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Deciphering the Domain of Corporate Responsibility. Jesse Dillard Portland State University. Why are we here ?. Share ideas and experiences Understanding the world differently Choose to live our lives differently, to do business differently, to practice accounting differently

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Deciphering the domain of corporate responsibility l.jpg

Deciphering the Domain of Corporate Responsibility

Jesse Dillard

Portland State University


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Why are we here ?

  • Share ideas and experiences

  • Understanding the world differently

  • Choose to

    • live our lives differently,

    • to do business differently,

    • to practice accounting differently

  • An enlightening, enabling, and transforming effect on our world


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What Is Ours To Do?

  • The professional part of our world comprises the study and practice of business, in its broadest sense

  • Therefore the possibility exists for changing the understanding and practice of business and accounting

  • The challenge, and that of any society, is to act, based on a value set that increases the societal welfare rather than the interests of only a subset of society

  • This is where we happen to be involved at this point in our lives



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ECONOMIC VIABILITY

SOCIAL SUSTAINABILITY

CORPORATE RESPONSIBILITY

LEGAL COMPLIANCE

ENVIRONMENTAL SUSTAINABILITY

WORKERS’ RIGHTS

PHILANTHROPY

HUMAN RIGHTS


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Market Dominated Systems

Economic Markets



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Corporate Responsibility

Corporate Responsibility

Context

Time


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SOCIAL DOMAIN

Norms and Values

Representational Schemes

Human & Material Resources

SOCIAL INTEGRATION

Mediating Social Systems

SOCIAL ACTION SPACE

Mediating Individual Systems

AGENT’S PSYCHOLOGICAL MAKEUP

Discursive Consciousness

Practical Consciousness

Unconscious Motives

Change



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Markets

Business





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Business in Society society?

  • Purpose

    • Provide material means (work, goods, and services) for the citizens of the society.

  • Role

    • Responsible member of an ongoing community

  • Rights

    • Use of society’s economic assets


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Economic Organizations’ society?Social Responsibility

  • a central role in the long-term viability of a democratically governed society

  • grounded in

    • justice

    • equality

    • trust

  • supported by a sustainable economic system.


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Corporate Management’s Responsibility society?

While all members of society have a moral responsibility to act in the public interest, corporate management is specifically granted fiduciary responsibility over society’s economic resources (natural resources, financial assets, human assets, and technology). 


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Responsible Member of an Ongoing Community society?

  • Observed outcomes

  • Anticipated actions

  • Solidarity

  • Accountability



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Corporate Management society?

Expectation of giving an account

Responsible to others for something

Answering to, for

Answerability

Representation

Society

Expectation of receiving an account

Criteria

Feedback

Rewards/sanctions

Expose and constrain abuse of power

Duality of Accountability


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Accountability society?

What activities matter? How much? To Whom?

EVALUATION OF ACTIVITIES/ ACTIONS

ACTIVITIES/ACTIONS

REPRESENTATIONS OF ACTIVITIES

EVALUATION CRITERIA


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Management’s Character society?

In order to fulfill its charge as a trustee of society’s economic resources, corporate management must maintain high standards of integrity, responsibility, and accountability.


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Information/Accounting Professionals’ Responsibility society?

  • Assist management in carrying out their fiduciary responsibilities.

  • By assuring the efficacy and integrity of the related information and administrative systems and those who design, implement, and utilize them.

  • Nested accountability


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Academic Accounting society?

  • Develop and disseminate expert knowledge and professional responsibilities to current and future professionals

  • Facilitate and engage in an ongoing conversation among stakeholders regarding public interest responsibilities associated with the ethic of accountability

  • Act as conscience and critic of profession, organizational management, and society


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Accounting and Accountability society?

  • Accountability is the linchpin of any legitimate and just economic system

  • Accounting resides at the critical interface between those who control the economic assets (corporate management) and the society that they benefit

  • An ethic of accountability

    • is a key component in implementing corporate responsibility

    • provides a contextual framework wherein we all can carryout our responsibilities



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Brief History of Corporate Responsibility society?

  • Industrial revolution –shift of power and population

  • Limited liability corporation emerged

  • Late 1800s – amassed significant wealth and power – trusts/monopolies

  • Early 1900s – trusts busting by the state

  • WWI – business left to its own devices

  • Great depression – 1930s business blamed

  • Mid 20th century – society best served if businesses are state controlled

  • Late 20th century – privatization and globalization


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What’s In Store for the Early 21 society?st Century Given the Recent and Frequently Reoccurring Market Failures?

  • Dot.com bubble

  • Corporate defaults

  • Banking crisis


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Fundamental Issue society?

(Re)Distribution of wealth generated through the power of socialized production


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Ongoing Dialectical Process society?

  • Corporate autonomy or control by the state

    • Abuses aroused social concern

    • Power and wealth concentrations brought calls for accountability and redistribution

  • Ideological models

    • Liberal – individual equality and liberty

    • Nationalist/mercantile – economic activities subordinated to goals of the state

    • Communist/socialist – investment and enterprise are controlled by the state


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Western Democratic Capitalism society?(Socio-economic Political Context)

  • Liberal model

  • Utilitarian philosophy

  • Dominant economic focus

    • Markets as primary mechanism for wealth distribution

    • Economic well being synonymous with social well being

    • Markets provide a just and sustainable society

    • Totality of corporate responsibility can be specified through an economic calculus



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Corporations society?

Economic Markets





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Corporate Responsibility society?

  • Realignment of perspective

    • Responsible entity shifts from individual to corporation

    • Resource use shifts from narrow, private interests to broad, social ends

  • Requires

    • Linking responsibility to power

    • Being open to pubic scrutiny

    • Considering noneconomic costs and benefits in decisions

    • Involving corporations in social affairs


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Establishing Parameters society?

  • Voluntary – imposed

  • Normative – practical theories

  • Citizen – lesser legal entity

  • Consequentialism – nonconsequentialism

  • Basis for Responsibilities

    • Economic, legal, ethical, discretionary

  • For whom

    • Stockholders, management, workers, business stakeholders, nonbusiness stakeholders

  • What rights

    • Life, liberty, property, justice, equity, human rights, education, happiness, dignity, health


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Current Focus society?

  • Issues having broad social and environmental implications – global warming, human rights, economic growth, poverty reduction

  • Economic benefits associated with social and environmental actions

  • Business attitudes, awareness and practices related to nonfinancial operations

  • Implications of corporate actions on nonbusiness stakeholders

  • How different segments of society conceptualize and practice corporate responsibility


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Current Challenges society?

  • Focus on financial factors/results diverts attention away from social and environmental costs and benefits that cannot be easily converted

  • Little evidence to support or refute economic benefits

  • Linking actions to outcomes

  • Major measurement problems and few benchmarks

  • Assessing collective local, regional, systemic implications (multi-scale, multi-entity)

  • Imbedding in management, reporting and control systems


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Fundamental Questions society?

  • Capitalism’s ability to cure capitalism’s ills

  • Market’s ability to self regulate and allocate

  • Validity of the business case

  • Sustainability of transnational corporations

  • Corporation’s responsibility for nonfinancial objectives

  • Role of government and civil society

  • Should, how, and by whom should corporations be held accountable to for their nonfinancial performance


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Issues On the Corporate Responsibility Agenda society?

Acting in the Public Interest

Facilitating a democratically governed society

Supported by a sustainable economic system


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ECONOMIC VIABILITY society?

SOCIAL SUSTAINABILITY

CORPORATE RESPONSIBILITY

LEGAL COMPLIANCE

ENVIRONMENTAL SUSTAINABILITY

WORKERS’ RIGHTS

PHILANTHROPY

HUMAN RIGHTS


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Reality Checks society?

  • Possible future/alternative directions

  • Contribute to or exacerbate problems

  • New initiatives

  • Reconceptualizations needed

  • Evolve and transform into more integrated agenda


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Macro Issues society?

  • Political influence of corporation in directing the responsibility conversation and avoiding responsibilities (e.g., taxation)

  • Capital markets’ influence on corporations

  • Implications for small and medium sized organizations


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Specific Issues society?

  • Corporate governance

    • Public reporting

    • “stakeholder” involvement/management

  • Internal implementation

    • Embedded within managing structures

    • Management, reporting, and control systems

    • Internal audit function

  • Improved information systems and external reporting media


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Specific Issues society?

  • Professional service firms

    • Their responsibility for responsibility

      • Allegiance

      • Fee structure and compensations schemes

      • Desired source and level of regulation and oversight

  • Supply chain influence

    • Right to impose values and systems

    • Upon whom

    • Effective processes and procedures

    • Information systems use and control


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Specific Issues society?

  • Universality of standards

    • Content

      • Cultural differences

      • Economic disparities

      • Political demands

    • Implementation

      • Financial accounting model

      • Uniform accounting and reporting standards

      • Who sets standards

      • Who monitors compliance


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Specific Issues society?

  • Changing investor values

  • Changing customer values

  • Alternative organizing arrangements

    • Social enterprises

    • Social entrepreneurship

    • Sustainable production

    • Sustainable consumption


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Can a Commercial Enterprise Survive in the Long Run with its Primary Objective Being Something Other than Maximizing Shareholder Value?

  • What would it look like?

    • Alternative business models, organizational structures, business plans

  • How would it formulate a viable, sustainable strategy?

  • What types of accountability systems would be facilitative?


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Objectives of Seminar Series Primary Objective Being Something Other than Maximizing Shareholder Value?

  • Identify the factors explaining the gap between academic research and corporate responsibility activity

  • Articulate existing and new policy-oriented research paths addressing climate change and sustainable development.

  • Develop a more comprehensive and intelligible theoretical understanding of the field by engaging a wider range constituents (inter alia, media, local government, and SMEs) in the debate.

  • Develop conceptual framework(s) providing the basis for establishing corporate responsibility as a distinct research area with a coherent research agenda within Business, Management, and Accounting.


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Extending and Refining Field Primary Objective Being Something Other than Maximizing Shareholder Value?

  • Multi-perspective exploration and critique of corporate responsibility goals by academics, professionals, and practitioners

  • Specify the national, organizational, and community strategies for implementing corporate responsibility goals

  • articulate how academics, professionals, and practitioners differently and commonly do, and should, contribute to the debate, identifying appropriate bridging strategies.

  • Compare and contrast selected aspects of corporate responsibility practice with international developments.

  • review the nature, direction and applicability of selected theoretical dimensions that inform the understanding of corporate responsibility.

  • assess the opportunities for theory building, to further support understanding of the complexities of corporate responsibility and the sustainability and long-term value of corporate responsibility practice to corporations and civil society.


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How Do We Decipher the Domain? Primary Objective Being Something Other than Maximizing Shareholder Value?

  • Is corporate tax practice a corporate responsibility issue

  • How, in a world of depleting resources, can we ensure equity between business and society

  • Can corporate responsibility make poverty history

  • Can corporate philanthropy contribute to social justice

  • Where do the responsibilities of corporations, government, and civil society begin and end


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STOP Primary Objective Being Something Other than Maximizing Shareholder Value?


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Social Enterprise Primary Objective Being Something Other than Maximizing Shareholder Value?

  • Private sector v NFP/NGO/Gov’t

  • Self sustaining economically

  • Extent to which commercial activity supports the social objective

  • Agriculture

    • Food production

    • Food processing

    • Wine


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“Business” Model Primary Objective Being Something Other than Maximizing Shareholder Value?

Exclusively concerned with achieving social objectives (heath care, recycling, vocational training, education, jobs, reducing poverty) NFP/Gov’t

Concerned with achieving social objective and sustaining operations through marketing a/the related product/service (improve skill levels of disadvantages-vocational training, producing food to feed the hungry, natural beef)

Social business enterprise

Concerned with achieving social objective and sustaining operations through marketing a product/service for consumption (clean water – Belu, Ethos, Ben & Jerry’s franchise)

Explicitly concerned with responding to market demands providing a marketable product/service for consumption (autos, petroleum, candy, coffee, furniture, commodity beef)FP

Sustainable product/ service/ process

Unsustainable product/ service/ process

Sustainable product/ service/ process

Unsustainable product/ service/ process

Sustainable product/ service/ process

Unsustainable product/ service/ process

Sustainable product/ service/ process

Unsustainable product/ service/ process


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Economic results are seen as Primary Objective Being Something Other than Maximizing Shareholder Value?

1. What is the most responsible alternative?

2. How do we accomplish it in the most economical way?

1. What is the most economically viable alternative?

2. How do we accomplish it in the most responsible way?

Means

(Provide resources for social objective(s)

End

(Maximize economic/ shareholder value)

Concerned with achieving social objective and sustaining operations through marketing a/the related product/service (improve skill levels of disadvantages-vocational training, producing food to feed the hungry, natural beef)

Social business enterprise

Concerned with achieving social objective and sustaining operations through marketing a product/service for consumption (clean water – Belu, Ethos, Ben & Jerry’s franchise)

Explicitly concerned with responding to market demands providing a marketable product/service for consumption (autos, petroleum, candy, coffee, furniture, commodity beef)FP

Sustainable product/ service/ process

Unsustainable product/ service/ process

Sustainable product/ service/ process

Unsustainable product/ service/ process

Sustainable product/ service/ process

Unsustainable product/ service/ process


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Can a Corporation Survive in the Long Run with its Primary Objective Being Something Other than Maximizing Shareholder Value?

  • Context and infrastructure

  • Accountability systems


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Balance Objective Being Something Other than Maximizing Shareholder Value?

  • Economic System v. Lifeworld

  • Instrumental Rationality v. Communicative Rationality

  • Instrumental Action v. Communicative Action


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Emergent Organizational Structure Objective Being Something Other than Maximizing Shareholder Value?

  • Core values are being facilitated by the organization structure

  • Cooperative structure enables them to meet their needs.

  • An organic organizational structure developed out of the norms and values of people involved, NOT a given organizational structure imposed upon a set of values.


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Future Considerations Objective Being Something Other than Maximizing Shareholder Value?(revise)

  • Growth & ability to control & maintain values

  • Interface with traditional economic markets

  • Other sustainably-oriented companies and their values & models

  • Prescriptive sustainable business model

  • Scaling up?


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An agenda for the Academy Objective Being Something Other than Maximizing Shareholder Value?

  • Scholarly investigation

    • Practices and technique

  • Educational innovation

    • Context, complexity, and critique

  • Community interaction

    • Responsive and responsibility social action