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Educación (EIEP01)
Universitas Pelita Bangsa
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Chapter 4
Corporate Social Responsibility,
Sustainability, and Stakeholder
Management
In this chapter, I set out to de ne the principles of responsibility and sustain- ability within the framework of normative stakeholder theory and business ethics with a possible application to public administration ethics. 1 A corporate strategy concerning sustainability and corporate social responsibility can be considered as a practical application of the concept of corporate citizenship and of the “good citizen corporation” in business ethics and public administration (Rendtorff, 2009, 2018a). The argument presented here begins with an analysis of the concepts of “sustainability” and “corporate social responsibility” which are taken as being the foundation for the application of business ethics within strategic management and concrete elds of business ethics. A normative view of the stakeholder model is important for this development of my argument. The discussion of stakeholder theory begins with a presentation of the principles of corporate social respon- sibility and sustainability. Thereafter, the ideas will be linked to the stakeholder model as the basis for assuring the social legitimacy of the corporation.
1. Sustainability and Corporate Citizenship
The concept of sustainable development can be de ned as the broad goal of ethi- cal business and emerges out of our de nition of “good corporate citizenship” (Crane & Matten, 2004, p. 21). Sustainable development has been proposed as the common goal for the international community by the World Commission on the Environment, the 1987 Brundtland-commission (World Commission, 1987) and this has been developed in the following declarations and conventions by the United Nations. It is de ned as the respectful use of natural resources in order to leave possibilities for future generations to live on earth with the same or better
1 Previous versions and preparatory works for this chapter include Rendtorff (2006,
2009, 2018a).
Philosophy of Management and Sustainability: Rethinking Business Ethics and Social Responsibility in Sustainable Development, 43– Copyright © 2019 by Emerald Publishing Limited All rights of reproduction in any form reserved doi:10/978-1-78973-453-
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conditions as present generations. In this sense, environmental sustainability has been a fashionable term for the international community since 1987. However, the term sustainability does not only apply to the environment. For a long time, sustainability has been a well-known term in business eco- nomics, in which it designates the long-term maintenance and development of the rm (Crane & Matten, 2004, p. 24). Within the framework of corporate citi- zenship, and with the emergence of the United Nation’s concept of sustainability with the SDGs, this concept has become broader to encompass social and envi- ronmental concerns in the de nition of corporate sustainability. The concept of sustainability has been developed further in the idea of “the triple bottom line,” according to which the rm accounts not only for its economic returns in its evaluation of the economic success and prosperity of the rm, but also for its impact on the environment and social relations with employees, the local community or governments (Elkington, 1999; Rendtorff, 2009, 2018a). The intention being to integrate the concept of the sustainability of the rm into the global initiatives con- cerning public policies relating to sustainable development, and we can conceive of an application of the notion of corporate citizenship in business ethics. It is important to integrate this concern for triple bottom line management in the development of applied business ethics. We can say that the triple bottom line based on sustainability responds to the traditional values of the economizing, ecologizing, and power aggrandizing of the rm (Frederick, 1995). Such con- cern for the rm’s interaction with environment requires a temporal dimension integrating relations to future generations. Moreover, the perspective of repub- lican business ethics includes nature in the idea of what the French philosopher Paul Ricœur calls “the good life for and with others in just institutions” (Ricœur, 1990), so that we can add “the good life within nature.” The concept of sustainability should be considered from within the perspec- tive of corporate social responsibility, which is the other important concept for applied business ethics in relation to the internal and external constituencies of the rm. The concept of responsibility is implied in our concept of the rm as being a political and moral actor, which is the result of the idea of corporate citizenship. Lynn Sharp Paine argues in Valueshift. Why Companies Must Merge Social and Financial Imperative to Achieve Superior Performance (2002) that there has been a value-shift in the economy in which we no longer conceive of the rm as an economic instrument for pro t maximization or as a ctive legal person, but as a morally responsible actor with values and ethical principles (Paine, 2002). This is the basis for a republican conception of the corporation as a good citizen that in addition to earning money is concerned about the political, social, and ecological environments. This concept of responsibility implies that the rm should not only obey the law, but also engage constructively in the social better- ment of society.
2. The Concept of Corporate Social Responsibility
The German philosopher Hans Jonas de ned the concept of responsibility in Prinzip Verantwortung. Versuch einer Ethik der technischen Zivilisation (1979). He
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argued that corporate social responsibility will improve business’ public image and that government regulation can be avoided if business is proactive with regard to the promotion of engagement in society. Being a socially responsible business can meet the expectations of society, and businesses can help to solve problems, because rms have such great power in society, indeed they may even be able to turn social problems into business opportunities. In addition to these rather prudential arguments (in Kantian terms, hypotheti- cal imperatives) we can say that corporate social responsibility combines enlight- ened self-interest with concern for good citizenship (Frederick, 1994, p. 153), the common good of society with respect for basic ethical principles of respect for human autonomy, dignity, integrity, and vulnerability (Rendtorff, 2009, 2018; Rendtorff & Kemp, 2000). Corporate social responsibility re ects, in this moral sense, the responsibility to respect basic human rights and take into account the corporation’s different stakeholders. This is the basis for de ning the different elements of corporate social respon- sibility (Carroll, 1979; Carrol & Buchholz, 2000). Seen from the perspective of our proposal of the good citizen corporation, we may, according to an impor- tant article by Archie B. Caroll, a member of the business and society movement (Capron & Quairel-Lanoizeelée, 2004, p. 105; Caroll, 1979), distinguish between (1) economic responsibility, (2) legal responsibility, (3) ethical responsibility, and (4) philanthropic responsibility (Crane & Matten, 2004, p. 44). Economic responsibility can be de ned as the mandate of pro t maximization as has been proposed by Milton Friedman: “The social responsibility of business is to increase its pro ts” (Friedman, 1971). But this responsibility also implies good corporate governance and the fair treatment of shareholders. Compliance with and formulations of codes of corporate governance can be considered as a contribution to such economic responsibility. Moreover, it includes the conscious and prudent use of management and employees’ resources, together with the technical and pro- fessional duties of management and production to see and exploit market opportu- nities. In this sense, we may say that economic responsibility is different from moral responsibility, because it is about following self-interest and the exchange of goods in the market according to capitalist principles (Comte-Sponville, 2004). Legal responsibilities are about the obligation to follow the law and to play “within the rules of the game” (Friedman, 1970). This also means not doing eve- rything to operate at the limits of the law, and to make an effort to comply with the intentions of the legislator with regard to speci c laws. Indeed, efforts to for- mulate internal compliance programs and programs for values-driven manage- ment can be considered as a contribution to such compliance with the laws of society. Moreover, legal compliance should not only be at the national level, but indeed also the local and international levels (Paine, 2002). In debates about corporate social responsibility, the ethical responsibilities are de ned as an effort not only to do what is right in economic and legal terms, but to go beyond economic and legal terms and make a voluntary effort to be virtuous and excellent (Paine, 2002). Ethics is about nding the right balance in the gray zone where things may be economically and legally prospective, but not legally justi ed. The ethical duty may override economic and legal concerns in
Corporate Social Responsibility 47
cases of con ict, and ethical responsibility is about formulating values and norms for the corporation that contributes to the performance of the rm as a good corporate citizen. Ethical responsibilities imply wider concerns for justice and the sustainability of the corporation and society. In this way, the level of ethical responsibilities goes beyond the two other levels. It is de ned by the respect for justice and fair treatment of all stakeholders. Ethical responsibility contributes to the democratic legitimacy of the rm in the community. The corporation’s philanthropic responsibilities are not only about the virtues of being philanthropic, but also about the responsibility to be philanthropic in a way that really bene ts society. There is a long tradition of corporate philan- thropy in which corporations give grand donations to society as a demonstration of power and wealth, and because they want to do some good for the local com- munity. In many cases, corporate philanthropy is directly linked with efforts to obtain at better public image in society. With Michael Porter we may point to the importance of linking philanthropic activities with other of the rm’s strategic and economic initiatives (Porter & Kramer, 2002, 2006, 2011). There should be increased strategic re ection over the philanthropic spending of money by foun- dations or for other purposes in order to ensure the greatest bene t for society.
3. Corporate Social Responsibility in Stakeholder
Management
In Mythes et réalités de l’entreprise responsable. Acteurs, Enjeux, Stratégies (2004), Michel Capron and Françoise Quairel-Lanoizeelée argue for a strategic applica- tion of corporate social responsibility. They connect corporate social responsi- bility with the concept of sustainable development in claiming that the United Nations has asserted that corporations have a role to play in sustainable develop- ment in the sense that they should manage their operations and stimulate eco- nomic growth at the same time protecting the environment and promoting social responsibility (Capron & Quairel-Lanoizeelée, 2004, p. 5). The idea is that the rm should be considered as a part of society, and that environmental and social issues should be integrated into the strategic management of the rm (Freeman, 1984). At the international level, the rm has, as a good cor- porate citizen of the world, a duty to contribute to the solution to all the important problems relating to world politics with respect to the environment. We can men- tion the problems of the destruction of the Eco-sphere, the uses of resources and environmental degradation, and the need to ght social poverty, the prevention of war and con ict as well as to promote human rights, good working conditions, and social stability. Corporate social responsibility implies the conscious contribution of the rm to engage with the problems of the world community as revealed by the different declarations and statements of intent by international bodies of the United Nations (Capron & Quairel-Lanoizeelée, 2004, p. 6). The Commission of the European communities follows the UN initiatives when it argues that corporate social responsibility does not only suggests compli- ance with legal obligations but also a voluntary effort to do something more for human rights, the environment or for the relations with other stakeholders. We
Corporate Social Responsibility 49
Thus, from the strategic perspective, it is argued that corporate social respon- sibility is not only an important argument for the economic growth of the rm, but also a con rmation of the status of the rm as a moral agent (French, 1984). Corporate citizenship is not only the real “license to operate of the rm,” but also the basis for economic sustainability. The argument for this relation between responsibility and economic performance is basically an argument drawn from the theory of corporate legitimacy. When the rm is an actor that is integrated in the norms and values of society and when economic markets cannot be separated from the social context, it is necessary for good corporate management strategy to conform or comply with society’s values (Capron & Quairel-Lanoizeelée, 2004, p. 93). Otherwise, the rm would be excluded from spheres of social legitimacy, and it is likely that stakeholders would be indifferent or reluctant to deal with the rm or even turn away from the rm and boycott its products and services. Economic arguments are combined with normative arguments concerning business ethics and sociological arguments about corporate social responsibility as measures to increase the legitimacy of corporations in society. In the light of institutional theory, strategies of corporate social responsibility in combination with stakeholder analysis contribute to the understanding of how direct and indi- rect stakeholders in uence the rm (Powell & DiMaggio, 1983, 1991). Corporate social responsibility includes not only stakeholders with power or explicit con- tracts with the rm, but also other stakeholders who have an interest in the rm from the point of view of social legitimacy. Moreover, corporate social responsibility implies a concern for the common good as being important in legitimate relations with stakeholders (Argandona, 1998). We may interpret this concern in the Kantian perspective of the rm as a world citizen. What is important in corporate social responsibility for stake- holders is the promotion of the common good of humanity in order to increase sustainability and protection of world citizenship of corporations, which includes the commitment to engagement in problems of globalization. Accordingly, we can argue for a close relation between stakeholder manage- ment and corporate social responsibility. The stakeholder theory of business ethics helps us to de ne the strategic basis for triple bottom line sustainability manage- ment (Elkington, 1999). In this theory, ethical principles and values emerge as important values in the dialogue between organizations and their stakeholders. Stakeholder business ethics considers communication with stakeholders; this is analogous to the dialogue that goes on in a political democracy. Such an ideal conception of communication with interested parties in the rm is based on the kind of reason implied in political deliberation in a critical public sphere. This contributes to a communicative foundation of business ethics receiving universal validity from the rationality of critical examination of arguments in a space of open dialogue.
4. Institutional Theory and Stakeholder Management
From the perspective of institutional theory in sociology, the stakeholder cor- poration might be considered as a kind of organizational ecology, where the
50 Philosophy of Management and Sustainability
organization instead of being a bureaucratic military entity is considered as an inclusive company in constant interaction with the environment. This interaction contributes to the self-perception of the company in order to secure its growth and survival. Dialogue with stakeholders is conceived of as a process of commu- nication and learning in order to improve the re ectivity of the organization. In this way, the integration of the stakeholders in a learning process is a basic condi- tion for the organization in order to “learn how to learn” (Wheeler & Sillanpää, 1997, p. 133). By developing formalized dialogue with stakeholders as a part of the activity of the rm, it is possible to engage in a closer and more productive dialogue with the rm’s environment. Stakeholder management is rst of all a way to improve the scope of cor- porate social responsibility, because it opens up the way for larger groups of interested parties. However, this does not a priori de ne the implied stakes for governance. After having identi ed relevant stakes, it will be the job of manage- ment to make the correct decision among these implied interests. Nevertheless, a theory of stakeholder interest is insuf cient without some view of the common good. Therefore, we need to nd the basis of stakeholder theory in the view of the corporation as a practice searching for the common good. An important guide in this process might be to be aware of the communitarian elements of stakeholder management. In addition, we can de ne the principle of justice as a manor to choose among different stakeholders and in this sense combine instrumental and normative dimensions of stakeholder theory. On this basis, stakeholder management can be conceived as a response to the societal expectation of corporate citizenship and contribution to the common good of society. However, stakeholder management is also legitimate from the point of view of strategic management, because stakeholders have legitimate claims of being treated justly by the organizations. Different groups of stake- holders are legitimate stakeholders if they have justi ed claims of being treated with fairness by the organization. In the perspective of corporate citizenship, the principles of responsibility and sustainability must be included in this account of the fair treatment of the stakeholders. Therefore, stakeholders who do not directly cooperate with the corporations do not have a direct normative claim and a corresponding obligation to be accounted for as its core constituencies may have a derivative claim of being taken into account (Philips, 2003, pp. 124–127). Accordingly, we can say that civil society organizations or social activists can have legitimate claims in so far as they are representatives of core constituencies of the corporations for example employees or local communities (Philips, 2003, p. 152). In this sense, the strategic management of corporate social responsibility combines concern for economic performance with the concern for the social legitimacy of the corporation. From the institutional point of view, the corporation is an integrated part of society and the values of the organization are shaped by the perceptions of internal and external actors and stakeholders (Capron & Quairel-Lanoizeelée, 2004, p. 105). Social responsibility is necessary for strategic management, because it ensures the social legitimacy of the corporation as a good corporate citizen. In the light of institutional theory, we can argue that legitimacy is determined by the institutional environment of the organization. This environment represents
52 Philosophy of Management and Sustainability
Following the triple bottom line of corporate performance in the intersection between economic, social, and environmental concerns, the rms have the pos- sibility of increased long-term economic performance (Elkington, 1999). Even though there is a tension between ethics and economics, the ideal situation is one of convergence between corporate social responsibility and economic performance. The ideal of good corporate citizenship is a rm that produces values for share- holders, employees and customers and also contributes considerably to the com- mon good of society. This rm not only considers corporate social responsibility and stakeholder management as a matter of risk or reputation management, but also views legitimacy as a license to operate. Moreover, it regards stakeholders as resources who contribute to improving innovation, learning, and the competi- tiveness of the rm. In this sense, corporate social responsibility aims not only at risk management but also at developing proactive operational procedures for values-driven management and stakeholder inclusion in order to improve social acceptance of the rm. Thus, management of good corporate citizenship is fundamentally important in the transition towards global sustainability. We can emphasize that sustainable development is based on the ideal of the good life, where the triple bottom-line combines a moral and instrumental concept of the good life in the transition towards sustainability. The idea of sustainable capitalism relies on the vision that it is possible to combine technological and industrial development with protec- tion of the good life and nature. This concept of sustainability combines ethics with economics in the vision of sustainability. Corporate social responsibility in the relation between stake- holders, institutions and sustainability is therefore essential for the transition towards the SDGs in management and business. Businesses needs to take into account limits of instrumental and utilitarian uses of resources, which is included in ecological and environmental criticism of the capitalism of growth. Accordingly, it is important to develop new virtues of business management of stakeholders, based on the vision of “the good life with and for others in just institutions”. In this context, arguably, the SDGs emerge as the new framework for institu- tional legitimacy of corporate social responsibility and stakeholder management. With the SDGs as general framework for sustainability management, corpora- tions ght to achieve legitimacy in business ethics and CSR by integrating SDG management in stakeholder management. Therefore, normative compliance with SDGs become an essential virtue of management to deal with the challenges of transformation of society towards a more protective and sustainable attitude towards nature and the environment. Indeed, the concepts of responsible innova- tion and education in virtues of sustainability become essential for dealing with these complexities of developing authentic sustainability of corporate citizenship.
Aftual sekali - dokumen yang sangat berguna untuk semua orang
Course: Educación (EIEP01)
University: Universitas Pelita Bangsa
