paternalism as a particular approach to business society...

ESSEC BUSINESS SCHOOL / March 8-9, 2012 / Cergy (Paris), FRANCE

PATERNALISM AS A PARTICULAR APPROACH TO BUSINESS SOCIETY INTERACTIONS – AN EVOLUTION THROUGH TIME

Helen Schneider , ESSEC Business School

2Presented at the 1st International Workshop : The Role of Business in Society and the Pursuit of the Common Good ESSEC BUSINESS SCHOOL / March 8-9, 2012 / Cergy (Paris), FRANCE

Research question

1. How did business engage in CSR before it was called CSR?

1. Implicit vs explicit CSR (Matten and Moon 2008)

� paternalism

2. What has happened to paternalism in this era of CSR?


Agenda

Introduction

● The concept and key insights

Paternal business practices

1. Trace the evolution of paternalism

• From the social/catholic entrepreneur to the welfare state

2. Identify similar outcomes and practices today

• The turn to CSR• Shaping structure and content of business - society relations

Discussion and further research


The concept: Paternalism

● No common definition: narrow vs broad view (Ackers 1998)

● “Paternalism is generally characterised by an interference with individuals' liberties justified by a claim of alleged better protection of their interests. Under paternalism people in authority make decisions for other people which are often beneficial but which prevent those people from taking responsibility for their own lives” (Iankova 2008)


In search for an improved concept

Principle of complete

implication (1979)

Libertarian paternalism (2003)

N. Fotion:Wholistic concept beyondits coercive aspects, integrating change

Thaler and Sunstein:Architecture of choices for theindividual‘s and thecommon good (ex. Speeding)

How can this be applied to the corporation acting for the common good?

Hypothesis: Paternalism is still widely present in business-society interactions but in different forms and under different labels, like HR/CSR


Key insights from literature review

Paternal practices are just as present in corporate capitalism as they were in family

capitalism

Paternal aspects of CSR practices are not identified

• Negative connotation

• Focus on State-level

Paternal lens enhances understanding of business-society relations

• Motivation

• Structure

• Content


18/19th century family firms and charismatic entrepreneurs as “caring fathers” of their employees

Traditional paternalism


housing the entire worker community and corporation delivering the “equivalents of wealth”

1859: Jean-Baptiste-André Godin creates a “social pal ace” in rural Northern France

Lallement (2009)

Bentham‘s Panopticon 1791Fourier‘s „Phalanstère“


Identifies patron’s responsibility towards 4 main s takeholders:

the Catholic Church, civil society, the work-family or corporation,

and the family of the individual worker

Léon Harmel (1829-1915): Catholic entrepreneur, owner of textile mills, and social reformer

Coffey (2003)


- More diversified ownership structures and larger stockholder models

- Discretionary paternal power

- Utilitarianism

- Factory towns

Industrial paternalism

Barse MILLER, 1946


• Abuses of employer‘s power

• Violent strikes and riots

• Trade union and social democraticmovement

• Bismarck‘s social reforms in the 1880s

• De-responsibilization of business

Crisis of paternalism and the rise of the Welfare State


The turn to CSR and what remains of paternalism

� Neoliberal movement:

- from „give-it-to-me“ to „do-it-yourself“

� CSR movement


Acting for the common good

RESPONSIBILITYPOWER


Paternalist influence on structure of business-society relations

• An example of assumed roles:The Swedish Trade Union Confederation

• “Not acceptable , however, seems to be the role as welfare provider in the local community and in developing countries . (…) Welfare services and distributive politics is a common issue and should be agreed upon in democratic order and should be financed by public funds .

• Corporations , rather, should pay the taxes that the legislation of different countries demands. (…) What is also not acceptable is the idea that corporations should take up the relay where states are not pulling their weight. (…) The contributions of corporations must be under the control of public au thorities in order not to undermine the politics of elected politicians” (in De Geer, Borglund et al. 2009).

Result of 1st crisis? Nationalization of social question, State’s role to redistribute wealth


Paternalist influence on structure of business-society relations

● Protests, State and localcommunity blame MNCs

● Establishing a „dependenceculture“

Shell has gone beyond what was necessary and delivered benefits to the communities precisely because of government failure. (Boele et al., 2001b) in (Ite 2004).

A diffusion story in developing countries?Shell in the Niger Delta region

Highlights: shared responsibility between private and public institutions and partnership logic, risk of de-responsibilization and dependency of actors


Paternalist influence on content of business-society relations

� CA [Community Assistance] approach� focused on what Shell felt the communities lacked (Ite 2004)

� CD (Community Development) approach � emphasis on the empowerment of communities (Ite2004).

Targeting the local community

Highlights: paternalism is still practiced in somewhat different forms and under different labels; CSR is not all good and paternalism is not all bad


Selected literature overview

Traditional paternalism

Industrial paternalism

Paternal WelfareState

Historicalanalysis

Conceptualanalysis

Crisis 1Nationalizationof social question

Crisis 2Neoliberalism

State-level

Business-level

Ethical/performance justifications(pro-contra)

Reid 1985, Nielsen 1994, Tone 1997, Ackers, 1998

Debouzy 1988,Coffey 2003,Lallement 2009

Gilbert and Gilbert1989

Beck 1995Briggs 2006

GAP

Dworkin 1971, 1983, Fotion 1979, Arneson 1980, Feinberg 1986, Alston and Ferrie 1993, Thalerand Sunstein 2003, 2008, Rostboll 2005, Moyo2009, Eisenach 2011, Szerletics 2011

Historic link with CSR:Iankova 2008, Matten and Moon 2008, Carroll 2009, De Geer, Borglund, et al. 2009Family firms (employee focus):Mueller and Phillipon 2011


Discussion and further research

� Towards a “new corporate paternalism”• Extend the concept to modern stakeholders

• Investigate SMEs and cultural differences

� Applications to stakeholder theory• Internal and external stakeholder involvement• State intervention for the common good

� Instrumentalizing paternalism• Business case for CSR

• Paternal measures as Sales argument (explicit CSR)• BOP strategies

• PPP


„New corporate paternalism“: ExamplesTargeting the client (1/2)


„New corporate paternalism“: ExamplesTargeting the client (2/2)


Bibliography

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• Alder, P. S. and B. Borys (1996). "Two Types of Bureaucracy: Enabling and Coercive." Administrative Science Quarterly 41(1): 61-89.

• Alston, L. J. and J. P. Ferrie (1993). "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth

• of the Welfare State." The American Economic Review 83(4).

• Anheier, Toepler, et al. (1997). "The implications of government funding for non-profit organizations: three propositions." International Journal of Public Sector Management 10(3).

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• Argandona, A. and H. von Weltzien Hoivik (2009). "Corporate Social Responsibility: One Size Does Not Fit All." Journal of Business Ethics 89: 221-234.

• Beck, H. (1995). The Origins of the Authoritarian Welfare State in Prussia, 1815-1870, University of Michigan Press.

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Bibliography

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APPENDICEA changing management mentality: practices and objectiv es

paternalism as a particular approach to business society...

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