From Social Responsibility to Global Compact: Toward Inclusion Polices and Responsive Business...

Several years ago, we called scholars' attention to the need to look beyond the prevailing narrow concept of corporate social responsibility. The concept was a product of an era of domestic business growth, cold war rivalry, and limited appreciations for international involvement. Even after

Social responsibility as a concept and practice is limited to corporate contributions to its community (e.g., training and employment, charities, schools, etc.). Later on it encompassed environment protection. In today's global environment, corporations have to engage actively to combat discrimination in all its forms, as well as poverty and diseases, ecological issues, child labor, economic sanctions, and human rights. In addition, corporations have to cooperate with governments and civil organizations on local, international, and global scales. This accentuates that international relations and diplomacy have to be considered as a normal activity of global corporations. Global corporations (e.g., Daimler-Chrysler, Royal Dutch Shell) are already engaged in some forms of international relations mad diplomacy. Other firms are expected to follow suit.

Unfortunately, it is in academia that business scholars are still committed to the old concept of social responsibility. There are several reasons for this attitude. Chief among them are the failure to see (1) that corporations exist to create value for society, (2) that globalization is not the equivalent of internationalization, and (3) international relations and networking, including personal relations and political connections, are political capital. Corporations are not only economic entities but also social and political actors. They must make economic growth and the enhancement of the life of people a top priority. It should be mentioned that there is a failure in academia to note that healthy, prosperous and stable communities mean more business opportunities for corporations. That is, it is to the advantage of corporations that poverty, discrimination, diseases, and political abuses are eradicated.

The second reason is related to the widespread misconception that globalization is the same as internationalization. The latter means trade and/or market expansion. It became a household name after the 1970s growth in trade and foreign direct investment (FDI). It is true that globalization is mostly induced by business operations and global growth; nevertheless, globalization has political, cultural, moral and intellectual components. More importantly, globalization is a qualitative step in the journey of humankind. It implies the interdependence and connectivity of the world community. That is, globalization is a set of beliefs that fosters a sense of connectivity, interdependence, and integration in the world community. It highlights commonalties without overlooking differences, and it extends benefits and responsibilities on a global scale. In terms of business operations, globalization means the ability of a corporation to conduct business across borders in an open market, the maximizing of organizational benefits, without inflicting social damage or violating the rights of people from other cultures.

International relations and diplomacy in the age of globalization assume vital roles in enhancing a corporation's position and' image in the global marketplace. Furthermore, corporations have the resources, experiences and skills to significantly minimize problems in world affairs. In fact, global corporations are qualified, more than politicians, to negotiate and provide practical solutions to most of today's international misunderstandings and conflicts. This should not be surprising. Corporations and their executives have certain skills and resources that can be utilized effectively and to the satisfaction of all parties involved. More importantly, corporations exist to serve and create value for the world community. Unlike politicians, their allegiance and loyalty are to the people they serve globally and for the long term. Therefore, their judgments and involvements are not impaired by short-term interest and allegiance to specific constituencies or a national government. Involvement of corporations in solving international affairs problems and in improving human rights, along with cultivating relationships with civil, religious, cultural, and political leaders, enhances their image globally and eventually strengthens their competitive advantage in the marketplace. That is, corporate international relations and diplomacy is increasingly becoming a vital function for any competitive firm.

In 1999, the United Nations Secretary-General Kofi Annan suggested that the Global Compact should be an integral part of corporate philosophy and policies. Since then several global corporations and organizations have endorsed the Global Compact. The Global Compact has nine principles covering areas of human rights, environment, and labor. These principles assert that business people should:

1. Support and respect the protection of international human rights within their sphere of influence;

2. Make sure their own corporations are not complicit in human rights abuses;

3. Uphold freedom of association and the effective recognition of the right to collective bargaining;

4. Eliminate all forms of forced and compulsory labor;

5. Abolish child labor;

6. Eliminate discrimination with respect to employment and occupation;

7. Support a precautionary approach to environmental challenges;

8. Undertake initiatives to promote greater environmental responsibility; and

9. Encourage the development and diffusion of environmentally friendly technologies.

Principles 3-9 pertain to labor and environmental standards. These principles are fairly discussed and debated in the management and business literature. This is, however, not the case regarding the first two principles. These two principles are seldom discussed in the literature. Scholars in the business fields often regard human rights issues as outside the domain of business organizations, despite the fact that several organizations and executives have actively become involved inhuman rights protection. In fact, companies such as the Body Shop have made defending human rights a usual part of their operations. Furthermore, on July 26, 2000, in the UN headquarters, more than 50 corporations agreed to observe and translate the Global Compact principles in their mission statements, annual reports, and other publications. In addition, these companies pledged to report in their official outlets lessons and progress that have been made relative to their engagement and observance of the Global Compact principles.

These developments should stimulate scholars to rethink their narrow definitions of corporations' and businesses' responsibilities. Viewing corporations primarily as economic entities ignores the fact that corporations are the most important agents in facilitating the transition to today's interdependent and integrated world. In addition, it fails to grasp that corporations not only create value to the society but also search for new avenues to make the world a safe place for their operations, and that civility in conduct optimizes their returns. They want to be responsive (taking the initiative to move beyond what is prescribed by laws) economic and civil actors that touch and contribute to the life of people all over the world. It is for these reasons that corporations seek to be inclusive and responsive in their conduct.