This article is written by Utkarsh Jhingan. The article discusses the difference between the two frequently used terms in business law jurisprudence, Corporate Social Responsibility and Corporate Citizenship.

Corporate Citizenship

In the 1980’s a new term entered the glossary to describe the business-society relationship. ‘Corporate Citizenship’ now appears frequently in the business and academic literature. Corporate citizenship is defined as the way a company exercises its rights, obligations, privileges and overall corporate responsibility within the neighbouring and global environment. There has been some disagreement about the terminology: some writers view corporate citizenship and corporate social responsibility as synonymous.[1] On the contrary, some writers argue that corporate citizenship focuses more on internal organizational values.[2] The advocates of corporate citizenship claim it can bridge the theory-practice divide that characterizes much of the research on corporate social responsibility.[3] Most of the corporations publicize about their efforts towards to corporate citizenship so that they can create a goodwill in the market.

What is the complication?

Attempts to distinguish between corporate citizen and CSR has ended up only defining corporate citizenship essentially having the same features of CSR i.e. economic, ethical, legal, philanthropic responsibilities.[4] Corporate citizenship can be divided into two, a good and bad citizen. Bad corporate citizens like tobacco companies, weapons manufacturers are excluded from socially responsible investment funds. There have been arguments that the refurbished academic focus on corporate citizenship is an opportunity to reposition the older ideas about CSR.[5] Corporate citizenship is limited and specific and its focus on local community welfare and philanthropy and it is necessary to envision global business citizenship to bring back the issues of duty and responsibility.[6]

The applicability of CSR in America and Europe had been questionable and there was a need to bring uniformity in the responsibilities of business. The notion of a global business citizen was particularly relevant for multinational corporations. Multinational corporations are both local and global actors whose rights and responsibilities across national boundaries implied an analysis of hyper norms.[7] The U.N. Global Compact where multinational corporations voluntarily commit to a set of principles in the areas of environment, labour and human rights values and principles which gives a human face to the global market and aspire to overcome imbalances between the economic, social, and political realms.[8]

Corporate Social Responsibility and Corporate Citizenship

The main elements of corporate citizenship are not very different from the concept of CSR i.e., legal requirements, societal obligations, voluntary actions, values and ethics are integrated along with a stakeholder view of the firm although environmental responsibility which the key theme of CSR and sustainability are missing. The issues of implementing a consistent set of universal hyper norms seem to be glossed in the literature.

A multinational corporation must be seen to be insightful to local cultures. At the same time it is required to implement a universal code of conduct, the assumption being that the company can adapt its hyper norms to suit local custom without violating them.[9] It is still not clear how this strategy will address the issue of environmental and social problems. A good corporate citizen is obliged to fulfil the obligations but it is not legally enforced. The major shortcoming of CSR, corporate citizenship is that there is an absence of any enforcement mechanism to meet the obligations. At a global level, the complexities of legal systems also enable multinational corporations to develop innovative and creative accounting practices that, while being perfectly legal, have uncertain outcome.

The problematic nature of citizenship, when applied to corporations, need to be looked into. The use of the term citizen to denote corporate identity is related to the legal notion of the corporation as a natural citizen. The rights of the corporation are guaranteed and protected but the problem is that the responsibilities remain unrestricted. The term corporate citizen extends the legal fiction of corporate personhood even further because a corporation cannot satisfy key cannons of citizenship such as voting or holding public office, which are inalienable rights held by individuals.[10] Corporate citizenship also does not provide a critical analysis of power dynamics between individuals, groups and corporations. Citizenship rights of corporations are limited to certain activities like the right to vote furthermore the economic power of corporations to influence electoral results through campaign contributions cannot be ignored.

There have been notions of corporate citizenship that bring in the legal fiction argument of the corporation in order to create a soul for the body corporate run the danger of conflating citizenship with personhood. A corporation cannot be a citizen in the same way a person can. A corporation can be considered a person as far as its legal status is concerned. The conflation of a corporation with an individual citizen obscures the gaps between individual citizen rights and corporate rights. There are concerns that corporate citizenship discourses could have the effect of reducing governmental scrutiny of corporate practices because they promote self-governance. Corporate strategies of responding to social and environmental concerns have led to array of codes of conduct on various issues which are not enforceable.

So to conclude rather than uncritically applying concepts of citizenship to the business firm, it is important to contest current notions of corporate citizenship. The limitations of applying superficial concept of citizenship to corporations attempt to develop a broader conceptualization of corporate citizenship based on notions of liberal citizenship in political science.[11] Corporate citizenship becomes relevant in an era dominated by neoliberal doctrine because, while corporations may not be the same as individual citizens, they are taking the roles and activities normally associated with the government.[12] When the state is not the sole guarantor of citizenship rights and corporations provide services that were previously the purview of governments then it becomes necessary to interrogate corporate roles in administering citizenship. Thus corporate citizenship is about administering citizenship rights for individuals rather than about whether the corporation is or can be a citizen.

References

[1] Swanson Diane and Niehoff Brian P. (2001), “Business Citizenship outside and inside organisations”.

[2] David Birch (2002), “Corporate Citizenship in Australia: Some Ups, Some Downs”.

[3] Subhabrata B. Banerjee, (2001), “ Corporate Social Responsibility : the good, the bad and the ugly”.

[4] ArchieB.Caroll (1998), “The Four Faces of Corporate Citizenship”.

[5] Dirk Matten. Andrew Crane (2005), “Corporate Citizenship: Toward an extended theoretical conceptualization”.

[6] Natasha Vijay Munsh (2004), “Conversations on Business Citizenship”.

[7] Wood and Logsdon (2001), “Global Business Citizenship and Voluntary Codes of Ethical Conduct”.

[8] Annan (2000), “Executive Summary and Conclusion, High Level Meeting in the Global Compact”.

[9] Natasha Vijay Munsh (2004), “Conversations on Business Citizenship”.

[10] Subhabrata B. Banerjee, (2001), “ Corporate Social Responsibility : The Good, The Bad and The Ugly”.

[11] Matten and Crane (2005), Corporate Citizenship: Toward an Extended Theoretical Conceptualization.

[12] Hertz (2001), “Better to  Shop than to Vote”.