File Name: private politics corporate social responsibility and integrated strategy .zip
Political CSR emphasizes the need for the democratic governance of business conduct through public deliberation, and expects multinational enterprises MNEs to contribute to self-regulation and public goods provision to fill the gaps left by unwilling or unable governments. In the under-researched context of autocracies, however, political pluralism and participation are severely limited, which confronts MNEs with limited governance spaces for such activities.
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Political CSR emphasizes the need for the democratic governance of business conduct through public deliberation, and expects multinational enterprises MNEs to contribute to self-regulation and public goods provision to fill the gaps left by unwilling or unable governments.
In the under-researched context of autocracies, however, political pluralism and participation are severely limited, which confronts MNEs with limited governance spaces for such activities. Drawing on political science literature on state power and authoritarianism, I reconstruct political CSR in the political—institutional context of authoritarianism, using different autocracies across the globe as illustrative examples.
I elucidate the boundaries and room for responsible business policies in autocracies drawing on a framework I developed that distinguishes between high- and low-capacity autocracies. My framework implies that MNEs face constraints in autocracies with regard to public deliberation and self-regulation, while there is considerable room for public goods provision.
Finally, I explain why the normative desirability for the former two is high, whereas the normative desirability of public goods provision through MNEs in authoritarian contexts is lower given its implications for stabilization of autocratic rule.
I focus on using Middle Eastern autocracies as illustrative examples, but also refer to other regional contexts where appropriate. Several indexes underscore the need to address these issues in autocracies, where forced labor mixed with weak government responses is prevalent see, e. In different political—institutional contexts, different formal and informal rules of the game constrain and shape human interaction North, and the room and boundaries for responsible business.
However, the political—institutional context forming the background condition for MNEs taking on quasi-governmental roles see, e. The rich body of the IB literature equally examines different political activities and roles of MNEs in challenging host-country contexts focusing on fragile state or developing country contexts Adegbite et al. IB research building on the Varieties of Capitalism e. In their recent Varieties of Institutional Systems framework, Fainshmidt et al.
It is not entirely clear, however, how governmental power limits the room for political and CSR activities of MNEs in these contexts. The contextual sensitivity of such conceptualizations notwithstanding, I thus see value in applying an interdisciplinary approach to better account for state power, and go beyond single measurements of state involvement.
For example, a dominant role of the state state direct dominance is measured through the prevalence of state ownership and government expenditure as a percentage of GDP Fainshmidt et al. I argue that the interdisciplinary approach I pursue in this paper provides an analytical macro-structure that contributes to a theoretically enriched understanding of how power materializes in predatory or authoritarian states in a way that shapes the room for political CSR. Whether one addresses state power, or the power of MNEs Ruggie, , in a political—institutional context of democracy or authoritarianism holds different theoretical and managerial implications.
While the room for the central political CSR activities of public deliberation and self-regulation is severely constrained given the unchecked power of governments, their normative desirability is high, which is why we should not disregard them completely based on the contextual challenges MNEs will inevitably face when attempting to implement them. Given their status as powerful actors in international business Ruggie, , MNEs need to explore how they can overcome or mitigate contextually induced boundaries for political CSR, at least if we assume that human rights violations and exploitation are unacceptable phenomena in any given context.
This leads to the guiding research question of this paper: How can political CSR theorizing be applied to authoritarian contexts? I focus on political CSR, as it is a widely discussed concept of rising prominence, and because its critical deconstruction promises to contribute to a refinement of IB theory on political and CSR activities of MNEs.
I present central IB research on political and CSR activities of MNEs in challenging host-country contexts before summarizing some crucial conceptual commonalities and differences between the corresponding political CSR and IB literature.
Then, I explore and reconstruct political CSR in the political—institutional context of authoritarianism, using mostly Middle Eastern autocracies as illustrative examples, while focusing on the three central dimensions of governance, role of law, and democracy. Finally, I derive managerial implications for responsible business policies in autocracies. I seek to make three contributions: First, I contribute to the development of political CSR by critically deconstructing its central assumptions on political—institutional context, especially with regard to the notions of state power and regime type, to thus, second, refine IB theory on political and CSR activities of MNEs in authoritarian host countries.
As current developments in the U. Nonmarket strategy research comprises examinations of a variety of political activities, e. IB research is often particularly interested in the implications of political activities and CSR for corporate performance and competitive advantage see, e.
Recent work has inquired how firms seek to establish close business—state relationships to obtain access to critical resources Doh et al.
Not all of these political activities of firms necessarily have to be interpreted as political CSR, while it certainly remains true that the theoretical and normative underpinnings of political CSR research go beyond the Habermasian foundation Scherer et al.
According to political CSR, governments and MNEs, often in interaction with civil society actors, jointly contribute to the governance of business conduct Scherer et al. As political actors, MNEs in particular contribute to the responsible governance of business conduct by providing public goods such as education or improved labor conditions, or limiting public bads such as corruption or inequality Scherer et al.
Since it is also an approach the authors have indicated to be of particular relevance to authoritarian host-country contexts of international business activity Scherer et al. Political CSR builds on a set of assumptions on political—institutional context that need to be inquired more critically, especially since these assumptions are also prevalent in the IB literature, which generally takes great interest in varieties of business—government relations Blumentritt, ; Doh et al.
The three central dimensions of political—institutional context — governance model, role of law, and democracy — that Scherer and Palazzo discuss extensively in their almost classical paper are decisive preconditions for the three normative prescriptions of Habermasian-inspired political CSR for MNEs: public deliberation, self-regulation, and public goods provision.
Therefore, they are of particular relevance for my analysis, and structure the following discussion accordingly. The presentation of the literature should be understood as observed tendencies of the respective literatures, rather than universal truth claims. The first dimension of political—institutional context of particular relevance to my analysis refers to the underlying governance model.
According to Scherer and Palazzo, public authorities and state power are increasingly weakened, and the state is no longer the main political actor. In the course of globalization processes, networks of actors including MNEs and civil society organizations shape the governance of business conduct, e.
This leads to an assumption of increasingly heterarchical modes of governance in political CSR research, and shifts the locus of governance from the national to a global or intergovernmental level. In IB research, national governance both within the host and home country tends to be emphasized, which corresponds to an emphasis on hierarchy. The second dimension refers to the general role of law that influences whether and how MNEs are best understood as mere addressees or co- authors of governmental regulation: MNEs proactively contribute to filling governance gaps, thus changing the mode of regulation from governmental to self-regulation.
This shift emphasizes voluntary action of MNEs, i. IB research on political and CSR activities of MNEs provides little specification on the level of obligation and precision of rules, but this depends on the focus of the respective work, especially with regard to government regulation.
Concerning the delegation of political activity to third parties, e. In IB research, a tendency towards an increasing delegation of political activities to third parties is observable Mellahi et al.
Finally, the third dimension of interest refers to the model of democracy. Political CSR is based on a model of deliberative democracy, which allows firms, governments, and civil society actors to enter into public deliberation and thus produce regulation. Discursive politics in political CSR subject corporate activities to democratic control.
This leads to a commitment to democratic modes of corporate governance that even extends the inclusion of stakeholders other than shareholders also of interest to IB scholarship.
Corresponding to this is another dimension I added, the power of MNEs. In IB research, the weakening of state power in the course of globalization leads to an increased power of MNEs — which are already powerful in several ways Ruggie, This observation is shared in political CSR, which widely assumes the same tendency, but also goes beyond that observation in assigning them an enlarged set of obligations and responsibilities.
In the next section, I elucidate the underlying assumptions on state power informing such analyses. As indicated in the previous section, the two bodies of literature share several assumptions regarding state power that vary in degree rather than principle, e.
When, for example, authors like Doh et al. In particular, an explicit and in-depth conceptual differentiation of regime types in connection with state power is lacking. While some authors do refer to authoritarianism explicitly e.
This presents a promising avenue for scholarly enquiry since an autocracy may be weak in one aspect for example, public goods provision and powerful in another aspect for example, repression of civil society , thus highlighting the need to distinguish the categories of state power and regime type.
Ruggie , for example, rightfully argues that power is inherently relational, and highlights that the power and authority of state and MNE coexist. He does not differentiate regime types and thus optimistically argues that MNEs can, for example, force suppliers in host states to adhere to social and environmental standards Ruggie, : While this is true for specific political—institutional host country contexts, MNEs will inevitably face considerable constraints in consolidated autocracies.
This illustrates how an engagement with the political science literature on state power and authoritarianism may be a promising avenue of further theorizing of MNE power. There are various approaches to conceptualizing and measuring state power, mostly referred to as state strength or capacity see, e. State power and its implications have been discussed in the political science and related literature for decades and from various perspectives Krasner, , all of which I cannot account for in this article.
The first generic and rather important distinction that needs to be made refers to regime type on a continuum of autocracy — democracy versus government capacity. To make this more concrete, I draw on the related but more hands-on typology of crude regime types introduced by Charles Tilly , , which illustrates this consequential differentiation of particular relevance to both the political CSR and the IB literature on political and CSR activities of MNEs, and has considerably shaped how political science scholars think about state power.
To remain consistent with the terminology used throughout this paper, I adapted the denotation accordingly. Implications of crude regime types for responsible management autocracies highlighted , own figure adapted from Tilly , On the vertical axis, political regimes are located based on government or state capacity, i.
This refers to the extent to which the population is involved in political decision-making, how equal access to agents of government is distributed, the degree to which the government is controlled by political participants, and the extent to which the latter are protected from arbitrary action by governmental agents.
The resulting typology of high-capacity autocracy, low-capacity autocracy, high-capacity democracy, and low-capacity democracy contains, on average, descriptions, and countries within a single quadrant can differ considerably with regard to degree of government capacity or democracy Tilly, Against this background, it becomes obvious that state power and regime type should not be conflated.
In the following, and going beyond this general distinction, I draw on empirically informed political science research to reconstruct how these general distinctions materialize in autocracies. I also use authoritative IB studies on business in authoritarian contexts to provide additional illustrative examples that support my arguments. To be able to assess the room and boundaries for MNEs pursuing their political CSR in the context of authoritarianism, we have to reach a more nuanced understanding of the role of governmental institutions in an autocracy.
In general, authoritarianism refers to all forms of undemocratic rule. The ruling elites of autocracies limit pluralism and political participation, and the power of the executive lacks popular control. I use Middle Eastern autocracies as illustrative examples, and refer to other autocracies where appropriate. Certain observations are generalizable to autocracies in other geographical regions.
The states of the Middle East differ with regard to their political foundations e. Iraq and the corresponding degree of repression higher in Saudi Arabia than, for instance, in Jordan , the importance of oil wealth for the economy oil vs. Due to their demonstrated ability to employ repressive means, autocracies are often described as powerful. Empirically, autocracies do not necessarily realize state goals most effectively.
In the following, I again discuss these focusing on the governance model, the role of law, and democracy. In autocracies, the state or rather: the ruling elite continues to be the main political actor. With regard to public goods provision, historically e. In times of abundant oil revenues or rents generated through e. During a fiscal crisis Schwarz, , however, this may change, and lead to waves of privatization and an outsourcing of government functions to MNEs.
In conclusion, the governance model in autocracies is shaped by the authoritarian government as the main political actor, as well as informal actors close to the ruling elite, e. When areas of governance affect foreign direct investment FDI , governance is more likely to be selectively opened to e. The mode of governance is correspondingly hierarchic.
Economic rationality dominates insofar as corporate agency is viewed through a lens of usefulness for the autocratic ruling elite, and domesticated insofar as political survival is prioritized over economic sustainability of a corporate entity. In state-owned enterprises SOEs in particular, decisions are mainly made on personal or political rather than business grounds, e.
They play an important role in autocracies in general Sprenger, and the Middle East in particular OECD, , and MNEs entering these markets are typically required to partner with them in joint ventures. Finally, the separation of political and economic spheres with regard to both domestic and foreign companies is low in the sense that firms owned by ruling elites dominate the economic ecosystem, and domestic companies in private ownership are under equally strong influence of, and interwoven with, the autocratic rulers Hertog et al.
MNEs face a comparable amount of institutional pressure and governmental interference, but have even less influence on public regulation than domestic companies whose representatives are more likely to participate in informal meetings e.
This article develops a framework in which corporate social responsibility CSR represents the contested terrain of global governance. The rise of CSR is one of the more striking developments of recent decades in the global political economy. Calls for multinational corporations MNCs to demonstrate greater responsibility, transparency, and accountability are leading to the establishment of a variety of new governance structures—rules, norms, codes of conduct, and standards—that constrain and shape MNCs' behavior. CSR is thus not just a struggle over practices, but over the locus of governance authority, offering a potential path toward the transformation of stakeholders from external observers and petitioners into legitimate and organized participants in decision-making. This article points to two distinct perspectives on CSR; as a more socially embedded and democratic form of governance that emanates from civil society, or alternatively, as a privatized system of corporate governance that lacks public accountability. Keywords: corporate social responsibility , global governance , global political economy , multinational corporations , stakeholders.
Corporate social responsibility CSR is a type of international private business self-regulation  that aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices. While it has been considered a form of corporate self-regulation  for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Considered at the organisational level, CSR is generally understood as a strategic initiative that contributes to a brand's reputation. With some models, a firm's implementation of CSR goes beyond compliance with regulatory requirements and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law". Furthermore, businesses may engage in CSR for strategic or ethical purposes. From a strategic perspective, CSR can contribute to firm profits, particularly if brands voluntarily self-report both the positive and negative outcomes of their endeavors.
Scientific Research An Academic Publisher. Baron, D. Journal of Economics and Management Strategy, 10, We adopt the conception of social risk that includes the risks originated by environmental and social sustainability. Any risk involves hazards and opportunities. The success of its management consists of hedging the hazards and turning opportunities into value. CSR is the key for dealing with both goals.
This article develops a framework in which corporate social responsibility CSR represents the contested terrain of global governance. The rise of CSR is one of the more striking developments of recent decades in the global political economy. Calls for multinational corporations MNCs to demonstrate greater responsibility, transparency, and accountability are leading to the establishment of a variety of new governance structures—rules, norms, codes of conduct, and standards—that constrain and shape MNCs' behavior. CSR is thus not just a struggle over practices, but over the locus of governance authority, offering a potential path toward the transformation of stakeholders from external observers and petitioners into legitimate and organized participants in decision-making.
Metrics details. Corporate Social Responsibility CSR is like a chameleon, that changes its colour according to the context it is in. But, business houses, do look for maximising its profit. If not money, then at least the effort must be compensated with reputation, image, that helps in brand building!
DOI: Keywords: Financial performance , Corporate social responsibility , Organizational engagement , Moderation , Banking. Home About Us. Therein, the study worked to find out how Corporate Social Responsibility CSR and organizational engagement can be used to predict financial performance. In addition, the study also tested the moderating role of organizational engagement on the relationship between CSR and financial performance. Managerial level employees from seven retail banks in Bahrain were sampled for the present study.
It is created to make employees, and employers, feel more connected with society. Both are rooted in a stakeholder-oriented perspective. Corporate social responsibility demonstrates that companies go beyond profitability and take an interest in social issues. Read about our strategies, guiding principles, and policies below.
Private politics and corporate social responsibility not only have a direct effect on the costs of the From an integrated-strategy perspective the paper investigates the strategic implications of Request Full-text Paper PDF.
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