Corporate Social Responsibility (CSR) and Corporate Governance: Moral Regulation and Beneficial Constraint?

Friday, June 24, 2016: 2:30 PM-4:00 PM
639 Evans (Evans Hall)
Catherine Casey, University of Leicester, Leicester, United Kingdom of Great Britain and Northern Ireland

Calls for ‘corporate social responsibility’ (CSR) considered in business and management literatures increasingly attract a wider interest in political economy and social research. As liberally regulated and highly competitive global markets expand concerns about the actions of large and powerful corporate firms and their social and environmental effects broaden. Current debates on CSR reveal a general confluence of concerns about the implications of firm action in society and at the same time much contestation and ambiguity over what CSR means and who may be its beneficiaries. CSR discourse and practices present normative value claims and profess assurances to the public and consumers of a firm’s good behaviour and responsible actions. For many business actors, taking CSR initiatives in the course of or in addition to their usual economic business is the “right thing” to do. For some there is a mutually beneficial “market for virtue” (Vogel 2006). Critics, on the other hand, contend that CSR is designed and controlled by powerful firms to serve their own strategic interests especially to enhance their reputation or brand (Fleming and Jones 2013). On that view, CSR is simply corporate public relations and readily dismissed as window-dressing. It has little or no substantive effect in regulating the firm’s economic rationality and utility maximization. At worst, it may deceive and cheat publics.

However, as global production and trading relations expand in complex networks of transnational operations and value chains, CSR evolves into an extensive domain of corporate voluntary and quasi-mandatory action. Of particular prominence and importance in current debates is the role of CSR in responding to, or possibly exacerbating, observed  weaknesses in the substance, reach and enforcement of mandatory law, notably labour and employment and environmental protection laws (Bowen 2014; Fransen 2012), in transnational production and trade zones. Those weaknesses at state-level regulation propose or require greater legitimation of the corporate firm’s voluntary regulation. Many transnational corporations find themselves engaged in negotiations and alliances with civil society and non-governmental organizations (NGOs) in addition to or instead of interlocution with state actors (Utting and Marques 2010).

These developments accord CSR a potentially significant role in corporate governance, politics and economy. Accordingly, the public’s interests in the assumed private actions of the firm invite probing interrogation of CSR and its role, potential and social risks. Efforts to theorize complexities and varieties of CSR include importantly institutional and comparative approaches (Brammer, Jackson and Matten 2012; Crouch and Maclean 2011). Comparative approaches stimulate greater attention to moral and cultural institutions in shaping CSR and their interaction with diverse corporate and social actors at multiple levels. The scope and demands of corporate business power draw increased attention to governance institutions at both macroeconomic levels and at the level of the firm (Culpepper 2011). The governance of firms emerges as a core issue in contemporary economies around the world.

Corporate governance has traditionally been the domain of business economics and management. It has seldom been a central issue of political science attention and debate. Political science has traditionally focused on the role of the state and of formal political actors such as political parties, interest organizations and associations. While much attention has been accorded to socio-economic governance across countries and regions governance of private firms has largely been left to firms (Utting and Marques 2010). The “private hierarchy” of organizations and firms has been assumed to regulate firm action within the law. Attention to corporate governance has predominantly focused on systems and processes by which a corporation operates to serve the interests of its owners in the conduct of its operations.

Recent debates in political economy fields address the rise of complex new forms of political governance. Much of that attention has arisen through the development of the European Union (EU) and its mixture of supranational and member-state national institutions and economic integration. It also arises as global expanse of production and diverse markets across national borders and regions gives rise to recognition of a governance gap, that is, the occurrence of spheres in which formal law has limited or no reach and in which extreme institutional ambiguity and informal economies prevail. Spheres of informal and traditional law have long governed many parts of the world. But the global expanse of large private firms and complex linkages of production and markets have made the domains of informal and traditional governance regimes of greater significance for developed market economies with more effective formal regulatory regimes. Both multi-level governance regimes and governance gaps are salient.

This paper particularly enquires into the role and effects of CSR pressures on MNC corporate governance. It considers the potential for institutional development of moral regulation and beneficial constraint of corporate action, alongside pressures on firm actors to refuse or manipulate regulatory constraint. It explores CSR as part of a multi-level governance regime. In particular it addresses CSR and transnational labour governance. It considers the intersection of labour standards with environmental and product standards.


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