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Big Business and Inclusive Development : Changing Roles and Perceptions Peter Utting United Nations Research Institute for Social Development (UNRISD) ESRC Research Seminar Series, “Changing Cultures of Competitiveness” Institute for Advanced Studies, Lancaster University
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United Nations Research Institute
for Social Development (UNRISD)
ESRC Research Seminar Series,
“Changing Cultures of Competitiveness”
Institute for Advanced Studies, Lancaster University
17 April 2009
1.To examine the changing roles of business in growth models and policy regimes conducive to inclusive development
2.To assess the potential and limits of CSR from the perspective of inclusive development
3.To highlight the importance of multi-disciplinarity for understanding the potential and limits of CSR
- What worked historically?
Under what conditions did large corporations play a
constructive role in growth models and policy
regimes conducive to inclusive development ?
What worked in the late industrializers (Nordics & East Asia) and Fordist/New Deal USA?
-- certain sets of business preferences
-- certain types of state-market and power relations
-- certain forms of collaborative institutions
Albeit significant variations under different Varieties of
Capitalism and Welfare State or Policy Regimes
- company support for education & training, healthy workforce, decent wages, related for example to the need for skilled labour, to reduce absenteeism/rise productivity, to expand consumer markets
- ISI/protectionism mitigate low wage preferences
- production centred in TNC affiliates (rather than out-sourcing)
- managerial ‘long-termism” (concern with value creation over the long term)
- presence of countervailing forces; balance of social forces (e.g. strong state, strong labour); relative decline in corporate power (during depression and WWII)
- developmental states (with vision, regulatory and administrative capacity)
- contestation; social movement activism
- social pacts: “CSR” (e.g. good working conditions, life-long employment, healthcare, fiscal responsibility, philanthropy) as part of a bargain/compromise in return for pro-business & pro market incentives (e.g. industrial policy, minimalist regulation)
- embedded elites, which identified with the community
& their workforce (through direct production);
(Gramscian) hegemony (discursive power of business
- encompassing business associations, representing
broad range of private sector interests, including
- stakeholder consultation/dialogue; collective bargaining
Fundamental changes occur in business preferences, power relations and collaborative institutions
Stylized facts & perceptions (albeit with variations by VoC and policy regime):
- “rolling back” of certain state functions; rise of the “competition state” &
- deterritorialized capital versus territorially constrained states
- global penetration of TNCs & growing structural, instrumental and
discursive power of big business
- unravelling of corporatist social pacts
- weakening of countervailing forces (state and labour)
- nature of social movements/civil society and activism changes with rise
of NGOs & the information revolution
- importance of “knowledge”, knowledge networks, “epistemic
authority” i.e. decision-making based on expert technical opinion
- business preferences change (e.g. focus on skills & higher
education; increased international competition puts pressure
on firms to cut costs/wages; race to the bottom)
- “disembedding” of elites through some forms of FDI, global supply
chains and sub-contracting & flexibilization of labour markets
- short-termism: quarterly results, prioritization of shareholder
interests and CEO remuneration.
As a result:
CSR becomes a crucial element in this strategy
- CSR takes off internationally in early 1990s (Earth Summit) & is backed by powerful actors, institutions and ideas:
- Emergence of a CSR “movement”, involving global corporations, business associations, NGOs, academia (management studies, IR, development studies), international organizations, and (belatedly) trade unions and government.
- CSR becomes institutionalized via CSR consultancy industry, MBA curricula, multi-stakeholder initiatives (e.g. UN Global Compact, ISO, ETI, SA8000, Global Reporting Initiative, etc., and international soft law
importance of non-state actors (business and NGOs) in knowledge networks, “epistemic communities” and private regulation
Big business is seen as a proactive
CSR Balance Sheet
Study of top 100 Fortune corporations, reveals major differences in approach and commitment to CSR & poverty reduction.
Source: Rob van Tulder 2008
%; overlap possible
Inactive Re-active Active Pro-active
Source. van Tulder 2008
Weaknesses & Blind Spots
- migrant, casual workers often excluded;
- issues of concern to women workers often excluded;
- working conditions versus labour rights (freedom of association and
- minimum wages versus “living wage”
- “policing” approach to CSR in the supply chain; negative impacts on
suppliers and workers in developing countries)
- superficial audits
- focus on micro (firm level) as opposed to macro (public
policy) issues, e.g. lobbying, tax evasion & tax avoidance;
- focus on primary and secondary sectors; limited attention to financial
- weak disclosure & free riding (e.g. company sustainability reporting & UN
- double standards: suppliers operate in a straight-jacket; talk the talk of CSR and lobby for socially regressive policies or engage in « the race to the bottom »
It is difficult to generalize about CSR & the behaviour of firms; there exist multiple drivers, conditions and contexts:
Very different interpretations therefore exist regarding the contribution, substance & potential of CSR:
Moving Foward ?
Fundamentally depends on reconfiguring governance systems and the balance of forces:
Economic globalization and liberalization generated a deep governance imbalance: economic (and finance) modes became too powerful, and trumped state & associational modes
Current crisis creates spaces for a) reconfiguring power relations, b) reforming/transforming institutions, and c) addressing the blind spots on the CSR agenda
Recent shifts in thinking and practice:
- less “policing” of supply chains by TNCs; limits of social auditing; more training & capacity building in SMEs
- greater attention to the actual developmental impacts of CSR & PPPs (not just process)
- more equitable power relations and participation within MSIs and PPPs
- the need to strengthen: a) systems of industrial relations, e.g. via International Framework Agreements, and b) state labor inspection capacity.
- need for greater policy coherence: e.g. when private sector expansion occurs, state regulatory capacity needs to be strengthened not diminished)
- greater compatibility between CSR initiatives in LDCs and national & international development strategies & priorities
- need to ensure “corporate accountability” by strengthening disclosure of information, grievance procedures for stakeholders, and possibilities for redress; as well as penalties for non- compliance;
- important role for international “soft” and “hard” law, e.g. OECD Guidelines on MNEs; UN Human Rights law
- Moving beyond corporate self-regulation and
- Moving beyond the narrow emphasis on shared
values, stakeholder dialogues, best practice
Responses will vary by firm, industry, society and VoC
4 analytical and empirical limitations of
mainstream thinking on CSR. It is
This suggests the crucial importance of breaking out of the confines
of management studies and IR, and drawing more on sub-disciplines
and schools of thought associated with political science, sociology,
law, human geography and development studies.
How do CSR (and Corporate Accountability (CA), PPPs & fair trade (FT) look from a development perspective?
How do they relate to different development models?
Grosso modo – three models:
CSR & PPPs (depending on their content and context) tend to reinforce the neo-liberal or embedded liberalism models;
CA & FT tend to reinforce the embedded liberalism or