Calling in a Debt: Government's Role in Creating the Capacity for Explicit Corporate Social Responsibility

• Published date: 01 June 2013
• DOI: http://doi.org/10.1111/basr.12006
• Author: Richard Marens
• Date: 01 June 2013

Calling in a Debt:

Government’s Role in

Creating the Capacity

for Explicit Corporate

Social Responsibility

RICHARD MARENS

ABSTRACT

Before the field of business and society can adequately

analyze the relationship between governmental policies

and corporate social responsibility (CSR), either as a rea-

lity or an ideal, it is first necessary to understand exactly

how governments nurtured the development of the auto-

nomous corporation. The roles assigned to government

by the economics and management literatures—

regulator, standard setter, protector, and adjudicator—

ignore the crucial part played by state violence and

government expenditures in the rise and sustained

success of the corporate economy. An examination of the

history of the American case, crucial for the development

of the modern corporation as well as the “explicit” form

of CSR that eventually followed it, highlights these roles:

the willingness of the state to intervene with force in

labor conflicts bolstered the managerial autonomy that

defined the large corporation, and the way government

Richard Marens is a Professor at the College of Business Administration, Sacramento State

University, Sacramento, CA. E-mail: rmarens@monmouth.edu.

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expenditures promoted innovation and firm success.

Acknowledging how corporations depended on govern-

ment assistance in their development is a necessary step

for both assessing the responsibilities owed stakeholders

and for advancing the theoretical development of the

field.

Before one can consider possible roles that governments

might play in encouraging corporate social responsibility

(CSR), the first essential step is to frame the historic

relationship between government and the rise of corporate econo-

mies in more realistic terms than has generally been the case

within both the “business and society” and economics literatures.

Both literatures have focused their attention too strongly on the

“arm’s length” aspect of this relationship, as if the corporate world

and governments were independent spheres of human activity

that only intervene intermittently in each other’s separate, if

sometimes connected, worlds. According to this implicit model of

their relationship, firms pay taxes (or pay taxpaying employees)

and lobby politicians and regulatory bodies on behalf of their

organizations’ interests, while government, in turn (1) regulates

and sets standards; and (2) establishes and enforces contract and

property law, and (3) furnishes certain public goods that facilitate

businesses activity. While this picture is not inaccurate, the

model is flawed by its neglect of the more nuanced and interpen-

etrating aspects of the relationship, aspects that played a central

role in the evolution of the corporate world during the course of

the twentieth century.

A typical example of this conventional formulation of the

business–government relationship can be found in the call-for-

papers of the 2001 Academy of Management meeting whose

theme was “How Government Matters.” According to the

announcement, governments “construct the transparent rules

allowing organizations to compete and citizens to organize for

their interests; governments create private property enabling pow-

erful profit-seeking incentives; and governments provide the secu-

rity and protection from misfortunate that overwhelm the capacity

of clans and families in complex developed societies” (Academy of

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