Dr. Jeroen Veldman

CSR and Global Value Chains: the case for Corporate Governance

Notions of Corporate Social Responsibility (CSR) and Corporate Citizenship (CC) have a long history in management theory. Lately, they have become central to the discussion of human rights in global supply chains. Most standards currently being developed take a ‘soft law’ approach. This article takes a closer look at CSR and argued that it suffers from two main defects. First, CSR is embedded in a notion of corporate governance that is steeped in a notion of political economy that structurally excludes the issues that CSR represents. As such, CSR is the moral stopgap for a broader system that is not interested in addressing the issues that CSR wants to address. Second, central to many of the issues in global value chains is the notion of the TNC. the fact that the corporate group functions as a corporate group with little or no theoretical consistency provides the basis for an absence of legal recourse to mitigating the risks that such entities engage in in their global value chains. These two issues lead us to argue that the adoption of CSR creates a structural myopia when it comes to addressing problems in global value chains.

Adopting an approach that foregrounds corporate governance in relation to political economy we take a closer look at the Chinese context. First, we ask whether the ‘externalities’  that CSR represents can be mitigated on the basis of a choice for a broader and more inclusive model for corporate governance, based on a more inclusive model of political economy. Second, we take a look at the development of specific types of legal representation for entities, and what this means for the development of specific corporate governance systems.