Chapter 3 – Organizations

“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.” (Margaret Mead)

“Society does not consist of individuals, but expresses the sum of interrelations, the relations within which these individuals stand.” (Karl Marx)

Learning Objectives

In this chapter you will accomplish the following learning objectives:

  • You will understand some of the theoretical principles underlying responsible management (RM) and corporate social responsibility (CSR)
  • You will integrate organizational forms and the role of governance in promoting RM and CSR

Example: Progression Of Community Forest Agreements in British Columbia Through Social And Political Pathways

Source: https://cases.open.ubc.ca/progression-of-community-forest-agreements-in-british-columbia-through-social-and-political-pathways-a-study-on-the-history-of-cfas-with-context-from-a-specific-coastal-case/

This conservation resource was created by Arlo Bryn-Thorn. It is shared under a CC-BY 4.0 International License.

Community forestry has conceptually, and in practice, existed globally for centuries. State-recognized management structures with community forestry components have been increasingly present and important since the 1970’s (1). Rural and indigenous communities are often viewed with judgment for their supposed ignorance of the ecological implications of their natural resource use; this is exacerbated by state-imposed property systems that often disincentivize conservation and long-term management strategies (2).
However, it is often the time-, and space-specific knowledge of local communities and individuals that make them excellent natural resource managers(2). The misconception of rural community as an antonym for progress has led forest management to represent and serve the objectives of government and state-institutions, rather than local and indigenous people for most of modern history (2). Agrawal et al (1999) call for the “decentralization, meaningful participation, cultural autonomy and conservation” through community participation in natural resource decision-making (2). What better representation of these components than a tenure system that supports the “sustainable use and environmental protection [that] intersects with ethical concerns for human rights and social justice and with local interests in improved livelihoods” (p. 11) (1). This is the working definition of Community-based forest management that best represents the objectives of the Community Forestry Agreement in British Columbia.
In Canada, it has been the combined effect of the social perception of mis-management from state institutions (BC Ministry of Forests, at the time), and the general criticism of the forestry industry’s priority of economic development that has increased the salience of an alternative management system that better serves the people (3). According to Beckley (1998), institutional models like those supported by community forestry provide an opportunity to “maximize benefits of forest values to a different and usually wider range of stakeholders while simultaneously serving as mechanisms to reduce conflict between stakeholders” (p.736) (3); which is to say that community forestry enables a more broad array of objectives that represent more “sustainable and equitable outcomes” (p. 633) (2), serving multiple actors, rather than state or governmental groups.
Achieving simultaneous objectives is a difficult feat, however given the importance of environmental sustainability and protection, British Columbia’s updated Forest Practices Code (1995) represented the global movement towards environmental preservation through improved governmental policy. According to Hayter (2008) (4), the 1995 revamp of the Forest Practices Code included reduced cut-block size, riparian protection and transparency in the permitting process, requiring public input for cutting permits. It is clear that complex objectives are often the result of clear public opposition to governmental actions.
This was especially evident in the “War in the Woods” of Clayquot Sound, recounted by Tindall’s (2013) writing in a twenty-year anniversary article (5). It was this event of civil disobedience that paved the way for locals to protest the mis-management of their government in BC. Approximately 850 people were arrested during that 1993 protest, marking it the largest civil disobedience event in Canadian history. The early 90’s proved productive for ENGO’s, and environmentally conscientious citizens. The result of the “War in the Woods” was considerable strain on BC politics, and the establishment of the first First Nation-owned forestry company in BC (besides the unique North Cowichan Municipal Forest program (6): the Iisaak.)
The media coverage and outcome of the protests also provided a platform for women to express their disapproval of the current governmental structure, which clearly did not serve the people of the province or the environment on which they depended. The celebrated founders of the campaign were praised for their powerful and successful event, leading to an emergence of “strong female environmental leaders” (p. 3) (6). This was perhaps a contributing factor to the increase in female enrolment in environmentally-related university programs in the following years. Environmentalists learned from this opportunity; applying the fact that rallying for support internationally can be an effective tool for governmental persuasion to other causes.
The involvement of ENGO’s, providing resources and media coverage enabled a broad audience to which this event was exposed.As the salience of environmental stewardship in BC increased in the late 80s and 90s, the provincial government took action. Based on the democratic political structure of BC, the approval of the public is one of the most important concepts for elected public servants. In 1994, the government answered the calls of the public for more integrated, multi-objective forest land management (3). The result was the introduction of a new tenure form for forestry: British Columbia’s Community Forest Agreement.
References 
(1) Menzies, N. K. (2007). Introduction. In Our Forest, Your Ecosystem, Their Timber: Communities, Conservation, and the State in Community-based Forest Management. New York: Columbia University Press.
(2) Agrawal, A., Gibson, C. C., Britt, C., et al. (1999). Enchantment and Disenchantment: The Role of Community in Natural Resource Conservation. World Development, 27(4), 629–649.
(3) Beckley, T. M. (1998). Moving Toward Consensus-based Forest Management: A comparison of industrial, co-managed, community and small private forests in Canada. The Forestry Chronicle, 74(5), 736–744.
(4) Hayter, R. (2008). “The War in the Woods”: Post-Fordist Restructuring, Globalization, and the Contested Remapping of British Columbia’s Forest Economy. Annals of the Association of American Geographers
(5) Tindall, D. (2013, August 12). twenty years after the protest, what we learned from Clayquot Sound. The Globe and Mail. Retrieved from https://www.theglobeandmail.com/opinion/twenty-years-after-the-protest-what-we-learned-from-clayoquot-sound/article13709014/
(6) Haley, D. (2002). Community Forests in British Columbia: The Past is Prologue. Vancouver. Retrieved from http://bccfa.ca/wp-content/uploads/Forests_and_People_Paper_David_Haley.pdf

Society has organized into groups, clans, and clusters of people since time immemorial. It is a fundamental assumption that people want to belong to organizations.  It is wired into our genetics (1). It follows that these organizations can sometimes have conflicting interests, that each feel are worthwhile. The mutual accommodation of these interests can be read in the example above that led to the British Columbia’s Community Forest Agreement.

It is no surprise that organizations of people clustered together to pursue common business interests.  Adam Smith in his Wealth of Nations addressed many philosophical issues relating to the creation of firms and their responsibility to their workers and to society. Some consider Adam Smith to be at the forefront of social responsibility and even the forerunner of corporate social responsibility (CSR) (2).

The emergence of the industrial revolution also revolutionized the way people joined and created businesses and firms.  The increased wealth of people and firms and their search for resources to supply a consumer market led to the colonization efforts of Western powers in different continents to the detriment and interruption of indigenous societies in the Americas, Asia, and Africa (3).

It is worth reflecting on the presence of ancestral and indigenous societies that had different value systems. These indigenous groups were enslaved, integrated, separated, and isolated to various levels and in various reserves in many parts of the world by colonizing groups at different stages of history.  Only recently has an increased awareness of these historical situations been recognized and reconciled to varying degree (for a fuller discussion of the Truth and Reconciliation process in Canada read (4)). Figure 1 illustrates indigenous regions in the Americas as an example of pre-established grouping of societies. You can get several layers of analysis by accessing https://native-land.ca .

 

 

Figure 1. Indigenous linguistic regions in Canada. https://native-land.ca

Academic researchers have explored the organizational forms that societies have adopted and proposed a variety of theories relating to the behaviour of those organizations and the individuals who are engaged with the organizations. The industrial revolution and its visible output as shown in Figure 2 has expanded the number of ways that people organize. Theories abound to the way that organizations form and behave and in light of responsible management, researchers continue to explore reasons, mechanisms, and linkages between complex internal and external variables that lead to a firm behaving in one way – ethically and another behaving in a reprehensible way (5).

 

Figure 2. Industrial Revolution. Photo by Michal Pech on Unsplash https://unsplash.com/photos/GrijtNGd_g0

One of those theories focused on the organizational level of analysis is institutional theory as initially proposed by Meyers (6) and further developed by DiMaggio and Powell (7).  This theory suggests that organizations – and in the context of responsible management, firms and businesses behave according to isomorphic constraints. That is organizations tend to behave and organize in similar ways due to societal pressures along mimetic, coercive, and normative dimensions.

Mimetic isomorphism refers to the process where organizations mimic others that are considered to be succesful or have accumulated social legitimacy. As an example from the field of sustainability, organizations that lead with sustainability initiatives such as Unilever are often held as benchmarks for other organizations to follow.  Politically and socially, organizational levers such as certifications by B-Lab Corporation and LEED signal high standards of sustainability whilst incorporating as a Benefit corporation in the US, as a Community Interest Company (CIC) in some European countries or a Community Contribution Company (CCC) in British Columbia similarly denote a legal commitment to sustainability along the dimensions of responsible management.

Coercive isomorphism explains how organizations will be constrained usually by political actors through rules and laws to organize or behave in a particular manner. For example, the Canadian government provides extensive guidelines on doing business abroad based on respecting Canadian regulations and international regulations (3). Local rules and regulations (standards) for operating safely, sustainably in various industries and for various stakeholders are coordinated through the Standards Council of Canada through agencies such as the CSA group who provides standards that are often implemented into laws governing safety and uses of tools and materials.  These political and regulatory constraints force organizations to create managing and reporting mechanisms to ensure legal legitimacy. Similar situations exist internationally within the constraints of their cultural and political systems.

Normative isomorphism describes how organizations will tend to organize similarly due to norms and rules imposed by professions; for example see the Chartered Professional Accountants (CPA) (see the Sustainability Accounting Standards Board logo in Figure 4) or Professional Engineering associations (coordinated in Canada by Engineers Canada) or other professional associations. Voluntary standards such as ISO 26000 (a global standard for corporate social responsibility) or specific norms such as Fairtrade Canada (enhancing social responsibility through fair trade of raw material – its logo is shown in Figure 3) and many others provide the opportunity for firms to organize in a way that benefits their own success and essentially mimic each other as a success strategy.

Firms however, need to function within the accepted boundaries of society.  This is where one dimension of institutional theory explains that concerns with reaching legitimacy via conforming to implied or explicit rules assures the organization of survival in its macro-environment.  Organizations can use signaling theory to reduce the information asymmetry with its stakeholders through its online presence, through an announcement of its initiatives, through formalized commitments or compliance to socially accepted norms. For example, there is a plethora or symbols, icons, and designations indicating conformance to various product requirements that add social legitimacy to coroporations. This becomes a potentially risky strategy if stakeholders perceive the firms to be ‘greenwashing’ (falsely rating) their claims.

 

Figure 3. FairTrade. https://commons.wikimedia.org/wiki/File:FM_RGB.jpg Fairtrade International e.V., CC BY-SA 3.0 DE, via Wikimedia Commons
Figure 4. Sustainability Accounting Standards Board (SASB). https://commons.wikimedia.org/wiki/File:SASB_Logo_RGB-Reg-tm.jpg SASB, CC BY 4.0, via Wikimedia Commons

 

 

 

 

 

 

 

 

 

 

 

 

Individuals over history, embraced various grouping concepts in order to survive in society and so organizational forms evolved to address a variety of needs. For-profit firms as the economic engines of modern Western society provide the scalability to address profit-seeking opportunities. Organized isomorphically, they address needs along the raw material extraction, agrarian cultivation, industrial processing and production of goods and services that address human material needs.

For-profit firms, range from small to medium sized enterprises (SMEs) to large firms that may be multinational (MNCs) or global in scope and structure. Variations exist along various combination of state-owned and partially state-owned entreprises depending on the local political state of a nation (8).

Not-for-profit firms can range from cooperatives, through community enterprises, through private social enterprises and social entrepreneurship, non-governmental (NGOs) bodies, and other social ventures (9). They are mostly organized to address needs not otherwise addressed by government structures or through private enterprises.  Their funding can result from for-profit enterprise philanthropy, community or crowd-funding, private funding, or government grants or loans.

Governments are socially constructed organizations of people grouped and assembled according to various electoral or appointed mechanisms to address the governance, infrastructure needs, and defence of their population. Governance and policy is then administered through assemblies of people (elected or not depending on the political context). In Canada, the some of the levels of government groups are the rural councils, town councils, city administration, provincial governments, and the federal government.  Beyond the federal government supra-national  coalitions such as the United Nations (see Figure 5), the North American Treaty Organization, and internationally, the World Treaty Organization (WTO),  the European Union (EU), Mercosur, the ASEAN group, and other regional coalitions exist (10).

Figure 5. United Nations Headquarters in Geneva Photo by Mathias P.R. Reding on Unsplash https://unsplash.com/photos/yfXhqAW5X0c

Additional literature can be found and is described in the ‘key take-aways’ section relating to the econimically disadvantaged part of the global population that is often considered the base of the pyramid (BOP). Since the initial concepts of the BOP model however, increasing affluence has changed this pyramid into a quadrilateral with a significant middle class but with economic disparities and inequalities still an issue from the global context (11).

Responsible management in organizations of all sorts and at all levels does not happen without the intervention of managers which then brings in agency theory (12), stakeholder theory (13), and managerial and governance frameworks which will be discussed in the next chapter.

 

 

Key Takeaways

Your key takeaways may be:

  • that organizations try to be the same (isomorphism) for a variety of internal and external reasons and so responsible management is important to maintain a focus on sustainability and CSR throughout;
  • that infrastructures exist with different types of organization that have a common goal of promoting responsible management.
The idea of organizational forms is not just a colonial concept, as economic development at the base of the economic pyramid (BOP) is always a global concern. Prahalad (2002) was instrumental in explaining this concept from the viewpoint of what multinationals can do to leverage local expertise whilst Kolk et al. (2014) reviews BOP research in the decade after Prahalad’s ideas took root. Read the following articles for more information:
Prahalad, C. K., & Hart, S. L. (2002). The Fortune at the Bottom of the Pyramid. Strategy+Business Magazine, 26, 273. https://doi.org/10.2139/ssrn.914518
Kolk, A., Rivera-Santos, M., & Rufín, C. (2014). Reviewing a Decade of Research on the “Base/Bottom of the Pyramid” (BOP) Concept. Business and Society, 53(3), 338–377. https://doi.org/10.1177/0007650312474928
Tying everything together, you should read Calton et al.’s (2013) prescriptive work on decentralizing networks of individuals, leveraging “global action networks”, and recognizing the importance of knowing who the other is and the importance of place (“faces and places”):
Calton, J. M., Werhane, P. H., Hartman, L. P., & Bevan, D. (2013). Building Partnerships to Create Social and Economic Value at the Base of the Global Development Pyramid. Journal of Business Ethics, 117(4), 721–733. https://doi.org/http://dx.doi.org.subzero.lib.uoguelph.ca/10.1007/s10551-013-1716-0

Reflective Questions

Take some time to reflect on how you would answer the following questions:

  1. When addressing the social, economic, environmental well-being of societies, why is it necessary to consider colonization and reconciliation efforts at the same time?
  2. Reflect on the fundamental objectives of different organizational forms – for-profit firms, not for profit social enterprises, governmental bodies? How are they similar or different?
  3. Explain who are the internal and external stakeholders for an organization? Does it change if the organization’s objective is business or social enterprise?
  4. In for-profit firms, individuals join this organizational form towards capitalistic end results of making a profit. Explain how you would explain to an executive of this organization how this objective could encompass a social or environmental motive in addition to the profit motive.
  5. How did the industrial revolution, in part, lead to colonization by Western powers? Do you believe that this inevitably led to a split between the profit motive and the social or environmental motive?
  6. The UN SDGs were previously discussed; explain how coalitions such as the UN play a role in addressing societal needs, and forming societal aspirations. Do you see them as effective? Why or why not?

References used in the text – you are encouraged to consult these references through your institutional library services or through the internet

(1) Baumeister, R. F., & Leary, M. R. (1995). The need to belong: Desire for interpersonal attachments as a fundamental human motivation. Psychological Bulletin, 117, 497–529.

(2) Smith, Adam An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by S.M. Soares. MetaLibri Digital Library, 29th May 2007

(3) https://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse.aspx?lang=eng

(4) TRC (2012). Truth and Reconciliation Commission of Canada: Calls to Action. Retrieved from https://nctr.ca/records/reports/#trc-reports

(5) Lange, G., Wodon, Q., & Carey, K. (2018). The Changing Wealth of Nations 2018: Building a Sustainable Future. Washington, DC: World Bank. Retrieved from https://openknowledge.worldbank.org/handle/10986/29001 License: CC BY 3.0 IGO.

(6) Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American journal of sociology, 83(2), 340-363.

(7) Powell, W. W., & DiMaggio, P. (Eds.) (1991). The New Institutionalism in Organizational Analysis. University of Chicago Press. http://catdir.loc.gov/catdir/toc/uchi051/91009999.html

(8) Read Chapter 1 (pp. 1-19) in Sexty, R. W. (2020). Canadian Business and Society: Ethics, Responsibilities and Sustainability (5th Ed.). McGraw Hill.

(9) Read Chapter 16.3 (pp. 309-312) in Sexty, R. W. (2020). Canadian Business and Society: Ethics, Responsibilities and Sustainability (5th Ed.). McGraw Hill.

(10) Lists of organizations are dynamic but one site that provides a consolidated list is https://www.safalta.com/blog/international-organization-and-their-headquarters . Retrieved July 19, 2022.

(11) Lange, G. M., Wodon, Q., & Carey, K. (Eds.). (2018). The changing wealth of nations 2018: Building a sustainable future. World Bank Publications.

(12) Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360.

(13) Freeman, R. E. (1984). Strategic management : a stakeholder approach. Pitman.

License

Icon for the Creative Commons Attribution-NonCommercial 4.0 International License

The Integration of Corporate Social Responsibility and Sustainability into Responsible Management Copyright © 2022 by Ruben Burga is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License, except where otherwise noted.

Share This Book