Corporate Citizenship

Conceptual Overview

Other scholars have attempted to extend the theoretical conceptualization of corporate citizenship by drawing on theories of citizenship from political science. Citizenship in the traditional sense refers to the relationship of the individual to the state. Matten and Crane argue that in today's globalized political economy, corporations have taken over many of the roles previously performed by governments, and hence it might be appropriate to conceptualize corporate citizenship as the relationship between the individual and the corporation. They adopted a descriptive (as opposed to normative) approach to corporate citizenship, defining it as “the role of the corporation in administering citizenship rights for individuals.” This perspective shifts the focus from the corporation as a citizen to an administrator of a set of citizenship rights whereby corporations can either enhance or impede social rights (such as delivering educational, health, and welfare services), civil rights (conflicts between multinational corporations and indigenous communities), or political rights (political lobbying and donations to political parties).

There is also a strategic aspect to corporate citizenship: It is assumed that being a good corporate citizen will bring benefits to the firm in terms of enhancing its reputation, and creating goodwill and customer loyalty. An examination of the literature indicates that the rationale and assumptions behind corporate citizenship discourse are the following: (1) corporations should think beyond making money and pay attention to social and environmental issues, (2) corporations should behave in an ethical manner and demonstrate the highest level of integrity and transparency in all their operations, and (3) corporations should be involved with the community in which they operate in terms of enhancing their social welfare and providing community support through philanthropy or other means. The normative core of this discourse is not hard to ascertain: The assumption is that corporations should do all these things because (1) good corporate citizenship is related to good financial performance (despite the dubious nature of empirical evidence of this relationship), and (2) if a corporation is a bad citizen then its license to operate will be revoked by society. Both of these are simplistic assumptions with little theoretical or empirical support. Large transnational corporations responsible for major environmental disasters and negative social impacts in the Third World, rather than losing their license to operate, have actually become stronger and more powerful whether through mergers, restructures, or relentless public relations campaigns. While it is true that public outcry and consumer boycotts have forced these corporations to change some practices and develop codes of conduct, it is important to realize that these codes are voluntary and not legally enforceable.

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