Albareda 1..1

Corporate Governance The government’s role in promoting corporate responsibility: a comparative analysis of Italy and UK from the relational state perspective Laura Albareda Researcher at the Institute for the Individual, Corporations and Society, ESADE Business School, Universitat Ramon Llull-URL, Barcelona, Spain Antonio Tencati Assistant Professor of Management at the Department of Management (IEGI), Bocconi University, Milan, Italy Josep M. Lozano Professor at the Department of Social Sciences, ESADE Business School, Universitat Ramon Llull-URL, Barcelona, Spain Francesco Perrini Associate Professor in the Department of Management (IEGI), Bocconi University, Milan, Italy

Corporate Governance, Vol. 6 No. 4, 2006, # Emerald Group Publishing Limited, 1087-8572

Corporate Governance Co-Editors Professor Nada K. Kakabadse Professor in Management and Business Research, Northampton Business School, The University of Northampton, Park Campus, C214, Boughton Green Road, Northampton NN2 7AL, UK Tel: +44 (0)1604 892197 Fax: +44 (0)1604 721214 E-mail: nada.kakabadse@ northampton.ac.uk Professor Andrew Kakabadse Deputy Director, Cranfield School of Management, Cranfield University, Cranfield, UK Editorial Assistant Alex Kessler E-mail: [email protected] Managing Editor Kate Snowden E-mail: [email protected] ISSN 1472-0701 # 2006 Emerald Group Publishing Limited

EDITORIAL ADVISORY COMMITTEE Professor Henri-Claude de Bettignies Professor, INSEAD, Fontainebleau, France Professor Gilbert Lenssen Dean, European Academy of Business in Society, Brussels, Belgium Professor Xavier Mendoza Dean, Esade Business School, Barcelona, Spain Professor Samuel M. Natale Fischler School of Education and Human Services, Nova Southeastern University, Florida, USA

EDITORIAL ADVISORY BOARD Dr Melsa Ararat Programme Director, Sabanci University, Turkey Professor Eric Cornuel Director General and CEO, The European Foundation for Management Development, Brussels, Belgium Professor John Dixon Professor of International Social Policy, University of Plymouth, Plymouth, UK Professor Edward Freeman The Elis and Singe Olsson Professor of Business Administration, Co-Director, Olsson Centre for Applied Ethics, Darden Graduate School of Business Administration, Charlottesville, USA Dr Thomas A. Hemphill University of Michigan-Flint, School of Management, Michigan, USA Professor Frank Horwitz Director - Graduate School of Business, University of Cape Town, South Africa Professor Ken Kernaghan Professor of Political Science and Management, Brock University, Ontario, Canada Dr J.C. Khurana Director General, Centre for Corporate Governance, New Delhi, India Professor Atle Midttun

Director of the Centre for Corporate Citizenship, Norwegian School of Management BI, Sandvika, Norway Dr Lance Moir Senior Lecturer in Finance & Accounting, Cranfield School of Management, Cranfield, Bedford, UK Dr Mette Morsing Associate Professor, Director Center for Corporate Values and Responsibility at Copenhagen Business Schools, Denmark Dr Eleanor O’Higgins Senior Lecturer, University College Dublin, Blackrock, Ireland Professor Yvon Pesqueux C.N.A.M., Chaire ‘‘De´veloppement des Syste`mes d’Organisation’’, Paris, France Professor Juliet Roper Chairperson, University of Waikato, Hamilton, New Zealand Professor Lawson Savery Executive Dean of Business, Southern Cross University, Lismore, Australia Professor Prakash Sethi President, International Center for Corporate Accountability Inc., University Distinguished Professor, Baruch College/CUNY, New York, USA Professor Roman Tomasic Dean, Faculty of Business and Law, Victoria University, Melbourne, Australia Professor Lutgart van den Berghe Executive Director, Belgian Directors’ Institute and Vlerick Leuven Gent Management School, Gent, Belgium

EDITORIAL CORPORATE ADVISORY BOARD Dmitry Afanasiev Executive Director, Severstal Corporate University, Vologda Region, Russia Paul Davis Senior Business Consultant, Endeavour Training and Development Pty Ltd, Australia Roy Jones European Investor Relations Manager, Schiffrin & Barroway LLP, Radnor, Pennsylvania, USA Reeves P. Knyght Manager, Wingate House, Melbourne, Australia Peter Lacy Executive Director, European Academy of Business in Society, Brussels, Belgium Dr Kazuhito Masui Attorney at Law, Shiba International Law Office, Tokyo, Japan Frederic Nortier Director Learning & Development – Europe, Right Management Consultants, Lyon Cedex, France Patrick De Smedt Chairman, Microsoft Europe, Middle East and Africa, Belgium Laura Snyder Senior Associate, Winston & Strawn, Paris, France Vanni Treves Senior Partner, MacFarlanes, London, UK Mark Wade Shell People Services, London, UK Frank Welvaert Director, Corporate Social Responsibility Europe, Johnson & Johnson, St-Stevens-Woluw, Belgium

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The government’s role in promoting corporate responsibility: a comparative analysis of Italy and UK from the relational state perspective Laura Albareda, Antonio Tencati, Josep M. Lozano and Francesco Perrini

Laura Albareda is a Researcher at the Institute for the Individual, Corporations and Society, ESADE Business School, Universitat Ramon Llull-URL, Barcelona, Spain. Antonio Tencati is an Assistant Professor of Management at the Department of Management (IEGI), Bocconi University, Milan, Italy. Josep M. Lozano is a Professor at the Department of Social Sciences, ESADE Business School, Universitat Ramon Llull-URL, Barcelona, Spain. Francesco Perrini is an Associate Professor in the Department of Management (IEGI), Bocconi University, Milan, Italy.

Abstract Purpose – The purpose of this paper is to analyse the changing role of governments promoting corporate responsibility (CR) as a result of the challenges raised by globalisation. Design/methodology/approach – CR is linked to the restructuring of governments’ agendas in the framework of government/private sector/civil society relationships. It is a result of the research project that applies the Relational State Model Approach to the analysis of CR public policies. The relational state situates the relations between the public and private sectors, between the state and society, in the sphere of co-responsibility. Findings – The paper concludes that in the UK a more systemic, national government-centred and business-oriented approach prevails, while Italy has a more extensive, multi-stakeholder and multi-level approach. Research limitations/implications – Future research should complete the comparative analysis expanding it to other European countries: northern and central European countries to analyse the difference between all European governments in order to promote CR. Practical implications – The analytical framework of this paper could be used for academic, business leaders and policy makers to develop future actions in relation to CR public development. Originality/value – The objective to be achieved is to understand the new political and public framework incorporating CR as a new form of governance. We compare two countries that represent two very different models of government action. The theoretical approach of the paper is based on the comparative analysis of CR governmental vision, objectives, strategies and internal government CR structure. Keywords Italy, United Kingdom, Corporate social responsibility, Public policy Paper type Research paper

Methodology Literature review The relevant literature on the role of government in corporate responsibility (CR) was reviewed and categorized, first according to the type of author and then analysed by policy context and by policy implementation.

This report has been prepared with the support of the European Academy of Business in Society (EABIS), as part of its Research, Education, and Training Partnership Programme on Corporate Responsibility. This Programme has been made possible due to the financial support of EABIS’ founding corporate partners, IBM, Johnson & Johnson, Microsoft, Shell, and Unilever.

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Analytical framework In order to analyse the changing role of government promoting CR we have applied a relational CR public policy matrix and a government CR policy framework created by IPES-ESADE (Lozano et al., 2005), based on the relational state model (Mendoza, 1991, 1996) developed in 1991 at ESADE and explaining the changing role of government. The relational state situates the relations between the public and private sectors, between the state and society, in the sphere of co-responsibility (Mendoza, 1996).

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VOL. 6 NO. 4 2006, pp. 386-400, Q Emerald Group Publishing Limited, ISSN 1472-0701

DOI 10.1108/14720700610689504

First, we have applied a relational CR public policies matrix to study CR public policies in the light of relationships between companies, government and civil society organizations. Using this analytical framework we have mapped the existing CR policy framework and CR policies and programs of governments in the two countries of study, Italy and the United Kingdom. Second, we have explored the government CR policy framework in order to analyse in each country: government CR public policy (vision, objectives, strategies and priorities), internal government CR structure (position of political figure, organizational structure, centralized or decentralized), CR responsibilities at different levels of government (cross cutting policies, regional/decentralized government, local government), scope of CR policy (domestic versus international) and the role of other organizations.

Introduction: the changing role of government promoting CR CR has been described as an important influence on voluntary action by companies, and as an instrument for accountability and responsibility in the face of the new social challenges (European Commission, 2001, 2002, 2006; Zadek et al., 2001; Crane and Matten, 2004). Nevertheless, even when considered within a voluntarist approach to CR by companies, very few agents would today dispute the role that governments can and ought to adopt in promoting and developing CR in their respective countries. It was the action of pioneer governments like the UK, Denmark and Australia and the efforts of the European Commission (2001, 2002) that legitimized the need for all governments to take CR public policies. The first documents on CR to incorporate the debate on the role of governments as promoters or drivers of CR date from the last decades of the past century. Most of these texts put forward the need for governments to act in promoting CR as a response to the social and environmental problems caused by corporate action within a globalized economic context. Zadek et al. (2001), one of the pioneers in identifying government roles in relation to CR, did so in a publication that described a third generation of CR, where the new protagonism of governments in promoting CR was the central issue. Other pioneering publications were those of the CBSR (2001), Aaronson and Reeves (2002a) and Bell (2005). One of the most significant documents in analyzing government roles is the work of Fox et al. (2002). The report presents a sound analysis of the role of governments in the development of CR, based on a study of developing countries. In the study, Fox et al. (2002) classify government initiatives from two standpoints. The first identifies the four main roles developed by governments: mandating, facilitating, partnering and endorsing. The second classifies government initiatives under ten CR agenda items. It constructs and develops a significant matrix of possible activities for the public sector to carry out in each role, depending on the aspect of CR being dealt with. This forms a matrix that allows government action to be analysed. Lepoutre et al., 2004 also present a review of the role of the government in the CR debate. They analyse the strategic roles to be played by government relative to the issues brought about by a collaborative stance of the government. These roles link governments to systems that involve ‘‘soft intervention’’ policies (Joseph, 2003), highlighting the government role as user of soft tools and soft regulation forms.

Issues related to CR on the policy agenda The increasing profile of CR as a concept in government action is generally linked to the challenges raised by globalization and economic change in the late twentieth century. CR is linked to issues that affect and restructure government agendas and the relationship between social agents, governments, companies and organizations in civil society. Globalization, the new economy and CR Zadek et al. (2001) point to links between the concept of the new economy and corporate citizenship. They explore the relationship between the new information and communication economy and the radical changes this has engendered in the nature of our organizations,

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above all companies but also states and social organizations. Crane and Matten (2004, pp. 389-434) also develop the concept of corporate citizenship by analyzing the changes globalization has made to relationships between governments and companies. They emphasize the role of governments as stakeholders in the company, legitimized by their representativity as actors democratically elected by their citizens. They study the consequences of globalization. The role of the state has changed from a traditional Westphalian setting where it was dominant as regulator with imperative regulation in the face of a dependent role of the company. There is now a post-Westphalian setting, where the opposite applies: the state has a dependent role in the face of a dominant role of companies, due to economic corporate power. The state’s political power has been eroded, often due to activities by other actors like companies or organizations that operate in civil society. In this new global scenario, governments are facing new ethical dilemmas in the relationships of interests between companies and society.

New model of societal governance, the welfare state crisis and CR The context of the globalized economy has given rise to political challenges like the crisis in the welfare state and the need to seek new forms of societal governance both in a national context and in the global economy. CR is seen as a useful framework within which new ways of collaboration between corporations, governments and civil society can be found that will create innovative mechanisms for governance (Zadek, 2001a; Midttun, 2004, 2005; Albareda et al., 2004). This enmeshes with another of the key issues governing the links between CR and public policies, the demand for societal governance to cope with the social challenges or demands faced by all post-industrial societies: unemployment, poverty, social destructuration. Moore et al. (1989) looked at how the concept of governance as applied directly to the CR public policies adopted by the British government. Moon (2002, 2004) considers that the British government assumed the role of CR driver in response to a crisis in governance and legitimacy. This meant the origin of CR policies was justified by the crisis in governability affecting British society in the form of unemployment, social poverty and lack of economic development. The welfare state crisis has made people look for new ways of developing and funding collective action to deal with social demands that cannot be covered by the state. It has led to the appearance of partnership projects with governments, companies and civil society working together. CR has oiled the wheels of these new partnerships, and CR literature witnesses the clear link between CR and social partnership (Nelson and Zadek, 2000; Gribben et al., 2001; Kjaergaard and Westphalen, 2001).

National competitiveness, corporate innovation and CR Among the most influential works in the search for positive elements of CR is that of Swift and Zadek (2002), who approach CR from the standpoint of the competitive advantage of nations and economic competitiveness. The authors conclude that public policy is a pivotal mechanism to scale up CR business practices and achieve wider sustainable development benefits of corporate responsibility practices. CR clusters provide an excellent framework for understanding, designing and operationalizing public policies on CR; such as international competitiveness framework statutory compliance and fiscal measures and multi-sectorial partnerships. Zadek et al. (2003) have pointed out that a nation or region’s competitiveness is fundamental to its economic health, which is in turn fundamental to its sustainability. The authors assess the potential for ‘‘corporate responsibility clusters’’ to reshape sectors, markets and economies to ensure that responsible companies win the markets for products, labor and finance. They see competitive responsibility as the third generation of CR. The challenge for governments here is to find a way of designing and implementing public policy that will generate leadership and partnership-based innovation.

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Sustainable development and CR Finally, another of the recurring themes in the theoretical documents is how to make progress towards the common objective of sustainable development. The European Commission (2002) refers to CR as the business contribution to sustainable development. Bell (2005) explicitly refers to the importance of the role of government promoting corporate sustainability. He argues that in the wake of the government processes of deregulation, downsizing and deficit reduction that dominated the agenda of the 1990s, governments have an opportunity, and the responsibility, to take on a leadership role by creating a more sustainable habitat in which sustainable business can thrive, creating framework conditions that promote sustainability.

The relational state and its implications for CR Our approach to CR is based on the hypothesis that the concept of responsibility only acquires meaning when linked to these global challenges. Focusing on challenges like sustainable development, governance, the crisis of the welfare state and global justice makes us consider the responsibilities that each of the different agents has assumed and ought to be assuming. CR, then, should be linked to the concepts of sustainability and citizenship. CR public policies therefore address the relationships of the company with its stakeholders, and how each social agent can adopt frameworks for action that meet common challenges from a multi-stakeholder and not just a company standpoint. This being so, some authors like Lozano et al. (2005) or Middtun (2004, 2005) are applying the new model of governance based on a relational concept to the challenges of CR. The relational state (Mendoza, 1991, 1996; Midttun, 2005) is a perspective based on the thesis that changes affecting the economic and political structure in recent decades have transformed the roles and capacities of social agents, above all in public and government sectors. Mendoza (1996) has argued that internationalization and globalization of the economy had transformed the welfare state model into a relational state model, above all in its function as public manager. The new limitations to the welfare state in an increasingly complex and interdependent society demonstrate the need to rethink relationships among the public, private and civil spheres, among state, business and society. Mendoza considers that the organizational model to which the relational state belongs is that of the social entrepreneur, capable of creating and managing complex inter-organizational networks in which public, private and civil society organizations play their part. Lozano et al. (2005) apply the relational model to analyse CR public policies and classify policies according to the relationships among their social actors and show that there are links between the evolution of public policies on CR in the 15 European Union countries and their respective models of the welfare state (see Figure 1). The key to the model (Albareda et al., 2004, 2006; Ysa et al., 2004) lies in understanding that there are areas of bilateral interest between each sector, but at the same time there is an area of mutual and shared interest of all three actors at the intersection of the three circles. They argue that the more we can extend co-operation and synergies in these areas of intersection, the greater the possibility of success in implementing decisions on CR (because they have been reached jointly), and of creating welfare for society as a whole, with best outcomes, and overcoming the limitations presented by each sector acting on its own. Midttun (2005) considers that following a period of neo-liberalist re-emphasis of the liberal market model in the 1980s, the emerging embedded-relational model reinstates a stronger social and environmental agenda. This new relational model of governance relies more on de-centralized civil society initiatives, media exposure and business self-regulation than on active state intervention.

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Figure 1 Relational model for analysis of public policies on CR

Public policies and governmental programmes promoting CR to the relational state model Italy CR public policy The Italian Government sees CR as the means to increase the degree of companies’ awareness of social, environmental and sustainability issues by promoting the spread of a culture of responsibility within the industrial system (Italian Ministry of Labour and Social Affairs, 2003, p. 22). The Italian government intends to make a tangible contribution to the European debate on the achievement of a common reference framework on CR. The objectives of the CR public policy are to: B

promote CR culture and best practice exchange;

B

guarantee to citizens that reporting of CR commitment by companies is true and not misleading;

B

define a simple and modular standard – a list of key performance indicators – that firms can adopt on a voluntary basis;

B

support small and medium-sized enterprises (SMEs) in developing CR strategies and policies; and

B

foster experience exchange between countries in order to identify and implement the best practices at international level.

As regards the government CR structure, the political figure in charge of the CR public policy is the Minister of Labour and Social Affairs, through the Directorate-General for the Family, Social Rights and Corporate Social Responsibility and the Directorate-General for the Protection of Working Conditions. However, this responsibility is also shared with the Ministry for the Environment and Territory, through the Directorate-General for Environmental Research and Development. Concerning the development and implementation of government initiatives, we also find cross-cutting policies in the Ministry of Industry and Trade, through the Directorate-General for Market Regulation and Consumer Protection and the Directorate-General for

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Internationalizing Policies; also within the Ministry of Foreign Affairs, through the Directorate-General for Multilateral Policies and Human Rights and the Ministry for Public Administration. One of the most important characteristics in the development of public policy on CR in Italy is its decentralization through initiatives taken by the regional governments. The Tuscany Region gives financial support to local SMEs and it has created a CSR office within the Department of Economic Development, the Fabrica Ethica Project and also a multi-stakeholder committee within the regional government. The Umbria Region approved the Regional Act No. 20 of 2002 to enable the creation of a regional register of organizations certified against SA8000 standard. It also approved the Regional Act No. 21 of 12 November, 2002, ‘‘Measures for the certification of quality, environmental, safety and ethical systems of Umbrian companies’’. The Emilia-Romagna Region created the program ‘‘Chiaro, Sicuro, Regorlare’’ about safety and quality at work. In July 2005, the Region adopted the Law No. 4 in order to promote employment and the quality, safety and compliance of working conditions. The Marches Region promotes SIRM (‘‘Sistema Impresa Responsabile Regione Marche’’) and it is a partner in the project carried out by the Marches Training Centre, promoted by training companies who aim to conduct a feasibility study for the establishment of a information system on CR. In February 2005, the Law No. 11 was adopted to promote CR initiatives, managerial tools and schemes. And finally, the Sicily Region carried out the CSR-Vaderegio Project, funded by the European Commission, and supports the Etiqualitas Project. There are also many initiatives taken by local governments like those of the Provinces of Chieti, Lecce and Novara and the City of Rome. There are also more than 200 territorial agreements ( patti territoriali) developed to promote collaboration between private and public players to support business initiatives and employment in a sustainability-oriented perspective. More than 300 local authorities – including municipalities, provinces and regions – lead and foster Local Agendas 21 and local forums for sustainable development. The Italian government has created the Italian CSR Multi-Stakeholder Forum (www.welfare.gov.it/csr). The CSR Multi-Stakeholder Forum is composed of 50 stakeholders representing at national level employers, trade unions and civil society. The President of The Forum is the Minister of Labour and Social Affairs.

Strengths and weaknesses of Italian government CR policy Government-public administration The central government has developed regulations and initiatives to promote the accountability of public administrations, anti-fraud and corruption policies, occupational health and safety policies and green purchasing practices. A key-point is the growing role of regional and local authorities in the field of CR and sustainability-related interventions. Although in 2002 the Italian Ministry for the Environment and Territory issued the Environmental Action Strategy for Sustainable Development and in 2003 the Ministry of Labour and Social Affairs presented the Project called Corporate Social Responsibility-Social Commitment (CSR-SC), what is still lacking is a coordinating framework for the different initiatives promoted at different government levels. Government-business In this field there is a wide range of policies carried out by national, regional and local governments. These interventions pursue the following objectives: B

increasing the degree of the enterprises’ awareness of social, environmental and sustainability issues;

B

promoting CR culture and best practice exchange among businesses;

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B

supporting SMEs in identifying and developing CR strategies and policies;

B

defining a simple and modular standard that firms can adopt on a voluntary basis in order to identify, assess and also communicate socially responsible behaviour;

B

promoting voluntary agreements with industrial organizations;

B

fostering, trough funding streams made available especially by Regions, the adoption of quality (ISO 9001), social accountability (SA8000), occupational health and safety and environmental (ISO 14001 and EMAS) management systems;

B

supporting, through fiscal and administrative incentives, the adoption of management systems;

B

promoting labeling schemes; and

B

fostering experience exchange between countries.

The common objective of these initiatives is to combine stronger competitiveness with enhanced social cohesion according to a sustainability perspective as encouraged by the European Commission. Therefore the key-element of this broad set of policies is its innovative and wide-ranging approach to CR. Government-civil society National, regional and local governments pay great attention to civil society. In fact, there is a great need to support civil society and not-for-profit organizations (in particular, social/cooperative enterprises) in order to meet growing societal demands in terns of goods and services (e.g. in the education, household, environmental protection and health sectors). A good example of this approach is provided by Law No. 118 on ‘‘The new regulation concerning social enterprise’’, approved by the Italian Parliament on 13 June 2005. Government-business-civil society A broad stakeholder engagement and the building and implementation of partnerships between public and private players (i.e. business and civil society) characterize the Italian situation. Examples of these sustainability-oriented networks are the following: B

multi-stakeholder initiatives at different levels – , e.g. the Italian CSR Multi-Stakeholder Forum and Local Agendas 21, Local Forums and territorial agreements;

B

collaboration, supported by public authorities, between NGOs and companies for social programs;

B

collaboration among public authorities, companies and civil society to foster sustainability-oriented innovation; and

B

the establishment, by the Ministry of Labour and Social Affairs, Bocconi University, INAIL (Italian Workers’ Compensation Authority), and the Italian Union of Chambers of Commerce (Unioncamere), of the Foundation for Corporate Social Responsibility, known as the Italian Centre for Social Responsibility (I-CSR). I-CSR aims at promoting the knowledge of CR and developing research on social responsibility, with a stronger focus on the needs of the national economy, mainly based on SMEs.

Therefore according to the relational framework, the Italian approach to CR implies a nationally extensive network of private and public interventions that are highly innovative.

United Kingdom CR public policy The British government was one of the pioneers in adopting the concept of CR and incorporating it within the framework of public policy. The origins of the UK’s CR policy goes back to the early 1980s when a crisis affecting the international and hence the British economy meant the government had to find new solutions to social governance problems Moon (2004, p. 1). The crisis caused a considerable increase in unemployment and poverty in the major British cities. Moon (2002, 2004) writes that both the Thatcher Conservative

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government and the subsequent Labour government had recourse to giving companies protagonism in the public sphere to increase efficiency in jointly meeting the social challenges brought by economic crises, by appealing to the role and responsibility of the company. The British government sees CR as the business contribution to sustainable development, supporting the government’s own strategy on the matter, with its aims of integrating objectives on social progress, effective protection of the environment, prudent use of natural resources and high and stable levels of economic growth and employment. The UK government sees businesses taking account of their economic, social and environmental impacts, and acting to address the key sustainable development challenges based on their core competences wherever they operate – locally, regionally and internationally. Far from being seen as a form of altruism, CR should be good for long-term business success as well as good for wider society (DTI, 2004). Stemming from this vision, the British government presents these CR delivery objectives: competitiveness, poverty reduction, community investment, environment, governance and workplace. The UK government’s CR strategy is to do as follows (DTI, 2004): B

promote business activities that bring simultaneous economic, social and environmental benefits;

B

work in partnership with the private sector, community bodies, unions, consumers and other stakeholders;

B

encourage innovative approaches and continuing development and application of best practice;

B

ensure decent minimum levels of performance in areas such as health and safety, the environment and equal opportunities;

B

encourage increased awareness, open constructive dialogue and trust; and

B

create a policy framework which encourages and enables responsible behaviour by business.

As regards the political structure, in March 2000, the British government created the political figure of Minister for Corporate Social Responsibility. The Minister for CSR is responsible for CR policies, and his/her main duty is to develop the government’s CR strategy. The Minister of State responsible for CSR is one of three Ministers for State directly under the Secretary of State for Trade and Industry in the Department for Trade and Industry (DTI). The government did not create a new position, but incorporated a new institutional competence, CR, into the competences of the DTI. The principal objective assumed by the Minister for CR was the development of an inter-ministerial program to co-ordinate government action. It incorporates all policies and programs intended to promote CR. Although the DTI takes the lead, CR is seen by the UK government as a cross-government area. The DTI works closely with the Department for International Development, the Foreign and Commonwealth Office, the Department for Environment, Food and Rural Affairs (DEFRA) and Her Majesty’s Treasury on international areas. It works with the Department for Environment, Food and Rural Affairs, the Home Office and Her Majesty’s Treasury on domestic issues. DEFRA has a strong interest in CR, particularly in relation to environmental performance and the wider goals of sustainable development. To incorporate different viewpoints and perspectives into the policy-making process, the Minister for CSR has created a Ministerial Steering Group for CR. Membership is broad, and includes non-departmental government bodies (e.g. the Health and Safety Executive and the Environment Agency). An important role in the application of the UK CR policy is played by the devolved administrations, which are responsible for many of the policy mechanisms for encouraging

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CR. The Regional Government Offices support and work with the Regional Development Agencies (RDAs) and other stakeholders to deliver regional and national policy objectives. The government CR policy also finds application in local governments through Local Strategic Partnerships (LSPs), which are local partnerships of public services, business and voluntary and community groups to work better with business.

Strengths and weaknesses of UK government CR policy Government-public administration The UK government has developed internal initiatives in leading by example on issues like the integration of sustainable development into government action, the accountability of public administration, work-life and equal opportunities policies, ethical investment policies, anti-fraud and corruption policies, good employer practices, volunteer programs. CR has become linked with the implementation of internal actions that the government carries out as part of its commitment to sustainable development, and often seems like a parallel policy. Government-business This is one of the frameworks within which government CR policy has been most fully developed. The government has developed programs to facilitate business activity in CR on general issues like: raising awareness, facilitating and promoting voluntary initiatives, capacity building, stakeholder engagement, funding streams, convergence and transparency), fiscal incentives, soft regulation, international organizations and networks. The UK government has developed different lines of work to encourage CR in companies. It has: B

stimulated new and existing business associations;

B

funded different CR activities and organizations;

B

developed a favorable fiscal framework;

B

developed a legal framework for transparency and disclosure;

B

defined policies that facilitate the engagement of business in disadvantaged communities and neighborhood renewal;

B

supported company creation and social entrepreneurship;

B

strengthened the role of companies in driving up skills and educational levels; and

B

developed internal policies to set a good example.

All these programs have been developed with the support of intermediary CR organizations, which have acted as links in the dialogue among government, the private sector and civil society. The British government has developed a policy of soft intervention, dispersing its policy over a considerable volume of small programs and projects to cover small initiatives from different departments. This is not a centralized policy designed as an intervention directed and implemented in a unified block from a government department. Unlike other governments, the UK government maintains control of programs, although some intermediary CR organizations have been supported in implementing and visualizing some programs. Even local partnership projects are initiated by local administrations. So this relationship framework is least developed where there are fewer programs and projects supported by the government. Government-civil society As regards policies for development of CR within civil society, the government has focused its projects on raising awareness, through prizes or campaigns publicizing company action

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and the concept of CR in civil society. Another objective of these programs is to facilitate the action of citizens or workers through involvement in volunteering initiatives, or their financial support through fiscal incentives. Government-business-civil society Along with the government-business relationship, policies directed at partnership actions between government-business and civil society form one of the most highly-developed relationship frameworks of the UK government’s CR policy. Here again, we can see how the relational method as a model for analysis allows us to explain the conception and design of the CR policy in this country. Using this framework, the government has particularly concentrated on projects of capacity building, facilitating and promoting voluntary initiatives and funding streams and tax incentives. This means, above all, partnership projects seeking joint solutions to social exclusion in specific issues like adult education, neighborhood renewal and community engagement.

Conclusions: a comparative analysis of Italy and the United Kindgom from the relational state perspective The relational framework has enabled us to take a more complete and holistic view of the development of CR public policies, based on the relationships between different actors. This runs true with the general idea that CR public policies should adopt a multi-stakeholder approach. We observed that the relational model has permitted us to organize a specific analysis of the CR public policies implemented, focusing our attention on the actors involved and the exchange relationships between them. Various structural factors (the predominance of SMEs and the role of local districts) and other historical reasons (e.g. the importance of the cooperative movement and the role of the State and local authorities in the economy) have strongly marked the Italian national economic system and its attentiveness to social relationships as a whole. In this context, during the last five years and also thanks to the European Community intervention, several initiatives on CR have been promoted to address the rising attention paid by public opinion to environmental protection, product safety, the respect for human and workers’ rights, corporate governance, the role of business in the community. Furthermore, CR in Italy is seen as a competitive opportunity. More specifically, some of the most successful industries nationally (food/agriculture, tourism, ‘‘quality’’ manufacturing) could certainly benefit from the adoption of a sustainable development-oriented approach, compatible with the environment and socially cohesive. In general terms, the protection of the environment, respect for social conditions and awareness of the needs of the various stakeholders (human resources, members/shareholders and the financial community, clients/customers, suppliers, financial partners, the State, local authorities and public administrations, the community), all contribute to the broad concept of CR. It is these very factors that enable problems of competitiveness with newly-emerging countries to be addressed, by contributing distinctiveness to the supply provided by Italian companies. This approach may be a determining factor in directing attempts at collaboration for ambitious and shared objectives, and in identifying the new organizational and manufacturing models which many districts are trying to develop during this transitional phase. Therefore while there is great attention to the competitiveness dimension, there is also a widespread need to support civil society and not-for-profit organizations as a fundamental pillar to combat social exclusion and strengthen social cohesion. These two dynamics have generated many government initiatives at different levels (national, regional, local). Finally, we conclude that in Italy there is a broad set of initiatives in the CR area that are both business-driven and society-driven. The major problem is related to the lack of a systemic approach, or any general coordinating framework. Central government tries to lead change,

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but meanwhile many other different actions are carried out, often in competition with each other. This produces undesired effects in terms of confusion and absence of clarity for companies and the other stakeholders. On the other hand, the relational model is a suitable framework for interpreting the UK government’s CR policy. The government policy itself is fragmented into small projects and initiatives that do not yet add up to a solid and consistent policy. In addition, by this interpretation, the UK government’s CR policy is a low profile policy that forms part of the more strategic economic and social policies. We can thus conclude that the UK government’s CR public policy can be considered as soft intervention, aiming to encourage companies to intervene in the major economic and social challenges facing the government: sustainable development and combating social exclusion. All this is confirmed in the thesis used by the government itself: a new social agenda for business. We have seen that in the UK a more systemic, national government-centered and business-oriented (top-down) approach prevails, while Italy has a more extensive, multi-stakeholder and multilevel approach (weaker top-down with a stronger bottom-up approach). A good explanation of these differences could be related to the concept of ‘‘community-rooted’’ social capital (Putnam et al., 1993), which characterizes Italian society and which has also been related to the competitive success of its industrial districts (Becattini, 2004) and to the different paths of local development (Trigilia, 2005). In both countries, the real focus of action is government-business. This may seem obvious, since we have been discussing public policies and CR. However the development of CR programs in each of the other sets of relationships is becoming increasingly important, above all in the government-public administration and government-business-civil society perspectives. There are different government CR agendas: in the UK the central government has a wider scope, covering a greater number of policy areas and programs according to the relational framework (government-business-civil society). In the UK, the government works with intermediary organizations to encourage companies’ CR best practices. In Italy the national government plays a crucial role and leads the change, but also regional governments and local authorities develop important programs and interventions. Furthermore, intermediary organizations such as the chambers of commerce are active and involved. Both in the UK, and in Italy CR is linked to issues on the global agenda of all governments (globalization, national competitiveness, welfare state crisis etc). While in the UK the related policies are promoted by the national government, in Italy multi-stakeholder initiatives are developed adopting a business or civil society-driven approach. The policies within the relational framework are defined by the characteristics (structural, financial, priorities) of the different social agents (businesses and civil society organizations) taking part in the multi-stakeholder relationships. Company cultures and the role of the companies in society define the type of relational programs found. In the UK government a formal multi-stakeholder debate forum is non-existent, but the implementation of government initiatives do involve different sectors. In Italy, the development of CR public policies cannot be analysed without taking into account the protagonism of multi-stakeholder initiatives and the role of dialogue and consensus among stakeholders. In the UK, with a strong role of the State in welfare policies, the relational framework initiatives receive great encouragement from the national government and the regional and local governments are also involved in the implementation of these policies. In a country with a highly developed model of community and family solidarity, initiatives from the relational framework receive more support from civil society and companies. It can be observed that in a country like Italy where there is a great public recognition of the value of social capital, there is an extensive involvement of companies (especially SMEs) and civil society in CR initiatives. We observed that in Italy, in the government-civil society perspective, the government financially supports organizations in civil society to carry out activities whose ultimate social

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beneficiary is society in general. In the UK, the government tends to encourage civil society organizations to directly influence businesses activities. We conclude there must be further relational analysis of CR policies. This would permit a more detailed study of the potential of the policies, and the weakness of government frameworks. This methodology is a tool that supports the design and implementation of CR policies, and the role that other social agents (companies and civil society organizations) could develop in relation to these public policies. It also seems reasonable to conclude that encouragement for public policies on CR would be reinforced and strengthened if initiatives were developed in all four perspectives of the relational state.

References Aaronson, S. and Reeves, J. (2002a), The European Response to Public Demands for Global Corporate Responsibility, National Policy Association, Washington, DC. Albareda, L., Ysa, T. and Lozano, J.M. (2004), ‘‘The role of public policies in promoting CSR: a comparison among the EU-15’’, paper presented at the Interdisciplinary CSR Research Conference, Nottingham. Albareda, L., Ysa, T. and Lozano, J.M. (2006), ‘‘The role of governments in fostering CSR’’, in Kakabadse, A. and Morsing, M. (Eds), Corporate Social Responsibility: Reconciling Aspiration with Application, Palgrave, Houndmills, pp. 112-28. Becattini, G. (2004), Per un capitalismo dal volto umano. Critica dell’economia apolitica, Bollati Boringhieri, Turin. Bell, D.V.J. (2005), ‘‘The role of governance in advancing corporate sustainabilty’’, background paper-final draft, Sustainable Enterprise Academy, York University, Canada. CBSR (2001), Government and Corporate Social Responsibility. An Overview of Selected Canadian, European and International Practices, Canadian Business for Social Responsibility, Vancouver. Crane, A. and Matten, D. (2004), Business Ethics. A European Perspective. Managing Corporate Citizenship and Sustainability in the Age of Globalization, Oxford University Press, Oxford. DTI (2004), Social Responsibility. A Government Update, UK Government, Department of Trade and Industry, London. European Commission (2001), Green Paper: Promoting a European Framework for Corporate Social Responsibility, COM 366-final, European Commission, Brussels. European Commission (2002), Corporate Social Responsibility: A Business Contribution to Sustainable Development, COM 347-final, European Commission, Brussels. European Commission (2006), Implementing the Partnership for Growth and Jobs: Making Europe a Pole of Excellence on CSR, COM 136-final, European Commission, Brussels. Fox, T., Ward, H. and Howard, B. (2002), Public Sector Roles in Strengthening Corporate Social Responsibility: A Baseline Study, The World Bank, Washington, DC. Gribben, C., Pinnington, K. and Wilson, A. (2001), Governments as Partners: The Role of the Central Government in Developing New Social Partnerships, The Copenhagen Centre, Copenhagen. Italian Ministry of Labour and Social Affairs (2003), Project CSR-SC: The Italian Contribution to CSR promoting campaign developed at European Level, Italian Ministry of Labour and Social Affairs, Rome. Joseph, E. (2003), A New Business Agenda for Government, Institute for Public Policy Research, London. Kjaergaard, C. and Westphalen, S. (2001), From Collective Bargaining to Social Partnerships: New Roles of the Social Partners in Europe, The Copenhagen Centre, Copenhagen. Lepoutre, J., Dentchev, N. and Heene, A. (2004), ‘‘On the role of the government in the corporate social responsibility debate’’, paper presented at the research track 7, ‘‘Policy Making and the Role of Government’’ in the 3rd Annual Colloquium of the European Academy of Business in Society, Ghent. Lozano, J.M., Albareda, L., Ysa, T., Roscher, H. and Marcuccio, M. (2005), Los gobiernos y la responsabilidad social de las empresas. Polı´ticas pu´blicas ma´s alla´ de la regulacioń y la voluntariedad, Granica, Barcelona.

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Mendoza, X. (1991), ‘‘Algunas reflexiones acerca de la ‘transicioń al mercado’ de los servicios sociales’’, Jornades Pu´blic-Privat i Benestar Social, Barcelona. Mendoza, X. (1996), ‘‘Las transformaciones del sector pu´blico en las sociedades avanzadas. Del estado del bienestar al estado relacional’’, Papers de Formacio´, No. 23, Diputacio´ de Barcelona. Midttun, A. (2004), ‘‘Realigning business, government and civil society: The C(S)R model compared to the (Neo)Liberal and Welfare State Models’’, paper presented at the research track 7, ‘‘Policy Making and the Role of Government’’ in the 3rd Colloquium of the European Academy of Business in Society, Ghent. Midttun, A. (2005), ‘‘Realigning business, government and civil society: Emerging embedded relational governance beyond the (neo) liberal and welfare state models’’, Corporate Governance: The International Journal of Business in Society, Vol. 5 No. 3, pp. 159-74. Moon, J. (2002), ‘‘Business social responsibility and new governance’’, Government and Opposition, Vol. 37, pp. 385-408. Moon, J. (2004), ‘‘Government as a driver of corporate social responsibility: the UK in comparative perspective’’, ICCSR Research Paper Series, No. 20-2004, The University of Nottingham. Moore, C., Richardson, J.J. and Moon, J. (1989), Local Partnership and the Unemployment Crisis in Britain, Allen and Unwin, London, pp. 1-163. Nelson, J. and Zadek, S. (2000), Partnership Alchemy – New Social Parnerships in Europe, The Copenhagen Centre, Copenhagen. Putnam, R.D., Leonardi, R. and Nanetti, R.Y. (1993), Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press, Princeton, NJ. Swift, T. and Zadek, S. (2002), Corporate Responsibility and the Competitive Advantage of Nations, AccountAbility/The Copenhagen Centre, London. Trigilia, C. (2005), Sviluppo locale. Un progetto per l’Italia, Laterza, Rome-Bari. Ysa, T., Lozano, J.M. and Albareda, L. (2004a), ‘‘Governments and corporate social responsibility (CSR)’’, paper presented at the research track 7, ‘‘Policy Making and the Role of Government’’ in the 3rd Annual Colloquium of the European Academy of Business in Society, Ghent. Zadek, S. (2001), The Civil Corporation: The New Economy of Corporate Citizenship, Earthscan, Stirling, London. Zadek, S., Hojensgard, N. and Raynard, P. (2001), Perspectives on the New Economy of Corporate Citizenship, The Copenhagen Center, Copenhagen. Zadek, S., Sabapathy, J., Dossing, H. and Swift, T. (2003), Responsible competitiveness. Corporate Responsibility Clusters in Action, AccountAbility/The Copenhagen Center, London.

Further reading Aaronson, S. and Reeves, J. (2002b), Corporate Responsibility in the Global Village: The Role of Public Policy, National Policy Association, Washington, DC. Chatam House, Sustainable Development Programme (2004), Following up the World Summit on Sustainable Development Commitments on Corporate Social Responsibility: Options for Action by Governments, executive summary, Chatam House, Sustainable Development Programme, London. Donaldson, T. (2001), ‘‘The ethical wealth of nations’’, Journal of Business Ethics, Vol. 31, pp. 25-36. DTI (2001), Business and and Society. Developing Corporate Social Responsibility in the UK, UK Government, Department of Trade and Industry, London. DTI (2003a), Business and Society. Corporate Social Responsibility Report 2002, UK Government, Department of Trade and Industry, London. DTI (2003b), Social Responsibility – A Draft International Strategic Framework, UK Government, Department of Trade and Industry, London.

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Frank Hawkins Kenan Institute of Private Enterprise (2003), Promoting Global Corporate Social Responsibility. The Kenan Institute Study Group Consensus, Policy Recommendations, The Frank Hawkins Kenan Institute of Private Enterprise, Washington, DC. Guarini, E. and Nidasio, C. (2003), ‘‘CSR role in public-private partnerships: models of governance’’, paper presented at the research track 6, ‘‘The Policy Framework/The Societal Context’’ in the 2nd Annual Colloquium of the European Academy of Business in Society, Copenhagen. Habisch, A., Jonker, J., Wegner, M. and Schmidpeter, R. (Eds) (2005), Corporate Social Responsibility Across Europe, Springer, Berlin. Midttun, A. (2003), ‘‘Business, the state and civil society: introduction to a CSR research programme’’, paper presented at the research track 6, ‘‘The policy framework/societal context’’ in the 2nd Annual Colloquium of the European Academy for Business in Society, Copenhagen. Ministero dell’Ambiente (2002), Strategia d’azione ambientale per lo sviluppo sostenibile, Rome. Ministero dell’Economia e delle Finanze. Dipartimento per le Politiche di Sviluppo e Coesione (2003), La lezione dei Patti territoriali per la progettazione integrata territoriale nel Mezzogiorno, Rome. Nidasio, C. (2004), ‘‘Implementing CSR on a large scale: the role of government’’, paper presented at the research track 7, ‘‘Policy Making and the Role of Government’’ in the 3rd Colloquium of the European Academy of Business in Society, Ghent. Perrini, F., Pogutz, S. and Tencati, A. (2004), ‘‘Corporate social responsibility in Italy: state of the art’’, paper presented at the Workshop on Corporate Social Responsibility, organized by Journal of Management Studies at the University of Illinois, Chicago, IL. Perrini, F. and Tencati, A. (2005), ‘‘La Corporate Social Responsibility nei Paesi dell’Unione Europea. Sostenibilita` dei modelli di sviluppo’’, in Rosci, S. (Ed.), Il grande salto sociale, Controcorrente, Naples. Porter, M. (1990), The Competitive Advantage of Nations, The Free Press, New York, NY. Sapir, A. (2005), ‘‘Globalisation and the reform of European social models’’, background document for the presentation at ECOFIN Informal Meeting, Manchester, 9 September 2005. Tencati, A. (2004), ‘‘Public policies to encourage CSR: the Italian CSR-SC Project’’, paper presented at the 3rd Transatlantic Business Ethics Conference, ESADE, Barcelona. Tencati, A., Perrini, F. and Pogutz, S. (2004), ‘‘New tools to foster corporate socially responsible behaviour’’, Journal of Business Ethics, Vol. 53 Nos 1-2, pp. 173-90. Wilson, A. (2002), ‘‘Governments, business and corporate social responsibility: towards a partnership’’, MT Eliza Business Review, Winter/Spring. Zadek, S. (2001), Third Generation Corporate Citizenship, The Foreign Policy Centre and AccountAbility, London. Zadek, S., Sabapathy, J., Dossing, H. and Swift, T. (2002), Corporate Responsibility Clustering – Leveraging Corporate Responsibility for National Competitive Advantage, AccountAbility/The Copenhagen Centre, London. Zappal, G. (2003), Corporate Citizenship and the Role of Government: The Public Policy Case, research paper no. 2003-04, Australia.

About the authors Laura Albareda is a Researcher at the Institute for the Individual, Corporations and Society (IPES), ESADE, Universidad Ramon Llull-URL. She is manager of the Observatory on SRI in Spain, an annual IPES publication. Fields of research and academic interest are corporate social responsibility, business ethics, global governance, governments and public policies on CSR and socially responsible investment. She is doing her PhD in international relational and European integration (Universitat Autonoma de Barcelona) and Master of Development Studies (Fundacio´ CIDOB-UAB). Graduate in political science and sociology (Universitat Autonoma de Barcelona). She is the corresponding author and can be contacted at: [email protected] Antonio Tencati is an Assistant Professor of Management and CSR at the ‘‘G. Pivato’’ Department of Management (IEGI), Bocconi University. He is a Senior Researcher at SPACE, the European Research Centre on Risk, Security, Occupational Health and Safety, Environment and Crisis Management, Bocconi University. He is also member of the Business

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Ethics Inter-faculty Group of the Community of European Management Schools (CEMS). His primary research interests include corporate social responsibility and management of sustainability. Josep M. Lozano is currently Professor in the Department of Social Sciences at ESADE, Universidad Ramon Llul-URL and Director of the school’s Institute for the Individual, Corporations and Society (IPES). Co-founder of E´tica, Economıá y Direccioń (Spanish branch of the European Business Ethics Network), member of the international Editorial Board of Ethical Perspectives and member of the Business Ethics Inter-faculty group of the Community of European Management Schools (CEMS). He has been a highly-commended runner-up in the European division of the Beyond Grey Pinstripes Faculty Pioneer Award. Author of Ethics and Organizations: Understanding Business Ethics as a Learning Process (Kluwer, Dordrecht, 2000). Francesco Perrini is an Associate Professor of Management and CSR at the ‘‘G. Pivato’’ Department of Management (IEGI), Bocconi University. He is also a Senior Professor of Corporate Finance and Real Estate at SDA Bocconi School of Management, Bocconi University. His primary research interests include corporate social responsibility and sustainable entrepreneurship.

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