section discusses the main implications of our analysis of the routes and pathways for CSR.
Moreover, when organizations pursue their individual interests in complex systems without reference to the interests of others there is a tendency to create turbulence or instability in the system. A tyranny of small decisions can arise, in which choice is informed by too narrow a view of outcomes and consequences. Suggested responses to turbulence include the establishment of common rules for organizations operating in the system. More specifically there is a need for new governance procedures that improve communication between organizations, give greater attention to the legitimate interests and concerns in the set and the knowledge and perspectives held by actors.
Initiatives such as the Global Compact, the forum provided by Corporate Social Responsibility Europe and the Global Reporting Initiative are examples of attempts to establish common rules for organizations, especially business, and there are many other forums and initiatives that seek to foster change and new codes and guidelines for business.
The concept of globalization
Chevalier and Cartwright (1966) identified pollution, poverty and ill-health as typical examples of meta-problems. The importance of this characterization is that it highlights that what were seen 40 years ago as distinct meta-problems have now merged into larger, more complex problem sets. What has caused this increasing complexity? To pursue this issue we shall analyze the claim that the globalization of economic and financial systems is a more recent example of a meta-problem. Here the interdependence and interconnection of global financial and economic markets – facilitated by linked digital tech- nologies and improved global communications and transport – together with more open markets means that what happens in one region of the world has potential repercussions for economic and financial interests and organizations in other parts of the world. More critically, instability in one region can destabilize the overall (more) global system.
This is consistent with Castells’ (1996) argument that a technological revo- lution has brought us into the networked information age, which combined with the progressive liberalization of the world market has fuelled the process of (economic and financial) globalization. From an environmental perspective it has led other authors to suggest that economic and financial globalization has resulted in a world-wide increase in wealth, but also in a world characterized by interdependency and vulnerability, in which a local problem today can turn into a global (environmental) crisis tomorrow (Elkington, 1998).
However, Roome (2000) suggests that economic and financial globalization is a rather narrow conceptualization of globalization. He advances the view that globalization describes a class of complex phenomena where by inter- dependence and interconnectivity between locations around the world arise from human agency. The causes of globalization are the actions and choices that create these ties and interdependence. The primary drivers of globalization fall into three categories: technological, such as the internet and rapid, cheap
transport; organizational and institutional, such as the span of multinational companies and of trade and supply-chains, and the practices of international organizations such as the WTO; and concepts or idiolect, such as a univer- sal model of progress and development, or words that we use to describe the economic system, such as open, global markets for products and services. These categories may overlap, for example when companies expand their business globally on the basis of their technologies, using the argument of free trade and drawing on the support of global institutions such as the WTO.
These primary drivers are themselves composed of smaller technological, organizational or institutional innovations. For example advances in digital technology have enabled the interconnection of computers and communica- tion media, while silicon technology and miniaturization have led to rapid increases in the power and diffusion of telecommunications and computing.
Moreover advances in aeroplane engines, lightweight metals, composite materials and radar technology, together with the organizational ability to move vast numbers of passengers through airports and on to planes, have facilitated the mass movement of travellers by air.
However, economic and financial globalization, as experienced in the late 1980s and beyond, is only one part of what we call ‘broad definition’ global- ization. This also includes changes in environmental systems arising from the demands of developed economies and the model(s) and experiences of development in developing countries during the 1950s and 1960s, as well as the increasing pace of social and cultural globalization, as evidenced by global migration and the emergence of multicultural, multiethnic communities around the world.
In conceptual terms globalization, as interdependence and connectivity arising from human agency, has outcomes that are often manifested as events, trends, or patterns. These take a number of forms. First, events in one part of the world affect other parts of the world. For example in environ- mental terms the demand for hardwood has led to deforestation; in eco- nomic terms defaults on loans can lead to a broad collapse of financial markets. This can occur rapidly or may unravel over an extended period of time. Second, spatially diverse events or changes around the world form pat- terns because they share common causal factors, such as migration from environmentally impoverished and politically disputed territories. Third, some changes are so ubiquitous that they affect many global locations, such as the spread of persistently toxic chemicals. The interconnections between human and natural systems mean that there are often second-, third- and higher-order effects to take into account.
The perception that some of the outcomes of globalization are undesirable has prompted demands for new forms of governance. The environmental consequences of development were addressed at the Stockholm Environment Conference in 1972, the Earth Summit in Rio de Janeiro in 1992 and the Johannesburg Summit in 2002. These events led to a raft of new approaches
to global and local governance: the Montreal Protocol on ozone-depleting substances, Agenda 21, the Kyoto Protocol and so on. Financial and economic instability due to globalization has given rise to the WTO and the Basel Accord, led by the International Bank for Settlements. Cultural and social globalization has caused national governments to impose controls on the flow of migrants and refugees.
Roome (2000) suggests that we are now experiencing a collision between and a combining of these waves of globalization. The implication is that the forms of governance that have emerged in response to each successive wave of globalization are no longer adequate as new forms of globalization have added to the complexity and interdependence of issues. In terms of our earlier analysis we have entered a period in which previous meta-problems are combining to form a more complex and turbulent meta-problem.
We can list some examples of this complexity and turbulence. The disparity in economic opportunity between rich and poor countries is giving rise to a number of issues. Countries with low labour costs are attracting inward invest- ment from companies based in developed countries, with a consequent loss of jobs in the developed world. This raises a number of CSR concerns in respect of labour and environmental standards in developing countries, the loss of jobs and closure of plants in developed economies, and the overall environmental burden of material flows around the world. The demand for food, timber and materials and the need for export-driven growth in developing countries are stimulating overfishing, deforestation and resource extraction. Poor people in developing countries and countries in conflict are migrating to the richer countries of North America and Europe, with the consequent problem of cultural adaptation. The growing wealth in developing economies is support- ing the spread of cars and other energy-consuming devices, thereby increasing the demand for fossil fuels and metals and provoking global climate change.
The broad recognition among politicians, business leaders, consumers, citizens and non-governmental organizations of the environmental stresses and social and cultural tensions that are accompanying global production and consumption is putting pressure on business to consider new forms of respon- sibility, either reactions to existing events or actions taken in anticipation of perceived risks.
Instabilities in the system and CSR
If ‘broad definition’ globalization is the canvas upon which modern CSR is being painted, and if CSR is a governance response by business to the knots and tears in the relationships between business and the societal actors that make up this canvas, then it is possible to identify where in the weft and warp of this canvas that better governance is required. The weft of the canvas is composed of the demands that actors place on relationships. The threads here are simple. A growing number of informed and sceptical citizens are seeking to defend their concerns but at the same time are experiencing
disempowerment as their jobs, health and safe and secure environments are being affected by the decisions of those who seem more and more remote.
This is leading to a wider perception in society of the potential risks associated with some technologies and some aspects of modern lifestyles, as well as a lack of trust in relationships with [remote] others.
The threads that make up the warp of the canvas are technological, organi- zational and conceptual in nature. We have become dependent on complex technologies to meet our daily needs, and the technologies that underpin globalization (transportation, communication and computing) are bringing images of and information about distant places and issues closer to our lives.
They provide both information and disinformation and offer a means to mobilize and organize interest movements. At the same time the organiza- tional span of businesses and the length of global supply chains are distancing corporate decision makers from the complex issues that prevail in locations of production or consumption around the world. This is a source of concern for decision makers, who need much more detailed information about an increasing number of local settings. It is creating new axes of governance, from global to multilocal. At the same time individuals are able to access powerful, but often simple images of issues that cause concern among citizens, interest groups, consumers and producers. There is an asymmetry between the informational aspects of protest and the informational demands of good governance. Similarly globalization is distancing consumers and others from what is involved in the production, manufacture and supply of the products they use, wear and eat. While some wish to know more about the provenance of these goods and services, this is being rendered more difficult by the ever lengthening supply chains. In terms of concepts or ideas, recognition of the value of company logos and brands, made possible by global markets and communication, exposes these assets to vulnerability.
Added to this are highly publicized events such as the industrial accident in Bhopal, the oil spill from the Exxon Valdez and the nuclear accidents at Three Mile Island and Chernobyl, as well as trends such as global climate change, fears about genetic manipulation and food safety, concern about child labour and poor working conditions at Nike’s suppliers in the Far East, scandals over the fiduciary responsibilities of senior executives and the dubious practices of some leading corporations.
There is a growing recognition among policy makers, business leaders and others of the fault lines arising from our economic system and economic activity. These fault lines have gradually developed over time and so far few see them as a consequence of the system that is being created. Nevertheless there is a growing call for better governance in general, and for better governance in business in particular. In our view, while the market economy has the value of rapidly informing producers about consumers’ wants and it promotes efficiency in the allocation of resources between competing eco- nomic interests, it is not good at revealing the environmental, social, cultural
and economic instabilities created by the system as a whole, as these mostly lay outside the market. These require different capacities in governance.
For the cynical, CSR is an attempt to conceal the knots and tears in modern business practice, while for advocates of CSR it is a means of repairing these flaws so that the economic system can continue to provide the many benefits we have secured. In that sense CSR, in common with all human activities, has the capacity to be both a mask and part of the search for a more authentic form of capitalism that will fit the demands of the modern world.