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Behind the Mask - Revealing the Face of Corp Cit

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ABSTRACT. This paper traces the development of corporate citizenship as a way of framing business and society relations, and critically examines the content of contemporary understandings of the term. These conventional views of corporate citizenship are argued to contribute little or nothing to existing notions of corporate social responsibility and corporate philan- thropy. The paper then proposes a new direction, which particularly exposes the element of “citizen- ship”. Being a political concept, citizenship can only be reasonably understood from that theoretical angle. This suggests that citizenship consists of a bundle of rights conventionally granted and protected by gov- ernments of states. However, the more that govern- mental power and sovereignty have come under threat, the more that relevant political functions have gradually shifted towards the corporate sphere – and it is at this point where “corporate” involvement into “citizenship” becomes an issue. Consequently, “corporate citizens” are substantially more than fellow members of the same community who cosily rub shoulders with other fellow citizens while bravely respecting those other citizens’ rights and living up to their own responsibility as corporations – as the conventional rhetoric wants us to believe. Behind this relatively innocuous mask then, the true face of corporate citizenship suggests that the corporate role in contemporary citizenship is far more profound, and ultimately in need of urgent reappraisal. KEY WORDS: business and government, corporate citizenship, corporate social responsibility, globaliza- tion, human rights, stakeholder theory 1. Introduction This paper critically examines the rise and the content of the term corporate citizenship (CC), and asks how far it really embodies a new concept or new ideas. We first discuss the emer- gence of CC as new way of framing business- society relations, and outline two common perspectives on CC in the extant literature. We then develop a third, extended view of the concept that starts from the “citizenship” element of CC. We argue that, apart from one or two exceptions (e.g. Wood and Logsdon, 2001), this has been largely ignored in the still growing body of literature. Hence, starting from this notion of citizenship, we develop a conceptual framework for CC that reflects the shifting role of corpora- tions in society during the last decade, and ulti- mately conceptualises a political role for the corporation in society. We suggest, however, that the face of current conceptions of CC as found in the literature, and as expressed by corporations and consultants, may actually serve to obscure this new role for the corporation, and in so far as new institutional arrangements are masked by this terminology, preclude a critical examination of business-society relations. 2. Corporate citizenship in context: 2. Conceptual frameworks for 2. business-society relations As CC represents a progression within a longer tradition in conceptualising business and society relations, it is important to first examine the legacy of these concepts. The most popular concept to date, and essentially the building Behind the Mask: Revealing the True Face of Corporate Citizenship Journal of Business Ethics 45: 109–120, 2003. © 2003 Kluwer Academic Publishers. Printed in the Netherlands. Dirk Matten is a Senior Research Fellow at the International Centre for Corporate Social Responsibility (ICCSR) at the Nottingham University Business School. Andrew Crane is a Senior Lecturer in Business Ethics at ICCSR and Wendy Chapple is the Deputy Director of ICCSR. Dirk Matten Andrew Crane Wendy Chapple
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ABSTRACT. This paper traces the development ofcorporate citizenship as a way of framing business andsociety relations, and critically examines the contentof contemporary understandings of the term. Theseconventional views of corporate citizenship are arguedto contribute little or nothing to existing notions ofcorporate social responsibility and corporate philan-thropy. The paper then proposes a new direction,which particularly exposes the element of “citizen-ship”. Being a political concept, citizenship can onlybe reasonably understood from that theoretical angle.This suggests that citizenship consists of a bundle ofrights conventionally granted and protected by gov-ernments of states. However, the more that govern-mental power and sovereignty have come underthreat, the more that relevant political functions havegradually shifted towards the corporate sphere – andit is at this point where “corporate” involvementinto “citizenship” becomes an issue. Consequently,“corporate citizens” are substantially more than fellowmembers of the same community who cosily rubshoulders with other fellow citizens while bravelyrespecting those other citizens’ rights and living up totheir own responsibility as corporations – as theconventional rhetoric wants us to believe. Behind thisrelatively innocuous mask then, the true face ofcorporate citizenship suggests that the corporate rolein contemporary citizenship is far more profound, andultimately in need of urgent reappraisal.

KEY WORDS: business and government, corporatecitizenship, corporate social responsibility, globaliza-tion, human rights, stakeholder theory

1. Introduction

This paper critically examines the rise and thecontent of the term corporate citizenship (CC),and asks how far it really embodies a newconcept or new ideas. We first discuss the emer-gence of CC as new way of framing business-society relations, and outline two commonperspectives on CC in the extant literature. Wethen develop a third, extended view of theconcept that starts from the “citizenship” elementof CC. We argue that, apart from one or twoexceptions (e.g. Wood and Logsdon, 2001), thishas been largely ignored in the still growing bodyof literature. Hence, starting from this notion ofcitizenship, we develop a conceptual frameworkfor CC that reflects the shifting role of corpora-tions in society during the last decade, and ulti-mately conceptualises a political role for thecorporation in society. We suggest, however, thatthe face of current conceptions of CC as foundin the literature, and as expressed by corporationsand consultants, may actually serve to obscurethis new role for the corporation, and in so faras new institutional arrangements are masked bythis terminology, preclude a critical examinationof business-society relations.

2. Corporate citizenship in context: 2. Conceptual frameworks for 2. business-society relations

As CC represents a progression within a longertradition in conceptualising business and societyrelations, it is important to first examine thelegacy of these concepts. The most popularconcept to date, and essentially the building

Behind the Mask: Revealing the True Face of Corporate Citizenship

Journal of Business Ethics 45: 109–120, 2003.© 2003 Kluwer Academic Publishers. Printed in the Netherlands.

Dirk Matten is a Senior Research Fellow at theInternational Centre for Corporate Social Responsibility(ICCSR) at the Nottingham University BusinessSchool. Andrew Crane is a Senior Lecturer in BusinessEthics at ICCSR and Wendy Chapple is the DeputyDirector of ICCSR.

Dirk Matten Andrew Crane

Wendy Chapple

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block of the modern business-society relationsliterature, is corporate social responsibility(CSR). CSR first arose in the 1950s, however itwas in the late 1970s that the academic debatereally started to form (Carroll, 1999). One of thefounding definitions of the modern concept ofCSR is the much-cited four-part model of CSRby Carroll (Carroll, 1979; see further Carroll andBuchholtz, 2000). According to this model, thecorporation has four types of responsibilities:first, the economic responsibility to be profitable;and second, the legal responsibility to abide bythe laws of the respective society. These twoaspects are the mandatory part of businessresponsibility. The third responsibility is ethical,and obliges corporations to do what is right, justand fair even when business is not compelledto do so by the legal framework. Rather thanbeing mandatory, the issues linked to the ethicalresponsibilities should lead to voluntary actionby corporations, but are – as Carroll puts it –“expected” from business. These “ethical”responsibilities, one could argue, have been themost debated ones, and much of the controversyin business-society relations have focused onthese responsibilities. The fourth area of respon-sibility is labelled philanthropic and describes thoseactivities “desired” by society, such as con-tributing resources to various kinds of social,educational, recreational or cultural purposes.Again, similar to “ethical” responsibilities, thisfourth area of CSR is not mandatory and merely“should” be done by companies, although is notnecessarily “expected”. It is these latter two areaswhich are central to the area of study of CSR,since they differentiate corporate behaviour frommere compliance, but also are the most contro-versial due to the normative nature of these twoforms of responsibility.

Other writers have focused on the nature andscope of CSR and have attempted to map theboundaries of responsibility of the firm. Wood(1991) defines business and society relations asbeing “interwoven rather than being distinctentities” and hence, societal expectations havedirect influence in the shaping of CSR. Woodargues that this interrelatedness stems from 3distinct levels of social responsibility within thefirm – institutional, societal, and managerial –

and it is these that shape the relationship betweenbusiness and society. Hence, much of the seminalwork on CSR was largely normative, in naturewith the main focus being on the definition ofthe boundaries of responsibility of business. Morerecently, certain strains of the literature haveattempted to address more pragmatic concerns.The corporate social performance (CSP) litera-ture, for example, attempts to model and measuresocial responsibility in terms of performance, anda fertile stream of literature has attempted to drawout the relationships between social and financialperformance (for an overview, see Wartick andCochran, 1985; and McWilliams and Siegel,2000).

The concept has not changed significantlybeyond this definition. The second overarchingframework we regard as important to mention,stakeholder theory, attempts to operationalisethese responsibilities to an ill-defined “society”by identifying specific constituencies. Ratherthan looking at responsibilities, stakeholder theory,as initially brought forward by Edward Freeman(1984), starts by looking at potential groups insociety and analyses the relation of the firm tothese groups. By this it transcends the limits ofmanagerial capitalism and its focus on share-holders as the most important group. On thecontrary, stakeholder theory claims that thecorporation has a responsibility to all thosegroups who are harmed by, or benefit from, thecompany and/or whose rights will be affectedeither positively or negatively (Evan andFreeman, 1993). Much of the wide acceptanceof stakeholder thinking can be credited to itsplausibility, based on descriptive and instrumentalarguments (Donaldson and Preston, 1995) – thatis, that managers appear to consider particulargroups rather than society as a whole (descrip-tive); and that by doing so, performance mightbe improved (instrumental). However, accordingto Donaldson and Preston (1995), the centralnotion of stakeholder theory is normative, in thatcorporations actually have a moral obligationto all stakeholders (Gibson, 2000; Wijnberg,2000). Thus stakeholder theory can be seen asa necessary but not sufficient condition forsocial responsibility. Stakeholder theory helps toidentify concrete groups in society to which a

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firm has responsibilities, and by its reflection onKantian thinking (Evan and Freeman, 1993),specifically provides a basis for legitimising andprioritising stakeholder influence on corporatedecisions. Therefore, stakeholder theory can beseen as a necessary process in the operationalisa-tion of CSR, as a complimentary rather thanconflicting body of literature.

However, these concepts to date have still beenlargely normative in tone, both in answering thequestion of why, and to what extent, the volun-tary involvement of corporations in societyshould take place. As such they generally wereexpressions of a rather critical attitude towardsbusiness and the debate never really transcendedthe ideological divide between business oriented“capitalist” thinkers (Milton Friedman being thetextbook example) and “critical”, “liberal” or“socialist” proponents of a stronger responsibilityfor the corporation in society.

In practice, there were many barriers tothe implementation of CSR and stakeholdertheory. The 1980s of “Reaganomics” and“Thatcherism” reinvigorated and legitimated theprinciple of the “market” and of “competition”as generally applicable to most business situationsand introduced this economic approach to allstakeholder relations. Consequently, ethical orphilanthropic responsibilities were not judgedunder the criterion of certain ethical values orsocial duties but under the clear perspective ofcorporate interests. Therefore, “investing” insocial, ethical or philanthropic causes was increas-ingly deemed to be acceptable as long as it addedto the bottom line (see Stroup and Neubert,1987; Burke and Logsdon, 1996). Consequently,we might suggest that the traditional normativeaspects of concepts of CSR, CSP and stakeholdertheory were not in very strong demand in thebusiness community, although much of therhetorical and practical dimensions persevered.Moreover, from the 1990s onward, the new ter-minology of corporate citizenship began toincreasingly compete with and replace theseextant notions in the realms of managementtheory and practice.

3. Why a new term?

One might ask why this new label of “corpo-rate citizenship” has surfaced, and the old ter-minology of “stakeholder management” and“corporate social responsibility” has been deemedto some extent inappropriate. First, as Van Luijk(2001) has pointed out, industry has never beencompletely happy with the language of businessethics. The underlying inference of both theterms “business ethics” and “corporate socialresponsibility” implies that “ethics” or “responsi-bility” are concepts which are not present inbusiness, or even worse, which are opposed tobusiness. They were terms used by many propo-nents in the sense of reminding business of some-thing additional they should or even must do.“Citizenship” on the other hand, has a rather dif-ferent connotation for business. CC can be saidto highlight the fact that the corporation sees –or recaptures – it’s rightful place in society, nextto other “citizens”, with whom the corporationforms a community. Citizenship then focuses onrights and responsibilities of all members of thecommunity, which are mutually interlinked anddependant on each other (Waddell, 2000).

Second, it is clear from reviewing the wealthof literature and citations on CC that the termi-nology has been very much driven by practi-tioners, including managers, consultants and thepopular business press. Rather than accepting theexhortations of academics and critics to becomemore “socially responsible”, corporations simplychose to set their own agenda based around beinga “good corporate citizen”. Interestingly, themushrooming of CC rhetoric in business hasprecipitated a rush of interest in academia andelsewhere. Hence, we have seen the emergenceof articles and books on CC, the establishmentof new academic research centres focused on CC,as well as the launch of the dedicated Journal ofCorporate Citizenship.

It is evident, however, that despite the additionof the CC term to the debate surrounding thesocial role of business, its usage has been far fromconsistent, and we might suggest, not at all clear.In the following sections, we shall thereforeexamine this usage, and in so doing, delineatethree different perspectives on CC evident in the

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literature. Of these, two are largely conventionalviews based on CSR, whilst one, we suggest,offers an extended view which goes beyondexisting conceptions of CSR. These differentviews, as we shall see, imply significantly socialroles and responsibilities for business.

4. A critical analysis of contemporary 4. framings of corporate citizenship

In the following we will critically analyse theconventional use of CC in literature and therebyexamine the content and potential implicationsof this new concept as it currently stands. We willstart with what we will call the “limited view ofCC”, before proceeding to what we refer to asthe “equivalent view of CC”.

Limited view of corporate citizenship

Initially, CC was, and in many respects stillis, used to identify the philanthropic role andresponsibilities the firm voluntarily undertakesin the local community, such as charitabledonations. Carroll (1991) for example identifies“being a good corporate citizen” with a specificelement of CSR, namely philanthropic respon-sibilities, identified as his fourth level of CSR.Accordingly, Carroll (1991) places CC at the toplevel of his CSR pyramid, suggesting that it is adiscretionary activity beyond that which isexpected of business. CC in this respect isregarded as a choice to “put something back”into the community, but is merely “desired” bythe community rather than representing anethical injunction of any kind – and as a resultis, according to Carroll (1991, p. 42) “less impor-tant than the other three categories”. For thefirm, CC is generally seen therefore as fuelledby issues of self-interest – including the insightthat a stable social, environmental, and politicalenvironment ensures profitable business (cf.Windsor, 2001; Wood and Logsdon, 2001).Following from this self-interest driven approachis a considerable amount of literature whichdiscusses CC as manifest in specific investmentdecisions into the firms social environment

(Warhurst, 2001). Following the language of cor-porate finance there is talk of “social investing”(Waddock, 2001) in order to build up “socialcapital” (cf. the papers in Habisch et al., 2001)or “reputational capital” (Fombrun et al., 2000),all of which ultimately help to improve theeconomic performance or organisational perfor-mance of the corporation (Bolino et al., 2002).This approach ultimately sees the new contribu-tion of CC to the debate in its basicallyeconomic character as an approach of long-termprofit maximization as a result of (enlightened)self-interest (Seitz, 2002, pp. 61f.).

We refrain at this point from commenting onthe use of CC in this limited sense from a nor-mative perspective. In the context of this paperwe would rather like to take up the questionwhether this limited view of CC really justifiesthe invention and usage of a new terminology.Neither the element of self-interest in corporatephilanthrophy, nor the investment aspect of socialengagement are elements that are completelynew and have not been discussed in the litera-ture on CSR or stakeholder theory before. Apartfrom that, there seems to be no common under-standing about the definition of CC, and quali-fications such as “good” CC even underline theelusive nature of the “limited view of CC”.Furthermore, there is only very poor referenceto the fact that this new concept of business andsociety makes usage of the term “citizenship”.Apart from the occasional reference to sharedrights and duties with other members of society,there is no explicit explanation of the term“citizenship”. Though there might be goodreasons from the business viewpoint to reframesocial involvement, the literature on CC dis-cussed in this section does not provide con-vincing evidence for the necessity of a newterminology.

Equivalent view of corporate citizenship

The second use of the term is more general inscope, and is essentially a conflation of CC withexisting concepts of CSR. The most strikingexample for this use of CC is probably Carrollhimself who, in a paper entitled “The four faces

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of corporate citizenship” (Carroll, 1998), definesCC exactly the same way as he defined CSR twodecades ago (Carroll, 1979; Pinkston and Carroll,1994). This approach has been taken up byseveral authors, though in some cases by usingslightly different phrasing (e.g. Ulrich, 2000). So,for instance, Andriof and McIntosh talk ofcorporate “societal” responsibility but use itsynonymously with CSR – which does notparticularly further the unambiguous under-standing of CC (Andriof and McIntosh, 2001).Or, in a number of recent papers, Maignan andcolleagues (Maignan et al., 1999; Maignan andFerrell, 2000, 2001) have defined CC as “theextent to which businesses meet the economic,legal, ethical and discretionary responsibilitiesimposed on them by their stakeholders”. Thisis largely synonymous with the Carroll (1991)definition of CSR, albeit with a slight refocusingof emphasis towards the meeting of respon-sibilities as opposed to the responsibilities them-selves. Thus, CC is essentially a performance-oriented reconceptualisation of CSR (similar toDavenport, 2000), perhaps reflecting the promi-nence of CC in practitioner discourse.

One of the problems in conceptualising CCis that many authors present a certain view of thedebate in business and society relations so far andthen attribute certain “new” issues and develop-ments to this new label. Thus, “corporate citi-zenship” just functions as a new, as it were,combination of letters for certain ideas withoutany serious reflection on the notion of “citizen-ship” and its potentially new meaning. So, forinstance, Birch regards CC as an innovation tothe CSR concept in that CC causes business tosee itself as part of the public culture whereasCSR is – according to his perception – moreconcerned with social responsibility as anexternal affair (Birch, 2001; see also Logan etal., 1997; McIntosh et al., 1998). CC, from theperspective of those authors, is an extension toa very selectively defined view of CSR, as thebook by Sundar from an Indian perspective quitepowerfully shows (see Sundar, 2000).

From the analysis of the current academicthinking on CC, it would appear that this is reallyjust a rebranding or relaunch of extant ideas inorder to appeal better to business. After all, there

seems to be nothing in the CC literature whichis significantly different from the traditional CSRstance, except that it lacks any explicit norma-tive aspect. In the limited view, CC is at mostnothing more than a slightly more strategicapproach to philanthropy – as when Smith (1994)refers to CC as “the new corporate philan-thropy”. In the equivalent view, CC is princi-pally about either rebranding CSR or turningCSR into CSP. We would suggest that suchdevelopments to incorporate the business casewere already underway in the CSR literatureanyway. Not surprisingly, such use of CC has ledto a good deal of scepticism about the term beinga mere management fad or fashion. More impor-tantly though, the notion of citizenship whenapplied to corporations also serves to maskemerging shifts in business society relations. Inorder to show this, we have developed what wecall an “extended” view of CC.

5. Extended view of corporate 5. citizenship

Finally, it also possible to discern some hints ofan extended view of CC that goes beyond theseconceptions rooted in CSR. Whilst there hasbeen only very limited discussion of this per-spective directly in relation to CC, it has beenalluded to in several recent articles, includingthose by Van Luijk (2001), Windsor (2001),Wood and Logsdon (2001) and Logsdon andWood (2002). In the following sections, weattempt therefore to draw also on a broader rangeof literature from management, political theoryand sociology in order to set out a morecomplete conceptualisation of an extended viewof CC, as well as to examine its implications forbusiness-society relations.

“Citizenship” as a core element of corporate citizenship

In the vast and growing debate on CC there areonly very few authors1 who deliberately con-ceptualise the notion of citizenship (cf. Woodand Logsdon, 2001). The majority of authors do

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not move beyond a conventional idea ofcitizenship that “implies membership in abounded political (normally national) commu-nity” (Hettne, 2000, p. 35). CC, following thisidea, means that corporations are “legal entitieswith rights and duties, in effect, ‘citizens’ of stateswithin they operate” (Marsden, 2000, p. 11; seealso the title of Seitz, 2002 which is symptomaticof authors in the business community). Althoughthis is a notion of citizenship at the forefront ofthe discussion of the “European State”, the one-dimensional and direct application to corpora-tions appears to be more than odd.

To really get behind what could be meantby CC, it is important to have a closer look atcitizenship from a perspective that is informedby social sciences, especially political theory.The superficiality of the current reception ofthe notion of “citizenship” in the managementliterature on CC is largely a result of a nearlytotal neglect of interdisciplinary research intothe concept. Looking back into the intellectuallegacy of citizenship, we could start withAristotle, who saw citizenship as the “right toparticipate in the public life of the state,which was more in the line of a duty and aresponsibility to look after the interest of thecommunity” (Eriksen and Weigård, 2000, p. 15).Examining corporate citizenship from this per-spective, the usage of the term – at least in adirect sense – seems somewhat inappropriate.These rights of political participation were onlyassigned to individuals. Though there might bea broader application of these rights to corpora-tions there is no real reason to use the termcitizenship to indicate activities such as “avoid-ance of undue influences” through bribery, or“lobbying and other political action” (cf. Woodand Logsdon, 2001, p. 101).

The picture does not get any clearer if wescrutinize the dominant understanding of citi-zenship in most industrialized societies. In theliberal tradition, citizenship is defined as a set ofindividual rights (Faulks, 2000, pp. 55–82).Following the still widely accepted categorisationby T. H. Marshall, liberal citizenship comprisesthree different aspects of entitlement: civil rights,social rights and political rights (Marshall, 1965).Civil rights consist of those rights which provide

freedom from abuses and interference by thirdparties (most notably the government); amongthe most important ones are the right to ownproperty, to engage in “free” markets or freedomof speech. Social rights consist of those rightswhich provide the individual with the freedom toparticipate in society, such as the right to edu-cation, healthcare or various aspects of welfare.Both types of rights are clearly focusing on theposition of the individual in society and help toprotect its status (Eriksen and Weigård, 2000). Assuch, civil and social rights are to some extentextremes on the same continuum: civil, some-times called “negative”, rights protect the indi-vidual against the interference of stronger powers;social, “positive”, rights are entitlements towardsthird parties. The key actor here is the govern-ment, which on the one hand respects and grantsthe civil rights of the “citizens” and – generallyby the institutions of the welfare state – cares forthe fulfilment and protection of social rights. Incontrast to these more passive rights (with thegovernment as active respecter or facilitator) thethird category of political rights moves beyond themere protection of the individual’s private spheretowards his or her active participation in society,which therefore takes in a special position(Habermas, 1996). Political rights include theright to vote or the right to hold office and, gen-erally speaking, enable the individual to take partin the process of collective will formation beyondthe sphere of his or her own privacy.

If we analyse the term “citizenship” from thisperspective it is, at first glance, somewhat hardto make any sense of something like “corporatecitizenship” at all. Civil rights, of course, countamong the main conditions for modern capi-talism as they allow individuals to engage in freemarkets, own and accumulate property etc. Onemight even argue that some of these civil rightsare also granted to corporations as artificial, legalpersonalities. This becomes more problematic inthe area of social rights: none of these rights inthe direct sense can be regarded as an entitlementfor a corporation. The only (indirect) role cor-porations have in these rights is that govern-ments, in protecting social rights, have sometimessignificantly restricted the civil rights of individ-uals (or their business activities). The same applies

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to the political rights: as already discussed abovein the Aristotelian context, political rights in thedirect sense do not belong to corporations indemocratic societies.

Wood and Lodgson (2001), whom we havequoted above as the only other authors whoexplicitly link their concept of CC to the notionof citizenship now proceed from this under-standing of citizenship (which they call a “min-imalist view”) and gradually loosen the conceptof citizenship by introducing other contempo-rary normative notions of citizenship, such as thecommunitarian or the human rights view. Inso doing, citizenship is not confined to rightsonly, but includes the respective duties as well.Corporations then enter the picture – notbecause they have an entitlement to certain rightsas a “real” citizen would, but as powerful publicactors which have a responsibility to respect those“real” citizen’s rights in society. Inevitably there-fore, we see a tendency to collapse back intomore conventional perspectives on CC, albeit byreferring to a new normative concept of citi-zenship such as the communitarian approach.

It is our intention, however, to proceed dif-ferently and analyse these changes from a descrip-tive perspective. Clinging to the liberal view ofcitizenship, which at least officially dominatesmost modern societies (Hindess, 1993), we wantto further establish the relation of corporationsand citizenship in the context of contemporaryWestern societies. By this we want to show thatCC is not a view of business and society relationswhich might (or might not) be adopted bycertain voluntary actors (such as a “communi-tarian” view). We argue that because of elementsof institutional failure crucial to the functioningof the notion of liberal citizenship, corporateinvolvement in “citizenship” moves from avoluntary form of behaviour to an unavoidableoccurrence which ultimately results in a neces-sary reconceptualization of business-society rela-tions.

The decline of liberal citizenship

The pivotal actor within the liberal view ofcitizenship is typically the state, or more precisely,

the governmental institutions of the nation state(Hettne, 2000). The state is usually expected toprotect civil rights, to run the welfare state inorder to protect social rights, and the nation stateis the arena in which political rights are exercisedand collective decisions are taken within thelegitimate procedural framework. The crucialpoint is therefore that citizenship is inseparablylinked to a certain (national) territory, which isgoverned by a sovereign state as ultimate guar-antor of citizenship and the rights it embodies.

The decisive step towards a notion of citizen-ship, which ultimately allows the extensiontowards a conceptualization of CC, centresaround the proposition that nation states increas-ingly fail to provide this variety of civil rights,resulting in the decline of the role of state. Themain reason for this proposed decline of citizen-ship (at least in the sense of the liberal viewcommonly shared by most Western democracies)lies in the process of globalization (Falk, 2000).The rights embodied in the traditional conceptof citizenship are linked to the state which is sov-ereign in its own territory. The central charac-teristic of globalization though consists in thedeterritorialization of social, political and economicinteraction (Scholte, 2000). This means that agrowing number of social activities appear to betaking place beyond the power and influence ofthe nation state.

In the context of this paper, we would positglobalization as the main eroding factor of citi-zenship (similarly Logsdon and Wood, 2002).This is not only a reflection of the recent debatein political theory (cf. Turner, 2000), but cru-cially, globalization also seems to be one of thetriggers for the heightened attention to CC inthe business community (see World EconomicForum, 2002). This is not a new observation, andhas been scrutinised from a variety of perspec-tives. Most notably, this phenomenon has beenincluded in current sociological debates. As Beck,Giddens and others have pointed out in thecontext of risk, the state has proved to be unableto protect its citizens’ rights in the face of newsocial and environmental threats (Beck et al.,1994; Beck, 1997). Without discussing thevariety of reasons for this failure, Beck haslinked his work closely to the globalization

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debate (Beck, 2000), and can be seen to haveidentified changes that are crucial underpinningsfor our argument. First, there is a definite endto a political setting where the state and itsgovernance structure is the only arena wherepolitical action takes place: “the equation ofpolitics and the state”, Beck argues, is a“modernist category error” (Beck, 1997, p. 98).Second, and as a direct consequence, we alsowitness manifestations of politics that “breaksopen and erupts beyond the formal responsibili-ties and hierarchies” (Beck, 1997, p. 99). Thisnew political arena, labelled “subpolitics” byBeck, is clearly visible in the context of global-ization and citizenship. As globalization hasoccurred in the business arena, similar globaliza-tion has occurred in the civil arena. There hasbeen the emergence and growth of global NGOsand other civil society actors such as Greenpeace,Amnesty International who advocate the protec-tion of civil and social rights where nation statesare either unwilling, have failed, or have beenunable to intervene.

Corporations as major players in a framework of dissolving liberal citizenship

Where do corporations fit into this picture? Ourcentral argument is that corporations enter thearena of citizenship at the point of governmentfailure in the protection of citizenship. More pre-cisely, we suggest that they partly take over thosefunctions with regard to the protection, facilita-tion and enabling of citizen’s rights – formerlyan expectation placed solely on the government.We thus argue that if a term such as “corporatecitizenship” makes any sense in the propermeaning of the term, “corporations” and “citi-zenship” in modern society come together atexactly the point where the state ceases to bethe only guarantor of citizenship any longer. Seenin another light, it could be hypothesized thatcorporations are compensating or correcting forgovernment failure. Let us consider some empir-ical examples.

First, in the area of social rights, it is clear thatwhen analyzing the literature on CC, and espe-cially looking at initiatives from the business

community, the majority of CC targets those“positive” rights where governmental actors fail(for typical areas see Habisch, 2003, pp. 85–139).Foremost, there is the general role of corpora-tions as employers, which is the basis of a varietyof functions of the welfare state. However, someof the more philanthropic activities, such asemployee volunteering, and charitable acts suchas feeding homeless people, helping headmastersin managing school budgets, or improvingdeprived neighbourhoods, are all activities wherebusiness has focused on protecting social rightswhich originally would have been the task ofgovernment.

Ironically, this role of corporations is a directconsequence of the neo-liberal revolution of the1980s, where the welfare state was decisively cutback and government drew back from many ofits economic functions in order to facilitate agreater variety and intensity of civil rights, suchas those embodied in the “free” market and otherindividual freedom to all sorts of economic activ-ities. Therefore in the industrialized world, it canbe argued that CC consists of a partial attempt,motivated by self-interest, to take over thoseunserved governmental functions that were theresult of a cutback in social rights two decadesago.

The situation looks significantly different indeveloping countries where governments simplycannot afford a welfare state. Improving workingconditions in sweatshops, ensuring employees aliving wage, providing schools, medical centresand roads, or even providing financial support forthe schooling of child labourers are all activitiesin which corporations such as Shell, Nike, LeviStrauss and others have engaged under the labelof CC. In fact, citizenship again means here thatcorporations take over those functions which areclearly governmental functions in the frameworkof liberal citizenship.

Second, in the area of civil rights, mostdeveloped countries provide their citizens witha fairly reasonable protection of their civil rights.Governmental failure however again becomesvisible in developing or transforming countries.Drastic examples, such as the role of Shell inNigeria and its apparent role in the restrictionof civil rights of the Ogoni people (see Wheeler

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et al., 2002), show that corporations might playa crucial role in either discouraging (as Shell) orencouraging governments to live up to theirresponsibility in this arena of citizenship.

Thirdly, in the area of political rights, the afore-mentioned argument already seems to suggestthat corporations themselves assume some polit-ical rights if they take in such a pivotal role ingranting and facilitating major rights linked tocitizenship. Furthermore, corporations are takingan increasingly active role in the political arena(Schneidewind, 1998). Corporate influencethrough lobbying, party funding and other activ-ities to influence the political process has grownincreasingly, and has put corporations as a moreor less officially accepted player in the arena ofpolitical rights. This is particularly striking whenwe look at how the individual citizen seeks toexercise their political rights. Voter apathy innational elections has been widely identified inmany industrialized countries (Hertz, 2001), yetthere appears to be a growing willingness on thepart individuals to participate in political actionaimed at corporations rather than at governments. Anexample of this is when Greenpeace activistsHelen Steel and Dave Morris (the McLibel Two,see Vidal, 1997) sought to draw attention tovarious political issues such as import tariffs,cultural homogenisation, environmental protec-tion and union rights, they achieved internationalcoverage for their efforts not by tackling theFrench or the U.K. governments, but byattacking the McDonald’s corporation.

6. Conclusion

The enthusiastic adoption of the term CC in thebusiness world can be viewed in a positive light,and in a sense business is taking ownership of aterm that they themselves shape, and mould intoa concept of business and society. However, froman academic perspective, the change in termi-nology to CC is equivocal. On the one hand,CC as understood within the two conventionalperspectives appears to provide little of substanceto the debate on business-society relations – andinsofar as it contributes to conceptual confusion,may even be counter-productive. Conversely, in

the light of the extended theoretical perspective,there appears to be significant relevance for theadoption and reconceptualisation of the socialrole and responsibilities of business in the frame-work of CC. However, this perspective could besignificantly different from the practitioner inter-pretation of CC. This raises some importantissues.

First, by stepping outside of the boundariesof business ethics, and drawing on broadernotions of citizenship, the implications forbusiness and society relations are far more thanthe idea that corporations have discovered their“place in society”, in a cosy harmonious co-exis-tence with their “fellow citizens” living up to avision of citizenship including both a mixture offair rights and responsibilities. Behind this maskof CC, our analysis suggests quite a different face:apart from small and medium sized enterprises,who because of their size and level of socialembeddedness could be viewed on a closer levelto “private” citizens, large corporations do notshare a similar status of citizenship as individuals.Thus, “corporate” citizenship could imply a sub-stantially different notion. Citizenship is a bundleof more or less well defined rights, and the cor-porate involvement in this context does not meanthat corporations bravely share in these, but thatthey have gradually amounted to replace the mostpowerful institution in the traditional concept ofcitizenship, namely Government. Corporations,and to a decreasing amount governmental insti-tutions, assume responsibility for the protectionand facilitation of social, civil and political rightsand corporate “citizenship”, we would suggest,can and should be reconceptualized to meanexactly this. The implications are that corpora-tions are engaging as facilitators of the citizenprocess, regardless of whether they are explicitlysetting out to be “good corporate citizens”.

This finding is even less surprising whenthe implications of power are brought into theCC argument. Traditional models of citizenshipimply being a member of a democratic society,with equal political, civil and social rights, withequal power. It seems inappropriate to applythese traditional models of citizenship to corpo-rations, as although the concepts of political, civiland social rights (and responsibilities) can be

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stretched to fit the corporate case, the underlyingfact is that corporations possess considerablepower over and above the average citizen.Corporations are economic institutions, whichare reliant on citizens, but cannot be classed ascitizens themselves. If CC represents participa-tion in society, it makes sense that business fulfilsa role similar to that of government rather thanthe average citizen.

This leads to another observation: corporate“citizens” normally assume their role only if itis in their self-interest to do so. This leads toactivities of CC that are often, but certainly notalways, praiseworthy and for the benefit ofsociety. If governments fail in their responsibilityto facilitate citizenship, society can only be happyif this gap is filled by corporations. But shouldsociety really be entirely happy about this? Theimmediate question is: if corporations haveassumed such a pivotal and powerful role insociety, what happens if CC – in its extendedsense – is not in their self-interest? The questionleads to a more general, and in fact more fun-damental problem connected to CC: if corpora-tions take over vital functions of governments,they should take over to the same degree exactlythe type of accountability which modern soci-eties demand from government as a facilitator ofcitizen rights. Governments are accountable totheir citizens and, in principle, could be approvedor discharged of their responsibilities through theelectoral process. Similar mechanisms however donot yet exist with regard to corporations. CC inthis light is far more than a new brand of CSR,or a fad in describing business and society rela-tions – it is taking the roles and responsibilitiesof business into a whole new area. Corporationsare left to protect (or when it is not in their ownself-interest, to not protect) certain rights for con-sumers, workers and other citizens even if itdoesn’t come under the explicit heading of“Corporate Citizenship”. It identifies a shift inthe corporate role of society that puts thequestion of corporate accountability up to thetop of the social, political and economic agendaof societies in the age of globalization. From thisperspective, rather than being, as many haveclaimed, the solution to urgent problems (e.g.Habisch et al., 2001, p. 1), CC in its more mean-

ingful sense, is in fact just as much the urgentproblem itself.


1 One of the few contributions reflecting the explicitnotion of “citizenship” in Europe is a recent bookby Seitz (2002). However, his translation of “citizen-ship” by the German “Bürgerschaft” shows the trapsand pitfalls of a politically uninformed approach tothe term. As Eriksen and Weigård (2000) stress, theGerman “Bürger” (or the Scandinavian equivalent“borger”) includes both the English/French notion of“citizen/citoyen” and “bourgeois”. Whereas the firstmainly reaches back to the Aristotelian notion ofcitizenships as a set of rights and duties in politicalparticipation (a limitation clearly reflected by Seitz’work), only the second extends the perspective andfinally leads to the integrative perspective of liberalcitizenship in the Marshallian sense, which is thedominant pattern of citizenship on Western democ-racies today.


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Dirk MattenInternational Centre for Corporate Social

Responsibility,Nottingham University Business School,

Jubilee Campus,Wollaton Road,

Nottingham NG8 1BB,U.K.

E-mail: [email protected]

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