In an increasingly complex world with increasingly powerful organisations it seems inevitable that society – or groups in society – would become anxious about whether these organisations could be encouraged to match that power with an appropriate responsibility. This is the function of accountability – to require individuals and organisations to present an account of those actions for which society holds them – or would wish to hold them – responsible. And the history of social accounting, at its most fundamental, (...) is a history of attempts to develop this accountability. It seems to me that the widespread and systematic practice of social and environmental accounting is a deeply essential element in any well‐functioning, complex democracy. The corollary is that the absence of such mechanisms raises fundamental questions about the nature of modern democracies. This article briefly outlines what I believe to be the three strands of social accounting. It then identifies a few of the lessons that we may be able to learn from current experience and, in particular, how social accounting is related to accountability, democracy and sustainability. The central issue of the tension between accountability and control is touched upon: I then illustrate how the stakeholder model can be used to help define the social account, and conclude with a few words on attestation. (shrink)

The UN Global Compact is a voluntary initiative designed to help fashion a more humane world by enlisting business to follow ten principles concerning human rights, labor, the environment, and corruption. Although the four-year-old Compact is a relatively successful initiative, having signed up over eleven hundred companies and more than two hundred of the large multinationals, and having begun some important projects on globalization issues, there is a serious problem in that very few of the major U.S. companies have joined. (...) While the premier U.S. companies are interested in meeting the legitimate expectations of society, there is concerncentering around accountability issues. The accountability issues are in four major areas: 1. Accountability showing that the globalization of the economy actually helps the poor. 2. Accountability showing the corporate performance matches rhetoric. 3. Accountability that provides legitimacy to a two-tier pricing system and other measures that are designed to assist the poor in developing countries. 4. Accountability in the human rights area; what societal expectations are multinational companies accountablefor? The article outlines the problems that the Compact brings to the fore and offers some insight from the ethical literature that may address U.S. company concerns or provide new ways of thinking about the issues. It further argues that the forum provided by the Compact may be the most effective means to gain consensus of the role of business in society. (shrink)

Since it appeared in 1971, John Rawls's A Theory of Justice has become a classic. The author has now revised the original edition to clear up a number of difficulties he and others have found in the original book. Rawls aims to express an essential part of the common core of the democratic tradition--justice as fairness--and to provide an alternative to utilitarianism, which had dominated the Anglo-Saxon tradition of political thought since the nineteenth century. Rawls substitutes the ideal of the (...) social contract as a more satisfactory account of the basic rights and liberties of citizens as free and equal persons. "Each person," writes Rawls, "possesses an inviolability founded on justice that even the welfare of society as a whole cannot override." Advancing the ideas of Rousseau, Kant, Emerson, and Lincoln, Rawls's theory is as powerful today as it was when first published. (shrink)

In this paper, the Executive Head of the Global Compact shares some of his own reflections on the evolution of the Global Compact initiative – United Nations Secretary-General Kofi Annan’s voluntary corporate citizenship initiative in the area of human rights, labor, the environment and anti-corruption. Two main themes are addressed. The first considers the Global Compact’s institutional context, examining how such an initiative is even possible in the historically hierarchical and traditionally business-unfriendly UN. The second concerns the voluntary nature of (...) the initiative and how it interacts with regulatory approaches. It explains what the Global Compact has to offer as a voluntary initiative, as well as how it can make a unique and complementary contribution to regulation-backed initiatives. The paper concludes with a brief consideration of what the future holds for the Global Compact. (shrink)

Amongst a backdrop of debate regarding Codes of Conduct and their raison d’etre this paper provides a detailed summary of the management systems used by multinational enterprises in the Code implementation process. It puts forth a framework for analysis based on the elements of – the creation of a vision, the development of understanding and ability, integration into operations and feedback, improvement and remediation – and then applies it across the sports footwear, apparel and retail sectors in order to firstly, (...) demonstrate the complexities of the Code implementation process and secondly, to provide useful examples and lessons-learned to companies, policy-makers and others interested in implementing their own Code of Conduct or who are actively involved in this field. (shrink)

In Between Facts and Norms, Jürgen Habermas works out the legal and political implications of his Theory of Communicative Action (1981), bringing to fruition the project announced with his publication of The Structural Transformation of the Public Sphere in 1962. This new work is a major contribution to recent debates on the rule of law and the possibilities of democracy in postindustrial societies, but it is much more. The introduction by William Rehg succinctly captures the special nature of the work, (...) noting that it offers a sweeping, sociologically informed conceptualization of law and basic rights, a normative account of the rule of law and the constitutional state, an attempt to bridge normative and empirical approaches to democracy, and an account of the social context required for democracy. Finally, the work frames and caps these arguments with a bold proposal for a new paradigm of law that goes beyond the dichotomies that have afflicted modern political theory from its inception and that still underlie current controversies between so-called liberals and civic republicans. The book includes a postscript written in 1994, which restates the argument in light of its initial reception, and two appendixes, which cover key developments that preceded the book. Habermas himself was actively involved in the translation, adapting the text as necessary to make it more accessible to English-speaking readers. (shrink)

Three strategies for developing just and consistent global business practices are examined: 1) international treaties and agreements, 2) global codes of business conduct, and 3) voluntary self-restraint. International agreements investigated are: NAFTA, Global Warming Treaty, OECD Anti-Bribery Treaty and Infant Formula Agreement. The codes examined are the Caux Round Table’s Principles for Business, The Global Sullivan Principles and The United Nations Global Compact with Business. Each of these three strategies is probed for its relative strengths and weaknesses, and its prospects (...) for developing ethical business practices—especially in the areas of improving the environment, human rights and working conditions. (shrink)

Since its appearance in English translation in 1996, Jurgen Habermas's Between Facts and Norms has become the focus of a productive dialogue between German and Anglo-American legal and political theorists. The present volume contains ten essays that provide an overview of Habermas's political thought since the original appearance of Between Facts and Norms in 1992 and extend his model of deliberative democracy in novel ways to issues untreated in the earlier work. Habermas's theory of democracy has at least three features (...) that set it apart from competing positions. First, it combines a concern with questions of normative justification with an empirical analysis of the social conditions necessary for the realization of democratic institutions. Second, at the heart of his model is the assertion of an internal relationship between liberalism and democracy. Finally, Habermas defends a conception of universal human rights that is not only sensitive to cultural differences but also calls for legal and political institutions that facilitate the cultivation of cultural and religious identities within pluralistic societies. These essays demonstrate the extraordinary power of Habermas's theory of democracy through a further engagement with Rawls's political liberalism and through original contributions to current debates over nationalism, multiculturalism, and the viability of supranational political institutions. (shrink)

This long-awaited book sets out the implications of Habermas's theory of communicative action for moral theory. "Discourse ethics" attempts to reconstruct a moral point of view from which normative claims can be impartially judged. The theory of justice it develops replaces Kant's categorical imperative with a procedure of justification based on reasoned agreement among participants in practical discourse.Habermas connects communicative ethics to the theory of social action via an examination of research in the social psychology of moral and interpersonal development. (...) He aims to show that our basic moral intuitions spring from something deeper and more universal than contingent features of our tradition, namely from normative presuppositions of social interaction that belong to the repertoire of competent agents in any society. Jürgen Habermas is Professor of Philosophy at the University of Frankfurt. (shrink)

ABSTRACT:Based on theoretical insights of discourse ethics as developed by Jürgen Habermas, we delineate a proposal to further develop the institutionalization of social accounting in multinational corporations (MNCs) by means of “Social Accountability 8000” (SA 8000). First, we discuss the cornerstones of Habermas's discourse ethics and elucidate how and why this concept can provide a theoretical justification of the moral point of view in MNCs. Second, the basic conception, main purpose, and implementation procedure of SA 8000 are presented. Third, we (...) critically examine SA 8000 from a Habermasian perspective, and discuss advantages and drawbacks of the initiative. Fourth, to address the drawbacks, we introduce a “discourse-ethically” extended version of SA 8000. We show that this approach is theoretically well-founded and able to overcome some of the current deficits of the certification initiative. We demonstrate that the extended version of SA 8000 can be successfully applied on a cross-cultural basis, and that our findings have significant implications for other international ethics initiatives. (shrink)

Abstract:This article elaborates a normative Stakeholder Management Theory (SHMT) from a critical theory perspective. The paper argues that the normative theory elaborated by critical theorists such as Habermas exhibits important advantages over its rivals and that these advantages provide the basis for a theoretically more adequate version of SHMT. In the first section of the paper an account is given of normative theory from a critical theory perspective and its advantages over rival traditions. A key characteristic of the critical theory (...) approach is expressed as a distinction between three different normative realms, viz., legitimacy, morality, and ethics. In the second section, the outlines of a theory of stakeholder management are provided. First, three basic tasks of a theoretically adequate treatment of the normative analysis of stakeholder management are identified. This is followed by a discussion of how a critical theory approach to SHMT is able to fulfill these three tasks. (shrink)

In addressing the theme of this special issue of Business Ethics Quarterly on business ethics in the new millennium, I want to focusnot on business ethics as an academic field of study but rather on ethics in business. By ethics in business I mean the standards for ethical conduct that are generally recognized in business and the ways in which these standards are established. Ethics in business in this sense is, at least in part, what the field of business ethics (...) studies. (shrink)

Traditional approaches to regulating corporate behavior have not, and cannot, produce socially responsible corporations.Although many of the problems with these approaches were identified twenty-five years ago by Christopher Stone, an effective regulatory system still has not been implemented. A model of regulation is needed that is flexible enough to accommodate the variety of contexts in which corporations operate, but also makes corporations responsive to the ever-changing societal expectations of propercorporate behavior. To accomplish these goals, a reflexive law regulatory system is (...) needed. Under this approach, corporationsshould be encouraged to engage in corporate social accounting, auditing, and reporting (SAAR). The development of SAAR standardsinformed by reflexive law theory will create a regulatory system that is consistent with the latest thinking in business ethics, includingStakeholder Theory and Integrative Social Contracts Theory. (shrink)

Business and Society: Ethics and Stakeholder Management, 5th edition employs a stakeholder management framework, emphasizing business' social and ethical responsibilities to both external and internal stakeholder groups. A twin theme of business ethics to illustrate how ethical or moral considerations are included the public issues facing organizations and the decision making process of managers. The text is written from a managerial perspective that along with the twin themes of stakeholders and ethics, shows how to identify stakeholders, incorporate their concerns into (...) the organization's strategy and operations, and also integrate ethical wisdom into their decision making process. In addition, 35 case histories are included to help connect theory and practice through timely and interesting examples. (shrink)

A new approach to understanding the nature of ethics and ethical decision making, not only in the context of business, but also in other life contexts.

Confronted with mounting pressure to ensure accountability vis-à-vis customers, citizens and beneficiaries, organizational leaders need to decide how to choose and implement so-called accountability standards. Yet while looking for an appropriate standard, they often base their decisions on cost-benefit calculations, thus neglecting other important spheres of influence pertaining to more broadly defined stakeholder interests. We argue in this paper that, as a part of the strategic decision for a certain standard, management needs to identify and act according to the needs (...) of all stakeholders. We contend that the creation of a dialogical understanding among affected stakeholders cannot be a mere outcome of applying certain accountability standards, but rather must be a necessary precondition for their use. This requires a stakeholder dialogue prior to making a choice. We outline such a discursive decision framework for accountability standards based on the Habermasian concept of communicative action and, in the final section, apply our conceptual framework to one of the most prominent accountability tools (AA 1000). (shrink)

This paper reports on an investigation of issues surrounding the use of ethical codes/codes of conduct in Irish based companies. Using a comprehensive questionnaire survey, the paper examines the incidence, content and enforcement of codes of conduct among a sample of the top 1000 companies based in Ireland. The main findings indicate that the overall usage of codes of conduct amongst indigenous Irish companies has increased significantly from 1995 to 2000. However, in line with prior research, these codes focus primarily (...) on issues surrounding company and employee protection as opposed to society protection. Almost half of all codes are written by company personnel or provided by head office. Revisions of codes are common but formal ongoing methods of instructing new staff about codes are not prevalent. Less than one-third of companies with codes have formal channels for reporting violations but a high percentage have formal disciplinary procedures in place for breaches of codes. (shrink)

This paper explores the growing array of initiatives aimed at creating corporate accountability with the goal of attempting to uncover the foundation principles that underlie them and create a floor below which practices are ethically questionable. Using the Global Compact's nine principles and the work of Transparency International as guides, foundational principles seem to exist in the areas of human rights, labor standards, environment, and anti-corruption initiatives.

By focusing on the reasoned debate in the discourse -ethical approach to business ethics, this paper discusses the possibilities and limitations of moral reasoning as well as applied economic and business ethics. Business ethics, it is contended, can be looked at from the standpoint of two criteria: justification and application. These criteria are used to compare three approaches: the Integrative Business Ethics, developed by Swiss philosopher Peter Ulrich, the Cultural Business Ethics of the Nuremberg School in German business ethics, and (...) the concept of “Good Conservation” by Frederick Bird. It is argued that discourse -ethical approaches can be called upon for justifying moral principles. Improving the chances of their application, however, necessitates a good understanding of lifeworlds and culturally developed institutional settings. Bearing this in mind, further research perspectives stressing a linkage between discourse -ethical and critical approaches in social sciences are suggested. (shrink)

Following on from work on stakeholder identification, this paper constructs a typology of stakeholder theories based on the extent to which serving the interests of non-shareholders relative to those of shareholders is accepted as a responsibility of companies. A typology based on the division of stakeholder theories into normative, descriptive, and instrumental is rejected on the grounds that the latter two designations refer to second order theories rather than divisions within stakeholder theory and the first is a designation which, for (...) the purposes of business ethics, applies to all stakeholder theories. The crucial distinction between stockholder and stakeholder theory is argued to be their respective rejection and acceptance of role-specific responsibilities toward non-shareholders that are `ultimate objective fulfilling''. From this starting point, a typology is constructed using a division of stakeholder theories into those which do and do not give priority to the interests of shareholders over those of non-shareholders, do and do not posit perfect duties towards non-shareholders as well as shareholders, do and do not accept accountability to non-shareholders as well as shareholders. (shrink)

Abstract:The term stakeholder is a powerful one. This is due, to a significant degree, to its conceptual breadth. The term means different things to different people and hence evokes praise or scorn from a wide variety of scholars and practitioners. Such breadth of interpretation, though one of stakeholder theory’s greatest strengths, is also one of its most prominent theoretical liabilities. The goal of the current paper is like that of a controlled burn that clears away some of the underbrush of (...) misinterpretation in the hope of denying easy fuel to the critical conflagration that would raze the theory. We aim to narrow its technical meaning for greater facility of use in management and organizational studies. By elaborating a number of common misinterpretations – critical and friendly – of the theory, we hope to render a stronger and more convincing theory as a starting place for future research. (shrink)

In an increasingly complex world with increasingly powerful organisations it seems inevitable that society – or groups in society – would become anxious about whether these organisations could be encouraged to match that power with an appropriate responsibility. This is the function of accountability – to require individuals and organisations to present an account of those actions for which society holds them – or would wish to hold them – responsible. And the history of social accounting, at its most fundamental, (...) is a history of attempts to develop this accountability. It seems to me that the widespread and systematic practice of social and environmental accounting is a deeply essential element in any well‐functioning, complex democracy. The corollary is that the absence of such mechanisms raises fundamental questions about the nature of modern democracies. This article briefly outlines what I believe to be the three strands of social accounting. It then identifies a few of the lessons that we may be able to learn from current experience and, in particular, how social accounting is related to accountability, democracy and sustainability. The central issue of the tension between accountability and control is touched upon: I then illustrate how the stakeholder model can be used to help define the social account, and conclude with a few words on attestation. (shrink)

This paper presents a report on the first Swiss Master Class in Corporate Social Responsibility, which was held between the 8th and 9th December 2006 at HEC Lausanne in Switzerland. The first section of the report introduces the topic of the master class – ‚Corporations as Political Actors – Facing the Postnational Challenge’ – as well as the concept of the master class. The second section gives an overview of papers written by nine young scholars that were selected to present (...) their research. The brief summary of each paper also includes a summary of comments from the masters, practitioners, and NGO representatives at the event. The third section brings in the perspectives of one master and one NGO representative on the discussed issues. The final section offers a brief wrap-up of the discussed topics and outlines ways to structure future conceptual and empirical research. (shrink)

Business codes are an oft-cited management instrument. But how common are codes among multinationals? And what is their content? In an unprecedented study, the codes of the largest corporations in the world have been collected and thoroughly analyzed. This paper presents the results of that study. Of the two hundred largest companies in the world, 52.5% have a code. More than half of these codes describe company responsibilities regarding quality of products and services (67%), adherence to local laws and regulations (...) (57%) and the protection of the natural environment (56%). Many codes make reference to principles governing stakeholder relations (e.g. transparency (55%), honesty (50%) and fairness (45%)), corporate core values (e.g. teamwork (43%)), appropriate conduct among employees (e.g. discrimination (44%) and intimidation (43%)) and treatment of company property by employees (e.g. conflict of interests (52%), corruption (46%) and fraud (45%)). Monitoring compliance with the code is addressed in 52% of the codes. Based on this content study, three types of codes are distinguished: the stakeholder statute (72%), the values statement (49%) and the code of conduct (46%). The results of this inquiry present a benchmark for the evaluation and development of both individual and international business codes. (shrink)

Definitions of what it is to be a stakeholder are divided into "claimant" definitions requiring some sort of claim on the services of a business, "influencer" definitions requiring only a capacity to influence the workings of the business, and "combinatory" definitions allowing for either or both of these requirements. It is argued that for the purposes of business ethics, stakeholding has to be about improving the moral conduct of businesses by directing them at serving more than just the interests of (...) owners. On that basis, influencer definitions are eliminated on the grounds that they only concern morally neutral strategic considerations and combinatory definitions on the grounds that the combining of ethical and strategic considerations they promise can be less confusingly achieved through an exclusively claimant definition. It is concluded that for the purposes of business ethics, stakeholders are claimants towards whom businesses owe perfect or imperfect moral duties beyond those generally owed to people at large. (shrink)

As the 21st century breaks upon us, no ethical issues in business appear as significant as those being created by the rapidglobalization of business. Globalization has created numerous ethical problems for the manager of the multinational corporation. What does justice demand, for example, in the relations between a multinational and its host country, particularly when that country is less developed? Should human rights principles govern the relations between a multinational and the workers of a host country, and if so, which (...) principles are the correct ones? How should a multinational deal with a government in which corruption is rife? What are the ethical considerations involved in determining whether and how to transfer a risky technology to a country whose people may not be able to safely absorb that technology? What kind of labor and environmental standards should a multinational adopt when operating in a country whose government legislates only very low standards? (shrink)

This article presents a model for the procedure of elaboration of an effective ethical code. Taking as the starting point the concept of business ethics as critical hermeneutics, we describe a process which will lead to the creation of a document that is truly ethical and efficient. We believe the elaboration of an ethical code should follow a definite procedure, and that the process is as important as the result, but we also add that in order for the process to (...) be a truly rational dialogue it is necessary to make efforts to ensure the participation of truly valid interlocutors who can represent their interests in conditions that are as close as possible to an ideal community of dialogue. Our model for the elaboration of an ethical code attempts to break with the conventional distinction between processes of elaboration and application in order to develop a truly integrative ethics, while also giving attention to the concrete conditions in which the ethical code is developed. In our view the contribution made by this model is the emphasis it places on the transformation of the will of the participants in the dialogue. (shrink)

This paper presents a report on the first Swiss Master Class in Corporate Social Responsibility, which was held between the 8th and 9th December 2006 at HEC Lausanne in Switzerland. The first section of the report introduces the topic of the master class – ‚Corporations as Political Actors – Facing the Postnational Challenge’ – as well as the concept of the master class. The second section gives an overview of papers written by nine young scholars that were selected to present (...) their research. The brief summary of each paper also includes a summary of comments from the masters, practitioners, and NGO representatives at the event. The third section brings in the perspectives of one master and one NGO representative on the discussed issues. The final section offers a brief wrap-up of the discussed topics and outlines ways to structure future conceptual and empirical research. (shrink)

"Ethical Leadership" in modern multicultural corporations is first the consideration of different personal and cultural value systems in decision-making processes. Second, it is the assignment of responsibility either to individual or organisational causalities. The task of this study is to set the stage for a distinction between rational entities and the arbitrary preferences of individuals in economic decision making processes.Defining rational aspects of behaviour in economics will lead to the formal structures of organisational systems, which are independent of concrete but (...) varying values. Luhmann''s Theory of systems of communication describes the internal dynamic forces of economic communication processes in terms of formal structures. On the other hand Habermas'' Theory of discourse integrates the previous relationship between individual subjectivity and rational behaviour. Habermas gives an indication of how to separate subjective values and meaning from rational arguments in rational communication processes. The translation of these theoretical structures into practical applications for decision making processes and decision taking acts links the ethical, or value-oriented, context precisely to both individual and organisational areas of responsibility. (shrink)

:Three strategies for developing just and consistent global business practices are examined: 1) international treaties and agreements, 2) global codes of business conduct, and 3) voluntary self-restraint. International agreements investigated are: NAFTA, Global Warming Treaty, OECD Anti-Bribery Treaty and Infant Formula Agreement. The codes examined are the Caux Round Table’sPrinciples for Business, The Global Sullivan Principlesand The United NationsGlobal Compact with Business. Each of these three strategies is probed for its relative strengths and weaknesses, and its prospects for developing ethical (...) business practices—especially in the areas of improving the environment, human rights and working conditions. (shrink)

Three strategies for developing just and consistent global business practices are examined: 1) international treaties and agreements, 2) global codes of business conduct, and 3) voluntary self-restraint. International agreements investigated are: NAFTA, Global Warming Treaty, OECD Anti-Bribery Treaty and Infant Formula Agreement. The codes examined are the Caux Round Table’s Principles for Business, The Global Sullivan Principles and The United Nations Global Compact with Business. Each of these three strategies is probed for its relative strengths and weaknesses, and its prospects (...) for developing ethical business practices—especially in the areas of improving the environment, human rights and working conditions. (shrink)

The UN Global Compact is a voluntary initiative designed to help fashion a more humane world by enlisting business to follow ten principles concerning human rights, labor, the environment, and corruption. Although the four-year-old Compact is a relatively successful initiative, having signed up over eleven hundred companies and more than two hundred of the large multinationals, and having begun some important projects on globalization issues, there is a serious problem in that very few of the major U.S. companies have joined. (...) While the premier U.S. companies are interested in meeting the legitimate expectations of society, there is concerncentering around accountability issues. The accountability issues are in four major areas: 1. Accountability showing that the globalization of the economy actually helps the poor. 2. Accountability showing the corporate performance matches rhetoric. 3. Accountability that provides legitimacy to a two-tier pricing system and other measures that are designed to assist the poor in developing countries. 4. Accountability in the human rights area; what societal expectations are multinational companies accountablefor? The article outlines the problems that the Compact brings to the fore and offers some insight from the ethical literature that may address U.S. company concerns or provide new ways of thinking about the issues. It further argues that the forum provided by the Compact may be the most effective means to gain consensus of the role of business in society. (shrink)