Martijn Boersma is an associate professor of human trafficking and modern slavery at the University of Notre Dame Australia, where a new course aims to provide the skills and knowledge that will enable people to work proactively to put an end to the exploitation of vulnerable people.
In this radio interview on 2SER, I discuss the chapter published in the “Research Handbook on the Sociology of Organizations” on “Organizational Legitimacy and Legitimizing Myths.” It suggests that companies, as an influential and dominant group, want to maintain how they are held to account for their social and environmental impacts, which is through market forces. The research contends that the social license to operate and other concepts such as corporate purpose are hierarchy-enhancing legitimizing myths that uphold this status quo in favour of companies, at the detriment of society.
Over the last two decades many of the world’s largest companies have been involved in scandals, misconduct and dubious ethics. Rather than relying on interventions by public authorities, the dominant governing rationality is informed by the belief that the market is able to balance social, environmental, and financial interests. However, the vast majority of companies that have been involved in ethical transgressions have survived – and have even thrived. Potential damage to the reputation of companies, or threats to their ‘social license to operate’, seems to have had a limited effect. There is therefore reason to believe that market forces are not adequate by themselves to correct corporate misbehaviour.
This chapter from the upcoming ‘Research Handbook on the Sociology of Organizations’ explores the reliance on market forces to correct corporate actions that are not aligned with the common good. It examines to what extent legitimacy theory adequately explains the dynamics around organizational legitimacy, and it proposes an expansion of legitimacy theory to increase its explanatory power: the use of social dominance theory and legitimizing myths expands (organizational) legitimacy as a theoretical construct. In explaining why antagonistic stakeholders continue to rely on market-based approaches, this research suggests that they have either bought into the hierarchy-enhancing myths, or they have not yet developed compelling hierarchy-attenuating myths to challenge the status quo. The chapter concludes with the suggestion that the ‘social license to operate’ and ‘corporate purpose’ are legitimizing myths that uphold the idea that the market can balance social, environmental, and financial interests.
This article establishes a new basis for examining the participation, mobilisation and impact of investors at a time when market-based activism for social change is rising in prominence. Existing terminology describing the expression of political values through investment decisions lacks conceptual clarity. Political participation by shareholders and other investors is variously described as shareholder activism or socially responsible investment, and currently conceptualised under the banner of political consumerism. However, this term fails to capture the unique political role and diverse actions of investors. We put forward ‘political investorism’ as a cohering term for investment-based political participation to remedy existing conceptual confusion, to distinguish between investors and consumers as political actors and to set an agenda for the future study of market-based activism. This article defines and develops the concept of political investorism, drawing upon illustrative cases from Australia to identify hallmarks, actors and tactics of this form of political participation.
While the efforts by actors on the buyer-side of value chains – such as brands and retailers – to address upstream labour abuses are well documented, there is a lack of research into how actors on the production-side of value chains – such as raw material producers – can identify and address downstream labour risks. This research presents the findings of an action research project that focused on the Australian cotton industry. By applying a sense-making lens, we propose four properties that can be used to identify labour risk in global value chains, providing insights into the capacity of producers to address downstream labour abuses. We suggest that there is a possibility for a ‘book-end’ approach that combines upstream and downstream actions by buyers and producers in global value chains.
Multistakeholder initiatives are often heralded as a solution to many social and environmental issues. Yet, due to their composition, these initiatives are not without tensions and challenges. This paper examines which factors determine the (il)legitimacy of multistakeholder initiatives in the context of efforts to remediate child labor.
Child labor in global supply chains is increasingly addressed through multistakeholder initiatives. However, the participation of stakeholders with distinct views and interests can generate tensions. Based on interviews with civil society actors, this research finds that tensions exist between the normative‐ethical and political‐strategic dimensions of multistakeholder initiatives, which are manifest in the existence of international and national norms and their contextual application, in definitions of child labor, risk and responsibility, and in doubts about corporate incentives to join multistakeholder initiatives. In addition, tensions exist concerning the effectiveness of supply chain auditing, enabling broader labor rights as a means to remediate child labor, and whether standards need to be mandatory or self‐regulation suffices. The success of collaboration depends on the effective navigation of these tensions. Failure to do so can undermine the legitimacy of multistakeholder initiatives from the perspective of civil society actors. The research finds that due diligence, in the shape of human rights risk assessments, is not subject to normative‐ethical/political‐strategic tensions, and can play a key role in the success of multistakeholder initiatives and the fight against child labor.
When it comes to doing what is morally right, there are some things that are best not left to the market, writes Martijn Boersma, lecturer in the UTS Management Discipline Group.
Last week, CNBC reported that a Goldman Sachs analyst wrote in a note to clients: “Is curing patients a sustainable business model?” The argument he allegedly put forward was that healing people with a one-shot cure does not bring in the same revenue stream that chronic therapies do and is therefore bad for business in the long run.
My latest research finds that effective approaches to child labour in global supply chains are characterised by companies engaging with a broad range of stakeholders, taking a contextual and holistic approach by considering local circumstances and broader human rights, and by focusing on prevention and remediation. By shifting from code of conduct and auditing based approaches towards stakeholder collaboration and due diligence, companies are moving away from reactive and paternalistic approaches to child labour and instead increasingly adopt proactive and pluralistic strategies. The influence of the UNGPs has the potential to ameliorate some the tensions in multi-stakeholder partnerships by requiring companies to be first movers and using this advantage to include stakeholders rather than exclude them in developing CSR strategies. While these developments can help to elevate child labourers from latent and discretionary stakeholders to expectant and dependent stakeholders, they continue to rely on CSOs to add weight to their claims.
A Senate inquiry has revealed that wage theft and underpayment are so prevalent in some industries that they have become the norm. Around 79% of hospitality employers in Victoria, for instance, did not comply with the national award wage system between 2013 and 2016.
Regulators and unions don’t have the resources to combat this issue, and so we need another method to tackle wage exploitation. One way is to introduce a multi-stakeholder certification scheme, using market forces to reward companies that have committed to fair working conditions and punish those that don’t.
Australian companies will soon be publishing financial results, as well as information about sustainability efforts. Corporate social responsibility of the big four banks – Australia and New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac is a continuing topic of debate following recent scandals and reports of unsustainable activities. Yet according to ANZ chairman, David Gonski, Australians ought to “stop bashing the banks” for being large and profitable. This comment should put civil society on guard.