and brands. This type of ‘signalling’ is also oriented at shareholders. As
shareholding has become more distributed, both the intensity and variety of
public ‘signalling’ by corporations has increased. Shareholder value is still
primarily defined by the growth in share prices, but a number of other means of
signalling to shareholders have been developed. These may be seen as a response
by management to the need to demonstrate quality and prospects for future share
performance, even during periods of weak share performance. Therefore, it can be
argued that the greater vulnerability of firms and their managers in more
competitive markets has produced a need for new forms of signalling about
management performance. Corporate social responsibility and reporting, and
other signalling activities associated with them, has been a particularly significant
response to this need.
Third, corporate social responsibility may be seen as a response to the
changing context of social regulation within which firms operate. The ‘statist’
model of regulation, in which governments — regional, national or local — impose
legally enforceable standards on firms, is being replaced by a model of social
regulation that is more interactive and distributed. New information-rich
voluntary and market-based regulatory measures are being developed to
complement classical systems of ‘command and control’ regulation. While
national environmental policy styles remain highly specific, the capacity of
governments to secure the public interest in the environmental field has been
reshaped. Increasing voluntarism, ‘partnership’ between business and government,
and a more influential role for non-governmental organizations are all signs of
this process of ‘ecological modernization’.
This new context of social regulation has posed challenges for business, which
has sought to develop new capabilities and roles in response. Although firms in
many industries have secured greater economic freedoms as a result of the
liberalization and deregulation of markets, in many cases this has been matched
by a new set of pressures to demonstrate conformance with social norms and
expectations, frequently also through a process of re-regulation. Corporate social
responsibility can therefore be seen as a way of ‘filling the space’ that has been
opened in the reshaping of environmental governance of firms. Paradoxically,
many firms now operate in a more difficult and insecure social environment with
a wider range of constituencies to relate to, and expectations to meet. Formal
regulation, while often inflexible and procedurally onerous, presents firms
(especially large ones) with clear objectives and a simple set of external
relationships to manage. In a more fluid and voluntaristic regulatory context
these certainties are replaced, and relationships with ‘stakeholders’ need to be
reconfigured.
In short, corporate social responsibility is being shaped by a bundle of needs in
many firms: new needs for internal cultural cohesion and management control;
new needs to ‘signal’ about management quality to customers and shareholders;
and new needs to engage actively in the new context of social regulation of firms.
A. Weale, The New Politics of Pollution, Manchester University Press, Manchester and New York, 1992.
J. Murphy, Ecological modernisation, Geoforum, 2000, 31 (1), 1—8.
J. S. Harrison and R. E. Freeman, Stakeholders, social responsibility, and performance: empirical
evidence and theoretical perspectives, Acad. Manage. J., 1999, 42 (5), 479—485.
Corporate Environmental Performance
163
shareholding has become more distributed, both the intensity and variety of
public ‘signalling’ by corporations has increased. Shareholder value is still
primarily defined by the growth in share prices, but a number of other means of
signalling to shareholders have been developed. These may be seen as a response
by management to the need to demonstrate quality and prospects for future share
performance, even during periods of weak share performance. Therefore, it can be
argued that the greater vulnerability of firms and their managers in more
competitive markets has produced a need for new forms of signalling about
management performance. Corporate social responsibility and reporting, and
other signalling activities associated with them, has been a particularly significant
response to this need.
Third, corporate social responsibility may be seen as a response to the
changing context of social regulation within which firms operate. The ‘statist’
model of regulation, in which governments — regional, national or local — impose
legally enforceable standards on firms, is being replaced by a model of social
regulation that is more interactive and distributed. New information-rich
voluntary and market-based regulatory measures are being developed to
complement classical systems of ‘command and control’ regulation. While
national environmental policy styles remain highly specific, the capacity of
governments to secure the public interest in the environmental field has been
reshaped. Increasing voluntarism, ‘partnership’ between business and government,
and a more influential role for non-governmental organizations are all signs of
this process of ‘ecological modernization’.
This new context of social regulation has posed challenges for business, which
has sought to develop new capabilities and roles in response. Although firms in
many industries have secured greater economic freedoms as a result of the
liberalization and deregulation of markets, in many cases this has been matched
by a new set of pressures to demonstrate conformance with social norms and
expectations, frequently also through a process of re-regulation. Corporate social
responsibility can therefore be seen as a way of ‘filling the space’ that has been
opened in the reshaping of environmental governance of firms. Paradoxically,
many firms now operate in a more difficult and insecure social environment with
a wider range of constituencies to relate to, and expectations to meet. Formal
regulation, while often inflexible and procedurally onerous, presents firms
(especially large ones) with clear objectives and a simple set of external
relationships to manage. In a more fluid and voluntaristic regulatory context
these certainties are replaced, and relationships with ‘stakeholders’ need to be
reconfigured.
In short, corporate social responsibility is being shaped by a bundle of needs in
many firms: new needs for internal cultural cohesion and management control;
new needs to ‘signal’ about management quality to customers and shareholders;
and new needs to engage actively in the new context of social regulation of firms.
A. Weale, The New Politics of Pollution, Manchester University Press, Manchester and New York, 1992.
J. Murphy, Ecological modernisation, Geoforum, 2000, 31 (1), 1—8.
J. S. Harrison and R. E. Freeman, Stakeholders, social responsibility, and performance: empirical
evidence and theoretical perspectives, Acad. Manage. J., 1999, 42 (5), 479—485.
Corporate Environmental Performance
163