Social Responsibility and the Regulation of the Global Firm

“Social responsibility” now seems to have become the panacea for the ills of globalization. Still marginal only a few decades ago, it now promises to fill the regulatory void created by the dismantling of Fordism and the formation of global economic and financial markets. In this article, we explore the anticipated regulatory impact of social responsibility in order to determine whether it could play a regulatory role for globalized business.One of the most recent definitions of social responsibility actually cites the voluntary initiatives now being taken by corporations, above and beyond their legal obligations. Since many stakeholders from the business world argue that regulatory measures are excessive, unwieldy and costly, voluntary initiatives are being viewed as alternatives to regulation or as regulatory alternatives inasmuch as they are founded on self-regulation. In contrast, this paper presents voluntary measures and regulations as two sides of the same coin: voluntary measures only emerge in anticipation of regulatory measures. This interweaving of voluntary measures with regulation is diametrically opposed to the discourse on social responsibility, which tends to reinforce the image of voluntary measures as an alternative to traditional regulation. Accordingly, the current discourse on social responsibility would have us believe that somewhere between the invisible hand of the market and the all-too-visible hand of the State, corporate management can lend a helping hand in the regulation of corporate activities. Thus, the discourse on social responsibility appears to have placed the greater good of society at the heart of corporate missions, without reforming corporate structures – structures still devoted to the private interests of their shareholders. So, what is this discourse on social responsibility really targeting? It is hypothesized here that the social responsibility discourse is a corollary of the new role that business is playing in the society in an era of a globalized economy.By entering into discussions and partnering with states in their strategic maneuvers to profit from globalization, global corporations have freed themselves of the now obsolete Fordist regulatory framework. However, they have also distanced themselves from the social role defined by Fordism and the social relevance of their production in a global era. In such a context, the call for social responsibility could redefine the social role of business in way that is consistent with the new conceptualization of development, contributing to its legitimacy in a post-industrial society.Discussion on social responsibility unfailingly brings us back to social transformations. It is not only a question of knowing how to make business socially responsible, but also of examining its role in the context of a new model of development, one that is different from the Fordist model. By approaching the discussion on social responsibility from these two vantage points, a variety of modes of regulation can be foreseen in the context of globalization. Given the dynamic created between adopting voluntary measures and establishing the regulatory possibilities mentioned earlier, we argue that international initiatives on corporate social responsibility are the harbingers of a worldwide normative regulatory framework that will be characterized by an unprecedented repositioning of the regulatory axes traditionally defined by the State, the market and civil society. Socio-economic movements are bringing pressure to bear on globalized corporations. In the absence of any world governing body, these initiatives are unlikely to be institutionalized, but such pressures could lead to an international regulatory framework supported by new regulatory agencies. Supposing that business anticipates the emergence of such a framework, we can view social responsibility initiatives as proactive and strategic behaviour on the part of leading edge businesses and conclude that official codes reflect an emerging compromise between international social movements and global corporations. We believe that codes of conduct that include substantive obligations are evidence of a compromise regarding the content of corporate social responsibility. They should be viewed as premises within this new international regulatory framework, rather than as regulatory instruments. Although still in its infancy, analysis in Europe has been instructive in predicting the configuration of this emerging regulatory framework. The European Commission clearly recognizes the existence of a new axis of regulation brought forth by civil society. However, it does not want to interfere with the definition of any substantive criteria, emphasizing instead the recognition of emerging social compromises. Ostensibly prudent, this analysis is nonetheless courageous since the Commission has explicitly cited reference norms, unlike some conceptualizations of social responsibility which tend to reject or invalidate the idea of a shared, worldwide commitment to universal values or norms. The stakeholders approach to corporate social responsibility excludes any debate on the substantive content of social responsibility by concentrating on the definition of a procedural framework. This perspective on social responsibility, which widens the gap between procedural and substantive norms, is already changing the international regulatory landscape. In years to come, it is entirely possible that two regulatory systems, with quite different regulatory impact, will be at loggerheads: one will be weak on substance and mainly oriented towards procedural imperatives, the other will be based in international law. Often presented as a univocal response to the regulation of globalized business, corporate social responsibility has generated a new arsenal of tools, signalling the arrival of an emerging international regulatory system. The emerging system is infinitely complex, relying on a variety of actors, mechanisms and normative foundations. It has been the basis of fundamental debates fired by antagonistic conceptions of society and the greater good. Combined with an analysis of other international initiatives now being taken, the tone and orientation of discussions across Europe give us a glimpse of how the emergent regulatory system will be configured: private and public, national and international, mandatory and voluntary, and brought forth by institutions whose legitimacy will be crucial.

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