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3 - The emergence of NGOs in the context of ethical and institutional complexity

Published online by Cambridge University Press:  13 January 2010

Michael Yaziji  and
Jonathan Doh
Michael Yaziji
Affiliation:
IMD, Lausanne
Jonathan Doh
Affiliation:
Villanova University, Pennsylvania
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Summary

What are the roles and responsibilities of the corporation? What should corporations do and not do? Where does the boundary lie between moral obligation and discretionary corporate action to improve societal wellbeing? As well as facing all the complexity involved in simply navigating toward a single goal of sustained profitable growth, firms are simultaneously being challenged about the appropriateness of such a singular goal. There are seemingly ever-increasing calls from various stakeholders such as NGOs, unions, financial markets and governments for businesses to take on additional social or economic goals beyond mere financial performance.

The evolution of complex responsibilities

At the very heart of this complexity is a single critical fact: firms increasingly operate under multiple, inexplicit, incomplete, often conflicting and continually re-negotiated social contracts and institutions. Social contracts can be defined as a real or hypothetical agreement expressing shared beliefs, norms and values concerning the rights and responsibilities of the state, non-state actors and citizens within a country. Institutions can be defined as highly resilient social and governance structures that express and enforce these beliefs, norms and values. These institutions govern firms' structures and behaviors, provide resources and define what is appropriate and what is not. Firms that are better at meeting institutional demands will tend to have greater legitimacy and thereby have better access to resources and improve their chances of survival.

The notion of a social contract dates back to Hobbes and Locke who envisioned a single implicit social contract between citizens and the sovereign.

Type
Chapter
Information
NGOs and Corporations
Conflict and Collaboration
 , pp. 33 - 45
Publisher: Cambridge University Press
Print publication year: 2009

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