CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITYRESPONSIBILITY::

An institutionalist approachAn institutionalist approach

Robert BOYERRobert BOYERPSE (Paris School of Economics), EHESS, PSE (Paris School of Economics), EHESS,

CEPREMAPCEPREMAP International Conference on « International Conference on «

Business Governance and Social Business Governance and Social Responsibility, EAEPE-CNAMResponsibility, EAEPE-CNAM

MayMay 22nd 2008 22nd 2008 - Paris - Paris

INTRODUCTIONINTRODUCTION

Since the 70s, Since the 70s, managerial paradigmsmanagerial paradigms and and macroeconomic macroeconomic policiespolicies have been in have been in permanent flux.permanent flux.

During the last decades, analysts During the last decades, analysts have been proposing have been proposing various various alternativesalternatives to Fordism, both as a to Fordism, both as a firm organization and a firm organization and a macroeconomic growth regime:macroeconomic growth regime:

Toyotism as overcoming the weakness of Toyotism as overcoming the weakness of Fordist organization and new growth Fordist organization and new growth regimeregime

A service led economy and a consumer A service led economy and a consumer driven firmdriven firm

Information and communication Information and communication technology led growth and start-uptechnology led growth and start-up

Knowledge based economy and firms as a Knowledge based economy and firms as a learning entitylearning entity

Finance led regime and firms governed by Finance led regime and firms governed by shareholder valueshareholder value

Competitiveness led growth and new Competitiveness led growth and new configuration for multinationals.configuration for multinationals.

But these forecasts have proved to But these forecasts have proved to be largely erroneous, probably be largely erroneous, probably because they extrapolate only because they extrapolate only oneone canonical principlecanonical principle……

……And they were mimicking And they were mimicking organizations and macroeconomic organizations and macroeconomic regime as regime as simplesimple as the Fordist as the Fordist configuration…configuration…

……And they were supposed to be And they were supposed to be uniformuniform all over the world. all over the world.

Would Corporate Social Would Corporate Social Responsibility (CSR) be the right Responsibility (CSR) be the right answer both at the level of firms answer both at the level of firms governance and growth regimes governance and growth regimes in in an integrated world?an integrated world?

……Since it is a priori Since it is a priori more complexmore complex because it proposes to articulate because it proposes to articulate three principles…three principles…

Profit – People - PlanetProfit – People - Planet

THE ORGANIZATION THE ORGANIZATION OF THE OF THE

PRPREESENTATIONSENTATION1 – What is Corporate Social 1 – What is Corporate Social

Responsibility (CSR): A strict Responsibility (CSR): A strict or an extended or an extended definitiondefinition ? ?

2 – The various 2 – The various institutionalistinstitutionalist theories facing CSRtheories facing CSR

3 – A 3 – A regulationistregulationist approach of approach of CSRCSR

4 – 4 – Does CRS define a new Does CRS define a new compromise of compromise of governmentgovernment and mode of governance of and mode of governance of firms?firms?

5 – Is CSR the embryo of an re-5 – Is CSR the embryo of an re-articulationarticulation of the national of the national and international regulation and international regulation modes?modes?

6 – Conclusion6 – Conclusion

I. WHAT IS CSR?I. WHAT IS CSR?

A strict definition…A strict definition…« The RSE aims at promoting the « The RSE aims at promoting the

integration by firms of integration by firms of social, social, environmental and economic environmental and economic concernsconcerns in their activities and their in their activities and their interactions interactions with the various with the various stakeholdersstakeholders on a on a voluntary voluntary basis. »basis. »

Its origin is in the requests of NGO Its origin is in the requests of NGO back to the Seventies, and this back to the Seventies, and this movement has been strengthening movement has been strengthening and and diversifying since then.and and diversifying since then.

… … Or an extended concept?…Or an extended concept?…AnotherAnother form of good governance… form of good governance…Beyond the shareholder value…Beyond the shareholder value…Stimulated by the Socially Stimulated by the Socially

Responsible Investment (Responsible Investment (SRISRI)…)…Including ecologicallyIncluding ecologically sustainable sustainable

development…development…Supplemented by the rise of the Supplemented by the rise of the

equitable tradeequitable trade……And the emergence of an And the emergence of an ethical ethical

financefinance..

Figure 1 – The CSR as a logic permeating the various institutional forms

Civil Societ

y

Shareholders

Rating Agencie

s Consumers

FIRM

R1

Wage earners

Environment

Competitors

Subcontracting

R’1

Wage earners

State

Local Communit

ies

R5

R4R7 R3

R2

R6

Major features common to Major features common to both approachesboth approachesA A complex mix complex mix of criteria more of criteria more

than one single objectivethan one single objectivePrinciples which go beyondPrinciples which go beyond the the

borders of a single firm…borders of a single firm………because they cross the because they cross the valuevalue

chain at the world levelchain at the world levelRelatively Relatively fuzzyfuzzy nature of the nature of the

CSR indexes compared with CSR indexes compared with the precision of financial the precision of financial evaluationsevaluations

II. THE II. THE INSTITUTIONALIST INSTITUTIONALIST

THEORIES FACING RSETHEORIES FACING RSE The New Institutionalist Economies The New Institutionalist Economies

(NIE)(NIE)Douglass North (1990, 2005) stresses Douglass North (1990, 2005) stresses

the role of the beliefs, social norms, the role of the beliefs, social norms, informal rules besides the law and informal rules besides the law and public interventions.public interventions.

Avner Greif (2005) investigates the Avner Greif (2005) investigates the nature of individual behaviors allowing nature of individual behaviors allowing the emergence of the basic institutions the emergence of the basic institutions that sustain the co-operation, necessary that sustain the co-operation, necessary to the blooming of the marketto the blooming of the market

Figure 2 – The CSR as the internalization of reputation effects

Competitive premium

Ethical firm

Access to the

financing

Reputation towards the consumers

Reputation towards the

investors

1

2

Rational institutionalismRational institutionalism

Consequently, they are the Consequently, they are the external external actorsactors who discipline the firm who discipline the firm

The virtuous circle of the reputation The virtuous circle of the reputation effects may exist effects may exist independently independently of any of any beneficial impact of the CSR on the beneficial impact of the CSR on the financial performances.financial performances.

If the firms are opportunist and not If the firms are opportunist and not ethical, they can have interest to ethical, they can have interest to exploit exploit this reputation effectthis reputation effect and thento break and thento break with their good former behaviourwith their good former behaviour ..

It is not any It is not any example in historyexample in history of of emergence of institutional arrangements emergence of institutional arrangements founded exclusively on reputation, founded exclusively on reputation, without any control of a without any control of a third partythird party..

Figure 3 – CSR as a countervailing mechanism against the commodification of

labor, money and nature

An institutionalism à la An institutionalism à la PolanyiPolanyi

ECONOMY

Commodification of

1. Labor

2. Money

3. Nature

CSR

SOC I ETY

1. Basic social rights

2. Financial stability

3. Ecological Pact

In a sense the CSR aims at thwarting In a sense the CSR aims at thwarting excessesexcesses of globalization and the of globalization and the shareholder valueshareholder value

The RSE relates to the human and The RSE relates to the human and social social rights on the one hand, the rights on the one hand, the safeguarding of the safeguarding of the environmentenvironment on on the other hand…the other hand…

……but not on the requirement of but not on the requirement of financial and monetary stabilityfinancial and monetary stability at at the world level….the world level….

……While nowadays the management While nowadays the management of financial crises has a major of financial crises has a major impact on the viability of any CSR.impact on the viability of any CSR.

III. RÉGULATION III. RÉGULATION APPROACHES AND THE APPROACHES AND THE

CSR : CSR :

1.1. An evidence of the erosion An evidence of the erosion in the institutionalization of in the institutionalization of the the wage labor nexuswage labor nexus

Figure 4 – The shift in the hierarchy of the institutional forms : from the 60s to the 90s

Wage Labor Nexus

Forms of competition

Monetary regime

State State

Forms of competitio

n

Financial regime

Versus Wage Labor Nexus

If the wage labor nexus( WLN) is If the wage labor nexus( WLN) is thus thus dominateddominated……

It is important to act on the It is important to act on the other other institutional forms that shape the institutional forms that shape the WLN…WLN…

For example, in order to compensate For example, in order to compensate for the loss of influence on the labor for the loss of influence on the labor market, use the market, use the boycott of the boycott of the productsproducts whose production does not whose production does not respect the social or environmental respect the social or environmental rights…rights…

This strategy is promoted by Anglo-This strategy is promoted by Anglo-Saxon Saxon activistsactivists..

Figure 5 – The 60s: the wage labor nexus is the leading institutional

form

Figure 6 – The 90s:International insertion is the

dominant institutional

form

2.2. An analysis of the An analysis of the globalization: globalization: international international insertioninsertion becomes the key becomes the key factor.factor.

Through the liberalization of the Through the liberalization of the foreign tradeforeign trade

By the delocalization of By the delocalization of productionproduction

By the financial globalizationBy the financial globalization

……What explains the international What explains the international character of the CSRcharacter of the CSRIt relates primarily to the It relates primarily to the

multinationalsmultinationals……Whereas national regulations Whereas national regulations

remain remain heterogeneousheterogeneous......

Thus CSR aims at an international Thus CSR aims at an international homogenization , homogenization , via privately via privately generated standards.generated standards.

3.3. CSR : CSR : an evidence for the an evidence for the erosion of State capacity ?erosion of State capacity ?

A A double shift:double shift: decentralization of decentralization of public action and new public action and new supranational governancesupranational governance

A A tendency tendency to the break-up of the to the break-up of the State and autonomization of State and autonomization of various of its functionsvarious of its functions The monetary policy:The monetary policy: independenceindependence of of

Central BanksCentral Banks Finance: Finance: agency foragency for financial stability financial stability Public services: Public services: independentindependent

administrative agenciesadministrative agencies The budget: proposal of an The budget: proposal of an

independentindependent rating agency rating agency

Table 2 – A epochal change for economic policy A hierarchic and

centralized approach

A relational and decentralized approach

Key Actors Ministry of finance Central bank and independent administrative

authorities Degree of

centralization of decisions

Strong centralization and coordination at the

highest level

Shared responsibility of

economic policy

Source of effectiveness

Coherence of the budgetary, fiscal, monetary and regulations

Credibility, reputation, expertise and action on the expectations of the

private agents Nature of the

flows of information

Top down from public authorities towards less informed private

agents

Informal and formal, two sided exchanges between public and private actors. Certain actors can be better informed than the State

Method of decision-making

Often unilateral, largely centralized with possibly dialogue of the social partners

Shared responsibility and continuous learning at all levels and for all actors

Instruments Static macroeconomic modeling or adaptive expectations and microeconomic calculus with complete information

General assumption of rational expectations within General Equilibrium Models and series of principal/agent contracts with asymmetrical information

Example emblematic

France in the Sixties

American configuration in the Nineties

Periods The Sixties and Seventies

The Nineties and first decade of this century

……This shift affects even This shift affects even developing countriesdeveloping countriesA striking example: Chinese A striking example: Chinese

SME of Shanxi apply for SME of Shanxi apply for international certification…international certification…

The multinationals of the Third The multinationals of the Third World claim to implement CSRWorld claim to implement CSR

The standards of the CSR shape The standards of the CSR shape the governance of emergent the governance of emergent countriescountries

4.4. FinancializationFinancialization: an avenue for : an avenue for restoring some power to restoring some power to employees?employees?

For Michel Aglietta (1998) the For Michel Aglietta (1998) the financiarisation is irreversible…financiarisation is irreversible…

So that the employees must accept saving So that the employees must accept saving and and pension fundspension funds in order to compensate in order to compensate for the wage concessions…for the wage concessions…

..Still more to control the direction of the ..Still more to control the direction of the investment , by requiring that it contribute investment , by requiring that it contribute to the improvement of employment and the to the improvement of employment and the living standardsliving standards

It would be a justification of the SRIIt would be a justification of the SRI

But this optimism is mitigated by But this optimism is mitigated by other researchesother researchesSabine Montagne (2006): Sabine Montagne (2006): Finance won Finance won

against against the need for security in the the need for security in the management of pension funds.management of pension funds.

Robert Boyer (2000), Michel Aglietta Robert Boyer (2000), Michel Aglietta and Antoine Rébérioux (2004) conclude and Antoine Rébérioux (2004) conclude to the to the instabilityinstability of the current financial of the current financial regime.regime.

The mobility of the capital supports the The mobility of the capital supports the attempt by OECD to consider that attempt by OECD to consider that freedom of managementfreedom of management for for multinationals is a higher principle than multinationals is a higher principle than the national laws (AMI).the national laws (AMI).

The speed of the The speed of the financial innovationfinancial innovation outclasses the capacity of reaction of the outclasses the capacity of reaction of the employeesemployees

5.5. The macroeconomic factors which The macroeconomic factors which supported the emergence of the CSRsupported the emergence of the CSR

Internationalization Internationalization erodes the capacity erodes the capacity of negotiation of the employees…of negotiation of the employees…

A stiffer A stiffer competitioncompetition on product markets on product markets feeds back into employment and wages…feeds back into employment and wages…

Therefore a possible relevance of Therefore a possible relevance of boycott…boycott…

The The financialisationfinancialisation may trigger the may trigger the emergence of countervailing powersemergence of countervailing powers

The imbalances of the world economy The imbalances of the world economy threaten the supply of threaten the supply of global public global public goods.goods.

Figure 7 – CSR: trans nationalization and soft law

Loss of autonomy of Nations-

States

Capacity of boycott by the

consumersRise of NGOs

Proposal for new standards and codes of

good governance

CSR

Protection of the

environment

Threats on global public goods

Socially responsible investment

Financialisation

Erosion of the bargaining

popwer of the employees

Erosion of the institutionalized compromises of

the fordism

Internationalization

6. Preliminary conclusions: TR and CSR6. Preliminary conclusions: TR and CSRC1 – It is important not to confuse an C1 – It is important not to confuse an

alternative of alternative of managerial managerial principle principle with the logic of a with the logic of a mode of regulationmode of regulation..

C2 – The C2 – The diversity and pervasivenessdiversity and pervasiveness of of CSR across institutional forms makes CSR across institutional forms makes difficult the diagnosis of the related difficult the diagnosis of the related growth regime.growth regime.

C3 – A quite C3 – A quite problematic coherenceproblematic coherence At the level of the firmAt the level of the firmIn terms of national and international In terms of national and international

regulationsregulations

IV. IS CSR IV. IS CSR DEFINING A DEFINING A NEW COMPROMISE OF NEW COMPROMISE OF

GOVERNMENT FOR GOVERNMENT FOR FIRMS?FIRMS?

The viability of a firm: the internal The viability of a firm: the internal consistency of three logicsconsistency of three logicsA response to competition on A response to competition on product product

markets markets A form of organization and control over theA form of organization and control over the

wage labor nexuswage labor nexusGetting access Getting access financingfinancing

Typical configuration of the fordist firmTypical configuration of the fordist firm

Figure 8 – The organization of the fordist firm

Product / Financing

Firms’

Gouvernment

Production Subcontracting

Financial regime

Form of competition

Wage Labor Nexus

Multiplicity and increasing Multiplicity and increasing diversity of the domains governed diversity of the domains governed by the principle of by the principle of transparencytransparencyStandards of quality and safety of Standards of quality and safety of

the productsthe productsEnvironmental standardsEnvironmental standardsCode good governance concerning Code good governance concerning

subcontractorssubcontractorsStandards of decent workStandards of decent workStandards for the ethical Standards for the ethical

investment.investment.

Figure 9 – Segmentation and externalization of the principles of management under the

requirement of transparency

Product

Finance Environment

Production

SubcontractingLabor

Quality standards

Rating Agencies, including

social rating, Socially

Responsible Investment

ISO Standards

Environmental Externalities

Standards of

decent work

Codes of good

governance

Respect of the

humans rights

World pacts

Reputation

Effects

A coherence that is more problematic A coherence that is more problematic than everthan everFrom a strict technical point of view, how From a strict technical point of view, how

to assess the to assess the compatibilitycompatibility of these of these diverse standards?diverse standards?

A contrario, the criteria are so numerous A contrario, the criteria are so numerous that each firm will that each firm will select select those which are those which are most favorable its interests.most favorable its interests.

In In political political terms: profit, individuals and terms: profit, individuals and environment, have quite different environment, have quite different impacts!impacts!

The dissolution of the concept of firm’s The dissolution of the concept of firm’s governmentgovernment , replaced by that of , replaced by that of governancegovernance..

V. IS V. IS THE CSR AN EMBRYO THE CSR AN EMBRYO OF A NEW BALANCE OF A NEW BALANCE

BETWEEN NATIONAL AND BETWEEN NATIONAL AND INTERNATIONAL INTERNATIONAL

REGULATION MODES?REGULATION MODES?

From micro to macro: what From micro to macro: what are the processes of are the processes of extension and generalization extension and generalization of the CSR?of the CSR?

Figure 10 – Actors and processes that could generalize the CSR

1. NGOs and experts proposals

2. Standardization and implementation Ex: Social Accountability Standard 8000

ISO 14001 - AFAQ 1000NR - GRI

Global compact

Voluntary adhesion of the firms

Diffusion by :• Mimetism• Favorable impact on

the performance

Adoption by public authorities

• Law on New Economic Regulation 2001 (France)

• Possibly European directives on corporate law

Possible impact upon firms’ governance / Régulation modes

A. Local and marginal innovations

B. Standardization, routines, norms

C. Ethial Codes

D. Soft Law

E. Hard law

The CSR: a trial and error process The CSR: a trial and error process in search for a multi-polar and in search for a multi-polar and internationalized mode of internationalized mode of regulationregulationThe wage labor nexus is not any The wage labor nexus is not any

more the central institutional form.more the central institutional form.The transformations of the The transformations of the

international regime, finance and international regime, finance and competition shape the redesign of competition shape the redesign of the wage labor nexusthe wage labor nexus

The era of the CSR is an attempt at The era of the CSR is an attempt at rebalancing of the institutional rebalancing of the institutional formsforms

Figure 11 – The Golden Age: The Fordist wage labor nexus logic shapes all the other

institutional forms

Wage Labor Nexus

Financial regime

Form of competition

International insertion

Oligopolistic

Shapes

Fix exchange

rate

Figure 12 – The 80s and 90s: the erosion of wage labor nexus under the pressure of other

institutional forms changes

Wage labor nexus

Financial regime

Form of competition

International insertion

Flexibility strategy

Financialization

Segmentation

Figure 13 – The epoch of CSR: domination of internationalization and a new balance between

institutional forms

Wage labor nexus

Financial regime

Form of competition

International insertion

Boycott

SRI

CSR

Decent work

An emerging configuration more An emerging configuration more than one stabilized regimethan one stabilized regimeObvious limits of a Obvious limits of a voluntary voluntary

adhesionadhesionComposite Composite and sometime and sometime obscure obscure

character of standards proposed by character of standards proposed by third parties (i.e rating agencies)third parties (i.e rating agencies)

A A low low capacity for implementing capacity for implementing CSR to the alliance of top-CSR to the alliance of top-managers and financiersmanagers and financiers

A premium given to the A premium given to the multinationalsmultinationals against Nation- against Nation-States.States.

A problematic compatibility with A problematic compatibility with democratic principlesdemocratic principles..

Table 3 – From the Fordist regime to the CSR configuration

Fordist regime CSR configuration

1. The overall logic

Institutional compromises at the national level

Voluntary adoption to a series of international standards

2. The nature of institutional forms

Codification basic social relations by collective actors

Composite mix of norms elaborated by third parties

3. Conception of the firm

Government compromise between stakeholders at the firm level…

Ideal of transparency with respect to all stakeholders

…At odds with the conventional legal conception of the firm as the property of shareholders

…At odds with the primacy of shareholder value

4. Relevant territory

Nation-State A network of multinationals and their relations with the environment

5. Links with polity

Close links between governments and public administration within the State

Independent public or private agencies with few or no relations with politicians

CONCLUSION CONCLUSION 

C1 : C1 : The diffusion of CSR is an The diffusion of CSR is an invitation to analyze the relations invitation to analyze the relations between the management of the between the management of the large firmslarge firms and and macroeconomic macroeconomic evolutions evolutions

Macro Crisis Macro Crisis erosion of the erosion of the institutional formsinstitutional forms sectoral and sectoral and

local innovationslocal innovations addition of their addition of their macroeconomic impactsmacroeconomic impacts

C2 : C2 : An institutional emergence An institutional emergence triggered from the crisis of the triggered from the crisis of the Fordism:Fordism:

Loss of employees bargaining Loss of employees bargaining power,power,

Internationalization of the Internationalization of the production,production,

Financial globalization,Financial globalization,Segmentation and externalization Segmentation and externalization

of the functions of the State,of the functions of the State,Political difficulties in Political difficulties in

redesigning institutionalized redesigning institutionalized compromise.compromise.

C3 : C3 : The firm is the source of The firm is the source of major major externalitiesexternalities in the in the various fields:various fields:Social,Social,Environmental,Environmental,Economic,Economic,Financial.Financial.

C4 : C4 : In a sense the CSR aims at In a sense the CSR aims at promoting the internalization promoting the internalization by the firm of these by the firm of these externalitiesexternalities

C5 : C5 : CSR appears to be a new CSR appears to be a new form of form of good governancegood governance of of the firms, and an antidote to the firms, and an antidote to the domination of the the domination of the shareholder valueshareholder value… …

……But the But the voluntaryvoluntary nature nature and the variable geometry of and the variable geometry of the CSR make problematic its the CSR make problematic its effectiveness.effectiveness.

C6 C6 : : A major uncertainty A major uncertainty concerning the concerning the diffusiondiffusion of the of the CSR as a form of government of CSR as a form of government of the firmsthe firmsAA fashion fashion that will fadethat will fade……A reassuring A reassuring rhetoric rhetoric hiding hiding

almost unchanged practicesalmost unchanged practices….….An evidence for the raising An evidence for the raising

concerns for a form of concerns for a form of business business ethicethic in reaction to recent in reaction to recent financial scandals and crisisfinancial scandals and crisis……

Supported by Supported by worldworld standards standards and/or and/or EuropeanEuropean directives directives……

With a possible incorporation in With a possible incorporation in the the legal system legal system in the very long in the very long run.run.

C7 : C7 : The CSR is only a weak The CSR is only a weak determinant for emerging determinant for emerging growth regimesgrowth regimesPluralityPlurality of the possible of the possible

compromises between various compromises between various components of the CSR…components of the CSR…

Strong dependence with respect to Strong dependence with respect to the relative bargaining power of the relative bargaining power of multinationalsmultinationals and governments….and governments….

A major gap between developed A major gap between developed countries andcountries and the rest of the the rest of the worldworld……

Uncertain Uncertain viabilityviability of the related of the related international regime.international regime.

Many thanks for your attentionMany thanks for your attention

Robert BOYERRobert BOYER

Paris-Jourdan Sciences Economiques (PSE)48, Boulevard Jourdan 75014 PARIS

+ 33 (0)1 43 13 62 56 - boyer@pse.ens.fr

WEB : http://www.jourdan.ens.fr/~boyer/