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The Social Responsibility of Business and New Governance 1

  • Jeremy Moon (a1)
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This Article Considers The Social Responsibility Of Business, why it exists, why governments might be interested in it, and its place in new governance. The discussion is primarily conceptual, informed and stimulated by empirical findings from Australia and the UK, countries which have been associated neither with the extent of business social responsibility long-witnessed in the USA nor with the extent of neo-corporatism characteristic of parts of northern Europe and Scandinavia.

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1

This article was completed whilst I was Hallsworth Visiting Professor, Department of Government, University of Manchester. I am grateful to participants in seminars at the Manchester Department of Government and at the Institute for Advanced Study, Princeton; to Ruth Abbey, Michael Moran and Geraint Parry for their discussions of the issues; and to Mervyn Frost and Jennie Somerville for their thoughts on a draft.

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2 See Grant, Wyn, Business and Politics in the UK, Basingstoke, Macmillan, 1993; Bell, Steven and Wanna, John (eds), Business-Government Relations in Australia, Marrickville, NSW, Harcourt Brace Jovanovich, 1992.

3 Guy Peters, B., ‘Shouldn’t Row, Can’t Steer: What’s a Government to Do?’, Public Policy and Administration, 12:1 (1996), pp. 51–2.

4 BSR includes activity which may be subject to taxation incentives. The US tax system contributes to ‘The Social Policy of the Firm’ (Martin Rein Policy Sciences, 14:2 (1982), pp. 117–35). But given the tradition of American business philanthropy it is hard to conclude that all BSR is attributable only to the fiscal regime ( Bremner, R. H., American Philanthropy, Chicago, Chicago University Press, 1988 ). There are some grey areas where it is more difficult to distinguish non- and for-profit motivations (e.g. sponsorship, fees for business people who sit on government boards).

5 But see Moore, Chris and Richardson, Jeremy, ‘The Politics and Practice of Corporate Responsibility in Great Britain’, Research in Corporate Social Performance and Policy, 10 (1988), pp. 267–90; Moon, JeremyThe Firm as Citizen: Corporate Responsibility in Australia’, Australian Journal of Political Science, 30:1 (1995); Moon, Jeremy and Sochacki, Richard, ‘The Social Responsibility of Business in Job and Enterprise Creation: Motives, Means and Implications’, Australian Quarterly, 68:1(1996) and ‘New Governance in Australian Schools: a Place for Business Social Responsibility?’, Australian Journal of Public Administration, 55:1 (1998); Moon, Jeremy, ‘Business Social Responsibility as a Source of Social Capital’, Reason in Practice, 1:3 (2001); Jorg Andriof and Malcolm Mclntosh (eds), Perspectives on Corporate Citizenship, Sheffield, Greenleaf, 2001; and the new The Journal of Corporate Citizenship.

6 E.g. Tomorrow’s Company, London, Royal Society of Arts, 1995. Numerous business organizations devoted to promoting and conducting BSR have emerged in both countries in the last two decades (e.g. Business in the Community, Centre for Social and Environmental Accounting Research, Institute for Social and Ethical Accountability, New Academy of Business, New Economics Foundation, Social Investment Forum, One London, Prince of Wales Business Leaders Forum and Worldaware [UK]; state-based Business in the Community, The Centre for Corporate Affairs, St James Trust, Social Ventures Australia; Corporate Social Responsibility Europe).

7 See Majone, Giandomenico, Regulating Europe, London, Routledge, 1996; Moon, Jeremy, ‘The Australian Public Sector and New Governance’, Australian Journal of Public Administration, 58:1 (1999).

8 This contrasts with Grant Jordan’s and Jeremy Richardson’s description of the British policy process as sectorized, ‘The British Policy Style or the Logic of Negotiation?’ in Richardson, Jeremy (ed.), Policy Styles in Western Europe, London, Allen & Unwin, 1982.

9 Developments over the last two decades underscore the need for the conceptual separation of actors and modes which were conventionally conflated, e.g. in Lindblom, Charles, Politics and Markets: The World’s Political-Economic Systems, Basic Books, New York, 1977.

10 Most OECD systems also saw exceptions to these main tendencies. Governments exploited markets (e.g. by subsidizing private schools) and networks (e.g. by using charities for child care). For-profit organizations exploited hierarchy (e.g. in neocorporatist policy-making, systems of self-regulation) and networks (e.g. trade associations, research collaboration with government or charities). Non-profit exploited hierarchy (e.g. in church-based organizations) and markets (e.g. selling services to government).

11 See Rhodes, R. A. W., ‘New Governance: Governing without Government’, Political Studies, 44:4 (1996).

12 See G. Majone, Regulating Europe, op. cit.

13 Clarke, Julia, ‘Shareholders and Corporate Community Involvement in Britain’, Business Ethics: A European Review, 6 (1997) pp. 201–7.

14 Corporate Citizen, 18, Autumn (1996), p. 15.

15 Calculated from J. Moon and R. Sochacki, ‘New Governance in Australian Schools’, op. cit. American evidence suggests that in terms of donations, small companies give proportionately less than large ones See Thompson, J., Smith, H. and Hood, J., ‘Charitable Contributions by Small Businesses’, Journal of Small Business Management, 31:1 (1991). On UK small and medium-sized enterprises, see Joseph, Ella, A Welcome Engagement: SMEs and Social Inclusion, London, Institute for Public Policy Research, 2000.

16 J. Moon and R. Sochacki, ‘The Social Responsibility of Business in Job and Enterprise Creation’, op. cit.

17 See: Beesley, Michael E. and Evans, Tom, Corporate Social Responsibility, London, Croom Helm, 1978; C. Moore and J. Richardson, ‘The Politics and Practice of Corporate Responsibility in Great Britain’; J. Moon and R. Sochacki, ‘The Social Responsibility of Business in Job and Enterprise Creation’, op. cit.

18 The term partnership is used broadly here because its precise nature varies. However, the sharing of decision-making, resource responsibility and some consensus over values and interests characterizes most partnerships.

19 E.g. a retail services company with the major Australian group training system; a fast-food chain with an Australian system of accommodation to allow families to visit their children with leukaemia in hospital; an oil company with an Australian and UK national business competition which provides business counselling for participants; a bank with a clean up Australia day; a UK utility company’s long-term partnership with a charity for the blind; a UK supermarket with computers for schools.

20 J. Moon and R. Sochacki, ‘The Social Responsibility of Business in Job and Enterprise Creation’, op. cit.

21 J. Moon and R. Sochacki, ‘New Governance in Australian Schools’, op. cit.

22 52.7% of principals attributed business social responsibility to Community Involvement; 28.5% to Parental Responsiveness; 44.2% to Vocational Education; 27.8% to Education about Business; 42.1% to Marketing; 23.2% to Recruitment; and 11.7% to Employee Relations (ibid.).

23 The Economist, 20 February 1982.

24 Coase, R. H., ‘The Nature of the Firm’, Economica, IV (1937), pp. 386405.

25 Williamson, Oliver E., Economics of Discretionary Behaviour: Managerial Objectives in a Theory of the Firm, Chicago, Markham Publishing, 1967.

26 See Alcaly, Roger E., ‘Reinventing the Corporation’, New York Review of Books, 10 04 1997.

27 This explanation is similar toj. K. Galbraith’s explanation of business social responsibility (The New Industrial State, Harmondsworth, Pelican, 1972, 2nd edn) but unlike Galbraith it does not rely on the motor of corporate growth and it addresses the free-rider problem.

28 This echoes other distinctions among firms e.g. between those firms that engage in tripartism and those that are either ‘pragmatic’ or ‘capitalist aggressive’; those which have institutionalized their government relations and those which have not ( Grant, Wyn, ‘The Business Lobby: Political Attitudes and Strategies’ in Berrington, Hugh (ed.), Change in British Politics, London, Dent, 1984).

29 This line of argument is extended in Moon, ‘Business Social Responsibility as a Source of Social Capital’.

30 E.g. Jones, Martin, New Institutional Spaces: TECs and the Remaking of Economic, London, Jessica Kingsley, 1999; Geddes, Michael, Local Partnership: A Successful Strategy for Social Cohesion”?, Luxembourg, European Foundation for Living and Working Conditions, 1998; Eisenschitz, Aram and Gough, Jamie, The Politics of Local Economic Policy: The Problems and Possibilities of Local Initiative, Basingstoke, Macmillan, 1993; OECD, Partnerships: the Key to Job Creation, Paris, OECD, 1993; Moon, Jeremy, ‘From Local Economic Initiatives to Marriages a la mode?: Western Australia and Tasmania in Comparative Perspective’, Australian Journal of Political Science, 26:1 (1991); J. Moon and R. Sochacki, ‘The Social Responsibility of Business in Job and Enterprise Creation’ and ‘New Governance in Australian Schools’, op. cit.

31 Lukes, Steven, Power: A Radical View, London, Macmillan, 1974.

32 See Taylor, Charles, ‘Communitarianism, Taylor-made: An Interview with Charles Taylor’ (with Ruth Abbey), Australian Quarterly, 68:1 (1996), pp. 45. For a wider account of Taylor’s political theory see Ruth Abbey, Charles Taylor, London, Acumen, 2000.

33 J. Moon and R. Sochacki, ‘New Governance in Australian Schools’.

34 See Coleman, James, Foundations of Social Theory, Cambridge, Mass., Harvard University Press, 1990; Putnam, Robert D. with Leonardi, Robert and Nanetti, Raffaella Y., Making Democracy Work: Civic Traditions in Modern Italy, Princeton, Princeton University Press, 1993.

35 See C. Lindblom, Politics and Markets, op. cit.; and Vogel, David, ‘Political Science and the Study of Corporate Power’, British Journal of Political Science, 17:4 (1987) for contending views.

36 See Moon, J. and Sochacki, R., ‘New Governance in Australian Schools’. The fear was expressed in the Australian Senate Employment, Education and Training References Committee Not A Level Playground: The Private and Commercial Funding of Government Schools, Commonwealth of Australia, Canberra, 1997.

37 See: Lacey, R. and Kingsley, C., A Guide to Working Partnerships, Brandeis University Press, Waltham, Mass., 1988; S. Heaviside et al., Education Partnerships in Public Elementary and Secondary Schools, US Department of Education, Office of Educational Research and Improvement CS 89–060; Timpane, P. and McNeil, L. Miller, Business Impact on Education and Child Development Reform, Committee for Economic Development, New York, 1991; ‘Schools at the Top of the Hill’, The Economist, 22 February 1997.

38 M. Jones, New Institutional Spaces, op. cit.

39 Watling, Rob and Hallgarten, Joe, Firms’ Apathy Sinks Education Action Zones, Independent Public Policy Research, press release 17 01 2001. http://www.ippr.org.uk/news/index.html

40 The Guardian, 9 November 2000.

41 Owen, D. and Swift, T., ‘Social Accounting, Reporting and Auditing: Beyond the Rhetoric’, Business Ethics: A European Review, 10:1 (2001).

42 Gray, Rob, ‘Thirty Years of Social Accounting, Reporting and Auditing: What (If Anything) Have We Learned?’, Business Ethics: A European Review, 10: 1 (2001).

43 Hirschman, Albert O., Shifting Involvements: Private Interest and Public Action, Princeton, Princeton University Press, 1982.

44 Etzioni, Amitai, ‘School Reform: A Serious Challenge for Business’, Challenge, (05-06 1989) pp. 51–4.

1 This article was completed whilst I was Hallsworth Visiting Professor, Department of Government, University of Manchester. I am grateful to participants in seminars at the Manchester Department of Government and at the Institute for Advanced Study, Princeton; to Ruth Abbey, Michael Moran and Geraint Parry for their discussions of the issues; and to Mervyn Frost and Jennie Somerville for their thoughts on a draft.

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