1,326
Views
43
CrossRef citations to date
0
Altmetric
Original Articles

Can business make decisive contributions to development? Towards a research agenda on corporate citizenship and beyond

Pages 175-195 | Published online: 16 Aug 2006

Abstract

This introductory article considers the increasingly prominent expectation that business can and will make a significant contribution to sustainable development under the banner of corporate citizenship or related terms. It suggests a research agenda that questions the underlying assumptions of this discourse and addresses some of the practicalities of enhancing the business contribution to development, with a focus on southern Africa. The suggested key research themes acknowledge the complexity and contradictions in current debates and expand the corporate citizenship agenda to embrace the possibility of more fundamental and systemic changes. These themes are (1) relating corporate citizenship to the southern African context; (2) the scope for innovative business opportunities and a new purpose for business; (3) the drivers and enabling conditions for corporate citizenship; (4) implementing corporate citizenship; and (5) measuring and monitoring the impacts of corporate citizenship efforts. The article cautions against too much optimism or excessive reliance on business contributions to development and it emphasises the need and opportunity for investigating the many open questions introduced here and in the articles in this special issue.

1. Introduction

Attainment of the Millennium Development Goals (MDGs) is least likely in sub-Saharan Africa. Despite advances in some areas, such as schooling, many countries in the region are experiencing setbacks in terms of poverty levels, health and effective governance, among other things (UN Economic Commission for Africa, Citation2005). Although the ‘capacity and quality of government’ remains a key focus of policy makers or analysts (Commission for Africa, Citation2005; UN Economic Commission for Africa, Citation2005: 13), there are increasing expectations that the private sector has a vital role to play in achieving the MDGs. Indeed, the MDGs themselves explicitly call for business involvement in ‘a global partnership for development’ (MDG goal eight; see also the outcomes of the World Summit on Sustainable Development – United Nations, Citation2002).

Over and above the importance attached to the need for a growing private sector for increased employment opportunities and investments, there is a relatively novel emphasis on the private sector itself and the role it can or should play in sustainable development. Perhaps the most prominent expression of this is the UN Global Compact, an initiative of the Secretary General, which enjoins companies to abide by and promote ten principles in the areas of human rights, labour, environment and anti-corruption. The initiative's website argues:

Through responsible business practices, business is making a unique and significant contribution to implementing the Millennium Development Goals. Private enterprise is at the heart of growth and development. By taking a principle-based approach to business, companies can help to ensure that sustainable development is achieved and that the benefits of globalization are shared more widely. (www.unglobalcompact.org)

A report co-published by the UN Development Programme suggests that it makes business sense for companies to contribute to the MDGs because this builds a sound business environment with healthy employees, prosperous consumers and reliable trading systems, enhances companies' ability to manage costs and risks associated with social issues, such as HIV/AIDS and conflict, and provides potentially important business opportunities related to new markets, products, or services. Companies are called upon to support the MDGs by means of their core business activities in the workplace and marketplace and along the supply chain, in their social investment and philanthropic activities, and through an engagement in public policy dialogue and advocacy. Examples that are given of such initiatives with a bearing on southern Africa include Anglo American's ‘comprehensive small business outreach programme’ and the South African National Business Initiative's support for government schools (Nelson & Prescott, Citation2003: 8, 10).

A prominent role for business is also envisaged in recent efforts focused on Africa's development. The Commission for Africa argues: ‘Businesses must sign up to leading codes of good social and environmental conduct, including on corruption and transparency, and focus their efforts on coordinated action to tackle poverty – working in partnership with each other, with donors, with national governments, and with civil society, including trades unions’ (Commission for Africa, Citation2005: 74). Similarly, Nepad has recently launched a project in conjunction with the African Business Roundtable and the UN Office of the Special Advisor for Africa, focused on involving the private sector ‘to help fast track the attainment of the MDGs in Africa’. The initiative promises to develop a framework for business to ‘report annually on contributions towards the MDGs’ (www.bendingthearc.com).

Parts of the business community, led by prominent multinational companies, support this image of business as contributor to development. Business associations such as the World Business Council for Sustainable Development (WBCSD) have been at the forefront of efforts to argue the business case for sustainable development and to propose mechanisms through which this contribution can be implemented (www.wbcsd.ch; Holliday et al., Citation2002). In a recent report focused on the MDGs, the WBCSD argues: ‘Business is good for development and development is good for business’ (WBCSD, Citation2005: 6). A similar association of companies has also been established with a focus on Africa in the wake of the Commission for Africa's report (www.businessactionforafrica.org).

2. What's in a name?

Corporate citizenship, corporate social responsibility (CSR), and an array of other labels have emerged to signal this new emphasis on the role of business in society. In this introductory article, corporate citizenship is used as an umbrella term broadly referring to the hope that business is willing and able to contribute to sustainable development. It refers to the expectation that if companies enhance their engagement with stakeholders (Clarkson, Citation1995), if they assess and manage their social, environmental and economic impacts (the so-called triple-bottom line – Elkington, Citation1997), and if they channel some of their capacities for value creation and innovation towards developmental objectives, then these efforts will make decisive contributions to a better society.

This article does not necessarily argue in support of these assumptions, but uses the terms corporate citizenship and CSR to designate an increasingly prominent discourse on the role of business in society. The objective is to identify a core set of themes that deserve more dedicated research and discussion. More committed and coordinated investigation into these themes ought to provide important insights into the feasibility of the underlying assumptions in the corporate citizenship discourse, and it will also address more practical issues of how the business contribution to development may be enhanced.

At the outset, it must be noted that the debate on corporate citizenship is complex because the term is used in such a variety of forms and with diverse intentions. For instance:

  • Corporate citizenship as an object of analysis: in the North American management literature, in particular, terms such as CSR have been discussed for a number of decades already. This debate has devoted much of its energy to defining the term for the purpose of statistical analysis, with an emphasis on trying to prove a relationship between a company's social performance and its financial performance (Carroll, Citation1999; Margolis & Walsh, Citation2003).

  • Corporate citizenship as a normative injunction: initiatives such as the UN Global Compact and much of the grey literature on the topic claim that business should act responsibly and contribute to development, and they provide normative frameworks to guide such behaviour ( provides the Global Compact principles). References are made to the business case, or the expectation that corporate citizenship is good for profits, at least in the medium to long term, but in many instances the explicit or implied message is that abiding by corporate citizenship principles is simply the ‘right thing to do’.

  • Corporate citizenship as a management doctrine: few large multinational companies do not devote attention to corporate citizenship in some form or other, and providing advice and assurance to these efforts has become a growing industry. For instance, the Global Reporting Initiative (GRI) provides guidance on sustainability reporting (www.globalreporting.org). The big accounting firms, as well as a host of smaller companies, give advice on strategy and management systems and provide assurance statements meant to give credibility to companies' sustainability reports. The clearest sign yet for the mainstreaming of CSR is the development of a social responsibility management system by the International Organization for Standardization (www.iso.org).

  • Corporate citizenship as an object of critique: the first, more long-standing critique of CSR and related terms argues that it gets in the way of what business is meant to do: make profits (Friedman, Citation1970). According to Henderson: ‘The case against CSR is not that it would necessarily be bad for profits, but that, whatever its effects on enterprise profitability in particular cases, it would make people in general poorer by weakening the performance of business enterprises in their primary role’ (Henderson, Citation2005: 32). The second critique comes from the other end of the spectrum, arguing that the CSR discourse amounts to an attempt by business to legitimate its hegemonic position and to pre-empt more radical changes to the system, particularly in the form of stricter government regulation:

    CSR is a completely inadequate response to the sometimes devastating impact that multinational companies can have in an ever-more globalised world – and… it is actually used to mask that impact. Those who suffer the most as a result are the poor and vulnerable people in developing countries and the environments in which they live. Business, moreover, has consistently used CSR to block attempts to establish the mandatory international regulation of companies' activities. (Christian Aid, Citation2004: 2)

Table 1. The UN Global Compact principles

These various interpretations and versions of corporate citizenship make it a slippery concept to approach for research purposes. This introductory article suggests a research agenda that acknowledges the diversity and contradictions in the debate. It seeks to provide a set of overarching, simple research themes that capture the key issues, based on published research frameworks on this or related topics (e.g. Pettigrew, Citation1988; Fox, Citation2004; Blowfield & Frynas, Citation2005), while allowing for different vantage points and methodologies. This is important also because corporate citizenship is an inherently multi- and interdisciplinary concept. As mentioned, it has been a subject for debate in the management literature for some time already, but it also requires increased attention from sociologists, development scholars, and others. This is particularly so in view of the growing link between corporate citizenship and development, which is relatively new and not as established in the academic literature.

Indeed, the research symposium from which this special issue of Development Southern Africa draws its papers was explicitly meant to provide a platform for discussion among diverse perspectives on corporate citizenship. Hosted by the UNISA Centre for Corporate Citizenship, the symposium took place in July 2005 at the UNISA School of Business Leadership. It featured 21 papers selected from over 40 submissions from six African countries and four continents and it also included panel discussions with representatives from business and other organisations. As stated in the proceedings, ‘[corporate citizenship or CSR] offers common currency for researchers and practitioners working on issues as diverse as workers’ rights and biodiversity conservation' (available at www.unisa.ac.za/ccc).

However, it must also be noted that the terms corporate citizenship and CSR may have inherent limitations. They have a history that gives them connotations that may be difficult to shake off. For instance, in some quarters CSR is still seen as synonymous with corporate philanthropy, with little understanding of the broader, more complex interactions between business and society. The overarching concern is that, like the critique of corporate citizenship mentioned above (see the quotation from Christian Aid, Citation2004), the discourse of corporate citizenship has a conservative character in that it encourages ‘tinkering at the edges’ and stifles the fundamental, systemic changes that seem necessary for improved livelihoods in Africa.

Over and above providing a set of key research themes, this article therefore seeks to deliberately expand the content and purpose of the term corporate citizenship. It will also suggest that perhaps new concepts and terms are called for, beyond the corporate citizenship discourse, in order to push current approaches to the role of business towards more fundamental or systemic changes.

3. What does corporate citizenship mean in Southern Africa?

The corporate citizenship movement is linked to the sustainable development agenda launched in earnest at the Rio Earth Summit in 1992, as well as to increasing anti-globalisation sentiments most prominently expressed in demonstrations at meetings of the World Trade Organisation and similar bodies (Christian Aid, Citation2004; Utting, Citation2005). Many of the initiatives linked to this corporate citizenship movement, such as the UN Global Compact and the Global Reporting Initiative, have a global reach and refer explicitly to universal principles. Furthermore, most of these initiatives and the corresponding definitions of corporate citizenship or CSR have their origin in developed countries (see ). Finally, the academic literature, especially in management-related fields, has focused primarily on corporate citizenship as it applies in developed economies.

Table 2. Sample definitions of corporate citizenship, CSR or related terms

Despite the importance of universal principles, for both company management and other stakeholder groups, there are recurring tensions between universal expectations and local challenges and opportunities. In particular, there is the concern that universal definitions and approaches to corporate citizenship, with their origin in developed economies, may not sufficiently relate or respond to the context and circumstances encountered in developing economies (Fox, Citation2004). Given the particularly pressing development challenges encountered in southern Africa, this need for contextual relevance is perhaps especially important in this region, giving rise to the first overarching research theme: ‘What does corporate citizenship mean in southern Africa?’.

The argument that corporate citizenship needs to be responsive to the southern African context has a number of important components, each of which has ramifications for the research agenda. First, corporate citizenship in southern Africa needs to respond to the development challenges particular to the region, rather than the vision of sustainable development prominent in developed countries. Even within southern Africa there are manifold contextual differences with important implications for the definition and implementation of corporate citizenship (Malan, Citation2005). As argued by a representative of a large mining company: ‘As an international company we are sensitive that we don't act as colonialists and apply the North American views of sustainable development to this region.’

Southern Africa's pressing development challenges relate to deepening poverty, high levels of unemployment and increasingly vulnerable livelihoods, high levels of urbanisation, severe housing backlogs and lack of basic services, environmental degradation and the spread of HIV/AIDS and other diseases. These challenges are not unique to the region, but they have a special character and severity, and this shapes the definition and implementation of corporate citizenship-related activities. To begin with, debates related to corporate citizenship in the region are characterised by the prominence of particular priority issues, such as skills development and HIV/AIDS. Concerns about the housing shortage pose particular challenges, for instance, to banks faced with pressure to extend housing finance to the poor, or to mining companies faced with the spread of informal settlements around their mines. International definitions of corporate citizenship are not always sensitive to such priorities or challenges (Fox, Citation2004; Hamann et al., Citation2005a; Kivuitu et al., Citation2005).

This potential disjuncture between ‘home-grown’ conceptions of the role of business in society and the international corporate citizenship agenda is apparent in the South African debate surrounding black economic empowerment (BEE), which has corollaries in other African countries. It is apparent that important elements of BEE, such as human resource development, affirmative procurement and support for small businesses (see www.dti.gov.za/bee/complete.pdf), represent important corporate citizenship related issues. Indeed, it may be argued that BEE corresponds to a negotiated definition of what corporate citizenship means in the South African context.

However, much depends on how BEE is implemented. Critics of BEE have argued that it is primarily about the creation of a black elite, with little benefit to the poor and vulnerable. Defenders of BEE, and the state in particular, have been at pains to describe BEE as ‘broad-based’ and inclusive of issues pertaining to the needs and interests of the poor. South Africa's corporate citizenship agenda will be defined by the extent to which BEE will, in fact, benefit the poor, rather than contribute only to the establishment of a new elite. This will depend not only on the state but also on companies' interpretation of BEE and whether they will link it to broader corporate citizenship expectations. This will be a crucial area for researchers to investigate.

The historical legacy in South Africa and other African countries has further implications for corporate citizenship. The common disjuncture between an established formal economy with international linkages, on one hand, and the informal and survivalist economy, on the other hand, presents particular challenges to the role of business in development. A key element of corporate citizenship is that companies should be accountable to their stakeholders, or persons or groups that are affected by or may affect the business (Clarkson, Citation1995; see also ) – however, given this disjuncture between ‘first’ and ‘second’ economies there is the danger that the poor and powerless are not registered as stakeholders. John Sharp expands a similar line of argument in his contribution to this special issue.

The historical legacy also provides for a special role for the state. In the South African case, for instance, the Constitution tasks the state explicitly with providing redress and restitution in the wake of apartheid. The government thus has a powerful mandate to circumscribe the constitutional property clause and influence the role of business towards social objectives – BEE is the most prominent expression of this, as mentioned above. The implication of this is that corporate citizenship in South Africa and indeed Africa cannot be purely about voluntary business initiatives, as is common in definitions emerging from developed economies (see, in particular, the European Commission definition in ).

Another reason why corporate citizenship in developing countries needs to include the role of the state is that adherence to rules and regulations cannot be taken for granted, especially because government enforcement is often constrained. As noted by Kivuitu et al. (Citation2005: 3) with reference to Kenya and Zambia: ‘The limited capacity of regulators and inspectorates means that compliance with even basic legislation can be in effect voluntary’ (see also Acutt, Citation2003). Corporate citizenship commits business to comply with not only the letter but also the spirit of the law. This is also pertinent with respect to tax avoidance (Christensen & Murphy, Citation2004; see Snyckers, Citation2005, for a South African perspective).

The state is not only an important role-player in enforcing or motivating corporate citizenship: state institutions themselves may have much to learn from the principles and practices associated with corporate citizenship, as discussed by Maryanne Antoni and Quentin Hurt in their case study of the eThekwini municipality (this issue).

Significantly, the limited capacity of the state may in itself become a priority concern for companies. Particularly at the local level, the government's limited ability to provide basic services and planning frameworks in some instances challenges companies to contribute collectively to supporting local government in these functions. For instance, in the mining area around the South African town of Rustenburg, as well as in other similar areas, mining companies are realising that they cannot deal independently with the burgeoning informal settlements around the mines, which pose numerous risks to their mining business, such as escalating levels of crime, HIV/AIDS and worker absenteeism. Instead, they are searching for ways in which partnerships between the mining companies, local government and other role-players can help local government to fulfil its developmental mandate (Hamann, Citation2004). The issue of accountability in such partnerships is just one of the many that deserve careful attention. Partnerships are considered in more detail in Section 6 below.

Some of southern Africa's socio-economic challenges directly affect companies' business practices, and enlightened self-interest or even business survival informs companies' responses. A prominent example is HIV/AIDS. Many large companies with significant operations in Africa, such as Anglo American or Eskom, have realised that comprehensive, targeted efforts are necessary to reduce and mitigate the effect of the epidemic on their workforce. Smaller, national companies throughout Africa are also being driven to innovative responses to the epidemic (Kivuitu et al., Citation2005; see also Daisy Kambalame & Sean de Cleene's article, this issue). Indeed, the severity of HIV/AIDS and its direct impact on employees' lives may well have a profound effect on how corporate citizenship is motivated and implemented within companies, with some studies suggesting that employee solidarity can force the hand of top management (Dickinson, Citationforthcoming).

4. Corporate citizenship as opportunity and new purpose for business?

Some of southern Africa's socio-economic challenges may actually present innovative companies with important business opportunities. This quest for innovative products or services that benefit the poor is perhaps the most exciting and important corporate citizenship frontier, although the label ‘corporate citizenship’ is rarely mentioned in this context.

Contrary to popular assumptions, the poor can be a very profitable market – especially if MNCs [multinational corporations] change their business models. Specifically, [the poor are] not a market that allows for the traditional pursuit of high margins; instead, profits are driven by volume and capital efficiency. (Prahalad & Hart, Citation2002: 5)

This notion of business targeted at the ‘bottom of the pyramid’ is popular with big business: ‘Leading companies are offering clear development benefits through investing in new ideas designed to create opportunities for the poor’ (WBCSD, Citation2005: 7). Particular examples provided by the WBCSD include Eskom's efforts at affirmative procurement and support for small business and Vodafone's innovative use of mobile phones to extend access to financial services to the poor. An example of a much smaller but particularly innovative business opportunity is that of an advertising company in Kenya that has erected streetlights in Nairobi by asking companies to pay for those lights that will carry their advertisements – lights which are, furthermore, erected by street children (Kivuitu et al., Citation2005).Footnote2

Prahalad & Hart provide a South African example to support their thesis: ‘In South Africa, where 73 per cent of the population earns less than R5000 ($460) per month, according to a 2001 World Bank study, retail banking services for low-income customers are becoming one of the most competitive and fast-growing mass markets’ (Prahalad & Hart, Citation2002: 7). An optimistic assessment may see the major banks' recent collaborative launch of a low-cost bank account (‘Mzansi’) as further indication of big business's innovation capacity to help the poor.

However, such optimism may be tempered in the light of the broader context, in which the banks have long been a target of civil society activism for their failure to service the poor. It is also important to note that initiatives such as the ‘Mzansi’ bank account are, at least in part, a response to sustained pressure by the state in connection with black economic empowerment. These recent developments in the South African finance sector are assessed by Theresa Moyo and Shannon Rohan in their article in this issue.

The above points to a frequent critique levelled at so-called ‘best practice’ examples of business contributions to development: they focus on a particular scale of analysis without considering the broader role of the company or business (as considered again below in Section 7). This emphasises the importance of approaching corporate citizenship in broad terms, going beyond the particular corporate citizenship project or business organisation as the primary scale of analysis to also consider pertinent aspects of the political economy (Bezuidenhout et al., Citation2003; Fig, Citation2005).

A further question with regard to the quotation from Prahalad & Hart Citation(2002), above, is whether MNCs are indeed able and willing to ‘change their business models’. Considering the persistent pressures for short-term returns to shareholders, epitomised by quarterly reports, it is fair to suggest that innovative business models that effectively cater for the poor may remain a sideshow to ‘business as usual’. As argued by White Citation(2004), the former head of the Global Reporting Initiative, the corporate citizenship discourse focuses too much on peripheral elements of corporate activity and neglects core elements such as company law and fiduciary duties to shareholders.

This is why the frontier of corporate citizenship lies precisely here: where there are crucial opportunities for investigating the philosophy, practicalities, and feasibility of a revised purpose of business that places greater emphasis on value-based principles, longer time frames and the interests of a broader array of stakeholders. For instance, what are the roles of social entrepreneurship, servant leadership and related concepts in a more expanded approach to corporate citizenship? Increasingly, such questions are being asked by groups such as the Globally Responsible Leadership initiative of the European Foundation for Management Development (Arruda et al., Citation2005), which is discussed by Paul Prinsloo and his colleagues in their article in this issue. Much scope remains for researchers to question the purpose of business and the means by which it is institutionalised in company law, organisational structure and culture, and indeed in personal ethics and aspirations.

5. What are the drivers and enabling conditions for corporate citizenship?

There are three approaches to answering the question of why companies engage in corporate citizenship efforts. The first focuses on economic incentives, whereby the so-called business case for corporate citizenship maintains that it has positive impacts on profitability or competitiveness, at least in the medium and long term (e.g. WBCSD, Citation2002). The initial argument of this sort was the hypothesis that effective environmental management would increase the efficiency of the production process, reduce energy and material needs and hence increasing bottom line profits (Porter & van der Linde, Citation1995).

However, the interaction between social issues and business success is in many instances more complex and uncertain. Margolis & Walsh Citation(2003) survey 127 studies, published between 1972 and 2002, which sought to establish a relationship between corporate social performance and economic performance. They conclude that all this research effort fails to add up to a conclusive argument and, worse, that it misses the point by paying insufficient attention to the underlying tensions between the profit motive and social initiatives. It should also be noted that despite these manifold studies the relationship between CSR and profitability has scarcely been investigated in developing countries, apart from a wide-ranging study by the IFC and others that relied primarily on anecdotal evidence (IFC et al., Citation2002; see ). In this issue, Caroline Ashley & Gareth Haysom present case-study material to argue that ‘pro-poor’ tourism can have significant business benefits.

Table 3. Examples of the business case for corporate citizenship in Africa, according to IFC et al. Citation(2002)

The second approach to understanding the drivers of CSR focuses on ethical motives, often with an emphasis on why economic incentives are insufficient for delineating a social role for business: ‘The standard model of simple profit maximisation as the dominant (perhaps even exclusive) principle covering all economic activities fails to do justice both to the content of business principles, which can be much broader, and to the domain of moral sentiments, which can be quite far-reaching’ (Sen, Citation1999: 16).

The field of business ethics has already played an important role in advancing research and teaching on CSR-related issues in Africa (Barkhuysen & Rossouw, Citation2000), including a dedicated network of researchers in the form of the Business Ethics Network Africa (www.benafrica.org). It has also been at the forefront of discussions about the role of traditional norms and customs in adapting Western business models for the African context or shaping indigenous forms of business organisation.

The third approach emphasises the institutional dimension, directing ‘attention toward forces that lie beyond the organizational boundary, in the realm of social processes’ (Hoffman, Citation1999: 351). It investigates how changes in companies' organisational fields, constituted by the government, business associations, funding organisations, non-governmental organisations (NGOs) and other stakeholders, as well as more intangible cultural elements, influence these companies' behaviour. In particular, institutions – the ‘rules of the game in a society’ (North, Citation1990: 3) – influence companies' behaviour because of the companies' need to establish and maintain legitimacy (Bansal & Roth, Citation2000).

Rather than seeing economic, ethical and institutional approaches to CSR as distinct, it is important to realise that they are closely interrelated, with an overarching role for the institutional dimension (Hamann, Citation2004). In the example of the South African mining industry, the institutional context prior to 1994 encouraged an approach to CSR that emphasised philanthropic gestures in the name of ‘corporate social investment’ (CSI), which failed to make a meaningful impact especially because it coincided with abuses of human rights linked to the migrant labour system and single-sex hostels, as well as safety and health concerns in the mines. As noted by one company director: ‘Pre-1994… there was a different culture.’

Political changes since 1994, epitomised in the Constitution of 1996 and mining-specific legislation such as the Mines Health and Safety Act of 1996 and the Mineral and Petroleum Resources Development Act of 2002, have brought forth a much more inclusive and committed approach to CSR. These institutional changes at national level have also had an impact at the local level, with local community groups and local councillors becoming more adamant and confident about their socio-economic and environmental rights.

Institutional changes in the South African state have been complemented by developments in the market, with the establishment of investment indices focused on sustainability issues at the Dow Jones and FTSE signalling an increasing emphasis by international investors on such concerns, and backed up by a growing network of NGOs monitoring corporate conduct. As noted by a manager of a South African company that moved its primary listing to London in the 1990s: ‘Once we were listed in London, the whole world was watching!’. Such market changes have also occurred in South Africa, most prominently in the form of the second King Report on Corporate Governance published in 2002, which explicitly commits companies to reporting on social and environmental issues, and the establishment of the JSE Socially Responsible Investment Index in 2004 (see the article by Dan Sonnenberg & Ralph Hamann in this issue).

Significantly, this confluence of institutional changes at local, national and international level has not only impacted on management's understanding of what it means to maintain legitimacy (Bansal & Roth, Citation2000) but also informed its assessment of a company's risk profile and access to finance and other resources (the economic perspective), and what it means to ‘do the right thing’ (the ethical dimension). How this interaction manifests in different companies, sectors and economies in Africa is a crucial research theme, with implications for managerial practice and public policy, as well as academic theory.

An institutional perspective on CSR hence highlights the crucial role of both civil society and the state in engendering more committed forms of management response (see also Fox, Citation2004; Lund-Thomsen, Citation2005). This gives rise to the need for tackling capacity constraints amongst such organisations, as noted by Kivuitu et al. (Citation2005: 3) with reference to Kenya and Zambia:

A critically important contextual factor for business activities generally in both Kenya and Zambia, as well as CSR more specifically, is the relative lack of capacity within many of the institutions that could exert pressure on companies to operate responsibly. This applies in particular to the public sector… But it also applies to a lack of capacity within other supporting institutions, including businesses and business associations; specialist local CSR intermediary organisations; and NGOs working on particular aspects of CSR.

The role of the state in corporate citizenship is perhaps a particularly significant issue in developing countries, as mentioned above in the context of defining corporate citizenship and the example of BEE in South Africa. BEE is a clear indication of how the state can play a crucial role in providing incentives, pressures and benchmarks for CSR. In particular, the South African state is using its position as the country's largest buyer of products and services to force companies to comply with its BEE requirements, especially in those sectors where it does not have direct control (in the form of mining licences, for instance).

The potential role of the public sector in providing an enabling environment for corporate citizenship is outlined in . To illustrate, the South African government's BEE policies encompass the mandating and facilitating roles, and it has also played a facilitative role in other initiatives, such as the Kimberley Process, an international initiative to curb the sale of so-called ‘blood diamonds’. But there is much more scope for the government, in South Africa and elsewhere, to monitor and assist partnerships between business and other role-players, particularly because most of the existing initiatives of this sort have not fulfilled their promise (AICC, Citation2004).

Table 4. Public sector roles in strengthening CSR

An increasingly important area where the South African government could make a more significant contribution is in promoting South African companies' corporate citizenship in other African countries. Despite the fact that South Africa has become the continent's largest source of new foreign direct investment (FDI) (UNCTAD, Citation2004), relatively little is known about the impacts of South African companies' investments in Africa in terms of employment creation, labour standards, human rights, corruption, environmental quality and sustainable development more generally. In the interests of Nepad and the reputation of South African companies as preferred investors, as well as the national reputation, there are significant expectations that the South African government has a role to play in this regard. This is also because existing initiatives relevant to South African companies in the rest of Africa are not having a significant impact, as summarised in .

Table 5. Existing corporate citizenship initiatives relevant to South African companies in the rest of Africa

There are at least three potential options through which the South African government could promote South African companies' corporate citizenship in the rest of Africa, whereby ‘promote’ goes beyond voluntary business initiatives but stops short of state regulation (AICC, Citation2005):

  • (1) The ‘easy’ option would be for the government to promote one or more of the existing initiatives. In particular, the UN Global Compact currently has only a handful of South African signatories, so a targeted publicity and endorsement campaign supported by the government could lift the Global Compact beyond a critical mass of members and make it significantly more influential in guiding corporate behaviour.

  • (2) An intermediate option would be for the government to mandate disclosure on companies' policies and practices with regard to corporate citizenship. Such regulations exist in some European countries, including the United Kingdom and France. This would facilitate awareness-raising among a broad spectrum of companies and provide self-imposed benchmarks against which companies' performance could be monitored by a range of stakeholders.

  • (3) The more committed option is for the government to play a leading role in delineating a set of corporate responsibility guidelines and developing an institutional mechanism for promoting them. A suitable model for such guidelines and promotion mechanism is the OECD Guidelines for Multinational Enterprises, because they are probably the most comprehensive existing guidelines on corporate citizenship and because their system of National Contact Points provides a potentially effective means for government promotion of good corporate conduct.

Significantly, developing a more effective enabling environment for corporate citizenship in Africa is beyond the scope of any one national government. There is, hence, a potentially vital role for the African Union and Nepad to play in this regard, in particular. Much remains to be done by researchers and policy analysts in this area.

6. How is corporate citizenship implemented?

As mentioned above, a traditionally dominant conception of corporate citizenship has been in terms of philanthropy, or donations and support for worthy causes separate from the core business functions of the company. Although these efforts represent welcome development contributions, particularly in the areas of education and health, they have been an easy target for criticism because by themselves they do not affect the way companies go about their business. As noted by an interviewee from a prominent mining company in South Africa:

The view that CSR is primarily CSI [or philanthropy] is a result of how things were structured, in the sense that businesses thought that they needed to pay what some people referred to as blood money, but it never needed to be part of the business processes. So in order to operate, they needed to do some charity work or CSI, but it has never been key to their own business strategy.

Despite the various initiatives emphasising a broader approach to corporate citizenship, such as the Global Reporting Initiative and the second King Report on Corporate Governance in South Africa, many CEOs are still prone to pointing to their charitable foundations or similar departments when asked about corporate citizenship. A lack of integration into core business is apparent in the manner in which some companies call themselves good corporate citizens, with reference to their education and health programmes, while at the same time continuing to neglect some of the negative consequences of their core business activities.

In terms of management processes, the level of commitment from top management to implementing corporate citizenship related issues is well illustrated by the extent to which these issues are reflected in performance assessment measures for operational management. In this respect, it is striking that in 2004 only one mining company with significant operations in South Africa had a comprehensive, systematic process in place for including both environmental and social criteria in mine managers' performance appraisals.

This potential contradiction between rhetoric and practice is, of course, the primary concern of critics who label corporate citizenshipFootnote3 a ‘greenwash’ strategy. These critics argue that the gap between corporate policy and its implementation is inherent or even intentional.

An alternative interpretation, more common among company representatives, is to point out the complexity of implementing corporate citizenship in often difficult circumstances. Such interviewees commonly refer to ‘the steep learning curve’ that they are on, both personally and as organisations. They point out the challenge of generating ‘the necessary buy-in from all pertinent employees’, especially if these have a background in technical professions with little inclination towards ‘soft issues’. In this issue, Claudia Appels and colleagues discuss a case study of Barloworld that illustrates how important employee commitment is to the institutionalisation of corporate citizenship in a company, and the crucial role of leadership in developing this commitment.

A related problem identified by corporate managers is the challenge of creating management systems that effectively coordinate the diverse and interrelated elements of sustainable development. As argued by Anglo American's sustainable development manager:

Integration and coordination remain the biggest challenge, given that implementing the various sustainable development policies is too big for any one individual. No one could drive this broad-ranging agenda individually. So we need to find out how best to integrate, and also when it's okay to let [different line departments] operate in parallel.

Another challenge for many companies is that implementation of policy objectives is often hampered by ‘turf wars’ between departments, lack of coordination, multiple and overlapping reporting and performance management systems, and limited capacity (and the resulting reliance on external consultants).

Company managers also emphasise the inherent complexities and contradictions encountered in the quest for sustainable development, which make the implementation of CSR policies difficult. As noted by one CSR manager of a mining company: ‘For example, we have a mine… that cannot pay for environmental standards but provides 6 000 jobs – what do you do, close it down?’ Such dilemmas should not remain the preserve of management consultants, but rather deserve and require dedicated interdisciplinary investigation. In this issue, Claudia Appels and colleagues discuss the importance of a company's business proposition and organisational culture in this regard, while Caroline Ashley & Gareth Haysom consider common challenges encountered by tourism companies.

Further levels of complexity are created by the fact that to achieve corporate citizenship objectives is often outside the ambit of firms acting independently. Crucial efforts are under way in taking a sector-based approach, because different sectors face different challenges and opportunities, and many of these can best be dealt with collectively. In South Africa, the National Business Initiative represents one such collective effort (Fourie & Eloff, Citation2005). In this issue, the article by Theresa Moyo & Shannon Rohan on the South African finance sector describes collective approaches to broadening access to financial services.

Finally, the achievement of corporate citizenship objectives, whether by companies acting individually or collectively, often requires collaboration with other stakeholders, including the state and civil society organisations. For instance, mining companies in South Africa and elsewhere are realising that they can deal effectively with the pressing social problems around many of their mines only if they make a systematic contribution to enhanced local governance and local economic development planning, in collaboration with local government, NGOs and others (Hamann et al., Citation2005b). Such collaboration is often difficult to implement, given these different role-players' different priorities and capacities. However, there is an increasing body of knowledge about some of the key requirements for effective partnerships (Business Partners for Development, Citation2002), including those in southern Africa (AICC, Citation2004; Rein et al., Citation2005). In this issue, Daisy Kambalame & Sean de Cleene discuss partnership efforts in the Malawian agriculture sector, arguing that there is a progression towards increasingly ambitious partnership arrangements that require greater levels of professionalism and facilitation.

7. What is the impact of corporate citizenship?

This is the question that pulls together much of the above. Despite glossy sustainability reports and emerging accounting systems, we do not know whether corporate citizenship really makes a difference. Companies that report on clearly defined and measurable targets are still in the minority, as illustrated in an overview of leading South African companies' sustainability reports by Dan Sonnenberg & Ralph Hamann in this issue.

Again, some of this may be due to the ‘learning curve’ experienced by company management. Social issues related to corporate citizenship ambitions, in particular, are difficult to measure, and indeed this has implications for their effective implementation. As noted by a mining company representative: ‘Tailings and environmental issues are probably well managed, because that's good engineering practice – they are much easier than the social, soft issues.’

Even if companies have a clear set of indicators for their corporate citizenship ambitions, successful implementation at the local level is prone to being hampered by the complexity of the problems, as mentioned above, or by the constraints of the broader political economy (Lund-Thomsen, Citation2005). A telling example is the role of corporate citizenship activities in Nigeria's oil fields, as discussed by Wilson Akpan in this issue. Some of the world's largest oil companies have implemented comprehensive and sophisticated CSR programmes in this area, yet their overall environmental and social impact seems dismal. Furthermore, companies' assessment of their impacts is often starkly opposed to that of local communities. This makes the challenge of measuring and monitoring corporate impact all the more important.

It is not necessarily the case that companies are wilfully misrepresenting their impacts in a particular area. Nor is it necessarily the case that they are implementing token CSR activities to mask their true impact. Rather, the diverging assessments of companies' impacts may also be due to the different perceptual lenses applied to the problem, or to the discourses of corporate citizenship and sustainable development that will inform an observer's generation of information and its analysis. As an indication of such contrasting perceptions, compare the comment made by Anglo American's CEO, ‘Johannesburg, built on the gold industry, is a shining example of sustainable development!’ (Trahar, Citation2002), with the critical view, ‘Johannesburg is perhaps the world's most unsustainable city’ (Bond, Citation2001: xvi). In this issue, John Sharp develops this view of CSR as discourse in incisive fashion.

In considering the impact of corporate citizenship, the role of the scale of analysis is crucial. As noted above, ‘best practice’ examples of corporate citizenship prominent in business communications commonly focus on a particular project or initiative. The positive development impact of such initiatives is apparent, but if they are seen in the broader context their broader significance becomes more problematic. For instance, the WBCSD Citation(2005) extols BP's efforts at supporting local suppliers in the Caspian in connection with its involvement in the Baku–Tbilisi–Ceyhan pipeline, yet ignores the broader social and environmental problems caused by this project (Baue, Citation2005).

If the impacts of corporate activity are difficult to assess at the local level, these difficulties are compounded at larger scales of analysis. For instance, what is the overall impact of a particular company? Despite concepts such as the ‘ecological footprint’ (e.g. Lenzen et al., Citation2003) and others, the metrics for such an integrated assessment are still nascent and they remain untested in the southern African context.

Assessment becomes even more complex if extended to the level of the private sector in general in a country or region. Bezuidenhout et al. (Citation2003: 46) argue that existing attempts at ‘triple bottom line accounting’ at a national level ‘rest on wild speculation’ (on this topic see also Korten, Citation2001). They argue that it is nevertheless an important issue to investigate because the business discourse on corporate citizenship goes hand-in-hand with forceful lobbying for business-friendly policies. Take, for instance, the WBCSD's recent report on the role of business in attaining the MDGs: ‘By focusing development efforts on creating supportive investment climates in developing countries, governments can provide an innovative way to leverage our [businesses’] collective resources and capabilities' (WBCSD, Citation2005: 5). In the South African context, Bezuidenhout et al. (Citation2003: 11) argue: ‘Whilst using the language of patriotism and commitment to the RDP [Reconstruction and Development Programme] to describe their responsibility programmes, on a broader level business aggressively started to lobby for an alternative developmental path to the RDP’ (see also Fig, Citation2005).

There is also the issue of unintended consequences. These are particularly ominous if ‘Northern’ definitions of CSR are imposed on African contexts without circumspection, which is the subject of the first research theme introduced in Section 3 above. For instance, there are concerns that standards for labour, sanitation, or environmental protection are used as non-tariff trade barriers to North America or Europe. If not handled sensitively, such standards could have detrimental effects on the viability of emerging African businesses aspiring to take advantage of international supply chains. This explains the importance of efforts to make the new ISO standard on social responsibility responsive to African priorities (Hamann et al., Citation2005a).

Considering these complexities and the possibility of unintended consequences, the development of a reporting and monitoring framework for business contributions to the MDGs, as suggested by Nepad and others, seems fraught with difficulty. The question arises as to whether an over-simplified approach to these complexities may perhaps do more harm than good.

8. Conclusions

This article has argued that the role of business in sustainable development in Africa is a crucial and complex field of research, with many opportunities for researchers in a diverse array of disciplines and with disparate perspectives. The overarching research themes suggested in this article seek to highlight gaps in our understanding, while acknowledging and providing space for debate between diverse approaches, including both optimistic and critical appraisals of the role of business.

This diversity is important. It allows for productive conversations that will provide fresh ideas and new ways of seeing, and it forces us to conduct our research rigorously and to make our arguments more persuasive. It also promotes interdisciplinary research that will illuminate the multifaceted challenges and opportunities in the field. Research on corporate citizenship needs to build bridges between academia, business and other role-players. It will need to meet criteria of academic rigour, but it should also relate to the questions that confront managers, whether they are designing or implementing business strategy, government policy or NGO agendas.

The need for research is also apparent because existing research on corporate citizenship and the role of business in development is scarce and inconclusive, particularly in the African context. Given the recent enthusiasm of multilateral organisations and others for involving business in development, this gap needs to be filled. There is a special requirement for more empirical research in particular.

Such a conversation between diverse perspectives and backgrounds was the objective of the symposium from which most of the papers in this special issue are drawn. Each of the papers provides its own understanding and analysis of corporate citizenship, but they all contribute to a richer understanding of the field, beckoning for further investigation.

The author is grateful to Ellen Kallinowsky, Karien Pienaar, and Nkosi Ndlovu for their comments on earlier versions of the paper.

Additional information

Notes on contributors

Ralph Hamann

Head of Research, Centre for Corporate Citizenship, University of South Africa (UNISA). This paper is a result of the First Southern African Corporate Citizenship Symposium held at the UNISA School for Business Leadership, Midrand, in July 2005, hosted by the UNISA Centre for Corporate Citizenship.

Notes

3Examples of corporate citizenship are Christian Aid, or, in South Africa, Groundwork (www.groundwork.org.za).

References

  • Acutt , N . 2003 . “ Policy, people and petrochemicals: a case study of voluntary approaches to corporate environmentalism in the South Durban Bas ” . PhD dissertation, University of East Anglia
  • African Institute of Corporate Citizenship (AICC) . 2004 . A preliminary audit of tri-sector partnerships in South Africa . Report prepared for the South African Department of Environmental Affairs and Tourism
  • African Institute of Corporate Citizenship (AICC) . Promoting South African companies' corporate responsibility in Africa . Briefing paper for a workshop . May 27 2005 , Johannesburg.
  • Arruda . 2005 . Globally responsible leadership: a call for engagement , Brussels : European Foundation for Management Development .
  • Bansal , P and Roth , K . 2000 . Why companies go green: a model of ecological responsiveness . Academy of Management Journal , 43 ( 4 ) : 717 – 36 .
  • Barkhuysen , B and Rossouw , GJ . 2000 . Business ethics as academic field in Africa: its current status . Business Ethics: A European Review , 9 ( 4 ) : 229 – 235 .
  • Baue , W . 2005 . Business impacts on the Millennium Development Goals: a virtuous cycle or a coin toss? . SocialFunds.com (accessed 18 September 2005)
  • Bezuidenhout , A , Fig , D , Hamann , R and Omar , R . A political economy of corporate social and environmental responsibility . Paper presented at the United Nations Research Institute for Social Development/Sociology of Work Unit conference on Corporate Social and Environmental Responsibility in South Africa . May 22 2003 , Johannesburg.
  • Blowfield , M and Frynas , JG . 2005 . Setting new agendas: critical perspectives on Corporate Social Responsibility in the developing world . International Affairs , 81 ( 3 ) : 499 – 513 .
  • Bond , P . 2001 . “ Against global apartheid: South Africa meets the World Bank, IMF and International Finance ” . Cape Town : UCT Press .
  • Business Partners for Development . 2002 . Putting partnering to work: tri-sector partnership results and recommendations (1998–2001) , London : Business Partners For Development .
  • Carroll , AB . 1999 . Corporate social responsibility: evolution of a definitional construct . Business & Society , 38 ( 3 ) : 268 – 95 .
  • Christensen , J and Murphy , R . 2004 . The social irresponsibility of corporate tax avoidance: taking CSR to the bottom line . Development , 47 ( 3 ) : 37 – 44 .
  • Christian Aid . 2004 . Behind the mask: the real face of corporate social responsibility , London : Christian Aid .
  • Clarkson , Mbe . 1995 . A stakeholder framework for analysing and evaluating corporate social performance . Academy of Management Review , 20 ( 1 ) : 92 – 117 .
  • Commission for Africa . 2005 . Our common interest: report of the Commission for Africa , London : Commission for Africa .
  • Dickinson , D . forthcoming . “ Corporate social responsibility from below in the era of AIDS ” . In Corporate social and environmental responsibility in South Africa , Edited by: Fig , D . Durban : University of Kwazulu-Natal Press .
  • Elkington , J . 1997 . Cannibals with forks: the triple bottom line of sustainable development , Oxford : Capstone .
  • European Commission . 2001 . Promoting a European framework for corporate social responsibility – Green Paper , Luxembourg : Office for Official Publications of the European Communities .
  • Fig , D . 2005 . Manufacturing amnesia: Corporate Social Responsibility in South Africa . International Affairs , 81 ( 3 ) : 599 – 617 .
  • Fourie , A and Eloff , T . 2005 . The case for collective business action to achieve systems change: exploring the contributions made by the private sector to the social, economic and political transformation process in South Africa . Journal of Corporate Citizenship , 18 : 39 – 48 .
  • Fox , T . 2004 . Corporate Social Responsibility and development: in quest of an agenda . Development , 47 ( 3 ) : 29 – 36 .
  • Friedman , M . 1970 . The social responsibility of business is to increase its profits . New York Times Magazine , 13 September : 32 – 33 . 122 – 26 .
  • Hamann , R . 2004 . Corporate social responsibility, partnerships, and institutional change: the case of mining companies in South Africa . Natural Resources Forum , 28 ( 4 ) : 278 – 90 .
  • Hamann , R , Azagbue , T , Kapelus , P and Hein , A . 2005a . Universalising corporate social responsibility? South African challenges to the International Organization for Standardization's new social responsibility standard . Business and Society Review , 110 ( 1 ) : 1 – 19 .
  • Hamann , R , Sonnenberg , D , Mackenzie , A , Kapelus , P and Hollesen , P . 2005b . Corporate citizenship, collaboration, and local governance as complex system: lessons from mining in South Africa, Mali, and Zambia . Journal of Corporate Citizenship , 18 : 61 – 73 .
  • Henderson , D . 2005 . The role of business in the world today . Journal of Corporate Citizenship , 17 : 30 – 32 .
  • Hoffman , AJ . 1999 . Institutional evolution and change: environmentalism and the US chemical industry . Academy of Management Journal , 42 ( 4 ) : 351 – 71 .
  • Holliday , CO , Schmidheiny , S and Watts , P . 2002 . Walking the talk: the business case for sustainable development , Sheffield, UK : Greenleaf .
  • International Finance Corporation (IFC), Sustainability & Instituto Ethos . 2002 . The business case in emerging economies , Washington : International Finance Corporation .
  • Kivuitu , M , Yambayamba , K and Fox , T . 2005 . How can corporate social responsibility deliver in Africa? Insights from Kenya and Zambia , London : IIED .
  • Korten , D . 2001 . “ The responsibility of business to the whole ” . In The Earthscan reader in business and sustainable development , Edited by: Starkey , R and Welford , R . London : Earthscan .
  • Lenzen , M , Lundie , S , Bransgrove , G , Charet , L and Sack , F . 2003 . Assessing the ecological footprint of a large metropolitan water supplier: lessons for water management and planning towards sustainability . Journal of Environmental Planning and Management , 46 ( 1 ) : 113 – 41 .
  • Lund-Thomsen , P . 2005 . Corporate accountability in South Africa: the role of community mobilizing in environmental governance . International Affairs , 81 ( 3 ) : 619 – 33 .
  • Malan , D . 2005 . Corporate citizens, colonialists, tourists or activists? Ethical challenges facing South African corporations in Africa . Journal of Corporate Citizenship , 18 : 49 – 60 .
  • Margolis , JD and Walsh , JP . 2003 . Misery loves companies: rethinking social initiatives by business . Administrative Science Quarterly , 48 : 268 – 305 .
  • Nelson , J and Prescott , D . 2003 . Business and the Millennium Development Goals: a framework for action , London : International Business Leaders Forum & United Nations Development Programme .
  • North , D . 1990 . Institutions, institutional change, and economic performance , Cambridge, MA : Harvard University Press .
  • Pettigrew , A . 1988 . “ Introduction: researching strategic change ” . In The management of strategic change , Edited by: Pettigrew , A . 1 – 13 . Oxford : Basil Blackwell .
  • Porter , M and Van Der Linde , C . 1995 . Green and competitive: ending the stalemate . Harvard Business Review , 73 ( 5 ) : 120 – 34 .
  • Prahalad , CK and Hart , SL . 2002 . The fortune at the bottom of the pyramid . strategy + business , 26 : 2 – 14 .
  • Rein , M , Stott , L , Yambayamba , K , Hardman , S and Reid , S . 2005 . Working together: a critical analysis of cross-sector partnerships in southern Africa , Cambridge : University of Cambridge Programme for Industry .
  • Sen , A . 1999 . “ Economics, business principles, and moral sentiments ” . In International business ethics: challenges and approaches , Edited by: Enderle , G . 15 – 29 . Notre Dame : University of Notre Dame Press .
  • Snyckers , T . Evading corporate social responsibility through tax avoidance . Paper presented at the First Southern African Corporate Citizenship Symposium . July 21–22 2005 , Midrand.
  • Trahar , T . Presentation during a WSSD side event hosted by the World Business Council for Sustainable Developmen . August 31 2002 , Johannesburg.
  • United Nations (UN) . 2002 . Report on the World Summit on Sustainable Development, Johannesburg, South Africa, 26 August – 4 September 2002 , New York : United Nations . (A/CONF.199/20*)
  • United Nations Conference on Trade and Development (UNCTAD) . 2004 . World Investment Report 2004: the shift towards services , New York and Geneva : United Nations .
  • United Nations (UN) Economic Commission for Africa . 2005 . The Millennium Development Goals in Africa: progress and challenges , New York : United Nations .
  • Utting , P . 2005 . Corporate responsibility and the movement of business . Development in Practice , 15 ( 3–4 ) : 375 – 583 .
  • World Business Council for Sustainable Development (WBCSD) . 2002 . “ Responsibility: the WBCSD's journey ” . In Corporate Social , Geneva : World Business Council for Sustainable Development .
  • World Business Council for Sustainable Development (WBCSD) . 2005 . Business for development: business solutions in support of the Millennium Development Goals , Geneva : World Business Council for Sustainable Development .
  • White , LA . 2004 . Lost in translation? The future of corporate social responsibility . Journal of Corporate Citizenship , 16 : 19 – 24 .

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.