroline 514
Davie, L. 387
Davis, G.F. 4
Davis, James H. 435
Day, K. 81
De Bakker, F.G.A. 5, 281, 395
De Caelo et Mundo (Aristotle) 502
de Jonquires, G. 581
de Schutter, Olivier 349
de Tocqueville, Alexis 274
Deetz, S. 409
defense contractors 5356
DeGeorge, Richard T. 80, 186, 432
degree of symbiosis 102
Dehn, G. 413
Deitelhoff, Nicole 245
Delanty, Gerard 41
Deleuze, G. 51213
deliberative democracy
achieving grip for 41719
and extended corporate citizenship
41517
in practice 41921
vs radical democracy 4078
democratic corporate citizenship
4235
democratic interventionist state
challenges for 2979
overview 2937
Demsetz, H. 542
Den Hond, F. 5, 281, 395
Deng, F. 2
Denson, Charlie 523
Derber, C. 462, 530
derivative stakeholders 107
Deutsch, Karl W. 297
Deutsche Bank 26
Devlin, P. 199
Diageo 26
Dicken, P. 87
Diermeier, Daniel 431, 434
DiMaggio, P. 191, 196, 382, 454, 458,
584
Dine, Janet 358
discursive power 46061
Disney 110, 141, 143
distributive justice 74
Dobel, J.P. 285, 2889
Dobson, Andrew 42
Doctors without Borders 276
Doh, J.P. 185, 274, 27882, 284, 286,
431, 464, 583
Doha Declaration on TRIPS and
Public Health (2001) 3567
Dolphin Tuna case 279, 355
Domini Index 68
Donaldson, T. 39, 60, 63, 80, 84, 320,
332, 4323, 437, 448, 543
Donlan, W. 106, 114
Doonesbury 516
Dorado, S. 584
Dorsey, D. 386
Dow Jones Sustainability Index 68
Dowell, G. 166
Drahos, P. 2, 88, 163, 352, 586
Driver, C. 493, 586
598
Index
Index 599
ExxonMobil 26, 169, 209, 210, 302,
330, 3745, 5045
FaceBook 111
facilitative element of CC 530
Fagre, N. 456
Fair Labor Association (FLA) 517
Fair Trade Labeling Organization 67
Falk, Richard 38
Fama, E. 383
Fast Food Nation (2006 film) 32
Fayerweather, John 267
Featherstone, Lisa 141
Feddersen, T. 3245
Feenstra, R. 531
Feinberg, Joel 158
Feldman, Dan 362
Ferguson, Adam 563
Ferraro, F. 396
Ferrell, O.C. 3, 30
Fichtner, U. 449
Fikentscher, Wolfgang 233
Fine, B. 461
Fineman, S. 176
Finger, Matthias 231
Finnemore, Martha 245
Fishman, C. 375
Fitzgerald, Peter 368
FLA (Fair Labor Association) 517
Fletcher, George 1623
Fligstein, N. 19091, 193, 203, 412,
45463, 465, 470, 472
Flint, D. 506, 525
Florent-Treacy, Elizabeth 435
Florini, Ann M. 230
Fombrun, C.J. 29, 55, 62, 193, 322,
332, 41011
Forbes, N. 580
Ford Foundation 287
Ford Motor Company 117, 210, 302
Foreign Corrupt Practices Act (US
1977) 50, 349
Forest Stewardship Council (FSC) 67,
244, 264, 280, 41921
Forest Troop baboons 208
forestry, global policy on 4678
Fort, T.L. 2, 21117, 219, 395
Foucault, M. 460, 5034, 546
Fougre, M. 544
foundational values 634
600
Index
Index 601
Grameen Bank 68
GrameenDanone Food Co. 449
Grandin, G. 459
Granovetter, M. 190, 457
Grant, Wyn 31
Graves, S.B. 51
Grayson, David 52
Graz, Jean-Christophe 234
Grecco, Celso 449
Green, K. 166
Greenleaf, Robert K. 436
greenwashing 285
GRI (Global Reporting Initiative) 60,
67
Grieger, M. 580
Griffiths, Percival Joseph 233
Grimsey, D. 4
grip
achieving grip for deliberative
democracy 41719
definitions 409, 415
Grossman, Gene 259
GSMs (global social movements) 278
Guattari, F. 51213
Guay, T.R. 278, 281
Guha, R. 527
Gulati, R. 283, 457
Gurria, A. 185
Ha, Joseph 516
Habermas, Jrgen 1, 45, 65, 187, 242,
249, 265, 413, 41516, 41819,
422, 4267, 528, 579, 5823
Habisch, A. 3, 29
habitus 171
Hadden, T. 477
Hafner-Burton, Emilie 354
Haidt, J. 383
Haigh, Matthew 32, 44
Hall, Peter 251
Hall, Rodney B. 231, 253, 263, 305
Halliburton Corporation 536
Handbook of Positive Psychology
(Snyder and Lopez) 384
Handy, Charles 569
Hannan, M. 457
Hannerz, Ulf 439
Hanson, G. 531
hard law 263
Harrison, J.S. 61, 282
Hart, O. 481
Hart, S.L. 689, 274, 321, 395
Harte, G. 469
Harvey, D. 535, 545
Hasenclever, Andreas 305
Hassel, Anke 301
Haufler, Virginia 235, 245, 263
Hawken, P. 395
Hay, C. 87
Hayek, Friedrich 213, 461, 479, 557,
563
Heald, M. 540
Heap, Simon 277
Held, David 4, 241, 265, 269, 440, 442,
444, 4478, 568
Helyar, J. 81
Henderson, P.D. 5
Henisz, W.J. 192, 197, 455
Hennart, Jean F. 395
Hepple, B. 81
Herling, J. 81
Hertz, N. 37, 307, 343, 466
Hertz Rent-a-Car 128
Hess, D. 2812
Hessen, R. 462
Hewlett-Packard 26, 117
Hilary, J. 367
Hill, C.W.L. 60, 84
Hillgenberg, Hartmut 264
Hillman, A.J. 455, 578
Hirsch, Seev 395
Hirschman, A.O. 200
Hirst, P.Q. 497
Hitt, M.A. 455, 578
Hobbes, Thomas 556
Hobsbawm, E. 529
Hock, Dee 389
Hoffman, A. 456, 460
Hohfeld, W.N. 478
Hollingsworth, R.J. 580
homeworkers 1434
Honneth, Axel 444
Honore, Tony 150
Hooijberg, R. 431
Hoppe, H. 325
Horst, T.J.J. van der 178
House, R.J. 584
Hsia, R.Y.-J. 289
Hsieh, N. 105, 108
Hudsons Bay Company 233
602
Index
human rights
and aid-based development 35864
and commercial enterprise 34752
and globalization 3434
and international trade and
investment 3528
overview 3645
Human Rights Council of Australia
363
Human Rights Norms for
Corporations (UN) 351
Hunt, S.A. 197
Hunt, S.D. 196
Hunter, J.D. 195
Husted, B.W. 5, 465
hypernorms 63
IBM 74, 76, 117, 132, 580
ICANN (Internet Corporation for
Assigned Names and Numbers)
305
ICCPR (International Covenant on
Civil and Political Rights) 3489
ICCR (Interfaith Center for Corporate
Responsibility) 278
ICESCR (International Covenant on
Economic, Social and Cultural
Rights) 348
identities 1945
identity-based citizenship 434
Ikeda, Satoshi 33
Illouz, E. 194
ILO (International Labour
Organization) 345
image, branding 51314
IMF (International Monetary Fund)
345, 460
individual, the 1235
INFACT (Infant Formula Action
Coalition) 278
information asymmetry 324
information imbalance 9092
Infosys 198
Inkpen, A.C. 5, 586
institutional logics
corporate influence on 1934
definitions 19091
institutional theory 3812
integrative stage (business-NGO
relationships) 283
integrity 50810
see also transparency, openness and
integrity
Intellectual Property Committee (IPC)
2545
Interfaith Center for Corporate
Responsibility (ICCR) 278
internal-democratic element of CC 530
internal responsibility management
systems 66
internalization theory 37980
International Business Leaders Forum
(IBLF) 50
international business scholarship
37883, 38894
International Labour Organization
(ILO) 345
International Monetary Fund (IMF)
345, 460
International Organization for
Standardization (ISO) 264
international regulatory framework,
corporate involvement 13
international society 252
International Covenant on Economic,
Social and Cultural Rights
(ICESCR) 348
Internet Corporation for Assigned
Names and Numbers (ICANN)
305
internet gambling 258
interpenetrating systems model 567
IPC (Intellectual Property Committee)
2545
Iscar Ltd 392
Isin, Engin F. 33, 41, 45
ISO (International Organization for
Standardization) 264
ISO 14000 Environmental
Management Standard 181
ISO 26000 standards 67
ITT, overthrow of democratically
elected government in Chile 537
Ivancevich, John M. 432
J.C. Penny 143
Jensen, M.C. 5, 66, 81, 84, 319, 383,
542, 564, 586
Jeurissen, Ronald 31
John, C.H. St. 61
Index 603
Johnson, Harry G. 395
Johnson, J. 106
Johnson, J.L. 283
Johnson, M. 171
Johnson, Mark 448
Johnson, Nancy Brown 382
Johnson, S. 198
Johnston, Doug 368
Jonas, Hans 155
Jones, Kent 357, 358, 364, 367
Jones, Marc T. 32, 44
Jones, T.M. 60, 84, 320, 332, 432
Jordan, Michael 514, 515
Jrgensen, M. 425
Joss, Robert 367
Jost, J.T. 196
Journal of Corporate Citizenship 26
Juan Bosco Obrero 213
justice see distributive justice; global
justice; responsible leadership, and
social justice; structural injustice
Kahler, Miles 303
Kakabadse, Nada K. 553
Kalegaonkar, A. 285
Kalisvaart, S. 178
Kant, Immanuel 139, 213, 439, 543
Kanter, R.M. 77, 326
Kaplan, Rami 36
Kapoor, I. 418
Karliner, J. 471
Karmel, R.S. 84
Kasky, Marc 517
Kastein, E.B. 88
Kaufmann, D. 185, 189
Kaul, I. 3, 578
Keady, Jim 516
Kearney, A.T. 297
Keating, Charles 81
Keay, John 233
Keck, Margaret E. 231, 245
Keim, G. 455, 580
Kell, Georg 570
Kellow, A. 274
Kelsen, H. 484
Kenis, P. 4
Kennedy, P. 4
Kenneth Galbraith, John 541
Keohane, Robert O. 232, 23840, 242,
245, 250, 265, 269, 568, 570
Kerr, Jeffrey L. 40
Kerwer, Dieter 300
Kets de Vries, Manfred F.R. 435
Keyes, C.L.M. 383
Khan, F.R. 585
Khan, M.H. 464
Khattak, Saba Gul 143
Kim, B. 455
King, Andrew 380, 395
Kingsbury, B. 5
Kinley, D. 45, 348, 351, 366, 578
Kinzer, S. 537
KLD Research and Analytics 68
Klein, N. 162, 534, 537
Klitgaard, R.E. 189
Kluge, Norbert 296
Knight, Phil 51418, 521
Knill, Christoph 230
Kobayashi, Sayaka 4056
Kobrin, Stephen J. 1, 3, 250, 2568,
265, 269
Koenig-Archibugi, M. 45, 269, 582
Kogut, B. 282
Kolk, Ans 3012
Kooiman, Jan 225, 2278, 230, 242,
245
Korten, D.C. 2, 37, 209, 4667
Kostova, Tatiana 308
Kotschwar, B. 279
Kraakman, R.R. 478
Kramer, M. 326
Krasner, Stephen 263, 566
Krauss, M. 87
Kruger, M. 5
Krugman, Paul 298
Kuhn, Thomas 392
Kwok, C. 219
Kwong, Peter 142
Kyj, Myron J. 30
Kymlicka, Will 33, 440
labor, commodification and
objectification of 173
Laclau, E. 407, 413, 41516, 4245
Lad, L.J. 60, 282
Lado, A. 381
LaFraniere, Sharon 390, 396
Lakoff, G. 171
Lamont, James 254
Lamy, Pascal 262, 345, 352, 3656
604
Index
Index 605
Margolis, J.D. 2, 396, 4689, 580
market politicization 293, 3058
Marquis, C. 382, 395
Marsden, C. 30, 52, 623
Marsh, D. 87
Marshall, Alfred 258
Marshall, T.H. 3, 34, 296, 308
Martens, Kerstin 232
Marvel, H. 326
Marwell, G. 396
Marx, Karl 554
Mathews, Jessica T. 23031
Mattel 109
Matten, D. 25, 3031, 37, 39, 46,
512, 645, 78, 81, 105, 1689,
1867, 193, 197, 20911, 216, 234,
273, 302, 3325, 395, 411, 414,
487, 528, 530, 5567, 565, 578,
581
Mau, B. 374, 395
Mauro, P. 185, 1889
May, Larry 155, 158, 163
Mayer, Peter 245
Mayntz, Renate 227, 243
Mazlish, B. 3, 586
Mbembe, A. 536
McAfee, K. 460
McDonalds Corporation 26, 111, 324,
57980
McDonough, W. 177
McGrew, Anthony 250
McIntosh, M. 3, 26, 30, 51, 623, 209,
211, 491
McLean, B. 392
McVea, J. 3, 84
McWilliams, A. 5, 31518, 3216,
3323, 469
Means, G. 536
Meckling, W. 319, 383
Medetsky, A. 289
MEIs (multilateral economic
institutions) 278
Merck & Co. 26, 179
Merleau-Ponty, Maurice 171
Meyer, J. 457, 460
micro-finance 689
Microsoft 26, 179, 529
Miethe, T.D. 426
Miles, S. 469
Milgrom, P. 323, 481
Milken, Mike 81
Mill, J.S. 554
Millennium Challenge Account 363
Miller, David 138
Miller, John 144
Miller, Roger LeRoy 308
Miller, W.H. 26
Milstein, M.B. 274
Mintzberg, Henry 436
Mir, A. 547
Mir, R. 547
Mirvis, P. 65, 284
Misangyi, V. 186, 188, 190, 194,
1978
Mische, A. 191, 196, 202
Mitchell, R.K. 61, 84, 432, 469
Mokhiber, R. 2
Moldoveanu, M.C. 5
Molz, Rick 375
Monbiot, G. 466
Monsato 5334
Montesquieu, Charles 213
Moon, C. 381
Moon, J. 3, 31, 35, 46, 645, 99100,
1867, 211, 302, 414, 487, 528
Moorthy, R.S. 432
moral legitimacy 317
moralsethics duality 415
Moran, T.H. 88
Moravcsik, Andrew 304
Moreau, R. 198
Mrth, U. 5
Mosakowski, E. 381
Mosdorf, Siegmar 307
Moskowitz, M. 77
Moss, Scott J. 563
Motorola Inc 169, 324
Mouffe, C. 407, 416, 418
Moulettes, A. 544
Mufson, S. 209
multilateral economic institutions
(MEIs) 278
Munck, R. 534
Mntefering, Franz 260
Mure, L.T. La 277, 284
Murphy, D.F. 51
Murphy, Liam 163
Muthu, S. 532
Myers, D. 383
MySpace 111
606
Index
Nader, Ralph 57
Nanus, Bert 434
Nanz, P. 583
Narayan, Deepa 347
Nation and its Fragments, The
(Chatterjee) 533
nation-state, definitions 529
National Resource Defense Council
276
Nationalist Thought and the Colonial
World (Chatterjee) 532
natural persons 486
Nature Conservancy, The 276
Nazi memorabilia trading 2578, 298
Neidenthal, P. 171
Nron, P.-Y. 34, 26, 31, 35, 46, 187,
197, 487
Nestl S.A. 278
Neubert, R.L. 29
neutrality result 324
Newell, P. 456, 460, 467
Newton, L.H. 278
Newton, T. 469
NGO Watch 290
NGOs (non-governmental
organizations)
and business 2816
definitions and classifications 2747
future involvement in corporate
citizenship 28890
illustrations of corporateNGO
interactions 2868
influence on global governance
27781
overview 2734
Nguyen Thi Lap 515
Nguyen, Thuyen 515
Nichols, P.M. 213
Nicomachean Ethics (Aristotle) 195
Nigh, D. 57
Nighthawks 258
Nike
company reporting 324
controversies 51417
corporate citizenship statement 302
Corporate Responsibility Report
51822
embracing language of corporate
citizenship 210
historical overview 514
integrity 522
lawsuit 51718
openness 507, 522
outsourced manufacturing 109
ranking on 100 Best Corporate
Citizens List 562
as rhizomatic 518
squandering opportunity to exhibit
internal-democratic citizenship
behavior 532
as surrogate government 38
sweatshops 141, 537
transparency study 51424
Nilakant, V. 382
Nixon, R. 209
Noddings, Nel 444
Nokia 302
Nolan, Justine 345, 350
Nlke, Andreas 234
nomadic thinking 512
non-governmental organizations see
NGOs (non-governmental
organizations)
nonprofit sector see civil society
Noonan, J. 419
Nordstrom 143
Norman, W. 34, 26, 31, 33, 35, 46,
187, 197, 487
Norms see Human Rights Norms for
Corporations
North, Douglass C. 308
North, Walter R. 564
Norval, A.J. 411, 418
Novak, M. 85
Novartis 5012
Nowak, P. 283
Nozick, R. 461
Nussbaum, Martha C. 430, 433, 438,
440, 446, 449
Nye, Joseph S., Jr 250, 265, 269
Oakes, L.S. 192
Oaxaca State Coffee Producers
Network (CEPCO) 287
Ober, Josiah 40
OBrien, R. 278
Ocasio, W. 190
OECD (Organization for Economic
Cooperation and Development)
186, 188, 345
Index 607
OECD Guidelines for Multinational
Corporations 67, 349, 4912
Oetzel, J. 215
Offe, Claus 300
Offenheiser, R. 288
Ohl, Cornelia 300
Oliver, C. 283
Oliviero, Melanie Beth 163
Olsen, Johan P. 245
Olsson, C. 51415
ONeill, Onora 14041, 141, 447
Ong, A. 534, 544, 547
openness 5068
see also transparency, openness and
integrity
operational NGOs 276
Oresme, N. 502, 524
Organization for Economic
Cooperation and Development
(OECD) 186, 188, 345
Orientalism, construct of 538
Orlie, Melissa 163
Orlitzky, M. 327, 468
ORourke, D. 161, 516
Orts, E.W. 84, 87, 89
Ott, R. 537
outsourced manufacturing see value
chain members
Ovett, Davinia 368
Oxfam 2878
Paine, L.S. 199, 3956, 583
Palacio, Ana 366
Palacios, Juan Jos 32, 35
Palazzo, G. 23, 5, 45, 635, 7980,
169, 173, 187, 209, 234, 302, 307,
317, 336, 375, 395, 414, 41617,
41922, 437, 480, 487, 528, 553,
555, 5612, 564, 5778, 5813, 586
Palmisano, Samuel 259
Panasonic 26
Pandey, G. 533
Pandey, P. 547
Park, H. 465
Parker, B. 2824
Parker, C. 3, 5, 583, 586
Parker, Mark 523
Parkinson, J.E. 39
Parry, Geraint 33
Parry, K.W. 583
Parsons, R. 410
Pastin, Mark 128, 133
Pateman, C. 424
paternalistic corporations
altered expectations 767
as good 746
Paterson, M. 456, 460, 467
Pattberg, Philipp 244
Payne, S.L. 61
peace
through commerce 21116
and corporate citizenship 21619
future through commerce and
corporate citizenship 21920
rise through commerce and
corporate citizenship 20910
Pearce, J.A., II 282, 286
Pearce, R.D. 395
Peason, Ruth 161
Peck, C. 212
Pendleton, C. 534
Peng, M.W. 378, 380
Penrose, E. 321, 395
People, Planet and Profits report 51
pernicious CSR 326
Perrewe, P.L. 583
Perrini, F. 395
Perrow, C. 4624
Peters, F. 581
Peterson, C. 3834
Pfeffer, Jeffrey 283, 391, 580
Pfizer 26
Phelps, L.D. 86
philanthropic stage (business-NGO
relationships) 283
philanthropy 289, 1056
see also philanthropic stage
(business-NGO relationships)
Philippine Business for Social Progress
285
Philips 26
Phillips, L. 425
Phillips, R.A. 85, 101, 103, 1067
Philosophy and the Principles of
Auditing (Flint) 5056
Picketty, T. 543
Piga, C. 324
Pimlott, Daniel 258
planned obsolescence 178
Pless, Nicola M. 4312, 4346, 438
608
Index
Index 609
Reich, Robert B. 77, 78, 307, 466
Reilly, Bernard J. 30
Reiman, Jeffrey 162
Reinalda, Bob 23031
Reinhardt, F. 325
Reinicke, W.H. 2, 245
Renzo 143
Reputation Management Institute 62
reputational capital 29
resource-based perspectives 38081
responsibility
dark side of 585
future research directions 57980
liability model 14952
parameters of reasoning 15762
social connection model 1378,
1527
responsibility assurance infrastructure,
scholarship regarding 669
responsible business practice 55
responsible leadership
challenges for 4314
definitions 4345
future research directions 5824
overview 44850
quest for 43031
roles model 4368
and social justice 4478
responsive element of CC 530
Reynolds, Glenn Harlan 257
RF (Rainforest Foundation) 42021
rhizomatic reading of entrepreneurship
and branding 51214
rhizomes 512
Rhodes, Cecil 212
Riboud, Franck 449
Rice, Condoleezza 213
Richardson, Henry S. 152, 158
Richtel, Matt 258
Rifkin, J. 466
Rindova, V.P. 193
Risse, T. 4, 233, 245, 304, 583
Rittberger, Volker 245
Roberts, D. 506, 51920
Roberts, J. 323, 481, 506
Roberts, N. 282
Roberts, Sarah 26
Robillard Resources 143
Robinson, S.L. 385
Rock, Michael T. 160
610
Index
Senge, P. 58
Seo, M.G. 191, 196, 202
Sercovich, F. 87
service-oriented NGOs see operational
NGOs
Sethi, S.P. 74, 76, 79, 81, 834, 879,
92, 94, 278
Sewell, W.H., Jr 1912
Seyfang, Gill 161
Shaffer, Gregory 352, 3678
Shakespeare, Romeo and Juliet 502
Shakti 449
Shane, S. 209
Shanley, M. 62, 322, 332
shareholder activism 281
Sharma, S. 166, 181, 469
Sharplin, A. 86
Shell
Brent Spar 5051
culpability in death of Ken SaroWiwa 537
Nigeria 4478
openness 507
sustainability issues 202
Shell, G.R. 2
Shelton, D. 5
Shenkar, O. 378
Shiva, V. 466
Shleifer, A. 84, 1889, 465
Shrivastava, P. 167, 177, 181
Shylock (Merchant of Venice) 121
Siedel, G.J. 2
Siegel, D. 5, 31518, 3216, 3323,
469, 583
Siemens 74
Sikkink, Kathryn 231, 245
Silent Spring (Carson) 276
Sillanp, Maria 432
Silverman, D. 409
Simmons, Adele 163
Sinclair, Timothy 570
Singer, P.W. 139, 536
SIRI Group (Sustainable Investment
Research International) 68
Slaughter, Anne-Marie 261
Smid, M. 2, 580
Smilov, D. 189
Smith, Adam 445, 5634
and profit motive 11820
Smith, C. 484
Index 611
Smith, Gare 362
Snidal, Duncan 263
Snyder, C.R. 3834, 584
Social Accountability International
SA8000 standard 280
social capital, building 29
social enterprises 35
social investing 29
Social Investment Forum 68
social partnerships 2812
Social Responsibilities of the
Businessman, The (Bowen) 540
social rights 3
socialpolitical governance 225
socially responsible investment (SRI)
movement 68
sociology 4
soft law 2634
Solomon, R.C. 508
Sonenshein, S. 3856
Sony 74
Soros, George 192
Soskice, David 251
South Africa
as example of positive deviance
3878
see also British South Africa
Company
space, geographic, as
politicaleconomic construct
25660
Spar, D.L. 277, 284
Sparks, J.R. 196
Spencer, J.W. 455
Spicer, A. 189
Spiner, J. 528
Spirit of Democratic Capitalism, The
(Novak) 85
Spiro, Peter J. 264
SPP (selective public procurement)
356
Spreitzer, G. 3856
Spruyt, Hendrik 256
Sri Lanka First 21314, 218
Srinivasan, T.N. 356
Stafford, Alan D. 308
stakeholder-company imbalances
9095
stakeholder democracy 39, 484, 4925
stakeholder engagement see CR3
(corporate [stakeholder]
relationships)
stakeholder fairness
corporate obligations 10610
definitions 107
stakeholder management 61
stakeholder relationships 61
stakeholder responsibility 61
stakeholder theory 54, 99100, 103
stakeholders
as citizens 3840
and citizenship 4828
and competitive markets 847
definitions 86, 102, 1267
and global citizenship 1035
stakeholding
economic arguments for 48082
philosophical arguments for 47880
Standard & Poors 254
standards 67
see also ISO; ISO 14000
Environmental Management
Standard; SA 8000 labor
standards; Social
Accountability International
SA8000 standard
Starbucks 282, 2868
Starik, M. 166, 181
Starobinsky, J. 5035
status (citizenship characteristic) 334
status citizenship 484
Steffek, J. 583
Stein, J. 389
Steinmann, H. 81, 88, 187, 525
Stephens, Beth 347
Stephenson, Nick 43
Sternberg, E. 319
Sternin, Jerry 386
Sternin, Monique 386
Stewart, J.B. 81
Stiglitz, J.E. 88, 147, 367
Stinchcombe, A. 191
Stokes, G. 413, 426
Strand, R. 578
Strange, S. 88, 230
strategic CC 33940
strategic CSR 3289
Strategic Management: A Stakeholder
Approach (Freeman) 59, 84
strategic philanthropy 28
612
Index
Index 613
UBS 26
UDHR (Universal Declaration of
Human Rights) 348
Ulrich, P. 187, 437
UN (United Nations) 186, 192, 345
UN Global Compact 3767
10th principle 200
codes of conduct 188
corruption principle 465
expectations 234
future research directions 47071
as GCC advocacy 491
human rights coverage 349
increasing commitment to 2
new ways of thinking 60
NGO influence 279
number of companies signed up 51,
67
UN Global Compact Learning Forum
61
UN Human Rights Committee 3489
UN Millennium Development Goals
376
UNCTAD (United Nations
Conference on Trade and
Development) 461
Unger, Peter 139
Unilever 449, 580
Union Carbide, Bhopal gas leak 537
United Nations see UN
United Students Against Sweatshops
(USAS) 517
Unocal Corp 350
Urry, J. 539
US Steel 215
USA, internet gambling protectionism
258
USAS (United Students Against
Sweatshops) 517
Useem, Michael 31
Utting, Peter 360
Uzzi, B. 457
Vagts, D.F. 5
value chain members 10910
Values, Nature and Culture in the
American Corporation (Frederick)
59
values radar 4312
van Hees, Floris 358, 366
614
Index
Index 615
Yuthas, K. 584
Zadek, S. 3323, 501, 507, 512, 514,
517, 524, 582
Zaheer, S. 308, 381
Zajonc, Tristan 368
Zammit, Ann 35960
Zander, U. 282