Corporate governance models

There are a number of variations of the CSR model in practice across the globe. If we can imagine a linear scale moving from left to right, Stakeholder (excluding shareholders) interests on the far left to Shareholder Interests on the far right it becomes easier to understand the different models. The difference is the extent to which these two, often competing, interests are favored.

Lefties and neo-cons

This Left-Right divide is applicable in the political and philosophical context as well. The ideals of CSR have been considered “left leaning”, “leftie” or Liberal in its philosophy from the very beginning. Many Conservatives (Right), “neo-cons” are now coming to the understand that the best interests of shareholders are aligned with the best interests of the corporation and that is sustainability. If the corporation and the planet doesn’t survive then there is no point in generating profits.

Not-for-profit and For Profit organisations defined

It is necessary to define just what is a “For Profit” organisation. It is a business or commercial enterprises whose sole reason for being is to generate profit. A “Not-For-Profit” (NPO) organisation is one whose raison d’etre is some higher purpose such as famine relief, religious mission or the dissemination of education. They are often referred to as Nonprofit organisations however this is strictly not correct. NPOs will often strive to make a profit to fund their “charitable” works. The essential difference is that in the NPO the profit is retained within the organisation whereas the For-profit organisations “intention” is to distribute its profits to its shareholders. A quick wrap-up is, a NPO exists for its works whereas a For-Profit exists for its profits.

The “For-Profit” motive

It has been the maxim of corporations, in less enlightened times, that “the end justifies the means”. Plunder and pollute, exploit the workers and the environment if it makes a profit its OK. This is no longer acceptable nor tolerable in modern Western commerce. A profit without due reference to other stakeholders is not a sustainable ethos. CSR is driving the inversion to “the means justifies the ends”. What you did making the profit is more important than the profit.

Cultural Imperatives

There is a correlation between the propensity towards shareholder bias and culture. For example, the Anglo-American (Anglosphere) corporations tend towards the shareholder bias (right) whilst in Western Europe and Japan corporations tend towards stakeholder bias (left). The movement is however inexorably, although seemingly with glacier like speed, towards the left.

Conclusion

There are a number of variations of the CSR model in practice across the globe. The difference is the extent to which Stakeholder and Shareholder interests are recognized and favored. These competing interests can be described as a Left-Right divide. The ideals of CSR have been considered “left leaning”, “leftie” or Liberal in its philosophy. The maxim that “the ends justifies the means” is being diluted in the corporate world and is moving towards a belief that If the corporation and the planet doesn’t survive then there is no point in generating profits.

Source by Dr. Shane Healy