Business and Society Review 110:3 269 296

Corporate Citizenship and

Community Relations:
Contributing to the Challenges
of Aid Discourse

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Ethics at Bentley College

TREVOR GODDARD

INTRODUCTION

orporations are large social mechanisms with signicant

inuence over the physical, intellectual, social, and environmental
assets in developing communities. Their mere presence,
duration of operations, and the directness of the relationships they form
with communities to maintain a license to operate (particularly in
the extractive industries) identify them as forces capable of creating
positive change, moving beyond harm minimization strategies. This
may form the basis of debate surrounding corporate citizenship and
the balance of rights and responsibilities realistically bestowed upon
corporations that operate in a developing community environment,
where the notion of citizenship is applied to the corporate structure.
It is not proposed that multinational companies (MNCs) become
the sole providers of aid or primary service providers; however, there is
scope and scale for foreign direct investment (FDI) to act as leverage
for development through community relations programs. This paper
discusses the community relations function from a corporate

Trevor Goddard, MIntlStds (Distinction) BSc(OT) BCom(Curtin), AIMM, is a research associate

and lecturer at the Centre for Research into Disability and Society and School of Occupational
Therapy Curtin University of Technology, a PhD candidate at the Corporate Citizenship
Research Unit, Deakin University. He is afliated with the Centre for Research into Disability
and Society and School of Occupational Therapy Curtin University of Technology, Perth
WA, Australia.

2005 Center for Business Ethics at Bentley College. Published by Blackwell Publishing,
350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

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perspective, contributing to understanding the role played in the

international development arena. As a stand-alone concept, the
critique of this model is that corporate self-enlightenment and
market forces are not singularly the most appropriate tools to balance
aid objectives. However, given ongoing issues within the aid sector,
community contributions made by the corporate sector development projects should not be overlooked simply due to philosophical
variations in motivation. Corporations are valuable, yet not singular
contributors to community development through a rich tapestry of
other market-based aid projects. After all, a business that makes
nothing but money is a poor kind of business (Henry Ford, original
source unknown, cited in Wulfson, 2001). The challenge is to nd the
means of engaging corporations to weave their expert knowledge
base, economies of scale, and community relations function into
the rich solutions for community development.
Community, from the Latin munus, encompasses service,
duty, and sacrice; however, identifying community is increasingly
difcult due to the global integration of citizens and interdependence of nation-states. As assemblies of socially constituted individuals, communities are networks of partnerships and ecological
relationships (Vincent and McGinnis, 2000)relationships beyond
the traditional geographical boundaries dening nation-states. This
integration is advantageous in promoting community relationships
with corporations increasingly searching for methodologies of
engagement that enhance the license to operate. With current
discourse surrounding the value of aid, the contribution that
corporations may make to community development should not be
underestimated. Disintegration of geographical boundaries (Ohamae,
1991) recognizes corporations as social institutions with inuence
extending beyond owners, reinforcing the community relations role
as a social bridge between corporations and communities. The
challenge is to nd a means for, and demonstrate the value of,
corporate sector partnerships with community and the leveraged
contributions this makes to aid invested in community. Community relations will always exist, with the expression of value in
context of development bringing relevance to the discussion under
the auspice of aid. With ofcial development assistance (ODA)
dropping sharply in relative terms during the last two decades
(Sobhan, 2002), other avenues to pursue community development
must be identied within the current economic climate.

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Early pluralist societies were destroyed when no one took care of

the common good, with common good ultimately dening community
through common bonds (Drucker, 1999). Corporate citizenship
questions corporate sector leadership, asking community leaders
to act as agents of change that create community through positive
social action. This brings about new thought in a sector; rather
than passively viewing change brought about by actions and
responding, it can encourage and lead changes desired by community, understanding that those benets also have nancial reward.
Corporate citizenship as a framework may facilitate this change,
driving community development through corporate partnerships.
As a result, community relations is a growth industry, dealing with
complexities arising when corporations engage with those around
them, be they individuals, interest groups, or national governments. Impact of corporate activity is ultimately mirrored back into
the corporation, the premise being that good community relations
investment not only has good business and social outcomes, but
that these advantages so often sought are in fact one and the
same. Corporate engagement in the aid discourse may become a
more denitive method for corporations to contribute to bottom-line
success. So while corporate core business is not providing aid, they
have developed mature and insightful community relations functions that may be well served to change the nature and scope for
the role FDI plays (Sobhan, 2002). The question posed by Mehrotra
(2002) perhaps focuses too narrowly on increasing the total ODA as
a solution to effective aid and development, when the issue is more
fundamentally the method in which ODA is delivered. International
development targets (IDTs) are not the sole pursuit of international
aid agencies, but by other corporations who perceive it is in their
interests to engage with the development agenda. As power brokers
of all resources, goods and services that contribute to development
of the corporate sector should further engage as partners themselves to make contributions toward aid objective achievement.

WHY FOCUS ON CORPORATIONS?

The need to study corporate and community relationships, determining how socially responsible activity best meets community
needs within the corporate framework, is well documented

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(Schwartz and Gibb, 1999; Grifn, 2000; McMichael, 2000; Wulfson,

2001). Holistic corporate citizenship describes the systemic culture
in corporations that reects behavior and actions across each aspect
of mission and practices that acknowledge the impact corporations
exert on community (Birch, 2001). The manic nature of global capitalism has given rise to a calling to account the way that corporations interact with citizens of the globe and the effects of corporate
power (Michelman, 1994; Korten, 1995; Grieder, 1997; Schwartz
and Gibb, 1999). In 1998 the United Nations estimated that more
than 53,000 MNCs and 450,000 global afliates had global assets
in excess of US$13 trillion and global sales of more than US$9.5
trillion. Companies owning these assets have signicant inuence
over the access to and type of work undertaken by developing communities. With sales of the ten largest corporations exceeding the
combined gross national product (GNP) of the 100 smallest nationstates, the exponential rise in power of MNCs suggests a power shift
from nation-states to MNCs being inuential over elements of
production. As Mehrotra (2002) points out, since the announcement of IDTs in 1996, the level of ODA has fallen from 1.61 percent
to 0.24 percent of GNP in 1999, well below the target of 0.7 percent
set in 1970 (with 1961 seeing a level of 0.61 percent of GNP).
Perhaps most disturbing is that countries that generally have the
greatest capacity to contribute (G-7) (and often house the head
ofces of MNCs) in fact averaged 0.21 percent of GNP in 1999.
Government capability to resolve social problems is increasingly
called into question, with communities looking towards new
holders of wealth, the corporate sector, to assist in identifying and
rectifying social issues (Korten, 1995; Nolan and Nolan, 1995;
Birch, 2000; Quarter, 2000). Given the power shift towards corporations, it is important to raise discussion promoting the value of
engagement in community relations as a component of fullling
broader aid objectives. Community and government traditionally
promote engagement in a framework based on ethics and human
rights, encouraging or enforcing companies to fulll these vaguely
dened responsibilities. However, while these are relevant it is also
important to demonstrate corporate advantages that go hand in
hand with communitarian principles as a means of rationalizing
corporate contributions to development secondary to their FDI.
With changing roles, perhaps as Edgren (2002) suggests, the new
task for the government is to create circumstances through a macro

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policy that provides a framework of incentives that encourages

development activity. The corporate sector is already deeply embedded in development activities through community relations programs.
Perhaps the catalyst for change is the global recognition that no one
sector achieves IDTs on their own, and that the concept of trisector
partnerships is critical in recognizing the interdependent role of
government, corporations, and community in fostering development.
Corporate sector reforms of the twentieth century have concentrated
on restricting the growing power of capitalism, the rst economic
system to enjoy relative autonomy from national reigning political
systems (Michelman, 1994). However, little associated reform dealing with social issues developed as a consequence of corporate
activity (i.e., poverty escalation), with low priority given to establishing power equilibrium between the state and market capitalism. A
state of rapid ux in corporate interactions across multiple boundaries (religion, culture, age, national identity, corporate identity)
has caused ethical violations in the areas of environmental degradation, attention to occupational health and safety, avoidance of
issues relating to labor law, and discriminatory practices (Kegley
and Wittkopf, 2001). Rate of change characteristic of the corporate
sector often means that strategic decisions are out of date before
they can be put into operation (Tofer, 1990). This rapid ux is
evident in community relations through changing characteristics of
relationships that inuence the denition of the community and
the values they have at any one time. The issue debated often is the
concept of being held accountable for ones actions, both in terms
of nonmalecence and benecence (Spencer et al., 2000), which is
increasingly difcult as the application of these concepts is driven
by a constant change in community values. Ethically, corporations
should not only consider being accountable for being active in preventing the wrong thing being done but also initiate doing the right
thing. This statement of moral implication raises the legal context
of negligence and criminality. Rather than only being seen taking
action that prevents community harm, corporations can initiate
activity that represents doing the right thing, often requiring
engagements that may have historically been viewed as outside
their realm of interest or responsibility of the corporation (Nozick,
1996). Focusing on doing the right thing is fundamental to changing the way aid objectives are met. The development problem may
well in fact be the syndrome of aid dependency created by decades

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of development cooperation (Edgren, 2002) that was not receptive

to the role that corporations might have played. With many lowincome and poverty-stricken communities heavily dependent on foreign aid for public investment and current expenditure, focus on
capacity building is often lost. In some instances, certainly not all,
this function may be well addressed by corporations that are operational in these communities over multiple decades, and that require
this very capacity to conduct their business.
Stakeholder Theory
In maintaining a license to operate, Wulfson (2001) asks corporate
managers to view themselves as stewards or trustees acting in
the general publics interest, recognizing that business and society
are intertwined and interdependent. Debate surrounding corporate
adoption of socially responsible practices derives from the interpretation of who might be expected to be described as constituents.
Taking Friedmans neoclassical economic perspective that corporate executives, in an ofcial capacity, are merely agents acting on
behalf of the stockholders, the limited view of constituents would
include shareholders in the company (Michelman, 1994). However,
constituencies, in a holistic sense, are not only the stakeholders
who have a direct nancial interest in the company. Broadly dened,
constituents and stakeholders (Abt, 1977; Korten, 1995; Svendsen,
1998) cover employees, their families, shareholders, customers, the
local and national community, and the world at large. This proactive nature of stakeholder identication recognizes them as not only
those affected by but those that possess the ability to affect the
activities of the organization, precipitating debate surrounding the
impact that activities of multinational corporations have on the lives
of people around the world (Epstein and Birchard, 1999; Grifn,
2000). On the spectrum, other extreme corporate involvement is an
equally relevant model (Hanlon, 2004), proposing that aid may be
more efciently delivered through direct payment to those most in
need. While several cases demonstrate this successfully, the part of
stable governance and political security must be acknowledged in the
dissemination of funds. It becomes important to acknowledge these
alternatives as they all form part of a combined complex solution.
The relationship distance between corporations and their stakeholders effectively dilutes the ethical base on which actions are

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taken and subsequently viewed (Zadek, 1994). Along the continuum of stakeholders, one identiable variable is the proximity of
the relationship between the constituent/stakeholder and the
corporation. The varying methods of dening this distance and the
importance attached to it ultimately establish the relevance of
the stakeholder and drive both the inuence they have over the corporation and the degree to which the corporation is concerned with
the impact of its operations on that constituent. The current practice of adding poverty-related projects to an adjustment model,
alongside safety nets for those who suffer under economic reform,
appears problematic. The original development design has in many
ways failed to impact on the underlying poverty of many aid-reliant
nations (Sobhan, 2002), increasing the need for discourse exploring
the new roles that could be played by those already involved in
developing communities, as well as the use of their well-established
expertise in economic, social, and knowledge capacity building
(Samoff and Stromquist, 2001).

CORPORATE CITIZENSHIP
What Is Corporate Citizenship?
Corporate citizenship and sustainable development are integral
to understanding a new economic system where companies take
greater account of their impact on society as a basic principle of
business (Birch, 2001). In this new economy, corporate citizenship
implies strategic focus moving from short-term transactional-based
commitments to longer-term values based on building relationships with stakeholders. Good citizenship is a fusion of socially
desirable achievements and actions by corporations that are both
socially expected and beyond requirements of the law. Corporate
citizenship provides a framework to discuss the development of
social responsibility in the corporate sector and is the premise for a
relationship existing between the corporate sector and the community of which they are a part. The promotion of corporations to act
as good citizens is representative of a paradigm shift seeing corporations not just acknowledge the impact of their decisions but
building value in the community where their decision-making
processes have impact.

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Corporate citizenship matches the social, cultural, and environmental responsibilities that a business has to a community with the
economic and nancial ones that exist for shareholders. As a community in its own legal right, a corporation can dene itself through
the encouragement of learning, inclusive treatment of other communities, transparency in reporting, and application of social and
ethical standards. Indicators of social change such as the Human
Development Indicator (HDI) and Index of Sustainable Economic
Welfare (ISEW) increasingly support the ability of humanities and
social science qualitative measurements to measure the impact of
engagements of MNCs. An increase in the development of tools
(McIntosh et al., 1998), areas of coverage (Leipziger, 2001), and the
professional recognition given to them by bodies of global governance (i.e., World Bank and United Nations) indicate a growing
acceptance within the corporate sector of identifying corporate
impacts and contributing to sustainable community, viewing this
as a critical component of maintaining the license to operate. Indicators used to measure or assess corporate citizenship are constructs, based on observations, and are usually qualitative, which
tell us something about an aspect of life in which we are interested
or about changes that are taking place in it (Gray et al., 1987). This
information may be objective in that it claims to show a position or
how it is changing. It can also be subjective in purporting to show
how the community and constituent groups regard changes in position.
Development of Corporate Citizenship
Corporate power has been compared to the church in the Middle
Ages, to the army in Roman times, and to the great universities
(Korten, 1995; Grieder, 1997; Klein, 2000; Wulfson, 2001). Conducting business creates a powerful tool capable of social change
and a system of interactions in which community members can lay
claim to being a legitimate stakeholder (Burke and Logson, 1996).
Corporate citizenship as an inherent principle of business develops
as the ability to act with the advantage of economies of scale over
their constituents arises. The cause for concern behind this shift in
power is that the functions of accountability and transparency of
activities previously applied to government intervention within the
community may not have been easily transferred across to the
corporate sector.

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Over the past four decades, forms of global governance have

emerged with controls over various aspects of global interactions
with inuence extending to national policies, which governments
seem to write with MNCs in mind. The UNs World Investment
Report 2000 noted that of 1,035 changes worldwide in laws on
foreign investment between 1991 and 1999, a total of 94 percent
increased the freedom of foreign investors and reduced government
regulation. The capacity of governments to manage economies and
achieve national objectives in issues ranging from scal policy to
environmental control is strained by the growing inuence of
MNCs in the international economy (Kegley and Wittkopf, 2001).
From this growth, the need for corporate citizenship emerges, with
the inuence that MNCs now have over communities becoming disproportionately large in comparison to national governments.

COMMUNITY RELATIONS
Dening community is important when establishing whom the
relation is with, as by default a relationship is dened by those acting
within it (OConnor and Parker, 1995). Traditionally bound by a
neighborhood or geographical area, the boundaries are changing
with the effect of technology on transport; networks of people who
have a common and or shared set of characteristics can now include
multiple populations coexisting in diverse geographical settings.
Perhaps to the detriment of a relational or communal way of
being, economic globalization has stimulated the pursuit of cultural materialism and industrial values, such as the value of nature
as a machine or as a resource, and the environment as a commodity
rather than something to work in harmony with (Vincent and
McGinnis, 2000). A similar analogy can be applied to the relationship between the corporate sector and consumers. With internal
culture driving corporations to meet economic goals, consumers
often become a means to the end rather than an important part of
the whole process, and a reason for the corporation existing in the
first instance. These false relationships often remove the characteristics of positive, mutually benecial or sustainable relations
between community and corporation, lacking a reection of human
experience or the multiplicity of social unions important in dening
relationships. In many developed communities there is often more

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value attached to the personal ego and path of individualism than

communitarian or common goals (Jason, 1997), reecting the
individualism referred to by Trompenaars in his dimensions of
culture (Hofstede, 1991; Trompenaars and Hampden-Turner, 1997).
Developed societies promote the legal entity status that corporations enjoy as being the central characteristic allowing separation
from the same connection to community that individuals have.
Community relations programs cross this nexus and provide both
corporate and societal benets. To suggest that community and
business should be separated to discuss and analyze benets is in
fact detrimental to the purpose of the process itself, because the
separation implies variations in missions, values, and aspirations
between these two groups. In the stakeholder theory, benets exist
across a number of relationships and cannot exist without touching
all stakeholders in some way and therefore the whole community,
which by denition must include the corporate citizen as well. Rio
Tinto believes their competitiveness and future success depend not
only on their employees and the quality and diversity of assets, but
also on their record of good neighborly interactions and development
of partnerships around the world (RioTinto, 1998).
The community relations function ensures that corporations
understand the priorities of the community in which they operate,
providing a bridge to traditional business models that may not have
placed as much emphasis on the inputs from the population at
large and other caretakers. Community relation functions reduce
the gap between the commercial arm of the organization and the
goals that are not dissimilar to those postulated by foreign aid
programs, including enhancing state capacity for reaching down
and reaching out and strengthening state society capacity linkages
and empowerment of civil society organizations that give people a
voice (Degnbol-Martinussen, 2002). While the context and philosophy behind the engagement may differ, it is difcult to argue
that the ends sought by many community relations functions are
not dissimilar to the aid goals and objectives of many international
agencies. Corporate commitment to global charters including the
Global Compact and the Global Mining Initiative subsumes and
demonstrates a commitment to sustainable community development, further linking the ideas of institutional development assistance, irrespective of its origin to the strengthening of institutional
capabilities and capacities to perform the very functions they were

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deigned to achieve within a community. Community relations

seem a complementary function to aid in that the services often are
the focus of corporate intervention; basic health, education, water,
and sanitation (Mehrotra, 2002) also fall within the aid function.
During the latter half of the twentieth century, neoliberal
principles espoused across western developed communities often
rejected societal values, giving greater attention to personal gain.
This was fueled by the belief that serving self-interest alone motivated
individuals to achieve, profoundly reshaping societies and the way
people live. One attempted solution has been to empower community
groups as a part of a wider social change, with a view to changing
dominant structures, in this case the policies of nation-state governments, and working with them in different ways (Ife, 1995). The
communication required to facilitate stakeholder engagement takes
place in a variety of cultural, physical, and relational contexts.
Adherence to the principles of stakeholder management, a method
of empowerment addresses the often negative public association with
role titles such as community/public relations and external affairs
ofcers (Ihator, 1999). The discipline and/or practice of community
relations within the corporate sector is born from the notion that
society and business are not separate entities (Birch and Glazebrook,
2000), as companies are not only engines of economic growth but
act as agents of social change and political suasion (Fombrun, 1998).
Communities are at risk of losing social standards and safety systems established as corporate powers are now potentially able to
evade controls that are set up to protect the common good due to
the current practice of governments of withdrawing from supporting many socially driven local initiatives. While sources of power
and inuence change, the value of building stable political partnerships should not be underestimated as these are fundamental to
development and assist in the establishment of good governance
that may oversee future capacity building (Edgren, 2002).
Valuing Relationships between Corporations and Community
During 1999, Environics, in conjunction with the Prince of Wales
Business Leaders Forum (UK) and the Conference Board Canada,
surveyed over 20,000 citizens in 33 countries regarding expectations
of business contribution to societal goals. The results revealed that
two in three respondents expect business to go beyond historic roles

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of generating prots for shareholders towards taking responsibility

for the impact that their core business had on the local community.
The corporate sector provides many examples of community life
thriving among the pressures of commercial success, globalization,
and organizational demands. The key is successful stakeholder
engagement allowing active participation in the decisions that
affect the community by those who live and interact within it
(Wheeler and Sillanpaa, 1997; Tam, 1998). Communitarian thinkers such as Durkheim promoted a reform that developed the role of
the state in promoting equal citizenship, the role of educational
institutions in improving citizenship skills (Tam, 1998), and the
roles of organizations in providing new forms of commercial and
community interactions (Birch, 2001). This is essentially MNC
engagement through control of the nation-state form of governance,
where the framework was historically clearer in the delineation of
the responsibilities of the corporate and government sectors. Perhaps the question is not who should have the inuence, but if a
group such as MNCs is to take on the responsibilities, then control
mechanisms to ensure equity of engagement needs to be developed.
In a sense, current relationships are nontraditional only because
they represent combinations of concerns, both societal and business,
that were previously not acknowledged as being interdependent. In
the same manner that business conducts assessments to determine
the value of a strategic alliance, a community should go through the
same rigorous application in deciding how to engage with the corporate
sector. Systems interventions appear more effective than individually
oriented programs (Checkland, 1981; Nielsen, 1990; Jayaratna,
1994), with the systemic perspective of social and community
issues in development often coming from the dominant structures
like the corporation. The solution is not to necessarily remove
power or change the system fundamentally but to work with the
strengths that each stakeholder brings to the relationships that
support development, inuencing the power that currently exists.

DRIVERS FOR COMMUNITY RELATIONS PROGRAMS IN

THE CORPORATE SECTOR
Community relations as a core business function shifts the rigors of
nancial reporting to integrate humanistic goals, requiring attention

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across several societal sectors (Capra, 1983; Drucker, 1999). Environmental scanning identies factors inuencing corporate adoption of
community relation programs, under the descriptors of social, technological, economic, environmental, and political drivers (Schwartz, 1996).
Social Driver
Shifting corporate values from a compliance framework to an
activity forging closer links between the community and business
ensures that corporations are more aware of their effect on and
responsibilities in a wider social arena (Zadek, 1998). Across academia,
popular media forms and advocacy group anecdotal evidence exists
of the new economy producing social contracts, where communities
expect business to adopt higher social standards (Jason, 1997).
Socially responsible investment, often described as an oxymoron,
supports engaging in a good cause generally when the investment
that a company makes will grow on return of capital input. In this way
companies attend to the core business of creating prot while making feel-good public relations gestures on the side (Meyer, 1999;
Mulgan, 2000). It becomes problematic to criticize these efforts due
to the good it brings; however, the long-term ramications of
dependency and control over direction raise the darker issues of
allowing corporate inuence over social issues (Rawls, 1996).
The stakeholder model increases the wider communities ability
to impact on corporate decisions (Epstein and Birchard, 1999),
bringing into play constituents once on the periphery, that are
of secondary concern, or that are not directly related to the output
of a corporation into the direct line of reasoning behind decisions
made (Birch and Glazebrook, 2000). Social policy should no longer
serve the economy under single indicators using numerical representation to describe social issues. Economic policy should include
community development by integrating social objectives, giving
central importance to the responsibility of capacity building, promoting citizenship of individuals and organizations, and generating
sustainable education and employment (Ife, 1995; Tam, 1998).
Technological Driver
The ability to remain anonymous in business, social, or environmental
transactions has decreased with improved access to information

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for stakeholders. The relative distance a corporation can set between

itself and stakeholders groups has decreased dramatically with the
advent of real-time access to information that previously did not fall
into the public domain (Korten, 1990). Corporate information is
increasingly accessible; enhanced immediacy and public awareness
of historically privileged information has increased through requirements of disclosure for public documents and the range of media in
which they are available. Large-scale public interest groups have
beneted, with the ability to mobilize information and strategically
organize events such as press releases and demonstrations through
communication media allowing instant and numerous messages to
be sent, increasing the level of connectedness that global citizens
feel (Tofer, 1990; Svendsen, 1998). The absence of international
regulatory authorities to formalize criteria and standards of community impact, coupled with the speed of business transactions and
information provision, creates an uncertainty that many corporate
sector participants may not be prepared to build into their public
prole as they integrate into community development issues.
Economic Driver
The scal market is only one segment of any economy. Building
understanding of a new economy requires new mechanisms that
take community and corporations into unfamiliar territory. With
more companies in the top 100 global economic entities than nationstates, the increase in power may translate into enlightened selfinterest, with corporations valuing engagement as an economic
driver (Korten, 1990; Klein, 2000; Crowe, 2001; Kegley and Wittkopf,
2001). From a developmental perspective, social infrastructure and
community organization are often damaged to generate trade that is
required to meet the demands of richer communities (Tam, 1998).
Friedman argues that the best form of control over the corporate
sector, including their ethical and social behavior, is to let communities voice opinion, enabling market forces to determine success
or failure. However, it also allows for the domination of powerful
institutions over those that least threaten their business and have
the most to lose through exposure to irresponsible social activity
(Michelman, 1994; Mulgan, 2000). Economic theory must spread
to include human measures of growth and prosperity within
community stakeholder groups, including community satisfaction,
individual well-being, and quality of life, increasing the signicance

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of these issues in core business activity (Wheeler and Sillanpaa,

1997; Epstein and Birchard, 1999; Greenwood, 2001). Long-term
goals of companies are best achieved when core business activities
and methodologies are accepted by the communities in which they
operate (Birch and Glazebrook, 2000), recognizing that corporations are a part of the community and not something that exists
outside, only to be interactive when it suits their economic or
business objectives. The cost of failing to recognize the importance of
cohesive community commitment through the pursuit of short-term
economic gain (more often than not at odds with social stability)
may lead to a community that is unable to provide the very infrastructure, health, and resources a corporation requires to conduct
business and remain economically viable.
Environmental Drivers
The media exposure of professionally organized environmental
groups has required the corporate community to take heed of its
responsibilities to include the environment in the bottom line
(Nolan and Nolan, 1995). This has been achieved by addressing
ethical practices as part of everyday business, rather than passive
and reactive actions expressed solely through philanthropic
sponsorship of community-based programs.
At a greater degree than other community issues, environmental
issues often suffer due to the sometimes hidden costs and longevity
associated with the impacts caused by business practices. Even if
corporate prot and shareholder gain are not enhanced by a corporations activities, it must abide by the law and take into account
ethical considerations as pointed out to them by the community
where they operate (Shore and Wright, 2000). Environmental
risks are inherent in modern business and should be approached
in a similar fashion to conventional nancial and physical risks
(Crowe, 2001). Coupled with the technological driver that sees
information available to the broader community almost instantaneously, the environmental impacts of many business practices
can be shared globally in a matter of seconds.
Political Driver
The UN Copenhagen Declaration and Program of Action recommended
that nation-states intervene in markets to prevent or counteract

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market failure, promote stability and long-term investment, ensure

fair competition and ethical conduct, and harmonize economic and
social development. The UN Commission on Human Rights states
in subcommission resolution 1998/12 that unguided globalization
has helped reduce poverty in some of the largest and strongest
developing economies but has also produced a widening gap
between winners and losers among and within countries, and that
to create opportunities and not to lose them requires better
management of globalization, nationally and internationally
(Third World Network, 2001). National governments can take
responsibility for ensuring that governance issues are resolved to
enable the adoption of a communitarian model. This issue, set out
in the Copenhagen Declaration, was agreed to by 117 heads of
state at the World Summit for Social Development in 1995 (Tam,
1998). For corporations, focusing on the outcomes that communities desire rather than protecting the position of government is
aligned with a stakeholder approach and more characteristic of the
long-term view. With the quality of governance in an aid-recipient
nation an important driver for corporations (Sobhan, 2002) assessing risk of their investment, it will become increasingly evident that
corporations wishing to make foreign direct investment will be looking towards focusing operations in geographically and politically
stable regions. In these environments, governments are far more
likely to become secure and sustainable partners in development,
alongside corporations and nongovernmental organizations.
Ethics is a problematic partner for business, continually challenging corporations to deal with issues that at times appear socially
distant. It is this ongoing tension between ethics and business that
provides the grounding for frameworks encouraging business relationships with multiple community-based stakeholders (McIntosh
et al., 1998; Mulgan, 2000). Modern capitalism, with the assistance
of technology, has made interactions far more emotive, personal,
direct, and immediate. As a result, the corporate sector cannot
escape community-prescribed responsibilities, and with politics an
ever-changing arena, constituents can increasingly use the political
process to achieve their goals. One change required is a shift from
dening goals, targets, and indeed success of community programs
in terms of the population (people) toward goals that involve changes
in both systems and the organizations that adopt these systems
(Kickbush, 1997). By altering the way we measure results, the

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importance of changes to social indicators can be highlighted, rather

than traditional economic gures such as GNP, unemployment
rates, and ination, which at a macro level give very little indication
about the quality of relationships among the constituents or stakeholders within a community that has to engage with the corporate
sector in order to survive.
Engaging in participatory, collaborative processes and being
involved in the decision-making process is empowering, transforming both individuals and communities at large (Hills and Mullett
2000). Governments as partners in aid relationships can shape and
assist a market-based individual culture in moving away from the
highly counterproductive individualist approach in working within
and for communities, creating the space for corporations to contribute to the attainment of aid-related outcomes. Individualist zero
sum bargaining has traditionally hindered the development aid
process, with most problems tackled within the framework of the
nation-state. Partnerships between communities and corporations
may be a tolerable drawback for some purists; however, in the face
of rapid globalization, it represents a partial move toward communitarian cooperation (Tam, 1998) and the use of corporate creativity
and knowledge in resolving complex social and community issues.
As developing communities integrate into the global economic system
of development, established economic forces have continued to
develop a hold over aid structures that are crucial to communitarian
development. Instead of moving closer towards the requirements of
communitarian citizenship, the supportive conditions for education,
work, and social protection have been eroded and individuals have
not been encouraged, nor social policy allowed, to seek support from
the state or society, but rather to rely on market forces that have
gained a powerful position through the rationalist processes adopted
by governments. This force needs not be detrimental when harnessed
and used constructively through a series of relationships structured
around the common good.

CORPORATE BENEFITS OF COMMUNITY RELATIONS

PROGRAMS
Development of a multidisciplinary approach to management will
be led by proactive community engagement, even in the absence of

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externally imposed legal requirements (Burke and Logson, 1996),

enabling corporations to demonstrate a commitment to citizenship and community development as functions of core business.
This requires overt identication of the multiple corporate agendas
behind community relations functions with potential aid links, allowing
increasing dialogue between corporations, communities, aid
bodies, and local governments.
Global Change and Development
The current climate of reform among state institutions, businesses,
voluntary organizations, and community groups appears to silo
or compartmentalize issues as social, political, economic, or environmentally based. The interdependency of these issues is consistent with the dependencies recognized through the process
of globalization (Tam, 1998; Ihator, 1999; Vincent and McGinnis,
2000; Greenwood, 2001). Development of corporate and community
partnerships requires strategic change in focus for core business
activities, ensuring that aid objectives such as infrastructure
development and governance capacity building are built into
the community relations function. The new economy is recognized
by the socioeconomic revolution that impacts on all aspects of our
relationships with others and ourselves (Birch, 2001). Adam Smith
claimed self-interest drives capitalism (Ihator, 1999), and Friedmans model of social responsibility also concluded that business
was a going concern for the core purpose of prot maximization
(Wulfson, 2001). The development approach to community relations challenges both models, considering social, economic, and
environmental dimensions in the design of relationship programs that promise community change through the presence of
corporate activity. Empowerment of community is fundamental,
with change only achievable if forms of structural disadvantage
are used positively (Ife, 1995). This function is within the realm
of corporate activity by giving voice to those who traditionally
have had no dening inuences over services they receive
(Jason, 1997; Wheeler and Sillanpaa, 1997; Suggett, 2000).
Cause-Related Marketing
Research by Business in the Community (UK) reveals that 81
percent of consumers were more likely to buy a product associated

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with a cause, where price and quality are equal. This is collaborated
by research (Johnston, 2000; Wulfson, 2001), demonstrating increasing inuence of individual consumers over the interests expressed
by larger corporations, with 86 percent of consumers having a
positive image of companies seen to be making the world a better
place to live. Supporters of cause-related marketing claim that a
long, advertised record of community service also offers corporations
greater customer acceptance of price increases and favorable
publicity, and helps to win over skeptical holders of public ofce
who often have control over a companys expansion plans (Meyer,
1999; Schwartz and Gibb, 1999). Cause-related marketing strategies should not be dismissed because their altruism also makes
commercial sense and is reective of the increasing interdependence
of social and business environments.
Reputation Management
Reputation management is identied as an important area of future
research and practice for enhanced corporate social performance.
Studies by McGuire, Fombrun, and Shanley (Clark, 2000) using
Fortune Magazines Corporate Reputation Index found a positive
correlation between corporate social performance and nancial
performance. Implicit social contracts become self-enforcing when
the present value of a corporations gain from maintaining its reputation is greater than the loss if the contract was reneged on (Spencer
et al., 2000; Crowe, 2001). This creates a strong positive correlation
between the management of corporate reputation and commitment
to socially responsible activity. Corporations may not be seeking
power as a core function of business; however, it is gained as a
byproduct of their functioning. An awareness of the power distance
created between themselves as a legal entity and the individuals
who are the consumers of their goods and services can be advantageous in managing the reputation they hold among consumers.
Philanthropy has emerged as a strategic tool to improving prots,
instilling customer loyalty, enhancing employee morale, and building
community relations (Buchholtz et al., 1999). Rather than traditional
philanthropy that may have involved an open checkbook for a
worthy cause, philanthropic contributions of corporations might
be used to build lasting involvement, with community initiatives
contributing community sustainability and capacity building,
feeding back into management of a corporations reputation.

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Competitive Advantage
Mature and insightful corporations consider competitive and
socially responsible activity as interdependent. As with any notion
of citizenship, this allows them the right to pursue profit, while
simultaneously being held responsible for their place in the community (Khoury et al., 1999). Community relations programs can
then use this interdependence by demonstrating how the results of
their program contribute to a competitive advantage for consumers
and other stakeholders over and above competitors. With corporations increasingly experiencing difculty in out-innovating competitors, strategic programs that build a competitive advantage become
valuable leadership strategies (Meyer 1999), advancing the cause of
community relations functions and the framework of corporate
citizenship. Competitive advantage is also gained through longevity
in the marketplace, close linkage with community partners, and a
commitment to develop stronger community in which business is
conducted. Community relations adds value to corporate activity
through extending its positive impact on the community at a
standard over and above the law, external standards being measured
against, or the desires of the community itself (Schwartz and Gibb,
1999; Quarter, 2000). Many companies feel that public-spirited
initiatives that go beyond the requirements of law, often at great
expense, make good sense because public condence should be
maintained at all costs (Nolan and Nolan, 1995). Research by Russo
and Fouts presents the view that corporations can create and
exploit resources that provide a sustainable and competitive
advantage, of which one resource may be the community themselves.
In this way, a community program can be rationalized as core activity
because it directly links to the success of goods and services
production. It could be suggested that corporations be viewed
primarily as social enterprises, as their right to exist and decisions
they make are only justied in measurement against the public and
social purposes that they fulll (Nozick, 1996; Tam, 1998; Spencer
et al., 2000). This contrasts the argument that a corporation fulls
its social obligation merely by being in business and providing
employment as a stable form of family and societal support (Friedman,
1997). Corporations may also see application here by tapping into
local knowledge, often revealed to them through deep relationships
with local communities. The rich information exchange between a

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developed corporation and an indigenous community can have

mutual benet (Samoff and Stromquist, 2001) for both economic and
social progress, and serves as the catalyst for further trust development and information exchange that forms part of a corporations
competitive advantage.

CORPORATE IMPLICATIONS
Interdisciplinary research and joint policy setting among previously
recognized separate humanitarian and economic functions within
the corporate sector are supported by demonstrating connection of
community relations programs to corporate success. Active partnerships with regional and national governments and communities
through mutual commitment and reciprocity should be based on
trust, shared involvement of outcomes, and a long-term commitment to safeguard the social and economic well-being of the community. There appears to be no reason why corporations cannot
facilitate development through their core business operations. The
increasing employment of skilled professional staff with social
sciences and humanitarian focused backgrounds, coupled with
interdisciplinary training, allows for a transition of skills to social
issues, in the same way that community relations professionals
also gain broader understanding of the business. This is perhaps a
cultural change for many professions, used to silo operations
where it would actually appear each group has much to offer the
other in the establishment and justication of the aid agenda
playing a role in corporate engagement with community.
Challenges for the promotion of community relations within the
corporate agenda and the synthesis with global aid agendas are
mountainous, requiring room within standards and reporting
formats for local, national, and global contexts. The current debate
over the issue and effects of globalization on aid and its associated
processes is one that will affect the ability of community programs
to become a part of the core activities within organizational structures. This will become increasingly important, as the divergence of
economies and cultures has formed new sets of characteristics
constantly changing the denition of community and the role of
international aid contributors. A priority for these programs, particularly within an MNC environment, will be to remain actively aware of

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change, responding in a manner that allows the community to be

effectively consulted, and reective of their values across corporate
practices. The aid community should not overlook the value of
the marketplace, but embrace its presence as an economic and
social agent of change, working with it as a partner, rather than
against it, in creating a community capacity of lifting communities
into a position of self-sufciency (Sobhan, 2002).
Corporations need to establish a new identity for community
relations to supplement the aid agenda, through higher-level
understanding not only of nancial and physical forms of capital,
but also of the natural, human, and social capital forms that contribute to both organizational success and the external social
fabric of society. This process exposes corporations to stakeholders
through accountability, transparent governance, and consumer/
stakeholder input to guide larger decisions.
Taking community relations into the mainstream management
practice and aid discourse requires the multiple aid and corporate
actors to work together in overcoming the following issues:
Emphasis is often placed on what is measurable at the expense
of what is deemed important and therefore what is measured
tends to be driven by what experts perceive is most easily measurable. This is most commonly represented through a focus on
World Bank and International Monetary Fund program objectives,
rather than local sustainable development objectives and impacts,
where the community is the driver of measurement tools.
The potential for data overload and collation of extraneous
data is enormous unless there is a clear philosophical grounding and establishment of theory behind what is being collected. In community development the link between cause and
effect is often of subjective judgment, so interdisciplinary
research must work towards reinforcing the high correlative
factor of business activity and community impact. Signicant
time and resources are spent collecting data without the same
rigor in approach given to the actual program delivery. In the
delivery of aid, where the points between delivery and impact
can be decades, the process evaluation itself is often more
important than the nal outcome.
The complexities of interrelationships between social indicators
mean that there will always be discourse between practitioners,

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auditors, academics, and stakeholders over the perceived value

of various aid delivery models. This passionate debate needs to be
harnessed to drive forward the issue of corporate involvement
through FDI rather than be allowed to tear the importance of the
process apart by fragmenting the importance of the parts. In the
current economic climate, the corporate sector is acknowledged
as a powerful inuence over development. While it is important to question the validity of the power in this sector, it is also
important that communities currently work with and alongside
the corporate sector using its skill, expertise, and economies of
scale for positive inuence.
As a result, future directions for the involvement of corporations in
supporting the aid agenda could include:
A stronger link could be created between what actually
happens in the community (fact versus opinion and view) and
the role business plays in creating this change and choosing
indicators that effectively express this in terms agreed to by
both corporate and community sectors, while acknowledging
the role that governance and government plays in being a
consistent player of time. The role government plays as a
director of aid prior to a corporations presence, and also after
a corporation departs a community, could be acknowledged.
The boundary of relevance for corporate citizenship and the
scope of community programs within the often conflicting aid
agenda and capital business model could be determined.
Much of the discourse seems to originate from dening whom
the corporation is responsible to, without being able to clearly
dene this; it becomes increasingly difcult to set in place
actions that contribute to capacity building through aid within
the boundaries of corporate engagement.
It could be recognized that poverty eradication requires
knowledge afuence (Samoff and Stromquist, 2001), where
knowledge is acknowledged as an important capital item as
land, social capital, and economic capital. It is in this area of
knowledge sharing and collation that corporations could make
a strong contribution to poverty alleviation.
Information is critical to the organizational change process as
mature corporation takes on the opportunity for learning

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through community engagement, with insightful corporations

learning retrospectively by reection on past events. There is
growing support for prospective learningthat is, planning
to learn before an experience or project takes place (Courtice,
2001).
Market forces, while not perfect, have a unique ability to weed
out the ineffective administrative and systemic processes that
often render aid unproductive. Market forces may in fact be a
useful medium among the extremes and the direct payment
model proposed by Hanlon (Hanlon, 2004). What becomes
problematic is corporate control over where and when their
commercial projects are established, this spasmodic yet
commercially strategic approach dictating that corporate community relations can never be the sole facilitator of capacity
building.
Current de facto aid programs through FDI and community relations
programs often appear motivated by the maintenance of a license to
operate, appearing consistent with effective stakeholder management and risk management control, using internal structures for
external promotions rather than joint commitment to sustainability
for the mutual benet of both community and business. Again it
must be stated that the premise is not to criticize corporations for
acting within their best interests, but to raise the discussion on
what might be the value and contributions made to aid objectives
if the community relations function of corporations addressed
aid-related issues alongside traditional business agendas. There
is a strong future for community relations programs if those who
respond to its critics can take the criticism as tools to drive their
future change. Of these, the potential to integrate with existing
community partnerships in aid and development may be its
strongest change to develop respect among all stakeholders. While
Edgren (2002) does not directly advocate for private sector contributions to the aid agenda, his concerns with aid being an unwieldy
instrument for development are well founded and point to the need
for new players to drive aid and development agendas. Corporations
and commentators on aid models might do well to remember that
What you do may seem terribly insignicant, but it is terribly
important that you do it anyway (Mahatma Gandhi, original source
unknown).

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