BUSINESS IN SOCIETY

Business in Society

Business in Society

Introduction

Corporations often claim to be socially responsible and “good citizens,” and stakeholders typically want them to act this way. But what does this mean, especially in the fast-paced global economy of the 21st century? The goals of this chapter are to provide an explanation of “global business citizenship” as the 21st-century adaptation of corporate social responsibility. A “global business citizen” is defined as an enterprise that responsibly implements its duties to individuals and societies within and across national and cultural borders (Wood, Logsdon, Lewellyn, & Davenport, 2006). The ultimate aim of the theory of business citizenship, which is grounded in political theory and business ethics, is to illuminate the structural and moral ties among business organizations, human beings, and social institutions and offer guidance on the rights and responsibilities accruing to business organizations in the global environment.

The chapter begins by briefly examining the challenges to the 20th-century concept of corporate social responsibility (CSR) in the 21st century. Then it describes how the concept of citizenship for individual persons can be translated to citizenship for business organizations and how the local and national arenas of citizenship can be expanded to incorporate new global realities. Finally, the process of implementing global business citizenship (GBC) is explained in a four-step model.

Corporate Social Responsibility In The 20th Century

Although the elements of the concept and some practices of CSR had existed in the first half of the 20th century (e.g., Dodd, 1932; Heald, 1970), the term was initially popularized in the 1950s and 1960s to promote voluntary community programs and business self-regulation that addresses social concerns and creates a better society (Bowen, 1953; Frederick, 1986). Much of the scholarly literature through the 1970s focused on the debate with neoclassical economists about whether firms had responsibilities beyond a narrow economic mandate to maximize profits for the shareholders, and if so, how these responsibilities were to be defined and understood (e.g., Carroll, 1979; Preston & Post, 1975; Votaw & Sethi, 1973). Meanwhile, the public and many executives supported CSR as a means to deal with equal opportunity, urban decay, environmental pollution, worker and product safety, and other social issues.

During the last 2 decades of the 20th century, the early strong flavor of CSR—the idea that business could and should contribute to a more just and healthy society—began to be ignored as the economic environment shifted to high inflation and interest rates, declining international competitiveness, and growing costs to comply with increasing government regulations. The backlash against CSR reflected the free-market conservative rhetoric of the “Reagan/Thatcher Revolution” of the 1980s. Executives were urged to focus on short-term profitability in order to increase stock prices rather than consider the welfare of all groups affected by their decisions. Downsizing, reengineering, and outsourcing broke the bonds that firms had formerly developed with employees, communities, and suppliers.

Ironically or perhaps providentially, it was during this period that business ethics began to emerge in scholarly and popular business literature as a major topic to address the growing mistrust ...