Corporate Responsibility and the Embedded Firm

Abstract

This chapter examines institutional and political economy accounts of corporate social responsibility debates in law and business, and how those debates have been used to shape the social expectations of business and the view of firms as either oriented toward shareholders or stakeholders. The chapter brings a number of disciplinary perspectives to bear on the study of the regulatory evolution and relationship between firms, corporate governance, and labor in the transformation from industrial to finance capitalism. It engages with Karl Polanyi’s concept of embeddedness while reassessing the foundations of corporate social responsibility as an emerging trend. Ultimately it concludes that the problem to be solved in the corporate social relationship is the deeper one of the business corporation being conceptualized in narrow economic terms, and the fiduciary duties of directors being misconceptualized as to maximize shareholder wealth, even as the business corporation acts throughout the world today as a powerful social and political actor.