Corporate citizenship

Corporate citizenship is a term used to describe a company's role in, or responsibilities towards society. For this reason it is sometimes used interchangeably with corporate social responsibility, and in fact many companies including Microsoft, IBM and Novartis have used it in this way to describe their social initiatives.^[1] However, many also take it to mean that corporations should be regarded as citizens within a territory - i.e. that corporations have citizenship of some sort.^[2] This is usually based on the principle of corporate personhood, in that in certain legal jurisdictions, such as the United States, companies are afforded some of the same legal rights as individuals. Therefore, if corporations are 'artificial persons' under the law (e.g. they own their own assets, they can sue and be sued etc), then they can also claim some of the entitlements, privileges and protections of citizenship such as rights to free speech and political participation.^[3] Although this debate remains very active (see legal controversies below), a more recent approach to corporate citizenship has also stressed the political role of corporations in protecting or inhibiting the citizenship rights of individuals (such as by taking over previously governmental roles and functions)^[4] or direct political activity such as lobbying and party financing.^[5]

Uses of the term

The term 'corporate citizenship' has been in use for some decades, but only rose to prominence during the 2000s. There is considerable confusion over what exactly is meant by the use of the term. Matten and Crane (2005) distinguish between three views of corporate citizenship^[6]:

• Limited view - where corporate citizenship is used to denote corporate philanthropy in the local community, such as being a 'good citizen' in donating money to charity or helping out a local sports or arts institution.

• Equivalent view - where corporate citizenship is used to refer to corporate social responsibility. Matten and Crane refer here to a paper by Archie Carroll who described the "four faces of corporate citizenship" exactly the same as he had previously defined the four levels of CSR - as economic, legal, ethical, and philanthropic responsibilities. Many authors, companies, and consultancies adopt a similar approach. It is also evident in annual rankings of the 'top corporate citizens', such as those by CRO Magazine and Corporate Knights

• Extended view - where corporate citizenship is seen in terms of its distinctly political connotations, such as corporate claims to citizenship entitlements, firms' participation in global governance, or corporate involvement in the administration of individuals' social, civil and political rights. Some authors refer to this as "political CSR"^[7] or a "beyond CSR" perspective.^[8]

All three approaches can be seen in practice, but in the business world the first two views predominate, whilst in academia the extended view has started to gain greater prominence.

Corporations as citizens

Although it is generally accepted that corporations are not citizens in the same way that "real" citizens are - they cannot hold passports or vote in elections for example - it has been recognized that they do share in some of the same or similar practices, such as paying taxes, engaging in free speech, and expecting certain protections from the state. There is concern, however, that extending the scope of citizenship to incorporate corporations may infringe upon democracy and equality given their access to substantial power and resources.^[9] Some authors have suggested that corporations should not be considered in terms of the legal status or identity of citizenship but could be thought of as acting as if they were citizens when they participate in politics through lobbying and governance type activities.^[10]

Legal controversies

The legal context to claims that corporations have some official status as citizens varies across different legal jurisdictions, but is generally rather unclear. Two recent US cases illustrate this complexity.

In 2003, a Supreme Court showdown over corporate free speech was narrowly avoided when the parties in Nike v. Kasky settled out of court. The suit revolved around Nike's public defense of its actions, through letters to the editor, press releases, and other public commentary, to claims it was using sweatshop labor. The legal question was whether such public relations speech was "commercial speech," which receives less constitutional protection, or political speech, which receives the highest level of First Amendment protection. See WSJ -- Nike v. Kasky, the First Amendment... and USSC 02-575

In 2010, Citizens United v Federal Election Commission, 558 U.S. 50 (2010), was a landmark decision by the United States Supreme Court holding that corporate funding of independent political broadcasts in candidate elections cannot be limited under the First Amendment. That is, corporations now have a basic right assured under the constitution to provide funding for political ads and other communications during elections.

Both of these cases revolved around whether corporations could exercise free speech of a political nature in the same way as individual citizens (i.e. that it would be protected under the First Amendment), or whether they should be bound by more limited commercial rights. Citizens United came out in favour of the former, yet it is not clear to what extent this can be inferred to present corporations with broader protections of citizenship.

Corporations as political actors

Some authors and commentators subscribe to a view of corporate citizenship as denoting that corporations are political actors or that they have political agency of one sort or another.^[11] This is closely related to the idea that corporations are heavily influencing or even 'taking over' certain functions of politics from governments (a phenomenon that has been remarked upon for some time and was popularised by books such as Noreena Hertz's The Silent Takeover). Corporate citizenship theorists tend to particularly focus on the spread of global capitalism and voids in global governance, such as the protection of human rights in developing countries and access to basic public goods such as clean water. Corporations, they suggest, are increasingly influential in whether these rights of citizenship are respected or not.

This 'extended' perspective on corporate citizenship, sometimes dubbed 'new corporate citizenship theory' has been controverisal in that it is seen by some as legitimizing a role for corporations beyond their traditional economic functions.^[12] However, in defence of their approach, proponents argue that "The blurring boundaries between government, business and civil society challenge many of our existing constructs in the social sciences, of which citizenship and governance are just two prominent examples... to deny the changes that confront us just because they have some rather problematic or undesired implications will not make them go away."^[13]

See also

• Corporate personhood

References

1. ^ Matten, D., Crane, A. and Chapple, W. (2003) ‘Behind the Mask: Revealing the True Face of Corporate Citizenship’ Journal of Business Ethics, 45 (1/2): 109-120.
2. ^ Moon, J., Crane, A. and Matten, D. (2005). ‘Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society’. Business Ethics Quarterly, vol. 15 (3): 427-451.
3. ^ Green, F. (1946). Corporations as Persons, Citizens, and Possessors of Liberty. University of Pennsylvania Law Review, 94(2), 202-237.
4. ^ Matten, D. and Crane, A. (2005). ‘Corporate citizenship: towards an extended theoretical conceptualization’. Academy of Management Review, vol. 30 (1): 166-179.
5. ^ Moon, J., Crane, A. and Matten, D. (2005). ‘Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society’. Business Ethics Quarterly, vol. 15 (3): 427-451; Norman, W., & Néron, P.-Y. (2008). Citizenship Inc. Do We Really Want Businesses to be Good Corporate Citizens? Business Ethics Quarterly, 18(1), 1-26.
6. ^ Matten, D. and Crane, A. (2005). ‘Corporate citizenship: towards an extended theoretical conceptualization’. Academy of Management Review, vol. 30 (1): 166-179.
7. ^ Scherer, A. G., & Palazzo, G. (2007). Toward a Political Conception of Corporate Responsibility: Business and Society Seen from a Habermasian Perspective. Academy of Management Review, 32(4), 1096-1120.
8. ^ Scherer, A.G. and Palazzo, G. (2008), Introduction: corporate citizenship in a globalized world. In Scherer, A.G. and Palazzo, G. (eds) Handbook of Research on Global Corporate Citizenship. Cheltenham, UK, and Northampton, MA: Edward Elgar.
9. ^ Gerencser, S. (2005). The Corporate Person and Democratic Politics. Political Research Quarterly, 58(4), 625-635.
10. ^ Moon, J., Crane, A. and Matten, D. (2005). ‘Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society’. Business Ethics Quarterly, vol. 15 (3): 427-451.
11. ^ Gerencser, S. (2005). The Corporate Person and Democratic Politics. Political Research Quarterly, 58(4), 625-635. Matten, D., & Crane, A. (2005). Corporate citizenship: towards an extended theoretical conceptualization. Academy of Management Review, 30(1), 166-179. Norman, W., & Néron, P.-Y. (2008). Citizenship Inc. Do We Really Want Businesses to be Good Corporate Citizens? Business Ethics Quarterly, 18(1), 1-26.
12. ^ Jones, M. T., & Haigh, M. (2007). The transnational corporation and new corporate citizenship theory: a critical analysis. Journal of Corporate Citizenship, 27.
13. ^ Crane, A. and Matten, D. (2008), ‘Fear and loathing in the JCC: unleashing the monster of ‘New Corporate Citizenship Theory’ to confront category crisis’, Journal of Corporate Citizenship, 29: 21-24.

Further reading

• Crane and Matten blog on the political responsibilities of corporations
• Crane, A., Matten, D. and Moon, J. (2008), Corporations and Citizenship, Cambridge: Cambridge University Press.
• Scherer, A.G. and Palazzo, G. (Eds.). 2008. Handbook of Research on Global Corporate Citizenship. Cheltenham, UK, and Northampton, MA: Edward Elgar.
• Yasser, Qaiser Rafique, Corporate Citizenship: A New Peak (May 2, 2011). Available at SSRN: http://ssrn.com/abstract=1828602
• Willy, Rose, Corporate Citizenship: New Dimensions (April, 2011). Asian Economic and Social Review