Week 7 Post - Paul Merrill

Academic Paper Review: Emerging Investor Networks and the Construction of Corporate Social Responsibility, by Michael R. MacLeod

I particularly enjoyed Franklin's exploration of corporate social responsibility, or CSR (2008). As I explored other writings on the relationship between CSR and investor relationships to the companies they put their money into, I discovered Michael MacLeod's paper about the effect that groups have had on CSR.

MacLeod's paper began with a look into the history of how the idea of CSR began. A very short version of how it started was a tension between commerce and government. The international market economy drove corporations to seek profits above all else, and governmental institutions provided checks against negative side-effects of that corporate growth (MacLeod, 2009). The result was a re-shaping of how businesses and investors relate. Sections of the public are demanding CSR from companies where they place their investments (Franklin 2008).

Pressure to make changes related to CSR is stronger when it comes from groups. Macleod calls these groups "investor-driven governance networks" (2009). These include governmental regulatory initiatives and companies that run mutual funds and pension funds. Some of these groups cover a wide variety of issues and others focus on a single issue, such as Investors Against Genocide (MacLeod, 2009).

Eventually, businesses can reach the point of being self-regulating in the area of CSR. This happens as a result of the length of time that outside pressure is applied, as well as pressure from other competitive industries within the same sector (MacLeod, 2009). The widespread pressure of CSR has resulted in most large transnational companies producing their own annual reports of CSR.

MacLeod also brought out the similarity between CSR and the older concept or socially responsible investment, or SRI (2009). SRI is different from CSR in at least two ways. SRI includes the area of moral and sometimes religious concerns. SRI is often involves investment in a group of companies, and CSR normally focuses on an individual company. The most popular targets for change in CSR that groups focus on are environmental issues and human rights (MacLeod, 2009).

Investor networks have made a difference in the world. The international aspects of a company's CSR actions can have an effect on governments of countries where that company works (MacLeod, 2009). And CSR issues are approached differently in the countries where corporations originate. In my own experience, when I lived in England (1995-1998), issues such as animal rights were much more visible than in the States during the same time period.

References

Franklin, D. (2008) Just Good Business: A Special Report on Corporate Social Responsibility, The Economist, January 19, pp.1-14 (full article).

MacLeod, M. (2009). Emerging investor networks and the construction of corporate social responsibility. The Journal of Corporate Citizenship(34), 69-96.  Retrieved July 1, 2012, from ABI/INFORM Global. (Document ID: 1907432051).