#legitimacy

Under the radar: How companies can redefine what we consider socially responsible

By Verena Girschik

◦ 2 min read ◦

Notwithstanding promises of win-wins and synergies, we have good reasons to question whether companies address social problems in society’s best interests. As many critics have pointed out, companies tend to promote solutions that foster their commercial interests – often without considering their broader social impact.

Do our suspicions stop them? Of course not. Companies are usually well aware of any concerns and continuously evaluate the risk of prompting a controversy around their social activities. When they don’t have the social license to operate, they simply cultivate relations with organizations that do and get them to act on their behalf. Using such relational strategies, companies’ efforts remain hidden from public scrutiny insofar as they operate under the radar. Smart!

It’s not quite that simple, however. Legitimate organizations such as NGOs are just as aware of those widespread suspicions, and they are therefore often reluctant to work with companies. Indeed, if an organization’s relations with companies are perceived to be inappropriate, the organization risks exacerbating concerns around corporate influence and may thereby jeopardize its legitimacy too. The widespread suspicions of companies’ intentions thus make it more difficult for companies to participate in social change. Let’s call this a legitimacy barrier.

Overcoming the legitimacy barrier through relational work

How do companies overcome the legitimacy barrier and become legitimate actors in social change? In a recent publication (Girschik, 2020), I theorize how companies may engage in relational work to cultivate and shape their relations with legitimate organizations in such ways that redefine their involvement as socially responsible and thus legitimate. The paper details that companies can take four interdependent steps:

Cultivating communal relations: As a first step, companies can form or strengthen personal relations with people who work for legitimate organizations and who are likely to be interested in addressing the social problem in question. On a personal rather than organizational level, it is easier to align and create a shared understanding of potential courses of action.
Extending organizational support: Once a shared understanding is evolving, the company can start diligently targeting resources that enable the other organization to boost its activities and address the social problem. Such support has to happen on the organizational level to make sure that it is not considered for individual gain.
Articulating a partnership: Because the second step produces salient practical outcomes and illustrates the benefits of corporate involvement, it opens a window of opportunity to formalize collaboration through a partnership agreement. As part of this agreement, the company can participate in defining not only further courses of action but also the company’s role.
Differentiating as a socially responsible company: At this point, the company’s competitors have likely become interested and may try to imitate the company’s involvement by forming partnerships with the same or similar legitimate organizations. That’s a good thing for the first-moving company because it promotes the legitimacy of such partnerships. And benefiting from its strong relational embedding, the company is likely to outperform competitors through superior compliance with expectations. Being perceived as less sincere, competitors’ efforts are thus less strategically valuable and the first-moving company stands out as most socially responsible.

This process is time- and resource-consuming, but my study shows that it may pay off: it may enable companies to legitimate their involvement in social change while securing a competitive edge.

For better or worse?

These four steps explicate subtle yet consequential efforts through which companies may shape social change. The good news is that it is not easy and takes genuine long-term commitment. The bad news is that companies’ commercial interests may inform and mold trajectories of social change while their actual influence is hidden under a CSR veil. We need to keep deconstructing the relational constellations through which companies establish and exert their influence.

Reference

Girschik, V. (2020). Managing Legitimacy in Business‐Driven Social Change: The Role of Relational Work. Journal of Management Studies, 57(4), 775-804.

About the authors

Verena Girschik is Assistant Professor of CSR, Communication, and Organization at Copenhagen Business School (Denmark). She adopts a communicative institutionalist perspective to understand how companies negotiate their roles and responsibilities, how they perform them, and with what consequences. Empirically, she is interested in activism in and around multinational companies and in business–humanitarian collaboration. Her research has been published in the Journal of Management Studies, Human Relations, Business & Society, and Critical Perspectives on International Business. She’s on Twitter: @verenacph

Source: photo by Kelly Sikkema on Unsplash

Multi-Stakeholder Initiatives and Legitimacy

By Mikkel Kruuse.

Which groups of actors typically drive the standard development within Multi-Stakeholder Initiatives (MSIs) and why?
Power imbalances between actors within MSIs go beyond the global North/South dichotomy.
There seems to be a trade-off between input legitimacy (via equal participation) and output legitimacy (outcomes) of MSIs.

Approximate Reading Time: 2-3 minutes.

Private governance in a globalized economy
While it is difficult to dispute the benefits of globalization, the integration of production and trade has made it increasingly difficult for even highly developed nations to regulate activities that extend beyond their borders. For example, how do we decide who is responsible for the negative externalities of global production, such as emission of greenhouse gasses, when considering that goods often pass through several countries before reaching their final destination? Some of these issues can potentially be resolved through cooperation in intergovernmental organizations that are able to establish extraterritorial jurisdiction, but it is important to keep in mind that the implementation relies on the individual governments that in some cases may not be able or willing to do so.

Resulting from the absence of legally enforceable regulation, there has emerged a great number of non-state market-driven governance systems since the 1980s. However, unlike democracies where the government derives its legitimacy through public elections, this is not an inherent part of private governance. As such, a particular concern is that private governance could essentially be equivalent to corporate self-regulation. In order to avoid this issue, non-governmental organizations are increasingly encouraging companies to participate in so-called multi-stakeholder initiatives (MSIs), in which different types of stakeholders work together to achieve a common goal, such as the implementation of social and environmental standards for global production.

Stakeholder Participation and Distribution of Power
Some of the more well-known examples of MSIs include the Forest Stewardship Council (FSC) and the Marine Stewardship Council (MSC), which have both grown considerably since they were established in 1993 and 1996, respectively. Although the membership diversity ideally helps to ensure that MSIs are not being controlled by a single type of actor, this may not always be the case in practice. In particular, it has been suggested in the academic literature that this form of civil regulation is primarily being driven by actors from the global North, while values and knowledge originating in the global South are often marginalized.

Notwithstanding this naturally questions the legitimacy of MSIs, it still seems appropriate to ask why this tendency persists. First, there is a significant cost associated with creating a new initiative and the individual actors must therefore possess sufficient resources to do so. However, as resources are finite there is a trade-off between where to best apply them, and as such it appears reasonable to want something in return. In other words, there must be an opportunity to realize highly valued interests for an actor to spend the resource required to create and maintain an MSI. To be sure, this is not to say that the global South does not share an interest in solving the various social and environmental issues, but when viewed as a single group they have fewer total resources compared to the North. This may offer a partial explanation of why MSIs appears to be dominated by Northern interests, yet it is highly unlikely that there are no actors within the global South group that have the required resources to participate in the various standards-development activities.

Input and Output Legitimacy
Returning to the question of legitimacy, it does not really improve the situation to replace the commonly remarked North/South divide with a big/small distinction. Even so, it may help to better understand why actors behave in a certain way and how MSIs function. As noted above, the purpose of MSIs is to provide for a common good when national governments are unable or unwilling to do so, but at the same time it is not free to create and maintain these initiatives. Thus, while all parties may benefit from the common good, the associated cost renders it implausible that actors would be willing to carry the burden of providing it – that is, unless the reward is considered to be proportional.

In summary, it can be argued that having a small group of actors responsible for the majority of standards development will question the input legitimacy of an MSI, in terms of who participates in the process. But at the same time, the issue at hand is likely to remain unresolved if no one is willing to allocate the necessary resources, which ultimately lowers the output legitimacy of the MSI. In this way, some MSIs may present a trade-off between input and output legitimacy when it comes to regulating global production, where some actors gain increased influence over the decision-making in exchange for spending additional resources.

Finally, it is important to mention that there are a great many different MSIs in existence, and that the contents of this post do not apply to every single one. Instead, the purpose is to help advance the discussion of MSI and legitimacy in general, where these insights will hopefully prove beneficial.

Mikkel is a MSc Candidate in International Business and Politics at Copenhagen Business School and research assistant at the Department of Management, Society and Communication.

Pic by Margarida CSilva, Unsplash.

The Sustainable Development Goals: Elite Pluralism, not Democratic Governance

By Daniel Esser.

Was the process leading up to the SDGs really an exercise in global democratic policy making?
Although broad consultation efforts shaped the process, these alone were not able to alter the power structures undergirding the political economy of aid.
In the end, UN members states finalized the agenda behind closed doors and civil society organisations were once again relegated to serving as commentators and claqueurs.

Approximate reading time: 3-4 minutes.

The MDGs: An exercise in top-down development planning
Almost twenty years ago, a small group of white men sat together and dreamed up the Millennium Development Goals (MDGs). Soon after, the United Nations (UN) deployed them as carrot and stick to halve extreme poverty and hunger, reduce infant mortality, and put all girls and boys into primary education, all by 2015. There was real confidence that the MDGs’ top-down programming would eventually reach the farthest and most destitute corners of the globe, and that national as well as global resources would finally be spent on well-coordinated and effective projects. Listening to UN technocrats pontificate about the MDGs’ indispensability, one could have almost believed that old-fashioned development planning had finally been put on the right tracks. By the end of the exercise, thousands of new jobs in the international development industry had been created, yet most of the goals had been missed. The MDGs had begotten a hyperactive global network of goodwill ambassadors, faithful implementers and intrepid evaluators staff while billions in the global South continued to suffer.

The SDGs: Consultations as the end of procedural elitism?
The Sustainable Development Goals (SDGs) were supposed to end the MDGs’ dual legacy of procedural elitism and edentulism. Framed by the UN as the world’s foremost post-2015 development agenda, the new goals were designed to be more comprehensive in both scope and impact. Crucially, the UN also launched considerable efforts to incorporate voices from outside of the UN system. Thematic consultations took place around eleven areas selected by the UN Development Group (UNDG). They were complemented by web consultations, national consultations in 88 countries, and global high-level meetings. In addition, the UN created two websites to allow for direct consultation by inviting users to submit proposals and vote for challenges they considered most pressing. Moreover, a UN-sponsored civil society organization (CSO), ‘Beyond 2015’, brought together another 1,000 CSOs participating in national consultations.

Global democratic policy making – high aspirations, sobering facts
Undeniably, these efforts marked a clear departure from the MDGs’ backroom fecundation. But have they been sufficient to justify senior UN staffers’ praise of the SDGs as an exercise in global democratic policy making? Broad consultation alone does not alter the power structures undergirding the political economy of aid. Instead, it creates a thin layer of legitimacy that fades away as soon as accountability in invoked. The process leading up to the SDGs was rooted in an assumption that a goal-based framework was the only viable option; alternatives to such goals were never considered publicly. Countries were selected by UNDG and UN Resident Coordinators, and the breadth and depth of national consultations varied starkly. And although UNDG’s final report listed crowd-sourced issue rankings, it did not provide any rationale for excluding issues from subsequent high-level negotiations.

Closed doors, revisited
In the end, UN members states finalized the agenda behind closed doors. CSOs were once again relegated to serving as commentators and claqueurs. When push came to shove, the UN leadership thus followed its half-century-old practice of elitist international governance. Even though the UN leadership has been relentless in praising the virtues of accountability for post-2015 development cooperation, it has so far shied away from institutionalizing accountability in a way that would really make a difference: between the UN system and its powerful national agenda setters on one side, and CSOs, taxpayers, and intended beneficiaries on the other. If the SDGs demonstrate anything, it is that the UN remain unlikely to usher genuine global democratic governance into being.

Daniel E. Esser is Associate Professor of International Development at American University’s School of International Service in Washington, DC. His research on local governance amid violence, organizational management, and global health politics is widely cited. A former staff member of the United Nations in New York and Bangkok, he follows the organization’s continuous struggle to make a difference in the world from a safe academic distance. He can be reached at esser@american.edu.

Pic by UN Ukraine, edited by BOS.