Corporate Citizenship

Corporate citizenship suggests that companies have responsibilities which go beyond its direct stakeholder relationships. It is linked to the idea of corporate accountability which suggests that organisations are answerable for the wider consequences of their actions on society. This goes well beyond the provision of charitable donations to the local community and extends to the management of environmental and social issues.

The implication of this idea is that when setting objectives and strategy organizations should consider the impact of their decisions on society as a whole, and look for ways in which they can influence and improve the community, for example by local investments and local initiatives.

The demands for corporations to be more accountable as members of society is a response to the recognition that companies have power and the view that they can affect society in a number of different ways, for example:

• Companies create wealth and jobs, and have a direct impact on the well-being of their employees
• The products and services of companies have the potential to improve or damage society.
• Companies have a responsibility to consider not only their own action but those of their suppliers and customers.
• Countries struggle with unemployment and yet the decision to locate and support societies is often not theirs but that of corporations.
• Liberalisation and deregulation of markets increase market power and restrict the ability of governments to intervene.
• Privatisation of many previous state monopolies places greater power in the corporate hand.
• Complex cross-border legal agreement is very difficult and so corporations are encouraged to self-regulate.
• Governments have failed to address the risks and consequences of rapidly changing modern economies and the availability of more and more products and services – companies are seen to have the power to act where governments have failed in their duty.