Corporate Social Responsibility and Political Ties

Alireza Omidvar

Main sources of corporate power

• Privileged position of business; Public officials see businessmen as their partners in governance

• Superior political resources; more tangible resources to bear on the political process (Money information and organization)

• business’ ability to shape public preferences with persuasion

• CSR and philanthropy activities

CSR as Political Power

• CSR understood in three politically relevant ways– As public goods provision, (goodschools, low crime rates,

and clean air)

– As self-regulation,(business ethics codes or codes of conduct; efforts to ensure racial, ethnic, and gender diversity , compliance with labor laws)

– As political philanthropy (hard money contributions, soft money contributions, lobbying resources, information and expertise

Benefit

• Gain favorable regulatory treatment or helped you avoid additional regulation

• Obtain a specific political benefit such as legislative support from a particular official, a government contract, or a tax break

• Improve relationships with other groups active in the political process, such as consumer advocacy, environmental, or labor groups

• for example, reported that 72 percent of all Washington lobbying organizations represented business interests, while only 5 percent represented citizens’ groups, and only 2 percent represented labor interests

• In January 2010, a US Supreme Court ruling removed limits on corporate spending in political campaigns.

• Responsible Lobbying initiatives around the world

Facts

Developing Countries• government as dominant

player in the economy • Rentier Government or

rentier state• Quasi government Co and • State Owned Enterprise

are main player in the economy.

• CSR as a tools for Toll Management • Respond to the expectation of

pressure groups • CSR activities may flatter a

politician’s ego, help him fulfill a fundraising responsibility to an organization, support ideological or public policy goals he is deeply committed

• Obtain a specific political benefit such as legislative support from a particular official, a government contract, secure their position and get promoted

• Gain favorable regulatory treatment or helped business avoid additional regulation

Developing Countries• Corporation and Director don’t know about the social

challenges • Their CSR Activities are in favor of Political party and

political interest group • Their CSR Activities focus on religious and old fashioned

issue• They waste money on building mosques , Schools, they

are not trying to solve or tackle the real social issues , they are not partner of the society

• Firm ability to vary public goods provision means that firms can privilege interests affiliated with certain officials

• Corporations use lobbying to follow their self-interest under the mask of CSR.

Corporate Driver for CSR