Business Unusual: Corporate Responsibility in a 2.0 World*

The imperatives of a growing consensus on human‐induced causes of climate change, an increasing gap between rich and poor, and the misguided incentives in the economic, business, and financial models that dominated the last quarter of the twentieth century and first decade of the twenty‐first century along with the emergence of Web 2.0's transparency have highlighted the need for a new approach to capitalism. Looking around the world, we can witness the emergence of numerous new forms of enterprise that are part of a broader movement that we are calling change to a sustainable enterprise economy (SEE Change). This article details the broad outlines of the emerging shift, highlighting the new types of enterprise that constitute the SEE. First, we set the context in which business unusual is evolving, a context of “wicked problems”uncertainty, and sustainability problems. Then we provide an overview of new types of enterprises that are already emerging to cope with these changes, enterprises of the cloud (interlinked, web‐based enterprises that rely on the “cloud” of computers that store data such as social media, eBay, and Google). Next, we outline how such enterprises are permitting processes of dematerialization and “servicization” (the shift from product to services) to create new forms of enterprise that are less dependent on physical resources. From here, we explore what we term enterprise unusual, corporations that incorporate pro‐social goals into their very essence, for example, for‐benefit corporations, the B Corporation, and conscious capitalism companies, along with a few entities that are shaping their product development along the lines of biomimicry. All of this change, we argue, has created a blurring of sector boundaries evidenced in the rapid emergence of social enterprise, of which explore a variety of types, and what is being called the fourth sector, where business purpose and pro‐social activity are combined.     

Tenacity: The American Pursuit of Corporate Responsibility

This article attempts to answer the question, “What are the most important ideas from serving as Executive Editor of the five‐year history project that culminated in the book, Corporate Responsibility: The American Experience?” The ideas focus on (1) clarifying the phenomenon of tenacity; (2) looking at three foundations of our tenacity; and (3) asking “How fragile is our tenacity?” This article also presents three foundational principles that underlie the American experience of corporate responsibility. First, the Checks & Balances Principle tells us that there are checks and balances in democratic capitalism which give us confidence that the pursuit of economic goals will be moderated for the common good. Second, the Moral Projection Principle shows that there is good reason to consider the corporation not only as a legal person under corporate law but also as a moral person. And, last, the Moral Common Ground Principle reflects that there are shared moral values ascertainable by well‐developed consciences in individuals and in corporations. The article concludes with this argument: The tenacity regarding corporate responsibility that has been so characteristic of American capitalism is fragile—calling for serious vigilance if it is to endure.     

Reconciling Traditional Morality and the Morality of Competition

It is commonly believed that the moral norms of “everyday” or “traditional” morality apply uniformly in all business contexts. However, Joseph Heath has recently argued that this is not the case. According to Heath, the norms of everyday morality apply with respect to “administered” transactions but not “market” transactions. Market transactions are, he argues, governed by a distinct, “adversarial” morality. In this article, I argue that Heath's attempt to show that competitive contexts are governed by a distinct, adversarial morality does not succeed. I then undertake the task of showing that, contrary to what is commonly thought, competitive actions can be reconciled with the norms of traditional morality.     

Globalization and Its Challenges for Business and Business Ethics in the Twenty‐first Century

The global expansion of free enterprise has been underway for some time, and the challenges for global companies are well‐known. Companies often operate in economically blighted communities and in corrupt environments without a rule of law. At the same time Western‐based global corporations are under increasing public pressure to take on responsibilities to these communities that are often beyond their expertise or economic purview. For example, at the 2008 Davos meetings Bill Gates proposed the idea of “creative capitalism, challenging business to ‘meet the needs of the poor in ways that generate profits’...” In what follows I shall argue that while there have been many successful global ventures, the Gates’ challenge requires academics and managerial leaders to rethink their mind sets and expand their thinking about what we mean by globalization, poverty, and the multiple dimensions of free enterprise.     

Corporate Social Responsibility als Integrationsherausforderung

The increasing debate on Corporate Social Responsibility (CSR) in science as well as in practice reflects the relevance of ethical questions for management. However, it is still unclear which responsibilities can be ascribed to corporations and how they can deal with such attributions on an operational level. The blurring and ambivalence in the discussion about CSR indicate a need for a theoretical clarification which is traced back to a not yet satisfactorily resolved integration of the constructs “profits” and “ethics”. The aim of the article is to provide a theoretical structure which is tailored to offer reliable focal points for a sophisticated handling of conflicts between profits and ethics.     

Servitization of business: Adding value by adding services

More and more corporations throughout the world are adding value to their core corporate offerings through services. The trend is pervading almost all industries, is customer demand-driven, and perceived by corporations as sharpening their competitive edges.Modern corporations are increasingly offering fuller market packages or “bundles” of customer-focussed combinations of goods, services, support, self-service, and knowledge. But services are beginning to dominate.This movement is termed the “servitization of business” by authors Sandra Vandermerwe and Juan Rada, and is clearly a powerful new feature of total market strategy being adopted by the best companies. It is leading to new relationships between them and their customers.Giving many real-life examples, the authors assess the main motives driving corporations to servitization, and point out that its cumulative effects are changing the competitive dynamics in which managers will have to operate. The special challenge for top managers is how to blend services into the overall strategies of the company.     

Wem droht die Zinsschranke? Eine empirische Untersuchung zur Identifikation der Einflussfaktoren

One important aspect of the German corporate tax reform 2008/2009 is the introduction of an EBITDA-based interest deduction limitation. This article focuses on the questions how many and which companies are threatened by this so-called “interest ceiling rule”. Based on an analysis of 77.464 financial statements of German corporations this limitation is relevant for 561 up to 1.511 companies. Thus, this thin-capitalization rule affects more companies than expected by politics. Additionally, we derived several hypotheses from theory concerning possible distortions caused by this rule and tested them empirically. As a result, the “interest ceiling” does affect systematically large, less profitable companies, those with high collaterals as well as holding and real estate companies. Consequently, domestic corporate decisions will be distorted and the theorem of production efficiency is violated.     

The Meaning and Meaningfulness of Corporate Social Initiatives

In response to pressures to be more “socially responsible,” corporations are becoming more active in global communities through direct involvement in social initiatives. Critics, however, question the sincerity of these activities and argue that firms are simply attempting to stave off stakeholder pressures without providing a corresponding benefit to society. By drawing on institutional theory and resource dependence theory, we consider what factors influence the adoption of a “meaningful” social initiative—an initiative that is sustainable and has the potential for a significant positive impact on society—as opposed to a symbolic initiative. In addition, we raise the question of how social initiatives—both meaningful and symbolic—participate in the “institutional war” over the meaning of corporate social responsibility.     

The Good,the Bad,and the Ugly of Corporate Personhood and Corporate Political Spending: Implications for Shareholders

In the Citizens United v. Federal Election Commission (2010) decision, the Supreme Court rendered an opinion verifying the legality of unions and corporations to spend funds from their general treasuries to finance independent expenditures related to political and electioneering communications. Such speech and communications are constitutionally protected by the First Amendment, according to Justice Kennedy, who wrote the majority opinion (558 U.S. 22, 2010). The dissenting opinion questioned whether such rights should accrue to corporations, since corporations differ from constitutionally‐protected “natural persons” (dissent, 558 U.S. 50 at 2, 2010; Johnson 2011 ). The decision ignited a firestorm of controversy, which renewed interest in the legal concept of corporate personhood. This article reviews key findings in the Citizens United v. FEC case, then describes the historical, legal, and theoretical concepts of corporate personhood with the goal of unbundling the nuanced consequences of the majority and dissenting opinions of the Citizens United v. FEC case. The analysis then turns to a shareholder perspective, with particular emphasis on the implications for shareholders’ rights and responsibilities. It concludes with an exploration of options available to shareholders concerned about how to respond when a corporation uses its resources to communicate political opinions at odds with their own.     

Stakeholder Theory: The State of the Art

Abstract

For the last 30 years a growing number of scholars and practitioners have been experimenting with concepts and models that facilitate our understanding of the complexities of today’s business challenges. Among these, “stakeholder theory” or “stakeholder thinking” has emerged as a new narrative to understand and remedy three interconnected business problems—the problem of understanding how value is created and traded, the problem of connecting ethics and capitalism, and the problem of helping managers think about management such that the first two problems are addressed. In this article, we review the major uses and adaptations of stakeholder theory across a broad array of disciplines such as business ethics, corporate strategy, finance, accounting, management, and marketing. We also evaluate and suggest future directions in which research on stakeholder theory can continue to provide useful insights into the practice of sustainable and ethical value creation.     

The New Story of Business: Towards a More Responsible Capitalism

Business is undergoing a conceptual revolution. Since the Global Financial Crisis there are many new ideas and proposals to make capitalism more responsible. The purpose of this paper is to identify key flaws in the “old story” of capitalism. Six principles are explained that taken together form the basis for a new story of business, one of responsible capitalism.     

Making Corporations Responsible: The Parallel Tracks of the B Corp Movement and the Business and Human Rights Movement

The business and human rights (BHR) movement shares several goals with the Benefit Corporation (B Corp) movement: corporations respecting human rights; maintaining a “wide aperture” so that all impacts of a company on people and communities are addressed; and creating rigorous standards of conduct and means of accountability. This paper argues that nonetheless the movements are traveling along parallel tracks and thus missing an opportunity for mutual learning that can improve their effectiveness. The BHR movement can look to B Corps for concrete examples of viable companies that value human rights intrinsically and not just where there is a “business case” to do so. The B Impact Assessment, the B Corp certification tool, can better ensure that B Corps are in fact respecting human rights by adopting BHR standards. And both movements must give greater consideration to the potential contradiction between unlimited scaling—a key goal of B Corps—and the ability of large multinational corporations to respect human rights.     

Identification of Protective Actions to Reduce the Vulnerability of Safety-Critical Systems to Malevolent Intentional Acts: An Optimization-Based Decision-Making Approach

An empirical classification model based on the Majority Rule Sorting (MR-Sort) method has been previously proposed by the authors to evaluate the vulnerability of safety-critical systems (in particular, nuclear power plants [NPPs]) with respect to malevolent intentional acts. In this article, the model serves as the basis for an analysis aimed at determining a set of protective actions to be taken (e.g., increasing the number of monitoring devices, reducing the number of accesses to the safety-critical system) in order to effectively reduce the level of vulnerability of the safety-critical systems under consideration. In particular, the problem is here tackled within an optimization framework: the set of protective actions to implement is chosen as the one minimizing the overall level of vulnerability of a group of safety-critical systems. In this context, three different optimization approaches have been explored: (i) one single classification model is built to evaluate and minimize system vulnerability; (ii) an ensemble of compatible classification models, generated by the bootstrap method, is employed to perform a “robust” optimization, taking as reference the “worst-case” scenario over the group of models; (iii) finally, a distribution of classification models, still obtained by bootstrap, is considered to address vulnerability reduction in a “probabilistic” fashion (i.e., by minimizing the “expected” vulnerability of a fleet of systems). The results are presented and compared with reference to a fictitious example considering NPPs as the safety-critical systems of interest.     

Corporate Profit,Social Welfare,and the Logic of Capitalism

Business ethics scholars have proposed strategies for mitigating the ill effects brought on by a wealth maximization business strategy by urging managers to either embrace corporate social responsibility (CSR) or to manage according to stakeholder theory. In this article I argue that these strategies are often ineffective in bringing about the behavior they promote because it is antithetical to the nature and logic of capitalism. I examine the organizing principles of capitalism and the role it assigns to capitalists, and juxtapose these with the behavior prescribed by three normative frameworks: strategic management theory (SMT), the CSR initiative, and stakeholder theory. Unlike the behaviors prescribed by the CSR initiative and stakeholder management theory, the behavior prescribed by SMT is consistent with the role of capitalists as defined by the organizing principles of capitalism, and SMT's “rules” have instilled habits that have, in turn, been able to mold managers’ aspirations and purposes. CSR and stakeholder theory must not only combat the habits instilled by the entrenched SMT, they must also find some way of instilling habits that run contrary to those defined by the nature and logic of capitalism itself.     

We Are the Corporation: Dispersive CSR

We contend that the current trend of emphasis on corporate social responsibility (CSR) serves to divert the public's attention from the real ethical issues facing business and society. We extend the scope of social responsibility beyond business corporations to include a range of institutions. We also propose that CSRs be reconceptualized in terms of the ways that managers enable stakeholders to hold themselves and each other responsible for the ways their actions affect each other as they conduct business through the firm. In this article, we propose a new view of corporations and responsibility that reconstrues behavior currently referred to as CSR. Starting with an overview of theories of the firm, we show that the way in which a firm is conceived yields different views on CSR. A shortcoming of the theory of the firm approach to CSR is that it leads us to focus excessively on business corporations at the expense of a broader analysis of other institutional players. These theories also tend to emphasize the obligations of corporations to people rather than of people to each other. We propose that social responsibility be viewed through a systems theory paradigm instead. We then argue that corporations should be construed in terms of the people who impact them. We advance a different conception of business responsibility that is more comprehensive, inclusive, and systemic.     

The Global Food Industry and “Creative Capitalism”: The Partners in Food Solutions Sustainable Business Model

Rising global food prices have driven 44 million additional people into extreme poverty—and malnutrition—in developing countries since June 2010. Partners in Food Solutions (PFS), a nonprofit social enterprise affiliated with General Mills, is proposed as the conduit for food industry managers, engineers, and scientists to initially advise small‐ and medium‐sized African mills and food processors—and later other developing countries—on improving supply chain management by addressing manufacturing problems, developing products, improving packaging, extending product shelf, and finding new product markets. In this article, the “creative capitalism” model of sustainability and social and environmental responsibility is applied to the food manufacturing industry's efforts supporting PFS. Furthermore, the evolution of the sustainable business model developed by PFS is thoroughly described, explained, and analyzed as a generic model of social enterprise to be “scaled up” by the global food manufacturing industry. A summary of salient points conclude the article.     

Human Error Contribution in Collision and Grounding of Oil Tankers

The purpose of this article is to present a quantitative analysis of the human failure contribution in the collision and/or grounding of oil tankers, considering the recommendation of the “Guidelines for Formal Safety Assessment” of the International Maritime Organization. Initially, the employed methodology is presented, emphasizing the use of the technique for human error prediction to reach the desired objective. Later, this methodology is applied to a ship operating on the Brazilian coast and, thereafter, the procedure to isolate the human actions with the greatest potential to reduce the risk of an accident is described. Finally, the management and organizational factors presented in the “International Safety Management Code” are associated with these selected actions. Therefore, an operator will be able to decide where to work in order to obtain an effective reduction in the probability of accidents. Even though this study does not present a new methodology, it can be considered as a reference in the human reliability analysis for the maritime industry, which, in spite of having some guides for risk analysis, has few studies related to human reliability effectively applied to the sector.     

Masquerading in the U.S. Capital Markets: The Dark Side of Maintaining an Institution

This article examines the work of professional service firms (PSFs) in their relationships with public corporations; work that is designed to ensure that investors and potential investors have information that will enable them to participate in the capital markets. Using an institutional theory lens, we view these efforts by PSFs as institutional maintenance work and specifically analyze their work related to policing (i.e., rating), enabling (i.e., tutoring), and embedding and routinizing (i.e., collaborating) that helps to support the capital market as a core institution in society. We illustrate how there is a “dark” side to each of these forms of institutional work that exists because of ongoing conflicts of interest within and between their work practices. This dark side has the unintended consequence of producing often biased information or information unavailable to many. When a crisis brings this bias to light, some repair is introduced but often not enough to alleviate the distortion. Our contribution is, therefore, to shed light on the dark side of institutional maintenance work and to explore why repair is increasingly necessary, but often only partially effective.     

Economic globalization affecting economic development of East Asian countries

 Economic globalization is the inevitable result of the economic developing process, which has experienced three developmental phases: commercial capitalism, vertical rank division of labor of industrial capitalism, and global rank division of labor. This paper holds that evolution of economic production activity brought about by the third science and technology revolution provides a strong material and technological basis for economic globalization. The development of productivity brought forth by the new technological revolution exacerbates the supply–demand contradiction in capitalism and becomes the important propelling factor that promotes monopolistic capital to push outward to the rest of the world. The multinational corporations that master high technology and huge capital become the main powers that propel global production rank division of labor. Because of the aspiration for industrialization and modernization, East Asian countries have become the propelling power for economic globalization.     

From sovereign to subject: Applying Foucault's conceptualization of power to leading and studying power within leadership

This article uses Michel Foucault's conceptualization of power to rethink how power operates within leadership relations. Foucault (1980:220) defines power as a “a structure of actions, bearing on the actions of those who are free.” This idea is explored, noting how it differs from much leadership theorizing which defines power in terms of a leader's position or personal characteristics. Foucault's assertions that “power is everywhere” (1988, 12), that it is relationally based and is best perceived through its effects are examined. We identify implications for researching power from this perspective, including the appropriateness of methods capable of mapping social, historical, and institutional dynamics. We offer four analytic strategies: beginning from power's outcomes, investigating points of resistance, proactively identifying hidden dynamics and attending to networked alliances. Insights generated from this approach highlight the contingent, ephemeral nature of power and help explain the indeterminacy leaders often experience when wielding it in practice.