If you were a newcomer in the field of business and social issues and you started browsing academic literature, surely you would be bewildered by a number of different terms and definitions that imply similar or identical meanings: corporate social responsibility, public responsibility, corporate social responsibilities, corporate societal responsibility, corporate social responsiveness, corporate social performance, corporate citizenship, business citizenship, stakeholding company, business ethics, sustainable company, and triple bottom-line approach. Even the same author uses different terms throughout his or her papers11 For instance, , I. and Ralston, D. A., “Corporate Social Responsibility in Europe and the U.S.: Insights from Business’ Self-Presentations,”Journal of International Business Studies 33, 3 (2002): 497– 497. Maignan, I. and Ferrell, O. C., “Measuring Corporate Citizenship in Two Countries: The Case of the United States and France,” Journal of Business Ethics, 23, 3 (2000): 283– 298. or in the same paper.22 Carroll, A. B. , “The Four Faces of Corporate Citizenship,” Business and Society Review, 100/101 (1998): 1– 9, Seidman, G. W., “Monitoring Multinationals: Lessons from the Anti-Apartheid Area,” Politics and Society, 31, 3 (2003): 381– 406. S. Waddock, “Integrity and Mindfulness: Foundations of Corporate Citizenship,” in J. Andrioff and M. McIntosh (eds.): Perspectives on Corporate Citizenship (Sheffield: Greenleaf Publishing, 2001): 26–38. You will probably wonder whether historical and geographic reasons explain the preference for a particular name (e.g., until the 1990s, the term “corporate social responsibility” was more widely used; the use of corporate citizenship is preferred in Anglo-Saxon countries33 The European Union (EU), for instance, favors the use of “corporate social responsibility” instead of “corporate citizenship” (e.g., COM (2002) 347), as does the World Business Council for Sustainable Development. See http://www.wbcsd.org. ) or whether academics, out of the need to present original contributions, make up new names, and merely add nuances to past concepts. This work is an attempt to analyze the similarities and differences between two of the most recurrent terms used in the literature: corporate social responsibility (CSR) and corporate citizenship (CC). As some authors have highlighted, since the 1990s CC “started to compete and replace the other concept in the realms of management theory and practice.”44 Matten, D. , Crane, A. , and Chapple, W. , “Behind the Mask: Revealing the True Face of Corporate Citizenship,” Journal of Business Ethics, 45, 1/2 (2003): 109– 120. To explore this “competition” between terminology and concepts, the criterion “which one(s) is improving corporate accountability” will be used. The question of corporate accountability seems crucial today. Corporations have been acquiring increasing power, in certain cases, even more power than some states, without engaging in the advancement of the common good.55 D. C. Korten, When Corporations Rule the World (London: Earthscan, 1996), reprinted, p. 59. The situation presented by several authors66 N. Hertz, The Silent Takeover: Global Capitalism and the Death of Democracy (London: William Heinemann, 2001). N. Klein, No Logo (London: Flamingo, 2001). Korten, op. cit. 1996. Phillips, Matt, “Global Rules for Corporate Accountability: The Proposal to Establish a Corporate Accountability Convention,” Multinational Monitor 23, 10/11 (2002): 12– 15. L. Sklair, Globalization. Capitalism and Its Alternatives, 3rd ed. (Oxford: Oxford University Press, 2002). —the growth of truly global companies, the environmental damage, the “race to the bottom” in labor, environmental and welfare standards, the overcommercialization of culture, and moral values—has inflamed the debate on the control of corporations. This paper is structured as follows: The first section reviews the history of each term and analyzes the similarities and differences between these two concepts. The second section explores the first condition for improving accountability (changes in the system), its outcomes and limitations. The third section presents the second necessary condition that may overcome these limitations (a system change). The role that these concepts play in fostering each of these conditions will also be highlighted. The CSR originated in 195377 Carroll, A. B. , “Corporate Social Responsibility. Evolution of a Definitional Construct,” Business and Society Review, 38, 3 (1999): 268– 296. with the publication of Bowen's book Social Responsibilities of Businessmen. At this time, the emphasis is placed on businesspeople's social conscience, rather than on the company itself. The managerial “revolution”88 J. M. Lozano, “La Responsabilidad Social Corporativa: Una Nueva Forma de Gestión Empresarial, ESADE, http://prensa.esade.es/esade/documentos/estudios/La%20Empresa%20Ciudadana.pdf [accessed January 23, 2004]. and the growing hostility of the public—who, after experiencing increasing social problems, demanded changes in business99 J. R. Boatright, Ethics and the Conduct of Business (Englewood Cliffs, NJ: Prentice Hall, 1993). —led to a shift in the focus. Most of the responsibilities mentioned in the literature (which coincided essentially with the public's demands) were incorporated into regulation, giving rise to a new approach: the public policy approach.1010 J. L. Fernández, Ética de los Negocios y Áreas Funcionales de la Empresa (“Business Ethics in Firms and Business Units”), ed. J. F. Aguado, La Ética en los Negocios (Business Ethics) (Barcelona: Ariel, 2001), 194–257. The concept then became clear: companies have to abide by the law. However, the debate about CSR continued. Complying with the legal requirements did not seem enough, partly because not all the public's demands were protected by laws, and partly because CSR was favored as it was believed to overcome the inefficiencies derived from regulation.1111 N. C. Smith, Morality and the Market: Consumer Pressure for Corporate Accountability (London: Routledge, 1990). The CSR positioned itself as a challenge to the neoclassical business model that, at that time, began becoming a paradigm. Two other terms were used in the 1970s: corporate social responsiveness and corporate social performance. The first emphasized the proactive approach required from companies and was used to link CSR with strategic management;1212 R. E. Freeman, Strategic Management: A Stakeholder Approach (Mershfield, MA: Pitman Publishing, 1984). the second was an attempt to offer a managerial framework to deal with the CSR1313 Freeman, R. E. and Reed, D. L. , “Stakeholders and Stockholders: A New Perspective on Corporate Governance,” California Management Review, 15, 3 (1984): 88– 106. and simultaneously, an attempt to measure CSR.1414 Wood, D. J. , “Corporate Social Performance Revisited,” Academy of Management Review 16, 4 (1991): 691– 718. In the 1980s, the concept of stakeholders was coined. Although older references to the same concept have been found, it was Freeman's landmark book that triggered the thinking around stakeholders. Originally defined in a Stanford Research Institute Internal Report (1963) as “those groups without whose support an organization would cease to exist,”1515 Freeman and Reed, “Stakeholders and Stockholders,” p. 89. Freeman extended the scope by proposing the following definition: “any group or individual who can affect or is affected by the achievement of the organization's objectives.”1616 Freeman, Strategic Management, p. 31. The term proved to be useful as more than 200 theoretical papers have been written about stakeholders.1717 Gibson (2000) in S. S. Gao and J. J. Zhang (2001), “A Comparative Study of Stakeholder Engagement in Social Auditing,” cited in Andriof and McIntosh: 238–278. The CSR and the concept of stakeholders complement and reinforce each other. In the late 1990s, practitioners coined a new term: corporate citizenship (CC).1818 D. Matten, A. Crane, and W. Chapple, “Behind the Mask”, op. cit. Other terms appear in this decade, namely sustainable company or triple-bottom-line approach: see Van Marrewijk, M., “Concepts and Definitions of CSR and Corporate Sustainability: Between Agency and Communion,” Journal of Business Ethics 44, 2/3 (2003): 95– 105. The term CC is used to “connect business activity to broader social accountability and service for mutual benefit,” reinforcing the view that a corporation is an entity with status equivalent to a person.1919 Waddell, S. , “New Institutions for the Practice of Corporate Citizenship: Historical, Intersectoral, and Developmental Perspectives” Business and Society Review 105, 1 (2000): 107– 217. The CC also coexists with and draws on existing literature on stakeholders. These two concepts have been criticized for a number of reasons. A review of these criticisms may clarify similarities and differences between these concepts. Moreover, it will establish the basis for the subsequent discussion regarding their contribution in improving corporate accountability. The CSR has been used as an umbrella concept to introduce a large number of ideas, concepts, and techniques.2020 Freeman and Reed, “Stakeholders and Stockholders”, p. 90. Nonetheless, the principle that companies must not only be concerned about profits and economic performance underlies all of them. The CC advocates have pointed out some flaws in the CSR concept. Before the notion of CC appeared, some of these criticisms had already been mentioned, namely the lack of a single and clear definition of CSR2121 See the literature reviewed by Votaw, 1973, cited in Carroll, “Corporate Social Responsibility. Evolution of a Definitional Construct.” and the large number of different proposals of “responsibilities.”2222 Maignan, I. and Ferrell, O. C. , “Nature of Corporate Responsibilities. Perspectives from American, French, and German Consumers,” Journal of Business Research 56, 1 (2003): 55– 67. Besides, CSR has been criticized because of (1) its narrow content (the concept has been articulated more as management of externalities than as “holistic criteria in comprehensively redefining an organization internally”);2323 D. Birch, 2001. “Corporate Citizenship: Rethinking Business Beyond Corporate Social Responsibility,” in Andrioff and McIntosh, Perspectives on Corporate Citizenship, p. 55. (2) its broad content;2424 Van Marrewijk, “Concepts and Definitions of CSR and Corporate Sustainability,” p. 99. (3) its academic origin;2525 Davenport, 2001. Quoted by Windsor, D. 2001. “Corporate Citizenship. Evolution and Interpretation,” in Andrioff and McIntosh, Perspectives on Corporate Citizenship, pp. 39–52. (4) the difficulties to operationalize CSR;2626 D. J. Wood and J. M. Logdson, 2001. “Theorising Business Citizenship,” in Andrioff and McIntosh, Perspectives on Corporate Citizenship, pp. 83–103. and (5) the potential to bias its content towards specific interests.2727 Van Marrewijk, “Concepts and Definitions of CSR and Corporate Sustainability”, p. 100. In addition, CSR was further criticized by neoclassical proponents2828 M. Friedman, Capitalismo y Libertad (Madrid: Rialp, 1966). M. Friedman, “The Social Responsibility of Business Is to Increase Its Profits,”New York Times Magazine (1970), in T. L. Beauchamp and N. Bowie, Ethical Theory and Business (Englewood Cliffs, NJ: Prentice Hall). who regarded it as “subversive,” as an attack to property rights, and, in general, as a threat to free society. Some counterarguments may be offered to these criticisms. Against the lack of clarity of the concept and its contents, it may be argued that this is inherent in the concept of CSR. The CSR makes reference to a relative concept; social demands vary in time and space and even within the same group of stakeholders (e.g., employees). Therefore, there will always be some ambiguity in the concept. This counterargument also helps to explain the difficulties in operationalizing the concept: CSR has to be specified in each company, taking into account its changing environment. It is not easy to provide managers with rules of thumb as evidence shows that social demands change in every society.2929 Maignan and Ferrell, 2003, “Nature of Corporate Responsibilities.” Nonetheless, a number of operational models surged from the concept of CSR: standards (e.g., Sullivan Principles) and theoretical models (e.g., European Union's Green Paper). The criticism regarding the academic origin of CSR is not entirely valid. The CSR has been developed by academics, trying to systematize actual social demands.3030 Boatright, Ethics and the Conduct of Business. Simultaneously, their conceptual models were used by social movements to support their claims (e.g., Ralph Nader's Corporate Social Responsibility Project).3131 G. Cavanagh, American Business Values, 3rd ed. (Englewood Cliffs, NJ: Prentice Hall, 1990). Freeman and Gilbert, “Stakeholders and Stockholders,” p. 90. Hence, CSR has had both a bottom-up origin and a top-down development. Although CSR has been criticized for its focus on externalities, this approach is consistent with the neoclassical paradigm of the firm. It has been widely used to persuade managers to take into account the social side effects of their policies. Profits lose their capacity to measure performance when in their computation and externalities have not been taken into account.3232 A. Argandoña and D. Saras, Los Fondos Éticos y la Promoción de la Ética Inversora, WP No. 421 (2000) IESE, Universidad de Navarra. To some extent, developments in the measurement of intangible assets (e.g., corporate reputation) and the inclusion of social and environmental performance in risk management3333 PriceWaterhouseCoopers, 2003, at http://www.barometersurveys.com/production/barsurv.nsf/vwAllNewsByDocID/BC10B017C5062-D2485256BA60000F6B6?OpenDocument[accessed December 14, 2003]. try to capture these positive and negative externalities. Besides, it is not clear why companies are demanded to go beyond the management of externalities. When some firms do not even comply with the existing regulation, one may well wonder if they are ready to make the next step. Finally, several counterarguments have been advanced against those who reject CSR altogether.3434 For a review see C. Smith, Morality and the Market: Consumer Pressure for Corporate Accountability (London: Routledge, 1990). S. Linke, Ethics in Consumer Behaviour: The Importance of Ethical Products or Brand Attributions to Consumer Buyer Decision (2002). Unpublished PG Diss., University of Bath, UK. The main criticism of CSR applies to CC as well: the ambiguity of the concept.3535 Matten et al., “Behind the Mask,” p. 113. Wood and Logdson, “Theorizing Business Citizenship”, p. 83. Different from CSR, CC is a term coined by practitioners3636 However, it is important to highlight that this term has not been embraced by all practitioners. For instance, Spanish corporations prefer the use of “corporate social responsibility” over the other two, J. G. de Madariaga and C. Valor. 2004. “Analysis of Implementation of the Socioeconomic Model of Business Among Spanish MNCs,”Proceedings of the Academy of Marketing Conference Virtue in Marketing, Cheltenham (CD-ROM), p. 2. Certain organizations of practitioners favor the use of CSR (e.g., World Council for Sustainable Development, CSR Europe, or the Prince of Wales International Business Leaders Forum). who regard it as more positive than CSR.3737 Matten et al., “Behind the Mask,” p. 115. The CC advocates also believe that this term overcomes the difficulties of operationalization and implementation found in CSR by integrating previous concepts: “It may arguably serve to integrate corporate social responsibility and stakeholder management within a corporate social performance framework.”3838 Windsor, “Corporate Citizenship,” p. 44. Nonetheless, they do not offer any evidence to support this arguable advantage. Other authors do not seem to think that CC integrates CSR per se and propose other models to merge both concepts.3939 Wood and Logdson, “Theorizing Business Citizenship”. D. Swandon and B. P. Niehoff, 2001, “Business Citizenship Outside and Inside Organisations: An Emergent Synthesis of Corporate Responsibility and Employee Citizenship,” in Andrioff and McIntosh, Perspective on Corporate Citizenship, pp. 104–117. The definition of CC is not clear in the literature. In a recent paper, Matten and colleagues4040 Matten et al., “Behind the Mask.” explain that three visions underlie the label “corporate citizenship”: “a limited view” that equates CC with philanthropy or community involvement; “the equivalent view” that equates CC with CSR; and “the extended view,” according to which CC implies “a reconceptualization of business–society relations.” It is the meaning conveyed in citizenship that makes this term more desirable. It clarifies its content, because it is easy for companies to derive what society demands, from the shared portrayal of the “individual good citizen.” However, evidence shows that managers are still confused about what “corporate citizenship” means.4141 Abshire, M. , “State of Corporate Citizenship: Survey,” Corporate Philanthropy Report, 18, 8 (2003): 1– 3. In addition, “corporate citizenship” emphasizes the idea that corporations have rights and duties. However, because these rights are not equal to those of a “real” citizen, some authors argue that CC is a “fictional concept.”4242 Windsor, “Corporate Citizenship,” p. 46. Yet, the aim of CC is to highlight that firms are “public powerful actors, which have a responsibility to respect those real citizens’ rights in society”;4343 Matten et al., “Behind the Mask,” p. 115. this will eventually lead companies to take over those “unserved governmental functions that were the result of a cutback in social rights two decades ago, but also protecting civil and political rights.”4444 Ibid., p. 118. Again, it is difficult to find in the literature any evidence backing the posited effects on corporate behavior that would derive from this new theoretical concept. Moreover, some authors4545 J. Richter, Holding Corporations Accountable: Corporate Conduct, International Codes and Citizen Action (New York: Zed Books, 2001). argue that the use of the term “corporate citizenship” adds to the confusion between NGOs or civil society organizations (CSOs) and BINGOs (transnational corporation and business NGOs); on the grounds that they are also citizens, companies present themselves in a number of instances as NGOs and attempt to take part in regulation (or deregulation according to this researcher). Richter4646 Richter, Holding Corporations Accountable, p. 138. denounces the risks of this approach, while stating that corporations are not citizens but “legal entities entitled to carry out profit-making activities as long as they fulfil certain social obligations. Corporate rights are a contractual arrangement with society that can be taken away if corporations do not behave responsibly.” Finally, some scholars argue that CC should be defined as “understanding and managing company's wider influences on the society for the benefit of the company and the society as a whole.”4747 J. Andriof and C. Marsden, undated, “Corporate Citizenship: What Is It and How to Assess It?” WP Corporate Citizenship Unit, Warwick Business School, at http://users.wbs.warwick.ac.uk/group/ccu/research/dimensions. The argument that CC has made virtue a necessity and turned this necessity into strategic advantage4848 Windsor, “Corporate Citizenship,” p. 49. had already been advanced under the CSR debate4949 P. F. Drucker, La Gerencia de Empresas (Barcelona: Edhasa, 1988). and the theory of the stakeholders.5050 Donaldson, T. and Preston, L. E. , “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications,” Academy of Management Review 20, 1 (1995): 65– 91. Hence, it is not original with the CC concept. It is worth noting that, in contrast to CSR, neoclassical proponents have not rejected the notion of CC. This could be explained by two reasons: first, the concept of CC has “watered down” the requirements encapsulated in the concept of CSR; therefore, it is no longer perceived as a threat to the “neoclassical orthodoxy”; second, by the 1990s managers were already convinced that a certain degree of “social embeddedness” was desirable and necessary. The previous analysis shows that CSR and CC have more in common than proponents of CC seem to acknowledge. As explained in the introduction, this work will analyze which of them has proved to be effective in improving accountability. Few definitions of corporate accountability have been found in the literature on CSR/CC, even in those papers addressing specifically the issue of corporate accountability.5151 Phillips, “Global Rules for Corporate Accountability.” Waddock, S., “Creating Corporate Accountability: Foundational Principles to Make Corporate Citizenship Real,” Journal of Business Ethics 52, 4 (2004): 313– 327. Zadek, S., “Balancing Performance, Ethics, and Accountability,” Journal of Business Ethics 17, 13 (1998): 1421– 1441. Drawing on the literature on political accountability, corporate accountability could be understood as corporate control; that is, the establishment of clear means for sanctioning failure.5252 A. Follesdal, 1998. “Democracy, Legitimacy and Majority Rule in the EU,” in A. Weale and M. Nentwich (eds.), Political Theory and the European Union. Legitimacy, Constitutional Choice and Citizenship (London: Routledge), 34–98. R. Ladrech, 1999, “Political Parties and the Problem of Legitimacy in the EU,” in T. Banchoff and M. P. Smith, Legitimacy and the EU. The Contested Policy (New York: Routledge), 93–112. Both CSR and CC propose that firms should be controlled by society and not only by shareholders. When authors mention the “principle of neighbor of choice” or the “license to operate,”5353 Marsden and Andriof, Towards an Understanding of Corporate Citizenship and How to Influence It, p. 3. Waddock, 2004, “Creating Corporate Accountability.” they acknowledge that society should be conferred clear means for sanctioning corporate failure. These concepts reject the neoclassical vision of corporate accountability (i.e., companies should be accountable only to shareholders, as they are the legitimate owners of the firm).5454 E. Sternberg, Corporate Governance: Accountability in the Marketplace (London: IEA, 1998). Sternberg, E., “The Defects of Stakeholder Theory,” Corporate Governance, 5, 1 (1997): 3– 10. By claiming that companies are accountable for the creation of organizational wealth for its multiple constituents,5555 J. E. Post, L. E. Preston, and S. Sachs, Redefining the Corporation: Stakeholder Management and Organizational Wealth (Stanford, CA: Stanford University Press, 2002). these concepts oppose the neoclassical notion of shareholders as the only legitimate agent to sanction corporate results. Therefore, accountability should be understood as social corporate control. This work does not attempt to discuss whether this social control of companies is morally sound or technically correct. This aims to clarify whether these concepts have provided society with the means for choosing their companies and sanctioning corporate failure (i.e., the conditions for this social control of companies). Under the current neoclassical paradigm, where corporate control by society can only occur through the market, it may be evident that none of these concepts helps to improve corporate accountability, unless they are accompanied by real direct pressure on companies. Under the neoclassical paradigm, the only means for sanctioning failure is the market. As Sternberg5656 Sternberg, 1998, Corporate Governance, p. 118. puts it, “if individuals have views as to how business should be conducted, they should ensure that their individual choices accurately reflect those views. When each potential stakeholder—otherwise known as every member of society—acts conscientiously in his personal capacity, and strategically bestows or withholds its economic support on the basis of its moral values, then the operation of market forces will automatically lead business to reflect those values.” Therefore, it would be the stakeholders themselves that bring about changes in corporate practices by incorporating their ethical values in their economic decisions, not any socioeconomic theory such as CSR or CC. The first condition for accountability is that individuals incorporate their moral values into their economic decisions. Only when values change at the bottom of society and are incorporated into economic decisions will companies change their behavior to reflect these social values. This condition has also been suggested by other scholars. For instance, Marsden and Andrioff use the term social competition, which is analogous to market competition, to explain the same idea. According to them, social competition is necessary because “any powerful organization needs effective countervailing power to keep them performing effectively for their own benefit as well as that of wider society.”5757 C. Marsden and J. Andrioff, undated, Towards an Understanding of Corporate Citizenship and How to Influence It. WP Corporate Citizenship Unit, Warwick Business School, at http://users.wbs.warwick.ac.uk/group/ccu/research/dimensions. This condition is achieved in certain cultural contexts. Research in certain Western countries evidences that individuals are showing their interest in social performance in every one of the three markets where firms compete: product,5858 Allen, M. W. and Hung, S. , “The Direct and Indirect Influences of Human Values on Product Ownership,” Journal of Economic Psychology 20 (1999): 5– 39. 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