Does it really take the state?

This paper explores the role of the state for an effective engagement of multinational corporations (MNCs) in corporate social responsibility (CSR). In the OECD context, the “shadow of hierarchy” cast by the state is considered an important incentive for MNCs to engage in CSR activities that contribute to governance. However, in areas of limited statehood, where state actors are too weak to effectively set and enforce collectively binding rules, profit-driven MNCs confront various dilemmas with respect to costly CSR standards. The lack of a credible regulatory threat by state agencies is therefore often associated with the exploitation of resources and people by MNCs, rather than with business’ social conduct. However, in this paper we argue that there are alternatives to the “shadow of hierarchy” that induce MNCs to adopt and implement CSR policies that contribute to governance in areas of limited statehood. We then discuss that in certain areas such functional equivalents still depend on some state intervention to be effective, in particular when firms are immune to reputational concerns and in complex-task areas that require the involvement of several actors in the provision of collective goods. Finally, we discuss the “dark side” of the state and show that the state can also have negative effects on the CSR engagement of MNCs. We illustrate the different ways in which statehood and the absence thereof affect CSR activities of MNCs in South Africa and conclude with some considerations on the conditions under which statehood exerts these effects.</jats:p

the role of firms

Der Standortwechsel von Firmen in Länder mit niedrigen Sozialstandards wird in der Regel als treibende Kraft des abwärtsgerichteten regulativen Wettbewerbs zwischen Staaten angesehen. Es gibt allerdings eine Vielzahl von Fällen in denen genau das Gegenteil passiert: Firmen halten sich freiwillig an Sozialstandards (CSR) und üben sogar Druck auf Regierungen aus, um striktere Regulierung zu erwirken. In diesem Arbeitspapier zeigen wir, unter welchen Bedingungen Firmen zur Verwirklichung anspruchsvollerer Sozialstandards in Ländern mit geringer regulativer Kapazität beitragen. Zunächst stellen wir Hypothesen aus der bereits existierenden Literatur vor und arbeiten ihre Erklärungskraft für die hier diskutierte Problematik heraus. Das Arbeitspapier untersucht die Reaktion der südafrikanischen Textil- und Automobilindustrie auf die HIV Pandemie. Die südafrikanische Regierung hat nur begrenzte Kapazitäten aufgebracht, um sich gegen die Verbreitung des Virus zur Wehr zu setzen. Unter welchen Bedingungen versuchen Firmen den Staat im Kampf gegen HIV/AIDS zu unterstützen?Firms relocating production to countries with lower social standards are regarded as driving force behind the regulatory ‘race to the bottom’. However, there are numerous instances in which the behavior of firms reveals just the opposite: They adhere to self-regulatory standards (CSR) and even pressure governments to issue stricter public regulations. We intend to identify the conditions under which firms contribute to higher regulatory standards in states with weak regulatory capacities, thereby following a ‘race to the top’ rather than a ‘race to the bottom’- logic. Theoretically, we set out to test in how far the existing literature can be utilized to answer this question. Empirically, the assessment concentrates on the textile and automotive industries in South Africa and HIV/AIDS abatement. Only limited state capacities have been involved in fighting HIV/AIDS in South Africa. Under which conditions do firms try to foster state capacities for the fight against the disease

Effect of methanogenic substrates on anaerobic oxidation of methane and sulfate reduction by an anaerobic methanotrophic enrichment

Anaerobic oxidation of methane (AOM) coupled to sulfate reduction (SR) is assumed to be a syntrophic process, in which methanotrophic archaea produce an interspecies electron carrier (IEC), which is subsequently utilized by sulfate-reducing bacteria. In this paper, six methanogenic substrates are tested as candidate-IECs by assessing their effect on AOM and SR by an anaerobic methanotrophic enrichment. The presence of acetate, formate or hydrogen enhanced SR, but did not inhibit AOM, nor did these substrates trigger methanogenesis. Carbon monoxide also enhanced SR but slightly inhibited AOM. Methanol did not enhance SR nor did it inhibit AOM, and methanethiol inhibited both SR and AOM completely. Subsequently, it was calculated at which candidate-IEC concentrations no more Gibbs free energy can be conserved from their production from methane at the applied conditions. These concentrations were at least 1,000 times lower can the final candidate-IEC concentration in the bulk liquid. Therefore, the tested candidate-IECs could not have been produced from methane during the incubations. Hence, acetate, formate, methanol, carbon monoxide, and hydrogen can be excluded as sole IEC in AOM coupled to SR. Methanethiol did inhibit AOM and can therefore not be excluded as IEC by this study

Corporate Social Responsibility in the Regulatory Void - Does the promise hold? : self-regulation by business in South Africa and China

Defence date: 19 April 2010Examining Board: László Bruszt (EUI), Adrienne Héritier (EUI/RSCAS) (Supervisor), Aseem Prakash (University of Washington) Thomas Risse (Free University Berlin)In 2012 awarded the International Studies Association's 'International Political Economy Section (IPE) Best Dissertation Award'Under which conditions do firms engage in corporate social responsibility (csr) in the context of a regulatory void? Tackling this question the thesis suggests a set of theoretical propositions that explain the engagement of firms in csr. A number of new factors are theorized that derive from the application of transaction cost economics and of the concept of asset specificity to the analysis of intra-firm relationships between management and specific sub-units. These factors are ‘human asset specificity’ and ‘production-specific assets’. Also, the thesis argues that ‘filter’-effects of the institutional set-up of national arenas, which have so far not been accounted for, are factors that explain patterns of csr across countries. In addition to these newly theorized factors, the thesis identifies those factors that figure prominently in the literature as explanations for csr, such as ‘investments in a brand name’, ‘NGOs’, ‘associations’, ‘public-private-’ and ‘private-private partnerships’. Subjected to systematic qualitative empirical assessments in the context of the South African textile and automotive industries and the Chinese textile industry, it emerges that those factors usually pointed to by authors and practitioners alike as explanations for csr lack empirical basis. To be more precise, environmentally and socially aware consumers, NGOs, associations as well as public-private and private-private partnerships are factors that do not explain csr to the extent commonly assumed. Those factors, however, that were newly theorized in this study gain strong support in the empirical assessment. These factors are ‘human asset specificity’, ‘productionspecific assets’ and the ‘filter’-effects of national arenas. In conclusion, the study suggests that csr is best viewed as the unintended outcome of intra-firm asset specific investments as well as of ‘filter’-effects deriving from the institutional context. The promise of csr appears to hold surprisingly well, though for other reasons than commonly assumed

The managerial sources of corporate social responsibility : the spread of global standards

Why and under which conditions do companies voluntarily adopt high social and environmental standards? Christian Thauer looks inside the firm to illustrate the internal drivers of the social conduct of business. He argues that corporate social responsibility (CSR) assists decision-makers to resolve managerial dilemmas. Drawing on transaction cost economics, he asks why and which dilemmas bring CSR to the fore. In this context he describes a managerial dilemma as a situation where the execution of management's decisions transforms the mode of cooperation within the organization from a hierarchy to one in which managers become dependent on, and vulnerable to, the behavior of subordinates. Thauer provides empirical illustration of his theory by examining automotive and textile factories in South Africa and China. Thauer demonstrates that CSR is often driven by internal management problems rather than by the external pressures that corporations confront.-- 1. Introduction -- 2. A theory of internal drivers of corporate social responsibility -- 3. Corporate social responsibility: an inside-view approach and perspective -- 4. Internal driver 1: the human resources dilemma -- 5. Internal drivers 2 and 3: the technological specialization and foreign direct investment dilemmas -- 6. Internal driver 4: the brand reputation dilemma -- 7. Conclusion: internal drivers, corporate social responsibility and the spread of global standards.Published version of EUI PhD thesis, 201

The Firm as an Inspector: Private Ordering and Political Rules

With increasing fragmentation of worldwide production chains and the corresponding contracting relations between companies, the “firm as an inspector" has become a frequent phenomenon. Buyer firms deploy supervising activities over their suppliers' products and production processes in order to ensure their compliance with regulatory standards, thereby taking on tasks commonly performed by public authorities. Why would a firm engage in such activities? In this article we will analyze the conditions under which firms play the role of an inspector vis-à-vis their sub-contractor firms to guarantee compliance with quality and environmental regulations. We develop a theoretical argument based on transaction cost economics and institutionalism to offer hypothetical answers to this question and provide an empirical assessment of our hypotheses

Governing HIV/AIDS in South Africa : the role of firms

Firms relocating production to countries with lower social standards are regarded as driving force behind the regulatory 'race to the bottom'. However, there are numerous instances in which the behavior of firms reveals just the opposite: They adhere to self-regulatory standards (CSR) and even pressure governments to issue stricter public regulations. We intend to identify the conditions under which firms contribute to higher regulatory standards in states with weak regulatory capacities, thereby following a 'race to the top' rather than a 'race to the bottom'-logic. Theoretically, we set out to test in how far the existing literature can be utilized to answer this question. Empirically, the assessment concentrates on the textile and automotive industries in South Africa and HIV/AIDS abatement. Only limited state capacities have been involved in fighting HIV/AIDS in South Africa. Under which conditions do firms try to foster state capacities for the fight against the disease