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Responsibility and practice in notions of corporate social responsibility
h [electronic resource] /
by Denise Kleinrichert.
[Tampa, Fla] :
b University of South Florida,
ABSTRACT: This treatise presents a transcendental argument for corporate social responsibility. The argument is that corporate social responsibility, or CSR, is best understood as a collective moral practice that is a precondition for sustainable business. There are a number of theories and definitions of CSR in the contemporary business literature. These theories include considerations of economic, legal, social, and environmental notions of what a corporation ought to take responsibility for based on either motives or concerns of accountability for corporate acts. This work focuses on economic theories. I analyze the distinction between the technical terms "responsibility" and "accountability" found in these theories. This enables me to explicate the meaning of corporate responsibility as it relates to the conditions of sustainable business activity. These conditions necessarily include moral content. In other words, this is an applied ethics project.^ First, I inquire into the intellectual history of the broader sense of corporate responsibility and review various contemporary notions of corporate social responsibility. My concern is whether these notions presuppose broader forms of moral responsibility to others as an obligation, moral responsibility for acts, or to be held morally responsible (i.e., accountable) based on moral tendencies, particular motives, or resulting outcomes. This concern forms the basis of my consideration of the notions of individual and collective responsibility. The following work includes an analysis of the notion of human choice as a collective endeavor of institutional relationships and practice in the economic market system. I argue that corporate motives for moral interrelationships are necessarily implicit in biosocioeconomic multinational market enterprise.^ I conclude that an analysis of corporate community involvement may be found in a case study of Starbucks Coffee Company's efforts to practice CSR in particular coffee bean farming communities in developing countries.
Dissertation (Ph.D.)--University of South Florida, 2007.
Includes bibliographical references.
Text (Electronic dissertation) in PDF format.
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Mode of access: World Wide Web.
Title from PDF of title page.
Document formatted into pages; contains 181 pages.
Adviser: Stephen P. Turner, Ph.D.
Corporate community involvement.
t USF Electronic Theses and Dissertations.
Responsibility and Practice in Notions of Corporate Social Responsibility by Denise Kleinrichert A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy Department of Philosophy College of Arts and Sciences University of South Florida Major Professor: Ste phen P. Turner, Ph.D. Joanne Waugh, Ph.D. Charles Guignon, Ph.D. Martin Schnfeld, Ph.D. Walter Nord, Ph.D. Sharon Hanna-West, J.D. Date of Approval: March 30, 2007 Keywords: accountability, biosocioeconomic corporate community involvement, environmental footprint, huma n well-being, sustainability Copyright 2007 Denise Kleinrichert
Acknowledgments I would like to express gratit ude to my dissertation committee, who collectively have expected nothing short of excellence in my thinking, writing, and being Â– they have each contributed a spark to spur me forward. Stephen P. Tu rner, Ph.D. has my guiding professor over the past 5 years and is the individual who, thankfull y, got me into all of this. Joanne Waugh, Ph.D. introduced me to Philosophy and the good life. Charles Guignon, Ph.D. expanded my view of myself an d others, and re-ignit ed my interest in economics and human well-being. Martin Schnfeld, Ph.D. introduced me to Kant and all things environmental, dynamic, and holistic. Sharon Hanna-West, J.D. brought my interests in the social and ethical for cor porate endeavors full circle. Walt Nord, Ph.D. expanded my view of the corporation as inte grated with its socio-environment. Carolyn Eichner, Ph.D. granted me the latitude to see the social and revolutionary ways I can make a difference in the world. Finally, Eileen Kahl, M.A. has been my editor and muse in the development of this labor.
i Table of Contents List of Figures iii Abstract iv Introduction: Corporate Social Re sponsibility Â– What Does It M ean? 1 Chapter One: Economic Theories 14 Classic Economic Views of Corporate Responsibility 19 Adam Smith & Moral Markets 20 Profit as Responsibility Theories 29 Milton Friedman & Profit Model 31 John Kenneth Galbraith & Profit Model 38 Chapter Two: Business Â– Society Theories 45 Corporations and Society 47 Eugene Schlossberger & Dual Investors 47 Christopher Stone & Social C ontrol of Corporate Behavior 53 Stakeholder Theory 61 R. Edward Freeman & the Stakeholder Model 61 Chapter Three: Critique of Perfect Markets and Ideals of Capitalism 71 How did Classic Theory become Stockholder Views? 72 Rejection of Economic Man 72 Models of Economic Efficiency and Ideologi cal Responsibility 79 Utilitarian Applications of Responsibility 86 Economic Harmonies 89 Sidney C. Sufrin, Milton Friedman & Reflex Res ponsibility 90 Kantian Applications to Market Agency 94 Stakeholders and Moral Strategy 98 Chapter Four: Corporations Â– Respons ibility, Community, & Sustainability 104 Corporate Social Responsibility & Meaning 105 Can Economic Motivation be Moral Responsibility? 109 CSR Revisited: Communities 114 Ally-building & Corporat e Social Responsibility 115 Ethical Considerations of Co rporate Community Involvement 122 Corporate Social Responsi bility & Sustainability 127
ii Reciprocal Relationships & Communities 132 Cultivation as Sustainability 135 Case Study: Starbucks Coffee Company 138 Economic Footprints & Responsibilities 139 Environmental Footprints & Responsibilities 142 Social Footprints & Responsibilities 148 Conclusion Â– Biosocioec onomic Sustainability 159 Bibliography 165 About the Author End Page
iii List of Figures Corporate Social Responsibility Models 166 Biosocioeconomic Sustainability 166
iv Responsibility and Practice in Notions of Corporate Social Responsibility Denise Kleinrichert ABSTRACT This treatise presents a transcende ntal argument for corporate social responsibility. The argument is that corporate social res ponsibility, or CSR, is best understood as a collective moral practice that is a precondition for sustainable business. There are a number of theories and defin itions of CSR in the contemporary business literature. These theories include consider ations of economic, legal, social, and environmental notions of what a corporati on ought to take responsibility for based on either motives or concerns of accountability for corporate acts. This work focuses on economic theories. I analyze the distinction between th e technical terms Â“responsibilityÂ” and Â“accountabilityÂ” found in these theories. This enables me to explicate the meaning of corporate responsibility as it relates to th e conditions of sustai nable business activity. These conditions necessarily include moral cont ent. In other words, this is an applied ethics project. First, I inquire into the intellectual hi story of the broader sense of corporate responsibility and review vari ous contemporary notions of co rporate social responsibility. My concern is whether these not ions presuppose broader forms of moral responsibility to others as an obligation, moral responsibility for acts, or to be held morally responsible (i.e., accountable) based on moral tendencies, particular motives, or resulting outcomes.
v This concern forms the basis of my consid eration of the notions of individual and collective responsibility. The following work in cludes an analysis of the notion of human choice as a collective endeavor of institutional relationships and practice in the economic market system. I argue that corporate motives for moral interrelations hips are necessarily implicit in biosocioeconomic multinational market enterprise. I conclude that an analysis of corporate community involvement may be found in a case study of Starbucks Coffee CompanyÂ’s efforts to practice CSR in part icular coffee bean farming communities in developing countries.
1 Introduction Corporate Social Responsibility Â– What Does It Mean? Â…any given responsibility of action of busin ess could have economic, legal, ethical, or discretionary motives embodied in it. (Archie B. Carroll 1979, p. 500) I believe it all has something to do with the meaning of responsibility Perhaps it is because my early academic training was in economics, or perhaps because I ended up in a variety of corporate functions related to anal yzing risks, responsibil ity, and delving into human resources that I decided to tackle th is subject. Nevertheless, I ended up teaching business ethics and trying to understand how a ll of these activities, my own and those of corporate endeavors, hang together. Therefor e, I intend to discuss the history of the meaning of notions of corporate social responsibility. At first glance, we could argue that this phrase merely means some sort of human choice to be responsible within institutional relationships. But, this discussion fails to consider notions of economic and social arrangements in so ciety, or of the nuances of individual and collective re sponsibility. I am curious a bout the moral implications regarding corporate-societal relationships and the theories on which these hinge. Does the consideration of the meaning of corporate so cial responsibility entail an account of corporate moral practice? In other words, is this account contingent on some sort of notion of moral responsibility based on the meaning and development of an ethical, economic purpose?
2 I will argue that corporate social respons ibility, in order to have an ethical purpose, must be developed as a holistic, deliberative action based on choices and on duties to develop motives for moral inte rrelationships in multinational economic enterprise in communities. I am concerned with voluntary initiatives of corporate social responsibility, which can be developed as su stainable socioeconomic moral projects. In other words, this dissertation will define a nd apply economic theories of responsibility to corporate enterprise that is relational and mutu ally beneficial to the communities in which these corporations choose to do business. Fina lly, I intend to analyze a corporate social responsibility project in a case study of Starbucks Coffee CompanyÂ’s small loan and social development efforts in particular coffee bean farming communities in developing countries. In the following essay, I will examine what it means to say a corporation, as an economic entity, has moral responsibility to others in society, as opposed to claiming moral responsibility for its acts, or to be held morally responsible I believe these distinctions are important to understanding what we mean by the attribution Â“corporate social responsibility.Â” I argue that what we are actually meaning in the two latter phrases, Â“moral responsibility forÂ” and Â“to be held mo rally responsible,Â” is that an entity is accountable for the consequences of human deci sion-making that have an effect on others, or the Kantian notion of imputa tion or judgment (Kant [1797a, 6:227] 1996, p. 19). Accountability may be considered in moral terms, as we may argue from a utilitarian perspective, but accountability may also be considered in nonmoral aspects, as in determinations of financial accounting for profit in a cor porationÂ’s annual statements. Moreover, philosopher James Brummer traces th e usages of the term Â“responsibilityÂ”
3 settling on the definition of a corporation being held accountable as an evaluative, rather than discretionary, definition of corporate social endeavors ( 1991, p. 15). It is this latter determination that often is c onfused with the meaning of co rporate social responsibility. Moreover, it is this confusion in the meaning of responsibility that I believe is a problem. What I am seeking in this work is the basis of any sense of social re sponsibility Â– that of human tendencies and motives related to relationships with others. In the process of analyzing corporate so cial responsibility theories and moral practice, I cannot escape the starting point for corporate de cision-making and activity Â– economic theory. Economics is an analytical tool for determining meaning for human activities of exchange and commerce. Hence, the source of economic th eory is rooted in human activities as individuals and as or ganized communities of individuals, e.g. corporations, who share a common goal. I wi ll assume the understa nding of individual and collective endeavors of individuals as Â“age ncyÂ” in the sense of active, participative goal-oriented undertakings or deeds based on autonomous choices. In other words, there is a cooperative strategy to rational acts. Th ese choices of activit ies by agents are both social and valuable due to two criteria. Fi rst, human activities in corporations are necessarily social because these acts are alwa ys already involved in relationships with others. Second, individual and corporate agency is worthy of consideration because their choices reflect the importance, or value, an agent places on their decisions. Moreover, my work will reflect this value as based on Â“respe cting the agencyÂ” for these decisions, rather than focusing on the acceptance of whatever the agent Â“happens to value as valuableÂ” (Sen 2000, p. 42). Furthermore, these relatio nships are indicative of a concern to consider others, as well as ourselves, a concern that involv es thinking about our acts as
4 practices of responsible agency. Therefore, if we are considering human acts of relationship in corporate endeavors, then it fo llows that what we are concerned with is social and a responsibility, bot h of which are derivative of moral notions of agency found in ethical theories. The notion of Â“corporate social responsibi lityÂ” implies some sort of collective moral practice. A consideration of the meaning of responsibil ity in this respect may be found in the origin of the analysis of econom ic endeavor derived from ethical theory found in ancient Greek philosophy regarding one Â’s household, or Â“community,Â” and later in philosopher Immanuel KantÂ’s literature addressing concer n of otherness. While Kant does not give us the term Â“responsibility,Â” he does provide two forms of its appearance in his use of Â“obligationÂ” as a necessarily fr ee action derived from reason, which is coupled with his use of Â“dutyÂ” as Â“that action to which someone is boundÂ” (Kant [1797a, 6:222] 1996, p. 15). Each of these two perspectives require a form of self-examination, which would not be necessary but for the fact that we are social creatures, and an examination of the motives of individuals who formulat e a shared, collective endeavor. In this dissertation I am concerned with th e collective endeavor known as a corporation What follows from this consideration are notions of responsibili ty for oneself, to oneÂ’s decision-making, and to oneÂ’s considerati on of others. My use of the term regards prospective human relations and reciprocity, rather than a response or reaction to some particular prior event. It is important to ma ke a further distinction here Â– I will use the meaning of the term Â“responsibil ityÂ” in relation to rational, hu man choice, rather than in an attempt to attribute nonrational beings or objects as being Â“responsibleÂ” for some event, such as is used in the simple causal agency scheme. In this last respect, it is
5 possible to ascribe merely a causal agent, such as a hurricane, to be responsible for death and destruction. This is certain ly a descriptive event, but no t truly what is meant by being responsible in moral terms. I will argue that what I am after is a definition that is integrated within human choice, rather than an action of cause and effect, which is a nonmoral, descriptive event. I will argue that the term re sponsibility always already implies moral, and therefore, both de scriptive and evaluative meanings. The term Â“corporationÂ” will be similarl y argued. There have been a number of theories and definitions of the concept of cor porate social responsibility in the last thirty years in contemporary business literature. These theories entail considerations of what a corporation ought to presume responsibility for based on its concerns of accountability to some other entity or authority. Moreover, various notions, such as blameworthiness or holding someone responsible for corporate act s, may bear economic, social, political, legal, and environmental implications. Howeve r, these considerations involve the practice of corporate accountability and its financial impacts on the corporation, but not necessarily as a moral enterprise. This work will not provide a survey of contemporary literature discussing corporate social responsibility as I would have nothing new to contribute in that respect. Ra ther, the theories of corporat e social respons ibility require deliberation on per ceptions of what is vs. as if we view the world economically, ethically, or the two notions together. My concern is whether the particular traditional economic perspectives of corporate social responsibil ity are related to concepts of moral social responsibility and practice in contemporary society. First, I will develop an i nquiry into the intellectual hi story of various notions of corporate social responsibility related to economic theories of market endeavors.
6 Although the broader sense of corporate social responsibil ity may encompass legal, stakeholder, philanthropic, or social well-being theories, this work will only bring to light their basic definitions. Much has been written, and taught, on these topics by management scholars. For example, R. Edward Freeman and Daniel Gilbert (1988, p. 88) trace the history of the notion of corporate social responsibility to the post-World War II era of social concerns, which became pa rticularly focused in the 1960Â’s social movements and ideas of the societal obligations of corporations. This notion of corporate social responsibility was based on the idea that businesses were social entities and members of society; therefore, business endeavors engendered obligations to the societies in which they acted. These obligations, of company executives and managers, were governed by the social and legal norms of a particular society, as well as economic obligations to stockholders of the corporat ion. I would not have anything further to contribute at this point to the debate of the me rits of one perspective or another, such as of legislated obligations, legal determinations of corporate actions, societal demands, or philanthropic endeavors as corporate social re sponsibilities. Further, Archie B. Carroll (1977; 1981) has provided two significant contri butions to management literature in the areas of the development and management of corporate social responsibility and these works will serve as touchstones to the background of my work. Second, a number of terms require definiti on. First, Â“societyÂ” is variously defined in broad contemporary terms Â“as a communit y, a nation, or a broad grouping of people having common traditions, values, institutions and collective activities and interestsÂ” (Carroll 1981, p. 4). What follows from societ y in the following chapters, which has often been used interchangeably in business literatur e, but which I see as distinct in a number
7 of ways, is Â“community.Â” I prefer how Kant us es the term in relation to his attribution, commercium or the space in which we could pla ce individuals in a dynamic, continuous, reciprocal existence in which each member co exists simultaneously, and thereby is linked by chains of relationship. These relati onships are mutual to one another and representative of the unity of a whole environment, yet the members mutually determine their particular posit ions and roles in Â“ one timeÂ” (Kant 1781, B261, p. 236). There is connection and conformity within these relati onships, based on interactive information Â– in other words, there is energy and synergy. Further, there is a distinction betwee n Â“corporate social responsibility,Â” Â“corporate social responsiveness,Â” and Â“corpor ate social accountability.Â” Some of these models include notions of corporations as trus tees to society, while other models reflect corporate cultures that represent publi c interests (Beesley and Evans 1978, p. 9). Corporate social responsibi lity involves both intentiona l (theory and policy) and performance (practice complian ce and evaluation) considerat ions. More importantly, its meaning varies as widely as its use in ec onomic, organizational, social, and political literature. Oftentimes, the definition used for Â“corporate social responsibilityÂ” is misapplied and ought to be the reflection of notions such as Â“responsivenessÂ” or Â“accountability.Â” Â“ResponsibilityÂ” may be defi ned in early philos ophical terms of duty and obligation by employing Kant and base d on AristotleÂ’s foundations for ethical praxis, or character and practice. Am artya Sen, Nobel economist and philosopher, has stated this prospective self-examination as Â“induced by the Socratic question, Â‘How should one live?Â’Â” (1988, p. 2).
8 In contemporary literature, Â“responsibility Â” has been defined Â“in a descriptive sense to mean simple role application Â” (Brummer 1991, p. 11). On this view, responsibility requires an individualÂ’s comm itment to their role, for example as an auditor in a corporation or a professor teaching at a unive rsity. In BrummerÂ’s estimation, Â“since this use is descriptive in nature, ther e is no evaluation made or implied about how well one is meeting the commitments of oneÂ’s rolesÂ” (1991, p. 11). Rather, responsibilities for partic ular roles are recognized or acknowledged. However, determinations of how well an individual performs their function or keeps their commitments as a fulfilling of oneÂ’s duty take on a Kantian perspective as expressed in his The Metaphysics of Morals (Kant [1797a] 1996, p. 156). The term Â“responsivenessÂ” has origins in Jean Jacques RousseauÂ’s discourse on inequality where he argued for sentiment, over reason, in discussing the basis of social relationships and mutual commitments: Â“Man Â’s first sentiment was that of his own existence; his first concern was that of his preservationÂ” (Rousseau 1754, p. 60). For example, social responsiveness is defined by Freeman and Gilbert as the response to a particular event or act committed by either the firm or some other market entity (1988, p. 90). This notion provides a mechanism, rather than a policy of decision-making. In other words, this is a secondary, although misapplied use for the term Â“responsibility.Â” In this sense, R. S. Downie (1964) indicates the usage is a response to oneÂ’s role enactment (Brummer 1991, p. 11). Put another way, Â“the focus is upon the way in which individuals perform their institutional ro lesÂ” (Brummer 1991, p. 11), which is an evaluative construct of Â“the quality of oneÂ’s role performanceÂ” ( 1991, p. 14). H.L.A. Hart (1968) ascribes one of his definitions of respons ibility to this same sens e, referring to this as virtue
9 responsibility an Aristotelian perspective of oneÂ’s function in societ y with evaluative notions of how well these roles are performed. Further, Brummer states that praise or blame may be attributed to th e way individuals act out thei r roles. A third, similarly constructed meaning of Â“responsibilityÂ” by Downie that is closer to my use of the term Â“accountabilityÂ” has to do with role acceptance (Brummer 1991, p. 12). This last meaning is externally driven by an indivi dualÂ’s perceptions of social acceptance or rejection of their particular role, based on such things as the role including (or not including) making social commitments to provi de some benefit to others. Further, Hart defines another sense of the term Â“responsibilit yÂ” as the Â“capacity sense.Â” In other words, individuals are responsible merely because they have Â“the capacity to beÂ… morally praised or blamedÂ” (Brummer 1991, p. 13). Theref ore, in BrummerÂ’s estimation, the term Â“responsibilityÂ” conforms to Â“both desc riptive and evaluativ e usesÂ” (1991, p. 14). However, as I will argue in the ensuing chapte rs, some of these attributions are neither philosophically, nor economicall y, appropriate nor valid for th e deep meaning of social responsibility that I arguing for. For Freeman and Gilbert, if the firm empl oys a relativistic basis of accounting for corporate decisions in control ling aspects of unanticipated ep isodes as they arise, actions of corporations may be informed by these meanings in the following way: The main principle at work is to be responsive to those who can affect you, not from any sense of obligation to them, but because they can cause you potential harm. (1988, p. 90) Some examples are corporate product recalls, such as removing packaged, pre-washed fresh spinach from grocery shelves in September 2006 due to E. coli outbreaks among consumers, or corporate bottlers providing fr ee bottled water to su rvivors of Hurricane
10 Katrina in New Orleans in the months fo llowing the September 2005 catastrophe. While these actions are praiseworthy for their results, these actions do not constitute the sort of social responsibility I am interested in. Thes e are responsive acts to particular events. The first may have been prevented by other sorts of corporate decision-making, and the latter was the result of a natural disaster wrought on an area that had been altered by human decision-making regarding manmade dams. In other words, Â“the company [and/or government agency] is a principal initiator of [social] changeÂ” (Beesley and Evans 1978, p. 15); but this initial instance is what ought to be examined to determine responsibility rather than examining the response to it. Another example of what has been termed Â“social responsibilityÂ” is altruism. Altruism is a sentient concern for the welfare of others based on sympathy or sentiment in response to a particular need. For example, many individuals in the entertainment industry ha ve embraced particular causes for action in developing countries that inco rporate financial giving and/ or economic development of funds for education or medical facilities. Th ese individuals are not acting independently, but as a corporate executive in their role as head of their own en tertainment enterprise based on their product Â– themselves. I give th e cases of Oprah Winf reyÂ’s funding to build and endow a girlsÂ’ school in South Africa or U2 singer BonoÂ’s marketing of consumer goods with the proceeds allocated for developi ng AIDS medical research and care. These are praiseworthy endeavors, but th e distinction in these decisions of social concern is that they are consequentialist, th erefore also altruistic, or Â“doing good,Â” as corporate enterprise in response to soci etal events. I would argue that Â“doing goodÂ” is not the same as Â“being responsible.Â” Starbuc ks Coffee Company agrees Â– Dennis Macray, the Director of Business Practices, states th at his company, as a corporate entity, Â“partnersÂ” with the
11 communities in which they do business Â“hand in hand,Â” rather than merely seeking philanthropic opportunities to do good (Macr ay 2007). Further, I do not take purely altruistic corporate actions as examples of my view of the meani ng of Â“corporate social responsibility.Â” Hart uses a final sense of the term Â“respons ibilityÂ” in the attrib ution of liability he and Joel Feinberg use similar definitions, as cribing this sense of the word as generally a negative attribution of blame in that an individual is accountable for some lapse or failing of their own accord (Brummer 1991, p. 13). An example would be a pharmaceutical company such as Merck donating a powerfully effective veterinary drug to impoverished rural sub-Saharan communitie s adjacent to fast-flowing river waters because an independent researcher accident ally discovered the drug could be used to combat human river blindness caused by a para site. Criticism arose because of MerckÂ’s failure to explore the full potential for long-term human c onsequences, a failure that resulted from the economic shortfall the co mpany anticipated because the drug does not have wide scale marketability Gibs on 2006, pp. 650-1). Further, the term, Â“accountabilityÂ” is an evaluative, judgment-based concept of particular acts, rather than a notion of intentions or motives. On this view, the case of the Los Angeles hospital Â“dumpingÂ” of a mentally ill woman patient wearing only her hospital gown and slippers in March, 2006 on Skid Row, illustrates th e distinction between accountability and responsibility. The hospital and its parent corporation were cr iminally and civilly charged and Â“will be held accountable for violating state law, its commitment to its patients, its obligations under the Hippocratic Oath, and pe rhaps most importantly, principles of common decencyÂ” (Associated Press 2006). In this case, the hospital had a duty and
12 social responsibility to provi de medical care to the patien t because of its intention to function as a medical care provider in societ y. The failure to fulfill this responsibility resulted in the hospital being held accountab le for both its actions and lack of acts of care. The distinction between Â“accountabilityÂ” a nd Â“responsibilityÂ” is clear. To be held accountable is to be praised or blamed for oneÂ’s acts; one is determined to be liable or answerable for oneÂ’s virtuous or wrong deeds, consequentially. The notion of responsibility is to say that one has intentions to act derived from duty or commitment; or, that one deems as motive the dedication to oneself and others to do virtuous acts rather than misdeeds. These intentions ar e based on the Kantian notion of individuals being concerned with, or thinking of, thei r interests in humanity and well-being, in oneself and others with a mo tive of duty to other rationa l beings (Kant [1797b] 1994). The goal of this dissertation is to examine responsibility rather than responsiveness or accountability, as a rati onal moral sense and determine its meaning within the framework of various economic theories about corp orate practice in society. In the first chapter, I will analyze the meaning of the term respon sibility in my primary area of concern Â– economic theories, which involve profit and loss. In the second chapter, I will discuss the business-society theory of ma rket enterprise and how these perspectives differ from profit theories of corporate responsibility. For example, business-society concepts are founded on economic theories of an exchange system based on financial considerations, but this relationship also enta ils more explicit soci al considerations. In chapter three I will critique the economic and business-society models of corporate responsibility, find the socioeconomic f oundations within them and explore the integration of the socioeconomic aspects of both market and human well-being models of
13 corporate endeavors. Consequently, chapte r four will provide a revised notion of corporate responsibility by l ooking at three particular contemporary concerns: reenvisioned corporate soci al responsibility, communiti es of stakeholders, and socioeconomic sustainability. Finally, a conclusion to my an alysis of the meaning of Â“corporate social responsibi lityÂ” in practice will be il lustrated in a case study of Starbucks Coffee CompanyÂ’s initiatives in a voluntary corporate mi ssion of the complex sustainable stakeholder relationshi ps in their supplier-communities. I am captivated and inspired by the words of Robert L. Heilbroner, an academic and economist and just a bit of a philos opher, who contemplated the notion of responsibility, without expressi vely stating so. In his cons ideration of th e historical development of economic thinking and its origin s in ethics, he stated of those economists and thinkers who wrote the history of the economic world: They were all fascinated by the world about them, by its complexity and its seeming disorder, by the cruelty that it so often masked in sanctimony and the success of which it was equally often unaware They were all of them absorbed in the behavior of their fellow man, first as he created material wealth, and then as he trod on the toes of his neighbor to gain a share of it. (1999, p. 16)
14 Chapter One Economic Theories Every man thus lives by exchanging, or beco mes in some measure a merchant, and the society itself grows to be what is properly a commercial society. (Adam Smith, The Wealth of Nations Chap. IV, 33 ) In this chapter I will establish the historical basis for a transcendental argument for the concept of corporate social re sponsibility. Mutual ex change in any contex t is a process of human relationships. Since corporations ar e comprised of a series of collective relationships based on responsibil ities to self and ot her interest considerations, the basis of my analysis of economic theory is depe ndent on the initial attention to relational responsibilities. I will enga ge with several economic th eories, focusing on how the concept of mutual exchange is viewed by producers in the economic market system and how it is conceived as an element of corporat e responsibility. I then will show that since the idea of corporate responsibil ity is contained in the very no tion of the corporation in its role in the market, corporate social responsibility follows from corporate responsibility. In the classical economic theories there ar e notions of corporate responsibility to others in the market, and, when the classical theories address the corporation as an entity, the theorists advance that the concept of a corporation necessarily includes responsibility. This discussion includes the fact that cl assical economic theories assume rational decision-making by individuals individually or collectiv ely, within corporations. Rational behavior is define d in two ways in economic theory Â– as Â“internal consistency of
15 choice,Â” and secondly as, Â“ maximization of self-interest Â” (Sen 2000, p. 12). I argue that corporate decision-making is a collective act that is Â“akin to that of individualsÂ” in that corporations may base the strategies of their market endeavors on both normativeaffective factors and logical-empirical fact ors (Etzioni 1988, p. 93). My interest is in rational decision-making as a proj ect for moral consideration. In what follows, each of these notions, internal consistency of choice and maximization of self-interest will be evaluated on the basi s of validity, as philosophical aspects of economic theory. My discussion of validity is informed by the work of Leo Rogin, an economist, was concerned with th e theoretical and practical Â“problem of validity,Â” in economic theory (Rogin 1956, p. 1) .Validity refers to legitimate practical applications. Further, legitimacy refers to KantÂ’s deontological aspects of the role of values (Etzioni 1988, p. 229). I contend that va lidity is fundamental to economic theories, and that validity implies ethical ideas. I argue that validity also entails ethical notions, such as reliability, integrity or persistence, and that these notions hold both practical and ideal determinations when we talk of the notion of responsibility, in other words, what is and what ought to be corporate social respons ibility. Further, in th is discussion I briefly engage with the public policy practices of exte rnal interference and regulation of market events as described in some of the classica l theories of economic responsibility that, in spite of their differences, cont ain elements of or also insi st on a form of corporate responsibility. There is a philosophical differen ce in attempting to explain what is and what ought to be responsibility in economic theories. Aristotle ( Politics : 1256b) provides the foundation to classic economic theory when he describes the necessity of human
16 exchange in terms of commerce based on self-sufficiency, which purpose was not originally intended for wealth accumulation ( Politics : 1257a30). And, according to Aristotle this exchange is a process of commerce that later depended on money to facilitate exchanges and which led to the idea that commerce became a craft involved with the development of profit ( Politics : 1257b). However, he is caref ul to point out that Â“money itself is nonsense and wholly c onventional, not natural at allÂ” ( Politics : 1257b10). Further, in both his Politics and Nicomachean Ethics Aristotle considered the original exchange process as fundamental to the well-being of the community (Heimann 1966, p. 23). We must admit that there is a rational basis to thinking a bout this exchange that is meaningful, which would necessarily enta il moral considerations in the human interactions involved in this process. Perhap s what intrigues me most in considering the theories of this economic process is that we may view human responsibility related to human decision-making and acts as a cooperative effort, which is reminiscent of how the ancient Greeks viewed the function of individuals in a community. These cooperative efforts of members of a community who choos e to engage in the process of commerce result in what is called an Â“economic system ,Â” or series of economic activities. These activities include four br oad types of human acts: Activities to obtain raw materials or human skills Activities to adapt raw materials or skill s into finished products or services (Â“goodsÂ”) Activities to provide distri bution of goods to consumers Facilitating activities (e .g. banking, insurance, professional services) to support economic exchange (Salvadori 1963, p. 317-8) Therefore, we ought to consid er that Â“an economic system requires a set of rules, an ideology to justify them, and a conscience in the individual which makes him strive to
17 carry them outÂ” (Robinson 1962, p. 13). However, economic theories of market activities treat moral concerns and the notion of corporat e responsibility in the exchange process in varying ways. Therefore, there is a pr oblem correlating economics and corporate responsibility. If we say that business enterprise is economic, we are saying that society recognizes a value-based system of conditions for the exchange of goods or services between individuals or entities. These conditi ons may include financial value, such as profit. Economic ways of looking at corpor ate enterprise and the marketplace include individual and collective acts: Individuals may organize around a shared goal of commercial enterprise or collective economic and social relationships. Collective actions may result in corpor ate activities, which are financiallybased in exchange-oriented endeavors. Economic theories of business enterpri se incorporate notions of a common ground, or marketplace for exchan ge that society sanctions. These views of financial exchange integrat e facets of efficienc y, utility, resources, services, and associations of individuals. Corporate endeavors are based on a goal to provide some product or service to society, alt hough not without some return of value from some members of society. This process requires an analysis of the motives of individuals engaged in creating a market system and the corresponding responsibilities attributed to those involved in this system. According to Archie B. Carroll, an academic researcher of management practice, who wrote an overview of corporate social performance and responsibility, Â“it may seem odd to call an econo mic responsibility a social responsibility, but this is, in effect what it isÂ” (1981, p. 34). The function of the market includes what economist Gary Becker views as a social coordination of Â“the
18 actions of different participants Â– individuals, firms, even nations Â– so that their behavior becomes mutually consistentÂ” (Becker 1976, p. 5). The social coordination of these activities is the result of a market memberÂ’s motive to develop viable commercial goals as a market participant. Each market participant is responsible for fulfilling a part icular function in society. These functions may include manufacturing goods or providing services for other participants in reciprocating exchanges in the market. Th ese views of economic activity portray what is an environment in society. Eduard Heimann, economist and social theorist, lists Â“those human activities with which economics is concerned Â– the production, exchange, and distribution of goodsÂ” (1966, p. 3). He finds the moral aspects of human exchanges to be integrated with economic ones in the hi story and practice of economic thought. For example, he states "A commodity, then, has no economic value in itself, independently of the present needs of its pote ntial users" (1966, p. 108). His ap proach integrates economic and philosophical notions of va lue, utility, and validity in the principles of economic doctrines. The Western capitalist environment is ba sed on human expectations of economic relationships between marketplace particip ants, such as producers, suppliers, and consumers. But, these participants also deve lop social expectations of one another in terms of what ought to be ethical aspects found in mu tual market exchange Â– for instance, reciprocity and responsibility. Economic relatio nships between individuals or entities of individuals, by definition, bear reciprocal aspe cts, which are certainly comprised of some sort of mutuality, but are not necessarily equal. These economic relationships hinge on social connections that provide the opportunity for developi ng additional market member
19 bonds with the intention of setting in motion production, service, or economic exchange. In other words, Â“it is this sear ch for the order and meaning of social history that lies at the heart of economicsÂ” (Heilbro ner 1999, p. 16). Moreover, market relationships include commitments to others in society, thus the notio n of responsibility has historical import in terms of Â“the concept of corporate ec onomic powerÂ” (Beesley et al 1978, p.14). The following classic economic theories of corporate responsibility are based on the Â“business economic functionÂ” in relationships related to profit development. There have been analyses of the success of corporat e social responsibility using empirical data, such as stock price or return on investment (Aupperle et al, 1985). Ho wever, it is not the purpose of this chapter to analyze or determine the success of corporate social responsibility in economic theories on this ba sis. Rather, I will analyze the philosophical implications of the terms Â“corporate,Â” Â“socia l,Â” and Â“responsibilityÂ” in economic theories. My interest is in the various social possibili ties, including duties a nd responsibilities held or taken, which may be considered as what is and/or what ought to be Classical Economic Views of Corporate Responsibility The classical view of the free market focuses on human goals in the economic exchange of goods and services offered between pr oducers and individual consumers. This understanding is Â“restricted to the maxi mization of the sati sfaction of existing, unchanging desires for ever more private consumptionÂ” (Ackerman 1997, p. 49). The factors historically associated with this ex change between producers and their customers were viewed as being Â“impersonally and competitively determined by the marketÂ” (Galbraith 1967, p. 59). Further, external determinations of how the market must behave
20 impact prices, costs, wages, and other bus iness transactions. This view holds that corporate responsibility is a response to the market system. Beginning in the 18th century, Western economists who analyzed the developing formal market system were also philosophe rs and observers of social, political, and ethical concerns of the process of economic exchange. This trend continued into the 20th century, rather than being Â“d iscovered,Â” as some would ha ve it by Â“sociologists [who] observe Â– some with excitement others with trepidation Â– that economists are attending more to sociological concerns, even wi nning Nobel prizes for doing soÂ” (Baron and Hannan 1994, p. 1111). But, this Â“discoveryÂ” was the beginning of a movement to return to philosophical underpinnings of ethical notions, such as Â“res ponsibility,Â” in retelling the story of economic thinking. Examples of this emphasis are found in the classical economic views of the market in the work of Adam Smith, and later in the work of Milton Friedman and John Kenneth Galbraith. Adam Smith and Moral Markets My purpose in this chapter is not to deve lop Adam SmithÂ’s economic delineation of the market system, but rather to present the c oncepts of responsibili ty found in classical economic theory and variations on its theme. An economist and philosopher, Smith reflected on the moral aspects of market ente rprise in society. He used the term Â“selfinterestÂ” to define the motive of market exch angers. His notion of self-interest is based on his earlier notion of human vanity, need fo r attention, and desire for approval (Smith 1759, p. 71). But, SmithÂ’s self-interest is not an egoistÂ’s perception of the world; rather, it is based on human beings being interested in themselves. Self-interest is also distinct
21 from being selfish; self-inter est is an ability to put onese lf in the position of another person as an impartial observer in such a way as to be able to assess how one would likely be situated in similar circumstan ces (Heilbroner 1999, p. 47) Business ethicist Patricia WerhaneÂ’s analysis of SmithÂ’s Theory of Moral Sentiments and The Wealth of Nation concludes that, As a social being dependent on and interact ing with others, I am the subject of my interests, so there is a trivial sense in which all my interests are Â“self-interests.Â” That is, they are the interests of the self. But I am not always the object of those interests. (Werhane 1999, pp. 18-19) Heimann concurs with this assessment. For example, he states that Â“[Smith] did not believe that self-interest necessarily co incides with the common goodÂ” (1966, p. 65), but rather in a harmony between individuals and mark et agents in the form of both social and economic responsibilities to seek greater sati sfaction. In his assessm ent of SmithÂ’s later thinking, Heimann states: Â“In his work we fi nd a model of that integration of economic sociology and economic theory without wh ich economic theory remains empty and formalÂ” (1966, p. 73). Further, we could state th at self-interest serves as the driving force in societyÂ’s market exchange, but only such that Â“similarly motivated individualsÂ” seek to provide Â“goods that soci ety wantsÂ” (Heilbroner 1 999, p. 55). Â“Nature and reason coincideÂ” (Heimann 1966, p. 84) in a Â“social harmonyÂ” (Heilbroner 1999, p. 56) that will produce beneficial results for i ndividuals and market agents. Self-interest is the driving force behind an exchanger taking responsibility for the development of profit. Market exchange was facilitated by the introduction of government-issued currency, and further by the standard monetary values set within particular countries as Â“the universal in strument of commerceÂ” (Smith 1776, p. 41), but
22 this is the only latitude Smith grants in terms of the role of government in the market system. In this process, exchangers consider what constitutes Â“a fair price Â– a price society feels represents the value of goods and services de livered and that provides the business with adequate profit for its perpetua tion, growth, and reward to its investorsÂ” (Carroll 1981, p. 34). When the exchange of goods and services results in the receipt of currency that is valued higher than the expense of providing the goods or services exchanged, profit is derived. On SmithÂ’s acc ount, the notion of profit as a Â“goodÂ” in the sense of some sort of be nefit is the basis for the profit theory of corporate responsibility In other words, Â…it is only for the sake of profit that any man employs capital in the support of industry; and he will always, therefore, endeavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quantity ei ther of money or of other goods. (1776, p. 572) However, the notion of a Â“goodÂ” would also imply a qualitative, potentially moral implication. One possible implication is that reciprocity in human relationships, and the notions of ideas such as trust, consen t, and mutuality, do exist in commerce. SmithÂ’s concept of the private commercia l endeavor based on creating monetary values is supported by Â“circulation or successi ve exchangesÂ” that result in revenue, or profit (1776, p. 354). His concept is a harmoni ous, reciprocating, relational interaction between individuals and collectivities. As a result, merchants are motivated to determine the value of their goods in relati on to a prior standard of exch ange, or rather, to determine Â“the utility of some particul ar object, and sometimes the power of purchasing other goods which the possession of that object conveysÂ” (1776, p. 41). What is more, this motive is based on a sense of economic responsibility on the part of exchangers to value these
23 goods in dual considerations of fair prices a nd acceptable gains, or profits, for themselves as derived from the exchange with others. At about the same time as Smith, French social philosopher Jean Jacques Rousseau considered economy as a responsibility to oneself in, Â“the wise management of what one has, [rather] than the means to acquiring what one does not haveÂ” (1754, p. 130). Rousseau considered the responsibility for how society benefits from goods, such as products, as that of governmentÂ’s Â“invisi bleÂ” involvement in the market through the administration of public finances. While privat e enterprise actuates, Â“the distribution of commodities, money and merchandise in just proportions according to time and placeÂ…Â” (Rousseau 1754, p. 130), Rousseau was concerne d with government as a Â“moral beingÂ” which acts out of concern for society. A lthough this approach has bearing in some concepts of who should have the duty to Â“soc ial responsibility,Â” for my purposes in this work the focus is decidedly an analysis of intentional corporate acts. What is important in my view is SmithÂ’s concept of the Â“invi sible hand,Â” which is derived from his conception of self-inter ested acts. This noti on appears once in his The Wealth of Nations An individualÂ’s self-interest for personal benefit is her motive to pursue a commercial endeavor with the intentio n that her Â“industryÂ” will eventuate in its best possible economic gain. In other words, she is seeking her own well-being. She takes responsibility for her own we lfare by exercising autonomy and duty to herself. The success of her market endeavor impacts soci ety in some way, although this wasnÂ’t her intention. In taking resp onsibility for her role in society, she takes responsibility for being in society in a beneficial way. She does not seek to harm society, but neither does she
24 take direct responsibility for the well-being of society. She is Â“led by an invisible hand to promote an end which was no part of [her] intentionÂ” (Smith 1776, p. 572). Smith uses a metaphor, the Â“economic man,Â” as the individual who Â“strives for maximum satisfaction with minimum sacr ifice" (Heimann 1966, p. 73). But what is Â“satisfaction?Â” On HeimannÂ’s assessment of Smith, it is Â“that which comes with the attainment of more goods ra ther than lessÂ” (1966, p. 73) Smith considered a fuller picture than his Â“economic manÂ” might impl y according to philosopher Hilary Putnam (2002, p. 48). Noting PutnamÂ’s analysis of N obel economist Amartya SenÂ’s evaluation of SmithÂ’s treatise, we can elaborate on this as pect as it relates to the notion of social responsibility. Putnam states that Sen Â“provi des a Â“reintroduction of ethical concerns and concepts into economic discourseÂ” that is always already present in SmithÂ’s work (Putnam 2002, p. 48). Sen states that cla ssic economic thinking has misconstrued a Â“narrowÂ” view of human beings in evaluations of Smith th at attempt to Â“understand the nature of social interdependence;Â” however, Â“such interdependence is one of the more complex aspects of economics in general, a nd the insights derived from these theoretical analyses have proved useful even in pract ical Â‘bread and butterÂ’ problemsÂ” (Sen 2000, p. 8). I also see an Aristotelian perspective in SmithÂ’s notion of self-interest Â– that of individuals performing their functions in soci ety, and performing them well in such a way as to benefit themselves and thereby benef iting society as well. Smith states the moral aspects of individual responsib ility to labor as the social responsibility of commercial enterprise in his Introduction to Wealth of Nations (1776, p. 1). This is the moral implication of creating well-being, for self and others, by taking primary responsibility for oneÂ’s own acts.
25 Smith laid a foundation for the social res ponsibility of business in early economic thinking Â– that of self-interes t as the basis for developing pr ofit in acts of commerce. He was concerned with individual intentions in the act of commerce, which created a potential social good. In other words, SmithÂ’s concerns with market trade illustrate interdependence between individuals Â– Â“b ecause trade takes place on the basis of mutually advantageous (explicit and implic it) contractsÂ” (Sen 2000, pp. 24-5). Moreover, Rogin (1956, p. 69) captures this act as that of Â“cooperationÂ” based on SmithÂ’s assessment of Â“the skill, dexterity, and judgmentÂ” (Smith 1776, p. 1) of individual laborers. Cooperative endeavors of self-interes t result in socially responsible acts. These impacts are beneficial to society if they are beneficial to the individual who gains economic returns, or profits: By pursuing his own interest he frequen tly promotes that of the society more effectually than when he really intend s to promote it. I have never known much good done by those who affected trade for the public good. It is an affectationÂ… (Smith 1776, p. 572) There are further elements of AristotleÂ’s Nicomachean Ethics captured here. The intention to develop oneself (oneÂ’s role in society) bears moral im plications to doing well by oneself. This notion of well-being is not a direct intention of providing a benefit to society, which may have right or wrong motiv ations (i.e. self-ser ving expectations of gratitude for the sake of rece iving gratitude). Rather, with the metaphor of an Â“invisible hand,Â” Smith seems to say that the intention of private enterprise is to benefit oneÂ’s own well-being, which will ultimately, or guidedl y, benefit others. This would apply a responsibility to oneself in ma rket endeavors. I would argue that this also informs the classical economic view of co rporate responsibility as the use of oneÂ’s business acumen
26 in such a way as to benefit oneself Â– pleas ing the stockholders under whose direction one engages in corporate enterprise and there by increasing oneÂ’s value economically while the market benefits from successful business endeavors. However, this way of thinking may prove problematic in terms of how responsibility is considered. An analysis of SmithÂ’s view in te rms of whether this invisible hand is an implicit guiding mechanism or whether market agents act as if the market is determined in some particular way can be summed as follows: Â“In other words, is there a natural something, a hidden spring, which leads people in markets to seek their own interest and [/or] find the welfare of the society?Â” (Sufrin 1989, p. 26) Could these acts result in social costs, rather than benefits? On economist A.C. PigouÂ’s 1920 account, the market is the space wherein Â“conflicts between producers a nd large numbers of affected citizensÂ” occur (Ackerman 1997c, p. 123). Because of the potential economic and social costs, any appraisal of the responsibility for these conflicts will relate to the notion of accountability for acts in the market. The market is driven by, but also imp acts self-interest, as well as corporate duty to others in society. But, if we consider acc ountability for market agent acts, then we are negating intentionality as a drivi ng force in business endeavors. Many would argue SmithÂ’s perspective in this regard. There is a fiduciary responsibility to stockholders, owners of private property, an d laborers that Â“is strictly and inseparably connected with the general in terest of societyÂ” (Smith 1776, p. 337). But, the general interest of societ y is not strictly met in conn ection with profits because it poses a conflict of interest, that of corporate self-interest alon e, and thus a harm to society (Smith 1776, p. 338). A fiduciary responsibility is more than financial Â– it entails notions of stewardship, nurturing, and beneficence towa rds others. Smith is concerned that profit-
27 oriented investors, the Â“order of men, whose in terest is never exactly the same as that of the public,Â” would develop a re sponsibility to themselves th at creates harm to society through deception and oppression (Smith 1776, p. 339). Smith was suspicious of the Â“motives and consequences of business,Â” su ch as corporations (Heimann 1966, p. 69). In other words, Smith found that the early invest ors, the merchants and the manufacturers, Â“say nothing concerning the bad effects of hi gh profits. They are silent with regard to pernicious effects of their own gainsÂ” (Smith 1776, p. 137). On his view, investors do not feel a sense of responsibility to society for their craft. However, he isnÂ’t saying that investors shouldnÂ’t be socially resp onsible, only that they arenÂ’t. The condition for the possibility of res ponsibility in corporate decision-making in the market system is methodology. The histor ical chronology of economic responsibility illustrates the transformation in thinking a bout individuals as decision-making actors, who have shared relationships and motives with other decision-makers. These shared motives are the basis for formal relations hips that result in collective economic endeavors. In this sense, formal relationships rely on shared participation, as a collective endeavor, which acquires participant responsib ility in economic decision-making. Hence, the collective responsibility of the corporation is imp licit in terms of economic considerations. We may use social theorist Max WeberÂ’s a ccount of market exchange acts as Â“the economic activity of an individual [as] social if, and then only so far as, it takes account of the behavior of someone elseÂ” (1947, p. 113). I understand corporations as entities comprised of individuals who make decisi ons bearing financial outcomes for their organizations and for market exchange in so ciety. We could argue that these decisions
28 provide the potential for shar ed ownership of corporate entities. In other words, philosopher James J. Brummer stated these en tities are Â“involved in collective ownership, [and] thus they cannot characteristically be broken up and distri buted to individual shareholdersÂ” (Brummer 1991, p. 9). The concept of market exchange and of potential economic rewards resulting from market exchange could overlay the ways of thinking about corporate social responsibility. This overlay and corporate responsiveness based on economic returns for corporate acts is not to be mistaken for cor porate responsibility to ot hers. Further, market rewards are outcomes that are measured in terms of economic gains for investors and shareholders who have endowed a financial ri sk in a corporate interest as part of a relationship Â– in others words, an economi cally vested reciprocal relationship. The underpinnings of the process of corporate ma rket exchange are based on responsiveness to the demands of other market participants. For example, Weber describes Â“goodsÂ” as Â“all kinds of economic advantages,Â” such as good will (1947, p. 170). This good will is also found in philosopher Immanuel KantÂ’s concern about moral actions in the duties of producers to purchasers engaged in commerce and exchange, price-setting and honesty between market participants. He views these duties as social responsibilities based on Â“selfseeking inclinationsÂ” (Kant 1785, p. 10, cf 4), which have economic advantages. Kant states, Â…that a dealer should not overcharge an inexperienced purchaser certainly accords with duty; and where there is mu ch commerce, the prudent merchant does not overcharge but keeps to a fixed price fo r everyone in general, so that a child may buy from him just as well as everyone else may. Thus customers are honestly served, but this is not nearly enough for making us believe that the merchant has acted this way from duty and from prin ciples of honesty; his own advantage required him to do it. (1785, p. 10)
29 Moreover, good will is implicit in the notion of legitimate market exchange, rather than as a result of the experience of market agent acts of enterprise; otherwise, the transcendental argument regarding the conditions for the possibility of ongoing (corporate) concerns lacks validity. Market relationships are founded on a priori moral implications of reciprocity, reliab ility, integrity, and persistence. Profit as Responsibility Theories The distinction of motives in the market illust rates a further moral c onsideration of social responsibility. It could be that corporate enterprise would not have any particular duties to society, but only the motive to respond to the threat of its own demise or to its corporate effectuation in terms of meas urable and quantifiable economic decisionmaking. However, the idea of socially respons ible corporate decision-making that affords human capabilities correlates with Kantian as pects of benevolence. And on this view, those who have the means to provide for t hose in need (e.g. employment, goods, services) have a duty to do so. To do otherwise, woul d be to eliminate the reciprocity between market producers and consumers based on a Â“sel fish maxim [which] conflicts with itself when it is made a universal lawÂ” (Kant [1797b], 1994, p. 117). Economist Lionel Robbins describes the concurre nce of economic and ethical thinking: Â“Economics deals with ascertainable facts; et hics with valuation and obligationsÂ” (Robbins 1935, p. 134). In contrast, orthodox economic theory de veloped as a utilitarian model of efficiency and sum total utility, without conc erns of intrinsic values and interpersonal relationships (Sen 2000, p. 30). Hence, these la tter moral considerations are absent in
30 strict economic theory definitions. However, as we have seen, classic economic thought, although the basis for contemporar y corporate models of market enterprise, does include a correspondence between profit and responsibi lity in ethical terms. This correspondence has been observed in Western domestic corp orate enterprise in a number of ways, including employee relations (labor), and e nvironmental practices and consumer goods (society). In other words, there are constrai nts on domestic profit-s eeking enterprise. But, multinational corporate acts include development in foreign nations while seeking to generate profit. Therefore, the notion of responsibility is not a bounded construct, but rather a fluid idea of both fact and value. Hilary Putnam states that Â“issues of development economics and issues of ethical th eory simply cannot be kept apartÂ” (2002, p. viii). The human motivation for an exchange of goods and services in the marketplace is based on reciprocated, but unequal needs and desires of market ag ents. In a classical 20th century Western economic m odel Â“equilibrial economicsÂ” is the traditional ideology of market balance between supply and dema nd (Sufrin 1989, p. 19). This market balance is the economic responsibility of producers who seek to benefit from their business endeavors with consumers. Market agents re alize benefits in this exchange, but these agents have differing views of what constitu tes a benefit. The considerations of any benefit on the part of mark et agents would be relate d to whether they are: subjective or collective in nature notions of voluntary vs. coercive behaviors considerations of duties, respons ibilities, or accountabilities Moreover, market agents delineate tran sactional relationshi ps based on economic reciprocity and responsibility to selves a nd others. Likewise, contemporary aspects of
31 exchange include economic responsibility to market agents based on production of Â“goods and services that society wantsÂ” (Carroll 1981, p. 34). However, as has been observed, Â“assessing profitability is a relatively clear-cut pr ocess, but assessing social responsibility is notÂ” (Auppe rle et al 1985, p. 446). On BrummerÂ’s view, contemporary classical views measure efficacy of corpor ate acts as contracts between corporate executives or managers acting on behalf of st ockholders to derive the greatest possible profit for the firm (1991, p. 5). The character of the self-interests of these market affiliates informs their respective motives and ensuing market acts. Sidney C. Sufrin, who held two emeritus faculty positions as a business economist, states that market acts are both transactional and contra ctual in contextual scenes: Â“...the setting, the scene of the action, can be distinguished from the action, for it is the latter which is the tr ansaction of importance, the action of exchangeÂ” (Sufrin 1989, p. 14). To those who invest in the creation a nd growth of a business endeavor, corporate responsibility is limited to the relationship between shareholders and the corporate entity that is voluntarily en tered into. In order to develop private economic enterprise with consumers, corporate endeavors must be free of external interference and coercion (Friedman 2002, p. 14). Traditional Western economic theory ignores the notion of voluntary social responsibility and it limits corporate responsibilities to economic relations entered into, such as thos e with investors or customers. Milton Friedman and Profit Model When we talk of the responsibility of cor porate enterprise, we de rive a sense of its obligation to investors from th e reciprocity of an exchange between thes e individuals
32 who lend, or invest, money in an organization co mprised of other indivi duals. This is one element of the classical economic view. Sec ond, there is competition in how this money, or capital, is used in the market. Moreover, the human mo tivation to develop organized economic activity as a free (i.e., absent from government restriction) activity leads to private enterprise in these exchanges (F riedman 2002, p. 4). HeimannÂ’s account of the classic economic theory is similar in that his model is based on an implied sense of Â“human self-realizationÂ” within a Â“ free economy to denote the absen ce of authority in establishing the hierarchy of needs and in proportionally allocating means to their satisfactionÂ” (Heimann 1964, p. 12). In other wo rds, there is a negative freedom of public intrusion on market activity and a positive freedom of collective responsibility to actualize corporate market endeavors. Third, the motivation for organizing individuals into a corporate endeavor is based on shared goals and intentions of fulfilling a commitment to these goals. According to economist Milton Friedman, Â“collectivist economic planning has indeed interfered with in dividual freedomÂ” (2002, p. 11); however, along the lines of Smith, he views government intrusion thr ough policy and law as far more limiting of individual autonomy. FriedmanÂ’s notion of corporate responsi bility is based on conservative financial exchange relationships which result in profit. The profit basis of corporate responsibility is derived from collective endeavors in the market, and the interrelationships of the individuals within organizations are the only ones imbued with ethical responsibilities to one another. And, according to Friedman, the relationships between corporations and indivi duals in the market are base d more simply in terms of economic rather than social responsibilities (2002, p. 12).
33 On FriedmanÂ’s account an evaluative pr ocess in economic endeavors considers issues such as efficiency and coordination of acts. This is th e notion of accountability. In other words, Â“the basic problem of social organization is how to co-ordinate the economic activities of large numbers of peopl eÂ” such that a Â“voluntary exchange is a free private enterprise exchange economy Â– what we have been calling competitive capitalismÂ” (Friedman 2002, p. 13). However, reciprocal relationships are based in economic responsibilities to other market partic ipants. This concept forms the basis of the Â“Profit as ResponsibilityÂ” concept. The notion of responsibility in this con cept is based on an economic reciprocity between collectivities and indivi duals or other colle ctivities that resu lts in a Â“good.Â” In other words, Friedman posits that Â“both par ties to an economic tran saction benefit from it, provided the transaction is bi-l aterally voluntary and informed Â” (2002, p. 13), such as in freely producing safe products or services. But, the critical issue of what constitutes adequate disclosure of information, such as an environmental risk, is not determined in this statement. Moreover, the mutual exch ange is not equal in economic terms, but actualized in terms of value determinations Further, Michael Beesley and Tom Evans, economists of the London Business School, alig n the notion of cor porate responsibility with power. They trace the s ource of this power to a Â“ relative freedom from constraintsÂ” (Beesley and Evans: 1978, p. 25). FriedmanÂ’s assessment, although not expressed in the same manner, could also be considered in terms of power Â– recipr ocity is more than economic because it is built on the notions of Â“bi-lateral vol untarinessÂ” (absent government or external interference) and Â“i nformed consent.Â” I will address the further
34 implications of power and reciprocity in Chapte rs Three and Four as they relate to social responsibilities of corporations. Friedman provides a further caveat to his view of corporate responsibility. He argues that the free market system must have cooperation, beyond reciprocal money exchange for goods and services: a) enterprises are private; the ultimate contracting parties are individuals b) individuals are effectively free to ente r or not enter into any particular exchange c) every transaction is strictly voluntary (Friedman 2002, p. 14) In this latter case, his concern is that of interference by one indivi dual with another Â“in respect of most of his acti vitiesÂ” (Friedman 2002, p. 14). He refers to the market as Â“impersonal,Â” yet on his account individuals are comprised of personal character and may seek to monopolize the market. He likens the monopolist to someone who interferes with anotherÂ’s endeavor in the market. Moreover, monopolistic behavior is a mechanism to gain power. But, there is a Â“soc ial responsibilityÂ” in this mech anism Â“not solely to further [oneÂ’s] own interests but to further socially desirable endsÂ” (Friedman 2002, p. 120). In part, Friedman is using a Smith ian view of a market endeavor Â– that society places Â“no trustÂ” in a monopolistÂ’s market endeavors, but rather society holds an Â“opinion of his fortune, probity, and prudenceÂ” (Smith 1776, pp. 146-7). FriedmanÂ’s concern with a free market system is based on notions of voluntariness and negative freedoms. Thus, his notion of the responsib ility to gain profit is something more than merely economic exchanges in the market. His concept of corporate responsibility has some other public benefit beyond the financial exchange. The notion of reciprocity may be used in connec tion with market exchanges, but this notion
35 also bears moral implications based on consid erations of the integr ity of individuals and the trust between them. These considerations reflect on the veracity of any corporate endeavor. However, FriedmanÂ’s view is that Â“there is one and only one social responsibility of business Â– to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception and fraudÂ” ( 2002, p. 133). But, Friedman fails to account for how deception and fraud are defined Â– in other words, would the failure to disclose potential environmental risks of a corporat ionÂ’s competitive market activities constitute either deception or fraud, or both? His notion of corporate responsibil ity is based solely on the validity of the profit f unction of a market endeavor. Fr iedmanÂ’s view of corporate economic decisions regarding the use of res ources does involve choi ce and responsibility to others, but he does not view these two elements as a co rporate social responsibility. The existence of the corporation, on Friedm anÂ’s account, is the responsibility of the corporate managers to the stoc kholders. Corporate existence is only possible if it is based on economic choices in a free market. Further, Â“the corporation is an instrument of the stockholders who own it,Â” (Friedman, 2002, p. 135) funded by shareholders for their intention of extending the purpose of its existe nce as a Â“going concern.Â” On this account, FriedmanÂ’s view is in agreement, in part, with SmithÂ’s assessment that those who live by profit invest in the Â“sto ckÂ” of the corporation (S mith 1776, p. 338), hence taking responsibility to develop economic means through the use of resources for productive ends as a societal benefit, and thereby de riving profits as compensation for taking this responsibility. FriedmanÂ’s view reflects Sm ithÂ’s admonition regarding those who fail to
36 demonstrate ambition. Smith considers ambition a social responsibility of individuals involved in market endeavors: Even a tradesman is thought a poor-spi rited fellow among his neighbors, who does not bestir himself to get what th ey call an extraordinary job, or some uncommon advantage. This spirit and kee nness constitutes the difference between the man of enterprise and the man of dull regularity. (1759, p. 247) However, on this account those who Â“mutter that the business of business is business, miss the point;Â” rather, Â“what they really ar e asserting is that th e business of business should be businessÂ” (Sufrin 1989, p. 21). Some might argue that Â“business is no t equipped to handle social activitiesÂ” (Carroll 1981, p. 38); however, the term Â“org anizationÂ” as previously mentioned, is defined as a collectivity of individuals organized around a central, shared goal, like making money. This idea of sharing is based on aspects of reciprocity and the responsibility to avoid certain harms Â– su ch as employment or commerce-oriented discrimination against indivi duals in society. But, on management experts Allan ShockerÂ’s and Prakash SethiÂ’s account, a co rporation is also concerned with the legitimacy of its enterprise Â– as well as allowing society to hold it accountable for its actions (Shocker and Sethi 1973, p. 97), rather than merely re sponsible for its decisions. Legitimacy has to do with notions of trustworthiness and rationality (Baron and Hannan 1994, p. 1128), two elements of responsible choi ce, which are not easily quantifiable. In other words, holding a corporation socially responsible may not be feasible. This argument defines Â“holdingÂ” a corporation respon sible for its actions what I would argue is judging it to be Â“accountableÂ” based on a consequential view of good or bad outcomes. Moreover, Beesley and Evans state that corp orate social responsibility Â“is concerned
37 essentially with the competence of the corpor ate system to manage multiple goalsÂ” (1978, p. 23). Again, this is a backward-looking, evaluative methodology of determining the value of the outcome by using an a ccounting of a market activity in holding a corporation Â“responsible.Â” I would argue that this is a practice of de termining Â“accountabilityÂ” Â– a quantitative judgment of prior actions. One cannot hold intentions to act, but one can hold assessments of acts. This is an importa nt distinction betw een accountability and responsibility. FriedmanÂ’s depiction of social responsibi lity bears some manifestation of SmithÂ’s view of sympathy for others in The Theory of Moral Sentiments in that Friedman detaches the level of corporate response to ot hersÂ’ plights in lieu of societyÂ’s role. Smith related sympathy to self-interest from the imag inary view of oneself as an other: Â“this imaginary change [of situations] is not supposed to happen to me in my own person and character, but in the person with whom I sympathizeÂ” (Smith 1759, p. 465). On this view, neither individuals nor corporat ions would bear a social resp onsibility to others as an objective. Rather, that which Â“relates to my self, in my own proper person and character, but which is entirely occupied about what relates to youÂ” is a segregated view of responsibilities in market exchange (Smith 1759, p. 466). This segregation of responsibilities to oneself and to others seems in part to be FriedmanÂ’s approach to his notions of corporate responsibilities. However, his further distincti on of responsibilities involves corporate and societal entities.
38 John Kenneth Galbraith and Profit Model Five years after FriedmanÂ’s account of corporate capitalist endeavors, Harvard economist John Kenneth Galbraith outlined some liberal ways of thinking about the notion of a corporation: Â“Its purpose is to do business as an individual woul d but with the added ability to assemble and use capital of seve ral or numerous persons,Â” thereby affording directive for responsibilities of those agents who work fo r the organization to Â“make money for the ownersÂ” (Galbraith 1967, p. 83). But, on his view, corporations are imperfect. Corporations make mistakes, as well as act in praiseworthy ways. Galbraith holds a different view from Fr iedman of corporate action and corporate roles in society. He advances economics as much a study of social science as a study of Â“prices, output and incomesÂ” (1967, p. 409). For example, he noted that Â“there is no such thing as a corporation. Rather there ar e several kinds of corporations all deriving from a common but very loose frameworkÂ” (1967, p. 85). Further, a corporation is a legal image, based on an association of individuals, but yet autonomous and possessing a legal Â“personalityÂ” much as i ndividuals (1967, p. 84). He lends support for FriedmanÂ’s position, stating that profit maximization is th e sole, legitimate purpose of a corporation, and Galbraith concurs with FriedmanÂ’s view of developing profit: Accordingly, if the traditional commitmen t to profit maximization is to be upheld, they [i.e., managers] must be willing to do for others, specifi cally stockholders, what they are forbidden to do for themselves. (Galbraith 1967, p. 128) In fact, Galbraith states that Â“profit maximization excludes other goalsÂ” (1967, p. 136). However, Galbraith digresses from Frie dmanÂ’s more stringent view of profit maximization as the sole purpose of corporat e market endeavor. Galbraith considers the responsibility of corporate activ ity to social concerns Â– but noted as an indirect process
39 rather than as a goal. Further, he echoe d fellow Harvard economist Theodore LevittÂ’s statement of 1958 regarding the Â“d angers of social responsibil ityÂ” as an assumption of an improper extension of the role of busin ess enterprise (Galbraith 1967, pp. 124, 137). On GalbraithÂ’s view, corporate social responsibility as a goal does not extend directly for social concerns regarding hunger, clot hing, housing, and disease. Rather, his approach nears English economist John Ma ynard KeynesÂ’ view, as reflected by AckermanÂ’s assessment, Â“in which affluence w ill allow the development of more ethical behavior and less selfish character traits, re placing competitive, acquisitive individualism fostered by the market and the regime of scarcityÂ” (Ackerman 1997b, p. 85). In fact, the views of liberal economists, su ch as Galbraith, Â“start with the premise that the macro economic system does not work with automatic efficiencyÂ” (Sufrin 1989, p. 19). As such, according to Galbraith, Â“a concern for social goals would have an exceedingly disturbing effect on economics as it is professionally practicedÂ” (1967, p. 415). Rather, he stated that corporate responsibility is an indirect mechanism for social concerns in that the business endeavor is to provide Â“highe r income [as] the basic remedy; [the] problem is thus an economic oneÂ” (Galbraith 1967, p. 413). The basis of his argument is that we have not and cannot establish a determination of Â“how muchÂ” or Â“how completelyÂ” a corporate social responsibility might be. In other word s, he is saying that economic goals can be measured or quantified, while social goals ca nnot. Further, on GalbraithÂ’s view, Â“the quality of life is subjective and disputableÂ” (1967, p. 414). This is a Smithian approach to market behavior. However, corporate decisi ons have social implications for those who may have economic claims on the corporation. These claims are also imbued with socioeconomic moral concerns Â– or as Adam Smith states,
40 Â…the rent of land, the wages of labour and the profits of stock; [which] constitutes a revenue to three different or ders of people; to those who live by rent, to those who live by wages, and to those who live by profit. (1776, p. 336) Conversely, philosopher Elizabeth Anderson (19 97) argues that this sort of liberal economic position fails to value social goods, such as autonomy, that are necessary components of a capitalistic market system. She states that Â“we value goods in many ways that cannot be expressed in marketsÂ” ( 1997, p. 36). Further, the market is, Â“just one social sphereÂ” of human activity, but this sphere permits human choice in valuing all Â“goodsÂ” (1997, p. 37). To state otherwise, on her account, is to Â“place limits on marketsÂ” (1997, p. 37). Rather, goods, such as autonomy, ought to be valued in their own right. Thus, Â“the difficult task for modern societies is to reap the advantages of the market while keeping its activities confined to the goods proper to itÂ” (Anderson 1997, p. 40). I would argue that market limits on what cons titutes a market Â“goodÂ” ought to include the notion of corporate social re sponsibility. Otherwise, limits on market agent choices about autonomy and social concerns would hinder co rporate and collective abilities to make market decisions, placing emphasis on accountab ility or responsive ness, rather than responsibility, to market events. These limits could be both internal and external to the market, and would require desegregation, rather than integration, of the market system with society. The profit theory notion of corporate social responsibility presupposes the existence of individual capabiliti es and autonomies in society: a) to make choices based on the existence of choices, and b) to apply those choices in corporate activities
41 The ability to apply those choices that Galb raith observes in the Â“modern corporationÂ” produces responsibility because Â“corporation[s have] the power to shape societyÂ” (Galbraith 1967, p. 137); this implies a corpor ate paternalistic role bearing accountability for corporate acts on society, rather than in society as a reciprocal member. Sufrin and Friedman acknowledge that Smith accounted for sympathy in the market, but to the extent that efficiency and amenity are Â“r eductiveÂ” of one another unless the former remains within the market system and the latter holds outside the market (e.g., Sufrin 1989, p. 50). Further, Sufrin stipulates that th ese conceptions are id eals, and therefore, Â“together they structure the market, that is regulate or control individual behaviorÂ” (Sufrin 1989, p. 51). For example, FriedmanÂ’s remarks in 1962 about the social responsibility of corporations underlie the concerns over th e concentration of economic power among a limited number of large corporations (see Galbraith 1967, p. 86 for statistics), which are viewed as amoral enti ties apart from society. On GalbraithÂ’s view, Â“individuals have souls; co rporations are notably sou llessÂ” (1967, p. 71). Moreover, corporations, as efficient mark et entities, may even be immortal, surviving the individuals who may populate them. Galbraith considers responsibility to be useful. Corporate responsibility is particularly concerned with how economi c responsibility is used to advance determinations of market efficiency and e ffectiveness. The notion of efficiency for productive ends includes such factors as: utility technology organizational structure corporate strategy use of resources
42 The corporate funding of market and producti on planning Â– Â“control of supply, control of demand, provision of capital, and minimizati on of riskÂ”Â– has value to investors and society on GalbraithÂ’s view (1967, pp. 87-8). Nevertheless, he supports FriedmanÂ’s argument regarding corporate re sponsibility. Galbraith define s specific variables of his notion of corporat e responsibility: exchange of information coordination of decisions and actions formulation of committees development of associations uses of intervention cultivating reliability am ong individuals (1967, p. 75) Galbraith doesnÂ’t elaborate the methodology or sources of these defi nitions. On my view, these notions apply to social arrangements a nd thus imply social concerns, rather than strictly economic ones. One could argue that these are Â“public responsibilities.Â” Further, these notions are indicative of developing relationships based on mutuality in societal contexts. Therefore, it is important that we consider how the notion of responsibility may be defined, used, and attributed in the contex t of corporate functions and particularly in the economic sense under discussion in this chapter. On GalbraithÂ’s view, notions of Â“public responsibilityÂ” are a matter for public policy (1967, p. 135). Moreover, these implicati ons in a free market will effect both benefits and harms, thereby creating cooperation and competition among economic interests. Galbraith views ex ternal interference, such as governmental regulation, as a hindrance to corporate respons ibility and corporate roles in society Â– note, not to society. Galbraith disagrees with FriedmanÂ’s asse ssment of government policy Â– rather than intruding on corporate activity, corporate activity could be s ubsumed within the state if
43 corporate goals, other than profit maximi zation, are pursued (G albraith 1967, p. 406). But, Friedman argued that the responsibility for these benefi ts and harms, as long as law is not violated, are Â“the respons ibility of the rest of us to establish a framework of lawÂ” (2002, p. 133). As previously mentioned, to do otherwise in the ma rket is Â“subversive doctrineÂ” on FriedmanÂ’s account. In the case of both economists, Friedm an and Galbraith, notions of social responsibility relate to delin eated boundaries between cor poration and society. Although they admit reciprocation among market par ticipants in market relationships, their traditional viewpoints focus on the economic motives of producers involved in market exchange. Producers seek independence in de termining who gains greater control over resources and prices at the behe st of their investors. Accordin g to Galbraith, this sets the moral tone of developing corporations and market activity (1967, p. 59). However, although he does warn that corporate respons ibility may be abused by stockholders, and some limits on their exercise of these areas can be obtained through obsolescence, management actually wields decision-maki ng for corporations. Moreover, he views stockholders as properly remote and unknown to management, whose duty it is to be responsible for profit maximization (1967, p 126), rather than be concerned with solving social concerns. He sees st ockholders as the guiding for ces in shaping the decisionmaking processes for all aspects of corporat e endeavor, including creating a corporate culture of seeking economic advantages. Thes e advantages are benefits, or intangible goods, of the market system. They convey valu e, economically based on the relationships producers develop among other market participants.
44 I have argued that in these economic theori es, moral responsibility to others as an element of mutual exchange is found in market decision-making. While each of the classical economists also admits, at least defini tionally, to critical so cial relationships in corporate enterprise, Friedman and Galbraith segregate social from moral considerations. I would argue that such delineation is not possible; but, even if it were, I fail to see how the role of cor porate responsibility is enhanced in such a case. We may consider Â“stockholdersÂ” as more than direct economic investors with whom corporate responsibility lies. For example, society prov ides assets-in-kind, mu ch like investments, which have value, and which serve as indirect resources for corporat e activity. In other words, there is a Â“business-societyÂ” relati onship between corporati ons and two sorts of investors Â– stockholde rs and society.
45 Chapter Two Business-Society Theories The study of economics, though related immedi ately to the pursuit of wealth, is at a deeper level linked up with other studies, involving the assessment and enhancement of more basic goals. (Amartya Sen 2000, p. 3) In chapter one I presented the thinking of several classical economic theorists who demonstrated that corporate responsibility is inherent in the definition of the corporation as it functions in the marketplace, and, using their examinations, was able to show that the corporate enterprise incl udes the notion of corporate so cial responsibility. This chapter is a discussion of more recent economic theories which explicate and incorporate both economic and social aspects. These theories add complexity to the ideas of corporate responsibility and corporat e social responsibility. Stockholders and society i nvest economic value in co rporate enterprise. This investment may have either a direct or i ndirect role. FriedmanÂ’s account situates the investment role as a direct relationship w ith responsibilities be tween stockholders and corporations, with managers accepting financ ial stewardship of st ockholder investment. However, as I have shown in the previous chap ter, a Smithian perspective gives rise to an economic theory of corporate social responsibility in the form of a dual-investor relationship between corporations and their investors (owners) and their society. Further, societal concerns over harm to and the wellbeing of the citizens of society are often formalized in laws, which are designed to protect the public. These laws are designed to
46 constrain corporate behavior by enforcing part icular corporate social responsibilities (CSR). I will argue that orga nizations, comprised of individua ls, have a collective duty to avoid harming society because they have a dut y to avoid harming themselves as members of society. Each of the following theories I consider posit different aspects of responsibility for the corporation. First is the Dual-Investor Theory, which includes a corporate responsibility to profit, as we ll as its twin consideration of social concerns. In other words, it contains both the good of market enterp rise as a direct return on investment to stockholders and owners of a business along with the return on the development of indirect capital in the form of societal asse ts. Second, I will provide an analysis of social controls of corporate acts, such as found in legal and legislated d ecisions of the United StatesÂ’ legal system. While I wonÂ’t be di scussing individual legal cases and the corresponding merits for their determinations I will explore the mo ral reasoning related to aspects of laws pertaining to corporate e ndeavors. Third, I will discuss the Stakeholder Theory of corporate enterprise, which includ es another aspect of responsibility involving the corporation. The notion of economic stakehol ders in corporate e ndeavors incorporates a framework for business strategy, a strategy that is built on relational and reciprocal lines of responsibility to those entities that have a stake in corporate activities. The following three sections will address the business-society theories of Eugene Schlossberger, Christopher St one, and R. Edward Freeman.
47 Corporations and Society Business endeavors are conducted in societ y. However, contemporary economic theory has segregated corporate activity as economic functions and social c oncerns as the stuff of society. How we view these two endea vors may be based on our perceptions of boundaries to these functions in relation to se gregating the roles of business enterprise and the role we place on societal accept ance or response to these endeavors. Schlossberger and Dual-Investors Eugene Schlossberger, ethicist and social philosopher, pioneered a formal Dual-Investor Theory based on elements of both sharehol der theories and stakeholder theories (Schlossberger 2003, p.176). He states that the Â“n atureÂ” of a corporati on is intrinsic. In other words, organizations Â“exis t to serve a purpose, which is to advance or serve some goodÂ” (2003, p. 174) in society. According to Schlossberger (2003, p. 180) the nature of a corporation is comprised of three elements: intrinsic perceptions of the good distinctive economic and social relationships universal moral duties to others In other words, a corporation is the embodi ment of a collective effort to achieve a particular economic goal of market excha nge based on the corporationÂ’s individual membersÂ’ perception of what is both prof itable and good for society. If a corporation achieves a financial benefit for its acts, then society benefits from its validation of the corporationÂ’s persistent efforts to achieve that good. In order to attract or maintain corporate practice that results in this good, society provides needed Â“capital,Â” for example, in the form of educat ion or tax reduction incentives
48 To illustrate, a financially successful ente rprise requires skilled workers to fulfill the provision of the corpor ationÂ’s production. The workers attain payment for their services, or work efforts, to achieve this goal. This payment is based on two primary elements Â– the skill brought to the effort and the actual time spent working. But, the worker isnÂ’t born with this skill. However, society, through such in stitutionalized efforts of its own, provides education to develop skills that are valuable to these required work acts. Thus, society Â“investsÂ” time, space, and money for education, then reaps a benefit in terms of such things as employment, housi ng purchases, taxes, and more. This process develops reciprocating notions of dependa bility, expectation, and commitment of individuals to corporate endeavors. Why does this concept require analysis? One analysis of how individuals view themselves in relation to others in the sens e of collective efforts is found in organization behavior academic researcher Robbin DerryÂ’s (1991) analysis of self-interest. She expands on SmithÂ’s notion of se lf-interest insisting that th e broader concept of self includes consideration of self in relation to others in society. This extended self is dynamic; it is correlative to the collective efforts of collaborative institutions, such as the corporation. In other words, the extension of oneÂ’s view of oneself beyond individual self-concerns adheres in corpor ate responsibility for others. Â… it draws on the motivations to encourag e mutual growth, to combine efforts toward shared goals, to help others achi eve their potential, to build relationships for the sake of relationships, to respo nd to the need of others. All these are integral to human nature and critical to the success of free enterprise. (Derry 1991, p. 126) Further, Derry states that the collaborative self has an underlying nemesis Â– the myths of what constitutes a worker and manager, rath er than a responsible member of society. I
49 would term this perspective as the Â“corporat e self,Â” rather than a Â“cooperative self.Â” These images were based on old understandings of what constitutes a good employee Â– loyalty to company, rather than responsibility to the diversit ies and strengths of others within the community and society at large w ho can lend reciprocal support to corporate functioning. This dual responsibility is an intention to act to provide something for others. Schlossberger states: Â“The idea of a fiduc iary obligation presuppos es a general moral framework that generates such values as loyalty, trust, and go od faithÂ” (2003, p. 177). Moreover, organizations serve as stewards of this Â“perceived good for some perceived beneficiaryÂ” under the direction and intent of the owners, for society (Schlossberger 2003, p. 174). As organizations, corporati ons have dual intentions: maintaining their function in the market and their role in society. Corporate endeavors serve to provide a benefit, known as a Â“good.Â” This good includes the notio ns of beneficence and moral concern for others. SchlossbergerÂ’s view of how these ideas develop in corporations follows British philosopher P.F. StrawsonÂ’s insistence that re ciprocity among individu als in notions such as gratitude, resentment, and forgiveness ar e necessary to a definition of the moral implications of responsibility (Schlossberger 1992, p. 1). In other words, Schlossberger states that responsibility has a moral framewor k, is moral in the sense that an act is the result of a Â“moral calculationÂ” (1992, p. 96) This calculation relies on Â“whether x is morally offensive or desirableÂ” (1992, p. 96), wh ere x is an act of a particular individual moral agent. But, he also l ooks at the notions of praise and blame Â– both of which are
50 consequent, rather than antecedent, determina tions of acts. What is problematic with his definition is his use of two views of responsibility for moral acts Â– As moral agents, we are each a worldview in operation [our] Â“moral responsibilityÂ” amounts, roughly, to moral evaluability (1992, p. 101) These considerations do not seem to move us towards a sense of collective moral enterprise if we accept individuals as au tonomous selves who are Â“embodied in our circumstances, acts, thoughts, and feel sÂ” (1992, p. 101). He accepts some Humean elements of motive and intention on the part of moral agent character development, but disagrees with moral philosopher David Hu meÂ’s precondition of liberty in moral decision-making (1992, p.121). Rather, Schlossb erger argues that Â“how an act was caused is irrelevant to moral responsibilityÂ” a nd thus what is importa nt is Â“the ground of responsibility to be what our actions (among other things) show about us, rather than what causes us to actÂ” (1992, p. 121, 122). However, while he states th at individuals must instantiate their own moral characteristics in developing a view of moral practice, this perspective is not developed fo r collective endeavors in a so ciety. In his later work he makes an abrupt shift in this perspectiv e (Schlossberger 2003). He likens corporate enterprise to personhood, not in a lega l sense, but with corresponding moral responsibilities based on a sh ared goal. Schlossberger attr ibutes characteristics to corporations that shape and inform corpor ate decision-making. These characteristics, such as beneficence or integrity, may be derived from stockholder and owner expectations of how they wish the orga nization to be perceived by society. So the intended beneficiary is an idea while the objective bene ficiary is a thing. The conceptual beneficiary is the set of things the organization takes, as an organization, to fit that description, namely what the organization believesÂ…
51 [are] the difference between the perceive d good of an organization and what is really good. (Schlossberger 2003, p. 175) On this view, the minimal social respons ibility of a corporation is based on Â“a duty to be Â‘good citizensÂ’Â” to achieve a good, and to act consistently to the Â“needs, welfare, and projects of societyÂ” (S chlossberger 2003, pp.175, 177). Thus, Schlossberger believes that Â“the purpose of business is to ma ke a profit (or, more precisely, to increase shareholder value) by serving societyÂ” (2003, p.176). While this view seems to have the capacity to develop general notions of cor porate validity and legitimacy, he instead argues that the good is an intrinsic goal of ev ery organization. In th is theory there does not appear to be a particular reason for th e good to be an intrinsic goal other than the adage, Â“it is good to be good.Â” He uses the notion of an existent moral framework, which provides the definition of co rporate Â“purpose and raison dÂ’ treÂ” (2003, p. 177). In other words, corporate goals Â– whether financial, so cial, or moral Â– only exist as goals because this pre-existing moral framework produces them. This seems to indicate a metaphorical notion of a building Â– structure equals purpose and function. However, structure doe s not determine purpose or function, but may lend itself in one particular use or anothe r. I would argue that implicit characteristics do not exist for corporations as entities. Ra ther, these characteristics are developed as Â“culturesÂ” based on some partic ular collective decision comp rised of individualsÂ’ duties to act in one way or other, such as responsib ly towards others in so ciety. There is a wide base of literature that discusses corporate cu ltures; however, for purpos es of my argument I am accepting that such cultures exist and will leave the analysis to others in terms of how culture develops.
52 The dual-investor society comprises a num ber of entities. Th ese entities are viewed as investors in the corporate functioning of a ma rket system. According to Schlossberger (2003), the investment by each of th ese entities varies in availability, form, and quantity. These investors may include the following: governments and public agencies workers other producers as suppliers consumers Schlossberger refers to the Â“opportunity capita lÂ” for corporate functioning in society. In other words, this is an investment by memb ers of society who provi de the opportunity for corporate activity. This capital may be viewed as indirect investme nts to a corporation. Further, this opportunity capital is the resu lt of Â“duties of gra titude and reciprocity [which] seem to justify what one might call the limited Â‘donÂ’t bite the hand that feeds youÂ’, or Â‘no biteÂ’ principl eÂ” (Schlossberger 2003, p. 176). This opportunity capital includes such investments (socia l provisions of opportunity) as: road systems currency police protections fire eradication schools for educating potential workers social services Society is both a beneficiary and benef actor of corporate enterprise. The dualinvestor model incorporates th e reciprocity between corporations and society as a form of mutual responsibility. On this view, the res ponsibility of corporat ions is both economic and social, such as in providing employment and benefits, with moral implications of trust, choice, deliberat ion, and decision-making.
53 Hence, by the no-bite principle, every or ganization has a duty to go out of its way to ensure that in pursuing its purpose it does not undermine the good of society. (Schlossberger 2003, p. 176) Moreover, the Dual-Investor Theory is indi cative of an uncompli cated moral evaluation. In SchlossbergerÂ’s estimation, the Â“good-in-gen eralÂ” principle is both the motivation and the object of every corporate goal. Further, he states that corporations Â“serve a limited purposeÂ” and thus are subject to only limited questions regarding moral evaluation (2003, p. 178). This thinking is comprised of moral and social concepts. However, it seems to negate the complexity of the individual conc erns of corporate members, or agents, in determining what this good-in-general may be, or in how to apply collective decisions to economic or social practice. These limited con cerns are not specifically defined in terms of what ought to be social responsibility or to whom these concerns ought to be expressed. For example, SchlossbergerÂ’s dual-in vestor approach is missing the issue of moral decision methodology regard ing competing economic and social issues. Therefore, the notion of corporate social responsibility (CSR) is difficu lt to assess using his model. Christopher Stone and Social Control of Corporate Behavior Social controls between individuals determin e what we consider Â“society.Â” Society is comprised of individuals within a given bounde d sphere. This sphere has characteristics that may be geographic or conceptual. Mo reover, a society has characteristics accepted by its members based on the shared notions of perceived benefits or harms to its citizens and non-citizens. If we accept that society ha s valuable assets available for use by its citizens, including corporate citizens, one may argue that these assets require protection from exploitation or misuse by some member s of society, as well as nonmembers. In
54 other words, society has a res ponsibility as an investor in the well-being of its members to protect what its members have come to exp ect of its characteristics. We seem to have no difficulty in attributing moral thinking to intentions or acts of individuals. Traditional moral theories consider motives or conseque nces of decision-base d actions of rational beings. Furthermore, we look to moral theories to provide guidance, sometimes boundaries, to our individual acts towards othe rs in society. These acts may be social, political, or economic transact ions, or relational interacti ons, between individuals in a society. But, it is possible to accept an argum ent that Â“any law [is] a token of perfectly expressed collective choiceÂ” in society (Stone 1985, p. 25). Christopher Stone, professor of corporate and environm ental law, argues that, Â“Our society has become a corporate societ yÂ” and it bears particular characteristics (1985, p. 13). In other words, much of what o ccurs in a society is an act of corporate enterprise, rather than indivi dual enterprise. Stone looks to individuals as Â“officeholdersÂ” in corporate organizations; those individuals who make decisions at the behest of corporate stockholders for the sake of economi c market endeavors. We can say that these officeholders are financially accountable to the corporate investors because they are stewards of the capital of the organization. Fu rther, U.S. corporations have are afforded various legal protections as co mplex entities Â– Â“they have the status of legal persons and have consequently many of the same legal ri ghts, privileges, and ob ligations that humans doÂ” (Brummer 1991, p. 9). But, are we able to establish Â“socially approved boundsÂ” (Stone 1985, p. 13) to the results of these decisi ons in such a way as to hold a corporation responsible for the actions of its agents? Brummer sees a dilemma to the construct of corporations as entities in th at corporations also have Â“vir tual perpetual durationÂ” (1991,
55 p. 9). In other words, corporations, once fo rmed, exist independently of changes in original owners, executives, managers, or empl oyees such that it Â“has a life of its ownÂ” (1991, p. 9). The difficulty then is to determin e how social responsibility might factor for such an entity. Stone states that what we ha ve in mind is a mechanism in which to control organizational decisions and acts. This m echanism may serve to limit or punish the unwelcome results of decision-making by esta blishing responsible co rporate behavior in laws. But, on StoneÂ’s account, is it possible to control a corporation because Â“there is a need for something other than conventional legal mechanisms: Call it Â‘corporate social responsibilityÂ’Â” (1985, p. 14)? In other words, he finds that co rporate social responsibility is Â“a way of modifying corporate conductÂ” ab sent restrictive, or negative, traditional societal means (1985, p. 14). What Stone has in mind is a tiered, or hierarchal, construct of responsibilities traditionally held by corporations for practice in society (1985, p. 14). But, these responsibilities must be managed, controlle d, and manipulated by so ciety in order to protect individuals in society from harm by organizational acts. On FriedmanÂ’s view, the market system is a control mechanism on corporate behavior, but the market system could fail or be unable to pr ovide economic disincentives. In this case, legislation is required to control corporate act s. Corporations may be subject to fines, penalties, or punitive monetary damages as a way to punish unacceptable behavior. In other words, despite the duality of responsibility between business and society, the business-society model provides for negative actions to coerce corporate responsibility. the market disciplines corporate misconduct, deficiencies in creating employee well-being, or production errors society imposes discipline of law to curb irresponsible behavior
56 society pressures stockholders engaged in corporate acts by applying deadlines and penalties w ith threats to corporate profits (Schlossberger 1985, p. 14) But, is there a way to both encourage corporate social c ooperation and hinder harm to society in this scheme? Stone devises an analysis of two cha llenges to traditional CSR. First, he formulates an interventioni st approach based on amending laws that constrain corporate acts of potential harm to society, in other words, Â“to make the corporation Â‘responsibleÂ’, ir onically, through lawÂ” (Stone 1985, p. 17). However, the interventionist approach does not detract fr om FriedmanÂ’s notion of the business of business is to make a profit; rather, this approach creates a mechanism to ensure that corporate activity does not stray from its ma rket purpose through illic it acts and thereby threatening its profits (Stone 1985, p. 23). On this basis, Stone suggests that an organizationÂ’s structure and decision-maki ng apparatus needs Â“to nudge the corporation into a more responsible postureÂ” (1985, p. 14) much like a person. In other words, Stone states that a responsible corporation may be compared to a responsible person in decision-making methodology (1985, p. 17): think before they act gather relevant information assess benefits to themselves assess effects their actions ar e likely to have on others weigh alternative decisions and actions On this view, he is Â“institutionalizin gÂ” the methodology of decision-making and responsibility, even extending this process to the point that a corporation can be forced to act responsibly. An example would be the establishment of the Equal Employment Opportunity Act in 1972 to enforce wor kplace employee relations based on the Civil Rights Act of 1964, which criminalizes discri minatory employment practices based on
57 race, ethnicity, religion, or gender. These societ al controls of corporate activity were the result of interventionist thinking regardi ng harm done to society and its citizens in corporate hiring and promotion activities. In ot her words, society used its abilities Â“with the courtÂ’s recognition that job discrimination can exist even in the absence of conscious intent to discriminateÂ” (Shaw 2003, p. 109). StoneÂ’s second CSR challenge is what he terms Â“voluntarism.Â” This notion does not seek to constrain corpor ate acts through law. Rather, he states that through amending the corporationÂ’s goals and self-constraints, wi th substitutions of va lues, corporations can be ultimately profitable to both the organi zation and society (Stone 1985, p. 15). In fact, he submits that the voluntarist is closer to a movement than a requirement of corporate social responsibility. In fact voluntarism Â“questions the adequacy not only of the market, but of the law as well Â– even of the law as it might emerge after the Interventionist had reformed itÂ” (Stone 1985, p. 15). These concer ns are based on considerations of moral concerns as well as legal ones. Society has r easons for self-constraints Â– simply because an awareness of oneself and how we fit with other selves in society will ultimately be concurrent with how we act a nd how we wish others to ac t towards us. Law is not the only constraint on corporate acts. The voluntaristÂ’s approach is akin to Kan tian perspectives of individual, internal motives for acts, as well as exte rnally abiding by the law. Kant states that the idea of duty is internal combines individual inten tions with practical law, and thereby is fundamental to determinations of choice among alte rnative actions (Kant [1797b], Sec 219, 1994, p. 18). Stone defines the voluntarist approach by its Â“internalization of corporate social responsibilityÂ” (1985, p. 26). This internalization is an integration of ec onomic and social
58 constraints, such as is found in corporati ons who embrace a Â“living wageÂ” approach to employee compensation. The Â“living wageÂ” conception involves adopting independent economic bases for determining how individu als in particular ge ographic regions ought to be compensated for their labor, rather th an merely paying normative or legislated governmentally-determined minimum wage standa rds. Living wages t ypically are higher than societal or governmental standards. Furt her, the arguments for living wages indicate an initiative for sustainable employment based on moral concerns for worker sustenance and well-being (Rivoli 2006, p. 538). Corporat e action in this respect is a voluntary initiative and a moral responsibility to its workers and society. The motives for these types of decisions are generally based on a consideration of reciprocation Â– between society (workersÂ’ skill-set assets) an d business (employment assets). Stone provides an analysis of recipro cation through a use of game theory. The reciprocation in respect to the example of wage rates would seem to fit what Stone considers to be the space for cooperative egoism (1985, p. 27). He defines this space as a way for a corporation to act responsibly as a moral agent by ascertaining a long-range opportunity to secure the best workers, wh ile providing the occasion for sustaining longterm commitment from workers. He likens th is reciprocated action to a form of game theory in which each participant anticipates their own advantages in correlation to each Â“moveÂ” of the other. There is no beneficen ce in this practice beneficence being a provision of some benefit to ot hers without an expectation of anything in return (Kant [1797b], Sec. 30/453, 1994, p. 117). In this case, pr ofitability is bala nced on a scale of acceptable returns with a Â“rightnessÂ” to levels of wages paid. This game occupies space in relationship to the range of choices and expectations of each pl ayer. This space is
59 created in the idea of a game, which may have constraints, or boundaries, imposed by either of the players who choose to participate in acts of benefit to themselves. In other words, the voluntariness of creating this scen ario is a reciprocal responsibility based on cooperative egoism (Stone 1985, p. 28-9). Howeve r, Stone states there are problems with this line of thinking: Â“No one knows how mu ch space exists for such behavior, for the cooperative egoism, the strate gizing, and so onÂ” (1985, p. 28). But, Jeffrey Pfeffer and Gerald Salancik (2003), academic research ers in organizational behavior, view constraints differently. They state that: Â“Cons traints on behavior are often considered to be undesirable, restricting crea tivity and adaptation. However, in most cases action is not possible without constraints, which facilita te the choice and deci sion processÂ” (2003, p. 15). Moreover, a Kantian perspective of a duty to the social well-being of others includes a broad obligation that bears Â“no defin ite limitsÂ” (Kant [1797b], Sec. 394, 1994 p. 53), but limits nonetheless. Although Stone argues th at moral rules are Â“v agueÂ” in terms of application to corporate acts, he does not see this problem as a hindrance to encouraging corporate intentions along the lines of voluntary moral responsibility (1985, p. 29). At this point I would like to include some thoughts regard ing voluntary egoism and the space Stone formulates as requisite for moral configuration of responsible acts. We may consider KantÂ’s proviso regarding dut ies to ourselves and ot hers, the lacking of which would be a harmful self-contradicti on, in his last enumeration of the first categorical imperative (Kant 1785, Sec 423, p. 32). In this respect, individuals could take an egoist approach in their ro les in corporate endeavors; howev er, to fail to assist those we perceive as struggling wh ile we are benefiting only se rves to negate the human necessity for reciprocated, cooperative behavi or. Self-constraint bear s moral implications
60 when we talk about cooperative voluntary egoi sm. Kant considers free self-constraint as the underlying principle to a duty of virtue, and thereby an et hical obligation to ourselves and to others (Kant [1797b], Sec 383, 1994, pp. 40-1). Furthermore, the cooperative practice in StoneÂ’s game as described above may be considered part of a societal Â“occasionÂ” that has Â“great consequent respons ibilityÂ” to others (Horne 1912, p. 75). This sort of responsibility is reciprocal Â– in other words, using StoneÂ’s game play, corporations enter into relati onships with other entities or with individuals, such as suppliers or consumers. These relationshi ps are voluntary and c ooperative, although not necessarily equally distributed in terms of economic returns. However, each agent involved in these relationships has self-inter est in their own well-b eing in terms of how they may benefit from engaging with the other agent. But, each agent also realizes that egoism on their own part can result in a harm to others and thus a potential hindrance to accomplishing their highest well-being in societ y. Therefore, each agent feels responsible for their own well-being, but also for others in the sense that the well-being of others will result in continued, reciprocated cooperation. Stone also considers a second type of corporate responsibility, that of a space of corporate altruism which will not be included in this discussion. As discussed earlier in the Introduction to this dissertation, I view al truism as a choice based on a response to some particular event or circ umstance, rather than as a responsibility based on relational and reciprocating acts between memb ers of society as defined herein.
61 Stakeholder Theory R. Edward Freeman and the Stakeholder Model Stakeholder Theory is hot. I am paraphrasi ng business ethicists R. Edward Freeman and Daniel R. GilbertÂ’s view of business ethics in 1988, but th e advance of the Stakeholder Model by Freeman (Freeman 1983) as a Corporate Social Responsibility has reached the level of near-absolute acceptance as the theory of responsibil ity. In fact, FreemanÂ’s stakeholder approach is considered Â“a clas sicÂ” in the field of strategic management (Walsh 2005, p. 427). The Stakeholder Model of corporate enterpri se is based on the definition of an organization, and acco rding to Freeman and Gilbert is: a compilation of human beings a complex network of values a development of corporate culture both individualist and collectivist endeavors strategic human choices shared goals of market enterp rise in a society (1988, p. 6) Freeman (2003) expands the concept of the business/society rela tionship to include particular recognition of specific ca tegories of society, which he calls stakeholders who are interdependent in their societal role s. These stakeholders have an economic stake in the outcomes of corporate endeavors in th e marketplace. Stakeholders are either individuals or entities Â“who ar e vital to the survival and su ccess of the corporationÂ” and Â“who can affect or [be] affected by the corporationsÂ” (Freeman 2003, p. 168). In other words, I would argue he uses a notion of integration Â– relational interdependence of corporations and various entities within soci ety who benefit, or may be harmed, by the actions of one another. The integration of stakeholder relationships has been termed a Â“new realityÂ” in strategic mana gement of corporate enterprise that is vital to corporate
62 functioning (Walsh 2005, p. 428). When Freeman talks about the term Â“vital,Â” he means the particular aspects that permit an entity, su ch as a corporation or consumer, to flourish Â– economically. This is a direct impact of ma rket endeavors by corporations. But, these impacts are the result of goal-directed decisions inclusive of corporate voluntary initiatives involving societal c oncerns about these impacts. In other words, Â“FreemanÂ’s attraction to voluntarismÂ” is predicated on the basis that Â“he is not interested in having government regulate stakeholder relations Â” (Walsh 2005, p. 428). Further, on Freeman and GilbertÂ’s view, corporati ons are a means to an end Â– Â“the accomplishment of human goalsÂ” (1988, p. 8) Â– through noncoerced corpor ate strategy. Freeman (2003) has re-envisioned the defi nition of corporate economic endeavors to include the interests and values of social relati onships and moral responsibilities, rather than endeavors as responses to other entities related to their specific market activities. In this last respect of responsive actions, the Friedmanesque perspective of corporate obligations to stockholder intere sts is subverted in Â“giving aw ayÂ” invested assets without explicit consent or consideration of intended beneficiary needs. To alleviate concerns about corporate malfeasance in the face of so cial demands for corporate beneficence, many corporate executives attempt to avoid accusations of greed ( a la Friedman critics) by giving to perceived charitab le social causes. Oftentimes, the motive for acts of this type are based on a corporate fear of some sort of potential harm that social critics might attempt to inflict (Freeman and Gilbert 1988, p. 90), rather than an intentional act of beneficence. But this isnÂ’t what Freeman and Gilbert envision as Â“corporate social responsibilityÂ”:
63 The argument was made that as long as th e firm was Â“responsiveÂ” to the demands of society and tried to anti cipate and meet these demands issues of responsibility could be left for the debate among philosophers. (1988, p. 90) On Freeman and GilbertÂ’s view, Â“merely re sponding amounts to an admission that the interests and values of others need not rea lly countÂ” (1988, p. 90). Mo re accurately, they enjoin us to: Â“remember that a moral princi ple deals with others, by definitionÂ” (1988, p. 90). These others do not necessarily place clai ms or demands on corporate actions; rather, the Stakeholder Theory is a duty-based perspe ctive of reciprocal social relationships involved in economic exchanges. These relationships with ot hers, of individuals or en tities, form metaphorical spokes (financial stakes ) on a wheel, with the corporati on as the hub of activity. These spokes are the owners/stockholders, employees suppliers, customers/consumers, local community, competitors, environment, and government. Each of these stakes forms a reciprocal relationship with the corporation, inclusive of responsibi lities Â– economically, socially, legally, and morally. In fact, on this account, these responsibilities are conditioned on Â“the [negative] rights of individuals, both mana gers and stakeholders, to pursue their own projects without interferen ce and coercion from othersÂ” (Freeman and Gilbert 1988, p. 8). However, Freeman and Gilb ert choose to consider the moral concerns integrated with corporate soci al responsibilities Â– rather than Â“disconnecting ethics and strategyÂ” (1988, p. 87). While Freeman and Gilbert seem to be usi ng both rights-based and responsibilityclaimed approaches, a Kantian form of an impe rative results in their use of a concern to Â“Â‘discoverÂ’ what it is to be humanÂ” (Freeman and Gilbert 1988, p. 10). In other words,
64 they rely on a rational approach to corporate practice in the use of a series of questions to formulate the basis for determining recipro cated responsibilities between stakeholders: 1) Which values are important? 2) How are we going to act? 3) How should we act? 4) Who is going to benefit and who is going to be harmed by our action? 5) Who will be able to pursue their own projects, and who will be prevented from pursuing their projects, if we take this action? 6) Is this decision the very best one th at could be made in these instances? (1988, p. 7) Freeman and Gilbert predicate the Stakeholde r Model on a simple f actor: Â“It is people that count, not corporationsÂ” (1988, p. 9). In other words, each stakeholder is comprised of human beings who act in relational ways to the corporations with which they have a stake. Corporations are no less relational. Fu rthermore, human beings are social beings, and as such are always already engaged in relational acts with one another. On this basis, these relationships hold value, based on deri ving mutual understandings of these values, to those involved in a social tie to another. Freeman and Gilbert derive the responsibilities of corporations through the development of corporate strategies to be responsive to their stakehol ders (1988, p. 14). These res ponsibilities are based on the interdependence of the stakeholder-corporat ion relationship. Furthermore, stakeholders, as well as corporations, have intentions and purposes to their actions, which Â“implies some continuity of actionÂ” (Freeman a nd Gilbert 1988, p. 14). But, what is purpose? Freeman and Gilbert define purpose as: 1) Purposes are personal 2) Purposes guide action 3) Purposes require others 4) Purposes are shaped by bargaining 5) Purposes are the bottom line for performance (1988, p. 14)
65 Further, purposes are a Â“jus tification for actionÂ” (1988, p. 20) a mechanism in which one may measure the effectiveness of oneÂ’s respons ibility to assist others in society. This measurement belies a consequential view; ra ther, it is determined by the motives for acting one way versus another. Corporations may exert pressures on or cau se harms to those who have a stake in corporate decision-making; but, stakeholders are capable of similar acts. Similarly, each party to the stakeholder relationship may seek to produce benefit to the other. These are intentional acts. In fact, the motives for corporate decision-making are based on some consideration of various notions of what constitutes a relationship and how a relationship ought to be developed. There is a sense of being responsible to engage in cooperative, normative ways with others. In other words, for each party to corporate existence in society there are social res ponsibilities based on formal and informal relationships. The formal relationships are based on a specific economic opportunity for a stakeholder and the corporation. The responsib ilities of each party to this type of relationship Â– such as supplier to manufacturer are based on notions such as loyalty and trust to continue engaging in business with one another based on number of acts, such as fair pricing. The informal relationships ma y develop from indirect benefits to a stakeholder, the corporation, or both. An exam ple of an informal relationship would be the impacts on the housing construction industr y, a supplier of labor and product (homes built), in a particular region when a new corporate processing center is built. A processing center, such as a coffee bean roasting center, may change the community in which it is built in a number of economic and social ways. In this case, the processing center provides new intentions of business ende avors, new jobs for local and out-of-area
66 workers, new responses from the local comm unity to ease and support the development, and new opportunities for correlated aspects of human existence. One direct aspect would be related to new local tax impacts derived from both the company and new homeowners, which directly affect local services such as road systems and school resources. On an indirect basis, new employment and re-emp loyment of constructi on workers results in further development of well-be ing of many community member s. Those who initiate this scenario hold an explicit responsibility for th e impacts of the strate gies they choose to undertake. Therefore, there ar e direct and indirect res ponsibilities involved. These responsibilities develop into relationship Â“chainsÂ” of recipr ocated ties that provide potential strengths to the dire ct, formal relationships in the form of the Stakeholder Model. Stakeholder relationships formulate implic it as well as explicit expectations, which may result in contractual obligations. Fr eeman (2003) uses a Rawlsian approach in his Stakeholder Theory to further explicate the explicit contractual obligations. However, a Kantian perspective could be used in terms of various notions of im plicit duties, respect for others, and acknowledgement of moral e quals to argue both for and against the Stakeholder approach. These notions have bot h economic and social bases. For example, managers are employees of an organization and have a duty to represent the financial interests of stockholders (e.g. FriedmanÂ’s Stockholder Theory); but, according to the Stakeholder Model, managers also have a so cial and financial responsibility to satisfy suppliersÂ’ desires for continue d corporate loyalty in the pu rchase of raw materials. Likewise, suppliers have a social responsibility, among ot her responsibilities, to reciprocate loyalty to their Â“benefactorÂ” co rporate producers. For instance, Chrysler
67 CorporationÂ’s suppliers accepted deep cuts in payments from Chrysler during ChryslerÂ’s financial decline some years ago in exch ange for commitments of loyalty to long standing supplier relationships. Moral decisions are incorpor ated in financial decisions. On FreemanÂ’s account, a moral decision, much like a financial decision, Â“do[es] not mean it is a morally correct decisionÂ” (Freeman and Gilbert 1988, p. 3). Rath er, any decision is ju st that Â– a decision. What is Â“correctÂ” in decision-making is a fundamental concern regarding: methodology values evaluations determinations The stakeholder approach to corporate responsibility involves decision-making between individuals and other entities that have an economic as well as moral interest. Responsibilities are balanced be tween competing interests of th ese stakeholders in such a way as benefits and harms are apportioned based on the nature of the established reciprocating relationships. Freeman and Gilb ert state that, Â“Corporate strategy is about purpose, and so is ethicsÂ” (1988, p. 19). The methodology of assessing these responsibilities includes strategic considerations of assi sting Â“some group to realize its purposes and projects, or cause some group to fail to realize its pr ojectsÂ” (Freeman and Gilbert 1988, p. 5). My purpose is not to de lineate specific strategic managerial or corporate theories and practices, but rather to note that FreemanÂ’s Stakeholder Model (Freeman and Gilbert 1988) is predicated on theo retical aspects of corporate economic strategy as well as moral responsibility. These aspects depict the stak eholder relationships
68 as interdependent, reciproca ting exchanges between individua ls and entities and various corporations in society. Â“MushyÂ” is hot. In fact, Freeman and G ilbert (1988, p. 104) dispute the view that, Â“the whole point of the move from corporat e social responsibility to corporate social responsiveness was to be pragmatic, and to get away from those mushy, philosophical issues of values and ethics.Â” Rather, they fear Â“systematic ambiguityÂ” and a perversion of the Â“connection of ethics and strategyÂ” (Freeman and Gilbert 1988, p. 104). In other words, the interdependent, reciprocal rela tionships between stakeholders and their corresponding corporate entities are base d on strategic economic business choices underlined by moral principles. Further, corpor ate entities are viewed as strategic actors who base their decision-making among choices about how to act us ing rational theory. These decisions are based on in tentions to act from both economic and moral duties to those involved in recipro cating, cooperative relationshi ps. Moreover, Freeman and Gilbert argue an implicit notion of moral ity in a corporation, or Â“the internal logica of the institutionÂ” (1988, p. 109). This logic is base d on the necessary corporate actions that ensure the Â“proper functioning of an instit utionÂ” (Freeman and Gilbert 1988, p. 109). In fact, this functioning is realized in the proce ss of corporate Â“behavior.Â” This behavior is more than the explicit determinations of responsible corporate strategy. Behavior is almost inevitably constrai ned Â– by physical realities, by social influence, by information and cognitive capacity, as well as personal preferences. (Pfeffer and Salancik 2003, p. 15) But, in order for a corporation to realize it s purpose it must develop rules, or imperatives, of proper conduct, which provides for corpor ate sustainability. This conduct is imbued with economic and moral considerations becau se corporate acts are, by definition, in
69 regards to others and the impacts experi enced by others. What Freeman and Gilbert advocate is a notion of corporat e endeavor in society that hol ds moral considerations as implicit in economic decisions Â– something they term as Â“corporate moral responsibilityÂ” (1988, p. 105) to others in soci ety. Although not stated as su ch by Freeman and Gilbert, these considerations have th e Kantian aspects of autonomy and consideration of others found in the second categorical imperative (Kant 1785). I have discussed three theori es of corporate social respons ibility in this chapter. In SchlossbergerÂ’s dual-investor theory, the corp oration and society act as segregated, yet dependent, investors in business en terprise. But, there is a fail ure on his part to be precise about the moral complexity of the basis for the motives of these two perspectives to cooperate with one another as more than econo mic partners. In contrast, Stone states that moral rules are vague regard ing voluntary cooper ative corporate relationships, which result in legal or regulatory s tipulations to instantiate corpor ate social responsibility when it appears to be absent. Alt hough this perspective could ac count for corporate social failings, his work fails to provide a deeper sense of moral responsib ilities in relational game play that ought to specifi cally identify and frame corpor ate social responsibilities. Finally, I analyzed FreemanÂ’s Stakeholder Mode l as an argument for a relational basis of corporate endeavor that includes social, as well as economic, responsibility. While this model incorporates moral concerns in relati onships between stakeholders, I would argue that there is much more work to be done to determine how corporat e endeavors with their stakeholders are to develop moral, integra tive reciprocal relationships as embodied in economic exchanges. In the third chapter, I will discuss a number of critiques of the
70 notion of corporate social re sponsibility, with particular attention to the classic and contemporary views of corporate respons ibilities in the market system.
71 Chapter Three Critique of Perfect Markets and Ideals of Capitalism Almost all questions of corporate strategy ar e questions of ethics. Furthermore, the role of ethics in corporate strate gy has been, for the most part, systematically ignored in theory and in practice. (R. Edward Freeman and Daniel Gilbert 1988, p. 7) In the previous chapters I delineated the historical and contemporary approaches to corporate responsibility and the implications for the social responsibilities of business decision-makers. I also noted that the economic and business/society models of corporate social responsibility define moral and ec onomic endeavors as segregated ways of thinking about the market system. While the cl assical theories certain ly provide economic foundations for the current western view of co rporate responsibility, I argued that Adam Smith held that social responsibility to ot hers in the market community is implicitly present. In the two 20th century stockholder theoristsÂ’ pe rspectives in th e first chapter (Friedman and Galbraith), these thinkers dr ew distinct lines of demarcation between economic and social corporate responsibilities (if such we re even Â“permittedÂ”). On economist Amartya SenÂ’s account, Â“the importan ce of the ethical approach has rather substantially weakened as modern economics has evolvedÂ” such that mainstream 20th century views of the nature of corporate responsibility in the market system were Â“substantially impoverished by the distance that has grown between economics and ethicsÂ” (1988, p. 7). In chapter two, we obser ved the segregation of business endeavor and corporate social consideration in the at tempts of three contemporary theorists to
72 integrate business and societ y in various ways. These models began the dialogue of viewing cooperation between the corporate and social activities, yet a number of constraints arise which precluded success in th is respect. In this chapter, I will analyze a number of critiques of each of these economic approaches to corporate responsibility in order to subsequently provide a model for a notion of corporate social responsibility based on an integration of the socio-econom ic aspects of both market and human wellbeing. How did Classic Theory become Stockholder Views? Dogmatic profit theory ideology did not resu lt from classical economic theory. The early advocates of an economic market system belie ved in a process of integrated efforts of individuals interested in commercial exchange and these early theorists looked to broad definitions of relationships between exchange rs. Those who later developed the corporate perspectives of investor-owned enterprise narrowed their definitions to relationships based on singular motives Â– stockholder driv en motives for profit as the basis of economic markets. In chapter one I outlined im portant considerations of each of these economic theories of corporate responsibiliti es in the western market system. In what follows in this section, I will provide a critique of the tran sition in thinking about the meaning of corporate social responsibility. Rejection of Economic Man In The Wealth of Nations (1776) Adam Smith had suggested the basis for the motives of individuals interested in an economic exchange as an act of commerce. He formulated a
73 model of an Â“economic manÂ” who was autonom ous and acted freely based on motives of self-interest for his well-being. SmithÂ’s a dvocacy of voluntary mark et agent action, or initiative, stemmed from concerted efforts of like-minded individuals as they formed coalitions based on shared commerc ial goals. In his earlier work, The Theory of Moral Sentiments (1759), Smith demonstrated that human endeavors are the result of duty Â– to oneself and to others Â– and reflect self-exami nation of oneÂ’s character. But, this selfreflection is based on looking at oneÂ’s motives as both a Â“spectatorÂ” and as an Â“agentÂ” of conduct (1759, p. 164). As a result, individuals assess praise and blame for their own acts, developing an interest in themselves in their roles in society. I ndividuals seek to be Â“agreeable to mankindÂ” by being able to view th eir endeavor in society as Â“the impartial spectator would view itÂ” (Smith 1759, p. 172). On SmithÂ’s view, this sense of striving is a moral approbation, which he terms Â“ambition,Â” and which Â“is always admired in the worldÂ” (1759, p. 247). However, as I have shown in chapter one, by using a narrow, economic definition of the responsibilities of co rporations this concept has been co-opted by 20th century economic theorists such as FriedmanÂ’s. SmithÂ’s views were carried forward by ma ny overlooked thinkers, such as John B. Clark, a socio-political theorist, who argued for Â“economic altruismÂ” (1963, p. 390) when he stated that Â“the motives of human action are the ultimate determining forces Â… to the value of the results of econo mic reasoningÂ” (Clark 1963, p. 387-8) In this respect, Clark attributed moral concepts of Â“affections, as pirations, and conscienceÂ” to individuals, and eschewed the idea that human beings exist merely to pursu e material acquisitions (1963, p. 389). His concerns are with the moral asp ects inherent in huma n beings as social actors, responsible to and de pendent on relationships with one another beyond economic
74 ties. He attributed a Â“universal interdep endenceÂ” wherein Â“each member exists and labors, not for himself, but for the whol e, and is dependent on the whole for remunerationÂ” (Clark 1963, p. 390). Further, he situates individuals in society, not merely in particular systems: It is not merely man as an individual th at needs to be considered. A man is not independent. So close is the relation betw een him and others of his race that his conduct is dictated and his nature transformed by it. T hough a self-directing being of the highest organization, he is made, by hi s relations to others, to be an atomic portion of a higher organism Â– society.Â” (Clark 1963, p. 389) The sense of social mutuality among mark et agents is found in economist Ludwig von MisesÂ’ Human Action (1949). In other words, an indivi dual is not merely herself and only bearing responsibility to her own person, bu t a self in the sense of being a member of a social entity that bears responsibility to its own well-being for continued existence. This responsibility is derived from the collective actions of the individuals it comprises, but importantly it is based on these Â“indi viduals whose actions are related to the collective as the secondary s ourceÂ” of responsibility to the decision-making of the Â“intermediaryÂ” of individual/sÂ’ actions (Mis es 1963, p, 428). In considering the meaning of corporate social responsibility earli er in this work, MisesÂ’ premise is: The life of a collective is lived in the ac tions of the individuals constituting its body. There is no social colle ctive conceivable which is not operative in the actions of some individualsÂ…Thus the wa y to cognition of collective wholes is through an analysis of the individualsÂ’ actions. (1963, p. 428) Therefore, he argues that the meaning of a collectiveÂ’s acts is based on the meaning its individual members attribute to their endeavors. And, in this respect, I would argue that corporate responsibility is soci al for two reasons: a) individua ls are always already social by virtue of notions of rational, autonomous beings (one cannot be autonomous unless
75 there are others who seek to influence us), and b) individuals form themselves into relations with others, e.g. social ties. He nce, corporate responsibilities are social responsibilities. On MisesÂ’ vi ew, Â“a collective whole is a part icular aspect of the actions of various individuals and as such a real thing determining the course of eventsÂ” (Mises 1963, p. 429). In other words, an absence of so ciety would effectuate an absence of a market system in which commercial exchange could take place. Thus, the market holds responsibilities Â– the so cial responsibilitie s of corporate actors acti ng as corporations that strive to benefit themselves and others in economic activities through the intermediary of corporate endeavors. The early notion of corporat e social responsibility is based on specific business activities aimed at achieving a defined bene ficial outcome, such as a commitment to refrain from depleting a particular resource. Carroll (1979; 1981) has developed a history of the definitions of the noti on of corporate social respon sibility. He divides the early concepts of corporate responsibility into tw o initial discussions: economic models and legal models. The legal model is concerned with placing constraint s on the actions of business enterprise. Further cons iderations of the role of co rporate entities in society serve to expand societyÂ’s expect ations of how this role woul d prevail and to what extent these entities would benefit or harm society. These expecta tions range from philanthropic activities, community obligations, and paternal istic provisions for segments of society (Carroll, 1981, p. 30). For example, provisi ons such as school funding, employee housing or health benefits, or envi ronmental clean-up became mainstay claims. Thus, Carroll defines four contemporary kinds of responsibility: economic, legal, ethical, and discretionary (1979, p. 500; 1981, p. 34-5). These la tter two have been more prominent in
76 the literature and conceptu alization of what corporat e practice ought to be in contemporary society, but without an analytical explanati on of this view beyond some vague determination of social expectations. James J. Brummer, philosopher and busine ss ethicist, addresses the theoretical dilemma of defining corporate responsibility a decade after CarrollÂ’s work. He uses an interdisciplinary approach to assist in reach ing some conclusions regarding the definition and legitimacy of the term, Â“responsibility.Â” He states, Â“unlike persons social institutions must be legitimatedÂ” (Brummer 1991, p. 3). His basis for this argument is that corporations are human constructs and thus necessarily imply the capability to make rational choices, which requires taking res ponsibility for corpor ate acts (1991, p. 3). Many have argued that corpor ations cannot take ethical Â“responsibilityÂ” for actions because they are entities, not persons. Brumme r explores a number of related questions: 1) Do corporations themselves have responsib ilities, or doonly some or all of their members have such responsibilities? 2) To whom are corporations or their members responsible in their conduct? 3) What determinate responsibilities do they have? 4) Why do they have these re sponsibilities? (1991, p. 4) While these are important considerations, a nd they have served at times to be the springboard for some of the lite rature on corporate social re sponsibility. I will return to what I regard as a more fundamental probl em. I will argue that there are not merely kinds of responsibility; rather, there are different meanings attributed to the term, which derive from economic theory and which may or may not truly define Â“responsibility.Â” For example, Kant stipulates a voluntary duty to be responsible towards the well-being of humanity, inclusive of ourselv es, as ethical while not sti pulating Â“exactly how far one must go in this effortÂ” (Kant [1797b], In troduction, Sec. VII, Sec. 392, 1994, p. 50). The
77 notion of KantÂ’s human well-being is reminiscent of AristotleÂ’s eupraxia in Nicomachean Ethics, Book I as an inclusive state of acting, functioning, and faring well, in total immersion in society. However, the te rm Â“responsibilityÂ” may be also used when the reasoning is closer to evaluative or quantitative considerations, such as Â“accountabilityÂ” for misstated financial disclosing. Or, it may be used as Carroll and others have discussed, as Â“res ponsivenessÂ” to a social pressu re to react to a particular event, or to initiate some Â“action phase of management,Â” absent a continued commitment of such acts (Carroll 1979, p. 502; cf Ca rroll 1981). However, the notions of accountability and responsiveness fall short of duty. Rather, these two notions are reflective-based, evaluative assessments of corporate activities. I am interested in Â“responsibilityÂ” as denoting duty-based mo tives to effect human well-being, which necessarily implies a so cial responsibility. Duty is related to intentional thinking, rather than consequential, evaluative implications, in decision-making. We accept th at duty is related to the notions of human reciprocity between moral agents and responsibility to others. As has been discussed previously, moral agency can be attributed to corporate endeavors based on shared goals of individual agent decision-making within a corporation. Although not frequently cited, New York University philosopher H. H. Horne stated that in taking individual responsibility, Â“a manÂ’s character determines his acts, he is re sponsible, for the act is his own; he committed it because, being the man he is, he could not have done otherwiseÂ” (1912, p. 92). Two considerations could follow from this thinking. One, we could argue that a collective organizati on such as a corporation ma y have a Â“characterÂ” that determines its acts based on shared individua l decision-making and thus the corporation
78 holds responsibility for its decisions because these acts are its own, and, two, a corporation possesses a particul ar sort of culture and coul d only make decisions of a particular type, which could be moral or immoral. Returning to my discussion of historical foundations for social aspects of market activity in chapter one, the char acter of a corporation has been related to the Â“cultureÂ” of a corporation. Although the notion of corporat e culture is accepted in organizational behavior literature, its meaning and applica tion vary widely. I intend to use the accepted definition of corporate culture of organiza tional behavior expert Jeffrey Pfeffer as inclusive of Â“a system of shared values (tha t define what is impor tant)Â” (Pfeffer 1997, p. 121). Furthermore, Leo Rogin states that Â“the assumption that these institutions are in the public interest endows th em, further, with objectivity in the sphere of social valuesÂ” (1956, p. 6). Hence, objectivity is based on judgm ents reflective of what Rogin envisions as both adequacy of practical acts, and as importantly the Â“j udgments as to the possibility of the aim being realized in given histori cal circumstancesÂ” (1956, p. xv). This constitutes a duty for corporate responsibil ity to others in its market activity and practices. These responsibilities correlate to an organizationÂ’s capa city to develop a Â“culture.Â” Corporate culture derives from the rational decision-maki ng of individuals who consistently share the goals of the or ganization. This consistenc y is based on more than empirical determinations; rather, consiste ncy is a correlative notion that embodies valuative qualities, such as persistence a nd validity, based on an interdependence of Â“what one tries to achieve and how one goes about itÂ” (Sen 2000, p. 13). This parallels AristotleÂ’s view, in the Nicomachean Ethics, of the individual de velopment of virtuous
79 character, or internal consistency of rati onal choice, in the shar ed perspectives and interpretations of our choices as indivi duals functioning respons ibly in a society Models of Economic Efficiency and Ideological Responsibility The assumption that corporations, as market act ors, follow particular scripts, is the basis for classical economic models. These models attempt to advance optimal choices about corporate market roles using concepts of ideal capitalism, perfect competition, and unadulterated free enterprise. The result is an id eological construct in the form of what is termed Pareto optimality (Freeman et al 1988, p. 111; Sufrin 1989, p.22). Vilfredo Pareto, a neoclassical Italian economist, was interested in ho w rational behavior impacted human motivation and choice in economic decision-maki ng (Baron et al 1994, p. 1116). Pareto optimality is the underlying noti on of economic choices regarding the achievement of aggregate welfare for societ y under a supposition of general equilibrium between suppliers of goods and consumers of those goods in the capitalist market. This equilibrium is disrupted when one market agent benefits because a corresponding agent will be hindered in some respect, for example as a cost of market enterprise. This cost may be reflected in consumer desires to re ach maximum value for their expenditures; but, producers seek to maximize th eir return on their production investments. Each market agent is being responsible to themselves. He nce, one of these agents is harmed by the otherÂ’s self-interest and goals to maximize their utility. In other words, Â“Pareto optimality captures the efficiency aspects only of utility-based accountingÂ” (Sen 2000, p. 33). But, both efficiency and utility in this de finition do not account for the evaluative considerations of these two terms in rela tion to human well-being. Moreover, Pareto
80 optimality is often used interchangeably w ith the term, Â“economic efficiency.Â” Although Pareto optimality is used for analyzing issues related to welfare economics in the general public sense of state responsib ility to citizens, it has also been applied to corporate responsibility mechanisms in the free market system. But, Pareto optimality fails to engage in socio-economic considerations of what constitutes corporate social re sponsibility. For example, cor porations make mistakes, or in other words engage in imperfect market choices, about their economic activities and market relationships with other market ag ents. Thus, if an attempt to create an environment in which an improvement in the economic well-being of market participants is made, then at least one market agent will be harmed financially. It is this harm that is problematic Â– human efficiency and utility include notions of fairness, honesty, and responsibility of individual functions to society. Herein lies the problem with Pare to optimality Â– it is a mechanism of contemporary economic theory to evaluate th e success of the market system by looking at the consequences of the autonomous choices of individuals acting in the market. However, individuals do not act based solely on their individual choices; rather, rational choices in a capitalist market system are made in a collective decision-making environment of increasing cor porate enterprise. Moreover, the acts of market agents are necessarily social because these agents are op erating in a Â“marketÂ” of other agents who develop relationships with one another. The st rategy of market agents is thus based on mutual interdependence. Because our Â“behavior is ultimately a social matter as wellÂ” as an individual matter, Â“what should be Â‘ou rÂ’ strategy, may reflect a sense of identity involving recognition of other pe opleÂ’s goals and the mutual interdependence involvedÂ”
81 (Sen 2000, p. 85). Hence, as individuals who act within corporate endeavors perceive harm, they see themselves. But, they also see themselves as agents in roles in corporate enterprise. In other words, to have a motiv e to instigate harm requires acknowledgement that others, as rational beings, also have the capability to act with motives of harm. But, these harms are social harms, rather than merely individual to individual harms. Pareto optimality methodology, despite its use as a norm for state welfare responsibility, is inhere ntly concerned with market actors and corporate enterprise for economic development theory. However, this methodology does not account for interpersonal comparisons of utility. As stated by Sen, Â“the policy use of the Pareto criterion goes beyond welfarism and embraces c onsequentialism as well, since choices of actions, institutions, etc. are all required to satisfy Pareto optimality, so that consequentialism is implicitly but firmly demandedÂ” (1988, p. 39). On SenÂ’s account, questions must be Â“raised about the possibili ty of interpersonal comparisons of utilityÂ” (1988, p. 38). When we begin a discussion of in terpersonal concerns, we necessarily face questions about the motives of others. More over, as I have shown previously, social harms, as well as benefits, such as some sort of optimality, require conceptions of responsibility to others as we ll as to ourselves. Market actor s, including corporations, act from duty to themselves, as well as to othe rs, to prevent harm that may likewise be realized. Market actors may act according to Kantian notions of duty and responsibility to moral equals in fulfilling th eir social responsibility. Sen argues against a narrow utility-based de termination of market responsibilities for social well-being. In fact, he traces the evolution of th e current charact eristics of the economic market to the 1930Â’s and conserva tive economist Lionel Robbins in which
82 accountability became the new responsibility of market agents. On this basis, economists were Â“judging success [in the market] by the size of the sum total of utility createdÂ” (Sen 2000, p. 30). Moreover, RobbinsÂ’ definition of economics included relationships, but these relationships were Â“between ends and scarce means,Â” rather than between human beings (Cooter and Rappoport 1997, p. 95). Furthe r, Robbins espoused a view antithetical to ParetoÂ’s original view of responsibility to others in Â“rejecting the interpersonal comparability of utilityÂ” and in formulating a narrow definition of ophelimity, or economic satisfaction, as an economic market responsibility. ParetoÂ’s view constructs a social responsibility between market agents, wh ich is interdependent and reciprocal. It is important to look to ParetoÂ’s original sense of responsib ility in the economic market: We will say that the members of a collectivity enjoy maximium ophelimity in a certain position when it is impossibl e to find a way of moving from that position very slightly in such a manner that the ophelimity enjoyed by each of the individuals of that collectiv ity increases or decreases. That is to say, any small displacement in departing from that position necessarily has the effect of increasing the ophelimity which certain in dividuals enjoy, and decreasing that which others enjoy, of being agreeable to some, and disagreeable to others. (Pareto 1906, p.261) To put this differently, in re-defining Â“utilityÂ” as a perpetuation of the physical, intellectual, and moral development of indi viduals and communities, Pareto intended a social responsibility of market agen ts to one another (Salinas 2003, p. 150). The meaning of utility may mean different things, depending on whether we use an economic basis, or an ethi cal one, or an integrated sens e of the two. In other words, Â“utilityÂ” has been defined to en capsulate Â“total well-being,Â” an Aristotelian perspective, rather than the 20th century Benthamite attribution that requires a Â“metric of happiness, or desire-fulfillmentÂ” (Sen 2000, p. 40, n13). As I di scuss in this dissert ationÂ’s Introduction,
83 we may look at agency in terms of motives of utility in either definition. However, if we embrace the Â“well-being aspect,Â” rather than the Â“desire-fulfillment aspect,Â” or vice versa, I argue with Sen that the notion of agency importance is diminished in value because it dilutes the holistic approach of a Smithian perspective of market exchange (Sen 2000, p. 44 n15). However, Sen would have us be Â“more concerned with what ethics can do for economics than with its converseÂ” (1988, p. 78). I would suggest adopting the opposite view. I have argued that th e notion of corporate social responsibility entails considerations of both economic and ethical util ity. In this respect, Se n contends that, Â“it is, of course, possible to argue that interp ersonal comparisons of utility make no sense and are indeed totally meaninglessÂ…Â” (1988, p. 30). However, as I have shown, the meanings of economic terms have inherent soci al implications related to corporate responsibilities in the market system because of interrelational market agent ties. My argument returns to the meaning of what constitutes responsibility, and whether economic endeavors are distinct from or inte grated in ethical thinking about corporate enterprise that fulfills a social responsibility in society. The relationships of stakeholders in th e market system are constructed using quantifiable constructs of corporate efficiency and effectiveness, but not as ends to be pursued. Rather, this quantifiable construc t is absent any accounting for social responsibility to others based on efficacy in the system. But, as we have seen, the social interactions between producers and suppliers are fluid in mutu al exchange; yet, they are constrained in the market, Â“because people seek consistency between their conduct and creeds and because they tend to conform to th e values and expectations of othersÂ” (Baron
84 et al 1994, p. 1117). Moreover, it is this so cial aspect that claims of corporate responsibility address Â– in fact, responsibil ity, as I have shown, necessarily implies an otherness in rational decision-making. Sen states that economic theory is characterized by rational decision-making based on Â“internal consistency of choiceÂ” and with the Â“ maximization of self-interest Â” (1988, p. 12). In rational choice it is the consideration of others, as a responsibility to their wellbeing as our own, that takes on a Kantian perspective of an imperative: Â“Rational choice must demand something at least about the correspondence between what one tries to ach ieve and how one goes about itÂ” (Sen 2000, p. 13). Otherwise, we are no longer di scussing Â“responsibility,Â” but rather, Â“accountabilityÂ” for some quantifiable produc t, or good. My interpretation of the meaning and practice of Â“responsib ilityÂ” is implicitly social. In order to discuss Â“responsibility,Â” we n ecessarily must return to my earlier work in chapter one regarding individualsÂ’ f unctions in society. Responsibility requires individuals to adhere to part icular, purposeful roles in so ciety. Individuals attach to roles Â– Â“which are social (not techni cal) definitions of durable cl usters of task s, rights, and responsibilities Â– and only indi rectly to individuals by virtue of their occupying rolesÂ” (Baron et al 1994, p. 1117). In fact, sociologists traditionally re fer to roles in complex bifold layers Â– Â“the incentives or task responsib ilities confronting an act or in a position, but also to the expectationsÂ…asso ciated with a given social positionÂ” (Baron et al 1994, p. 1117). Further, these expect ations result in Â“the forms of economic and social exchange, and not simply the outcomes Â” (Baron et al 1994, p. 1117). These forms of exchange are intended to develop and provide satisfacti on, or good, to our roles in society, which entails Â“moral assumptions and purposesÂ” (Lilienthal 1963, p. 433). I concur with
85 philosopher Charles TaylorÂ’s assessment that economic exchange is Â“ordered, peaceful, and productive activity [as] has become the model for human behavior and the key to harmonious coexistenceÂ” as an element of so cial well-being (Taylor 2004, p. 15). This is what I am seeking Â– what the notions of co rporate social responsibility mean if the motive for market agency is based on consum er and producer satisfaction, or Â“good,Â” and therefore human well-being. However, as I have also shown, a Â“goodÂ” is such by virtue of being valued, as determined by human interest in what const itutes a Â“good.Â” Implicit in this determination is a responsibility to evaluate our motives for undertaking decisions regarding others, our intentions to consider the a lternative choices we may have and our willingness to assess these impacts in order to make decisions about our actions. TaylorÂ’s concern is the Â“new understanding of sociality, the society of mutu al benefit,Â” which leads to efficacy (Taylor 2004, p. 18). The efficacy of our actions conveys a social responsibility to others based on our decisions as a legitimate moral agency. On this basis, individuals act according to their roles in society, including acting in coll ective endeavors such as being a member of a corporation. Our economic decisions are ma de individually, and collectively, within corporate environments. However, classical economic theories use a model of efficiency in terms of economic well-being. But, improvements in well-being are value-based on more than economic calculations; goods are va lued because they are good, efficient, or efficacious by being useful for our individual and other selves as consumers, producers, and members of communities. What is effici ent for corporate endeavors has to do with responsibilities that determin e the status of goods in society. The status of corporate endeavors may indicate a quality or Â“good,Â” wh ich is of value, to produce material goods
86 that are economically successful, and thereby efficient, and socially successful based on efficacy in the market. In other words, the terms Â“goodÂ” and Â“efficientÂ” are not synonymous with Â“efficacy.Â” Utilitarian Applications of Responsibility John Stuart Mill, in his treatise on utilitarian ism, as the fundamental theory of value ( 1993), indicates moral and economic notions relating to what has been determined to be good and efficient in the market when he states, Â“Whatever can be proved to be good, must be so by being shown to be a means to something admitted to be good without proofÂ” ( 1993, p. 140). In othe r words, the good is not efficient in and of itself, without quantifiable proof; rather, what is good is efficacious because it accomplishes a social purpose that is valued by human determination. In fact, while what is efficient is Â“a superiority in quality, so far outweighing quantity as to render it, in comparison, of small amountÂ” (Mill  1993, p. 146), effici ency cannot be reduced simply Â– Â“if it were possible to assign numeri cal probabilities to the various effects of our actions we could devise a wa y of applying the method of to tal situationsÂ” (Smart 1998, p. 38). But, we canÂ’t. We value efficacy as well as a social responsibility to others. In other words, we cannot place a numerical valu e on the probability that Starbucks Coffee Company will consider it their corporate social responsibility to indefinitely continue to offer small business loans to coffee bean farmer s in Sumatra merely because this action is efficient, and thereby good. Rather, the efficacy of social relationships is a component of what is good in the market as well.
87 Further, efficiency is a sta ndard, or value, we place on events or actions, such as corporate endeavors. These endeavors are based on rational decisions regarding corporate responsibility for particular end eavors that are intellectual in basis; and, these intellectual pursuits are good in that they are efficient, or are valued, based on human choices to act one way versus another to achieve a strategi c goal of stakeholder satisfaction. In this respect, the notion of self-int erested agency encapsulates mo re than a monist pursuit of self-interested satisfaction; this pursuit is ba sed on a motive of agency, or efficacy, for its own sake (Sen 2000, p. 55). Satisfaction is no t a quantifiable constr uct, but rather a knowledge of achievement of some Â“aspirati on,Â” as Mill would term it ( 1993, p. 148). Aspirations are considered good; they iden tify a purpose, an effectiveness, a value Â– in other words, an integration of efficacy a nd efficiency. Further, if this aspiration, by definition as a human goal, is an aspiration by virtue of bei ng viewed as attainable, it would not be set out as a goal if it was unattaina ble. Thus, what is attainable is efficient and efficacious; moreover, what is attainable is good. Further, Mill calls upon individuals to be Â“public benefactorsÂ” to Â“consider public utilityÂ” ( 1993, p. 158), and thereby achieving an attainable Â“good.Â” On Sidney SufrinÂ’s account, the degree of efficiency oscillates due to trade offs. These trade offs must be considered in light of various cor porate responsibilities, including social ones. These responsibili ties are based on changing knowledge and arising market issues such that, Â“the intera ction of micro and macro, of small and large entities in the market-business system has to do, in an operational sense, with changes in the structures of the market,Â” which entail social relationships (Sufrin 1989, p.16). But,
88 how do we determine what these social respons ibilities may entail if the changes in the structures of the market are unknown until they occur? In response to this question, I would conc ur with Sumner H. Slichter, Harvard University economist, who suggests in his work The American Economy that the responsibilities of corporations are based on adaptations of ways of moral thinking about Â“conserving scarce resources, increasing the efficiency of men and equipment, or adapting the product more closely to the pr eferences of customersÂ” based on social efficacy (1963, p. 371-2). Further, his view is that the corporation fails its social responsibilities if it is sole ly motivated by self-interest in the sense of disregarding its Â“effect upon the community as a wholeÂ” (Slight er 1963, p. 371). In fact, he states that, unlike public policy, corporati ons have the opportunity a nd responsibility to Â“adapt themselves to changeÂ” without waiting for so cial demand. Further, he argues that the economy functions best Â“when there is proper balance between peopleÂ’s interests as consumers and their interests as producersÂ” because they are essentially the same individuals to which corporate ende avors are aimed (S lichter 1963, p. 373). Further, Adolph Berle, a fellow Harvard ec onomist, uses an expanded view of the importance of public concern a bout corporations, which he ca lls Â“corporate constituencyÂ” (Berle 1963, p. 368). He suggests that this cons tituency operates as a primary impetus for corporate responsibility to its role in so ciety. Moreover, this constituency Â– labor, consumers, and suppliers Â– acts as the Â“f orce of public opinionÂ” (Berle 1963, p. 365), which could be argued is a precu rsor to FreemanÂ’s Stakeholder Theory of market equals. In other words, Â“general equilibrium will result, if all the rules of the game are simultaneously honored by all participants in the marketsÂ” (Freeman et al 1988, p. 111),
89 but the market is anything but static. In f act, on this basis, Â“economists assume that the general-equilibrium conditions are descriptive of the way the world has to beÂ” (Freeman et al 1988, p. 112). Freeman and Gilbert point to the lack of truly perfect markets in which there is perfect information Â– or, Â“informed consentÂ” for economic agents to make rational choices within impersonal c onstructs in economic models. These market agents are stakeholders to one another Â– corporations to suppliers, consumers, etc., but also among themselves. In other words, corporations are not merely Â“hubsÂ” around which stakeholders revolve. Rather, corporations ar e themselves stakeholders to some other entities in the market who are held to be the Â“hubÂ” of th e Freeman metaphorical wheel. Said differently, corporations are interd ependent entities of individuals who are cooperating within and outside of their or ganizational constructs. This cooperation requires both economic and social interaction a responsibility to be concerned with othersÂ’ well-being because oneÂ’s self-interest is dependent on others. There is a duty to strive towards interrelational activities that provide cohesion to market endeavors, which are necessarily economic and social aspects of corporate decisionmaking. It is this cohesion that is primary to the functioning of a good market system. Economic Harmonies I have shown that corporate responsibility incl udes a social concern in that choices are made based on market agent efforts to secure information from others in order to strive towards the market ideal of both efficacy and efficiency. But, this then involves choices between trade-offs with others in the mark et and attaining some measure of Pareto
90 optimality based on social responsibilities to innumerable reciprocating market agents in order to attain good in a community. On th is basis, we will need some method to determine what is a socially optimal determ ination of responsibility to a community of rational members. A Â“civilized community,Â” ought to meet a number of tests according to Slichter (1963, p. 376). On his basis, there are both ec onomic and non-economic tests applicable to market agents of the economic system. The economic tests ought to include: Â“reasonable security and abunda nt opportunitiesÂ” for commun ity members, adaptability to change, fair product distribution, and Â“a fair balance betwee n the interests of consumers and the interests of producersÂ” (Slichter 1963, p. 369). What I notice about SlichterÂ’s economic concerns are the implicit, morally-based aspects of considerations of otherness. In the same year as Slichte rÂ’s publication, accountant Stuart Chase, in The Proper Study of Mankind (1948), argued that economic self-i nterest results in Â“a higher harmonyÂ” (1963, p. 391) that is absent selfis hness and inclusive of efficiency, and certainly incalculable in terms of SmithÂ’s economic man. Further, SlichterÂ’s four non-economic tests are directly concerned with a corporationÂ’s social responsibilities in the ma rket. These tests are based on whether there are decisive acts of corporat ions based on Â“intelligent actionÂ” (Slichter 1963, p. 369, 37781) for: 1) Regard for workers and their needs as human beings 2) Artistic and intellectual life free of constraints, encouragement in creativity and innovation, and sponsored interests 3) Favorable environment for democratic institutions and associations absent economic controls 4) Balanced scale and exchange of values within a community
91 Moreover, he argues that corporate endeavors ought to be inclusive of open contact and communication with the members of their comm unities, otherwise cor porations, as highly organized groups, Â“will become narrow and pa rochialÂ” (Slichter 1963, p. 382). In other words, his view of a Â“civilizedÂ” community is a harmony of market ag entsÂ’ interests that captures both economic and social responsibilitie s. These interests car ry mutual concerns and motives of self-interested market endea vors. However, each of these notions draws on moral responsibility based on choices about rational human acts. Horne stated that choice Â“presupposes motives, or ends of actionÂ” (1912, p. 72). Further, on his account choice is made at a particular point in time a nd is integrated with an individualÂ’s motives. Sidney C. Sufrin, Milton Friedm an and Reflex Responsibility Sidney Sufrin, a business economist, frames this scenario: So long as there are choices, or the illusi on of choices, so long as people think and act as if there are altern atives of thinking and acti ng, questions of degrees of goodness and badness, however conceived a nd measured, are implicit in thought and action. (1989, p. 13). The opportunity for a range of choices is a co ncept that has moral implications. If there are alternative ways of acti ng in the market, then the individuals making choices among these alternatives bear responsibilities to themselves a nd others to make a good selection. The implications of goodness or badness of acts can be represented in a variety of perceptions of the activities in the market. For example, Sufrin states that issu es related to fairness and justice are incorporated in the Â“functioni ngÂ” of the market system but that, Â“an ethical act is outside the market and its rulesÂ” (Sufrin 1989, p. 40) But, does this reasoning impinge on our
92 concern with social responsib ilities of corporations? Sufr in seems to be saying that ethical behavior is attributed to individuals, rather than mark et entities, but at the same time he states that Â“ethics is implicit in both individual and social behaviorÂ” (Sufrin 1989, p. 41). What is apparent is his distinction th at ethics pertains to individuals who act in markets, which is reflective of Â“the values of societyÂ” (Sufrin 1989, p. 41). In other words, he states that there is an Â“interc onnectedness between social and private values,Â” (Sufrin 1989, p. 45), rather than between social and corporate values. Thus, ethics does not seem to be a social responsibility of an entity, such as a corporation, to legitimize collective market acts. Rather, the notion of moral responsibil ity could be classified as Â“market baggageÂ” derived from theories of ethi cal acts, if not subsum ed in perceptions of justice and fairness as a responsibilit y of corporations (Sufrin 1989, p. 40). SufrinÂ’s view of corporate social re sponsibility is refl ective of, although not equivalent to, Friedman and Galbraith in rega rds to the purpose of corporate enterprise. Sufrin views the market for Â“practical purposesÂ” based on its structure. The market is Â“structured by considerations of efficiency and amenity, or more precisely by efficiency and lawÂ” (Sufrin 1989, p. 46). In other words, SufrinÂ’s concept of the profit model is, Â“the balancing of efficiency considerations and amenity considera tions in the act of responsible behavior [which ] obviously includes control ove r technical know how and acceptable valuesÂ” (1989, p. 51). But, these va lues are considered outside the market system, and they do not include government po licy imposition of societal values. In this respect, Sufrin considers government inte rvention in corporat e responsibilities, particularly in terms of legi slation, as stifling the use of reason in market systems (1989, pp. 52-53).
93 Friedman states that the notion of corporate social responsibility to something other than profit Â“is a fundamentally subve rsive doctrineÂ” and ought to be limited in scope to allow for corporate officials Â“to ma ke as much money for their stockholders as possibleÂ” (Friedman 2002, p. 133). But, his view implies a narrow concept Â– that corporations are formed through the investment of capital to ea rn a profit as an act of responsibility and as such an entity may not act in any other manner. His way of thinking thereby impinges on autonomy and choice for ma nagers operating within a corporation. Alfred Marshall, a neo-classical economist of the early 20th century, was concerned with reciprocity and choice in the so cial responsibility to relationships in what he termed, economic chivalry. In other words, economic end eavors will not bring about ideal economic functions, but rath er include an Â“aim of social endeavourÂ” inclusive of market participants (Marshall, quoted in Rogin 1956, p. 562). However, Sufrin notes: Â“Since providing income and security is not achieved by unthinking processes, by merely following the dictates of natu re in some Rousseauean fash ion, choice is implicit in personal behavior as well as social behavi orÂ” (1989, p. 13). Rouss eauÂ’s argument from nature, rather than reason, would have us taki ng responsibility for othe rs out of pity and a fear of being harmed by others, rather than some sense of reasoned duty as to how we behave towards others (1754, p. 55). This way of thinking failed in establishing an early conception of what the role, function, and res ponsibility of a corpor ation ought to be, yet it imposes some of the same concerns Friedman eschews in his rant against Â“corporate social responsibility.Â”
94 Kantian Applications to Market Agency FriedmanÂ’s imperative in economic theory would seem to advance a provincial perspective and proceeds to de feat its own purpose: stockholde r, corporate, and market agent endeavors must be individually, Â“mut ually unconcernedÂ” with one another on his view (Freeman et al 1988, p. 114). Furthermor e, FriedmanÂ’s view of SmithÂ’s Â“economic manÂ” and his motives of self-interest as driving economic forces fails to provide empirical evidence of absolute market success. Sen states that market success has not been proven to be solely dependent on all market agents acting only from a motive of self-interested profit (1988, p. 18). In fact, we do not have a measure for determining motives for every market agentÂ’s acts, nor what constitutes perceived degrees of corporate responsibility. Market agents may choose based on a sense of loyalty, courage (risk-taking), or benevolence over self-fulfillment Â– which are moral aspects of selfinterest, and commitments to concerns for others that Smith considered. In contrast to Friedman, a contemporary, Clarence Randall, a former industrialist and Chairman of the Committee on Foreign Economic Policy during President Dwight EisenhowerÂ’s administration, stated that Â“the secret of free en terprise is that we harness the natural instinct of each man to serve hims elf, and rely on other natural forces to see that as he serves himself he serves so cietyÂ” (1963, p. 351). Th is Â“enlightened selfinterestÂ” of Randall does appear to be the case in every exchange relationship in the market Â– corporate decisions demonstrate mu tual concern for other market agents in cases of free enterprise or fair compe tition, employee safety and health, or public reputation. Further, corporate ai ms of efficiency and effectiv eness are not equivalent, nor are they value-free. Rather, efficiency is mo re than a determinati on of Â“how much is
95 produced at what costÂ” (Pfeffer et al 2003, p. 34). I have argued that efficacy is valued as a thing in itself Â– as a soci al ideal as well as Â“an argumen t to achieve objectives sought for other reasonsÂ” (Pfeffer et al 2003, p. 35), su ch as effectiveness. The image of perfect competition and consequential realization of income maximization in classical economic theory is an ideal Â– a moral ideal Â– in SufrinÂ’s terms because ideals are projections of what ought to be rather than what is (1989, p. 22). Randall provided earlier foundations for this thinking in his work, A Creed for Free Enterprise : Personal participation means also, of c ourse, generous giving to community causesÂ…I hold deep conviction that this meeting of the social needs of the community is a proper charge to the cost of production. It is not charity, but the acceptance of responsibilityÂ… (1963, p. 353) Accordingly, the responsibility of business in cludes a Â“social concernÂ” as an impetus to corporate decision-making base d on the pursuit of an ideal market comprised of many constituents. This concern is found in Sufr inÂ’s notion of intera ction between micro corporate endeavors and macro applications of ideal market efficiencies. Moreover, the traditional view that efficiency is purely quant itative is a misnomer in SufrinÂ’s view: Real i.e. quantitative and physical deviations from the ideal are treated as the result of obstacles to the realization of the ideal. Such analysis and synthesis are clearly ideological a nd moral rather than scientific. (1989, p. 22) In other words, Sufrin states that this synt hesis is rooted in pol itics and morality, two social aspects of analytical pr ocesses, rather than purely 20th century economic models and statistical constr ucts of business enterprise (1989, p. 23). For that reason, an argument regarding the social responsibility of business is inclusive of social, evaluative notions of responsibilities to others base d on moral aspects of reciprocity involving economic exchange.
96 Pfeffer and Salancik (2003, p. 34) state th at effectiveness is a valuation that may include efficiency, but which also incor porates external judgments of how well a corporationÂ’s acts achieve social goals of satisfying market agents and stakeholders. Accordingly, economic theory must be linke d with moral imperatives (Freeman et al 1988, p. 112). On that basis, the object of c oncern would entail considerations of wellbeing for another agent as a good beyond part icular financial exchanges or legal constraints. And furthermore, any sense of interest for another market agent would be indicative of a moral concern. In citing Christopher McMahonÂ’s theory of Implicit Morality of the Marketplace (IMM), Freeman and Gilbert (1988, p. 112) argue that the notion of economic efficiency contains hypothetical imperatives of stockholder responsibility to consumers in moral terms related to cor porate decision-making. In other words, IMM is the link between economic and moral theories because Â“the achievement of economic efficiency is taken as an endÂ” (McMahon 1981, p. 255). Further, this view is link ed to classic economic theory in that corporate decisionmakers, as agents of stockholders of the corporation, act in co ngruence with owner preferences. As we have seen in classic theor y, the notion of self-inter est is regarded as a prominent motivator for market acts. This incl udes the idea that Â“the key to it obviously is the intelligent harnessing of the self-inter est of the individual for the advancement of the common goodÂ” (Randall 1963, p. 351). Fr eeman and Gilbert ( 1988) are concerned with the notion of market agents. Market agents may be stockholders, managers, suppliers, consumers, etc. whose behavior im pacts themselves and others in the operation of market exchanges. The interd ependent acts of these agents indicate the capabilities of these individuals to engage in rational deci sion-making, inclusive of economic and moral
97 determinations of motives to act with responsibility towa rds others. In this regard, Freeman and Gilbert attribute the competency of individuals Â“to bot h understand the idea of Â‘the goodÂ’ both for him or he rself and others, and to have a sense of duty in interaction with othersÂ” (1988, p. 52). Furtherm ore, rational individuals are moral agents with capacities of moral tendenc ies to act from a duty of respons ibility to their own well-being and that of others. Those engaged in collective activity, such as in a corporation, are agents who initiate the framework of responsible economic acts as role-players in the marketplace. Their capacities are bounded by the framework of their roles in such a way as to formulate duties to the functioning of corpor ate practice. Moreover, these capacities may be economic, as well as moral Â– without prejudice. Duties are Â“quite simply, an obligation to take specific st epsÂ” (Freeman et al 1988, p. 52). Further, duties Â“provide a full framework in which persons can take ac tion of their own accord Â” (Freeman et al 1988, p. 52). Thus, corporate agents who perf orm the duties apportioned by stockholders are in effect taking steps towards corporate practice without differe ntiation in terms of morally or economically based space for being responsible to others in society. Corporate practice is Â“corporate strategy.Â” The Â“implications for the practice of corporate strategyÂ” illustrate Â“no justifiable separation of owner and managementÂ” acts because stockholders are responsible, or liable, for the use of their capital (Freeman et al 1988, p. 113). Moreover, Freeman and Gilbert postulate that Â“certain decisions of the firm cannot be separatedÂ” (Freeman et al 1988, p. 113), such as managers being given responsibility for th e use of stockholder investment capital in ways that enrich the corporation. The problem occurs in terms of
98 how we define Â“enrich.Â” This term would s eem to connote a Â“goodÂ” in the sense of some benefit of a product, service, or idea that gives a se nse of human well-being. For example, McMahonÂ’s two basic requirements of the purpose of market activity are moral underpinnings of corporate responsibility th at is reminiscent of harmonious social decision-making. Freeman and Gilbert (1988, p. 112) paraphrase these as corporate imperatives: 1) Thou shalt bring about perfect information. 2) Thou shalt consult stockholders in ca ses of morally significant decisions. Once again, the problem is one of defini tion. A stipulation of stockholders to management that encompasses the notion of Â“m orally significantÂ” is no different than stating that consultation must occur in cases of Â“financial signifi cance.Â” In other words, Freeman and Gilbert state, Â“the point is that, to the extent that owners are liable for the use of their capital entrusted to management certain decisions of the firm cannot be separatedÂ” (1988, p. 113). Stakeholders and Moral Strategy The definition of Â“corporationÂ” proves to be troubling. The term is meant to encapsulate the collective endeavor of rational individuals, or rath er a coalition of rational individuals, toward some specific purpose, based on shared goals (Freeman et al 1988, p. 8; Pfeffer et al 2003, p. 23). In other words, Â“organizations are social instruments of tremendous power and energy, and the critic al issue becomes who will control this energy and for what purposeÂ” (Pfeffer et al 2003, p. 24). Based on the definition of a corporation, the strategy of corporate activ ity is the attainment of economic profit
99 through the collective exercise of shared individual goa ls. This formulates the basis of free corporate enterprise in society. The term Â“freeÂ” attains a moral notion of autonomous rational choices to make decisions related to corporate self-int erest of well-being. Further, the term Â“enterpriseÂ” attains the basi s of deliberative, shared activity to provide some good as we have defined earlier. As I have discussed previously, the classi c notions of economic theory argued that the notion of self-interest is a responsibility of an individu al to choose to engage in commercial exchange. The later theories of economic perspectives of Friedman and Galbraith embraced narrow definitions of utilitari an self-interest as an ideal of a corporate motive of profit within market enterprise. However, earlier 20th century economists and contemporaries of these thinkers viewed SmithÂ’s Â“economic manÂ” in broadly defined terms that included moral aspects of responsib ility to society based on Kantian notions. I would concur with current economist SenÂ’s vi ew that SmithÂ’s treatises elaborate what ought to be economic theory Â– Â“economics is supposed to be concerned with real peopleÂ” (Sen 2000, p. 1). To put it differently, economic thinking is originally considered, beginning in ancient Greek society and con tinuing up through Kant to the early 20th century, as a social activity based on consid erations of human we ll-being. Because the basis of corporate endeavor is founded in the practice of commercial exchange Â– thereby economic transactions Â– these exchanges and tr ansactions are implicitly human-based and thereby social. Therefore, when we speak of corporate responsibiliti es, we are including social responsibilities as harmoniously integr ated in all corporate decision-making about exchange and transactions. On SenÂ’s acc ount, Â“the study of economics, though related
100 immediately to the pursuit of wealth, is at a deeper level linked up with other studies, involving the assessment and enhancement of more basic goalsÂ” (1988, p. 3). But, on Freeman and GilbertÂ’ s perspective, as well as Pfeffer and SalancikÂ’s accounts, these social entities are less a constructed corps and rather a process. One could argue that this notion of a process is movement Â– whet her it be advancement or regression Â– of ideas and things. For example, corporate purposes lead to goals that include goods produced from material reso urces as well as human resources. Human resources would include the decisions of co rporate managers based on their particular skills in making market choices. Further, a cor poration comes to be defined by its activity (Pfeffer et al 2003, p. 25). However, corporate activity is characterized by the decisionmaking capabilities of its indivi dual members who are intent on the mutual concurrence of shared motives for the functioning of the organization. The economic endeavors of corporations acting collectively between one another and other entities is relational, thereby social, as is illustrated in FreemanÂ’ s Stakeholder Model, in a particular space Â– for our purposes, the Â“marketÂ” of ex changing goods, services, and ideas. Corporate economic responsibilities cons truct market activity that satisfies consumer demands. These responsibilities ar e based on purposive economic actions on the part of all market agents, as stakeholde rs in market exchange, which, according to classic economic theory, must be voluntary. In considering this elem ent of the definition, Freeman and Gilbert (1988, p. 8) argue that mark et choice must be voluntary in that it must also be free of coercion, impediment and constraint. However, on Pfeffer and SalancikÂ’s view, a corporationÂ’s responsibil ity to satisfy the n eeds and demands of consumers, Â“simultaneously constrains its ow n behavior in meeting other or subsequent
101 demandsÂ” (Pfeffer et al 2003, p. 29). Further, Morgan (1990, p. 5) develops an account of societyÂ’s expectations of others, which also se rves as a constraint, in the development of market relationships. This constraint is a responsibility for using rational processes between market agents in these relationships: participation coordination cooperation responsibilities to others Corporate decisions related to market rela tionships follow from understanding the values placed on these notions, as well as on market products and the social implications these products have on market participants. These understandings are particularly misunderstood in view of what Morgan observed of the 1980Â’s wave of multinational enterprise in which Â“wealth, income and so cial standing are incr easingly derived from being a member of, for example, IBM rather than being British or AmericanÂ” (Morgan, p. 225). Furthermore, political policies in developi ng countries had to change to meet the increasing demand for their inclusion in the world market, often with mixed results for how all resources would be rather than ought to be allocated for purposes of assigning responsibilities for new corporate endeavors. Â“The result is a highly complex trading environment where institutions make choices ab out the time-scales, nature and risk level of their investments on the basis of a pict ure of worldwide economic developmentsÂ” (Morgan, p. 233). In other words, corporate de cision-making requires social expectations as much as economic expectations. Each set of decisions is based on corporate considerations of the well-being of others, including themselves, in terms of corporate capabilities to satisfy all agents. However, Sufrin cautions: Â“Moral imperialism may also
102 be a characteristic of those in or out of the firm who require some particular behavior of the firmÂ” (Sufrin, p. 84). Moreover, corporat e agents and market agents may exercise autonomous choice, including decisions regard ing social responsibil ities of corporate acts. But, these choices ma y impinge on other choices. Freeman and Gilbert view corporate choices as Â“involv[ing] choices as to what is important to, and valued by, the firmÂ’s consti tuentsÂ” (Freeman et al 1988, p. 127). This is a Kantian notion of placing value in the intr insic worth of individual decision-makers to make rational choices. These choices are the process Freeman and Gilbert attribute to corporate economic endeavors, which on their account are inherently moral and socially responsible to other market participants (1988, p.130). I would argue that taking responsibility for decision-making is more than the financial fiduciary accountability of a firm; it is a moral statement of being responsible to others based on some perception of duty. This Kantian aspect of responsibility is an evaluative process inclusive of considerations of both moral and social reciprocity. The decisions producers make are based on choi ces; but, choice among alternatives is underscored with moral deliberations of what is best and what ought to be most advantageous. The assumption of moral respons ibility for making these decisions is held by individuals Â– investors and managers Â– w ithin the producing cor porate participant. In other words, corporate economic strategy, based on the classic economic theories of Freidman, Galbraith, and Schlossb erger, demonstrates notions of profit as a social responsibility, which is a narrow defi nition that on historical reflection does not find its basis in the original classicists of economic theory. As I have shown in this chapter, the theories of Smith and Pareto re quire revisiting Â– histor ical classic economic
103 theories, rather than the later 20th century contemporary wester n theories, that integrate social aspects of market endeavors into th e responsibilities of producers. If societyÂ’s expectations require corporate social responsib ility to social efficacy and efficiency, then corporate capabilities must stretch be yond production capacities and economic determinations such that the Â“goodÂ” of goods wo uld be a corporate soci al responsibility.
104 Chapter Four Corporations Â– Responsibilit y, Community & Sustainability The thinking on corporate responsibility that is represented here is motivated by the perception of a problem, an image of a preferred state, and so me specific ideas on how to move from where we are to where we would prefer to be. (Neva R. Goodwin 2001, p. 261) I have argued that the notion of social respons ibility is a necessary component of what is referred to as Â“corporate re sponsibility.Â” In the previous chapters, I provided the historical and contemporary economic theo ries and various notions of corporate responsibility, including those thinkers who specifically deny a social aspect to business endeavors in the Western commercial market system. The basis of these discussions has focused on the conditions of responsibility in the early classical economic theories and how contemporary economic and stakeholder th eories use the term. I have shown that market economic endeavors, and the theori es on which these practices are based, are necessarily social because they involve inte rdependent, cooperative relationships between individuals who are engage d in collective decision-making entities known as corporations. The meaning of responsibility of tentimes has been confused in ascribing corporate practice with theory. Hence, much of what has been cal led the Â“responsibilityÂ” of an organization is actually how I have defined Â“accountabili ty.Â” In this chapter is a brief review of my definitions of these two terms, community, and sustainability as I have used them in the Introduction and subsequent chapters of this work, which should be
105 helpful in providing background to my further analysis of the meaning and practice of corporate social responsibility Corporate Social Responsibility & Meaning I mean to say a corporation, as an economic entity, has moral responsibility to others in society, as opposed to claiming moral responsibility for its acts or to being held morally responsible for the consequences of its decisions, because a corporation has the intentional strategy to accomplish the shared goals of its founders and its constituents. Moreover, corporations are res ponsible to society: Â“business should help to anticipate and plan for the future needs and constraints of society and of the natural world within which society Â– and its subset, business Â– ar e imbeddedÂ” (Goodwin 2001, p. 262). In other words, corporate endeavors are based on forw ard looking motives to benefit themselves and others in society in socioeconomic ways. Further, if I say that a corporation is re sponsible to others, ei ther individuals or other entities, I am saying th at the corporation makes deli berative, autonomous choices from an a priori duty to act by way of rational th inking. Rational thinking may be attributed to corporate decision-making because it is just that a collective process of rational individuals who agree to operate as a single-minded decision-maker, appointing the entity known as a corporation as their ag ent to be responsible to others. We are not Â“responsible for,Â” nor can we be Â“held responsib le,Â” as these are noti ons of judgment and consequential evaluation Â– in other words, Â“accountableÂ” events. These events are not defined by our ties to others Â– our joint co mmitments Â– in the same way. Therefore, we can be Â“accountable forÂ” our actions as an evaluation or Â“held accountableÂ” to some
106 measurable outcome. Margaret Gilbert (1996), philosopher, states that as social beings we form collective relationshi ps with others based on shar ed, not summative, goals in joint commitments to one another. These co mmitments are holistic and interdependent. I have argued that not only are we morally re sponsible to ourselves and to others in general, but as members of corporations we are morally responsible to develop sustained socioeconomic relationships. The shared goals of individuals ar e based on the duty and function of a corporation Â– to be an ongoing concern. This Â“concernÂ” is human-or iented and mutually Aristotelian and Kantian in meaning Â– it entails both the objectives and the functions necessary to be a commercial entity and memb er of the market system (a society) of exchange between individuals and other entiti es comprised of indivi duals. Â“ConcernÂ” is both noun, as in this case, and verb, as in the case of Â“to care.Â” In each case, Â“concernÂ” is involved with the notion of Â“responsibili tyÂ” to others. As a noun, it means an organization of individuals who share a common objective. In this sense, a Â“concernÂ” is a unified, harmonious collective. Business concerns strive to achieve accord, or what we may call congruent goals, as a re sponsibility to its own well-be ing and that of others in the market. As a verb, concern is relational a nd social. It involves a motive for, and thus movement, toward human well-being. These me anings of Â“concernÂ” are indicative of a corporation because it is compri sed of autonomous, rational i ndividuals and thus is more than an entity, not merely a Â“thing.Â” It is complex. It is interactive. A corporation is both intra -relational and inter -relational. These relationships are based on human interactions, of rational human choice, regardless of the nature of these interactions. Thus, human interactions will oc cur within corporations between colleagues
107 intra -relationally, and various types of relati onships will occur between individuals and their corporations with outside entities inter -relationally. Further, the interactions between individuals and the organizations they form as corporations are based on socioeconomic choices, which form the basi s of the Western economic market system. Â“Does morality matter to economic analysis?Â” (Hausman et al 1993, p. 671). Since interactive rational human choice is nece ssary to the function of the corporation in the marketplace, economic analysis ought to seek and find social legitimacy as a moral intention of corporate decision-making. The notion of interactive choice in the economic market system involves social interdepe ndence among stakeholders Â– in business and society. This notion of choice has moral underpinnings: The question whether morality constitutes a constr aint on the prudent management of motivating interests is a good example, because morality does seem to require us at least sometimes to put the interests of other people ahead of our own. (Kahane 1989, p. 511) Further, stakeholder relationships Â– as ec onomic functions of corporate activity Â– are inter-reliant and mutually effective acts, which necessarily imply moral considerations of benefits and harms as acts of re sponsibility. Responsibility is not synonymous with accountability. The meaning of the term Â“responsibilityÂ” has been used in this study in relation to prospective human decision-making based on a duty to others, rather than an examination of the outcomes of human endeavors that c onstitutes a basis of Â“accountability.Â” I have argued that responsibil ity is integrated a priori in human choice as a duty, rather than as an action of cause and effect, such as a nonmor al descriptive event, or as a response to a particular occurrence. The term responsibil ity is forward-thinki ng and progressive, and
108 always already implies moral, and theref ore, both narrative and evaluative meanings. Responsibility is based on deliberative t hought; accountability is based on reflective thinking. I believe the distinctions between Â“responsibilityÂ” and Â“accountabilityÂ” are important to understanding what we m ean by the expression Â“corporate social responsibility.Â” I have argued that what ma ny contemporary theorists who refer to this expression actually mean is that an entity is accountable for the consequences of human decision-making that effects othe rs. Accountability may be cons idered in moral terms, as we may argue from a utilitarian perspective, but accountability may also be considered in nonmoral aspects, as in actualized determin ations of financial acc ounting for profit in a corporationÂ’s annual statements. More over, accountability is static. In my view, responsibility is movement It is inspiration, stimulation, and emergence. It is making things happen, it is evolutionary, and it is human other-oriented. Responsibility is necessarily always a moral term of huma n choice and duty to oneself and othersÂ’ well-being. Responsib ility includes showing consid eration to others and to various aspects of existen ce Â– development of individua lsÂ’ capabilities for economic sustenance, intellectual opportunities, and co mmunity. It is advan cement and innovation, as well as original. Responsibility is an integr ation of character and reason that contains power, strength, vigor, consiste ncy, and intensity. These notions are consistent with the query, Â“What are the motives for human conduc t?Â” (Schlick 1939, p. 36). In other words, responsibility characterizes potentiality. What I have examined in this work is the basis of any sense of social responsibility Â– that of human tendencies and motives related to relationships with others.
109 Can Economic Motivation be Moral Responsibility? As I noted in chapter three, on Amartya SenÂ’s view moral values have utility; the motivation for economic activity may be Â“the actual behavior of human beings [as] affected by ethical considerations, and influe ncing human conduct is a central aspect of ethicsÂ” (1986, p. ix). There is a sense of social achievement that marks the distinctions between efficiency, efficacy, and the good These concepts relate to the human motivation of how we ought to live Further, on SenÂ’s account there is a sense of an Â“ethics-related view of motivation.Â” The corporate ethos instigates the application of how production and exchange, as components of market relationships, develop patterns of interdependence (Sen, 1986, p.8). Economist Ne va R. Goodwin conc urs with his view. She states that we need to look further into the corporate mind Â– for its ethos Â– relating corporate responsibility to Â“b roader social interestsÂ” (2001, p. 271). In other words, Â“responsibility cannot be imposed entirely from the outside; if the goals of corporate responsibility are to be achieved, people in business Â– owners, managers, workers Â– must make some kind of moral commitment, acceptin g responsibility for their firmÂ’s impact on the worldÂ” (Goodwin 2001, pp. 270-71). This impact concerns human-well-being. SenÂ’s earlier work in a 1985 article, Â“Well-being, Agency, and Freedom,Â” illustrates his view of utility and his critique of the utilitarian conception of well-being Â– and whether this concept can be measured in terms of utility. He is careful to distinguish between the notions of well-being and the utility notion of being well off. The former notion reflects an integration of economic a nd social concerns, while the latter bears a singular economic concern. Moreover, the impor tance placed on rationality in matters pertaining to the consistency of choice and the maximization of self-interest for Sen has
110 both internal and external diffi culties of choice about how one ought to act in the market (1985). What is more, reciprocity between relational agents is a demand placed on choices about how we ought to act. This demand is an integration of economic and ethical considerations that motivates cor porate responsibility Â– inclusive of social responsibility Â– in the economic market system. On this view, the consideration of how we ought to act is an element of the motivation for social responsibility. The idea that Sen has in mind is the concept of Â“rational behaviorÂ” and how pe ople actually behave. In his words, human beings make Â“mistakes, experiment, get confusedÂ” (Sen, 1986, p.11), but duty is a priori moral consistency in our concerns towards othe rs. Moreover, Tibor Scitovsky and economists such as Amartya Sen, Albert O. Hirschman and John Oliver Wilson, also stress the importance of human values, in clusive of life expectancy, l iteracy, and human rights. For example, Hirschman looks to identifying hum an behavior with economic behavior and motivation in the productive processes of cor porations based on Â“the propensity toward self-interest or public morality Â” (1997, p. 184). In other words, he states that the espousal of self-interested markets to the exclusion of a sense of public morality results in the market system Â“undermin[ing] its own viabilityÂ” (1997, p. 187). There is a sense of promotion in SenÂ’s account Â– that of the value of human wellbeing that lacks full satisfac tion with an individualÂ’s own well-being, but instead requires a motivation to grant social values to the notions of both motive a nd utility. Whereas he sees motive as the foundation of agency approa ches and value as a ut ility factor of the nature of objects, there seems to be a synthesized approach to his view of an ethical market system (Sen, 1986, p. 40). Goodwin argues that a Â“positive corporate ethos
111 though essential, cannot be the only solutionÂ…it must be stimulated and reinforced by an environment in which firms will perceive their interests to coincide with broader social interestsÂ” (2001, p. 271). But, I am concerned wi th a further aspect of the corporation Â– and its ethos The traditional view of economic behavior, derived from the economic and philosophical work of Adam Smith in his Wealth of Nations is based on the belief that all parties to the economic system are self-interested and only beha ve as such. Further, selfinterest directs the economic system to its most efficient use of resources. However, I argue in concurrence with Smith regarding moral motives that corporations ought to consider contemporary views of moral motives of human well-being in the global market and seek to synthesize many differing economic market systems into a single perspective. Differing market systems have differing economic behaviors a nd differing self-interests, not only between these systems but also w ithin their respective markets. Thus, the corporate ethos ought to reflect the notion of social responsibility for human well-being based on corporate acts in the global marketplace (Kleinrichert 2006). Further, John Oliver WilsonÂ’s moral model is an integration of human values and economic behavior (1997, p.23). In other word s, there is an integration of economic behavior and human well-being that incorporates notions of values based on market preferences shaped by subjective considera tions of producers and consumers. Wilson suggests an alternative measurement of ec onomic behavior that encompasses three components related to Â“identifying the co mmonalities among various conceptions of justice and morality and identifying the condi tions that all must satisfyÂ” (1997, p. 24). First, economic evaluations must include his notion of social values Â– those Â“that shape
112 interpersonal relationships and the soci al externalities i nvolved.Â” Second, his consideration of shared values is reflective of what Â“all individuals in an economic system regard worthy of achievement.Â” Finally, he includes integrative values, or those Â“that integrate individual se lf-interest into the larger economic systemÂ” (Wilson, 1997, p. 24). This Smithian approach moves beyond stri ct adherence to a model that reflects economic distribution within a market system ; it synthesizes an i ndividual with their respective society in economic, social, poli tical, and ideological ways. This approach argues that the interdependen ce of economic behaviors of th e corporate decision makers ought to move from a singular view of self-int erest to a plural view of socioeconomic value-laden concerns. Certainly, consideration of this thesis bears importance in terms of relating economic development policies of multinationals to global enterprise. In this dissertation, I have used various economic theories to reflect the conditions for the meaning that I believe Â“corporate soci al responsibilityÂ” (CSR ) requires to validate the historical basis for saying that a corpor ation has social responsibilities as moral duties and because it is a member of so ciety. These duties are based on voluntary corporate initiatives, rather than on coercion by nongove rnmental organizations (NGOs) or governmental legislation. Although the Inte rnational Organization for Standardization (ISO) is a global organization of business entities from some 110 countries who voluntarily adopt standards of corporate ente rprise, many businesses have felt pressured, particularly regarding the ISO 14000 envi ronmental impact standards (Bruyn 2001, p. 291). Each of the following considerations support autonomous moral notions of corporate initiatives in the market system.
113 First, I have argued that there is a difference between Â“responsibilityÂ” and Â“accountability,Â” and that this distinction is critical to understanding why it matters to society that corporate action is based on collective motives to be socially responsible. Second, in this chapter I argue that being res ponsible to social con cerns is reflective of being a Â“going concern.Â” The definition of a valid corporation requi res that it have the potential and capacity to be a continuing, aut onomous entity comprised of shared goals of individual members, which compels both exis tence and perpetuity. These characteristics are the basis for moral responsib ility in relationships with ot hers and for the meaning of Â“corporate social responsibilityÂ” that I am advancing. Finally, I will argue that a corporationÂ’s fundamental nature is found in sustained economic relationships with others in a market system. These relationshi ps begin within a co rporation between its individual members, or staff. Then, corpor ate relationships deve lop with members of society, or as I have shown, its stakeholde rs. The broad definition of Â“stakeholdersÂ” includes a corporationÂ’s relationships with its community and environment, as well as its economic ties. These stakeholders are part of the market system, or what may be termed a particular community of interdependent entities seeking to individually sustain their stake in a corporationÂ’s existence. Corporate respons ibility is included in its purpose as a going concern that requires sustained, on-going, inte rdependent socio-economic relationships In other words, the purpose of a corporation is to be Â“sustainable.Â”
114 CSR Revisited: Communities The notion of corporate social responsibility is reform from within. Pure CSR is the development of corporate motives steeped in genuineness and authenticity. Its practice is an ethical matter of validity Â– as a socially legitimate act. In chapter one, I concurred with economist Leo RoginÂ’s assessment of the ro le of validity in economic theory and practice. I argued this sense of validity signi fies the legitimate intentions of practical corporate applications, and that validity is represented by noti ons of reliabili ty, integrity, or persistence. Further, in using the term Â“l egitimateÂ” to reflect corporate acts of validity, I am also conveying a sense of meaningfulne ss. In other words, there is purpose to corporate activity, but it is not singular in nature. Validity has the import of efficacy and value, two notions found in traditional ec onomic theory. Further, these notions of efficacy and value are determinations of both corporate and moral responsibility. Corporate social responsibility has been defined in a variety of ways, as I have shown in earlier chapters. With economic and polit ical science backgrounds, respectively, contemporary management scholars George A. Steiner and John F. Steiner, define corporate social responsibility broadly as: Â“the duty a corpor ation has to create wealth by using means that avoid harm to, protect, or e nhance societal assetsÂ” (Steiner et al 2003, p. 126). These assets are valued by indivi duals and corporations in society a priori to the social relationships imbedde d in corporate enterprise.
115 Ally-building and Corporate Social Responsibility I now consider how individuals wi thin corporations develop an intra -social purpose with or responsibility to others with whom they work through particular relationships of allybuilding Self-interest, as well as other-interest, are motives fo r ally-building. But, allybuilding is also the source of valid practice of developing relationshi ps with others in organizations. These relationships are based on the intrinsic value both individuals and corporations place on them. For exam ple, Jeffrey Pfeffer argues in Managing With Power: Politics and Influence in Organizations (1994) that establis hing ties to powerful others, and developing oneÂ’s position in th e network of communications and social relations in an organization, create s effective corporate endeavors. First, PfefferÂ’s notions related to sources of power require further definition. His notion of power is not portrayed as authoritaria n or self-serving, but ra ther as a source of effective ethical leadership that develops relational networks, intra -organizationally. Second, his notion of ally-building requires a dditional consideration in terms of how I have defined Â“responsibility.Â” For my purpos es, I am interested in developing a new model of moral corporate so cioeconomic enterprise based on PfefferÂ’s use of allybuilding. I will apply his model to the socially responsible vent ures of corporations using ally-building outside the organization. The effectiven ess of individualsÂ’ motives for decisions in an intra -organizational environment ma y be connected to corporate Â“intentionÂ” in referring to the organiza tionÂ’s mission as being Â“good,Â” or socially responsible. What I mean by a corporation being socia lly responsible is distinct from the notion of developing social ca pital. Social capital has b een defined as Â“a functional
116 feature of relations among social structures such as friends, community organizations, and governmentsÂ” (Kiron 1997, p. 204). Although a corporationÂ’s efforts in a community may result in social capital outcomes, I want to discern the motives of a corporation to be responsible to the communities in which it operates. These motives will necessarily be linked to the development of economic theory in such a way that the practice of corporate enterprise engenders Â“such concepts as trus t, social norms, and moral valuesÂ” (Kiron 1997, p. 207). The purpose of this analysis is based on a revisited notion of corporate social responsibility as a r eciprocal community relationship for ethical corporate practice. Therefore, I will advance a concern about how individuals in corporations may use an inter -organizational business practice in co mmunities to develop Â“corporate social responsibilityÂ” as a sustainable endeavor (Klein richert 2007). It would seem that the ability to exer cise influence through relationships with others in an organization and ge tting things done are the produc ts of Â“the consequences of [oneÂ’s] actions, measured against an objective standard of correctness.Â” However, Pfeffer disputes this view (1994, p. 144) He states that the conse quences of individual actions are inappropriate measurements of the effectiveness of an individual. Rather, he focuses on the motivation or intention, of the individual by l ooking at the respective capability of that manager or professional to solve probl ems. In other words, an individualÂ’s accomplishments ought to include the ties one has to others Â– particularly to powerful others, and the individualÂ’s fo rmal position in the organizati on. But, there is an implicit sense of Â“othernessÂ” in this view to devel op relationships based on the intention to be responsible to solve problems in an organi zation. An individualÂ’s formal position in an organization will itself be a source of respons ibility Â“because of what [it] implies about
117 an individualÂ’s ability to perform his or her job effec tivelyÂ” according to Pfeffer (1994, p. 142). This ability involves Â“performance,Â” or functioning, within the organization. Functioning within an organization may be lik ened to an Aristotelian notion of an individualÂ’s performance in the polis or Greek society, base d on voluntary actions. In other words, Â“we choose only what we belie ve might be attained through our own agencyÂ” (Aristotle, NE 1111b.25). What I mean by human c hoice is AristotleÂ’s sense of proairesis or moral choice based on ethical delib eration prior to an act of agency. Furthermore, an individualÂ’s development of an ethical practice, or functioning, in society is based on deliberative developmen t of character and re putation (Aristotle, 1105a.30, 1106a.20). The reputation of any type of agency is based on social approval, or praise versus blame. An indivi dualÂ’s capabilities to develop social approval, rather than reproach, are derived from early notions of individuals as Â“responsible agent[s]Â” who have the capacity to voluntarily develop ch aracter as found in AristotleÂ’s Book Three of his Nicomachean Ethics (1115a, 1-15; 1116a, 25-29). Moreov er, voluntary actions that may be considered noble, rather than disrep utable, on AristotleÂ’s account for example, are applicable to what I mean by reputation. Moreover, performance is an important sour ce of responsibility in that in PfefferÂ’s view, it Â“helps to build oneÂ’s formal au thority and reputati on [and] thus, position, reputation, and performance are interrelat edÂ” (1994, p.142). Moreover, the development of oneÂ’s reputation may be a value, or benefit, such that Â“reputations are a type of capital assetÂ” (Dasgupta 1997, p. 232). Therefore, th e development of oneÂ’s reputation is a responsibility to oneself and to others in creating something of value Â– such as trust in
118 relationships. I argue th at the processes of intra -relationships for th e individual in an organization should be applied to co rporate endeavors based on market inter relationships in communities. Pfeffer is concerned with relationships within organizati ons. In his view, individuals ought to be effectiv e, goal-oriented, and capable of developing a variety of relationships with others in the organization. But, what does he mean by Â“effective?Â” First, an individual, Â“to be effective, [will] also need to know how to develop sources of power,Â” according to Pfeffer (1994, p.71). In other words, individuals within an organization cannot work in isolation, but will need to use Â“tools,Â” or skills, in working with other individuals in the organization. Second, th ese skills involve developing a command of something Â– in the case of an organization this would be Â“resources.Â” Pfeffer defines a resource as, Â“anything pe rceived to be valuable Â– from building contracts to press exposure to contro l over systems and analysisÂ” (1994, p. 87). Moreover, this control over resources is the re sult of engaging in interrelationships with others in the organization. These relationships will dictate how an individual gains access to these elements, or resources, either by the individual alone or thr ough a particular work unit or department. These relationships are resources. One of the most valuable and effective mechanisms for being responsible for developing moral business practice is through the social ties we have to others Therefore, in using PfefferÂ’s notions of internal ally-building, I argue that external ties to community-others are valid moral motives for responsible corpor ate initiatives. However, in order to establish ties to ot hers in the organization one must be an individual who functions well in their role based on Â“personal competence,Â” as described
119 by Samuel A. Culbert, a clinical psychologi st who researches management issues (1996, p. 105). Personal competence is Â“the core ulterior motive for the self-interested perceptions people haveÂ” but th is translates to not only notions of self-respect and performing responsibly, but also to Â“want[ing] key others to view them as performing competentlyÂ” according to Culbert (1996, p. 105). This concept of competence entails moral motives, or Â“good intentions,Â” whic h are based on duty and responsibility to oneself and others. Further, he st ates one must be able to have a sense of Â“the view of the world that the other person actually livesÂ” (1996, p. 14). Hence, an individual needs to be able to identify the needs of those who would be probable sources of support and determine the likely responsibilities in buildi ng an ally network with those individuals. Additionally, decisions within an orga nization, more often than not, require support from others in a reci procating social network in order to be implemented and perceived as effective. This intra -organizational model may be applied to a corporationÂ’s inter -organizational relationships in such a wa y as to illustrate both the corporationÂ’s competence and its ability to view the world as it actually is. These characteristics build a source of potential through ally -building with other market agents based on working with community-others. In other words, rather th an being engaged in market endeavors in isolation, reciprocity may be, and is, deve loped through social ti es. Moreover, these social ties are similar to R. Edward Freem anÂ’s stakeholder model (1994). I suggest that corporate socioeconomic ties will be sustai ned based on reciprocity between market agents in a voluntary corporate community involvement model. What's more, as Pfeffer points out, the consequences of particular managerial decisions and actions are rarely known immedi ately, and the Â“responsibility for decisions
120 is often collectively sharedÂ” in corporate relationships (1994, p. 144). Further, it is impossible to predetermine or foresee the futu re outcomes of any decision or action, thus the motives for an individualÂ’s decisions must bear the determination of what constitutes a right action. As a result, th ese motives impact oneÂ’s re putation, which is honed based on how oneÂ’s intentions for decisions are evaluated. OneÂ’s intentions bear on what Pfeffer is concerned with in an organization Â– reliability. This is a long-term view of how an individual solves problems, rather than Â“correctness as a measure of performanceÂ” (1994, p. 144-5). Thus, how an individual CE O perceives her reputation within an organization may shape both her motive to esta blish ties to the community and her view of how she may establish her companyÂ’s inter -organizational sources of responsibility to the community relationships. For example, Pfeffer lists a number of im portant characteristics of individuals who have developed the reputation for the ca pacity to be effective as responsible individuals in an organizati on, with which I concur and w ould further incorporate in a revisited notion of corporate social re sponsibility to community relationships: 1) energy, endurance, and physical stamina; 2) the ability to focus oneÂ’s ener gy and to avoid wasted effort; 3) sensitivity, which makes it possibl e to read and understand others; 4) flexibility, particularly with respect to selecting various means in order to achieve oneÂ’s goals; 5) the willingness to engage, when nece ssary, in conflict a nd confrontation; 6) the ability to submerge oneÂ’s ego, at least temporarily Â– to be a good subordinate or team player. (1994, p. 166) These characteristics develop oneÂ’s reputati on, thereby gaining what Pfeffer views as social approval (1994, p. 166). Furthermore, Freeman, Jessica Pierce, and Richard Dodd point to the qualitative aspects of devel oping oneÂ’s reputation Â– Â“by asking the question,
121 Â‘What do you stand for?Â’Â” (2006, p. 613) This question has benefits for an organization because the response not only develops a perception in term s of validity and effectiveness, but builds allies both internally (employees of all strata begin to believe in these values) and externa lly (suppliers and consumers seek businesses based on integrity). The easy response to this question would include an ethical statement such as Â“honesty in all transactionsÂ” or Â“commitment to my stakeholders.Â” However, what many would deem as unethical responses, such as Â“g reed at the expense of my consumersÂ” and Â“malice towards anyone who attempts to enter my market shareÂ” could just as easily satisfy this question. Therefore, a rephrasi ng of this question mi ght look something like this: Â“What moral stance do you suggest in corporate relationships?Â” OneÂ’s ability to develop what Pfeffer re fers to as Â“coalitions of supportÂ” built on trust and loyalty in organizations is crucial to navigating what he refers to as Â“large interdependent, and complex systemsÂ” known as organizations (1994, p. 101). Hence, the development of allies is based on oneÂ’s re putation, oneÂ’s cap ability to get things done, and thereby social approval in the form of support for oneÂ’s efforts. In fact, the community in which a corporati on operates also affords the opportunity to develop, or to further hone, corporate social responsibility thro ugh external ally-bu ilding, or what I mean by corporate community involvement through community ties. The development of community allies may result in what I have mentioned earlier Â– social capital. Social capital of corporate community involvement is a determinant of economic well-being: it fosters reciprocity and efficiency it develops networks of social interaction, trust, and reputation it creates processes for collective action to solve social problems (Putnam 1997, p. 212)
122 Social capital can be a major element in th e success of a corporat ion, and the lack of social capital can certainly increase the negative effects of unexpected adverse occurrences. I use the example Pfeffer provides of the troubled years of labor unrest at Nissan in its early founding period in Japan. Taichi Mi noura, then-president of Nissan, secured a financial advisor, Katsuhi Kawamata, from the Industrial Bank of Japan to assist in developing a process of ally-building. Kawa mata became adept at building networks outside of NissanÂ’s organization, as well as internally among the managers of the organization. His development of banking and business ties between Nissan and IBJ, the government of Japan, and other manufacturers and automobile companies, garnered his reputation internally and externally as developing successful strategic planning capabilities. Further, KawamataÂ’s pr ocess was based on Â“building long-term relationshipsÂ” by developing allies into coaliti ons of loyal, suppor tive networks within and outside the organization according to Pfeffer (1994, pp.101-4). This model of NissanÂ’s external ties within the community of economic stakeholders provides my inspiration and groundwork for developi ng a framework for Â“corporate social responsibilityÂ” as corporate community involvement through ally -building. Ethical Considerations of Corporate Community Involvement Is there a model for thinking about others in the community that fits with PfefferÂ’s account of effectiveness (Pfeffer 1994)? On his account, as a cor porate extension of ethical concern it may be possible to devel op a diffuse, generalized obligation to the wellbeing of others through community efforts. But, what needs to be determined is whether a
123 more meaningful qualitative reciprocity be tween corporations and the communities in which they operate can be developed. And, if so, how does this relationship reflect a corporate motive to be socially responsible and involved in communities. The concept of Â“involvementÂ” I am interested in requires several factors: interest in and the intention for active, participative commitments development of reciprocal socioeconomic ties fostering and strengthening stakeholder relationships application of consistent and continuous acts of coordination patience, tolerance and persistence In other words, a corporation co uld develop a scenario akin to corporate social responsibility but distinct in its formulation th rough ally-building based on reciprocity and exchange of responsibilities in a commun ity, rather than on the conventional notion of paternal CSR-type responsibility to some particular stakeholder in society. The conventional notion of CSR may result in ally-building, and therefore serve as a source of validity for corporate social responsibility. However, I suggest that developing allies based on more than direct economic ties in a stakeholder model creates a revised model of Â“corporate social re sponsibilityÂ” based on the meaning of responsibility developed in th is dissertation. In fact, my re-formulation of the CSR model includes various obligations to so ciety based on the socioeconomic ties to stakeholders in the market, and particularly in the community, and on ethical concerns for others rather than merely Â“responsivenessÂ” to issues (Freeman et al 1988, p. 89-90). These ties, as I have argued, are based on the motive of corporate community involvement. Â“Corporate community involvementÂ” is a momentum. It is an active, participatory commitment based on corporat e concern for community well-being. It is
124 self and other-interested. As has been adva nced, this involvement is developed through corporate-community ally-building. Moreover, a further distinction is evident between the uses of external allies as strategic econom ic ties to resources a nd the ethical corporate strategies that bear on the qualitative aspect s of ally-building. I would like to argue that economics, as it has emerged, can be made more productive by paying greater and more explicit attention to the ethical considerations that sh ape human behavior and judgment. (Sen 2000, p. 9) The ethical concerns of community wellbeing underpin motives for CSR. These concerns apply to developing sources of ally-building inter-organizationally in communities. In PfefferÂ’s account, Â“coalitions of supportÂ” are requisite for individuals to develop effectiveness in th eir roles in an organizati on (1994, p. 101). According to Pfeffer Â“we are known by the issues we are associated with, and by what happens to those issues when they are decidedÂ” ( 1994, p. 140). Moreover, I argue that we may attribute this thinking to corporate enterprise in communities. PfefferÂ’s earlier work with Gerald Salancik (Pfeffer and Salancik, 1978) points to organizational effectiveness as a sociopolitical concern. In this sense, cor porations socially cu ltivate their position, reputation, and performance based on commun ity perceptions of ethical practice in corporate community involvement. Corporate social responsibility is a process of cultivation and reciprocation. Pfeffer uses the notions of Â“r eciprocityÂ” and Â“exchangeÂ” to further define interpersonal relationships in terms of loya lty. These notions underscore qualitative exampl es of moral implications for relationship building in corporate Â“communiti es.Â” In other words, Â“What distinguishes the deve lopment of allies through reciproc ityÂ…[is] making sure they feel important and secureÂ” (1994, p. 106 & 109). This no tion of reciprocity in the use of ally-
125 building in communities, which follows along th e lines of corporate social responsibility, carries ethical concern related to re spect for others, a Kantian concept. Moreover, Kantian perspectiv es of human acts includes th e notion of cultivation Â– that is both participative and cooperative in KantÂ’s referenc es to duty and virtue found in his second expression of the categor ical imperative (Kant [1797b] 1994, pp. 50-1 and 147). The term cultivation also seems to be imbued with something else Â– a Platonic moral, perhaps even an Aristotelian, qualita tive sense such as Â“concern.Â” Aristotle may be translated in his second chapter of Politics Book VII, to read that individuals Â“cultivateÂ” their characters and minds for good (1323b2). Further, Aristotle likened this cultivation of character to the persona of the city-state (1323 b34-35), which I am attributing to what we regard as the cultu re of a corporation and the corporationÂ’s purpose. Moreover, he equated the city-state to a Â“communityÂ” with the same defining characteristic I have used for Â“corporationÂ” Â– they are both relational. Nevertheless, cultivation may also establis h a metaphorical notion of s eeding social, political, or economic ties to others in the nurturing of relationships between corporations and the communities in which they operate. In ot her words, cultivation involves process. It is this methodology of nurturing within the cultivation of relationshi ps that must be developed from a motivation, or particular intention, with sincerity as referred to in KantÂ’s formulation of moral decision-making and prac tice. Kantian perspectives of human acts include a notion of cultivation Â– in his refe rences to morality and duty that is both participative and cooperative. Th is reciprocity is reflective of KantÂ’s second expression of the categorical impe rative ([1797b] 1994, pp. 50-1).
126 PfefferÂ’s notion Â– the cultivation of responsibility through ally-building intra organizationally Â– if applied to the community outside the or ganization could serve as the motivation of corporations to solve social problems through the cultivation of allies and developing a strategic position, and reputation, based on integr ity and the ability to get things done Â– in other words, responsibility to others as well as to the organization. I argue that an extension of PfefferÂ’s model of intrarelationship ally-building provides the framework for a revisited notion of co rporate social responsibility using interrelationship ties to valuable and valued others in co mmunities. These relationships are based on voluntary corporate initiatives th at include notions of legitimacy and social concern for the well-being of others. In the next section I will explicate the notion of corporate community involvement as an intentional corporat e social responsibility for sustainable corporate practice in communities in which corporations have a stakeholder-supplier relationship. In using PfefferÂ’s arguments I have formulated a model, corporate community involvement that is related to conventional CSR. Corporate community practice illustrates a transition from individual to collective inter-organizational performance in the community and is formulated as a mora l practice based on reci procity. In the next section of this chapter, I w ill develop a revised model of co rporate social responsibility that integrates its conventiona l features, the meaning of re sponsibility I have argued in this context, and the notion of corporate community involvement as sustainability.
127 Corporate Social Responsibility and Sustainability I have argued that Â“cultivati onÂ” is an ethics-laden term related to reciprocity and relationships. As I have shown thus far in this chapter, there is basis for this argument in moral, managerial, and economic literature. Th ese starting points are theories. It is important to these considerati ons that I determine how these theories may be applied to the meaning of the expression of corporate social responsibility and its practice. However, in this section I w ill first explicate the concept of Â“sustainability.Â” Second, I will expand the idea of sustainability as the cultivation of reciprocal relationships and I will develop what corporate social responsibil ity means as practiced in rural developing communities. In the following chapter, I will illustrate a case study of Starbucks Coffee Company and its practice of sustainability as a corporate social responsibility to the communities in which this company operates. Sustainability is hot Â– not in the ge neral sense what we think of as global warming, although it could play a role in this re spect but in the sens e that its meaning is already always situated contextually, rather than theoretically. A conceptual basis for sustainability can be articulated in mora l terms Â– in other wo rds, the notion of sustainability is prescriptive, universal, and practical in the same ways that we often ascribe the necessary elements of moral theo ries. I argue, with my emphasis on the social aspects of relational reciprocity, that sustainability is a corpor ate social responsibility. On this basis, my project in this dissertation is twofold Â– it is both reflective of the meanings we ascribe to corporate social responsibility and it is determining of the meaning of Â“the task of sustainabilityÂ” (Sen 2001, p. xxii). Firs t, the meaning of sustainability varies across disciplines. There are economic, environmental, and social theories regarding what
128 constitutes a notion of sustainable intenti ons. Further, within each of these broad categories are particular Â“subh eadingsÂ” of conceptual meanings. For example, economic theories of sustainability include corporat e, institutional, and governmental concerns: An economically sustainable system must be able to produce goods and services on a continuing basis, to maintain manag eable levels of government and external debt, and to avoid extrem e sectoral imbalances that damage agricultural or industrial production. (Harri s and Goodwin 2001, p. xxix) However, environmental and social th eories will also include these same concerns. Therefore, for my purposes in this se ction I will concentrate specifically on the corporate responsibilities that relate to su stainability using John ElkingtonÂ’s term, and what is commonly referred to in business literature, as the triple bottom line components of economic, social, and environmental m easurements of corporate decision-makers (Elkington 2006, p. 571). These three elements ar e integrated strategi c, or intentional, concerns of corporations that commit to be ing Â“sustainableÂ” business enterprises. For example, Elkington states: Today we think in terms of a Â“triple bottom line,Â” focusing on economic prosperity, environmental quality, and Â– the element which business had preferred to overlook Â– social justice. (2006, p. 572) A Â“sustainableÂ” corporate endeavor is defined as more than the Â“greening,Â” or the environmental impact reduction, of a corpor ationÂ’s responsibility to its community. According to Elkington, the corporation ha s a social responsibility to develop its practices based on strategic intentions to be a sustainable enterprise and to develop sustainable business practices that cause no harm to any stakeholders. This motivation will entail considerations of not only the purpose of a corporationÂ’s existence as an Â“going concern,Â” but also what Elkington refers to as its economic, natural, and human
129 capital (2006, p. 573). In fact, this attribution of social respon sibility treats the concept of motivation no differently than Milton Friedman Â’s directive to corporate endeavors in his New York Times Magazine statement Â– Â“there is one and onl y one social responsibility of business Â– to use its resources and engage in activities designed to increase its profitsÂ” (1970). We could easily argue that this view of corporate ente rprise recognizes businesses as having responsibilities to others in dete rmining the intentions of corporate market enterprise, such as employment, production, sa les, and distribution ac tivities. Therefore, why would one other area of st akeholder concern be any less a Â“responsibilityÂ” when community efforts are as equally social as any of these already recognized responsibilities of corpor ations? Granted, quantifying the outcomes of social responsibilities, including sustainability, requires different sorts of assessments for success. But, there are a number of accepte d measurement tools, such as the Human Development Index (HDI) that may be suitab le for corporate pract itioners (England 1997, pp. 373-402). While it is not my purpose in this chapter to explic ate the measurement tools for determining the triple bottom line components, it is important to understand what these three factors mean in order to get at the meaning of sustainability for the corporation and its community. All corporations measure their suc cesses. The standard form of these measurements requires an accounting Â– a fo rm of accountability Â– of the results or outcomes of a businessÂ’ market endeavors. In other words, in a corporationÂ’s annual financial statements this account ing includes economic capital in the form of the Â“total value of [its] assets minus [its] liabilities,Â” or the physical capital (buildings and contents)
130 and financial capital owned less any debt owed (Elkington 2006, p. 573). Some forms of accounting for costs to the organization for its ma rket practices begin to take shape in the form of external costs. However, the ex ternal costs of doing business, such as Â“externalitiesÂ” of e nvironmental and social costs, have not previously been fully accounted for until ElkingtonÂ’s formulation of the concept of th e triple bottom line (Elkington 2006, p. 575). Further, contempor ary concerns over valuing human and intellectual capital are beginning to be measured in terms of staff experience, skills, and education as well. These latter costs are refl ected as natural capital and social capital. Natural capital may be viewed as havi ng two forms according to Elkington: (1) Â“critical natural capital,Â” those elements of th e natural environment that are Â“essential to the maintenance of life and the ecosystem inte grity,Â” and (2) Â“renewable, replaceable, or substitutable naturalÂ” resources that can be replenished throug h breeding, relocation, repair, or replacement (2006, p. 576). These inte rests in the concept of Â“sustainabilityÂ” include Â“the issue of time,Â” or wh at thinking that follows KantÂ’s Critique of Practical Reason would consider as an extension of thought into practice (Kant  1996, p. 162). In this respect, I am using the meaning of strong sustainability Â– in which Â“some elements of natural capital are considered critical and not readily substitutable by human-made capitalÂ” in the l ong-term basis of time Â“in phys ical, not economic, termsÂ” (Munda 2001, p. 20). This definition is more than what has been referred to as weak sustainability or merely sustainable income, as a short term strategy of corporate initiatives. Rather, strong sustai nability Â“requires maintaining the stock of natural capitalÂ” such that there is a corporate responsib ility to Â“argue for the existence of a
131 complementary relationship between natura l resources and produced capitalÂ” (Serafy 2001, p. 34). Therefore, a comprehensive definition of environmental sustainability includes a system that: Â…must maintain a stable resource base, avoiding overexploita tion of renewable resource systems or environmental si nk functions and depleting nonrenewable resources only to the extent that invest ment is made in adequate substitutes. (Harris and Goodwin 2001, p. xxix) Further, the definition of socioeconomic su stainability is a f actor in an economic perspective of Â“social integr ation,Â” which provides that: Â…the process of examining the patterns of human relations an d values that bind people together in time and place and that define their life opportunities. (Ghai and Alcantara 2001, p. 248) Accordingly, in sustainability literature th e moral concepts important to the meaning of sustainability are the notions of prospective motives and the intentionality of corporate decision-making, rather than reflective or Â“damage-controlÂ” mindsets. Although much of this literature focuses on accounting for cor porate Â“footprintsÂ” in the community as a corporate social responsibilit y, my argument is that th is focus more often means Â“accountability,Â” rather than forward-thinking potentiality toward what I believe is Â“corporate social responsibility.Â” For exampl e, there is a sense of taking care of the environment in terms of admi nistering some aspect of land-use or water use Â– managing its direction and changes. An example is Ray Anderson, CEO of Interface, Inc. whose decree regarding human duty related only to th e biosphere, which: Â“as responsible people we are required to thinkÂ” about (Anders on, Interface). Specifica lly, I argue that the practice of cultivation is adversarial. We are Â“p lunderersÂ” of a nature that is filled with
132 self-organizing systems, such as a forest. In contrast, sustainability is based on the responsibility to maintain, st abilize, and replenish the biosocio-diversity of the community Â– with the motive of responsibil ity to the integration of ecosystem and socioeconomic well-being of the community. Reciprocal Relationships and Communities Many ways of thinking about the world and our societies look to a human/nature unity and a reciprocal relationship. These concep tual concerns are represented in both individual and collective intentions to be responsible to the communities in which we reside. For example, much can be found in I ndian thought that minimizes Â“othernessÂ” and shows Â“a strong aversion to representing the land as natural surroundings existing apart from its inhabitantsÂ” (Nakamura 1974, p. 130) Zen Buddhism and particular sects such as Hua-yen espouse a theory of mutual interdependence, pene tration, and identification of all things in harmonious interrelationships Â– nature and self are one (Nakamura 1974, pp. 278-9). Further, Â“man as a part of nature or the universeÂ” was not in opposition to nature, nor nature in opposition to human existence, and thus Â“seldom thought nature needed to be overcome by experimental manipulation in order to master her ways or lawsÂ” (Nakamura 1974, p. 281). In other words, philos opher Hajime Nakamura states that there is an element of ethical reciprocity between nature and human beings. A further view found in Japanese philosophical traditions incorporates this same harmonious, unifying relationship between human ac tivity and nature, and provide s honorific expressions for elements of nature. Human endeavors, in orde r to be ethical, ought to be reciprocally benevolent in the consideration of the intrinsic value of the natural world and its life
133 forms (Nakamura 1974, pp. 360-1). Finally, I conceive sustainable corporate responsibility in terms of how the intentions of a corporati on develop both natural capital for cultivation and social capital for farmers (Kleinrichert 2006). What about the social aspects of sustai nability? Elkington refe rs to sustainable corporate endeavors as inclusiv e of social capital Â– human ca pital as comprised of public health, skills, and education (2006, p. 578) Â– or what Sen refers to as human capability (2001, p. xxii). Further, political scientist Jonathan Harris and economist Neva Goodwin define sustainability as an integrative approach for corpor ate thinking in terms of the Â“possibilities for a different kind of [econom ic] development, one that would integrate the goals of economic prosperity, social ju stice, and healthy ecosystemsÂ” (2001, p. xxvii). They look to a socially sustainable system th at is based on responsib ilities inclusive of opportunity, social services, health care, e ducation and skill development, gender and political equity, and community participat ion in decision-making about the community (Harris and Goodwin 2001, p. xxix). In other words, sustainability is the potentiality for corporate endeavors in social re sponsibility to communities. Further, Harris and Goodwin define the so cial dimension of sustainable corporate and social responsibility as Â“progress toward enabling all human beings to satisfy their essential needs, to achieve a reasonable level of comfort, to live lives of meaning and interest, and to share in oppor tunities for health and educat ionÂ” (2001, p. xxvii). This is also reflected in the definition of sustaina ble development in social, governmental, and corporate endeavors by the World Commissi on on Environment and Development (1987) as the Â“development which meets the needs of the present without compromising the
134 ability of future generations to meet thei r own needsÂ” (quoted in Harris and Goodwin 2001, p. xxix). In chapter three I argued that the role of corporations in being responsible to social concerns as a concept and as a prac tice was always already present in economic theory Â– beginning with the ancient thinkers passing through early modern thinkers such as Adam Smith and Jean Jacques Rousseau and even in the work of traditional twentieth century economists such as Milton Friedm an and John Kenneth Galbraith. I argued earlier in this chapter that Â“corporate social responsibilityÂ” entailed Â“sustainabilityÂ” given the definition of a corporati on and the meaning of social concerns implicit in economic theory. This sense of sustainability is a c oncept that requires an organization to be a continuous nurturer of both the corporationÂ’s and societyÂ’s well-being as its duty to relationships that are inherently reciprocal, and thereby related to moral responsibilities. While sustainability has been a topic of so cial welfare and environmental public policy literature, I am particularly interested in what it means for Â“d eveloping countries.Â” Considered within a global context, so cial responsibility therefore takes on immediate practical and political impor tance for an international business community whose operations are co nditioned on continued globalization. (UNCTAD 1999, p. 355) In this dissertation I have considered a va riety of Â“developingÂ” concepts Â– theories and market systems, corporate responsibilities and endeavors, profit, moral concerns and motivations, and ally-building and relationships. While I have focused on the specific economic theories of corporate enterprise in Western market systems, rather than those aspects related to public policy and social or nongovernmental agency organizations, I
135 now turn to what sustainability means to developing rural agricultural enterprises in economically emerging non-Western countries. Cultivation as Sustainability The idea of cultivation is imbued with Â“c oncern.Â” This notion, cu ltivation, involves a process, yet it also seems to involve qual itative nurturance based on aspects of care, competence, and fruition. Cultivation is both a concept and a practice of nurturance Â– of oneself and others. It bears so cial, political, or economic imp lications. But, there is more Â– it serves as a simile in tying others in to the nurturing of relationships, as in a community. Some sort of intention, based on th e concept of cultivation, is inherent in the practice of cultivation. When we think of cultivation as a practice, the notion of Â“sustainabilityÂ” comes to mind. Agricultural cultivation involves the relationship between the human act of seeding and growing ve getation, or land-cover. The practice of agriculture is directly impacted by the process of relationships as well, which would imply some sort of attentiveness to human acts, choices regardi ng cultivation and land-use, and responses to sustainability. Agriculture is a human enterprise of cultivation, in other words land-use through direct human management of soil a nd planting vegetation, based on concern for human sustenance. This enterprise involves changing the landscape Â– land, water, and vegetation Â– as well as the life form s dependent on the landscape. My concern involves corporate choices re garding agricultural sustainability as a corporate social responsibility in devel oping countries. The literature regarding agricultural enterprise and hu man choices of crop cultivatio n are based on considerations
136 of food crops and the economic value for ot her land-use changes. However, concerns over sustenance are often seconda ry in terms of responses to non-food crop land-use, the clearing of tropical forests, and the absen ce of concern for sustainable land-use. There have been various interdiscip linary studies and models regarding agricultural land-use based on bi ological, sociological, poli tical, and economic concerns. Some show that both a pure market economy and a pure command economy suffer from procedural and material drawbacks as in stitutional settings for the satisfaction of needs. (Gough 1997, p. 33) Land use is a reciprocal element of human ac tivity and has been absent from much of the economic analysis of sustainability Â– not spec ifically an oversight, but a reflection of the segregation of theoretical aspects. My argument has been concerned with interdisciplinary arguments regarding cor porate motives that have inherent moral implications for social responsibility to communities. Moreover, paraphrasing philosopher Gilbert Ryle, there are inter-theory queries that are not truly scientific, nor social, political, nor economic Â– rather, these are philosophic al questions regarding the human/nature interplay (1998, p. 13). He states that only by philosophi cal inquiry are we able to determine rights and obligations w ithin any given relationship (Ryle 1998, p. 5). Moreover, corporations are capable of be ing responsible to communities for their activities, including th eir human/nature relationship. For Kant, responsibility extends to rational others in the world based on filial relationships found in humanity (Kant [1797b] 1994, pp. 127-8 and 134-5). This relationship is no t a short-term endeavor, but rather one built on consistency with the moral law to treat all humankind with respect, including sustenance for human life, in KantÂ’s sec ond formulation of the categorical imperative
137 (Kant  pp. 46-7). He also examined the cultivation of human capacities, rational choice, and morality (Kant [1797b] 1994, pp. 50-1). Perhaps Ryle has pointed us in this direction as well: Â…a deadly rivalry between what economi sts said about motives and policies of human beings and what ordina ry people said about the motives and policies of the people with whom they lived Â– and it was the latter story that seemed doomed to be condemned. (1998, p. 69) My concern is to clarify the argument that su stainability is recipr ocity, a relationship of corporate responsibility to the other, the community, with human interaction operating between the two. In this chap ter I have considered and ar gued that the measurement of corporate legitimacy is found in the inherent responsibility of a corporation to be moral. Corporations are social entities with moral requirements to practice what promotes the cultivation of the good of human capacities based on both corporate self-interest and other-interest. Furthermore, corporate practi ce entails more than at tention to biosphere footprints; corporate practice also requires at tention to footprints in the communities in which their corporate endeavors tread. Corpor ate attentiveness to both the biosphere and the sociosphere is based on su stained reciprocal relationships in communities. And, as such, any human action either individually or collectively in corporations, because it is particular rational behavior, is imbedded w ith moral implications, including corporate responsibility to society to advance sustainability. In ot her words, these intentions cultivate corporate community responsibility.
138 Case Study Starbucks Coffee Company Responsibility means the social, environmental, and economic benefits we provide to the communities where we operate. (Dennis Macray, Director of Business Practices, Starbucks Coffee Company, 2007) Starbucks Coffee Company advances a voluntar y corporate initiative of private-sector social responsibility to society. The Starbuc ks corporate strategy is an integration of stakeholder concerns. For example, the St arbucks Mission Statement has six guiding principles that affirm the moral aspects of relationships, inclusive of respect, dignity, diversity, excellence, sati sfaction, and community, and guided by those principles, Howard Schultz, Chairman of Starbucks Coffee Company, addressed himself to the consumer market interest in portable, good-tastin g coffee drinks. Although one of his motives is to provide the best, aesthetically -pleasing coffee to the market, his original corporate mission was based on multi-dimensional market relationships. For example, StarbucksÂ’ enterprise is also a growing agri cultural project. Starbuc ks builds relationship alliances not only within the communities in which they operate stores, but within the communities in which they have developed ties to independent suppliers of coffee beans. These communities are tradition-laden agricultural societies comprised of interdependent relationships. Starbucks envi sions its going concern as a relation-based entity in respecting all of its stakeholde r relationships, rather than su ccumbing to the lure of the
139 short-term outcomes of its enterprise. SchultzÂ’ mission as a corporate le ader is to develop corporate responsibility toward furthering the integration of social, environmental, and economic values in communities as a tradit ion-laden, sustainable corporate legacy (Starbucks, Â“Company Fact SheetÂ” 2006). This perspective is a revised concept of traditional Â“corporate social responsibilityÂ” as I have defined it earlier in this dissertation. In other words, StarbucksÂ’ business pract ices are designed to foster business sustainability. In this case study, I will anal yze the Starbucks model of sustainable corporate endeavors. Starbucks, as a corporate entity, embr aces the notion of Â“corporate social responsibilityÂ” with its stakeholders in each as pect of its market enterprise, including the companyÂ’s purchases of their primary resource, coffee beans, from small landholderfarmers in Asian/Pacific, West African, and Latin American rural and developing economic regions (Starbucks, Â“El Mn del Ca f;Â” Kleinrichert 2006). Corporate social responsibility means analyzing the impact of corporate Â“foot printsÂ” left by corporate endeavors because footprints always have an impact. But, SchultzÂ’ direction goes further than Â“traditionalÂ” concepts of CSR Â– the companyÂ’s mission is to be responsible to others, in this order: for the social, the e nvironmental, and the economic footprints of StarbucksÂ’ impact in all communities in which they have a presence. Economic Footprints and Responsibilities With reported net revenues of $7.8 billion, up 22% from the prior fiscal year per Starbucks Annual Report 2006, this organizatio n has developed success in just over 35 years as Â“the leading retailer, roaster and brand specialty co ffee in the worldÂ” (Schultz,
140 2005). In other words, though the Starbucks Mission Statement Guiding Principles primarily stipulate the socioeconomic guide lines for the corporationÂ’s decision-making, Starbucks has met the mandate of its last guideline which states: Â“Recognize that profitability is essential to our future succe ssÂ” (2007). In the U.S. alone, the company has almost 5,700 company-operated coffeehouses and 3,200 licensed locations, plus international sites in 36 countries. Starbucks produces and sells over 30 formulations of coffees, various teas, and an assortment of other related beverages, as well as branded products merchandised in their caf-style st ores (Starbucks, Â“Company Fact SheetÂ” 2006). In just a yearÂ’s time, from 2003 to 2004, StarbucksÂ’ purchases of coffee beans from alliances with small planting coffee fa rmer networks amounted to 14.5% of their total purchases and rose from 13.5 milli on pounds to 43.5 million, surpassing their goal of 30 million for the year (Starbucks Ke y Performance Indicators Summary 2005). Schultz built the company from a Sea ttle coffee shop enterprise, using high quality coffee beans to brew individual cups of coffee into a successf ul corporation with worldwide distribution of brewed products, w ith its growth based on balanced, ethical corporate endeavors inclusive of comm unity enhancements. Schultz states, We believe our growth and success are the result of our unw avering commitment to offer the highest-quality coffee and an exceptional customer experience while conducting our business in ways that pr oduce social, environmental and economic benefits for the communities in which we do business. (2005) Whether SchultzÂ’ motivation is more or less than traditional views of corporate social responsibility for its own sa ke, rather than a tool or commodity to further the effectiveness of his leadership and market position, this con cern will not be pursued for the purpose of this study. A key element of the corporationÂ’s perspective of its role in
141 society is a commitment Â– it is responsibility to communities as an active, participative, and relational partner. Starbucks does not take its role to be one of interference, nor of Â“bandwagonÂ” jumping. In other words, Macray describes this Â“Starbucks effectÂ” as a Â“hand-in-handÂ” involvement (2007). Further, th e corporationÂ’s precepts assert the model of sustainability as both a concept and a prac tice of socioeconomic enterprise, which is distinct from altruistic or philanthropic financial provisions. In other words, while altruism and philanthropy are valuable corpor ate practices in which Starbucks engages, neither is defined as the essence of sustai nable corporate respons ibility. Rather, these activities are an extension of a corporate bene volent response to the consequence of some particular climatic event or perc eived social need (Macray 2007). My analysis of corporate re sponsibility in this disser tation has been theoretical, though Â“corporate social responsibilityÂ” is understood as it is in economic and organizational theory. But, my purpose is also to develop an analysis of this meaning in corporate practice as an applied ethical concern. In this cas e study, I focus on the economic impact of sustainability on co ffee bean farming. Although Starbucks holds itself accountable to both themselves and thei r stakeholders, and the company uses both internal and external auditing in order to develop measures of financial reporting and its transparency, I will not analyze the accounting of the companyÂ’s commitments, other than to state what seems to be important to understanding the contex ts of StarbucksÂ’ CSR efforts. This case study will focus on the basic economic aspects of Starbucks Coffee Company as groundwork to the companyÂ’s mi ssion for sustaining the interdependent concerns of a business founded on relationships What is important to consider is the moral implication of ally-building in communities as part of a Â“new modelÂ” of corporate
142 social responsibility Â– that of sustainability in a co mpanyÂ’s mission of corporate community involvement (Kleinrichert 2007). Environmental Footprints and Responsibilities The collaborative ally-building exemplif ied in StarbucksÂ’ Environmental Mission Statement is based on a commitment to the development of understanding and measuring the companyÂ’s impacts on the environmen t (2007). While 81% of the companyÂ’s worldwide green house gas emissions (GHG) in to the atmosphere are generated as a result of retail store use of electricity, Star bucks has developed what they call Â“climate change mitigation strategiesÂ” to address the environmental footprints the cafs have on the communities in which they are lo cated (Starbucks 2006 Annual Report). The environmental effect of coffee roasting acc ounts for 18% of GHG, which adds to the corporationÂ’s admitted overall potential to harm the earthÂ’s biosphere, including climate change. Obvious in the following statement is th e role sustainability plays in StarbucksÂ’ environmental commitment. We agree with the consensus of the scie ntific community that climate change could pose an enormous threat to the fu ture of our planetÂ…Climatic conditions influence the yield and quality of coff ee crops. We are concerned that climate change could threaten the production of high-quality coffee crops and ultimately impact our business. (2006 Annual Report) Collaborative action is one source of re mediation. Beginning in 1998, Starbucks, in partnership with Conservation Internati onal, made a commitment to Â“support farmers of shade grown coffee while also protecting tr opical forestsÂ” (Starbucks, Â“Starbucks and Conservation InternationalÂ”). Much of this effort has focused on Mexican and Latin
143 American farming. Further, their partnership wi th Conservation Intern ational to preserve shade trees on coffee farms in Mexico is intended to sustain natural habitats and biodiversity (Starbucks, Â“Starbucks in Ou r CommunitiesÂ”). Moreover, the company has teamed with Earthwatch Institute to replan t trees and work toward the restoration of landscape in Costa Rica Â– where the current fore st footprint is curre ntly at 10% of its original land cover (Starbucks, Â“Help Re store a Costa Rican RainforestÂ”). Their environmental footprint self-a nalysis states: Â“The envir onmental impacts of growing coffee include damage to forests, soil erosi on, and the use of pesticides and herbicidesÂ” (Starbucks Coffee, Â“About UsÂ”). The company has developed Coffee and Farmer Equity (C.A.F.E.) Practices as guidel ines to monitor their sustai nability efforts internally: To ensure the sustainable supply of high quality coffee Achieve economic accountability Promote social responsibility within the coffee supply chain Protect the environment (2006 Annual Report) Further, Starbucks has established a partners hip with Scientific Certification System (SCS) to provide an external audit of their practices, including sustaining forest growth. However, the complexity of both advancing corporate commitments to environmental sustainability and to business sust ainability creates moral dilemmas. It is a given that Â“StarbucksÂ’ core business is highquality coffee, an ag ricultural product that flourishes in tropical microclimates around the globeÂ” (2006 Annual Report). For example, since the 2005 tsunami hit Suma tra, the company has placed increased emphasis on purchasing shade grown higher quality arabica coffee from small landholding farmers in the devastated areas, as they do in other supplier countries, because it provides a better tas ting coffee and it produces higher yield prices to farmers.
144 However, robusta coffee tree plantings are disease-resi stant, grow more quickly on arid land, and are a shorter term enterprise, al though the yields provide lower prices to farmers because the coffee cherries produ ced by these trees are harsher-flavored (Starbucks Â“Coffee Trees,Â” 2007). While StarbucksÂ’ effort seems to be ba sed on long-term duties to others, i.e., moral human activities based on motives of sustaining communities following naturecaused land-use changes, the question remains whether the drive for coffee market share and expansion through increasing international retail sites creates a moral tension in decisions made by all coffee producers, not only Starbucks, about changing landscapes and how land is used. Further, it seems that conducting oneÂ’s economic endeavor in the cultivation of coffee beans in known areas of illegal deforestation is immoral. When I say immoral, I mean to say that the commercial intent seems to be to increase the demand for coffee products, not as a response to tradition or local economic growth thereby increasing the short term de mand for more agricultural output and for monocultural agricultural land-use. Econom ist James K. Boyce is concerned with multinational corporate demands for uniformity of major food crops and its impact on crop genetic diversity in situ or in the field, and what it means for sustainable agricultural practices. On his view, Â“modern agriculture is associated with less genetic diversity than traditional agricultureÂ” (B oyce 2001, p. 236). Contemporary practices of farming based on monocrop planting can re sult in the benefits of greater land productivity, but also in incr eased vulnerabilities to mass crop failures due to climate changes, disease, or pest infestation (Boyce 2001, p. 236). The increase in demand also requires land conversion from some other goi ng enterprise or from natural forestation.
145 This has long term impacts Â– economicall y, ecologically, and c limatologically. For example, the deforestation of tropical and developing country lands capes continues at a pace far exceeding replanting efforts and the regrowth rate of mature tree lines that balance the vegetative CO2 transmission changes.1 Although some agricultural pr actice studies illustrate environmental concerns Â“decoupling conservation and agriculture is unwise, given the interconnectedness of biological, social, and economic factorsÂ” (D ietsch et al 2004, p. 625), recognition of climate impacts seem to be missing. The prim ary concerns in much of the agricultural research literature center on soil erosion and habitat for biotic diversity, but not changes in precipitation. Is it possible that the widespread deforest ation for saleable timber and coffee cultivation have contributed to changes in IndonesiaÂ’s climate? Further, Â“studies of climate change have relied on expert opinion or extrapolation of hi storical trendsÂ” in order to make sense of changing landscapes (A ntle, 743). These histor ical trends are part of how I view moral human enterprise, incl uding agricultural pract ices and land-use. Have we become Â“the respectful inheritors of a great traditionÂ” (S chultz, 24) of coffee drinkers, or rather have we become coffee consumers for the aesthetic pleasure at the expense of colonial thinki ng about land and forestation?2 This question does not provide 1 Antle provides further consideration of the impact s of climate change on land-use in tropical coffeegrowing regions Indonesia is Â“one of the most vulnerable countries; it is an archipelago of almost 17,000 islandsÂ” (Antle, 742). Indonesia provides the worldÂ’s la rgest agricultural product, coffee, and is the fourthlargest coffee-bean producer in the world. When the March 2005 tsunami hit Sumatra, climate took a toll on the region. The lower-quality Coffea robusta beans are easily grown on open, arid land and comprise 90 percent of the country's crop, wh ile higher quality, shade-grown arabica cherry beans that return higher prices to independent farmers comprise the remainde r of the coffee beans (OÂ’B rien and Kinnaird, 587). OÂ’Brien and Kinnaird advocate growing robusta coffee in Indonesia due to the lowland climate, but with additional subsidies to farmers to assist in conservation of existing forests through fair trade prices (OÂ’Brien and Kinnaird, 2004, 626). Others, such as Starbucks Coffee Company, would disagree with this approach. 2 Indonesia has about 10% of the worldÂ’s total tropical forest, but it is disappearing due to illegal logging and sale of the timber at an alarming rate according to BBC News A study by the New York-based
146 the moral basis for human decisions; rather the impetus is consequentialist economic thinking in terms of climate change impact s on agricultural crop yields, which benefit from tree shade and transpir ation, and soil conservation. St arbucksÂ’ stated mission in small farming communities includes a holistic ap proach to the role the corporation takes within the societies. The company espouses a value-based approach to long term relationships with suppliers and growers of coffee beans, such that the construction of schools, medical and dental c linics, libraries, an d textile factories in places such as Panama, Costa Rica, Guatemala, Antigua, and East Timor become important aspects of StarbucksÂ’ view of community sustainability (Starbucks, Â“Ho sabiesÂ…?Â”). In other words, Schulz has advocated a plurality in the approach the company takes: quality of product and quality of stake holder relationships are equa lly valued (Macray 2007). Starbucks has focused one avenue of thei r stated social responsibility mission on climate change strategies, but their analysis of renewable energy usage and recyclable product delivery have taken pr ecedence, rather than analys is of changes to land-use footprints (Schultz, 292-305). In fact, SchultzÂ’ 1997 book lacks a complete Â“blueprintÂ” of how the company has or intends to consider something so intrinsic to agricultural cultivation of his source of product as c limate change and cha nging landscapes. The company sought to measure the metric tons of CO2 equivalents and greenhouse gas emissions related to their enterprises, but only conducted a baseline climate inventory in 2003, choosing not to schedule one in 2004 or 2005 (Starbucks, Â“Starbucks Commitment Wildlife Conservation Society says that large areas of Indonesian lowland forest are being cut down to make way for coffee plantations. OÂ’Brien and Kinnaird st ate that a 28% increase in land clearing for coffee production has occurred in the Lampung province in Sumatra, Â“the heart of Indonesia's robusta coffee growing region,Â” between 1996 and 2001. The World Resource Institute (WRI) also reports widespread deforestation Â– Â“Land development for plantations to supply timber and valuable export crops is a vital part of the country's economic strategyÂ” ( BBC News, Â“Indonesia Risks Losing Rain Forests,Â” August 23, 2002; Â“Corruption in Indonesia Logging War,Â” January 14, 2003).
147 to Social ResponsibilityÂ”). However, thei r 2006 Corporate Social Responsibility Annual Report does adhere to a concern with gr eenhouse gas flux and its impact on human sustainability within the notion of environmental management, even if it doesnÂ’t seem to include the direct causal effects of changi ng agricultural landscapes on climate change. Consider the claim that, Â“a better understa nding of managed ecosystems would improve our understanding of agricultural sustainability as well as climate change impacts and adaptationÂ” (Antle, p. 741). Bu t, is it a matter of Â“managingÂ” ecosystems, or managing agricultural endeavors? An understanding of Â“adaptationÂ” is important. AntleÂ’s notion reflects a common usage of the term Â– that of landscape adjustment to changed climate. But, this adjustment may be naturall y evolutionary or human-induced changing landscapes that are reflecting climate changes. The analysis of agriculture adaptation, particularly in the poorer regions of the world, necessarily requires the critical information on the rate of climate change (Antle, p. 741). But, again this is thinking that refl ects on the economic impacts of climate change, rather than moral agency in the human/nature interplay. The climate change literature I have examined bears this vi ew, rather than a harmonious notion of human/nature relationships. Climate is seen as distinct from and adversarial to nature and human existence. Rather than moving hu man thinking toward moral decision-making regarding agricultural practices, climate change, and changing landscapes, this economicimpact-of-climate-change view advocates managing or conquering climate. Warrick echoes this position in his consideration of climatic change and agriculture: Â“Agricultural systems analyses suggest that, to a large exte nt, the potential advers e effects of climatic change could be absorbed or avoided thr ough agronomic, policy, and market feedback
148 mechanismsÂ” (Warrick, 221). Kant would view this perspective as paternalistic, thereby violating the second formulation of the categorical imperative. Further, I would argue that KantÂ’s notion of beneficence applies to human acts towards climate change via decisions to change landscapes such as forests and agri cultural lands that are governed by long term commitments to human potential as farmers a nd to community well-being. But, as others have noted, Kantian applicati ons are not individualistic, bu t rather may be applied to corporate rational decision-making: Â“Since Ka ntian obligations are supposed to guide the action of agents,Â” responsibil ity is equally applicable to institutional and collective deliberations and actions (OÂ’Neill 1986, p. 132-33). Environmental concerns are included in interdisciplinary literature regarding sustainability and social res ponsibility. These two concepts can be seen as based on KantÂ’s notions of perfect du ties of preservation of onese lf and imperfect duties of beneficence towards others in The Metaphysical Prin ciples of Virtue (Kant [1797b] 1994, pp. 82 and 117). If we accept that climate change is effected by choices of land cover, then the perfect duty of sustainable landuse and imperfect duty of beneficence as collaborative corporate endeavors in communities based on self-interest and otherinterest, including future others, would enta il considering land-use changes in moral terms of responsibility and duty. Social Footprints and Responsibilities Schultz refers to the companyÂ’s mission as a pr ocess of ally-building, or partnership, in other words relationships, with each of the companyÂ’s stakeholders (Schultz, 1997). He aspires to Â“Striking a BalanceÂ” among stakeholders as an ethical mission in the
149 organizationÂ’s Corporate Social Responsibil ity Fiscal 2004 Annual Report. This mission is still reflected in th e Fiscal Annual Report 2006: For us corporate social responsibility is not just a program or a donation or a press release. ItÂ’s the way we do business every day. (p. 2) Based on company analysis of the key issues of concern to their stakeholders and the potential impact on the compa ny, Starbucks determined that socioeconomic impacts on coffee suppliers were of utmost c oncern. The top three concerns are: Coffee purchasing practices: o Prices paid to coffee farmers and suppliers o Respect for workersÂ’ human rights o Long-term availability of high-quality coffee Growth and expansion o Impacts on local communities Environmental impacts o Climate change energy consumption o Paper cups (Starbucks Corporate Social Respon sibility Fiscal 2006 Annual Report) For example, Schultz has developed Starbucks as an inter -organizational ally in the communities in which small, independent supplier-farmers reside and work in coffee bean farming. Moreover, Schultz suggests that StarbuckÂ’s Â“ongoing success will be measured by how well we balance our fiscal responsibility with our goal to enhance the lives of those whom we serve and who serv e us,Â” based on notions of reciprocity and cooperation in community relationships (2005). The concept of recipr ocity that Starbucks anticipates in its supplier communities includes supplier commitments to the Starbucks Supplier Diversity Program. Among these co mmitments, for example, are the criteria regarding the suppliersÂ’ busin ess characteristics Â– dive rse ownership and employee population. This diversity program requires St arbucksÂ’ suppliers to be: Â“51% women or minority-owned, or socially or economically disadvantaged as determined by the U.S.
150 Small Business AssociationÂ” (Starbucks Supp lier Diversity Program, 2007). The intent of these criteria are to produce mutual bene fits for Starbucks and the supplier/farmer communities based on reputation, loyalty, and co mmitments Â– necessary elements of duty and respect to others. These characteristics and the companyÂ’s extension of loan funds with low interest may be measured in terms of the social approval of the motives of StarbucksÂ’ efforts as an ally-builder in coffee production enterprises in global communities. This is the kind of measurement of social approval Jeffrey Pfeffer (1994) sought in his analysis of a lly-building and the corporate effectiven ess of individualsÂ’ motives for decisions in an intra -organizational environment. SchultzÂ’ development of a di ffuse, generalized obligation to others through StarbucksÂ’ extension of Â“afford able credit to small-scal e farmersÂ” has meaningful qualitative reciprocity (Schultz, 2005). He has cultivated market allies based on more than direct economic ties in a stakeholder model. Further, Schultz expresses the companyÂ’s mission as Â“contributing positively to our communities and our environmentÂ” (1997, p. 293). He has developed something relate d to traditional CSR, but distinct in its formulation by using ally-building based on re ciprocity and the exchange of sustainable practices in a community rather than a notion of paternal responsibility to some particular construct in society. Put differe ntly, he does not see his role as a corporate leader in the way Western standards portr ay Â–Â“a charismatic, Â‘John Wayne type.Â’Â” Rather, a Â“consensus-building,Â” leader who uses Â“cul tivated relationshipsÂ” (Nielsen 2006, p. 269) to develop long-term corporate goals based on shared perspectives seems to fit his approach. I would also argue that SchultzÂ’ lead ership approaches what has been advanced as the three practices of citizenship Â– Â“enga gement, networks of ne tworks, and rotationÂ”
151 (Manville and Ober 2003, p. 120). Engagement is the Â“voluntary, spirited participation by individuals in the work and decisions of the community;Â” human networking Â“foster[s] innovation by building small subcommittees of tr ust;Â” and rotation is Â“the habit of taking turns at public serviceÂ” in leadership and community decision-making (2003, pp. 12125). It could be argued that Schultz seems to initiate, rather than follow, corporate trends Â– in other words, his leadership has taken Â“r esponsibilityÂ” to mean instigation and action, rather than meeting the Â“moral minima.Â” In fact, in 1997 he esch ewed the traditional terms, Â“corporate social res ponsibilityÂ” and Â“corp orate social respons ivenessÂ” because each imply paternalistic, and possibly coerci ve, aspects of effecting change on some particular stakeholder (Schultz 1997). Rather, the focus of his efforts has been in allybuilding through reciprocal dialogue and practice based on a company mission of inclusiveness in decision-making in stakeholder communities. This has been the hallmark of StarbucksÂ’ corporate community involvement. Corporate community involvement is an alogous to some elements of William ClohesyÂ’s notion that businesses are imbued w ith necessary social practices by serving the public good through a public market : Â“Business people are on the scene, know what is happening, can predict what could result fr om their products and practicesÂ” (1998, p. 56). Clohesy states that this is a call for social responsibility. In fact, Macray states that Starbucks may look more like a nonprofit ent ity in terms of its mission and practices, rather than a traditional corporate enterprise because few private corporations are willing to take the initiative to be sustainable. Why? He suggests it is because most corporations have not realized how they can add value through sustainable initiatives. Further,
152 Starbucks did not set out to develop CSR motiv es as a way to influence other corporate entities Â– sustainability is a Â“tall enough orderÂ” unto itself (Macray 2007). In addition, Schultz has used a model simila r to what Samuel Culbert describes as the Â“new modelÂ” Â– Â“relinquish ing control, increasing your sp heres of impact, and getting involved in influencing people over whom you have no formal authority, [which] requires that you find persuasive ways to ma ke your view knownÂ” (1996, p. 9). This latter strategy carries qualitative no tions of understanding the mi nd-set of a community in advance of decision-making about support a nd ally-building. Starbucks establishes influence through small loan access for sustaining farmersÂ’ working capital from season to season and through community development e ndeavors such as build ing health clinics or schools. These are vibrant, sustainabl e community resources for a multinational corporate enterprise to unde rtake. Relationships are comp lex and dynamic, and Macray relays that tracking changes to these rela tionships and assessing where the company ought to develop additional lines of CSR gr owth requires cultiva tion and nurturing of relationships (2007). These rela tionships are the result of in tegrating corpor ate endeavors and community endeavors with a goal of human well-being, a holistic perspective. Weissbrodt and Kruger have considered co rporate social responsibility efforts by multinational organizations: Transnational corporations evoke particul ar concern in relation to recent global trends because they are active in some of the most dynamic sectors of national economies, such as extractive industr ies, telecommunications, information technology, electronic consumer goods, foot wear and apparel, transport, banking and finance, insurance, and securities trading. They bring new jobs, capital, and technology. Some corporations make real efforts to achieve international standards by improving working conditions and raising local living conditions. They are certainly capable of exerti ng a positive influence in fostering development. (2003, p. 901)
153 In other words, the relational aspects of corporate endeavor s in any market are always already interdependent social structures ba sed on reciprocity and sustainable ties to others. To reiterate, these models move beyond traditional concepts of R. Edward FreemanÂ’s Stakeholder Model (1994) and Archie CarrollÂ’s definition of Â“corporate social responsibilityÂ” (1979) because of the emphasis on the socioec onomic aspects of corporate community involvement. For example, shareholder relationships are not StarbucksÂ’ primary mission. The first three stakeholder relationshi ps discussed in their annual reports are Â– in this order-partners (employees), customers, and coffee fa rmers. But, the coffee bean farmers come first in discussions of ally-building. Schultz and his management team have fostered an Â“integrated approach to building mutually be neficial relationships with coffee growers and their communitiesÂ” by not only paying premium prices for and preferential purchasing of coffee beans grown by community -based farmers, but also investing in Â“housing, health clinics, schools, and othe r projects in coffee-growing communitiesÂ” (2005). Further, Starbucks began committing lo an funds to foundations willing to partner in credit ventures for rural communities in 2001 when world coffee market prices were dropping, leaving farmers struggling to survive in their communities. By 2004, Starbucks had provided $6 million for foundation small loan provisions at low interest rates to small-scale coffee farmers, which increased in 2006 to $9.5 million following the inception of its partnership w ith the expertise of three foundations Â– Verde Ventures Fund, Calvert Foundation, and Ecologic Fina nce (Macray 2007; Â“Access to Affordable
154 CreditÂ” 2007; Annual Report 2006) Providing low interest lo ans enables coffee farmers to remain economically viable, in other words sustainable The small loans provide working capital to sustain the independent farmers between harvests of coffee cherries, providi ng a stabilizing socioeconomic force for the community and the ecosystem by supporting th e continuing allocation of land use for traditional agricultural endeavors. In this wa y, Schultz is creating l ong-term relationships with the farmers as allies in the coffee trade. Further, this constitutes ethical practice as a business partner by taking into considerat ion and respecting the needs of all these particular stakeholders Â– the suppliers, th e communities, and the environment. Macray states that StarbucksÂ’ small loan initiatives meet the corporate mission and expectations, in fact often exceeding their intentions. Moreover, the value of the corporate mission of sustaining these farmer-supplier relationships in the community is valued equally with its outcomes (Macray 2007). This is the basis of PfefferÂ’s (1994) se nse of ally-building based on developing feelings of impo rtance and security among allies. In the companyÂ’s annual reports, Schultz has emphasized these values in his relationships with coffee bean farmers and the communities in which the company operates. The financial role of small farm-sus taining loans is nine times that of each of the companyÂ’s recent philanthropic endeavors in 2006 Â– such as $1.7 million for community investments in coffee-growing regions and $1 million allocated to rebuilding projects in areas of Guatemala and Mexico that were impacted by Tropical Storm Stan. These activities imply that St arbucksÂ’ position in these comm unities takes a central role in terms of increasing commun ity enhancement and well-bein g. Further, these forms of community development engender a sense of exchange, or reciprocity, by creating a
155 sense of security and commitment to this well -being. This would appear to be a source of sustainability using inter -organization ally-building fo r StarbucksÂ’ position in the community, and in the world market in terms of market perceptions of ethical practice as a Â“good neighbor.Â” A potential caution may be in order in some cases of the development of social ties based on loyalty. Pfeffer states that Â“networks of allies can obviously be misused, [but] they are nevertheless essential in or der to get things doneÂ” (1994, p. 108). Social ties to others assists both indi viduals, and their organizations in terms of viewing their respective roles in the market Â“because what an organization does is significantly affected by who it is connected to a nd what they do,Â” according to Pfeffer (1997, p. 56). But, PfefferÂ’s intraorganizational model stops short of a reciprocal relationship based on social aspects, rather referring directly to market contacts in an economic sense of a resource dependence theory. Further, hi s view only includes the benefits of inter organizational business ties based on merger s, joint ventures, interlocking boards of directors, and other transactional interdependencies (Pfeffer 1997, p. 59). It seems to be the case that Schultz is committed to the interrelationship between position, reputation, and performance in the communities in which Starbucks develops social ties with indirect economic appro aches. Using PfefferÂ’s view, these ties would establish legitimacy (Pfeffer, 1997, pp. 58-9). Further, Pfeffer does admit to the need for Â“understanding inter-organizational as well as intra-organizational behavior [because] benefits from explicit attention to social influences [are] activ ated through network structuresÂ” (1997, p. 60). In analyzing Starbuc ks, one could make the argument that Schultz has found the notion and pr actice of CSR/sustainability to be a viable source of
156 socioeconomic value as a result of building al lies with the local co ffee bean growers in places such as Costa Rica. Although his argumen t would be both conceptual in terms of the companyÂ’s mission and sustainable in te rms of corporate pract ice, reciprocallyoriented ally-building relations hips create and develop a partic ular reputation of integrity for corporate decision-makers. Moreover, ally -building is a projec t entailing long-term relationships built on shared responsibilitie s in inter-organizational local networks. In this respect, Schultz commits to both indirect economic and non-economic allybuilding sources of sustainability for Star bucks and its stakeholders. His companyÂ’s purpose has been to develop a Â“sustainable model for coffee productionÂ” (Starbucks Annual Report 2006). But, this production incl udes two types of human resources, or partners, in the StarbucksÂ’ enterprise. First, in 1995 Starbucks init iated Â“a program to improve the conditions of workers in coffeegrowing countries, establishing a code of conduct for its growers and providing financ ial assistance for agri cultural improvement projects,Â” as well as becoming Â“the largest corporate contributor in North America to CARE, a worldwide relief and developmen t organization that sponsored health, education, and humanitarian aid programs in most of the Third World countries where Starbucks purchased its coffee suppliesÂ” (Thompson 1999). Second, this model of responsibility to partners (employees) is also found in the retail endeavors of the company. The sources for ally-building f ound in the retail communities in which Starbucks operates includes allies devel oped through the community efforts of their partners (employees) and customers. For example, Starbucks donates $10 for every volunteered hour (up to $1,000 per project) to nonprofit organi zations in which U.S. and Canadian partners (employees) and cu stomers volunteered 383,000 hours of their
157 personal time in their communities under an internal program called Â“Make Your Mark.Â” Starbucks has over 145,000 partners (employ ees) worldwide (Starbucks Annual report 2006). In PfefferÂ’s account, these are Â“coalit ions of supportÂ” (1994, p. 101), which are requisite for an organization to develop a reputation as a legi timate and ethical business. Starbucks seeks to be supported by rural co mmunity farmers, its partners in their stores and their corporate offices, and its retail consumers. Starbucks ranks their individual community initiatives in terms of: Â“achieved,Â” Â“making progress,Â” and Â“did not achieveÂ” as elements of their commitment to communities (Starbucks Annual Report 2006). These perceptions by Starbucks are based on societal views of social responsibility Â– in other wo rds, social approval of a reputation Â– while community perceptions of how deeply th is reputation affects their d ecisions are unknown. I advance that these initiatives are the Â“small winsÂ” advocated by psychologi st and organizational behavior scholar Karl E. Weic k Â– problems to be solved may appear to be overwhelming, and of such magnitude as to preclude gett ing involved with any hope of achieving an effective outcome, particularly those with social implicati ons such as unemployment or scarcity of raw materials (Kleinrichert 2007) Moreover, Weick states, Â“This strategy of small wins addresses problems by working di rectly on their constr uction and indirectly on their resolutionÂ” (2001, p. 427). In other words, corporate community involvement initiatives are those smaller components of larg er projects that serv e as stepping stones to bigger picture perspectives. Pfeffer and Salancik argue that Â“organ izational environments are not given realities; they are created through a process of attention and interpretationÂ” (1978, p. 13). The financial growth of Starbucks and Schultz Â’ leadership seems to point to support for
158 this statement. For example, the annual publ ic ranking of the 100 Best Corporate Citizens by Business Ethics journal notes Starbucks at #45, no ting the companyÂ’s strengths from the years 2000 Â– 2004 as: (1) community relations (2) women and minority staffing (3) environmental consciousness In this sense, organizations and their stak eholders socially construct their position, reputation, and performance based on per ceptions of the roles individuals play intra organizationally and inter -organizationally through socia lly responsible ally-building. The perceptions of the ro les individuals play become shared in collective interrelationships in the setting of corporat e enterprise goal-setting and practice. These relationships develop ties that bind individualsÂ’ intentions fo r public endeavors to the role of the corporation in society Â– to be an ongoing socioeconomic concern. These relational ties follow from Kant who Â“proposes a very intimate connection between the moral incentive and the feeling of respect for the [moral] lawÂ” (Guevara 2000, p. 2). The socioeconomic connections between corporations and individuals are the basis for relationships. For example, Gary Beck er, in his Theory of Social Interactions, refers to Â“social incomeÂ” as the sum of an i ndividualÂ’s personal income and the monetary value to her Â“of the relevant characteristics of othersÂ” (1976, p. 253). The monetary value of others is inherent in the social in tegration developed by multinational corporate endeavors. In other words, and this quote bears repeating: Â“the patterns of human relations and values that bind people together in time and place and that define their life opportunitiesÂ” require analys is (Ghai and Alcantara 2001, p. 248). These social integrations are changed and charged by global market socioe conomic initiatives in both
159 beneficial and harmful ways Â– interactio ns have the potential to promote greater understanding between corporations and their communities Â– developing a Â“civic culture,Â” but these interactions also have the capacity to extol consumerism over humanwell-being (Ghai et al 2001, p. 249-50). Neverthe less, social interact ions have value Â– socially and economically. In this respect, a primary intention of sustainable corporate practice is community ally-building as a reci procal relationship and a moral practice for corporate enterprise. Conclusion Biosocioeconomic Sustainability Cultivation of coffee beans as the primary element of a commitment to an ethical business practice seems an unlikely enterprise. Bu t, whether cultivation is practice, as in agriculture, or cultivation is conceptual, as in the development of relationships, the process involves self-examina tion. In other words to ask the question: Â“What do I stand for?Â” I have argued for Â“responsibilityÂ” and Â“sus tainability.Â” But, even by these standards I need to provide further clar ification in terms of the m eanings these concepts convey. The key concepts that represent more than the moral minima of co rporate responsibility are inherent in market relationships Â– co mmunity, reciprocity, e nvironmental concern, socioeconomic concern, interdependent relati onships, mutual beneficence, duty, respect, active and voluntary private sector initi atives, validity, and legitimacy. Corporate commitments to advance bio-socio-economic responsibilities for sustainable business deliberations are complex, and complexity creates moral dilemmas. A sustainable business model instantiates acts of corporat e capacity, rather than one-time responses to market events, for relationships with co mplex communities. Communities are interwoven
160 with economic, environmental, and human rela tionships. Sustainability is a complicated, ongoing concern requiring expertise derived from multiple layers of knowledge and direct involvement in communities. In chapter one, I illustrated Adam SmithÂ’s concern with the humanity that he found inherent in market exchanges and economist Eduard HeimannÂ’s assessment of the integration of ec onomic and social theories. I concur with these perspectives in that Â“economic manÂ” represents the harmonious relationship between human motives and market activity. An d I noted that these relationships carry moral and philosophical considerations, as well as environmental and socioeconomic ones. One might argue that this explication is a reinterpretation Â– and it is on some level. And, I argue that, following from that explicat ion/reinterpretation, wh at Â“corporate social responsibilityÂ” (CSR) means conceptually and in practice is biosocioeconomic sustainability. Biosocioeconomic sustainability encaps ulates sustaining, or cultivating and nurturing, the biotic community, the social community (society), and the economic community (the Â“marketÂ”) as interdependent elements of a holistic market society. Economist Neva Goodwin argues that Â“ideally business should serve people in society Â– rather than vice versaÂ” (2001, p. 262). In other words, Â“responsibility cannot be imposed from the outside; if the goals of corporate responsibility are to be achieved, people in business Â– owners, managers, workers Â– must make some kind of moral commitment, accepting responsibility for their firmÂ’s im pact on the worldÂ” (Goodwin 2001, p. 270-71). However, as I have argued, and illustrated in the Starbucks model of CSR, there is a reciprocal relationship between corporations an d stakeholders, and in particular in this dissertation, suppliers. This relationship is based on cor porate community involvement,
161 rather than corporate community accountabil ity. Some are arguing the Â“coming age of sustainable business,Â” that the twenty-fir st century will be one based on corporate responsibilities to economic, ecologic, and ethical busines s practice (DesJardins 2007). But, as I have advanced, sustainability is a tr adition rather than a tr end. I have argued that the meaning of corporate responsibility is alwa ys already social inte raction and with its respective communities based on sustained relations hips of duty as a corporate citizen. In other words, I refer to this private sector concept of biosocioeconomic sustainability as the Â“ BSE Sustainability Model Â” (see Figure 2). Many economists and philosophers would argue that the movement away from public policy initiatives to grea ter voluntary private sector re sponsibilities to communities Â“is making the goals of social and environmen tal well-being harder to reachÂ” (Gallagher 2001, p. 225). These individuals crit icize the greater role multinational corporations play in globalization, particularly in developi ng countries. In other words, they do not recognize voluntary corporate social responsib ility initiatives as sustainable community development, but rather as intrusive cap italism that poses more harms than good. A sustainable global economy will require the efforts of many different actors. These include corporations, local and national communities, as well as global institutions. (Galla gher 2001, p. 229) Economist Paul Streeten is concerned with the diminishing role of governments in overseeing worldwide markets, leaving private enterprise, such as corporations, without supervision of corporate practices in globa l communities. He argues that Â“socially and ecologically sustainable developmentÂ” must be underpinned by governmental frameworks (2001, p. 229). In other words, the integration of corporate social responsibility initiatives are fragmented and lacking centralized coor dination Â– or, as he
162 terms the scenario, Â“a schizophrenic, fragment ed world without effective coordinationÂ” (Streeten 2001, p. 230). Herman E. Daly, senior economist of pub lic policy and sustainable development, agrees with much of StreetenÂ’s perspective. Daly states that free trade conflicts with sustainable development because it internaliz es social and environmental costs rather than creating a market environment in which these costs are correlated on the same basis across countries engaged in multinational enterprise. In other words, free trade allows those living in developed countries to Â“ live beyond their own ecological capacities by importing those capacities from abroad,Â” and thereby also depleting necessary resources in developing countries (Daly 2001, pp. 233-4). Furt her, he states that free trade negates the fostering of community because Â“life and community can be made subject to distant decisions and events over which communities have no control,Â” among other harms (Daly 2001, p. 234). However, David Reed disagrees with these two wholesale approaches in that he argues that limiting government intrusion in community agricultural development has eliminated burea ucratic inefficiencies and mismanagement. While he argues that some economic reforms and social stabilities have been hampered as a result, he finds that environmental and social impacts on community farmers in developing countries have been Â“largely a f unction of the status of the farmers in the countries being consideredÂ” (Reed 2001, p. 258) Without some sort of ally-building between outside entities and farming communities that raises the socioeconomic status of farmers, small landholder farmers lack the so cial and economic capita l to sustain their livelihood in the face of increasing global dema nds. Therefore, these farmers may resort to short-term avenues of capital derivation by Â“agricultural extensification, deforestation,
163 and intensified use of marginal landsÂ” (Reed 2001, p. 258). But, if the goal of corporate social responsibility is focused on long term sustainable practice in itiatives, and based on reciprocal interdependent re lationships between corporati ons and farmers, then the potential for sustainable communities exists. Corporate efforts to be socially responsible have the capacity to cultivate corresponding sustainable rural agricultural community relationships. This course of action leads to the creation of allies in the community, an important stakeholder concern, based on Â“hope, discovery, and opportunity in communitiesÂ” (Starbucks, Â“About Us). In other words, as I have argued, corporati ons are founded on and depend on social and economic legitimacy Â– which is more than Â“the fact that a corporation has not violated the law [but] has otherwise conformed to the cu rrent moral or social standards of societyÂ” (Brummer 1991, p. 116). An inter -organizational ally-build ing process by corporate leaders has a distinct legitimate reciprocity rela ted to various concepts of corporate social responsibility. But, I have argued that there is even more in the sense of responsibility that we actually should m ean. This meaning is the f oundation of sustainability corporate community involvement hangs together with committed biosocioeconomic relationships. This is not a tr end. It is a tradition. Moreove r, using my teen daughtersÂ’ vernacular, when folks hang together, there is exciteme nt, and movement, and active participative progression of relational ac tivities. In other wo rds, I argue that BSE Sustainability Models are hot.
164 Corporate Social Responsibility Models Market Enterprise (Stakeholders) Economic (Multinational Corporations) Ethical (CSR) Sustainable (Environment & Community) Figure 1 -Kleinrichert 2007 dissertation ________________________________________________________________________ BiosocioeconomicSustainability society environmentFigure 2 -BiosocioeconomicSustainability Model integrates the biotic community (environment), the social community (society), and the economic community (corporations & the Â“marketÂ”) as interdependent elements of a holistic market society (Kleinrichert 2007 dissertation). corporations
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About the Author Denise Kleinrichert will be an Assistant Pr ofessor, Management at San Francisco State University beginning Fall 2007. She received her Ph.D. in Philosophy, with an area of specialization in Business Ethi cs and Corporate Social Resp onsibility and Sustainability, at the University of South Florida. She also received her M.A. in Philosophy and M.L.A. in Humanities / Social & Political Thought fr om the University of South Florida. Dr. Kleinrichert has over 12 year s corporate experience in Human Resources and Risk Management in the banking, health care, and insurance industries pr ior to attaining her graduate degrees. She received her B.A. in Economics from Indiana University.