Summative Assessment

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Contents

List of contributors viii Preface xx

1 Introduction: corporate citizenship in a globalized world 1 Andreas Georg Scherer and Guido Palazzo

PART I HISTORY AND CONCEPTUAL GROUNDWORK

2 The emergence of corporate citizenship: historical development and alternative perspectives 25 Andrew Crane, Dirk Matten and Jeremy Moon

3 Corporate responsibility/corporate citizenship: the development of a construct 50 Sandra Waddock

4 Defining the concept of good corporate citizenship in the context of globalization: a paradigm shift from corporate social responsibility to corporate social accountability 74 S. Prakash Sethi

5 Corporate citizenship and community stakeholders 99 Robert A. Phillips and R. Edward Freeman

6 Business ethics, corporate virtues and corporate citizenship 116 Robert C. Solomon

PART II CONTEMPORARY ISSUES AND CHALLENGES

7 Responsibility and global justice: a social connection model 137 Iris Marion Young

8 Corporate citizenship and the environment 166 Paul Shrivastava

9 Corporations as citizens against corruption: an institutional entrepreneurship perspective 185 Gary R. Weaver and Vilmos F. Misangyi

10 Corporate citizenship and global conflicts: the baboon moment 208 Charles P. Koerber and Timothy L. Fort

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EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 3/14/2019 2:47 PM via ASTON UNIVERSITY AN: 233050 ; Palazzo, Guido, Scherer, Andreas Georg.; Handbook of Research on Global Corporate Citizenship Account: s9815128

PART III ACTORS, INSTITUTIONS AND GLOBAL GOVERNANCE

11 Emerging patterns of global governance: the new interplay between the state, business and civil society 225 Klaus Dieter Wolf

12 Globalization, transnational corporations and the future of global governance 249 Stephen J. Kobrin

13 Between confrontation and cooperation: corporate citizenship and NGOs 273 Jonathan P. Doh

14 The politicization of economization? On the current relationship between politics and economics 293 Michael Zürn

PART IV DISCIPLINARY PERSPECTIVES ON CORPORATE CITIZENSHIP

15 The economic view of corporate citizenship 315 Jessica C. Ludescher, Abagail McWilliams and Donald S. Siegel

16 Human rights, corporations and the global economy: an international law perspective 343 David Kinley and Justine Nolan

17 Global business as an agent of world benefit: new international business perspectives leading positive change 374 Nancy J. Adler

PART V IMPLICATIONS FOR MANAGEMENT THEORY BUILDING

18 Structures, identities and politics: bringing corporate citizenship into the corporation 405 Peter Edward and Hugh Willmott

19 Responsible leadership in a globalized world: a cosmopolitan perspective 430 Thomas Maak and Nicola M. Pless

20 The political economy of corporate social responsibility 454 Subhabrata Bobby Banerjee

21 The interrelationship between global and corporate governance: towards a democratization of the business firm? 476 Grahame F. Thompson

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PART VI CRITICAL PERSPECTIVES

22 Transparency, integrity and openness: the Nike example 501 Frits Schipper and David M. Bojé

23 The corporation and its fragments: corporate citizenship and the legacies of imperialism 527 Raza Mir, Richard Marens and Ali Mir

24 The corporation as a political actor? A systems theory perspective 552 Helmut Willke and Gerhard Willke

PART VII THE FUTURE OF GLOBAL CORPORATE CITIZENSHIP

25 The future of global corporate citizenship: toward a new theory of the firm as a political actor 577 Guido Palazzo and Andreas Georg Scherer

Index 591

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Contributors

Nancy J. Adler holds the S. Bronfman Chair in Management at McGill University. She received her doctorate from UCLA. Dr Adler conducts research and consults on global leadership, cross-cultural management, and women as global leaders. She has authored over 100 articles, produced a film, and published four books. She is a Fellow of the Academy of Management, the Academy of International Business and the Royal Society of Canada. She was named a 3M Fellow, recognizing her as one of the top university-level teachers, among all disciplines, in Canada. Nancy is also an artist working primarily in watercolor and ink.

Subhabrata Bobby Banerjee is Professor of Management and Associate Dean of Research at the College of Business, University of Western Sydney. His research interests include sustainability, corporate social responsibility, postcolonialism and indigenous ecology. His first book, Corporate Social Responsibility: The Good, The Bad and The Ugly, was pub- lished by Edward Elgar in November 2007. He has published widely in international scholarly journals and his work has appeared in the Journal of Marketing, the Journal of Management Studies, Organization, Human Relations, Organization Studies, Management Learning, the Journal of Business Research and Organization and Environment.

David M. Bojé holds the Bank of America Endowed Professorship of Management (awarded September 2006), and is past Arthur Owens Professorship in Business Administration (June 2003–June 2006) in the Management Department at New Mexico State University. His focus is on the study of ethics, critical theory feminism, and power of language, dis- course and stories in organizations. Recent books include Storytelling Organization (Sage, 2007), Critical Theory of Business and Public Administration (Information Age Press, 2007), and The Passion of Organizing (with J. Brewis, S. Lindstead and A. O’Shea, Liber & Copenhagen Business School Press, 2006). His book, Narrative Research Methods for Communication Studies (Sage, 2001) is a widely used text in teaching qualitative methods to PhD students.

Andrew Crane is Professor of Policy and holds the George R. Gardiner Chair in Business Ethics at the Schulich School of Business, York University, Toronto. He is interested in various aspects of business ethics,

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including the role of morality in marketing and consumption; the contri- bution of evolutionary narratives to environmental management; the implementation of fair trade policies; and the contribution of Foucauldian thought to business ethics. Recent work appeared in the Academy of Management Review, the Journal of Business Research, Organization Studies, the Journal of Business Ethics and Business Ethics Quarterly. He holds a BSc from Warwick University and a PhD in Business Studies from Nottingham University. Previously, he was Professor of Business Ethics and Director of the MBA in CSR at Nottingham University Business School, UK.

Jonathan P. Doh holds the Herbert G. Rammrath Chair in International Business, is founding Director of the Center for Global Leadership, and Associate Professor of Management at the Villanova School of Business, Pennsylvania, USA. Jonathan is the author or co-author of more than 35 refereed articles, 20 chapters and five books. His work has appeared in the Academy of Management Review, California Management Review, the Journal of International Business Studies, Organization Science, Sloan Management Review and the Strategic Management Journal. He is presently completing work on two books: Multinationals and Development (Yale University Press) and Corporations and NGOs: Conflict and Collaboration (Cambridge University Press). He is a member of five edito- rial boards and is an associate editor of Business and Society. He received his PhD in Strategic and International Management from George Washington University

Peter Edward is currently a PhD student at the Judge Business School, University of Cambridge (UK). He has over 20 years’ experience as a char- tered engineer and as a management consultant, the latter predominantly in programme management of business transformations and business start- ups and mergers. His research interests are in using poststructural and crit- ical theory to investigate the role of business at the intersection of ‘Third World’ development, business ethics, sustainability and global growth. His work on global inequality, ethics of poverty and microfinance has appeared in World Development, Third World Quarterly and Perspectives on Global Development and Technology. He is also convener for the CSR study group of the UK and Ireland Development Studies Association.

Timothy L. Fort is the Lindner-Gambal Professor of Business Ethics, Executive Director of the Institute for Corporate Responsibility and Coordinator of the Peace Through Commerce Initiative at George Washington University (Washington, DC). His research interests include

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how ethical business behavior can contribute to the reduction of violence in the world and optimal organizational structures to foster affective ethical sentiments in business. He is the author of four books including Business, Integrity, and Peace (Cambridge University Press, 2007) and Prophets, Profits and Peace (Yale University Press, forthcoming). He is a member of the editorial boards of the Academy of Management Review, Business Ethics Quarterly and the American Business Law Journal.

R. Edward Freeman is the Elis and Signe Olsson Professor of Business Administration at the Darden School, University of Virginia, Charlottesville, USA, Academic Director of the Business Roundtable Institute for Corporate Ethics, and heads Darden’s Olsson Center for Applied Ethics. He is the author or editor of over 20 volumes in the areas of stakeholder management, business strategy and business ethics as well as more than 80 articles in a wide variety of publications. Freeman is perhaps best known for his 1984 book, Strategic Management: A Stakeholder Approach (Pitman). His latest book (with Jeffrey Harrison and Andrew Wicks) is entitled Managing for Stakeholders: Survival, Reputation and Success (Yale University Press, 2007). Freeman has a PhD in Philosophy from Washington University and a BA in Mathematics and Philosophy from Duke University.

David Kinley holds the inaugural Chair in Human Rights Law at the University of Sydney, before which he was the founding Director of the Castan Centre for Human Rights Law at Monash University (2000–05). He has written or edited five books and more than 60 articles, book chapters, reports and papers. He was a Senior Fulbright Scholar in 2004, based in Washington, DC, researching on the World Bank and human rights. He also worked for 12 years as a consultant and adviser on human rights law in Australia and overseas (especially in South and South-East Asia) for a range of organizations including the UN, the World Bank, the Australian Human Rights and Equal Opportunity Commission and many large NGOs and transnational corporations. He has just completed editing Corporations and Human Rights, to be published in early 2008 by Ashgate in its International Library of Essays series, and is currently working on two new books: a monograph entitled Human Rights and the Global Economy, to be published by Cambridge University Press, and a jointly edited collection of essays entitled Human Rights and the WTO, to be published by Edward Elgar.

Stephen J. Kobrin is the William Wurster Professor of Multinational Management at the Wharton School of the University of Pennsylvania. His research interests include globalization, international political economy and

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multinational strategy. His work has appeared in International Organization, the Journal of International Business Studies, the Review of International Studies and Foreign Policy, and in numerous edited volumes and other jour- nals. He is a past President of the Academy of International Business and a fellow of the World Economic Forum. He has served on the editorial boards of International Organization, the Journal of International Business Studies, and the Academy of Management Journal.

Charles P. Koerber is a Doctoral Fellow in the Department of Strategic Management and Public Policy at George Washington University (Washington, DC). His research interests include financial, ethical, environmental and social reporting; peace through commerce; voluntary environmental programs; and corporate responsibility.

Jessica C. Ludescher is Assistant Professor of Business Ethics in the Albers School of Business and Economics at Seattle University. She holds a joint appointment in Management and Philosophy. Her research interests include corporate social responsibility, theories of the firm, social justice, ethics, sustainability and philosophy of economics. She has contributed to the CORE Project on, ‘The Potential of CSR to Contribute to the Implementation and Integration of EU Strategies’ and her work has appeared in FEEM’s Working Paper Series.

Thomas Maak is Research Director at the Institute for Business Ethics and Assistant Professor of Corporate Responsibilty at the University of St Gallen in Switzerland. As visiting faculty he also co-directs a research stream within the PwC-INSEAD initiative on high-performing organizations at INSEAD, France. He has held visiting positions at the School for International and Public Affairs at Columbia University, New York and at Georgetown University’s McDonough School of Business in Washington, DC. His research and teaching focuses on business ethics, corporate citizen- ship, integrity management and responsible leadership. He is a member of the Executive Committee of the European Business Ethics Network, EBEN. As consultant and advisor he has worked with leading corporations such as Shell, PricewaterhouseCoopers, Volkswagen and DONG Energy. Among his many publications are Responsible Leadership (with Nicola Pless; London/New York: Routledge, 2006) and Integre Unternehmensführung (with Peter Ulrich; Stuttgart: Schäffer-Poeschel, 2007). He has also served as guest editor for the Journal of Business Ethics.

Richard Marens is Associate Professor of Management at California State University, Sacramento. His research interests include the use of financial

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activism as a tactic by labor unions, the rise and fall of American middle management as an occupation, and the redefinition of business ethics and corporate social responsibility during the 1980s. He has published in a variety of journals, including Business Ethics Quarterly, Business and Society, the Journal of Business Ethics, the Journal of Academic Ethics, the Journal of Management Inquiry, Organization, the Journal of Management History and the Journal of Business and Management. He serves on the edi- torial board of Organization and Management History.

Dirk Matten holds the Hewlett-Packard Chair in Corporate Social Responsibility and is a Professor of Policy at the Schulich School of Business, York University, Toronto. His doctoral degree and his Habilitation are from Heinrich-Heine-University Düsseldorf in Germany. He is interested in CSR, business ethics and international business. Dirk has taught and done research at academic institutions in Australia, Belgium, Britain, Canada, the Czech Republic, France, Germany, Italy and the US. He has published 10 books and some 80 articles and book chap- ters, including papers in journals such as the Academy of Management Review, the Journal of Management Studies, Organization Studies, the British Journal of Management, Human Relations and Business Ethics Quarterly. Recently, he co-edited the Oxford Handbook of CSR (with Jeremy Moon, Oxford University Press, 2008) and co-authored Corporations and Citizenship (with Jeremy Moon, Cambridge University Press, 2008). Previously, he held a Chair in Business Ethics and was Director of the Centre for Research into Sustainability at the University of London/UK (Royal Holloway).

Abagail McWilliams is Executive Associate Dean and Professor of Management in the College of Business Administration of the University of Illinois at Chicago. Since 2002 she has also been a Visiting Professor in the International Centre for Corporate Social Responsibility at the University of Nottingham. Her research interests include strategic man- agement, corporate social responsibility and research methodology. Her work has appeared in the Academy of Management Journal, the Academy of Management Review, the Strategic Management Journal, the Journal of Management Studies, the Journal of Management and Organizational Research Methods, as well as in several edited volumes and other journals.

Ali Mir is an Associate Professor of Management at the College of Business, William Paterson University, New Jersey, USA. His research interests center around the changing nature of work in late capitalism. His recent work includes the examination of transnational labor migration, the

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transformation of labor processes and markets under economic globaliza- tion, and the issues surrounding business process outsourcing.

Raza Mir is an Associate Professor of Management at the College of Business, William Paterson University, New Jersey, USA. His research mainly concerns the transfer of knowledge across national boundaries in multinational corporations, and issues relating to power and resistance in organizations. He has published in journals from a variety of disciplines, including the Academy of Management Learning and Education, Cultural Dynamics, the Journal of Business Communication, Organizational Research Methods and the Strategic Management Journal. He is a member of the editorial boards of Organization, Group and Organization Management and Critical Perspectives on International Business.

Vilmos F. Misangyi is an Assistant Professor in the Department of Business Administration in the Alfred Lerner College of Business and Economics at the University of Delaware. His research interests include CEO charisma, institutional entrepreneurship, corruption and managerial discretion. His work has appeared in several journals including the Academy of Management Review, the Strategic Management Journal, the Journal of Applied Psychology, Organizational Research Methods and Leadership Quarterly. He serves as an ad hoc reviewer for the Academy of Management Review, the Academy of Management Journal, Organization Science, the Journal of Management and Business Ethics Quarterly.

Jeremy Moon is Professor and founding Director of the International Centre for Corporate Social Responsibility at the University of Nottingham, UK. He won a ‘Beyond Grey Pinstripes’ European Faculty award for preparing MBAs for social and environmental stewardship in 2005. He is a Fellow of the Royal Society for the Arts. He is the author or editor of seven books and two special issues, and author of over 80 journal articles and book chapters. He is co-editor of The Oxford Handbook of CSR (with Dirk Matten, Oxford University Press, forthcoming) and co- author of Corporations and Citizenship (with Dirk Matten, Cambridge University Press, forthcoming). Journal publications on CSR include the Academy of Management Review, the British Journal of Management, the Journal of Management Studies, the Journal of Business Ethics, Business Ethics Quarterly and Business and Society Review.

Justine Nolan is the Deputy Director of the Australian Human Rights Centre and lectures in international human rights law at the University of NSW, Australia (UNSW). Her research interests are in human rights,

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corporate accountability and labour rights. She has worked closely with a broad range of representatives from NGOs, government, companies and the UN in consulting on business and human rights issues. Prior to her appointment at UNSW she was the Director of the Business and Human Rights Program at the Lawyers Committee for Human Rights (now Human Rights First) in the United States. She is an editor of the Human Rights Defender.

Guido Palazzo is Professor of Business Ethics at the University of Lausanne (Switzerland). His research interests are in ethical decision- making, global governance and corporate social responsibility. His work has appeared in the Academy of Management Review, Business Ethics Quarterly, the Journal of Business Ethics and in numerous volumes and other journals. He is a member of the editorial board of Business Ethics Quarterly and Business & Society. He has worked with numerous compa- nies and NGOs on projects in organizational ethics and CSR.

Robert A. Phillips is on the faculty of the University of Richmond’s Robins School of Business, Richmond, Virginia, USA. His work has appeared in Business Ethics Quarterly, the Journal of Business Ethics and Business and Society Review among others. He is also author of Stakeholder Theory and Organizational Ethics (Berrett-Koehler, 2003). His research interests include organizational ethics and the effects of managerial discretion on stakeholder management, ethics in network organizations and the com- mercial use of private military contractors. He currently serves on the Board of Directors of the Society for Business Ethics. He holds a PhD from the Darden School at the University of Virginia and also MBA and BS degrees from the University of South Carolina and Appalachian State University, respectively.

Nicola M. Pless is Research Director and Assistant Professor in Responsible Leadership at the University of St Gallen in Switzerland. She is also a Visiting Senior Research Fellow in INSEAD (France) where she co-directs the INSEAD-PwC research stream on Developing Responsible Leadership. She holds an MBA from the University of Bayreuth, a PhD in organizational theory from the University of St Gallen and a diploma in clinical organizational psychology from INSEAD. Prior to joining these faculties, she worked as a vice president in the financial services industry and served at the World Bank Group in Washington, DC. Her research, writing and teaching focuses on international management, responsible leadership and leadership development. She has delivered training and con- sulting services for the International Finance Corporation, Deutsche

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Telekom, Volkswagen, PricewaterhouseCoopers and DONG Energy. She has published three books and several articles in practitioner and academic journals. Her latest book on Responsible Leadership (with Thomas Maak) was published by Routledge in 2006.

Andreas Georg Scherer is head of the Institute of Organization and Administrative Science (IOU) and holds the Chair of Theories of the Firm at the University of Zurich (Switzerland). His research interests are in business ethics, critical theory, international management, organization theory and the philosophy of science. He has published eight books. His work has appeared in the Academy of Management Review, Business Ethics Quarterly, the Journal of Business Ethics, Management International Review, Organization, Organization Studies and in numerous volumes and other journals. He is associate editor of Business Ethics Quarterly and serves as a member of the editorial boards of Business & Society, Organization and Organization Studies.

Frits Schipper studied physics and philosophy. He coordinates a masters degree in the philosophy of management and organization, a joint venture of the Department of Philosophy, Vrije Universiteit Amsterdam, and the Department of Philosophy, Universiteit Utrecht. His research is in the phi- losophy of management and organization, in the context of which he has a theoretical as well as a practical interest, the latter being the possible con- tribution of philosophy to organizational practice. He has published three books, all in the Dutch language. His other publications have appeared in national as well as international journals and different volumes. He is a member of the editorial board of Philosophy of Management and chairman of the board of the Vanwoodman Society.

S. Prakash Sethi is University Distinguished Professor at the Zicklin School of Business, Baruch College, the City University of New York. In addition to his academic responsibilities, he is the founder and President of the International Center for Corporate Accountability Inc. (ICCA). ICCA is an independent non-profit think-tank, which undertakes cutting-edge research and public policy advocacy in the area of enhanced corporate accountability through voluntary corporate codes of conduct. A fellow of the International Academy of Management, Sethi has published 24 books and over 135 articles in professional and scholarly journals and national and international news media. He serves on the boards of directors/ advisors on various corporate and civil society organizations, and numer- ous editorial boards of various academic and professional journals.

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Paul Shrivastava is the Howard I. Scott Chair and Professor of Management at Bucknell University, Pennsylvania, USA. He received his PhD from the University of Pittsburgh. He was a tenured professor at New York University’s Stern School of Business. He has published 15 books and over 100 articles in professional journals on sustainable strategic manage- ment and crisis management. He served on the boards of 10 leading man- agement journals (including the Academy of Management Review, the Strategic Management Journal and Organization and Environment. He studied Japanese sustainability practices as a Fulbright Senior Scholar. He founded the non-profit organization, the Industrial Crisis Institute. He was co-founder and for five years was the CEO of eSocrates, Inc., an online training/education software company. Shrivastava is a consultant to major multinational companies and serves on the Board of Trustees of DeSales University. He is the organizer of the Steelman Triathlon and has a World Tango Music radio show on WVBU 90.5FM Lewisburg, PA.

Donald S. Siegel gained his PhD from Columbia University. He is Professor and Associate Dean of the A. Gary Anderson Graduate School of Management at the University of California, Riverside. He is an editor of the Journal of Technology Transfer, an associate editor of the Journal of Business Venturing and the Journal of Productivity Analysis and serves on the editorial boards of the Journal of Management Studies, Academy of Management Perspectives, Academy of Management Learning and Education, Corporate Governance: An International Review and the Strategic Entrepreneurship Journal. His papers have appeared in the American Economic Review, the Economic Journal, the Review of Economics and Statistics, the Journal of Law and Economics, the Journal of Financial Economics, Brookings Papers on Economic Activity, Research Policy, the Academy of Management Review, the Academy of Management Journal, the Strategic Management Journal, IEEE Transactions on Engineering Management, the Journal of Business Venturing, the Journal of International Business Studies, the Journal of Management Studies, Industrial and Corporate Change, the Leadership Quarterly and the Journal of Management. He recently completed two books for Oxford University Press: Innovation, Entrepreneurship, and Technological Change and the Handbook of Corporate Social Responsibility.

Robert C. Solomon was one of the most eminent scholars in business ethics. He spent the past 20 years thinking, writing and lecturing about the importance of ethics in business. He was the Quincy Lee Centennial Professor and a member of the Academy of Distinguished Teachers at the University of Texas at Austin. He also taught at Princeton, UCLA, Penn

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and Pittsburgh. He was the author or editor of more than 40 books in the domains of business ethics, history of philosophy, philosophical psychol- ogy (with a focus on emotions). His books on business ethics include Above the Bottom Line, Ethics and Excellence, It’s Good Business, A Better Way to Think about Business and Building Trust. Robert Solomon died on 2 January 2007.

Grahame F. Thompson is Professor of Political Economy at the Open University. Long-term research interests are in the nature of network forms of governance and the international system. He is currently engaged in researching the fate of the categories of borders, territories and jurisdic- tions in debates about globalization, and the meaning of ‘global corporate citizenship’. Recent book publications have included: Between Hierarchies and Markets: The Logic and Limits of Network Forms of Organization

(Oxford University Press, 2003) and Globalization in Question (3rd edition, Polity Press, 2008).

Sandra Waddock is Professor of Management at the Boston College Carroll School of Management and Senior Research Fellow at BC’s Center for Corporate Citizenship, and for 2006–07 a visiting scholar in the CSR initiative at the Kennedy School of Government at Harvard University. She holds MBA and DBA degrees from Boston University and has published widely on issues related to corporate responsibility/citizenship, multisector collaboration and related topics. She received the Aspen Institute’s 2005 Faculty Pioneer Award for External Impact.

Gary R. Weaver is Professor of Management at the University of Delaware and editor in chief of Business Ethics Quarterly. His research focuses on psy- chological, sociological and philosophical aspects of ethics in business and society. He is co-author of Managing Ethics in Business Organizations: Social Scientific Perspectives (Stanford University Press, 2003). He also serves on the editorial boards of the Academy of Management Review and the Journal of Management, and his research has appeared in the Academy of Management Journal, the Academy of Management Review, Organization Studies, Business Ethics Quarterly, Human Relations, the Journal of Management, Business and Society, California Management Review and other scholarly journals.

Gerhard Willke is Professor of Economics at the University of Applied Sciences at Nuertingen, Germany. He has published six books and numer- ous articles. His research areas are economic theory, the theory of capital- ism, political economy and employment policy.

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Helmut Willke is Professor for State Theory and Global Governance at the University of Bielefeld, Germany. His research activities are in the fields of systems theory, systems governance, state theory, global governance and governance of functional world systems. He has published 18 books and some 150 articles in all relevant German journals. He is a member of the editoral board of Jahrbuch für Managementforschung.

Hugh Willmott is Research Professor in Organization Studies, Cardiff Business School. He has previously held professorial positions at the uni- versities of Cambridge and Manchester and visiting appointments at the universities of Copenhagen, Lund and Cranfield. He has a strong interest in the application of social theory, especially poststructuralist thinking, to the field of management and business. He has published 20 books includ- ing Managing Knowledge (2000); Management Lives (1999), Studying Management Critically (2003) and Fragmenting Work (2004). He has also published widely in social science and management journals, including the Academy of Management Review, the Administrative Science Quarterly, Sociological Review and Sociology.

Klaus Dieter Wolf is Professor of Political Science at Darmstadt University of Technology and Deputy Director at the Peace Research Institute, Frankfurt (PRIF). His current research areas are governance beyond the state and the role of private actors in international relations. Among his recent books are Macht und Ohnmacht internationaler Institutionen (2007, co-edited with Andreas Hasenclever and Michael Zürn) and Staat und Gesellschaft – fähig zur Reform? (2007).

Iris Marion Young was Professor of Political Science at the University of Chicago. Her research covered contemporary political theory, feminist social theory and normative analysis of public policy. She was one of the most influential political philosophers of our time. Her writings have a huge impact in a broad field of domains, including theories of justice, democracy and difference, deliberative democracy, ethics and international affairs. Iris Marion Young died on 1 August 2006.

Michael Zürn is Director of the Social Science Research Center Berlin (WZB) and founding Dean of the Hertie School of Governance. In 1993 he was appointed Professor of Political Science at the University of Bremen. Since 1995 he has been Co-Director of the Institute for Intercultural and International Studies (InIIS) concentrating on issues concerning global- ization and global governance. From 1997 to 2000 he was Co-Director of the Centre for European Law and Politics at the University of Bremen,

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where he worked on an interdisciplinary basis on normative issues of European integration and international juridification. Before his move to the WZB in 2004 he was Director of the German Research Association (DFG) Special Research Project ‘State in Transformation’. Zürn is a member of the Berlin-Brandenburg Academy of Sciences and of the Senate of the DFG.

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Preface

The development of this book began in summer 2005 when we started to approach authors to contribute to the Handbook of Research on Global Corporate Citizenship. We were gratified that so many eminent scholars from various disciplines were interested in this topic. We should like to thank all the contributors for their hard work and timely cooperation. Also, we should like to thank Francine O’Sullivan and the Edward Elgar staff for their kind and reliable help. Christian Vögtlin prepared all the files for the publisher and helped enormously with the editing of the chapters and the preparation of the Handbook.

During the preparation, two scholars passed away soon after they had sent us their papers. We were very sad to learn that Iris Marion Young died on 1 August 2006, and that Robert Solomon passed away on 2 January 2007. We remember both these scholars as insightful thinkers and eminent scholars in their disciplines.

Andreas Georg Scherer Guido Palazzo

Zurich and Lausanne December 2007

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1 Introduction: corporate citizenship in a globalized world Andreas Georg Scherer and Guido Palazzo

Corporate citizenship as a global challenge In market societies economic exchange requires the existence and enforce- ment of rules that the market cannot generate itself. Although the dimen- sions and limits of state intervention have always been a matter of debate, it is indisputable that certain rules need to be implemented for an economy to function properly and contribute to the common good. Consequently, many theories of society assume that these rules will be created and enforced by national states. In this scenario the state deter- mines formal regulations and delineates the sphere of private freedom within which individual citizens and private businesses are entitled to con- clude contracts and pursue their private interests. Formal rules as embod- ied in the law are complemented by the informal norms of common decency which define the regulatory framework of business behavior in modern societies. With the help of this framework, modern society makes efficient use of available resources and entrepreneurial capacity. If this regulatory framework is properly defined and enforced, these governance structures will establish incentives so that the egoistic motives of business people in their consequences contribute to private profit as well as to the common good.

Current theorizing on corporate social responsibility (CSR) builds on the assumption of a more or less intact regulatory framework, in which national legislation and the values and expectations of social communities prescribe appropriate business behavior and define the responsibilities of business firms (Carroll 1991; Frederick 1998; Whetten et al. 2002; Schwartz and Carroll 2003). However, the pluralization and globalization of modern society results in a loss of cultural homogeneity and erodes the national context of governance (Beck 2000; Habermas 2001; Kobrin 2001). Today, multinational corporations (MNCs) operate in different environments with heterogeneous regulatory requirements and enforcement mechanisms. These business firms have to respond to contradictory expectations and often have to operate under conditions of state failure or situations where the rule of law is absent. Therefore, the synchronization of corporate behavior with societal demands through national regulatory regimes no

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longer operates as smoothly as it once did (Palazzo and Scherer 2006; Scherer and Palazzo 2008).

During the last decade, the global regulatory deficit has been abused sys- tematically by some business firms that got involved in ecological disasters, human rights violations such as child and slave labor, corruption, collabor- ation with repressive regimes, murder of union leaders and sweatshop con- ditions (see, for example, Mokhiber and Weissman 1999; Korten 2001). At the same time, big corporations are using their increasing power to influence decision-making processes in the political system by aggressive acts of lobbyism so that regulations get passed that are in favor of the inter- ests of the firms (Schuler and Rehbein 1995; Siedel 2002; Shell 2004). On the other hand, some MNCs attempt to promote positive social change. As of 2007 about 4000 business firms and organizations have subscribed to the UN Global Compact and have voluntarily committed to the support of human rights, compliance with social and environmental standards and the fight against corruption in their sphere of influence (Williams 2004; www.unglobalcompact.org). Apparently this is not just an occasional phe- nomenon; rather it has become a general trend. Bies et al. (2007, p. 788) even hold: ‘[t]hat corporations do sometimes act as social change agents is not in dispute; it is an empirical reality around the world. Moreover it is becoming a political reality as well’.

Obviously, multinationals navigate in increasingly complex and unstable global environments and have started to play a more active role in the transnational attempt to define and enforce governance policies, institu- tions and processes. Anecdotal evidence shows that some corporations have already assumed responsibilities that once were regarded as belonging to government (Matten and Crane 2005). They engage in public health pro- jects, education and protection of human rights while operating in coun- tries with repressive regimes. They address social ills such as AIDS, malnutrition, homelessness and illiteracy (Margolis and Walsh 2003; Rosen et al. 2003). They engage in self-regulation to fill gaps in legal regulations (Scherer and Smid 2000; Cragg 2005) and to promote societal peace and stability (Fort and Schipani 2004). Therefore, some corporations are not simply complying with societal standards in legal and moral terms; they are engaging in discourses that aim to redefine those standards in a changing, globalized world (Palazzo and Scherer 2006; Scherer and Palazzo 2007).

In a globalized world, global governance, referring to rule making and enforcement on a global scale, is no longer the purview of governments alone (Braithwaite and Drahos 2000; Reinicke and Deng 2000). Today, MNCs as well as civil society groups participate in the formulation and implementation of regulations in policy areas that were once regarded as the sole responsibility of state agencies. These policy areas include protecting

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human rights, implementing social standards, preserving the environment, fighting corruption and producing public goods (Kaul et al. 2003; Williams 2004). This development indicates a shift in global business regulation from a state-centric mode toward new multilateral non-territorial modes with the inclusion of private and non-governmental institutions as key actors (Parker and Braithwaite 2003). Chandler and Mazlish (2005) even call multinationals the new ‘Leviathans’ of our time.

The activities summarized above go beyond the widely accepted under- standing of stakeholder management (Freeman and McVea 2001) and cor- porate social responsibility (Carroll 1991). The globalization of society is eroding established ideas about the division of labor between the political and economic spheres, and it calls for a fresh view concerning the role of business in society (Kobrin 2001; Dubbink 2004). These phenomena need to be embedded in a new concept of the business firm as an economic and political actor in society. As a consequence, we have recently discussed the politicization of the corporation and proposed a new theory of ‘political corporate social responsibility’ (Palazzo and Scherer 2006; Scherer et al. 2006; Scherer and Palazzo 2007). The Handbook builds on this concept. Given the discussions in political science, political philosophy, law and soci- ology that deal with the consequences of the postnational constellation, our impression is that outside the management literature the term ‘corpo- rate citizenship’ (CC) is more common than CSR. Since this Handbook aims at a transdisciplinary view on the consequences of globalization for the role of business in society, we use the synonymous term of corporate citi- zenship instead of political CSR here.

The idea of corporate citizenship promises to contribute to this trans- disciplinary discourse (Andriof and McIntosh 2001; Wood and Logsdon 2001). The notion that business firms have rights and responsibilities toward society similar to those of citizens is borrowed from the political sci- ences and has gained wide attention both in academic research and in busi- ness practice (Habisch et al. 2001; Maignan and Ferrell 2001; Matten et al. 2003; Logsdon and Wood 2005; Matten and Crane 2005). In the political sciences the citizen of the modern state is conceived as a bearer of private rights such as the right to own property, to enter into private contracts and to engage in market activities. Accompanying these private rights are the right to education and healthcare (social rights) and the right to participate in determining public rules and issues of common concern (political rights) (Marshall 1965). At the same time, the citizen has obligations such as soli- darity with his/her fellow citizens and a concern with the common good.

However, the status of business firms with regard to these rights and obligations is not yet clear (Logsdon and Wood 2005; Matten and Crane 2005; Moon et al. 2005; von Oosterhout 2005; Norman and Néron 2008;

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Wood and Logsdon 2008). While some scholars suggest that corporations and business firms should be considered equivalent to citizens (Carroll 1998), others hold that the citizenship concept cannot easily be transferred to corporations (Norman and Néron 2008). Rather, business firms should be regarded as state-like agencies and not so much as citizens (Matten and Crane 2005). This suggestion is based on the observation that often busi- ness firms adopt a state-like role and protect citizens’ rights in cases where governments are neither able nor willing to perform this function.

Corporate citizenship as an interdisciplinary topic The task of this volume is to discuss the consequences of the social and political power and engagement of business firms and to examine the impli- cations for the theory of the firm and the role of business firms in society. Various disciplines such as political philosophy, political science, sociology, legal studies, management studies and economics recently have begun to reconsider the role of business in society in light of the ongoing process of globalization.

In political philosophy, scholars have started to deconstruct the trad- itional nation-state-based concept of democracy (Habermas 1998, 2001), examining the challenges of the current erosion of political power over eco- nomic actors and processes. Others have proposed to reconceptualize the meaning of responsibility in a global context, drawing consequences for the power balance and interaction between governmental, business and civil society actors (for example, Dryzek 1999; Young 2004). In political science and international relations, globalization has provoked discussions on ‘policy networks’ (Kenis and Schneider 1991), ‘private–public partnerships’ (Grimsey and Lewis 2004), ‘global governance’ (Held 2004), the various forms of ‘governance without government’ (Zürn 2002) and the role and legitimacy of ‘private authority’ (Risse 2002; Fung 2003; Ruggie 2004; Frynas 2005; Wolf 2005). In sociology, students have studied the influence of globalization on topics such as nationhood, culture, identity, communi- cation, industrial relations, and social and economic institutions (for an overview, see Cohen and Kennedy 2000). In particular, they have analyzed the changing role of politics, economics and civil society groups such as non-governmental organizations (NGOs) and social movements (Beck 2000; Davis et al. 2005). In legal studies, scholars have started to analyze the challenge of holding MNCs accountable for issues that take place beyond the territoriality of nation-states. They study, for example, the responsibil- ities of business firms for being involved in human rights violations abroad (Kinley and Tadaki 2004; Taylor 2004; Clapham 2006; Kinley and Chambers 2006). This is difficult within a framework of international law that is traditionally targeting nation-states only, but does not directly

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include the legal responsibilities of non-state actors (see Kingsbury 2003). Therefore, the conditions of a direct application of international law are explored (Kinley and Tadaki 2004; Vagts 2003; Weissbrodt and Kruger 2003). Other legal scholars have analyzed the various forms of ‘soft law’ (Shelton 2000; Mörth 2004) and alternative forms of regulation (Parker and Braithwaite 2003). In management studies, some scholars have started to reflect upon the consequences of globalization for the conceptualization of corporate responsibility and corporate citizenship (Rowley and Moldoveanu 2003; Teegen et al. 2004; Matten and Crane 2005; den Hond and de Bakker 2007; Scherer and Palazzo 2007; Levy 2008). And some management scholars dedicated to microeconomic theory have started to explore this phenomenon with the help of economic methods (see, for example, McWilliams and Siegel 2001; Husted and Salazar 2006; McWilliams et al. 2006; Mackey et al. 2007), even though the majority of students of economics are still reluctant to acknowledge a political respon- sibility of business firms and watch the trend toward CSR with suspicion (for example, Friedman 1962, 1970; Baumol and Blackman 1991; Henderson 2001, 2004; Jensen 2002).

However, with a few exceptions, these various discussions on the govern- ment–business–civil society interaction under a postnational constellation (Habermas 2001), take place in disciplinary silos. Political philosophers discuss among themselves, hardly referring to the debate in political science, not to speak of sociology and law (for an exception see, for example, Habermas 1996, 2006). Political scientists focus on the role of private–public partnerships, society and NGOs, but they have mostly neglected the political function of private business firms until recently (as an exception, see Ruggie 2004; Wolf 2005).1 And many management scholars who work in the field of corporate responsibility still build upon the assumption of the intact nation- state (see, for example, Sundaram and Inkpen 2004), thereby neglecting the conceptual consequences of the analyzes of globalization advanced in other disciplines (see, critically, Scherer and Palazzo 2007).

The concept of corporate citizenship is an important anchor which may help to connect these various disciplinary discourses. This volume therefore seeks to identify and foster emerging research on corporate citizenship in various disciplines and to provide a framework for academic debate on the role of business in a global society. Our goal for this volume is to advance the discussion of managerial, economic, political and legal perspectives on the new role of business in a global society. We have invited renowned authors from various disciplines to leave their silos and to participate in this transdisciplinary analysis of corporate citizenship in a globalizing world. Many of the authors have already established bridges across disciplinary per- spectives and now share their recent views on this topic, thereby advancing

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