In this chapter we discuss standards as forms of partial organization. Standards are defined as decided rules for common and voluntary use. Taking the example of CSR and corporate governance standards, we show that the degree of partiality of standards can vary widely – ranging from a single element of organization, i.e. decided rules, to all five elements of organization, i.e. decided rules, hierarchies, membership, monitoring and sanctioning. We demonstrate that in some cases partiality is the result of restrictions in the design of standards, while in other cases it is the result of an explicit choice. We also demonstrate that the degree of partiality of standards can change over time, as there are often pressures for standards to adopt additional organizational elements. Furthermore, we discuss the dispersed nature of many standards, showing how different actors often provide different organizational elements of standards without any central coordination. We close with an outline of an agenda for future research.

Learning Objectives

Introduction: The Emergence of Private Regulation

In the 1980s, a number of non-governmental organisations (NGOs) organised consumer boycotts against major retailers that were selling products based on tropical woods. The main goal was to tackle deforestation and associated problems (e.g. carbon sequestration). Some NGOs, such as Friends of the Earth, even started to introduce their own labelling and certification schemes. However, as the sourcing of tropical woods is based on long and complex commodity chains, these first attempts to regulate deforestation through voluntary measures remained without much impact. NGOs were convinced that intergovernmental action was needed; they lobbied the International Tropical Timber Organization (ITTO) to adopt a legally binding and government-sanctioned certification scheme. Some hoped that negotiations at the 1992 Earth Summit in Rio de Janeiro would produce such an intergovernmental agreement. Yet, governments showed little interest in adopting a legally binding forest convention that would have helped to tackle the negative effects of deforestation (Gulbrandsen, 2012). As a response, some environmental NGOs (most notably World Wide Fund for Nature (WWF)) were convinced that without the voluntary participation of major industry players (e.g. retailers and manufacturers), a wide-ranging certification programme could not be established. In 1993, a number of parties, including social and environmental NGOs, industry representatives and auditors, met in Toronto to launch the first voluntary certification standard to regulate deforestation: the Forest Stewardship Council (FSC) was born.

The FSC example points to one consequence of the globalisation of business activity. While companies can split their value chain activities across countries (e.g. to reap the benefits of low wages and access to natural resources), governmental regulation is often still bound to national borders, impeding the effective regulation of transnational social and environmental problems. The emergence of such governance gaps (i.e. areas in which governments and intergovernmental institutions do not contribute much, if at all, to problem solutions) has spurred the proliferation of private global business regulation. Such regulation is usually based on the adoption of voluntary CSR standards, including principles, certification, reporting and process standards, which firms voluntarily join.

The final part of this textbook looks at the underlying issues that corporations manage when addressing corporate social responsibility (CSR). Unlike other textbooks, which often focus mostly on CSR as a concept and its link to different stakeholder groups, we believe that emphasising real-life issues such as labour rights and corruption is critical. Without knowledge about such issue areas, it is hard to understand how CSR looks like in practice and how it is ‘lived’ in corporations.

Chapter 15 outlines the debate around business and human rights. Karin Buhmann and Florian Wettstein look at what human rights mean, both in general and in the particular context of corporations. Their chapter shows why non-state actors need to take human rights concerns seriously and how this debate relates to CSR. Most of all, they revisit a number of regulatory and policy frameworks that businesses need to be familiar with when managing for business and human rights, such as the United Nations Guiding Principles on Human Rights. Putting such a policy framework into action is still a challenge for many companies, as they often lack the capacity and the knowledge. The chapter shows how such challenges can be overcome.

The next chapter (16) by Hans Krause Hansen on corruption looks at one of the most neglected CSR topics. While much has been written about social and environmental problems, few people have made the link between CSR and corruption. Hansen starts by clarifying what corruption is and why it constitutes a problem for corporations and nation states. He then looks into different ways to fight corruption, ranging from state-based efforts (e.g. through extraterritorial law) to voluntary CSR-based initiatives (e.g. the Extractive Industries Transparency Initiative (EITI)). This chapter shows how widespread corruption still is and what companies can do to prevent it.

Chapter 17 by Stefano Ponte, René Toudal Poulsen and Jane Lister focuses on environmental problems. It shows the various challenges that businesses face when addressing the environmental impact of their activities (e.g. the global nature of value and supply chains). Ponte et al. discuss how far firms’ environmental strategies may align with and/or clash with emerging environmental regulations on the national and international level.

Part I focused on how business organisations themselves engage in CSR, including how their approaches have long reflected societal, governmental and stakeholder expectations and institutionalising pressures. But CSR is also regulated by actors and mechanisms outside the company. This is the focus of Part II. The chapters examine more specific forms of regulation shaping contemporary CSR, reflecting CSR's shift from ‘complete to partial organisation’, and its internationalisation which brings new forms of institutionalisation beyond its national configurations. These forms of regulation vary in nature: from NGO threats to corporate reputation and legitimacy; through forms of partnerships that businesses enter with other businesses, NGOs and governments (including for standards and non-financial reporting systems); to incentives and rules devised by governments to encourage and shape CSR.

Andreas Rasche and Sandra Waddock (Chapter 7) introduce CSR standards which are designed to specify particular principles, enable certification, require some form of reporting and evaluate processes of CSR. Rasche and Waddock indicate how CSR standards have proliferated and strengthened, including through interaction with governmental regulation. They consider their legitimacy and wider impact on firms, consumers and the issues the CSR standards address. Finally, Rasche and Waddock weigh up some of the criticisms of CSR standards as a form of business regulation.

In Chapter 8 Christian Herzig and Anna-Lena Kühn present an overview of the development and main forms of non-financial reporting. They detail how companies have shown a great interest in this form of reporting, and the different national and sector approaches that have emerged. Herzig and Kühn investigate the underlying involvement with stakeholders, the significance of the Internet as the medium for reporting, the implications of the limited assurance and wider critiques of non-financial reporting.

Frank G. A. de Bakker and Frank den Hond present what is often a more unwelcome form of regulation than detailed in Chapters 7 and 8, namely NGO activism (Chapter 9). They introduce different forms of NGO activism, its impacts on corporations and how corporations respond. De Bakker and den Hond also reveal how NGOs can adopt less hostile strategies to regulate firms through partnerships, and how other NGOs develop their own business models to advance their social objectives.

The significance of corporate social responsibility (CSR) for business, society and governance is now undisputed. It is even discussed at length by its traditional critics, ranging from neo-liberal economists to anti-corporate campaigners and scholars. Yet, it is also a contested concept, not only by its critics, but also by those who claim to work for it. Our aim is to clarify understanding of CSR and the nature of and reasons for the contestation.

This textbook joins a growing number of texts and other resources on CSR. It is designed for advanced undergraduate and postgraduate students, although no prerequisite knowledge is assumed. But, what you are holding in your hands (or viewing on your hard-drive) differs in many ways from other textbooks on CSR and such related concepts as business and society and corporate sustainability. This is for five main reasons: its conceptual ambition; its focus on issues; its critical awareness; its integration of expertise; and its attention to how you learn from it, or pedagogy.

First, this book is unique in bringing together three indispensable conceptual perspectives on CSR: strategy, governance (including regulation) and communication. Like most other CSR textbooks, we address strategic approaches to CSR in our book (Part I). However, we bring new perspectives on these, including critical and developing country viewpoints. We also examine the role of governance in CSR because so much of CSR now pertains to socio-economic governance and the political nature of corporations’ responsibilities. This book helps students to explore how CSR itself is regulated (Part II), and the role that corporations play in new governance arrangements (e.g. multi-stakeholder initiatives (MSIs) or public–private partnerships – Part IV). As much of CSR is about communicating firms’ social and environmental responsibilities, we invite students to think about how communication is formative of CSR actions (Part III). We explore the significance of CSR communication in different contexts, such as crises, transparency and reputation management.

Second, while other CSR texts are structured around stakeholders or management issues, they often give rather selective attention to the issues that CSR practitioners are concerned with.

Learning Objectives

The Corporation in Society: Shifting Perspectives

Consider the following three facts: The revenue of the largest corporation in the world, Wal-mart Stores ($482 billion in 2014), is worth more than the gross domestic product (GDP) of all but twenty-seven of the world's economies. The world's largest asset management firm, a New York-based company called Black Rock, currently manages $4.5 trillion of assets and thus invests more money than the total monetary reserves of any country in the world (China having the largest reserves with $3.9 trillion in 2015). The Bill and Melinda Gates Foundation, a private philanthropic organisation, spends about $3.9 billion annually on healthcare and development work, about the same amount as is spent by the World Health Organization (see also Rothkopf, 2012). What do these three facts suggest? They show that the relationship between public and private authority has taken an interesting turn in recent years. Globalisation together with an emerging privatisation of public goods/services has given rise to a situation where the state has withdrawn from many areas where it traditionally exercised a regulatory monopoly, such as in many Western countries. Nowadays corporations provide goods such as water, transport, education and healthcare. Private firms even run prisons, provide security and have become important actors in the conduct of war. In short, corporations are increasingly critical to a number of aspects of society, including many which are fundamental to security and welfare. As a result, they have become more powerful actors and often assume a political role, either directly or indirectly. This shift in power has important implications for how we understand and manage firms’ responsibilities towards society.

Due to their increased size and reach, corporations contribute significantly to some of the world's most vital social and environmental problems, such as overfishing of the oceans, water scarcity, violation of human rights, corruption and deforestation.

The first part of the book discusses the link between corporate strategy and CSR. This link has been subject to much debate among academics and practitioners. Some believe that CSR should always be well aligned with a firm's strategic direction, which means that responsibility needs to pay off for corporations, and that it has to support firms’ long-term objectives and strategic positioning on the market. Others do not necessarily fully reject the importance of such a strategic alignment, but they emphasise that firms’ engagement in CSR should not be limited to such a strategic understanding. After all, CSR is often needed in precisely those situations where strategic fit is missing.

The chapters in this section show that CSR and strategy can be related in different ways. Business strategy can be used as a justification for CSR (‘You only do CSR because it serves your business.’); it can be seen as part of the rationale for CSR (‘You do CSR and it serves your business, but it is not the only reason to engage in it.’); and it can be seen as one way to conduct CSR (‘You do CSR and you do it in a strategic way.’).

Jeremy Moon, Luisa Murphy and Jean-Pascal Gond (Chapter 2) start us off with a journey back in time to explore how CSR has changed throughout history. This discussion shows that the ‘strategic’ nature of CSR is by no means a given. The chapter frames business–society–government relations as a context for understanding different CSR issues, norms and rationales. If we want to understand how firms have linked strategy and responsible business, we have to appreciate the meaning of CSR in different contexts and at different points in time. Steen Vallentin and Laura Spence build on these remarks in Chapter 3, introducing different arguments that can be made for and against a strategic understanding of CSR. They show how strategic CSR itself went through different phases of development, from early discussions of a strategic view on philanthropy to more recent discussions on creating shared value (CSV). They also debate the limits and inherent contradictions of a strategic view on CSR.

The third part of the book discusses corporate social responsibility (CSR) communication as a new area, reflecting the emerging CSR literature's responses to the increased demand on companies to be more explicit and transparent about their CSR activities. This selection of chapters introduces key concepts to understand the opportunities for business engagement in CSR communication, while it also unfolds the complexity and approaches to manoeuvre this complexity in the context of social media. CSR communication is most often linked to the way that companies present their CSR activities to external audiences in advertising, marketing campaigns or CSR reports. The basic idea is that the positive association of CSR will lend itself to improve the corporate image. However, in practice many companies have experienced such communication attracting attention from sceptical stakeholders who criticise the company for not doing enough or for doing the wrong things. All chapters in this part point to this ‘double edge’: CSR communication is necessary, yet it has reputational risks. CSR communication must be managed, yet it is often beyond the corporate control to do so. With the rise of social media, many different stakeholders take part in the conversation about companies’ CSR. As such, the corporate messages from managers are only one among many other voices that come to influence the CSR communication and present managers with new challenges.

Mette Morsing (Chapter 11) introduces some of the key approaches to CSR communication. The discussion points out how CSR communication not only includes the strategically planned communication from managers but also the less planned and informal forms of communication. The chapter presents an overview of three CSR communication strategies and provides students with an insight into the main phases of the development of CSR communication. Tim Coombs (Chapter 12) builds on this overview by showing how crisis communication is centrally linked to CSR and reputation. Coombs takes the reader through the central modes of crisis communication exemplified by cases that illustrate the importance for companies in knowing how to respond when crises hit. Finally, Coombs recommends how to engage with CSR crisis communication.