This article aims to focus on how signatories versus nonsignatories in the U.S. pharmaceutical sector compare with respect to the internal and external stakeholders and principles of the United Nations Global Compact (UNGC). We seek to answer the question: Do signatories to the UNGC walk the talk better than nonsignatories as determined by a variety of published rankings and data? This research presents an innovative approach to the evaluation of UNGC signatories. It uses several objective and independent (...) data sources to assess a matched group of signatories versus nonsignatories in the U.S. pharmaceutical sector. Signatory organizations in the same sector as determined by SIC codes were matched with nonsignatories on variables such as size and number of employees in U.S. pharmaceutical companies. Then both types of organizations were compared on the following data sources: Coalition for Environmentally Responsible Economies ratings, ratings by external stakeholders, ratings by employees, unionization data, financial measures, and annual reports to shareholders. Using nonparametric testing the research found there are differences between signatories and nonsignatories in the U.S. pharmaceutical sector for some of the external stakeholder measures and no differences were found for the internal stakeholder measures. (shrink)

The United Nations Global Compact (UNGC) was created in 2000 to leverage UN prestige and induce corporations to embrace 10 principles incorporating values of environmental sustainability, protection of human rights, fair treatment of workers, and elimination of bribery and corruption. We review and analyze the GC’s activities and impact in enhancing corporate social responsibility since inception. First, we propose an analytical framework which allows us to assess the qualities of the UNGC and its principles in the context of (...) external and internal elements that influence code effectiveness and implementation. Second, we analyze UNGC performance in encouraging companies to become signatory members and bring about demonstrable change in corporate CSR-sustainability activities. In its 10-year report, UNGC has proclaimed growth in both membership and program activity. However, all credible and publicly available data and documentation conclusively demonstrate that the UNGC has failed to induce its signatory companies to enhance their CSR efforts and integrate the 10 principles in their policies and operations. The result has been a loss of public trust and support of UNGC from important constituencies among civil society organizations, and those individuals and groups adversely impacted by corporate activities and resultant negative externalities. This diminished credibility has also made UNGC largely dependent on the corporate sector for its very survival. We conclude that this dependence has in turn impaired and would continue to hinder UNGC’s ability to fulfill its mission. Such an outcome raises serious questions as to the viability, usefulness, and continued existence of UNGC. (shrink)

The article discusses the role of the UN Global Compact in the emerging global corporate social responsibility infrastructure. It evaluates the debate around the effectiveness and legitimacy of the UNGC alongside the arguments of its supporters and critics and thereby introduces the Thematic Symposium contributions. The article further identifies three theoretical perspectives that are used by scholars to discuss the performance of the UNGC: economic, socio-historical, and normative. It proposes that these perspectives can serve as generic distinctions with (...) direct relevance for the evaluation of the UNGC. Once the perspective is chosen, it drives towards a certain purpose which implies assumptions and design features with regard to the UNGC. Finally, the article offers a future research agenda, emphasising the research needed on the UNGC in four areas: the identification of processes and influence mechanisms; legitimacy and effectiveness; local networks and regional development; and the interface of the UNGC and responsible leadership. (shrink)

We examine market reactions to publicly held multinational firms announcing their affiliation with the United Nations Global Compact (UNGC). The UNGC is a voluntary initiative to support four areas of United Nations viz. Human Rights, Labor, Environmental, and Anti-Corruption. Because firms must file annual Communication on Progress (COP) reports toward these initiatives, we argue this creates a differentiating transparency of interest to stakeholders. Using a sample of 175 global firms, we find support to the theory for joining the (...) UNGC. Returns differ markedly, however, between multinational firms headquartered in the United States (negative) and Europe (positive). We also find that failing to complete the annual COP generates a negative market reaction. (shrink)

The implementation of corporate social responsibility is crucial for the legitimacy of an organization in today’s globalized economy. This study aims to enrich our knowledge of the implementation of the largest voluntary CSR initiative—the UN Global Compact. Drawing on insights from stakeholder, network, and institutional theory, I derive a positive impact of UNGC participation duration on the implementation level of the UNGC principles, despite potential weaknesses in the initiative’s accountability structure. Moreover, I scrutinize the validity of the newly (...) introduced UNGC “Differentiation Programme” before applying this framework in the empirical analysis. Results from ordinal, linear, and instrumental variable regression models suggest that, contrary to claims made by UNGC critics, the duration of UNGC participation does affect the level of UNGC implementation. However, this effect appears to be much smaller than previous practitioner studies have suggested. Moreover, strong local UNGC networks affect the implementation level of the UNGC positively. Their hypothesized moderating role between UNGC participation duration and UNGC implementation level, however, is only significant in networks with activities of high quality rather than high quantity. (shrink)

We address how the leaders of a Catholic business school can articulate and assess how well their schools implement the following six principles drawn from Catholic social teaching : produce goods and services that are authentically good; foster solidarity with the poor by serving deprived and marginalized populations; advance the dignity of human work as a calling; exercise subsidiarity; promote responsible stewardship over resources; and acquire and allocate resources justly. We first discuss how the CST principles give substantive content and (...) meaning to the Good Goods, Good Work, and Good Wealth framework in The Vocation of the Business Leader and then discuss their congruencies and tensions with the UNGC and UNPRME principles. Next, we describe the Catholic Identity Matrix, an assessment tool that provides a quantitative and qualitative portrait of how well a Catholic business school integrates, within the scope of its mission and capacities, the three goods and related CST principles in its strategies, policies, activities, and processes. The concluding section discusses implications for ongoing UNGC and UNPRME assessment, reporting, and development efforts, and addresses the generalizability of our approach to business schools who draw their inspiration and moral principles from other faith-based or secular traditions. (shrink)

The United Nations Global Compact has generated a lively debate among academics, activists, and policy practitioners. Given the scope and ambition of this program, and the prestige of the United Nations associated with it, its supporters believe it will fundamentally reshape how businesses practice corporate social responsibility. Its critics view it as a flawed program because it does not impose verifiable obligations and does not compel its participants to adhere to their program obligations. We present an approach to study CSR (...) programs grounded in rational-choice institutionalist theory, building on previous work viewing CSR programs as clubs which can produce reputational benefits for members as well as positive societal externalities, provided that they incorporate institutional mechanisms to prevent member shirking. This perspective puts the focus squarely on the institutional rules of the UNGC and their impacts on member behavior. While we conclude that the UNGC has not yet demonstrated a capacity to generate across-the-board improvements in CSR performance beyond what member firms would have done otherwise, we are hopeful that its sponsors and leaders can undertake worthwhile changes in program design to align member incentives with program objectives. (shrink)

Companies that have joined the United Nations Global Compact are required to submit a Communication on Progress, which is an environmental, social, and governance report, to the UNGC every year. If they fail to do so, they are marked and listed as non-communicating on the UNGC website. Using the event study methodology, this study shows that a company that fails to report to the UNGC is penalized in the financial markets with an average cumulative abnormal return of (...) −1.6% over a period of 5 trading days around the event. Although a major critique against the UNGC is that the initiative’s voluntary nature and its lack of external monitoring and sanction mechanisms render it ineffective in terms of the business participants’ implementation of the UNGC principles into their operations, this result suggests that investors may be able to pressure UNGC business participants to increase their compliance with the UNGC requirements and to “walk the talk.”. (shrink)

The United Nations Global Compact is one of the largest transnational governance schemes. Its success or failure, however, is a matter of debate. Drawing on research in cognitive linguistics, we argue that when evaluators discuss the UNGC, they apply the metaphorical concept of the family: the UNGC corresponds to the “family,” the UNGC headquarter to the “parent” and the business participants of the UNGC to the “children” of the family. As a corollary, evaluators’ implicit understanding of (...) how a family is best organized sets different benchmarks against which the governance structure of the UNGC is assessed. We describe two ideal models of “educating” UNGC business participants. Critics of the UNGC adopt a “strict father” model of transnational governance based on the idea that the proper education of inherently “bad” business firms necessitates obedience, discipline and punishment in case firms are non-compliant. In contrast, the UNGC’s advocates follow a “nurturant parent” model, which prioritizes empathy, learning and nurturance to support the moral development of “good” business firms. We develop the “UNGC-as-family” metaphor, explore its implications for transnational governance and discuss under what conditions these idealized models can serve as appropriate guidelines for TGSs. Specifically, we posit that following the behavioral prescriptions of the “strict father” model may, under certain conditions, jeopardize the organizational embedding and institutionalization of UNGC principles, and explain when and why it may be in the best interest of the UNGC and civil society to embrace the instructions of the “nurturant parent” model of transnational governance. (shrink)

Sethi and Schepers have identified an important issue for the global economy: Providing some mechanism for requiring assurance that environmental, social, and corporate governance information provided by a business is accurate and objective. Where they have gone wrong is in trying to change the mission of the United Nations Global Compact. From its inception, the UNGC has been clear that its mission is not to provide such assurance. This article first outlines the background for the historic announcement of the (...) UNGC by the then Secretary-General of the UN, Kofi Annan. Then a summary of the major criticisms of the initiative is provided with a focus on the Sethi–Schepers article. Finally, I argue that the mission of the UNGC, to gain consensus in the global community on the shared values and moral norms that will guide the global economy, is being accomplished, although it is a work in progress. (shrink)

The last ten years have seen particularly strong changes in corporate social responsibility (CSR), with the introduction of new instruments such as the UnitedNations Global Compact (UNGC) in 2000 and the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines in 1998. These instruments propose voluntary tools to address CSR. In November 2010, the International Organization for Standardization (ISO) released the new social responsibility guidance under ISO 26000. It is important to understand the contribution of ISO 26000 to already existing CSR (...) instruments and the connections between them. This article discusses whether companies need ISO 26000 if they already implemented UNGC and GRI: is there redundancy or complementarity? (shrink)

The corporate citizenship (CC) concept introduced by Dirk Matten and Andrew Crane has been well received. To this date, however, empirical studies based on this concept are lacking. In this article, we flesh out and operationalize the CC concept and develop an assessment tool for CC. Our tool focuses on the organizational level and assesses the embeddedness of CC in organizational structures and procedures. To illustrate the applicability of the tool, we assess five Swiss companies (ABB, Credit Suisse, Nestlé, Novartis, (...) and UBS). These five companies are participants of the UN Global Compact (UNGC), currently the largest collaborative strategic policy initiative for business in the world (www.unglobalcompact.org). This study makes four main contributions: (1) it enriches and operationalizes Matten and Crane’s CC definition to build a concept of CC that can be operationalized, (2) it develops an analytical tool to assess the organizational embeddedness of CC, (3) it generates empirical insights into how five multinational corporations have approached CC, and (4) it presents assessment results that provide indications how global governance initiatives like the UNGC can support the implementation of CC. (shrink)

While it is generally assumed that large corporations today give rhetorical support for basic human rights in public relations documents, skepticism continues toarise about the behavior of these firms. Do company actions support their rhetoric? This paper provides the initial analysis of our study of both rhetoric and practice regarding human rights in a small sample of large U.S. firms. At this point in the analysis, UNGC membership does not appear to have much influence on corporate rhetoric, but may (...) be partially correlated with several measures of corporate performance on human rights issues. (shrink)

The United Nations Global Compact has difficulties in attracting new voluntary members and inciting them to implement its ten principles. The present article analyzes this implementation deficit from the perspective of Lockean social contract theory and derives new strategies for reducing it. On this view, the UNGC presents itself as the attempt to realize a set of moral norms, typically enforced by an impartial minimal state, protecting its citizens from violations of their natural rights, negative externalities and discrimination by (...) bribed officials. It will only succeed in facilitating the realization of those norms on a strictly voluntary basis, if it manages to overcome the underlying n-person prisoner’s dilemma. This requires the existence of a critical mass k < N of conditionally moral firms, which are willing to observe the UNGC principles and to resist the temptation to free ride on their observance by others, if it does not disadvantage them in comparison to their situation in a state of universal non-observance. Four contracting problems can impede the conclusion of this Lockean social contract. The UNGC has a slim chance of overcoming its implementation deficit on a non-coercive basis by cultivating four institutional capabilities assisting conditionally moral firms in surmounting those four problems of voluntary norm compliance. (shrink)

While it is generally assumed that large corporations today give rhetorical support for basic human rights in public relations documents, skepticism continues toarise about the behavior of these firms. Do company actions support their rhetoric? This paper provides the initial analysis of our study of both rhetoric and practice regarding human rights in a small sample of large U.S. firms. At this point in the analysis, UNGC membership does not appear to have much influence on corporate rhetoric, but may (...) be partially correlated with several measures of corporate performance on human rights issues. (shrink)

While it is generally assumed that large corporations today give rhetorical support for basic human rights in public relations documents, skepticism continues toarise about the behavior of these firms. Do company actions support their rhetoric? This paper provides the initial analysis of our study of both rhetoric and practice regarding human rights in a small sample of large U.S. firms. At this point in the analysis, UNGC membership does not appear to have much influence on corporate rhetoric, but may (...) be partially correlated with several measures of corporate performance on human rights issues. (shrink)

Business ethics should include illicit businesses as targets of investigation. For, though such businesses violate human rights they have been largely ignored by business ethicists. It is time to surmount this indifference in view of recent international efforts to define illicit businesses for regulatory purposes. Standing in the way, however, is a meta-ethical question as to whether any business can be declared unqualifiedly immoral. In support of an affirmative answer I address a number of counter-indications by comparing approaches to organized (...) crime and to corporate crime, comparing the ethical critique of businesses studied in business ethics and those socially banned, and comparing the business ethics assumption as to businesses’ ethicality to societal ethical neutrality regarding war-related businesses. My conclusion: to help advance respect for human rights, business ethicists should apply their expertise to the task of defining illicit businesses. (shrink)