Anselm Schneider

Democratizing Corporate Governance Compensating for the Democratic Deficit of Corporate Political Activity and Corporate Citizenship

This article addresses the democratic deficit that emerges when private corporations engage in public policy, either by providing citizenship rights and global public goods (corporate citizenship) or by influencing the political system and lobbying for their economic interests (strategic corporate political activities). This democratic deficit is significant, especially when multinational corporations operate in locations where national governance mechanisms are weak or even fail, where the rule of law is absent and there is a lack of democratic control. This deficit may lead to a decline in the social acceptance of the business firm and its corporate political activities and, thus, to a loss of corporate legitimacy. Under these conditions corporations may compensate for the emerging democratic deficit and reestablish their legitimacy by internalizing democratic mechanisms within their organizations, in particular in their corporate governance structures and procedures. The authors analyze the available corporate governance models with the help of a typology and discuss the possible contributions of a new form of democratic corporate governance.

Embracing ambiguity – lessons from the study of corporate social responsibility throughout the rise and decline of the modern welfare state

In the work of Karl Polanyi, the negative effects of a self-regulating market economy are described as being limited by societal forces such as the policies of the welfare state. With the decline of the modern welfare state since the late 1970s, social activities of business firms are increasingly regarded as an important complement to or even as a substitute for welfare state policies by a part of the literature. However, and controversially, another stream of argumentation regards these activities as being aimed at advancing the reach of market forces. To fully grasp the ambiguous nature of the social activities of business, in this paper I provide an account of affirmative as well as of critical interpretations of these activities throughout the history of modern capitalism. On this basis, the power of critique to disentangle the diverse motivations that underlie the social engagement of business is highlighted as a condition for facilitating a role of business in society that balances economic and social considerations.

Globalization and the Political Role of the Firm: Implications for Corporate Governance

Corporate governance practice is mainly centered on the protection of investors’ rights. However, this view neglects the fundamental changes in the operating conditions of business due to globalization and the weakening of regulatory frameworks. Weak or absent enforcement of contracts, increasingly unfettered negative externalities of corporate action, and involvement of private actors in the provision of public goods change the role of business in a fundamental way, rendering it a political actor. Resulting in the extension of corporate power these developments challenge the very assumptions of efficiency based corporate governance theory. Recurrent misuse of power poses a threat to organizational legitimacy as well as to the legitimacy of the capitalist system. Drawing on suggestions to restore organizational legitimacy by means of discursive processes, we argue that opening corporate governance to such processes is a suitable means to safeguard organizational legitimacy in a globalized world. Based on these considerations, basic requirements as well as limits for modification of current corporate governance practice are introduced.

Modelling the Interrelationship Between Business and Society: A Complexity Perspective

Increasing business involvement in political processes and the rising significance of the negative externalities of business firms raise the complexity of the environments of business firms and eventually threaten their long-term viability. We suggest that the analysis of business firms’ approaches to tackling this complexity provides fruitful insights for institutional theory as well as for the understanding of the relation between business and society. First, we show that decoupling – conceived as a response to environmental complexity – might increase firm- internal as well as firm-external complexity, impairing the stability of decoupling processes. Second, we explain different responses to institutional complexity by reference to the complexity-reducing properties of these approaches and their respective organizational costs. Third, we offer a comprehensive framework for understanding the different modes of interaction between business and society.

Embracing ambiguity - CSR throughout the rise and decline of the modern welfare state

In the work of Karl Polanyi, the negative effects of a self- regulating market economy are described as being limited by societal forces such as the policies of the welfare state. With the decline ...