Christian R. Thauer

Goodness Comes From Within Intra-organizational Dynamics of Corporate Social Responsibility

This article makes the case for the importance of paying attention to the internal dynamics of business in order to understand why and under which conditions firms engage in corporate social responsibility (CSR). The argument is that CSR assists decision-makers in firms to resolve managerial dilemmas. By a managerial dilemma this article understands a situation whereby the execution of management’s decisions requires asset specific allocation of resources.  Asset specific allocation of resources transforms the intra-organizational mode of social coordination from a hierarchy to one in which managers become dependent on, and vulnerable to, the behavior of subordinates. It is in these situations that corporate decision-makers introduce CSR standards in their attempt to avoid the foreseeable loss of control and organizational efficiency.

Racing to the Top

Sans Fibre, a large chemical industrial textiles firm in Bellville, Cape Town, was a heavy environmental polluter during apartheid times (Heritier et al. 2009, Bray and Thauer 2014). The surrounding neighborhoods suffered badly from the Sans Fibre factory’s industrial fallout, effluents, uncontrolled hazardous waste disposal and emissions. With South Africa’s full transition to democracy, the local community would not take it any more. Citizens rallied together against the business. To force the company to reduce its pollution output, inhabitants organized a series of actions. A media campaign was launched; protests were organized in front of the factory gates; and local politicians and state representatives, who in South Africa often lack the capacity to enforce environmental laws, were pressured to take action against the pollution of the firm. As a consequence, the firm agreed to establish an environmental forum as a conflict mitigation mechanism. In the context of this forum, Sans Fibre was forced to negotiate pollution reduction measures with the local community. Today, the firm is in the process of ISO 14001 environmental management certification, and has significantly mitigated its negative impact on the locality.

HIV/AIDS in South Africa

“In South Africa, the government is hugely constrained in its ability to deliver, for a whole host of reasons: corruption, incompetence, poor leadership, incapacity, legacy of apartheid and so on.”1

Business, Governance and Government in South Africa: The Legacy of Apartheid

Business and government relations as well as industrial relations (such as between labor and capital) in general follow a corporatist pattern in South Africa (Adam 1998, Dunn and Donnelly 2006). Similarly to the experience in Europe (especially Germany), South African corporatism of today has its roots in past anti-liberal ideology and regime type (Murray 1982, Pretorius 2000, Streeck and Kenworthy 2003). Apartheid South Africa organized its economy based on the idea of autarchy and in a context of international isolation as a highly organized market economy (Barnes and Black 2003, Black 2001, Black and Mitchell 2002). A main organizing principle was that of racial segregation: the economy of the country depended on ‘white’ capital exploiting ‘black’ workers (Bramble and Barchiesi 2003, Lipton 1985, Murray 1982). The mining industry is illustrative in this respect. As Honke points out in her chapter on HIV/AIDS governance, the industry was based on a racial model of migrant labor ever since the opening of the first mines in 1886 (Lipton 1985, Murray 1982). ‘Black’ Africans from all over Southern Africa were brought to the mines owned by ‘white’ settlers, as underpaid workers, separated from their families and exposed to dangerous and humiliating working conditions. The Chamber of Mines (CoM) played a key role in institutionalizing and maintaining this system.