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Does it really take the state?

Author

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  • Börzel Tanja A.

    () (Freie Universität Berlin, Ihnestr. 22, D-14195 Berlin)

  • Hönke Jana

    (Freie Universität Berlin, Ihnestraße 22, D-14195 Berlin, Germany)

  • Thauer Christian R.

    (Freie Universität Berlin, Ihnestrasse 22, D-14195 Berlin, Germany)

Abstract

This paper explores the role of the state for an effective engagement of multinational corporations (MNCs) in corporate social responsibility (CSR)1. In the OECD context, the “shadow of hierarchy” cast by the state is considered an important incentive for MNCs to engage in CSR activities that contribute to governance. However, in areas of limited statehood, where state actors are too weak to effectively set and enforce collectively binding rules, profit-driven MNCs confront various dilemmas with respect to costly CSR standards. The lack of a credible regulatory threat by state agencies is therefore often associated with the exploitation of resources and people by MNCs, rather than with business’ social conduct. However, in this paper we argue that there are alternatives to the “shadow of hierarchy” that induce MNCs to adopt and implement CSR policies that contribute to governance in areas of limited statehood. We then discuss that in certain areas such functional equivalents still depend on some state intervention to be effective, in particular when firms are immune to reputational concerns and in complex-task areas that require the involvement of several actors in the provision of collective goods. Finally, we discuss the “dark side” of the state and show that the state can also have negative effects on the CSR engagement of MNCs. We illustrate the different ways in which statehood and the absence thereof affect CSR activities of MNCs in South Africa and conclude with some considerations on the conditions under which statehood exerts these effects.

Suggested Citation

  • Börzel Tanja A. & Hönke Jana & Thauer Christian R., 2012. "Does it really take the state?," Business and Politics, De Gruyter, vol. 14(3), pages 1-34, October.
  • Handle: RePEc:bpj:buspol:v:14:y:2012:i:3:p:1-34:n:8
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    References listed on IDEAS

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    1. Anton, W.R.Q.Wilma Rose Q. & Deltas, George & Khanna, Madhu, 2004. "Incentives for environmental self-regulation and implications for environmental performance," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 632-654, July.
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    6. Flanagan, Robert J., 2006. "Globalization and Labor Conditions," OUP Catalogue, Oxford University Press, number 9780195306002.
    7. Amengual, Matthew, 2010. "Complementary Labor Regulation: The Uncoordinated Combination of State and Private Regulators in the Dominican Republic," World Development, Elsevier, vol. 38(3), pages 405-414, March.
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    Cited by:

    1. van der Ven Hamish, 2014. "Socializing the C-suite: why some big-box retailers are “greener” than others," Business and Politics, De Gruyter, vol. 16(1), pages 31-63, April.

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