Wim Dubbink

Deliberative Democracy and Corporate Governance

This paper explores the implications of a political conception of corporate social responsibility for corporate governance. More specifically it discusses the implications of the theory of deliberative democracy of Jurgen Habermas for models of stakeholder democracy. Since there are several varieties of capitalism the paper relates the room for stakeholder influence and co-determination to the degree of freedom of economic actors within varieties of capitalism. Although the debate about a possible convergence to the shareholder model is still undecided, it is argued that there are good reasons to believe that the extent and institutionalization of stakeholder democracy within a capitalist economy is largely dependent on the institutional history or path taken within a national business system and the adaptive strategies of economic actors themselves. Finally, the paper describes the implications of four principles of stakeholder democracy for corporate governance, given the varieties of capitalism. Besides the national level, some of the implications of deliberative democracy and the related concept of human rights are explored for the international business system.

Case Description: A Matter of Involvement – Unilever and Indian Cottonseed Cultivation

On 3 May 2003 a coalition of non-governmental organisations (NGOs) accused the multinational Unilever of being involved in child labour in India’s cottonseed industry. The company responded by emphatically denying any direct or indirect involvement in child labour. In the public uproar that followed, the coalition of NGOs and Unilever disputed the truth of almost any fact the opposing party produced, including facts concerning the severity and the extent of child labour; even if all parties agreed that child labour is common in the cottonseed industry and that neither Unilever nor its first tier suppliers have employed children themselves. The concrete demands being made of the multinationals and the grounds upon which these where based, almost got lost in the discussion. Upon closer inspection these revolve around four issues: the extent of Unilever’s chain responsibility; Unilever’s supposed historical blame for child labour in the cottonseed industry; The reasonableness of Unilever having to assume a positive duty to help fight child labour; And the level of precautions the company must take to prevent indirect involvement in child labour.

A Question of Involvement: Unilever and Indian Cottonseed Production

On 3 May 2003 a coalition of non-governmental organisations (NGOs) accused the multinational Unilever of being involved in child labour in India’s cottonseed industry. The company responded by emphatically denying any direct or indirect involvement in child labour. In the public uproar that followed, the coalition of NGOs and Unilever disputed the truth of almost any fact the opposing party produced, including facts concerning the severity and the extent of child labor; even if all parties agreed that child labour is common in the cottonseed industry and that neither Unilever nor its first tier suppliers have employed children themselves. The concrete demands being made of the multinationals and the grounds upon which these where based, almost got lost in the discussion. Upon closer inspection these revolve around four issues: the extent of Unilever’s chain responsibility; Unilever’s supposed historical blame for child labour in the cottonseed industry; The reasonableness of Unilever having to assume a positive duty to help fight child labour; And the level of precautions the company must take to prevent indirect involvement in child labour.