Corporate Citizenship, Contractarianism and Ethical Theory

On Philosophical Foundations of Business Ethics

Jesús Conill, Reinhard Mohn, Tatjana Schonwalder-Kuntze

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351160988
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

This study provides a representation of the broad spectrum of theoretical work on topics related to business ethics, with a particular focus on corporate citizenship. It considers relations of business and society alongside social responsibility and moves on to examine the historical and systemic foundations of business ethics, focusing on the concepts of social and ethical responsibilities. The contributors explore established theories and concepts and their impact on moral behaviour. Together, the contributions offer varied philosophical theories in approaches to business ethics. The book will be a valuable resource for academics and researchers with an interest in the theoretical development of business ethics.

Part 1
Theorizing Corporate Citizenship

Chapter 1
Corporate Power and Responsibility: A Citizenship Perspective

Jeremy Moon, Andy Crane and Dirk Matten

Introduction¹

This chapter applies the metaphor of citizenship to business–society relations. We chose this metaphor because it raises important questions of power and responsibility which are in turn central to the developing agendas of business–society relations.

Whilst many studies which apply the idea of citizenship to corporations to business–society relations adopt a single perspective, that of corporate citizenship or membership of society, we adopt a three dimensional perspective by analysing corporations: as if they were people-type citizens; as if they were governments in relation to people as citizens; and as if they create an arena for people to enact citizenship. Through these conceptualizations we examine the different ways in which corporations possess and structure citizenship status, entitlements and processes. We do so in the context of two important and seemingly contradictory contemporary developments in business––ociety relations: the nature and appropriateness of increasing business power and the new claims being made by firms about their being socially responsible.

We use the concepts of citizen and citizenship in their metaphorical sense.² As mentioned, we apply them to corporations in three ways: corporations as citizens who participate in political communities and authorize governments to rule therein; corporations ruling political communities through deploying government-like powers and responsibilities; and corporations creating opportunities or arenas for their stakeholders to act in citizenship-like ways. There will always be debate about citizenship’s meaning, merits, and appropriateness. There are internal dynamics to this debate as new models of citizenship are developed against which practices are judged. As Marshall observed of the political concept of citizenship:

Societies in which citizenship is a developing institution create an image of an ideal citizenship against which achievement can be measured and towards which aspiration can be measured. (1950: 29)

For corporations, the nature of these debates reflects social and business contexts within firms, among firms, within countries and among countries. Recognizing that, like its related political concepts, the metaphor of citizenship for corporations is essentially contested (Gallie, 1956) does not, of course, obviate the need for closer investigation into its theoretical appropriateness.³

Corporations are generally regarded as the most prominent organizations of contemporary capitalism in part because of the employment, production, investment and wealth that they account for. They are now generally understood to be non-governmental profit-making business enterprises owned by shareholders who control the overall firm policy but managed by the agents of the owners. Their legal identity is distinct from that of their members and their internal governance regimes reflect government regulation and wider features of their national business systems. (Albert, 1991; Whitely, 1999) However, numerous big businesses are known as privately-owned in that the shares in the company are not traded through stock exchanges. These remain a particularly important form of big business in parts of the world particularly Asia. Other big businesses are exclusively institutionally-owned (e.g. by banks, governments), a common form of business organization in Rhenish capitalism of Germany, Austria and Switzerland, for example. The wider definition also brings in cooperative businesses, particularly prominent in Italy. Colloquially, the word corporation is generally used to denote any form of big, private business devoted to profit-making. This is the definition that we will use as the key issues of power and responsibility link to the size, ownership and purpose of the firm, rather than to one particular feature, albeit a very important one, of ownership and control.

Business–Society Relations

In the last decade or so there have been some radical developments in the agenda of business–society relations. These reflect changes in the corporations themselves and changes in the social and political context of business. Consideration of these developments has not simply been in the forums of university seminars and academic journals, nor of the pages of the financial media, nor yet in the agitprop media of the critics of corporations. The social status and impact of corporations has also been the subject of films (e.g. The Corporation, Roger and Me), of documentaries (e.g. The End of Politics, Supersize Me) and ‘airport literature’ (e.g. No Logo, Supercapitalism, Disaster Capitalism).

These and other forms of media coverage have brought to mass attention a whole range of issues which reflect or address business activities. For example, the role of Shell in Nigeria and the extent of its responsibilities for the social, political and economic status of the Ogoni people has raised questions about the extent to which a corporate presence is an implicit endorsement of governmental actions and the extent to which corporations should bring pressure to bear on governments. Conversely, the role of oil companies in benefiting from the US invasion of Iraq and the subsequent political settlement has animated anxieties about such close involvements with government. Recent concerns about obesity in western countries have raised the question of the role and responsibility of fast-food businesses for the health and well-being of their consumers, echoing debates about tobacco companies’, governments’ and personal responsibilities for cigarette consumption and attendant health risks. The publication of the 2005 Nike Social Report in which its suppliers are named and their working pay and conditions independently audited and reported represented a new landmark in the extent to which a western-based retailer is prepared to take responsibility for its supply chain.

Bringing some of these themes together we can see two simultaneous and seemingly contradictory trends. On the one hand there is a critique of what is deemed excessive business power such that the rights of citizens and the powers of governments (assumed in this critique to be protective of citizens’ interests) are weakened. On the other hand there are claims by businesses that they are taking more responsibility for society, or as acting as ‘corporate citizens’, and there are more clearly articulated expectations by citizens and governments that corporations should take greater responsibility for society.

The view that corporations are assuming excessive power is manifest in various ways. At the level of political practice, this is evident in the anti-globalization movement. This is a very heterogeneous movement, in terms of philosophy, organization and tactics, but united in a main target of corporate operations across a range of countries. Their central critique is not simply that corporations have power but that this is magnified by the ‘global’ nature of multinational corporations, or MNCs. In some cases anti-globalization reflects hostility to the cultural referents of particular brands, as in the attack on McDonald’s outlets in France. In other cases it reflects a critique of the business practices of major corporations through, for example, the terms and conditions of employment in the third world subsidiaries or supply chains of western clothing and sports equipment companies, the concerns of various fair trade movements. In other cases it reflects a general critique of the political power that goes with global economic power and the way in which this compromises the position of governments, particularly in developing countries, in their deciding the terms of inward investment of such MNCs. Hence MNCs are accused of escaping tax law, of extracting excessive benefits from developing countries and of making improper payments to secure investment opportunities. These perspectives have also been witnessed in a new literature which is critical of the activities of particular corporations and corporate activity (e.g. Hertz, 2000; Reich, 2007; Korten,1995; Monbiot, 2000; Klein, 2007)).

Contemporaneously, corporations have been claiming that they are acting more responsibly. Even sceptics of the idea that businesses should compromise their core market activity have noted this trend. Martin Wolf, Chief Economics Commentator of the Financial Times, commented that there is a sense that corporate social responsibility is ‘an idea whose time has come’ (2002: 62) and Clive Crook, Deputy Editor of The Economist observed that ‘over the past ten years or so, corporate social responsibility has blossomed as an idea, if not as a coherent practice’ (2005: 3).

At the nominal level, corporations claim to be acting more responsibly through the adoption of such terms and self-descriptions as corporate citizenship, corporate social responsibly, business ethics and sustainable business. In many cases, corporations go beyond the mere adoption of sociable labels, they also seek to integrate their responsibility into their brands (e.g. BP claims to be a green energy company). Whilst there may well be certain business advantages to the use of images of corporate responsibility in marketing and branding, this can also be a source of cynicism. Critics may well ask what lies behind the brand?

In many cases this can be substantiated by organizational manifestations of new forms of responsibility. Many companies have now developed organizational resources and processes to reflect their increased social commitments, be it defined as corporate citizenship, corporate responsibility or sustainability. Sometimes these are free standing and in other cases they are housed in larger functional units. Some companies are assigning board level responsibilities for these new social relations. Another manifestation of new social relations is that many companies are developing programmes and policies to substantiate their commitments and organizational innovations. These range from community involvement, through concern with responsibility in the products and processes, to attention to their labour relations. Community involvement to some extent reflects a traditional commitment to philanthropy on the part of companies, whether reflecting religious and ethical commitments or more functional concerns with labour force loyalty and productivity.

However, today corporations are viewing community involvement in much more systematic rather than discretionary fashion and doing so in a way that reflects a more self-conscious stakeholder approach. Concern with the products and processes reflects a decision to ensure that goods and services reflect various social expectations in their composition, in the ways in which they are produced, and in the social and environmental externalities thereby created. Sometimes this includes securing third party audits and verification. Thirdly, many companies are also investing greater resources in workplace conditions and even in the extra-work circumstances of their staff, reflecting new demands in the area of work-life balance and new attitudes to and expectations of employment.

In some cases these new areas of company activity have been complemented by self-regulation. An obvious means to this end is through the use of external or internal corporate codes to guide and benchmark responsible behaviour of corporations and their employees. Although these are often criticized for their lack of wider accountability, they do bring opportunities for corporations to develop policies which reflect and complement their own range of commercial activities. Moreover some companies are developing codes which provide for independent verification and certification, often in collaboration with stakeholder organizations.

Another manifestation of greater company concern with their social relations is their preparedness to join business associations whose purpose is to encourage and develop the social face of business. For example, in the UK over 700, mainly large, companies are members of Business in the Community (BITC). BITC provides a variety of services and awards in the area of socially responsible business through its national and regional offices, though it emphasizes that membership itself should be a step to a more reflective and proactive style of engagement with society. There are similar association in the USA (e.g. Business and Society). Internationally there are other business associations to encourage more responsible business. CSR Europe, the International Business Leaders’ Forum. Membership of the UN Global Compact entails commitment to ten principles covering human right, labour standards, the environment and corruption.

Another important development has been the growth of social reporting, be it within general company communications, in dedicated social responsibility reports, or within their annual reports. Some go so far as to legitimize their reports through external verification and stakeholder engagement (e.g. British American Tobacco, Nike). Various indicators of business responsibility have also been developed and adopted in tandem. Some of these reflect agreement among corporations about appropriate reporting norms (e.g. Global Reporting Initiative).

A new burgeoning of CSR consultants suggests that companies are prepared to pay for advice about their CSR (Fernandez Young, Moon and Young, 2003). There have also emerged new responsible business professional networks (e.g. CSR Chicks, Lifeworth, Association of Sustainability Professionals). A new business media on socially responsible business is also emerging. This includes dedicated media outlets (e.g. Ethical Corporation, Ethical Performance) as well as greater attention to these themes in the mainstream media, illustrated by the Financial Times’ employment of a CSR correspondent and recent special supplements of corporate social responsibility in The Economist (22 January 2005) and The Independent (23 March 2005).

So, in conclusion, there is plenty of evidence that corporations are at least keen to be regarded as behaving more responsibly and there is also plenty of evidence of resources being invested in organizational developments consistent with this. What explains these developments?

Explaining Contemporary Business–Society Relations

Having sketched something of the changing nature of business–society relations we now turn to providing some explanation for the trends that we have identified. This section is divided into two parts, the first addressing the drivers of business power and the second addressing the movement for corporate social responsibility.

Corporations are acquiring an increasingly conspicuous and, in some respects, contentious profile. There are various reasons for this. Corporations have acquired a greater share...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Figures
• List of Contributors
• Introduction
• PART 1: THEORIZING CORPORATE CITIZENSHIP
• PART 2: FOUNDING BUSINESS ETHICS AND (CORPORATE) SOCIAL RESPONSIBILITY
• PART 3: REFLECTING THE IMPACT OF ETHICAL THEORY: CONTRACTARIANISM, ETHICS AND ECONOMICS
• Name Index
• Subject Index