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government-business relations, but in cooperation with changes in governance and civil society,
call for a new social contract. As corporatism in Canada becomes more and more predominant
and globalization puts corporations increasingly out of the reach of national governments,
national polities lose influence on the economy they are supposed to govern. Thus the –
business grows more distant and lopsided. Still, the notion of corporate social responsibility is
Multi-national companies are major players in this new world and pose new challenges to the
amount of control governments can exercise over the economies. Being transnational in their
nature, it is only of secondary importance to these companies where they conduct their business
– too strict legislation or anything that is perceived as detrimental to a company's profit interest
can easily be evaded by just moving that part of business to another country with more favorable
capital flight and job loss. Thus companies can take refuge from governmental influence in the
international sphere: some country will always be persuaded by the perspective of jobs and
investment to provide a safe haven even for the most unethical, immoral or environmentally
unsound company.
Yet policies geared towards corporate social responsibility are gaining popularity among
businesses.1 This might be explained by the rise of new instances policing businesses' behavior,
namely its customers. Social movements have been a concern for corporations since the 1960s
and 1970s and, according to Brownlee, “they [the businesses] are now increasingly aware that
their conduct and activities are under a microscope.”2 This unwanted attention and resistance has
found its probably most clear expression in the protest against the 1999 WTO ministerial
meeting in Seattle3 or the 2001 G8 summit in Genoa, Italy, and organizations such as attac. From
1 Cf. Jamie Brownlee, Ruling Canada. Corporate Cohesion and Democracy (Halifax: Fernwood Publishing,
2005): 122.
2 Ibid.
3 Ibid. 123.
happen out of mere self-interest and are means towards an end instead of an end in itself.4
Responsibility as Self-Preservation
According to Nobel prize laureate Milton Friedman corporations have one, and only one
responsibility: maximizing their profit. Thus corporate social responsibility to him is immoral, as
long as it does not serve the aim of profit maximization.5 Accordingly, corporate social
responsibility is “a rational response on the part of the business community to the fact that on the
very issue of survivability, time is running out.” 6 To survive, however, companies must be
profitable. They have to be able to afford both “the costs of doing business and the cost of
The need for businesses to remain profitable is out of question, but do companies have to
conduct socially responsible or ethical business in order to earn profits? As some studies show,
they have to. A majority of Canadians, for example, distrusts the business community enough to
feel that consumers are better protected by government than by businesses.8 A majority of
Canadians, too, expects the acceptance of a certain social responsibility from businesses that
goes beyond mere profit interests and is willing to punish companies that fail to accomplish this. 9
From this one can safely assume that there is a demand for socially responsible entrepreneurship
4 Ibid.
5 Ibid.
6 David Macfarlane, “Why Now?,” Globe and Mail Report on Business 20,9: 45, as cited in: Brownlee, Ruling
Canada: 122.
7 D. Wayne Taylor, Allan A. Warrack and Mark C. Baetz, Business and Government in Canada. Partners for the
Future ( Scarborough, On: Prentice Hall Canada, 1999): 227.
8 Cf. ibid.
9 Brownlee, Ruling Canada: 122.
almost any field (with the notable exception of human rights), more Canadian companies have
written policies than their counterparts from the United States. 10 Welford's survey measured the
presence of written corporate policies relevant to corporate social responsibility within the thirty
largest corporations of selected countries in Europe, North America and Asia. He investigated
policies according to the UN Human Rights declaration, several ILO Conventions, the UNESCO
Project on Technical and Vocational Education (UNEVOC), the International Programme on the
Elimination of Child Labor (IPEC), the UN Global Compact, the UNESCO World Heritage and
the Global Reporting and Ethical Trading initiatives, Transparency International guidelines as
The favorable results for Canada are in accord with the previously stated public
expectations and the market opportunities resulting from them, which is confirmed by
capitalism such as the United States or the Asian tiger states tend to have lower levels of
corporate social responsibility policies than Canada.12 At the same time, such policies are
constantly more common within European countries,13 whose systems traditionally rather leaned
towards social than free market economies and where presumably the population has higher
The significant overlap between a marketable demand for responsible behavior from
companies and it precedence implies that companies further their profit interests by adopting
10 Richard Welford, “Corporate Social Responsibility in Europe, North America and Asia. 2004 Survey Results,”
Journal of Corporate Citizenship 17 (2005): 48.
11 Ibid. 35.
12 Ibid. 46-48, 49-50.
13 Ibid. 43-45.
bottom line instead of end in themselves. While this would make corporate social responsibility
acceptable to neo-liberal scholars such as Milton Friedman, it would also render them
“insincere.”14
Corporate Morality
Does the obvious presence of profit interests in corporate social responsibility policies
mean there is no moral high ground for companies to do good for the sake of the world's
betterment? This question is contested. First of all it presumes that companies are able to have
morals and values. Both are capacities usually ascribed to human beings, to individuals.
Therefore the mere search for corporate morality implies a personification of corporations, of
structures and systems optimized to achieve a single goal, the creation of profit. In The Question
even euphemistical).”16 She further argues that “the values etc., although referred to as
'corporate', are accepted rather than shared.”17 This is important because these values are
corporations its employees, fulfilling the expectation to abide by codes and standards instead of
fully adopting the ethics and values behind them. However, companies articulating “a core
ideology, defined (...) as consisting of core values and purposes”19 have been found to be more
successful and enduring as well as perceived far more positively. This is at least in part due to
seek not only traditional benefits such as good wages and opportunities for
advancement, but also meaningful work in socially attractive environments in a
company they can be proud of.20
The influence that has on organizational health is obvious, and that the effects on personal
health stated by Pruzan,21 feed back onto the organization seems also reasonable. The preference
of the public to patronize responsible companies established in the previous chapter adds another
After having established that organizations in fact can have values and ethics, it is
this investigation, a comprehensive set of tools to measure corporate social responsibility and
16 Ibid. 272.
17 Ibid.
18 Ibid.
19 Ibid. 275.
20 Ibid. 274.
21 Ibid. 275.
codes and rules falls short of the definition of corporate morality as internalized, stable moral
standards and ways to do business presented in this chapter. More promising is the attempt at
defining corporate social performance as suggested by Kim Davenport. She suggests a set of
It has been found that since the 1990s, corporations concerns for ethical and
environmental issues has been growing,23 thus most of the qualifiers above have been met.
Furthermore, it has been found that companies are increasingly expected to address societal
problems even beyond their profit interests and have thus been put under considerable social
tension.24 So far acting upon this pressure has not been detrimental to companies' bottom lines, as
Margolis and Walsh found out in a compilation of 127 studies linking social to financial
22 Kim Davenport, “Corporate Citizenship: A Stakeholder Approach for Defining Corporate Social Performance
and Identifying Measures for Assessing It,” Business & Society 39 (2000): 216.
23 Leonard J. Brooks, “Business Ethics in Canada: Distinctiveness and Directions,” Journal of Business Ethics 16
No. 6 (April 1997): 601.
24 Joshua D. Margolis and James P. Walsh, “Misery Loves Companies: Rethinking Social Initiatives by Business,”
Administrative Science Quarterly 48 No. 2 (June 2003): 271.
misappropriation of funds,26 which implies that ethical behavior affects not only companies'
dealings with society at large, but also in its internal processes. The fact that companies which
behave ethical as a whole are treated more ethical by their employees implies that both structures
and individuals have embodied their responsibility. Corporate morality, after all, is possible and
Replacing Relations
With corporations acting in a global arena and thus being to a large degree out of national
governments' reach while at the same time starting to follow their own moral standards the
question about the function of government in the economy and therefore its relationship with the
business world arises. Do governments still have a say about how companies run their businesses
or have the relations that once influenced corporate behavior been replaced by a post-democratic,
The answer to this question might go deeper than just the relationship between two
spheres of society. In fact, Wesley Cragg suggests that a new social contract might be emerging.
To this purpose, he sketches the post-World War II social contract as one of split responsibilities:
25 Ibid. 277.
26 Ibid.
This, however, is changing – a change pushed forward by more than half a century of
experience with the old social contract. Among the lessons learned is that many issues affecting
more than on sphere of society cannot be solved by government, the public or businesses alone.
Issues such as corruption are hurting every single part of society and have to be addressed by all
the actors together.28 Globalization of governance through organization such as the OECD and
the rising stake civil, non-governmental organizations have in decisions made by both
governments and businesses profoundly change the relations among the actors.29 Another
signifier is the change in behavior on the side of the companies that was described in the earlier
parts of this paper – companies such as Levi Strauss, who not only introduce their own ethical
standards instead of having them enforced by the government, but also turn towards the public,
Most obviously changes in the roles of all actors involved are occurring. Cragg makes a
compelling argument for a new social contract by showing that the existing one embedded in
post-World War II thinking, does not cover the reality of the day anymore. Given that he made
these observations nine years ago and that the tendencies he described have, in part due to
technological progress, accelerated, it is safe to assume that the paradigm shift he is describing is
almost completed. More important than the mere fact of change occurring, however, is the road
ahead. How should – or does – the new social contract look like? He therefore demands business
27 Wesley Cragg, “Human Rights and Business Ethics: Fashioning a New Social Contract,” Journal of Business
Ethics 27 (2000): 206.
28 Ibid. 211.
29 Cf. Ibid.
30 Ibid. 212.
government and business to realize their dependency on each other and their need to form
partnerships to advance common interests, civil society to pick up its task at monitoring this
process and “finally and perhaps most important, we need to remind ourselves, as Gandhi and
others have pointed out, that commerce without conscience is a formula for human exploitation,
31 Ibid. 213.
Cragg, Wesley. “Human Rights and Business Ethics: Fashioning a New Social Contract,”
Corporate Social Performance and Identifying Measures for Assessing It,” Business & Society 39
(2000): 210-219.
Margolis, Joshua D. and Walsh, James P. “Misery Loves Companies: Rethinking Social
Values, Virtues and Visions?” Journal of Business Ethics 29 No. 3 (Feb. 2001): 271-284.
Taylor, D. Wayne, Warrack, Allan A. and Baetz, Mark C. Business and Government in
Canada. Partners for the Future. Scarborough, On: Prentice Hall Canada, 1999.
Welford, Richard. “Corporate Social Responsibility in Europe, North America and Asia.