Corporate Social Responsibility and Democracy

1. Corporate Social Responsibility and Democracy Ville-Pekka Sorsa Hanken 19.5.2015

2. Purpose of the presentation • ”Political Philosophy 101 for doctoralstudentsinterested in CSR” • Makingsense of ’political CSR’ debates • Whatdoesitmean to take a ’political’ approach to CSR? Whatare ’political’ approachesgood for? • Movingfromgeneral political CSR debate to morespecifictype of political – democraticCSR • Whatkind of CSR and whatrole for it in democraticsocieties, does CSR promotedemocratization, is democraticnessgood for business etc. • Background: forthcomingresearchprojectIs Corporate Social ResponsibilityGood for Democracy?

3. Makingsense of Political CSR

4. What ‘political’ CSR? (1) • Normative and positive contestation of the instrumental conception of CSR based on ideas of economic liberalism (classical or neo-liberal) and/or modern systems theory • …i.e., on business as calculative decision-making based on voluntary membership and justified with (market-based) efficiency • The (ostensible) rise of multinational corporations as background, e.g. Whelan (2012): • “As -- MNCs -- have become more numerous, more powerful, and more variously engaged --, and as their global operating context has changed --, so too have the normative demands commonly made of them. Within the business ethics and business and society literatures for example, the belief that ‘globalization’ has increased the power of MNCs, and concomitantly decreased the power of states, has informed a body of work that normatively prescribes, and positively describes and explains, the political duties and activities of MNCs. This specific literature -- is here referred -- as the ‘political’ perspective of corporate social responsibility (CSR), or ‘Political’ CSR for short.”

5. What ‘political’ CSR? (2) • Examples of approaches identified as ‘political’ CSR: • New role of firms in global political economy / corporations as governments (Palazzo, Scherer, Crane, et al.) • Extended corporate citizenship (Matten, Moon, Crane et al.) and other civil society approaches to business (Den Hond, De Bakker et al.) • Analysis on political foundations of different conceptions of CSR (Whelan, Mäkinen, Kourula, Fougére) • Seeing business as polis / political theory of the firm (Néron) • Critiques of CSR as regulatory captures, CSR discourse as greenwashing etc. (Banerjee, Barley et al.) • These studies seem to represent quite different meanings of both ‘political’ and CSR – how to make sense of it all?

6. Usefulanalyticaldistinctions • How dounderstanddifferent ’political’ approaches to CSR? • ’The political’ vs. politics • Political interpretations of CSR vs. actualpoliticsof CSR • How to understanddifferentconceptions of CSR? • Explicit vs. implicitCSR • Corporatepoliciesand practicesusing CSR discourse vs. general social norms, expectations and demandsover business

7. What makes an approach ‘political’? • Often based on loose definitions or dualisms • Political vs. violent solutions, ‘economic’ calculation vs. ‘political’ deliberation • Analogies and metaphors (‘firms as governments’) • More series conceptualizations (required in research): • Conceptual frameworks based on politicalphilosophy • e.g. normative analysis (critiques, justifications etc.) rooted in political philosophy (Jukka’s presentation earlier today?) • Political CSR debates have especially drawn on Habermasian and Rawlsianphilosophy • Research based on political theory and focused on politics • In CSR debates, businesses have been seen to engage in politics as distributive agents, communities of decision-making and participants in public policy processes (Néron)

8. ’The political’ and politics (1) • ’The political’ is an ontological, ’politics’ an onticlevelconcept • Politics are things (policies, modes of governance, relations between citizens, conflicts of interests, legitimate exercises of the threat of violence, guarantees of rights etc.) in the world that can have descriptive characteristics or plain facts stated about their existence • ‘The political’ refers to questions regarding what defines the nature and meaningful structure of existence of such things • ”In contrast to merepoliticalconcepts, such as legitimacy, rights, or sovereignty, the concept of the political is a radical one, one that goes to the root, addressing as it were the substance of politics, and not merely its attributes and predicates” (Andrew Norris)

9. ’The political’ and politics(2) • Different conceptions of ‘the political’ make us see different types and forms of politics (foundationalism) • Recall Whelan’s definition: ‘political duties and activities’ of firms – what makes some duties and activities ‘political’? • E.g. Carl Schmitt’s essentialism (‘the political’ as friend vs. enemy & essence of state sovereignty), liberal aggregation of interests, Parsons’s structural functionalism • However, ‘the political’ should be seen as a field of debate and enquiry by its own right (post-foundationalism) • Issues like real-life relevance, normative commitments and social ontology should influence all definitions • N.B. ‘The political’ cannot be defined scientifically or without engaging in politics!

10. Examples

11. Implicit vs. explict CSR • By ’CSR’, onecanrefer to twoquitedifferentkinds of things / researchobjects (Matten & Moon) • Explicit CSR refers to (voluntary) corporate programmes and policies explicitly articulating some responsibility over social, environmental etc. matters • N.B. Doesn’t necessarily have anything to do with responsibility in a strict sense • Implicit CSR refers to the responsibilites firms have in the broader society (whether CSR discourse is used or not) • Social expectationsbusinessesface and channlesthroughwhichtheyareheldresponsible • Theoreticalapproachesneeded to address the nature and significance of responsibilities (e.g. new institutionaltheory) • Thesearen’tmutuallyexclusive, e.g. explicit CSR as corporatedefinitions of theirownresponsibilities

12. Exampleresearchagendas

13. Anotherexample • My research(in JSFI) on multi-levelpolitics of sociallyresponsibleinvestment in Finnishpensioninsurancecompanies • SR as emptysignifier+ new institutionaltheoryinterpretation of explicit SR (legitimation of actualpractices) • Main antagonisms: numeric vs. otherevaluations, profitability vs. otherconcerns, insider vs. outsider control • Findings: SR discoursehasmuchpoliticalsignificance – in symbolicallyreinforcinglegal and practical(MPT) status quo, notgoing ’beyond’ them

14. CSR and Democracy

15. Whydemocracy? ”Democracyhasbeendefended on the groundsthatitcomesclosestamong the alternatives to achievingoneormore of the followingfundamentalvaluesorgoods: rightfulauthority, politicalequality, liberty, moralself-development, the common interest, a fairmoralcompromise, bindingdecisionsthattakeeveryone’sinterest into account, social utility, the satisfaction of wants, efficientdecisions. Within the history of the clash of positionslies the struggle to determinewhetherdemocracywillmeansomekind of popularpower -- or an aid to decision-making--.” David Held (2006)

16. Whatdemocracy? • Literally ”ruleby the people” • Self-government and self-regulation • Theories of democracydiffer in howtheysee ’people’ (demos), ruling (and participation in it), obedience etc. • Key modernprinciple of politicallegitimacy and justification • ”The consent of the people” (Held) • Varyingroles in normativepoliticalphilosophy: in somestrandsit is a precondition for allpolitics, in othersoneformof politics • Differentwaysto approachidealtypes: • Formsof decision-making(modelsof democracy) • Principles of decision-making • Democracy as democratization

17. Dimensions of democratization • A litmustest of democracy: caneveryonepotentiallyaffectedby a decisionparticipate in makingit as equals • Dryzek(1996): the ’democraticness’ of anysuchpoliticalsetting (deliberative, representative etc.) canbeassessedthrough 3 dimensions: • Franchise – howmanypeopleparticipate in decision-making • Scope – howmanydomains of life areunderdemocraticcontrol • Authenticity – the degree to whichdemocraticcontrol is substantive, informed and competencyengaged • In order to qualify as democratic, no trade-offsbetween the dimensionsorabandonment of democraticprinciplesareallowed

18. Note: democracy vs. radicaldemocracy From Laclau and Mouffe’sradical democratic perspective, neither liberal democracy nor even deliberative democracy can ever amount to a truly political approach because their normative foci, on aggregation of interests and the construction of consensus respectively, decentre or sidestep the problems of difference, undecidability, negativity and antagonism. Rather than seeing consensus or the aggregation of interests as the measure of success for politicisation, radical democracy implies that we should look to the ways that a political process not only helps to expose difference and dissent but also, in doing so, leads us to confront, as problematic and in need of revision, our own self-identifications and understandings of the world. (Edward & Willmott 2011)

19. Towards ’democratic CSR’ • The challenge: businessesarenotdemocracies • …and for manyphilosophies(e.g. liberaltheory) theyarenotevenpoliticalsettings • Allthreedimensionsof democraticnessareverylimited • For examplejoint-stockcompanies and cooperativesmaydiffer in howdemocraticallytheycan act ’internally’. Yet, in neither case arethereguarantees for includingstakeholdersorthatactingdemocraticallywillcontinue. • The mostsuitable option: democracy as democraticlegitimacy • The challenge of the state: allbusinessesarenationallymandatedentieies • Potentialapplications in CSR studies: • Democraticjustification for & legitimacy of corporateresponsibilities & explicit CSR programmes • Democraticdecision-makingovercorporateresponsibilities • The role of CSR discourse in democraticpolitics

20. Wherecanyoufinddemocraticpolitics of CSR? • Rawls: wherefree and equalcitizensreasonpubliclyoverwhat the societalbasicstructurebusinesseshave to respectshouldbelike • Habermas: in the civilsociety (’life-world’) thatseeksconsensusovercorporateresponsibilities in ’idealspeechsituations’ • However, the consensusmustbebinding for the economicsystem in order to be a matter of democraticdeliberation • Gramsci: wherepopularlegitimacy is sought for the rulingcorporations • Note: democracy as a way to promotelegitimacy of capitalisthegemony • Laclau & Mouffe (radicaldemocracy): wheredifference, dissent and conflict is celebrated in addition to liberty and equalityin corporatematters

21. Is CSR good for democracy? • Friedman (neoliberal): possibly, and that’sexactlywhyyoushouldn’tdoCSR • Rawls (liberal): possibly, as long as it is citizens, notfirms, engage in politics of CSR • Habermas (criticaltheory): possibly, ifitmeansgenuinedemocratizationof organizations (withermarkets and firms) • Gramsci (post-Marxist): perhaps, ifitmakescorporationsmorelegitimate – butthenagain, that’s just anotherway to strengthenhegemony • Laclau (post-foundationalist): yes, ifitmarks a shift to new forms of self-government, i.e. withermarkets and firms– and that’s a big ’if’

22. CSR and hegemony Consider, for example, a central claim of mainstream `strategic CSR’: Porter and Kramer -- commend the idea of `win-win’ in which securing corporate profitability is conceived as perfectly compatible with social development and the reduction of inequity. This grounding presumption of much `strategic CSR’ is clearly contestable. Yet, as almost anyone who has taught business ethics, whether to executives or business students, will confirm, it is very difficult to call this notion into question without encountering defensive vehemence and ridicule provoked by any challenge to this sacred cow. In liberal democracy, the idea that different interests can be aggregated is a fiction, and yet is so central to liberal democratic thinking that doubting this possibility elicits vigorous, and at times acerbic, defence--. An equivalent fiction, we submit, is present in deliberative democracy where a normative investment, or identification, with the idea of consensus enables the fictitious nature of the grounding of this discourse to be obscured through claims that deliberative democracy is a pragmatic turn to democracy over philosophy. [Social theory of hegemony] and radical democracy raise an alarm whenever a perspective is presented as commonsense, as `pragmatic’ or as “just being realistic‟. It warns us that we are approaching the locus of signification where difference and undecidability are hidden and the discourse is stabilised through hegemonic practices involving emotional investment. The point, we suggest, is well illustrated by Willke and Willke’s -- revealingly excessive and patronising commentary on Palazzo/Scherer’s refutation of the relevance of the liberal democratic model where they opine that “it seems unwise to call for a politicization of the corporation in view of what is happening in Russia, Venezuela or Bolivia... Have they considered the possible effects of `democratic accountability‟ when the `demos’ (are lead [sic] to) believe they should boycott Jewish shops?” --. It is therefore unsurprising that challenges to commonsense encounter dismissiveness, defensiveness and even anger. (Edward and Willmott 2011)