This researcher’s role will be to provide an (not automatically the) American perspective for the symposium on “International Comparative Perspectives on Corporate Social Responsibility: Democratising Corporate Governance in the Global Economy.” (The researcher can give his view as an American, informed by a reading of the relevant American literature.) The symposium subtitle strongly suggests “”democratisation” of corporate governance in a globalizing economy as a thematic approach to corporate social responsibility.
The topic problem lies at the interface of stakeholder theory, corporate social responsibility theory, corporate governance theory, and public policy. The theme proposes that in a globalizing economy there should be increasing democratisation of corporate governance as a means for defining and implementing corporate social responsibility principles, processes, and practices to effectuate better responsibility outcomes.
The logical scheme is illustrated as follows: global democratic corporate social economy corporate governance responsibility outcomes democratisation corporate social approaches principles, processes, and practices “Democratisation” presumably involves broader and greater stakeholder influence on corporate management decisions, if not broader and greater stakeholder ownership of the firm. (Technically, the term “democratisation” can also refer narrowly to increased investor rights vis-ï¿½-vis management as agents.) There are efforts underway for broader stakeholder participation layered on top of increased shareowner democracy.
These efforts have occurred in several forms or venues. (1) Earlier there was a corporate constituency movement, whereby some 29 U.S. states effectively increased managerial discretion to consider non-investor interests-especially in acquisition battles. (2) More recently a number of key stock exchanges in Canada and Europe have issued corporate governance reform reports that simultaneously sought to increase managerial accountability to investors and maintain a broader stakeholder orientation. (3) Both Blair and Drucker argued a case for knowledge workers’ ownership shares (not necessarily voting rights) on mixed incentive and moral rationales.
(4) Most recently an economic democracy movement has developed. (This movement has old roots; see Dahl.) Turnbull (in Australia) has published work advocating that multinational enterprise ownership be transferred over a period of time (via tax incentives) to local citizens. This economic democracy movement may be considered to relationship to Scherer and Smid’s recent argument that multinational enterprises should address social and environmental problems of developing countries, because governments are incapable of doing so.
Their argument positions multinational enterprises closer to citizens’ needs than their own governments in such countries. The relationship between economic democracy and corporate social responsibility for social and environmental problems then involves the following development profile for individual citizens: liberation equality integration.
No practical theory of democratisation has been worked out, in relationship to American conditions-although pieces of such a theory can be found in the stakeholder and responsibility literatures. It is not clear whether restructured boards (such as German dual boards) or ownership rights or improved legal rights (as argued by Dodd years ago), or simply improved consultation practices would be involved.
American public policy generally favors more open world markets and increased financial performance (especially in the wake of recent corporate scandals, which will work toward greater accountability to investors). The U.S. has the highest proportion of employees investing in capital markets, especially through pension (superannuation) funds-a phenomenon developing more slowly in Europe and elsewhere. This circumstance occasions a considerable difference in the American situation.
An American perspective involves a specific developmental history stretching back to at least Carnegie (1900). Bowen (1953) is the origin for modern responsibility theory. The subsequent history is complex rather than straightforward. Carroll should be credited with much of the development of responsibility conceptualization. He generated a four-dimensional model of responsibilities (economic, legal, ethical, philanthropic) and pioneered (with others) in its empirical validation. Responsibility theory then flowed into richer developments of corporate social performance, stakeholder, and global corporate citizenship literatures.
Carroll has steadily shown the conceptual relationship of corporate social responsibility to these other theories. The latest turn of events is a body of literature arguing an economic conception of responsibility and stakeholder theories. The economic approach essentially argues that all management actions should be profit oriented (i.e., value creating), at least in the longer run. This approach traces back directly to Friedman (1970), who characterized all discretionary responsibility conduct by management as “theft” from the other primary stakeholders (customers, employees, investors). This approach tends to deflect such discretionary considerations to public policy (echoing Preston and Post, 1975).
This presentation will place these various considerations into an American perspective for comparative consideration of advantages and disadvantages of various approaches around the world as the globalizing economy develops during the 21st century.
Blair, Margaret M. 1995. Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century. Washington, DC: Brookings Institution.
Bowen, Howard R. 1953. Social Responsibilities of the Businessman. New York: Harper & Row.
Carnegie, Andrew. 1900. The Gospel of Wealth, and Other Timely Essays. New York: Century.
Carroll, Archie B. 1979. A three-dimensional conceptual model of corporate social performance. Academy of Management Review 4:497-505.