CSR – It is still Greek to European Banks!

Yesterday, Greek Prime Minister George Papandreou narrowly won the support of the Greek parliament for his ongoing efforts to steer the country away from bankruptcy. Whether this has given him a second political life though is an open question. Greece’s financial troubles are far from over.

As a member the EU and the Eurozone the survival of Greece within these European institutions seems still anything but certain. Last week, the debate among European heads of state and Finance Ministers on further support for Greece was tough and controversial. Finally an agreement of another multi billion Euro cash injection from mostly France and Germany paved the way for keeping Greece floating for another month or so.

A thorny nettle of disagreement between the countries was the question, in how far private sector banks should be part of the solution. Germany, whose banks exposure of some €20bn is much lower than France’s was insisting on more involvement, while France opposed this approach in fear of a downgrading of their private banks by rating agencies. The compromise turned out to appeal to banks to ‘voluntarily’ become involved – but precious little is found in the news about whether banks have actually taken up this ‘invitation’.

If we watch the footage of protests and civil unrest in Greece it is conceivable that further ‘austerity’ measures (i.e. cutting public services) – let alone an outright bankruptcy – of the Greek government will pose a serious threat to the country’s democratic institutions. Much (admittedly not all) of Greece’s current troubles are following the global financial crisis. Greece is perhaps the most visible example of what many citizens in North America and Europe think: that Governments pile up huge debts to fix the irresponsible behaviour of wealthy bankers and investors while asking the common taxpayer and middle/working class people to put up with reduced public services or – as for instance in the case of UK university students – higher prices for those services.

It reflects a recent debate in the CSR literature which was initiated by Colin Crouch, a prominent sociologist and, more recently, CSR expert at Warwick University. He argues that capitalism has been able to coexist with democracy in most Western countries only because there were mechanisms to deal with two problems inherent in capitalist market economies: first, the cyclical ups and downs of the economy, which exposes particularly middle and lower income groups to economic hardship. Second, the harmonious coexistence of both systems is only possible if the inherent inequality of income distribution in capitalist systems can be addressed in a way that some income at the top end is redistributed to those at the bottom.

For decades after World War II the mechanism to address this problem was referred to as Keynesianism. Government spending during recession as well as progressive taxation and a welfare state helped addressing these two problems. This system was somewhat obliterated in the 1980s with policies most visibly linked to Reagan and Thatcher, often referred to as ‘neo-liberalism’. Crouch though argues that those changes in fact created a policy regime of ‘privatized Keynesianism’. By encouraging and extending home ownership, pension plans based on investments in capital markets and other models of making the saving middle class to small scale investors, the two inherent contradictions between capitalism and democracy were basically to turn lower income citizens in ‘mini capitalists’.

With the so-called ‘financial crisis’ in the late 2000s though this system has proven to be no longer effective. Many lower and middle income citizens in Western countries have lost their homes and pensions – or at least have suffered a severe reduction of their value. Currently, he suggests, we see this mechanism of ‘privatized Keynesianism’ weakened, if not absent, with no real alternatives in sight.

In this situation we face two stark options. The first possibility is that similar to the 1920s and early 1930s, this absence of a mediating policy regime may give rise to political extremism, anti-democratic movements or outright the re-invigoration of fascism or left wing authoritarianism. In this light, the developments in Greece, but also the ongoing rise of the political extreme right in many European countries and the United States actually get quite a daunting character. We are not quite there yet, but the signs of far reaching unrest and despair about the effects of a global, largely unregulated capitalist system are clearly there and by all accounts, are likely to rise.

The other option though, in Crouch’s argument, is that one group among the winners of global capitalism and arguably the most powerful players step into the role of addressing the two inherent tensions between capitalism and democracy. This is exactly the point where corporate social responsibility would kick in. And in fact, as we have argued elsewhere, much of what companies are doing under the label of CSR is in fact very similar to classic welfare state activities. CSR in this perspective would see private corporations as pivotal actors in addressing those two inherent tensions between capitalism and democracy.

The reaction of European banks to support the effort of saving Greece from bankruptcy so far however shows little sign of awareness of this broader context for corporate responsibility. The Greek bailout situation is probably a blatant example of a country at the brink of severe political unrest where direct involvement of the private sector might indeed prevent a country sliding into anarchy or political extremism. So far though there are no signs that any of the European banks have seriously thought about their broader role in society. Maybe it is because the business case for this kind of CSR is so hard to make...

Picture by PIAZZA del POPOLO. Reproduced under Creative Commons Licence.

Another free download on corporate social responsibility

Last year we released a free download of our introduction to corporate social responsibility, originally published in our textbook "Corporate social responsibility: readings and cases in a global context". It proved to be pretty popular, with hundreds of downloads in the months since it was released. Today, we are making available another free CSR download, this time from our three volume edited collection on CSR, originally published by Sage in 2007. You can download the chapter by going HERE and selecting the "One Click Download" tab.

The new download is more of an academic-oriented treatment than our last one. It sets out to describe the academic literature on CSR rather than how CSR is thought about by practitioners. So for anyone doing research in the field, or just looking for a general introduction to the academic field of CSR, it will provide a handy starting point. We intended it to be accessible rather than too complex or jargony, so it should make sense to non-academics too.

The book itself is mainly intended for university libraries to purchase. At over 1000 pages and with a price tag of £450, that will probably come as no surprise! But we wanted to give the specially written introduction a wider readership and the publishers Sage have kindly agreed to now make it available free to anyone that wants to read it - and with all the final formatting and page setting in place too.

You may be interested in knowing which articles we ended up collating to capture the field of scholarship of CSR at the time. Things have moved on in the literature since 2007 but we think this still gives a pretty thorough overview of the field. The full table contents are below. If anyone wants full references for any of these pieces, just drop us a line. And keep watching for news of our next addition to the Sage Library in Business and Management - a mammoth 4 volume set on New Directions in Business Ethics, due out next year.

FULL CONTENTS: CORPORATE SOCIAL RESPONSIBILITY. 3 VOLS, EDITED BY ANDREW CRANE AND DIRK MATTEN

Volume I: Theories and Concepts of Corporate Social Responsibility

1. Editors’ introduction

2. Introduction to Corporate Social Responsibility
2.1 What's a business for?, Charles Handy
2.2 The case for corporate social responsibility, Henry Mintzberg

3. Corporate Social Responsibility in Theory
3.1 The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders, Archie B. Carroll
3.2 Corporate Social Responsibility Theories: Mapping the Territory, Elisabet Garriga & Domènec Melé

4. Critiques of Corporate Social Responsibility
4.1 The social responsibility of business is to increase its profits, Milton Friedman
4.2 The nature of business, Elaine Sternberg

5. Stakeholder Theory
5.1 The stakeholder theory of the corporation: concepts, evidence, and implications, Thomas Donaldson & Lee E. Preston
5.2 What stakeholder theory is not, Robert Phillips, R. Edward Freeman & Andrew C. Wicks

6. Corporate Citizenship
6.1 Corporate citizenship - towards an extended theoretical conceptualisation, Dirk Matten & Andrew Crane
6.2 Business citizenship: from domestic to global level of analysis, Jeanne M. Logsdon & Donna J. Wood

7. Corporate Sustainability and Business Ethics
7.1 Focusing on value: reconciling corporate social responsibility, sustainability and a stakeholder approach in a network world, David Wheeler, Barry Colbert & R. Edward Freeman
7.2 The corporate social policy process: beyond business ethics, corporate social responsibility, and corporate social responsiveness, Edwin M. Epstein

8. Corporate Social Performance
8.1 Corporate social performance revisited, Donna J. Wood
8.2 Corporate social and financial performance: A meta-analysis, Marc Orlitzky, Frank L. Schmidt & Sara L. Rynes

9. History of Corporate Social Responsibility
9.1 Corporate responsibility, Tom Cannon
9.2 Corporate social responsibility - evolution of a definitional construct, Archie B. Carroll


Volume II: Managing and Implementing Corporate Social Responsibility

1. Corporate Social Responsibility, Leadership And Strategy
1.1 Components of CEO Transformational Leadership and Corporate Social Responsibility, David A. Waldman, Donald S. Siegel & Mansour Javidan
1.2 How corporate social responsibility pays off, Lee Burke & Jeanne M. Logsdon

2. Organizing Corporate Social Responsibility: Organizational Structure, Culture And Learning
2.1 The Institutional Determinants of Social Responsibility, Marc T. Jones
2.2 The Path to Corporate Responsibility, Simon Zadek

3. Corporate Social Responsibility and Human Resource Management
3.1 The development of human rights responsibilities for multinational enterprises, Peter Muchlinski
3.2 Corporate social performance as a competitive advantage in attracting a quality workforce, Daniel W. Greening & Daniel B. Turban

4. Corporate Social Responsibility and Marketing
4.1 The Role of Marketing Actions with a Social Dimension: Appeals to the Institutional Environment, Jay M. Handelman & Stephen J. Arnold
4.2 Doing Better at Doing Good: when, why and how consumers respond to corporate social initiatives, C.B. Bhattacharya & Sankar Sen

5. Corporate Social Responsibility And Accounting
5.1 Thirty years of social accounting, reporting and auditing: what (if anything) have we learnt?, Rob Gray
5.2 Getting to the Bottom of "Triple Bottom Line", Wayne Norman & Chris MacDonald

6. Corporate Social Responsibility In Purchasing And Supply Chain Management
6.1 Supply chain specific? Understanding the patchy success of ethical sourcing initiatives, Sarah Roberts
6.2 Socially responsible organizational buying, Minette E. Drumwright

7. Corporate Social Responsibility And Public Affairs Management
7.1 Differences between public relations and corporate social responsibility: An analysis, Cynthia E. Clark
7.2 How Multinational Corporations Deal with their Socio-political Stakeholders: An Empirical Study in Asia, Europe, and the US, Dirk Holtbrügge & Nicola Berg

8. Stakeholder Management And Partnerships
8.1 Stakeholder management: framework and philosophy, R. Edward Freeman
8.2 Common interest, common good: Creating value through business and social sector partnerships, Shirley Sagawa & Eli Segal

9. Codes Of Conduct
9.1 Standards for corporate conduct in the international arena: challenges and opportunities for multinational corporations, S. Prakash Sethi
9.2 International codes of conduct and corporate social responsibility: Can transnational corporations regulate themselves?, Ans Kolk, Rob van Tulder & Carlijn Welters


Volume III: Corporate Social Responsibility in Global Context

1. Global Governance And The Firm
1.1 Global rules and private actors - towards a new role of the TNC in global governance, Andreas Georg Scherer, Guido Palazzo & Dorothée Baumann
1.2 Governing globalization? The state, law and structural change in corporate governance, John W. Cioffi

2. Institutions Of Global Corporate Social Responsibility
2.1 Reconstituting the public domain - issues, actors, and practices, John Gerard Ruggie
2.2 Strategic Responses to Global Climate Change: Conflicting Pressures on Multinationals in the Oil Industry, David L. Levy & Ans Kolk

3. Global Civil Society And The Corporation
3.1 The idea of global civil society, Mary Kaldor
3.2 Nongovernmental organizations as institutional actors in international business: theory and implications, Jonathan P. Doh & Hildy Teegen

4. Corporate Social Responsibility in Europe and North America
4.1 Corporate Social Responsibility in Europe and the U.S.: Insights from Businesses Self-presentations, Isabelle Maignan & David A. Ralston
4.2 A conceptual framework for understanding CSR in Europe, Dirk Matten & Jeremy Moon

5. Corporate Social Responsibility in Asia
5.1 Corporate Social Responsibility in Asia: A Seven Country Study of CSR Website Reporting, Wendy Chapple & Jeremy Moon
5.2 Transcending Transformation: Enlightening Endeavours at Tata Steel, S. Elankumaran, Rekha Seal & Anwar Hashmi

6. Corporate Social Responsibility in Africa
6.1 Revisiting Carroll's CSR pyramid: An African perspective, Wayne Visser
6.2 Do firms with unique competencies for rescuing victims of human catastrophes have special obligations? Corporate responsibility and the AIDS catastrophe in Sub-Saharan Africa, Thomas W. Dunfee

7. Corporate Social Responsibility in Latin America
7.1 The Corporate Social Responsibility System in Latin America and the Caribbean, Paul Alexander Haslam
7.2 Social and Environmental Responsibility in Small and Medium Enterprises in Latin America, Antonio Vives

8. Corporate Social Responsibility and International Development
8.1 Serving the world's poor, profitably, C.K. Prahalad & Allen Hammond
8.2 The false developmental promise of Corporate Social Responsibility: evidence from multinational oil companies, Jedrzej George Frynas

9. Fair Trade and Corporate Social Responsibility
9.1 The Fair Trade movement: parameters, issues, and future research, Geoff Moore
9.2 Fair Trade Futures, Alex Nicholls & Charlotte Opal

Photo by johntrainor. Reproduced under Creative Commons Licence

Cucumber ethics

Last week’s E-coli outbreak in Germany was another interesting case study in the ethics of risk management. A ferocious looking bacteria, thought to be carried by the very food we eat whenever we feel like a healthy option (i.e. salad vegetables) has led to a scare that has plummeted many of Europe’s farmers into severe financial troubles. On the face of it the numbers don’t quite hit home why exactly consumers and regulators across Europe (and especially in Germany) have reacted so strongly: while, sadly, 26 people have died so far from the E-coli outbreak, this number looks negligible in comparison to Germany’s 3,651 fatalities in road accidents annually (in 2010). Banning Spanish cucumbers – sure thing! But touching the fundamental right of Germans to speed without limit on the Autobahn? No way, no one even thinks about that.

Fair enough maybe - food is one of those things that does raise the risk perception more than almost any other. But one of the more curious things about the outbreak was the initial culprit: cucumbers (especially as attention eventually turned to those evil little bean sprouts). But of course it wasn't just any old cucumbers - still less German cucumbers - but Spanish cucumbers that were blamed. In a continuously integrating EU economy, suddenly a poor little vegetable becomes the carrier of nationalistic identities and accusations.

There is something about cucumbers, one has to admit. In the German context, the vegetable has once before been at the centre of a rather black humoured joke just in the wake of the unification in 1989. The German satirical magazine ‘Titanic’ opened with a picture of ‘Zonen-Gabi’ (‘Gabi from the East’) holding up ‘her first banana’: a cucumber, peeled in the style of a banana. This of course was to make fun of the chronic absence of exotic fruits in the East during the time of the wall. The cucumber became an epitome of the split national identity that divided the unifying halves of the country at the time.

Poor cucumbers have also been at the centre of many jokes about the regulatory frenzy of EU bureaucrats in Europe. Allegedly there exist norms that lay out not merely how long, hard and green a cucumber must be but which even stipulate the degree of a cucumber's curvature: at maximum, its arc can be no more than 10 millimetres per 10 centimetre length. Imposed on poor Polish or Czech farmers prior to their countries’ accession to the EU, these regulations made the vegetable a symbol of the hegemonic power of Brussels and the nearly totalitarian zeal of regulating even the smallest little detail. All symbolized by, yes, cucumbers!

How political the innocent vegetable can become was demonstrated nowhere more strongly than in Iraq. According the UK newspaper the Telegraph, a few years ago Al-Qaeda leaders in Anbar province allegedly banned women from buying cucumbers because they considered them to be ‘male’ vegetables, and therefore in violation of religious law. Tomatoes, however, were perfectly fine for women to buy because they were considered female.

Well, if we were to do more research on the cultural history of cucumbers, who knows where we might end up - but Crane and Matten have no intention of jeopardizing the ‘General Audiences’ rating of their blog! Still, who would have thought that the lowly green vegetable could be such a repository of ethical values and a tool for inter-cultural conflict. So next time you're in the supermarket remember to take a second look at those cucumbers. There's so much more to them than meets the eye.


Top photo by Surian Soosay. Reproduced under creative commons licence

Sex, privacy and media ethics

Sex sells. And sex really sells in the media business. With their profitability in free-fall, newspaper businesses especially are always on the look out for a salacious front page story to help them grab some precious market share. Unfaithful soccer stars "playing away from home", celebrity match-ups and break-ups, trysts with prostitutes, or accusations of sexual assault are all highly newsworthy, especially at the tabloid end of the market. But recent events in the UK and elsewhere have led many to question whether the sex lives of celebrities can be afforded some degree of privacy protection from an intrusive media, or whether in the interests of press freedom, and the growing uncontrollability on online social media "reporting", they are simply fair game.

In the last few weeks the Ryan Giggs super-injunction affair in the UK has brought these issues to a head. Why all the excitement? Well until a few days ago, Giggs, one of the UK's best known soccer players, was the mysterious unnamed figure who had successfully been granted a so-called super-injunction by the English courts. The injunction had been given to protect Giggs' privacy in the wake of an attempted kiss-and-tell story by Imogen Thomas, a former reality TV star, who claimed to have had an affair with the married, and previously squeaky-clean, soccer star. It not only prevented newspapers from reporting the story but also from even referring to the injunction or the claimant.

Super-injunctions like the one granted to Giggs have become the legal instruments of choice for individuals and companies in the UK looking to prevent their activities from being reported in the press. They are granted by the courts to protect privacy under the Human Rights Act. The newspaper industry is predictably waging a war of words against them because they shackle some of the traditional freedoms that they are used to and which they rely on to act as the fourth estate. Super injunctions also raise the hackles of the public because with a price tag that starts at something like US $100,000 they appear to allow special legal treatment for the rich and famous. Moreover, as the Giggs affair and the 2009 pollution case of the oil company Trafigura have shown, the rise of social media platforms such as Twitter through which stories can be circulated outside the remit of the formal TV and newspaper industries, the limits of existing legal protections for privacy are being severely tested. Giggs' name was connected to the injunction through Twitter long before the press could report on it, raising legal questions about the culpability of Twitter and it's tweeters for being in breech of the injunction.

There are all sorts of ethical questions arising out of this, but from our point of view, it largely boils down to the question of when our sex lives should be private and when could or should they also be public knowledge? Let's sort out some of the considerations here:

1. Consent
Obviously the starting point here is consensual sex between adults. Coerced sex or sex crimes fall into an entirely different realm of privacy. The media has a legitimate right to publish in these cases provided legal protections for victims and the accused (which differ between jurisdictions) are respected. But clearly Dominic Strauss Kahn's alleged assault on a hotel chambermaid should be held to a different standard of privacy than his consensual affairs. Affairs with subordinate employees, even when supposedly consensual, might fall somewhere in the middle given the power dynamics involved.

2. Public interest
Where there is a potential public interest at stake the media also has a stronger case for investigating and publishing, such as where politicians campaigning on "family values" are accused of marital infidelities, anti-gay advocates are caught with rent boys, or legal enforcers break the law by paying for sex. A weaker but sometimes defensible case can also be made for leaders in a position of authority and trust whose trustworthiness might be questioned when extra-marital affairs come to light. The sex lives of celebrities rarely have a public interest component .... however much the public may be interested in hearing about them!

3. Privacy vs free speech
In the absence of coercion or public interest, there is much less chance of the press claiming a prima facie right to publish. Privacy (and after all sex is pretty private) will usually trump rights to speech unless free speech can lead to other public benefits. It's a matter of avoiding harm being prioritized over some fairly minimal free speech benefits.  The media may claim that the right to privacy is critically weakened in the case of marital infidelities and other ethical infractions. But even the unjust should be able to expect justice.

4. Harms and benefits
Without public interest, for the equation to fall on the side of publishing, there will often have to be some meaningful moral benefits for one or more of the parties to the "private" act. A spurned lover with an illegitimate love child for instance might be looking to tell their side of the story in the media and thereby gain some kind of apology or recompense from a celebrity. Here the ethical equation between speech and privacy should shift more convincingly towards publishing.

5. Reasonable expectation
Where the waters really get muddied is in the question of reasonable expectation. Privacy is typically attributed when there is a reasonable expectation that something will remain so. A telephone call or a conversation in a private residence should reasonably be expected to remain private, for example. That is why the UK newspaper, the News of the World, is in such hot water for it's illegal phone hacking of celebrities. These conversations took place in a reasonable expectation of privacy and should remain that way unless one of the participants chooses otherwise. But phone hacking is a case of the ethics of media tactics. A newspaper offered a story by a willing kiss-and-tell informant is very different. Here it is one of the participants looking to rewrite the "contract " of privacy established between themselves and their sexual partner. And in this case we have to ask ourselves whether soccer stars and other celebrities really have a reasonable expectation that their affairs with glamour models and reality TV stars will remain private. However much they wish it to be the case, there appears to be a lot of evidence to the contrary. Sure, this may be a case of a highly pragmatic interpretation of rights to privacy, but it's in the real world, a world of privacy for sale that we increasingly find ourselves in. Celebrities should be protected from direct intrusions into their privacy by the media. But maybe they should not be protected from their own decisions about who to be "private" with in the first place.

Photo by AtilaTheHun. Reproduced under creative commons licence

The Opium still works

For those of our readers who don’t live in North America one of the news lines on major media outlets including CNN or The New York Times last weekend will sound rather quaint. Last Saturday (21 May), based on the predictions of the American Radio Broadcaster Harold Camping thousands of people on this side of the Atlantic were expecting the ‘rapture’, i.e. the disappearance of all ‘true’ Christians to heaven and the judgement day for all the rest of us.

The absurdity of what sounds like a weird hallucination of a 89-year old zealot however did not stop a remarkable number of followers to take his, allegedly, biblical calculations dead seriously. People dropped their university education and their jobs in the face of the world’s imminent end, or invested all their retirement savings into alerting the world to this event. As we know by now, it was of course all a big hoax.

Now we refer to this not so much as to dissect the insanity or validity of religious beliefs (though that’s a discussion worth having). The more amazing thing seems to be how powerful and pervasive religious beliefs still are. While Karl Marx’s famous quote of religion being ‘the opium of the people’ insinuated that a more liberated, developed and economically empowered humanity would no longer need this sedatitive we are still living on a planet where at least two thirds of the population confesses adherence to some form of religion. And the numbers are still rising.

It could be interesting to speculate about the reasons. Keith Bauer, a Maryland tractor-trailer driver who last week drove his family cross-country to witness the ‘rapture’ in Camping's California headquarters, told one newspaper: “I was hoping for it because I think heaven would be a lot better than this earth”. This all points to Marx: the ‘sigh of the oppressed’ is still loud and clear because by and large, the enormous social, economic and technological achievements of the last two centuries have still left the majority of people in the world where Marx saw them in the 19th century.

That would be one claim. We are aware that there are of course other contenders for explaining the unbroken popularity of religion. For us the prevailing relevance of religion has been interesting from a professional point of view. Initially, when we started writing the first edition of ‘Business Ethics’ in the early 2000s we were rather curt on the topic. This had to do, among other things, with the fact that the project of ‘ethics’ is in some ways the exact opposite of religion.

The central starting point of ethical reasoning is the assumption that human beings, by dint of experience and rational reflection, are indeed able to delineate morally right and wrong behaviour. Religion, most notably the monotheistic ones, however start from the assumption that human beings are not able to do this - in some religions even are considered intrinsically ‘fallen’ and corrupted. Man rather needs to be told about right and wrong by some ‘celestial dictator’ (as Christopher Hitchens would put it), who incentivizes his rules by the reward of heaven or hell - ultimately.

Consequently, we did not see too much space for religion in a book on ethics. However, it is remarkable how much research there has been on the effect of religious beliefs on business ethics in the last three decades. Just to talk a bit more from the Crane&Matten shopfloor, we are currently working on a four volume anthology on New Directions in Business Ethics – and lo and behold!: articles on religion and business ethics in the academic journals form a chunky part of it.

This reflects of course the fact that for many societies religion is still a major force in questions about the right or wrong of human behaviour. Over the years, we discovered this force of religion also among the readers of our textbook – hence we felt encouraged give it a bit more airtime in the latest edition. We are still, though, kind of puzzled about the conclusion from this research. After all, the imperatives of most of the world religions on business behaviour amount to some form of common sense, which does not necessarily need some superior authority to pull this out of the hat: fairness, honesty, respect of property, long term orientation, concern for the poor, and many other nice things. All these are strikingly similar to what secular ethicists would suggest.

Admittedly, some religions gave rise to specific tools (e.g. Islamic Finance) or elaborate conceptual frames (e.g. Catholic Social Thought) or pretty unique companies (e.g. Zoroastrianism and the TATA companies in India). More interesting is the research on whether religious business people act more ‘ethical’ (in the sense of morally more desirable) than others. Here, it strikes us that the beauty is often in the eye of the beholder (i.e. the person who conducts the research). But that’s probably a subject for yet another blog post.

Photo by Chris Yarzab, reproduced under the Creative Commons License.