Corporate Finance

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THEME: CORPORATE FINANCE *Miss. Y. EDITH JOY B.A., M.SC., M.B.A., M.phil.,MHRM ., (Facul ! M"#$"% i& D"pa% #"& '( Ma&a)"#"& * Bha%a hi+asa& ,&i-"%si ! C'll")" ('% .'#a&, O%a ha&a+u, Tha&/a-u%. E#ail: ("+i h/'ic"0)#ail.c'#*

** M%. A. AROC1IARAJ., M.B.A., M.phil. (Facul ! M"#$"% i& D"pa% #"& '( B,SINESS ADMINISTRATION* Ja.aha% Sci"&c" C'll")", N"!-"li.23. E#ail: a%'4ia%a/250!ah''.c'.i&



ABSTRACT C'%p'%a " S'cial R"sp'&si$ili ! (CSR* has $"c'#" a p"%-asi-" 'pic i& h" $usi&"ss li "%a u%", $u has la%)"l! &")l"c "+ h" %'l" '( i&s i u i'&s. This i& %'+uc '%! a% icl" ' h" Sp"cial Issu" '( S'ci'7Ec'&'#ic R"-i". "8a#i&"s h" p' "& ial c'& %i$u i'&s '( i&s i u i'&al h"'%! ' u&+"%s a&+i&) CSR as a #'+" '( )'-"%&a&c". This p"%sp"c i-" su))"s s )'i&) $"!'&+ )%'u&+i&) CSR i& h" -'lu& a%! $"ha-i'u% '( c'#pa&i"s, a&+ u&+"%s a&+i&) h" la%)"% his '%ical a&+ p'li ical +" "%#i&a& s '( .h" h"% a&+ i& .ha ('%#s c'%p'%a i'&s a4" '& s'cial %"sp'&si$ili i"s. I& '+a!9s )l'$al .'%l+, c'%p'%a " s'cial %"sp'&si$ili ! (CSR* is i&c%"asi&) pu$lic +"#a&+ ('% )%"a "% %a&spa%"&c! (%'# #ul i&a i'&al c'#pa&i"s. CSR is a &". a&+ )%'.i&) (i&a&cial %is4 (ac '%. 1"!.'%+s: C'%p'%a " s'cial %"sp'&si$ili !, %is4 #a&a)"#"& , , , cus '#"% %"la i'&s, -a%i" i"s '( capi alis#. INTROD,CTION Historically, the prevailing notion of CSR emerged through the defeat of more institutionalized forms of social solidarity in liberal market economies. Meanwhile, CSR is more tightly linked to formal institutions of stakeholder participation or state

intervention in other advanced economies. he tensions between business!driven and multi!stakeholder forms of CSR e"tend to the transnational level, where the form and meaning of CSR remain highly contested. CSR research and practice thus rest on a basic parado" between a liberal notion of voluntary engagement and a contrary implication of socially binding responsibilities. #nstitutional theory seems to be a promising avenue to e"plore how the boundaries between business and society are constructed in different ways, and improve our understanding of the effectiveness of CSR within the wider institutional $eld of economic governance. HISTORICA6 AND PO6ITICA6 ORI:INS OF CSR CSR itself has become a strongly institutionalized feature of the contemporary corporate landscape in advanced industrial economies. he idea that corporations should engage in some form of responsible behaviour has become a legitimate e"pectation. he institutionalization of CSR can be seen in the diffusion of CSR departments within companies, the spread of stock market indices related to sustainability, the proliferation of branding initiatives and even an #S% standard on CSR. hese activities are often associated with an understanding that a business case e"ists for CSR&namely, corporations will enhance or protect their reputations by visibly engaging in social or other initiatives. 'ut anyone in the CSR $eld knows that its meaning remains contested (%koye, )**+,. Some might even say that CSR rests upon a parado" between a liberal notion of voluntary engagement and a contrary implication of socially binding responsibilities. CSR AS AN INSTIT,TION OF TRANSNATIONA6 :O;ERNANCE CSR has arguably gained the greatest attention at the transnational level. #n fact, the emergence of new CSR!related institutions at the global level now shapes the practices and policies of corporations&multinational and local alike (-addock, )**.,. /ollowing 0eppert et al.1s ()**2, categorization of how M3Cs engage in building transnational institutions, we can locate CSR within three levels of governance. Most obvious is the role CSR plays within transnational or global institutions themselves. Here we refer to private, semiprivate and public regulations, standards or self!commitments, which have been rather in4uential on the CSR agenda. #nstitutions such as the 5nited 3ations 0lobal Compact (Rasche and 6ell, )*7*, and the #nternational Standards %rganization, with its )*7* release of #S% )2*** (Henri8ues, )*7*,, are some prominent e"amples. hese frameworks seek to institutionalize CSR on a global level through the creation of norms, rules and standardized procedures for CSR. Since transnational regulatory bodies lack the direct force of national law, many of them seek to build rules through negotiated frameworks through which companies engage in selfregulation. 9ut another way, these frameworks seek to institutionalize particular elements of CSR. hese can be issued by governmental or public bodies (such as the 53 0lobal Compact or the %:C; 0uidelines on M3Cs,, industry associations (such as the Responsible Care 9rogramme,, individual companies (such as the 0lobal 'usiness Coalition on H#<=>#;S, or in partnerships between business and 30%s (such as the Marine Stewardship Council, or business and governments (such as the :"tractive #ndustry ransparency #nitiative,.

CAPITA6IST :6OBA6I<ATION AND CRISES :ven in the conte"t of the financial crisis that has gripped the world economy since )**., the hegemonic view remains that there is no alternative to capitalist globalization and that all those who are uncomfortable about it can do is try to work for a better world within it. his fatalism is both morally indefensible and theoretically short!sighted. Capitalist globalization fails on two counts, fundamental to the future of all humanity and, indeed, to life on our planet. he crisis of class polarization, reflected in the growing numbers of the very rich, the failure of policies to improve the position of the [email protected]? C R # # C > A S % C # > A 9 % A # C B C * ( ? , very poor, and the widening gaps between them, is at the focus of radical criti8ues of capitalist globalization. -hat makes this a class crisis is the fact that poverty and ine8uality between countries and within communities in countries is largely a 8uestion of relationship to the means of production. >ccording to the -orld 'ank, agencies of the 5nited 3ations (53, and most other sources, between [email protected]* and )**D the distribution of income on a per capita basis between the richest and the poorest countries and within most countries, became more une8ual. he rich in most countries certainly became richer, both relative to the poor and absolutely. Relative to the rich, poor people are becoming poorer, and while some of the previously very poor were becoming better!off in absolute terms, other groups of poor people, notably landless peasants, including many women and children, and the families of the urban unemployed, became poorer in this period too. 0lobal capitalism, through the unceasing public pronouncements of its ideologues, official or unofficial e"ponents of CSR, acknowledges many of these issues, but as problems to be solved rather than crises. Corporate e"ecutives, world leaders, leaders of the maEor international institutions, globalizing professionals and the mainstream mass media all accept the facts on ine8uality. #n addition, there are signs that the vast maEority, including those in Fthe middle1, are e"periencing worrying levels of economic and social insecurity, not least in the grip of the current financial and economic crisis that faces the world. >nd beyond this poor people are increasingly constructed and targeted by politicians and officialdom across the globe as in different ways responsible for their predicament (Mooney, )**.,. his is rarely represented or understood as a crisis of class polarization, indeed the class basis of this is all too fre8uently denied, but this is what it is. Recent mainstream CSR narratives have come to the view that there are serious ecological issues and that these need to be addressed. he facts of ecological stress at the planetary level are clear, though their importance is not universally agreed. here are numerous indicators of such stressG agricultural lands, rainforests and other wooded areas, grasslands and sources of fresh water are all at risk. %n a global level, oceans, rivers and other a8uatic ecosystems are suffering severe ecological distress. -hile the details of the impending ecological crisis are still disputed, most people appear to be more aware of human impacts on the environment than ever before. Most maEor corporations now issue environmental impact reports. S 6 A > # R H M # A A : R & C % R 9 % R > : S % C # > A R : S 9 % 3 S # ' # A # B [email protected] :vidence is increasing to suggest that corporate globalization may be intensifying both crises. 3evertheless, globalization should not be identified with capitalism per se, though capitalist globalization is its dominant form in the present era. his makes it necessary to think through other Fgeneric1 forms of globalization, forms

that might retain some of the positive conse8uences of globalization (insofar as they can e"ist outside capitalism, while transcending it as a socio!economic system (see Sklair, )**+,. CONC6,SION > genuine CSR, one that puts human needs and ecological sustainability at the heart of its practice, rather than the CSR we have now that prioritizes private profits, market share, stock market valuation and regulatory capture is urgently re8uired. he focus of any new radical framework for globalization theory and research is clearly to elaborate such alternatives within the conte"t of genuinely democratic forms of globalization. 'ut we have little chance of successfully articulating such forms unless we understand what generic globalization is and how capitalist globalization really works. CSR, with few notable and partial e"ceptions, is a deliberate strategy to mystify and obscure the reality of capitalist globalization and, as such, unless we can e"pose it for what it is theoretically, substantively and politically, we will make little progress in the struggles to resolve the crises of class polarization and ecological unsustainability and to create radical alternative globalizations. 5nderstanding CSR as an institution of wider societal governance seems to be a promising avenue of research at a time when longstanding rules, actors and markets which have governed the global economy appear to be more and more in an ongoing state of crisis. :ven as individual and corporate Fgreed1, Fmisconduct1 and Ffailure1 have been argued to be at the root of the current $nancial crisis, the debate in the media, in politics and wider society has time and again focused on the Fsystem1 which invited&or at least tolerated&the practices responsible for the crisis (Campbell, )*77,. Many of the discussions currently popularized by movies such as #nside Iob or oo 'ig to /ail are 8uestioning the institutional set up in which responsible or irresponsible business behaviour is enacted. #nstitutional theory offers a promising way of investigating e"actly those 8uestions which currently lie at the heart of the public1s concern and, thus, offers a framework for scholarly work with the potential of bearing relevance beyond the con$nes of the ivory tower. REFERENCES >nnetts, I., Aaw, >., Mc3eish, -. and Mooney, 0. ()**+, 5nderstanding Social -elfare Movements. 'ristolG 9olicy 9ress. CosmopolitanismG heory, Conte"t, and 9ractice. %"fordG %"ford 5niversity 9ress. ;e 'uck, 9. ()**), Statement by F9hilippe de 'uck, Secretary 0eneral, Smith, I. ()**., Social Movements for 0lobal ;emocracy. 'altimoreG he Iohns Hopkins 5niversity 9ress. Starr, >. ()***, 3aming the :nemyG >nti!Corporate Movements Confront 0lobalisation. AondonG Jed 9ress. <ertovec, S. and Cohen, R. (eds, ()**), Conceiving CosmopolitanismG heory, Conte"t, and 9ractice. %"fordG %"ford 5niversity 9ress.

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