The Corporate Social Responsibility of Ukrainian Agroholdings: the Stakeholder Approach Revisited

Abstract

The agricultural sector in Ukraine and other transitional and developing countries is distinguished by the prominence of agroholdings, i.e., large-scale industrialized corporations, that offer extensive support to their stakeholders through the corporate social responsibility (CSR) initiatives. The stakeholder approach as a part of business ethics scholarship explains stakeholder salience in terms of the turbulence of the business environment. Drawing on the Luhmannian theory of complex social systems, the present paper shows this turbulence to be a relative concept that makes sense primarily in relation to the limited ability of dominant formal institutions, such as the function systems, to process the complexity of the societal environment. In line with this argument, the Ukrainian agroholdings are shown to direct their CSR efforts to stakeholders whose salience arises out of the transition-specific institutional shortcomings, such as the imperfections of land and labor markets. Paradoxically, the Ukrainian institutional environment has been conducive not only to the rise of agroholdings but also to the emergence of societal expectations which the agroholdings must face. The broader business ethics implication of the argument is the functional equivalence of the discretionary CSR activities and the quality of the dominant formal institutions, such as the function systems.