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Corporate Social Responsibility (Fach) / Lecture 6: Government & Civil Society (Lektion)

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• Functions of the Government Enabler of  business Rules of Law Constraints on government power Absence of corruption Open government Fundamental rights Order and security Regulatory enforcement Civil justice Criminal justice Informal justice Contraint on business Economic wide: taxes, avoiding negative externalities and monopolies Stakeholder: minimum wages, prevent misleading marketing Environment: regulatory limits to air pollution Globalization has made governments increasingly less capable of sufficiently constraining business
• For capitalism to work, governments MUST resolve two main problems: Negative externalities Costs that result from the production of a good that are not incorporated in the price of that good. (Instruments:Taxes, Prohibition) Monopolies Avoid that market power is accumulated in the hands of a few.
• Globalization and the problem of negative externalities As a result of globalization, externalities are: Expanding more difficult to detect While companies are better able to: escape the scope of national governments exert “corporate power of transnational withdrawal” “Race to the bottom”
• Globalization and the problem of monopolies Globalization has had both positive and negative effects on the free market system: Positive: Larger markets More competition  Negative: Increased corporate political activity and accumulation of monopolistic power Globalization, and the resulting enhanced competition, is considered to be a threat by: Incumbent firms The ‘losers’      Leads to political lobbying Corporate political activity to: Curb competition Suppress markets It requires an extremely courageous political to resist these pressures   
• Pirate organizations Pirate organizations are active in unchartered territories. When capitalism expands into new territory, monopolies, not free markets, are the means of expansion.  Pirate organizations advocate for the public ownership of the unchartered territory. They are a key source of innovation (i.e. “creation”).
• Public goods Non-excludable Non-rivalrous For profit organizations are limited in their ability to produce public goods. Therefore, they are often produced by: Governments Nonprofit organizations     
• Types of nonprofit organizations Donative nonprofits Commercial non-profits Purchasers ≠ recipients The non-distribution constraint in nonprofit organizations gives donors the confidence that the organization will not take advantage of contract failure.   
• For profit social enterprises Owners: shareholders Residual control rights: shareholders & boards of directors Residual earnings rights: shareholders, however earnings are limited. 
• Social enterprises: the very opposite of capitalism Social enterprises: Pursue “less than maximum speed of growth”. Have driving positive social and/or environmental change as THE organizational objective: Avoiding (or ignoring) negative externalities vs. creating positive externalities  Actively invite new entrants and imitation.  
• Civil Society Organizations Civil society organizations play an extremely important role in protecting society from: The government For profit (capitalist) firms But they also satisfy residual demand in society. More recently, alternative organization forms to capitalism have emerged that combine elements of for-profit and non-profit organizations.These organizations seem to be an effective and sustainable alternative to capitalism
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• Civil society is often said to comprise a third sector after the market and the state regarded as a counterbalance to the state made concrete through civil society organizations (CSOs) Include NGOs, pressure Groups, Charities, Unions... CSOs represent largely the interests of individual stakeholders Goals: guarding against the abuse of power and ensure people bests interest ensure a degree of social and political pluralism goals like: animal protection, social welfare, environmental protection...
• Different types of CSOs Sectional Group trade unions, student bodies represent specific section of society member-based Promotional Groups focused on promoting specific causes or issues anti-smoking groups, pro-life groups membership open to all
• CSO Tactics Indirect action: research and communication about relevant issues Violent direct action is often illegal but generates the most publicity destruction of property violence towards people non-violent direct actions demonstrations, protests, letter, email or social media campaigns boycotts
• Globalization and civil society organizations Engagement with overseas CSOs Global issues and causes Globalization of CSOs
• Corporate Citizenship and civil society increasing incidence of more intensive business-CSO collaboration to seek more partnership-based solutons to social and environmental problems Developed social enterprises  corporate fondations to manage philantrophic activities employee volunteering
• Social enterprise social and economic value creation profit earning  production and trade of social goods and services based on participation and democracy amongst stakeholders
• Government definition The government consits of a variety of insitutions and actors at different levels that share a common power to issue laws
• Law definition Laws serve a a codification into explicit rules of the social consensus about what a society rards as right and wrong
• Regulation definition Regulation is all about the rules governing business behavior rule-making  enforcement
• Government as a stakeholder of business Representative of citizens interests restricting business enabling business Government as an actor dependent on business competing with business
• Business influence on government Lobbying party financing corruption privatization of governmental functions
• Lobbying Atmosphere setting awareness-raising process intended to enhance government appreciation of industry issues and products events, diners, informations Monitoring building up relations with politicans to receive information Provision of information to policy-makers strong relationships  Advocacy and influencing influencing politicans offering policy-oriented expertise and consultancy Application of pressure use information to pressure politicans
• Players in the regulatory game Goverment  CSOs Business All together: Multiparty agreements  UN Gloabl compact European Alliance for CSR

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