Democratizing Corporate Governance: Compensating for the Democratic Deficit of Corporate Political Activity and Corporate Citizenship

Business & Society, Vol. 52 (2013) No. 3 (special issue on The Governance Challenges of Corporate Political Activity), pp. 473-514, DOI: 10.1177/0007650312446931

52 Pages Posted: 19 Jul 2012 Last revised: 29 Jun 2015

See all articles by Andreas Georg Scherer

Andreas Georg Scherer

University of Zurich - IBW Department of Business Administration

Dorothée Baumann-Pauly

New York University, Center for Business and Human Rights

Anselm Schneider

Stockholm Business School

Date Written: December 26, 2011

Abstract

This article addresses the democratic deficit that emerges when private corporations engage in public policy, either by providing citizenship rights and global public goods (corporate citizenship) or by influencing the political system and lobbying for their economic interests (strategic corporate political activities). This democratic deficit is significant, especially when multinational corporations operate in locations where national governance mechanisms are weak or even fail, where the rule of law is absent and there is a lack of democratic control. This deficit may lead to a decline in the social acceptance of the business firm and its corporate political activities and, thus, to a loss of corporate legitimacy. Under these conditions corporations may compensate for the emerging democratic deficit and reestablish their legitimacy by internalizing democratic mechanisms within their organizations, in particular in their corporate governance structures and procedures. The authors analyze the available corporate governance models with the help of a typology and discuss the possible contributions of a new form of democratic corporate governance.

Keywords: corporate citizenship, corporate democracy, corporate governance

Suggested Citation

Scherer, Andreas Georg and Baumann-Pauly, Dorothée and Schneider, Anselm, Democratizing Corporate Governance: Compensating for the Democratic Deficit of Corporate Political Activity and Corporate Citizenship (December 26, 2011). Business & Society, Vol. 52 (2013) No. 3 (special issue on The Governance Challenges of Corporate Political Activity), pp. 473-514, DOI: 10.1177/0007650312446931. Available at SSRN: https://ssrn.com/abstract=2112920

Andreas Georg Scherer (Contact Author)

University of Zurich - IBW Department of Business Administration ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland
+41 44-63 45302 (Phone)
+41 44-63 45301 (Fax)

HOME PAGE: http://www.business.uzh.ch/professorships/as.html

Dorothée Baumann-Pauly

New York University, Center for Business and Human Rights ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Anselm Schneider

Stockholm Business School ( email )

Stockholm
Sweden

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