Market-based social governance schemes that establish standards of conduct for producers and traders in international supply chains aim to reduce the negative socioenvironmental effects of globalization. While studies have examined how characteristics of social governance schemes promote socially responsible producer behavior, it has not yet been examined how these same characteristics affect consumer behavior. This is a crucial omission, because without consumer demand for socially produced products, the reach of the social benefits is likely to be limited. We develop a (...) comprehensive model that links twocharacteristics of market-based social governance schemes—(1) stringency and enforcement of requirements, and (2) promotion—to two conditions required for governance schemes to generate significant social benefits: (1) socially responsible behavior of participating firms; and (2) consumer demand for socially produced products which, in turn, expands products produced according to social governance schemes, and thus, the quantity of social benefits. We discuss market-based social governance schemes in the context of fair trade coffee. (shrink)

ABSTRACT:This paper analyzes how national institutional factors affect the adoption of the international environmental management standard ISO 14001, using a panel of 139 countries from 1996 to 2006. The analysis emphasizes that during the emerging phase of the standard, the potential lack of consensus within the constituents of the national institutional environment concerning the value of a new standard could send mixed signals to firms about the standard. The results show that in the early phase of adoption, regulative and normative (...) forces within the institutional environment can work against each other. Results also show that regulative or coercive forces play a relatively more important role in the early phase of adoption of the standard than in the subsequent phases of diffusion. In the later phases of diffusion of ISO 14001, normative forces, such as the diffusion of other management standards, as well as factors related to trade, play a more important role. Because of the similarities between environmental management standards and corporate social responsibility standards, this study can help identify some of the challenges for diffusion of ISO management standards in the area of social responsibility. (shrink)

Modern society is challenged by a loss of efficiency in national governance systems values, and lifestyles. Corporate social responsibility (CSR) discourse builds upon a conception of organizational legitimacy that does not appropriately reflect these changes. The problems arise from the a-political role of the corporation in the concepts of cognitive and pragmatic legitimacy, which are based on compliance to national law and on relatively homogeneous and stable societal expectations on the one hand and widely accepted rhetoric assuming that all members (...) of society benefit from capitalist production on the other. We therefore propose a fundamental shift to moral legitimacy, from an output and power oriented approach to an input related and discursive concept of legitimacy. This shift creates a new basis of legitimacy and involves organizations in processes of active justification vis-à-vis society rather than simply responding to the demands of powerful groups. We consider this a step towards the politicization of the corporation and attempt to re-embed the debate on corporate legitimacy into its broader context of political theory, while reflecting the recent turn from a liberal to a deliberative concept of democracy. (shrink)

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)

The Global Reporting Initiative (GRI) has successfully become institutionalized as the preeminent global framework for voluntary corporate environmental and social reporting. Its success can be attributed to the “institutional entrepreneurs” who analyzed the reporting field and deployed discursive, material, and organizational strategies to change it. GRI has, however, fallen short of the aspirations of its founders to use disclosure to empower nongovernmental organizations (NGOs). The authors argue that its trajectory reflects the power relations between members of the field, their strategic (...) choices and compromises, their ability to mobilize alliances and resources, and constraints imposed by the broader institutions of financial and capital markets. The authors draw three notable implications from this study. First, institutional theory needs to pay more attention to economic structures, strategies, and resources. Second, institutional entrepreneurship by relatively weak societal groups such as NGOs is inherently constrained by the structural power of wider institutions and by the compromises required to initiate change. Third, the strategies of NGOs represent a form of power capable of shifting, if not transforming, the field of corporate governance. (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)

The recent proliferation of International Accountability Standards (IAS) has attracted significant academic interest, but the extent of their adoption and integration by global firms remains underinvestigated.Capitalizing on institutional theory and the typology of strategic responses to institutional pressures proposed by Oliver (Acad Manage Rev 16(1): 145-179, 1991), this article uses an interpretive research methodology to analyze a sample of MNC practitioners' views regarding IAS, and derive some insights in relation to expected patterns of strategic responses to these new institutional pressures. (...) The article also presents relevant remarks relating to the usefulness of institutional theory in the context of research relating to IAS. The findings suggest patterns of engagement combining elements of both conformity and resistance, although the answers correspond most closely to a decoupling or symbolic conformity strategic response. The findings are fleshed out and their implications delineated/assessed. (shrink)

: We discuss the role that transnational corporations should play in developing global governance, creating a framework of rules and regulations for the global economy. The central issue is whether TNCs should provide global rules and guarantee individual citizenship rights, or instead focus on maximizing profits. First, we describe the problems arising from the globalization process that affect the relationship between public rules and private firms. Next we consider the position of economic and management theories in relation to the social (...) responsibility of the firm. We argue that instrumental stakeholder theory and business and society research can only partially solve the global governance issue, and that more recent concepts of corporate citizenship and republican business ethics deliver theoretically and practically helpful, fresh insights. However, even these need further development, especially with regard to the legitimacy of corporate political activity. (shrink)

ABSTRACT:A common complaint by academics and practitioners is that the application of international accountability standards (IAS) does not lead to significant improvements in an organization’s social responsibility. When organizations espouse their commitment to IAS but do not put forth the effort necessary to operationally enact that commitment, a “credibility cover” is created that perpetuates business as usual. In other words, the legitimacy that organizations gain by formally adopting the standards may shield the organization from closer scrutiny, thus enabling rather than (...) constraining the types of activities the standards were designed to discourage.There is a lack of research on why certain types of IAS are more prone than others to being decoupled from organizational practices. Applying a neo-institutional perspective to IAS, we theorize that the structural dimensions of the types of standards themselves can increase the likelihood of organizations adopting IAS standards in form but not in function. (shrink)

Market-based social governance schemes that establish standards of conduct for producers and traders in international supply chains aim to reduce the negative socioenvironmental effects of globalization. While studies have examined how characteristics of social governance schemes promote socially responsible producer behavior, it has not yet been examined how these same characteristics affect consumer behavior. This is a crucial omission, because without consumer demand for socially produced products, the reach of the social benefits is likely to be limited. We develop a (...) comprehensive model that links twocharacteristics of market-based social governance schemes—(1) stringency and enforcement of requirements, and (2) promotion—to two conditions required for governance schemes to generate significant social benefits: (1) socially responsible behavior of participating firms; and (2) consumer demand for socially produced products which, in turn, expands products produced according to social governance schemes, and thus, the quantity of social benefits. We discuss market-based social governance schemes in the context of fair trade coffee. (shrink)

Transnational corporations have become actors with significant political power and authority which should entail responsibility and liability, specifically direct liability for complicity in human rights violations. Holding TNCs liable for human rights violations is complicated by the discontinuity between the fragmented legal/political structure of the TNC and its integrated strategic reality and the international state system which privileges sovereignty and non-intervention over the protection of individual rights. However, the post-Westphalian transition—the emergence of multiple authorities, increasing ambiguity of borders and jurisdiction (...) and blurring of the line between the public and private spheres—should facilitate imposing direct responsibility on transnational firms. Mechanisms for imposing direct responsibility on TNCs are considered including voluntary agreements and international law. However, I conclude that a hybrid public-private regime which relies on non-hierarchical compliance mechanisms is likely to be both more effective and consistent with the structure of the emerging transnational order. (shrink)

This article explains problems and opportunities created by standardized ethics initiatives (e.g., the UN Global Compact, the Global Reporting Initiative, and SA 8000) from the perspective of stakeholder theory. First, we outline differences and commonalities among currently existing initiatives and thus generate a common ground for our discussion. Second, based on these remarks, we critically evaluate standardized ethics initiatives by drawing on descriptive, instrumental, and normative stakeholder theory. In doing so, we explain why these standards are helpful tools when it (...) comes to ‘managing’ stakeholder relations but also face considerable limitations that can eventually hamper their successful expansion. We suspect that this discussion is necessary to conduct meaningful empirical research in the future and also to provide managers with a more clear-cut picture about a successful application of such initiatives. Third, we outline possible ways to cope with the identified problems and thus demonstrate how standard-setting institutions can improve the initiatives they offer. (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)

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)

The United Nations Global Compact is with currently more than 6,000 voluntary participants the world’s largest corporate citizenship initiative. This article first analyzes three critical allegations often made against the Compact by looking at the academic and nonacademic literature. (1) The Compact supports the capture of the United Nations by “big business.” (2) Its 10 principles are vague and thus hard to implement. (3) The Compact is not accountable due to an absence of verification mechanisms. This article discusses these three (...) allegations and argues that they rest on a misunderstanding of (a) the nature of the Compact as well as its mandate and (b) the goals it tries to achieve. From this discussion of what the Compact is not, the article then outlines a perspective that classifies the initiative as a necessary supplement to incomplete state and nonstate regulatory approaches in order to illustrate what the Compact is. (shrink)

Private, voluntary compliance programs, promoted by global corporations and nongovernmental organizations alike, have produced only modest and uneven improvements in working conditions and labor rights in most global supply chains. Through a detailed study of a major global apparel company and its suppliers, this article argues that this compliance model rests on misguided theoretical and empirical assumptions concerning the power of multinational corporations in global supply chains, the role information plays in shaping the behavior of key actors in these production (...) networks, and the appropriate incentives required to change behavior and promote improvements in labor standards in these emergent centers of global production. The authors argue that it is precisely these faulty assumptions and the way they have come to shape various labor compliance initiatives throughout the world—even more than a lack of commitment, resources, or transparency by global brands and their suppliers to these programs—that explain why this compliance-focused model of private voluntary regulation has not succeeded. In contrast, this article documents that a more commitment-oriented approach to improving labor standards coexists and, in many of the same factories, complements the traditional compliance model. This commitment-oriented approach, based on joint problem solving, information exchange, and the diffusion of best practices, is often obscured by the debates over traditional compliance programs but exists in myriad factories throughout the world and has led to sustained improvements in working conditions and labor rights at these workplaces. (shrink)