Deciphering the Domain of Corporate Responsibility€¦ · of business, in its broadest sense •...
Transcript of Deciphering the Domain of Corporate Responsibility€¦ · of business, in its broadest sense •...
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Deciphering the Domain of Corporate
ResponsibilityJesse 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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Corporate Responsibility
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ENVIRONMENTAL SUSTAINABILITY
WORKERS’ RIGHTS
HUMAN RIGHTS
ECONOMIC VIABILITY
SOCIAL SUSTAINABILITY
LEGAL COMPLIANCE
PHILANTHROPY
CORPORATE RESPONSIBILITY
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Market Dominated Systems
Economic Markets
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Sustainable Systems
markets
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Corporate Responsibility
Corporate Responsibility
Time Context
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Norms and Values Representational Schemes
Human & Material Resources
SOCIAL INTEGRATION
Mediating Social Systems
Mediating Individual Systems
SOCIAL ACTION SPACE
AGENT’S PSYCHOLOGICAL MAKEUP
Discursive Consciousness
Practical Consciousness
Unconscious Motives
SOCIAL DOMAIN
C h a n g e
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Societal Place of Business
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Markets Business
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What is the purpose of economic institutions (business)
in society?
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Providing Goods and Services to the Members of Society
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Act in the Public Interest
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Business in 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’ 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
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
• Observed outcomes• Anticipated actions• Solidarity• Accountability
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An Ethic of AccountabilityRIGHTS RESPONSIBILITIES
CORPORATE MANAGE- MENT
Control of the economic assets of society
To provide relevant, timely, and understandable information adequate for being held accountable by rendering actions transparent
SOCIETY Assign control of society’s economic assets
To hold corporate management accountable for the use of society’s economic assets
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Duality of Accountability
Corporate Management• 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
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ACTIVITIES /ACTIONSREPRESENTATIONS OF ACTIVITIES
EVALUATION OF ACTIVITIES/ ACTIONS
EVALUATION CRITERIA
Accountability
What activities matter? How much? To Whom?
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Management’s Character
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
• 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
• 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• 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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From a Rather Ideal World to a Somewhat More Practical One
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Brief History of Corporate Responsibility• 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 21st
Century Given the Recent and Frequently Reoccurring Market
Failures?
• Dot.com bubble• Corporate defaults• Banking crisis
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Fundamental Issue
(Re)Distribution of wealth generated
through the power of socialized production
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Ongoing Dialectical Process• 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 (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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Market moralityBasis for participation
impersonal, no requisite status, character, relationships
Legitimating criteria
individualism without regard to other’s interests, requires clear distinction between self & other
Property of goods
value derived from appropriation & use (market price)
•Exclusivity – benefits limited to purchaser•Rivalry in consumption – zero sum game
Basis for exchange
individual tastes, needs
Means for protest
“exit”
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CORPORATE RESPONSIBILITY
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Corporations
Economic Markets
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Corporate ResponsibilityFocus Strategic Question
Compliance(legal)Past
1. What are the minimum requirements?2. How do I accomplish it in the most
economical way?Market(economic)Present
1. What is the most economically beneficial alternative?
2. How do I accomplish it in the most responsible way?
Society(social, environmental)Future?
1. What is the most responsible alternative?
2. How do I accomplish it in the most economical way?
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Corporate Responsibility
• 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• 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• 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
• 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• 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
Acting in the Public Interest
Facilitating a democratically governed society
Supported by a sustainable economic system
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ENVIRONMENTAL SUSTAINABILITY
WORKERS’ RIGHTS
HUMAN RIGHTS
ECONOMIC VIABILITY
SOCIAL SUSTAINABILITY
LEGAL COMPLIANCE
PHILANTHROPY
CORPORATE RESPONSIBILITY
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Reality Checks
• 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
• 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
• 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
• 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
• 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
• 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• 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• 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?
• 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
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Social Enterprise
• 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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Explicitly concerned with responding to market demands providing a marketable product/service for consumption (autos, petroleum, candy, coffee, furniture, commodity beef)FP
“Business” Model
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 product/service for consumption (clean water – Belu, Ethos, Ben & Jerry’s franchise)
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
Sustainable product/ service/ process
Unsustainable product/ service/ process
Sustainable product/ service/ process
Sustainable product/ service/ process
Sustainable product/ service/ process
Unsustainable product/ service/ process
Unsustainable product/ service/ process
Unsustainable product/ service/ process
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Means(Provide resources for social objective(s)
End(Maximize economic/ shareholder value)
1. What is the most economically viable alternative?2. How do we accomplish it in the most responsible way?
1. What is the most responsible alternative? 2. How do we accomplish it in the most economical way?
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)
Economic results are seen as
Explicitly concerned with responding to market demands providing a marketable product/service for consumption (autos, petroleum, candy, coffee, furniture, commodity beef)FP
Unsustainable product/ service/ process
Unsustainable product/ service/ process
Unsustainable product/ service/ process
Sustainable product/ service/ process
Sustainable product/ service/ process
Sustainable product/ service/ process
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Market morality Community moralityBasis for participation
impersonal, no requisite status, character, relationships
interpersonal, commitment to members of the community
Legitimating criteria
individualism without regard to other’s interests, requires clear distinction between self & other
collectivism with regard to other’s interests, requires a recognition of the inter- dependence of self with other
Property of goods
value derived from appropriation & use (market price)
•Exclusivity – benefits limited to purchaser•Rivalry in consumption – zero sum game
value derived from common possession
•Inclusively – benefits available to all•Cooperation in consumption – nonzero sum game
Basis for exchange
individual tastes, needs community needs
Means for protest
“exit” “voice”
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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
• Economic System v. Lifeworld• Instrumental Rationality v. Communicative
Rationality• Instrumental Action v. Communicative Action
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Emergent Organizational Structure
• 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 (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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Examples of Social Sustainability IndicatorsLabor Practices•Employment•Labor/management relationships•Occupational health and safety•Training and education•Diversity and equal opportunity
Community•Nature, scope and effectiveness of programs and practices that assess and manage strategic and operational impacts on the community•Corruption•Lobbying and contributions•Anti-compliance, anti-trust, and monopoly•Fines and sanctions for noncompliance
Human Rights•Investment practices•Procurement practices•Discriminatory practices•Freedom of association and collective bargaining •Child and compulsory labor•Security practices•Protection of indigenous people’s rights
Product Responsibilities•Health and safety impact of products and services throughout the product life cycle•Noncompliance with codes and regulations•Labeling requirements•Customer privacy
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An agenda for the Academy
• Scholarly investigation– Practices and technique
• Educational innovation– Context, complexity, and critique
• Community interaction– Responsive and responsibility social action