How do the Nikes, Westpacs, McDonald’s and Fords of the global economy engage with the wider community, and is this good for business? That has been the focus of the corporate citizenship debate over the last few years. Corporate citizenship is about companies understanding and taking account of their influence on society and integrating social, ethical, environmental and economic values in their core decision-making. More recently, the focus has shifted to the relationship between public policy and corporate citizenship. In other words, is there a role for government?
There is a role for government to play, although—as much as it may disappoint some—that role is not necessarily a regulatory one. Corporate citizenship has traditionally been regarded as something that companies engage in voluntarily. However, the growth of the ‘corporate citizenship movement’ has led to increasing pressure on governments in several countries to regulate corporate social behaviour.
A leading proponent of a greater role for government in corporate citizenship in Australia is the Shadow Treasurer, Mark Latham. In his book From the Suburbs (Pluto, 2003) he argues that government should impose higher levels of corporate social responsibility as part of the ‘Third Way’ approach to embracing pro-market and social democratic values. Although short on details, Latham’s contribution is welcome because at least it recognises that corporate citizenship is an important area for public policy.
It’s not easy to find an appropriate role for government in corporate citizenship. This is partly because definitions of corporate citizenship are fuzzy, varied and constantly evolving. Nevertheless, just as companies need to understand the advantages to business before they embark on various citizenship activities, governments should understand the public policy case for corporate citizenship.
The first public policy argument for corporate citizenship relates to a key concern of governments—national competitiveness. There are many reasons why some nations are more economically successful than others. Recent evidence suggests that the widespread adoption of corporate citizenship practices can contribute to the competitive advantage of a nation. At the micro-level, studies show that corporate citizenship practices improve a firm’s financial performance through their influence on reputation, staff morale, motivation, recruitment, turnover, consumer confidence and risk management. The message is that companies can do well by doing good.
At the macro-level, there are Corporate Social Responsibility (CSR) clusters. Research is now focusing on the positive effects these can have on regional and national economies. Clusters are concentrations of interconnected organisations in one place that share a