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.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
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.
References
Baumol, William J. 2002. The free-market innovation machine. Analyzing the growth miracle of capitalism. Princeton and Oxford: Princeton University Press.
Beck, Ulrich. 2002. Macht und Gegenmacht im globalen Zeitalter. Neue weltpolitische Ökonomie. Frankfurt a.M.: Suhrkamp.
Becker, Gary S. 1976. The economic approach to human behavior. Chicago: University of Chicago Press.
Becker, Gary S. 1993. Nobel lecture: The economic way of looking at behavior. Journal of Political Economy 101: 385–409.
Beckmann, Markus. 2010. Ordnungsverantwortung. Rational-Choice als ordonomisches Forschungsprogramm. Berlin: Wissenschaftlicher Verlag Berlin.
Beckmann, Markus, and Ingo Pies. 2008a. Ordo-Responsibility—Conceptual reflections towards a semantic innovation. In Corporate citizenship, contractarianism and ethical theory: Philosophical considerations of business ethics, eds. Jesus Conill, Christoph Lütge, and Tatjana Schönwälder, 87–115. Aldershot and London: Ashgate.
Beckmann, Markus, and Ingo Pies. 2008b. Sustainability by corporate citizenship. Journal of Corporate Citizenship 31: 45–57.
Boatright, John R. 1999. Does business ethics rest on a mistake? Business Ethics Quarterly 9(4): 583–591.
Boatright, John R. 2009. The implications of the new governance for corporate governance. Paper prepared for the conference “Corporate Citizenship and New Governance,” Lutherstadt Wittenberg, November 2009, included as Chapter 8 in this volume.
Buttkereit, Sören. 2009. Intersectoral alliances: An institutional economics perspective. Berlin: Wissenschaftlicher Verlag Berlin.
Coleman, James S. 1990. Foundations of social theory. Cambridge, MA: Harvard University Press.
Edwards, Michael, and Simon Zadek. 2003. Governing the provision of global goods: The role and legitimacy of nonstate actors. In Providing global public goods, eds. Inge Kaul, Pedro Conceição, Katell Le Goulven, and Ronald U. Mendoza, 200–224. New York: Oxford University Press.
Eigen, Peter. 2006. Fighting corruption in a global economy: Transparency initiatives in the oil and gas industry. Houston Journal of International Law 29: 327–354.
Frenkel, Stephen J., and Duncan Scott. 2002. Compliance, collaboration, and codes of labor practice: The Adidas connection. California Management Review 45(1): 29–49.
Friedman, Milton. 1962. Capitalism and freedom. Chicago and London: University of Chicago Press.
Friedman, Milton. 1970. The social responsibility of business is to increase its profits. New York Times Magazine, September 13, 32–33, 122–126.
Habisch, André, René Schmidpeter, and Martin Neureiter. 2008. Handbuch corporate citizenship: Corporate social responsibility für manager. Berlin and Heidelberg: Springer.
Hazlitt, Henry. [1964] 1994. The foundations of morality. New York: The Foundation for Economic Education.
Henderson, David. 2001. Misguided virtue. False notions of corporate social responsibility. Wellington: The Institute of Economic Affairs.
Henderson, David. 2004. The role of business in the modern world—Progress, pressures and prospects for the market economy. London: The Institute of Economic Affairs.
Hirsch, Bernhard, and Matthias Meyer. 2009. Integrating soft factors into the assessment of cooperative relationships between firms: Accounting for reputation and ethical values. Business Ethics: A European Review 19(1): 81–94.
Hollenhorst, Tirza, and Chris Johnson. 2005. Tools for corporate social responsibility. Atlanta: Forest Stewardship Council.
Homann, Karl. 1990. Wettbewerb und Moral. Jahrbuch für Christliche Sozialwissenschaften (31): 34–56.
Homann, Karl. 2002. Vorteile und Anreize. Tübingen: Mohr Siebeck.
Homann, Karl. 2003. Anreize und Moral: Gesellschaftstheorie—Ethik—Anwendungen. Münster: LIT.
Homann, Karl, and Ingo Pies. 1994. Wirtschaftsethik in der Moderne: Zur ökonomischen Theorie der Moral. Ethik und Sozialwissenschaften (EUS) 5(1): 3–12.
Jensen, Michael C. 2002. Value maximization, stakeholder theory, and the corporate objective function. Business Ethics Quarterly 12(2): 235–256.
Lin-Hi, Nick. 2009. Eine Theorie der Unternehmensverantwortung. Die Verknüpfung von Gewinnerzielung und gesellschaftlichen Interessen. Berlin: Erich Schmidt.
Lütge, Christoph. 2005. Economic Ethics, Business Ethics and the Idea of Mutual Advantages. Business Ethics: A European Review 14(2): 108–118.
Lütge, Christoph. 2007. Was hält die Gesellschaft zusammen? Tübingen: Mohr Siebeck.
Mackey, John. 2006. Winning the battle for freedom and prosperity. Liberty 20(6): 17–22.
Matten, Dirk, and Andrew Crane. 2005. Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management Review 30(1): 166–179.
Mises, Ludwig von. [1949] 1996. Human action. Irvington: Foundation for Economic Education.
Mises, Ludwig von. [1951] 2008. Profit and loss. Auburn, AL: Ludwig von Mises Institute.
Moon, Jeremy, Andrew Crane, and Dirk Matten. 2005. Can corporations be citizens? Corporate citizenship as a metaphor for business participation in society. Business Ethics Quarterly 15: 429–454.
Oosterhout, Hans van. 2005. Corporate citizenship: An idea whose time has not yet come. Academy of Management Review 30(4): 677–681.
Palazzo, Guido, and Andreas G. Scherer. 2006. Corporate legitimacy as deliberation: A communicative framework. Journal of Business Ethics 66: 71–88.
Pies, Ingo. 2008. Wie bekämpft man Korruption? Lektionen der Wirtschafts- und Unternehmensethik für eine “Ordnungspolitik zweiter Ordnung”. Berlin: Wissenschaftlicher Verlag Berlin.
Pies, Ingo. 2009a. Normativität als Heuristik. Ordonomische Schriften zur Wirtschaftsethik. Berlin: Wissenschaftlicher Verlag Berlin.
Pies Ingo. 2009b. Moral als Produktionsfaktor. Ordonomische Schriften zur Unternehmensethik. Berlin: Wissenschaftlicher Verlag Berlin.
Pies, Ingo, Markus Beckmann, and Stefan Hielscher. 2009a. Sozialstruktur und Semantik—Ordonomik als Forschungsprogramm in der modernen (Welt-)Gesellschaft. In Moral als Heuristik. Ordonomische Schriften zur Wirtschaftsethik, ed. Ingo Pies, 282–312, Berlin: Wissenschaftlicher Verlag Berlin.
Pies, Ingo, Stefan Hielscher, and Markus Beckmann. 2009b. Moral commitments and the societal role of business: An ordonomic approach to corporate citizenship. Business Ethics Quarterly 19(3): 375–401.
Pies, Ingo, Markus Beckmann, and Stefan Hielscher. 2010. Social value creation, management competencies, and global corporate citizenship—An ordonomic approach to business ethics in the age of globalization. Journal of Business Ethics 94(2): 265–278.
Popper, Karl R. [1945] 1966. The open society and its enemies, Vol. 2. New York: Hegel and Marx, Routledge.
Scherer, Andreas G., and Guido Palazzo. 2007. Toward a political conception of corporate responsibility: Business and society seen from a Habermasian perspective. Academy of Management Review 32(4): 1096–1120.
Scherer, Andreas G., and Guido Palazzo. 2008. Globalization and corporate social responsibility. In The Oxford handbook of corporate social responsibility, eds. Andrew Crane, Abagail McWilliams, Dirk Matten, Jeremy Moon, and Donald Siegel, 413–431. Oxford: Oxford University Press.
Scherer, Andreas G., Guido Palazzo, and Dorothée Baumann. 2006. Global rules and private actors: Toward a new role of the transnational corporation in global governance. Business Ethics Quarterly 16(4): 505–532.
Schönwälder-Kuntze, Tatjana. 2008. “Corporate citizenship” from a (systems)-theoretical point of view. In Corporate citizenship, contractarianism and ethical theory. On philosophical foundations of business ethics, eds. Jesus Conill, Christoph Lütge, and Tatjana Schönwälder-Kuntze, 49–65. Aldershot and London: Ashgate.
Suchanek, Andreas. 2007. Ökonomische Ethik. Tübingen: Mohr Siebeck.
Suchanek, Andreas, and Nick Lin-Hi. 2007. Corporate Responsibility in der forschenden Arzneimittelindustrie. Jahrbücher für Nationalökonomie und Statistik 227(5+6): 547–562.
Sundaram, Anant K., and Andrew C. Inkpen. 2004. The corporate objective revisited. Organization Science 15(3): 350–363.
Vanberg, Viktor J. 2007. Corporate social responsibility and the “game of catallaxy”: The perspective of constitutional economics. Constitutional Political Economy 18(3): 199–222.
Waldkirch, Rüdiger W. 2001. Prolegomena for an economic theory of morals. Business Ethics: A European Review 10(1): 61–70.
Waldkirch, Rüdiger W., Matthias Meyer, and Karl Homann. 2009. Accounting for the benefits of social security and the role of business: Four ideal types and their different heuristics. Journal of Business Ethics 89: 247–267.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2011 Springer Science+Business Media B.V.
About this chapter
Cite this chapter
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
Download citation
DOI: https://doi.org/10.1007/978-94-007-1661-2_10
Published:
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-007-1660-5
Online ISBN: 978-94-007-1661-2
eBook Packages: Humanities, Social Sciences and LawPhilosophy and Religion (R0)