Summary of lecture
 What is a corporation? What is social
responsibility?
 Carroll’s Pyramid of CSR
 Stakeholder theory and Corporate
Citizenship
 Corporate Social Responsiveness
 Political CSR, marketisation and
globalization
What is a corporation?
“An ingenious device for obtaining profit without
individual responsibility.”
Ambrose Bierce's Devil's Dictionary
States and corporations
 The first ‘corporations’ were established as legal forms of organization
created by European colonial states to trade profitable commodities
and perform specific public functions, e.g. dig canals; lay railways;
trade in cotton, silk, indigo dye, salt, spices, tea, opium; support
slavery.
 The English and Dutch East India Companies (est 1599; 1602),
West India Companies, etc.
 Established territorial control and trading monopolies.
 A corporation is a ‘natural person’ and has legal rights and liabilities,
like private individuals, that are distinct from its shareholders (limited
liability).
 The1886 Supreme Court case Santa Clara County v. Southern Pacific
Railroad Co.
 Corporations separate ownership from management to build up capital
over time and establish power through territorial control (corporate
succession).
 Corporations are owned by shareholders who appoint the Board of

Directors.
A corporation is managed by a Board of Directors (fiduciary responsibility).
What is ‘social
responsibility’?
Ethical concept that
asserts an entity
(organization or individual)
has an obligation to act in
a way that benefits society.
Trade-off between
economic development
(instrumental) and social +
environmental (moral)
costs.
Social responsibility is the
idea that this trade-off
needs to be addressed by
sustaining equilibrium
between these two
aspects of human activity.
Carroll’s
Pyramid
“Corporate social responsibility involves the
conduct of a business so that it is
economically profitable, law abiding,
ethical and socially supportive. To be
socially responsible then means that
profitability and obedience to the law are
foremost conditions when discussing the
firm’s ethics and the extent to which it
supports the society in which it exists with
contributions of money, time and talent”
Carroll, (1983) ‘CSR, Will industry respond to
cut-backs in social program funding?’
Base: Profitability, enlightened selfinterest.
Normative theory: has no predictive
power and is limited to organization.
What happens when
responsibilities are in conflict?
 Profitability vs Legal obligations?
 Redundancy vs employment in
economic downturn.
 Externalization of costs
What is CSR?
“Corporate Social Responsibility encompasses the
economic, legal, ethical and philanthropic expectations
placed on organizations by society at any given time.”
Crane and Matten, 2016
Freeman’s Stakeholder theory (Strategic
Management: A stakeholder approach,1984)
 A stakeholder: is an individual or group who either is
harmed by, or benefits from, the corporation; or
whose rights can be violated, or have to be respected
by the corporation (government, customers, workers,
suppliers, shareholders, etc.).
 Instrumental theory: In order to achieve a
sustainable business model, corporations must align
diverse interests of customers, suppliers, employees,
communities, governments and shareholders.
 Decentre shareholder primacy: Stakeholder theory
suggests that the purpose of a business is to create
as much value as possible for stakeholders.
Traditional, stakeholder and networked models
CSR as stakeholder
democracy
“The USA, the European Union (EU) and a number of
developing countries are all looking to corporations to
help address issues such as inequality, health and
unemployment. CSR is based on the concept of
‘stakeholder democracy’, which is premised on the notion
that organisations are made up of a number of different
stakeholders with a multiplicity of interests, all of whom
should have an influence over the organisation’s
activities.”
Tony Royal, 2005 (Lecture 8, week 9)
Corporate social responsiveness
 Reaction: The corporation is in denial about its responsibility;
blames others / asks govt to intervene.
 E.g. American and European banks in 2008 financial crisis.
 Defence: The corporation admits responsibility, but defends
itself.
 E.g. Deepwater Horizon in Gulf of Mexico: BP blamed concrete
manufacturers that caused pipe disintegration and massive oil spill in
2010.
 Accommodation: The corporation accepts responsibility and
does what is required.
 E.g. News International in UK closed down News of the World in 2011
during phone hacking scandal.
 Pro-action: Corporation goes beyond industry norms and
anticipates future expectations.
 E.g. Tata Industries in India have funded social research, hospitals,
education institutions since 1860s. Two thirds of the equity of parent
company is held by philanthropic trusts.
Political CSR 1.0: Corporate Citizenship
 “The dominant understanding of citizenship in most industrialized
societies is located in the liberal tradition, where citizenship is defined
as a set of individual rights.” (Matten and Crane, 2005)
 Civil (freedom from abuse), social (freedom to participate in society),
and political (right to vote and hold office) rights. (Marshall, 1965).
 Civil society or “Political society” ? – Partha Chatterjee disputes the
term civil society, claiming it to be a Western myth that perpetuates the
de-politicization of state-public relations.
 Why are corporations using citizenship terminology?
-
A. The corporation enters the realm of citizenship when the state’s direct
influence recedes and is operationalised through corporate activity (e.g. Mumbai
Pani).
-
B. The state is inadequate at granting citizens rights and corporations see a
commercial opportunity to step in and provide access / service (e.g. building
student accommodation).
The Water Wars: Privatizing the right to life?
Before the UN recognized the right to drinking water and sanitation as a basic human right in 2012,
the World Bank Organization insisted on the privatization of water and establishing free markets in
exchange for aid. This opened the door to corporations to initiate an experiment in commoditizing
water among some of the world’s poorest communities.
The case of Bolivia
The case of India


In 2012, French corporation, Veolia, signed a
25 year contract to supply and manage
water to 2.4 million residents of Nagpur,
India.

Veolia would invest 30%, remaining cost to
come from central and state govt. The govt
has to return Veolia’s investment plus
assured rate of return over 10 years.

Veolia has negotiated exemptions from
payment of customs duty and other taxes for
purchase of critical equipment.

The contract is in addition to other PPP
projects including pilot projects, construction
and maintenance of treatment plants,
technical and administrative assistance.

To date, Veolia’s contractual obligations have
not been fulfilled.
In the mid-1990s, under WBO pressure,
Bolivia privatized their water system.

Included implementing changes to law turning
community water resources into commodities.

Betechel Corporation (US) offered a deal to
supply and manage water supplies.

Led to increases in water prices, did not
increase water access, increased levels of
poverty by 2%.



Cochabamba (2000) and La Paz/ El Alto
(2005) uprisings.
Bolivian government rescinded contract with
Betechel and eventually neighbourhood
associations established their own service
provider.
Betechel filed suit against the Bolivian govt
of $25 million compensation, at a court run
by the World Bank. The case was dropped in
2006, after govt released statement that the
water company did no wrong.
Read more here.
Read more here and for a case of citizens selforganizing against privatization here.
Globalization and Political CSR
 Post-national constellation
 Internationalisation and multi-national corporations
 Loss of regulatory impact of national governments on activities of MNCs.
E.g. TTIP and CETA vs Trump / future of EU
 Lack of hard laws and prevalence of soft laws
 The problem of self-regulation and volunteerism.
 Paris Agreement 2015.
 Expanding the scope of CSR
 Numerous externalities in global supply chains.
 Social connectedness is replacing idea of legal liability.
Refs:
Frynas, J. G. and Stephens, S. (2015), Political Corporate Social
Responsibility: Reviewing Theories and Setting New Agendas.
International Journal of Management Reviews, 17: 483–509.
Scherer and Palazzo, (2010), The new political role of businesses in a
globalized world, Journal of Management Studies, (48)4.
Political CSR 2.0
 “PCSR entails those responsible business activities that turn
corporations into political actors, by engaging in public
deliberations, collective decisions, and the provision of public
goods or the restriction of public bads in cases where public
authorities are unable or unwilling to fulfill this role.” Governance,
effective resolution of public issues.
 Corporations not only influence politics via lobbying governments,
they also turn into political actors – they “co-create their
institutional environment” (Scherer, et al, 2016, special issue on
PCSR 2.0 in JMS).
 The era of Trump, Brexit, Bolsanaro, and Modi: Hardening
ideologies and return to protectionism; plurality of social
imaginaries and contextualising belief systems, digitization and
disruptive communications.