The Role of Private Business in Global Governance – An Analysis of Corporate Citizenship Approaches of MNCs and SMEs participating in the UN Global Compact

What are the corporate citizenship approaches of Swiss medium sized enterprises and large multinational corporations in their participation to the UN Global Compact?

Project Summary

The UN Global Compact (UNGC), with approximately 4000 members, the largest Corporate Citizenship (CC) initiative in the world, serves as an illustration of how corporations are expected to become involved in political activities on a global level. By signing the UNGC, companies voluntarily commit themselves to ten principles in the areas of human rights, labor standards, environment, and anti-corruption.

Citing the absence of screening or enforcement mechanisms to ensure that corporations adhere to the UNGC principles, numerous critics argue that the UNGC merely provides a forum for companies to “bluewash” questionable business practices constituting an easy possibility to brush up corporate image. A clear and consistent conceptualization of CC was lacking and a sound theoretical framework needed to be developed. Furthermore, previous studies rarely differentiated between large multinational corporations (MNCs) on the one hand, and small and medium-sized enterprises (SMEs) on the other one.

Academic Output

Working Paper

MNEs and the UN Global Compact: An Empirical Analysis of the Organizational Implementation of Corporate Citizenship

The UN Global Compact (UNGC) is the largest “corporate citizenship” (CC) initiative in the world. Almost 5000 companies have signed the initiative whereby they voluntarily commit themselves to adhere to ten principles in the areas of human rights, labor rights, the environ- ment and anti-corruption (www.unglobalcompact.org). More than nine years after the launch of the UNGC the question arises on how far the participants have progressed in the implemen- tation of the Compact’s principles. This paper presents the results of an empirical assessment of the implementation process at five large Swiss corporations that have been participants of the UNGC since the initiation of the Global Compact. The results illustrate that CC is a learn- ing process and corporations are at different stages of development. To date, only few compa- nies are implementing CC as intended by the founders of the UNGC. Also, some aspects show that companies assume a political role in their global business activities. In our study we make two contributions: (1) we develop an analytical tool for the assessment of how deeply corporate citizenship is embedded in the organizational structures and procedures of the UNGC companies. (2) With the help of this tool we deliver empirical insights into the imple- mentation of CC at five large Swiss multinational corporations that are members of the UNGC. In addition, the study confirms the theoretical argument of recent literature in political CSR that multinational corporations are contributing to emerging global governance struc- tures.

Working Paper

Small- and Medium-Sized Enterprises as Political Actors in Global Governance – Evidence from the Textile Industry

I conducted a multiple case study to assess the role of small- and medium-sized enterprises (SMEs) in global governance – the collective rule-making and rule-implementation among public and private actors on a global scale. Results of a sample of ‘best-practice’ SMEs in the textile industry suggest that companies, which are embedded in global supply chains and thus exposed to operating in zones of weak social and environmental regulation, are accepting ‘political’ responsibilities. They engage for instance in defining and enforcing labour standards for factory workers, a task once regarded as a genuine government responsibility. The SMEs of the sample show high awareness for global governance challenges; they stress the need to engage in collective action to counter their small individual impact, and have implemented a range of organizational procedures to engage in political CSR. In sum, findings suggest that global governance is not something just for larger companies. In fact, the analyzed SMEs are even more advanced in engaging in global governance than many MNEs. From the empirical findings, I deduct several propositions to be tested in further quantitative studies.

Working Paper

Legitimacy-as-Feeling: How Affect Leads to Vertical Legitimacy Spillovers in Transnational Governance

Transnational governance schemes (TGSs) are interorganizational networks of public and/or private actors that jointly regulate global public policy issues, such as the prevention of hu- man rights violations and the protection of ecosystems. Considering that TGSs mainly address issues of public concern, the general public represents a major source of legitimacy in trans- national governance. We theorize how members of the general public, whom we conceptual- ize as intuiters, apply heuristics to bestow legitimacy on TGSs. Given the difficulty of as- sessing TGSs, we argue that intuiters draw on affect-based responses towards a TGS’s better- known network affiliates, such as participating business firms, to judge the legitimacy of the TGS as a whole. This substitution produces a “vertical” legitimacy spillover. More specifical- ly, we examine the heuristic process of judgment underlying vertical spillovers in TGSs and derive implications for the legitimacy construct and the analysis of spillover phenomena.

Executive Summary

The main objective of the research project was to analyze the corporate citizenship engage- ment of private companies with global public policy issues. These companies help closing existing gaps in global regulation and compensating for the short supply of global public goods in certain policy fields. We identify and further scrutinize the legitimacy issues this involvement may entail and analyze the organizational implications of corporate citizenship in an empirical study of Swiss-based United Nations Global Compact (UNGC) participants. Results from the analysis of the organizational embeddedness of UNGC principles indicate that MNEs and SMEs are strongly committed to the principles. In particular among MNEs, the degree of implementation however varies in terms of the structural and procedural dimen- sion of embeddedness. Furthermore, our analysis clarifies that the legitimation of the UNGC is largely contingent on the legitimacy of corporate signatories. The research project contrib- utes to theory in that it substantiates the political role of MNEs and SMEs in global govern- ance and its organizational implications. Our research further elucidates that our understand- ing of legitimacy in global governance can be enhanced by conceptualizing social approval as a public and non-rival resource informed by a network of legitimacy relations between global governance schemes and participating companies and individuals. As regards to practice, the project provides guidance in terms of the organizational implementation of UNGC principles in MNEs vs. SMEs and offers recommendations for the management of legitimacy relations in global governance.

Research Team

Andreas Georg Scherer
Coordinator
University of Zurich

Dorothee Baumann
Principal Member
University of Zurich

 

Patrick Haack
Principal Member
University of Constance

 

Guido Palazzo
Principal Member
University of Lausanne

 

Status

completed

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