Abstract
This paper addresses the question of whether and how public action via civil society and/or government can meaningfully shape industry-wide corporate responsibility (ICR) behaviour. We explore how, in principle, ICR can come about and what conditions might be effective in promoting more ethical behaviour. We propose a framework to understand attempts to develop more responsible behaviour at an industry level through processes of negotiation and coalition building. We suggest that any attempt to meaningfully influence ICR would require stakeholders to possess both power and legitimacy; moreover, magnitude and urgency of the issue at stake may affect the ability to influence ICR. The framework is applied to the retail banking industry, focusing on post-crisis experiences in two countries—Spain and the UK—where there has been considerable pressure on the retail banking industry by civil society and/or government to change behaviours, especially to abandon unethical practices. We illustrate in this paper how corporate responsibility at the sector level in retail banking is the product of context-specific processes of negotiation between civil society and public authorities, on behalf of customers and other stakeholders, drawing on legal and other institutions to influence industry behaviour.
Highlights
The scrutiny by governments, non-government organisations and civil society that followed the Great Financial Crisis highlighted how banks can abuse their position as powerful economic intermediaries in pursuit of shareholder value creation
Governments have tended to see this as the role of investors, and many businesses have adopted investor-led corporate social responsibility (CSR) initiatives to address expectations related to broader impacts on society, the economy and the environment
Where problems extend over a sector and challenge the basic function of retail banks from a stakeholder perspective, have actions to improve corporate responsibility been coordinated rather than left to the discretion of individual banks? To explore these issues, we focus on post-crisis experiences in two countries, Spain and the UK
Summary
The scrutiny by governments, non-government organisations and civil society that followed the Great Financial Crisis highlighted how banks can abuse their position as powerful economic intermediaries in pursuit of shareholder value creation. Governments have tended to see this as the role of investors, and many businesses (including banks) have adopted investor-led corporate social responsibility (CSR) initiatives to address expectations related to broader impacts on society, the economy and the environment (de Bakker et al 2013; Doh and Guay 2006; Schaltegger and Burritt 2010; Steurer 2010) This positivist or instrumental approach to CSR recognises stakeholder demands for the primary purpose of sustaining or improving profitability and shareholder value (Esteban-Sánchez et al 2017) but leaves limited opportunity to meaningfully alter business models or the ethical foundations of business (Sternberg 2011). It is harder for industry-led initiatives to engage
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