Sometimes it takes a while for things to sink in. After a decade of talking about corporate social responsibility, it is only in the past few years that companies have come to appreciate the consequences of signing up to what seemed like a good idea at the time.
Relations between business and society are now viewed by governments, regulators and the community almost exclusively through the prism of whether corporations are being socially responsible. The proponents of corporate social responsibility ensure that its elements are never precisely described, with the result that business is susceptible to an ever-growing list of ill-defined responsibilities.
If the notion of corporate social responsibility had been around in the 1950s -- when the respective roles of government, business and unions were clearly demarcated -- companies could easily have satisfied what would have been expected of them.
Half a century later, as belief in the unlimited capacity of government has diminished, and as other social institutions decline in significance, it has been left to business to carry out the tasks that once would have been left to others. For example, the Prime Minister's Community Business Partnership lists "strengthening community ties" as an obligation now carried by the business sector.
The problem is not only that companies are diverted from their most important social responsibility, the creation of wealth. There is also the larger issue of shifting accountability for matters that are properly in the domain of public politics into the private sphere.
The attitude of most of the country's large public companies to the imposition of the requirements of corporate social responsibility demonstrates the perils of allowing marketing tactics to prevail over business strategy. Chief executives embraced the concept fearing the judgement of their peers, their critics and government.
It is unclear exactly what the benefits are for business and society from adopting corporate social responsibility. Companies are no more or less engaged with their communities than they were previously; anti-corporate campaigns rage unabated; and business regulation continues apace. Further, corporate social responsibility appears to have done nothing for the reputation of the directors of public companies. In a survey released in November by Roy Morgan Research, they were ranked as having a level of ethics and honesty below talkback radio announcers and union officials.
The question of how companies approach corporate social responsibility reveals the tension between acceding to external demands or confronting and defeating such demands. For as long as companies have been in existence, they have had to manage this dilemma.
The US railway tycoon of the 1860s and director of the Erie Railroad company, Jay Gould, was once asked whether he was a Republican or a Democrat. He replied: "In a Republican state, I am a Republican; in a Democrat state, I am a Democrat; in an independent state, I am independent -- but I am always for Erie".
For many in business such an attitude is commonsense. If the price of running a railway or selling a product is co-operating with a Republican or Democrat (or Liberal or Labor) administration then so be it -- it is not the business of business to play politics. But in the long run, there is a price to pay for not doing so.
Globalisation has further weakened the ability of companies to enunciate a position that is different from prevailing public opinion. An attitude that dictates that a company can and should be all things to all people might be good brand management but it has its dangers. In order to maintain their licence to operate in particular locations, businesses must adapt to local conditions and they are afraid to put at risk their political standing.
Such an approach was expressed a few years ago by Ford: "As a multinational ... Ford in its largest sense is an Australian company in Australia, a British company in the UK, a German company in Germany".
How to manage the monster it has helped create is the question now confronting corporate Australia. That job isn't made any easier by the recent success of the Australian Council of Trade Unions' advertising campaign. The image conjured up by the union movement is of all bosses as bastards, and of small-business owners around the country counting the days until the implementation of the Work Choices legislation so that they can sack their long-serving employees for being five minutes late for work.
Most business leaders would argue that those corporations that are successful in the long run are inevitably good corporate citizens anyway, and that adding the burden of social responsibility won't turn a badly behaved company into a well-behaved one.
The first task for Australian business in 2006 is to confront head-on the underlying assumption of corporate social responsibility, which is that unless governments force them, companies will ignore the social, environmental and ethical consequences of their actions.
The second task is to re-establish the principle that the single best contribution any company can make to the community is to be profitable.
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