Among critics of corporate social responsibility (CSR), there is growing concern that CSR is largely ineffective as a corrective to the shortcomings of capitalism, namely, the negative effects of business on society and the undersupply of public goods. At the same time, researchers suggest that despite the shortcomings of CSR, it is possible to make it more effective in a stepwise manner. To explain the frequent failures of current CSR practices and to explore the possibilities of remedying them, I examine (...) the close relationship between CSR, the persistent expansion of capitalism, and the pressure that capitalism puts on companies to legitimize their business operations. My analysis shows that the failure of CSR to serve as a corrective to the problematic effects of capitalism is, in fact, an inevitable consequence of the problematic dynamics of the capitalist system. On this basis, I suggest that capitalism limits the possibilities of making CSR more effective, argue for change on the systemic level of capitalism, and explore the ways in which CSR research can contribute to this political endeavor. (shrink)

Under conditions of growing interconnectedness of the global economy, more and more stakeholders are exposed to risks and costs resulting from business activities that are neither regulated nor compensated for by means of national governance. The changing distribution of risks poses a threat to the legitimacy of business firms that normally derive their legitimacy from operating in compliance with the legal rules of democratic nation states. However, during the process of globalization, the regulatory power of nation states has been weakened (...) and many production processes have been shifted to states with weak regulatory frameworks where businesses operate outside the reach of the democratic nation state. As a result, business firms have to address the various legitimacy challenges of their operations directly and cannot rely upon the legitimacy of their regulatory environment. These developments challenge the dominant approach to corporate governance that regards shareholders as the only stakeholder group in need of special protection due to risks not covered by contracts and legal regulations. On the basis of these considerations, we argue for a democratization of corporate governance structures in order to compensate for the governance deficits in their regulatory environment and to cope with the changing allocation of risks and costs. By way of democratic involvement of various stakeholders, business firms may be able to mitigate the redistribution of individual risk and address the resulting legitimacy deficits even when operating under conditions of regulatory gaps and governance failure. (shrink)

In order to enable firms to successfully deal with issues of corporate sustainability, the firms' stakeholders would need to participate in sustainability accounting and management. In practice, however, participative sustainability accounting and management are often unfeasible. The resulting consequence is the risk of misbalancing single aspects of sustainability. The purpose of this article is to show that reflexivity in sustainability accounting and management, that is, an ongoing reflection on the relationship between the goals of corporate sustainability and the overarching objective (...) of sustainable development can, at least, mitigate this problem. Reflexivity has the potential to initiate processes of collective learning and could eventually bring about the realization of business models that integrate economic, ecological, and social considerations. (shrink)

In the work of Karl Polanyi, the negative effects of a self-regulating market economy are described as being limited by societal forces such as the policies of the welfare state. With the decline of the modern welfare state since the late 1970s, social activities of business firms are increasingly regarded as an important complement to or even as a substitute for welfare state policies by a part of the literature. However, and controversially, another stream of argumentation regards these activities as (...) being aimed at advancing the reach of market forces. To fully grasp the ambiguous nature of the social activities of business, in this paper I provide an account of affirmative as well as of critical interpretations of these activities throughout the history of modern capitalism. On this basis, the power of critique to disentangle the diverse motivations that underlie the social engagement of business is highlighted as a condition for facilitating a role of business in society that balances economic and social considerations. (shrink)

Research on Grand Challenges often neglects capitalism as a major source of many social and ecological problems, and/or as a barrier to their solution. To find sustainable solutions through our research, we need to make explicit and problematize this systems-level cause of Grand Challenges instead of only looking for solutions at the organizational level.