Abstract
The purpose of this chapter is to develop an ordonomic conceptualization of corporate citizenship and new governance that (a) provides a framework for positively explaining the political participation of companies in new governance processes and (b) does not weaken but instead strengthens the functional role of corporations as economic actors in the market system of value creation. To this end, we develop our ordonomic approach in a critical discussion of Milton Friedman’s stance on the social responsibility of business in three steps. (1) The ordonomic perspective on the economics ethics of competitive markets argues that the social responsibility of business does not lie in maximizing profits but in addressing societal needs through the mutually advantageous creation of value. (2) The ordonomic approach to the business ethics of corporate actors claims that corporate firms can use moral commitments as a factor of production. (3) The ordonomic perspective on the process ethics of new governance holds that companies can act not only as economic actors but also participate as political and moral actors by taking ordo-responsibility in processes of new governance. This role of corporate citizens in the new governance does not weaken but, instead, strengthens the role of business firms as economic agents for value creation.
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Notes
- 1.
Matten and Crane (2005, p. 172, emphasis in original) hold: “Where government ceases to administer citizenship, this leaves open space for corporations to enter (or not to enter) the arena as administrators of citizenship. … Corporations also enter the arena where government has not as yet administered citizenship rights. This is particularly the case in developing countries. Globalization raises awareness of these ‘vacuums’ and exposes western MNCs in particular to charges that they are ‘responsible’ in some way for administering citizenship rights in such situations.”
- 2.
Palazzo and Scherer (2006, p. 81) explain that a “discursive approach to organizational legitimacy leads to a politicized concept of CSR.”
- 3.
The “ordonomic” approach builds upon the German tradition of an “economic theory of morality” (Homann and Pies 1994) that was originally restricted in a more narrow sense to discussing matters of business and economic ethics. This ordo-theoretical approach to economic ethics argues that the incentive properties of social institutions play an important role in implementing moral concerns. This research program was originated by Karl Homann. Cf. Homann (1990, 2002, 2003). Meanwhile, there are numerous publications available that specifically refer to this intellectual tradition. Cf. Habisch et al. (2008), Hirsch and Meyer (2009), Lin-Hi (2009), Lütge (2005, 2007), Schönwälder-Kuntze (2008), Suchanek (2007), Suchanek and Lin-Hi (2007), Waldkirch (2001) as well as Waldkirch et al. (2009). Ordonomics advances the “economic theory of morality” to a general social and organizational theory that takes a rational-choice perspective on the analysis of interdependencies between institutions and ideas or, more specifically, on the analysis of interdependencies between social structure and semantics. In ordonomics, “social structure” (institutions) refers to the incentive properties of formal and informal rule arrangements, whereas “semantics” (ideas) refers to the terminology of public and organizational discourse and the underlying thought categories that determine how people perceive, describe, and evaluate social interactions and, in particular, social conflicts. The ordonomic approach is interested in interdependencies between ideas (semantics) and institutions (social structure), i.e., in the question of how certain mental models and ways of interpreting social reality shape our thinking and communication and, vice versa, how our thinking and communication shape the social rules that coordinate human interactions and thus ultimately channel our behavior. For an application of the ordonomic approach to business ethics, see Pies et al. (2009b) as well as Pies et al. (2010). For a comprehensive overview of applications of the ordonomic approach to the domain of business and economic ethics, see Pies (2009a, b). For a more general discussion of the ordonomic methodology, see Pies et al. (2009a) as well as Beckmann (2010).
- 4.
Friedman (1970, p. 124) argues that “it may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government.”
- 5.
Friedman (1970, p. 124) contends: “Of course, in practice the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions. … In each of these … cases, there is a strong temptation to rationalize these actions as an exercise of ‘social responsibility’. [Yet, in effect, they are simply] expenditures [of the corporation] that are entirely justified in its own self-interest.”
- 6.
Friedman (1962, p. 27) indeed feels that only government can provide market interactions with functional rules. He contends (emphasis added): “The role of government just considered is to do something that the market cannot do for itself, namely, to determine, arbitrate, and enforce the rules of the game.”
- 7.
Economic approaches primarily deal with an analysis of social structures. Philosophical approaches primarily deal with semantics. What makes ordonomics special is a theory perspective that focuses on interdependencies—and, more specifically, even on discrepancies—between social structures and semantics.
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Pies, I., Beckmann, M., Hielscher, S. (2011). Competitive Markets, Corporate Firms, and New Governance—An Ordonomic Conceptualization. In: Pies, I., Koslowski, P. (eds) Corporate Citizenship and New Governance. Studies in Economic Ethics and Philosophy, vol 40. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-1661-2_10
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