Abstract
The way a company engages with the political process is directly relevant to its ”character,” yet lobbying and corporate social responsibility (CSR) are often seen as separate. Taking a narrative approach, the author examines the automotive industry’s processes around lobbying, in the light of legislation to restrict emissions of CO2 from cars in the European Union. The author uses the data generated through interviews to generate a narrative model of political engagement, and to start to apply Basu and Palazzo’s process model of CSR. This article shows competing narratives within the industry, which range from broadly cooperative toward regulatory activity, to broadly instrumental. The author argues that lobbying needs to be included in the scope of corporate citizenship theorizing and discusses changes to corporate character.
Firms have attracted opprobrium for their lobbying actions, which many consider inimical to socially responsible behavior. At the same time, however, firms have been keen to promote their “responsibility” credentials, and indeed they frequently attract good corporate social responsibility (CSR) ratings. This article presents research that shows the divide is not only the result of a disconnect between companies’ thinking on lobbying and CSR, but also that the divide is symptomatic of a wider issue, rooted in the way they make sense of politics. The author argues that this divide is dangerous for those firms’ ongoing legitimacy. The author also discusses the link between corporate citizenship (CC) and lobbying, which are both alternative forms of political activity, yet which are often not considered to be linked. Taking a narrative approach helps to make this link clearer. Finally, the author starts to use Basu and Palazzo’s (2008) process model of CSR.
The research presented here was conducted in the context of European Union (EU) policy making on carbon dioxide (CO2) emissions from new cars. Using data drawn from semistructured interviews with respondents from inside and outside the auto industry, the author develops a nuanced view of corporate lobbying by focusing on company-internal processes. The author identifies key narratives that explain and influence corporate-internal processes on lobbying. This approach is unusual: decision-making processes within firms have “by and large been overlooked” (Rehbein & Schuler, 1999, p. 145) in the literature.
The article proceeds as follows. It starts with a brief overview of the context of the research. The article then discusses previous scholarship, paying particular attention to political pluralism and corporate citizenship, before outlining the sensemaking approach. This literature review leads to the research questions, which are about firms’ narratives on lobbying, and the implications of these narratives. The author then sets out the research method and presents the findings. The main focus of that section is concerned with carmakers’ narratives around the political process. The article ends with a theoretical discussion and suggestions for further research.
Context of the Research
The research presented here was conducted between late 2005 and mid-2008, in the context of European Union policy making on CO2 emissions from cars. This section starts with a description of the evolution of EU policy on CO2 from cars, moves to the broader context within the auto industry, and ends with an outline of the EU’s policy-making process.
The EU has been discussing CO2 emissions from cars for at least two decades (European Commission, 1991, pp. 5-6). It focused on the issue in the 1990s, suggesting that carmakers should contribute to CO2 reductions through a voluntary commitment (European Commission, 1995, pp. 13-14). In 1998, European manufacturers signed a voluntary agreement with the European Commission, to reduce average emissions from new cars by 2008. Manufacturers’ progress toward this target was widely considered insufficient (European Commission, 2006; T&E, 2005, 2006, 2007): discussions on legislation began in earnest in late 2005. A legislative proposal in December 2007 provided specific targets, with significant fines for noncompliance (European Commission, 2007, p. 21).
CO2 emissions are directly related to fossil fuel use, so the issue of climate change has created a significant challenge for carmakers. They face increasingly strict standards globally on fuel economy (Lawson, Pearson, Tyrrell, 2007, pp. 17-18), but EU policy is particularly significant. In “Charlemagne: Brussels Rules OK”, the Economist (2007, p.42) claims that Europe is becoming the “world’s chief regulator” due to its wider influence on technical standards. The fastest growing markets, notably India and China, frequently adopt EU standards (Koch & Metzger, 2006). China was the world’s third-largest car market by 2007 and is expected to be the largest by 2015 (Datamonitor, 2007b, p. 17). Moreover, net profit margins in China are high, averaging more than 9% in 2004 (Economist, 2004), compared with global average margins, of below 5% by 2004 (Carson, 2004). Also, profit margins on cars in the premium segment, which have much higher average CO2 emissions, have been healthier than those in other segments, and so likely to be disproportionately represented in margins (Lawson et al., 2007, p. 9). The EU’s policy on CO2 from cars therefore has high global salience and revealed rifts within the European automaking sector (Reed & Bounds, 2007).
EU policy making is notoriously complicated. For more detailed treatment, see, for example, Mahoney’s (2008, pp. 17-30) excellent overview: what follows is a much-simplified outline. The main EU institutions are the European Commission (the EU’s civil service), the European Parliament, and the Council; all of which are based in Brussels. The Commission is the only EU institution allowed to propose legislative instruments. “Council” refers to national governments, and membership varies (e.g., environment ministers meet as the Environment Council). 1 The Parliament has dramatically increased its power over time, and now often has equal power with Council (under codecision); as was the case on CO2 from cars.
The formal codecision process generally works as follows. In Stage 1, the Commission publishes a policy proposal, which goes to Parliament and Council for comment. Stage 2 is a formal reaction (first reading) from both bodies. Parliament’s position is discussed in one or more committees before being finalized at a plenary session. Once both sides have delivered their opinions, the proposal returns to the Commission for reworking. In Stage 3—the second reading, of the amended proposal—Parliament and Council refine their positions. If they are now in agreement, the proposal is adopted. If not, it goes to Stage 4: conciliation. Here, key players from Parliament and Council, together with Commission officials, negotiate. If the parties can agree, the proposal can be adopted. If there is no agreement at this stage, then it falls. The legislation enters into force in Stage 5.
However, this complex process is the tip of the policy iceberg: under the surface lies “Stage zero,” during which the European Commission convenes working groups, takes expert advice, and engages in other activities designed to understand a policy area both technically and politically. This preparatory work is the most important stage for lobbyists because, as each formal stage proceeds, so the amount by which the proposal can be changed is reduced. As Mazey and Richardson (2001, pp. 219-220) put it, “Lobbying resources allocated to this early stage of EU agenda-setting are likely to produce greater returns than resources allocated to lobbying later in the policy process.” Their statement is consistent with Mahoney’s finding (2008, p. 131) that 94% of lobbyists meet with the Commission, yet only 39% do so with Council. Journalistic reports suggest that early intervention has become more important (Marek, 2006). The EU sets 85% of regulations affecting the auto industry (Marek, 2006), so it is in firms’ interests to allocate resources to the early stages of policy making. That is why the research was set in the run-up to the Commission’s proposal on CO2 from cars. Finally, note Mahoney’s (2008, p. 204) finding that the EU system tends to lead to “policy compromises that allow everyone to see at least some of their goals realized.”
Lobbying and Corporate Citizenship
Lobbying is a significant part of firms’ political engagement (Bonardi, Hillman, & Keim, 2005; Bonardi & Keim, 2005; Hillman, 2003; Hillman & Hitt, 1999; Hillman & Keim, 1995). It can be defined as activities undertaken with the aim of influencing legislative/regulatory processes and outcomes. Lobbying can be understood to have been effective if it succeeds in promoting the lobbyist’s goals. However, scholars have found it “troubling to quantitatively measure the concept [of influence]” (Mahoney, 2008, p. 183), and Baumgartner and colleagues found that, “it is difficult to find reliable predictors of policy change” (Baumgartner, Berry, Hojnacki, Kimball, & Leech, 2009, p. 237). CSR scholars have previously investigated lobbying (Hamilton & Hoch, 1997; Ostas, 2007; Stark, 1997; Weber, 1996, 1997), but such research makes up only a small minority of the work conducted in the CSR field. Recent CSR reviews do not address lobbying at all (Garriga & Melé, 2004; Lee, 2008; Secchi, 2007). CSR research tends instead to “analyze CSR by examining CSR” (Basu & Palazzo, 2008, p. 122). This approach is unsurprising: actions in the nonmarket environment comprise a small minority of a firm’s overall actions. Although there is some CSR literature that explicitly links lobbying and CSR (Luo, 2006), the lack of systematic attention to lobbying is a noticeable gap in the literature.
Lobbying in a Pluralist Environment
The dominant corporate perspective on the function of lobbying is that it should add value to the business (Baron, 2006, see p. 31). Elsewhere, lobbying is often regarded as involving backroom deals among powerful, corrupt “special interests” (Mills, 1956, and see innumerable media reports); a view picked up on in the CSR literature (Palazzo & Scherer, 2008, p. 581). Yet in a pluralist system, political activity by independent groups is considered not only an inevitable consequence of democratic institutions but also a prerequisite for the successful operation of large-scale democracy (Dahl, 1982). The argument is that representative democracy allows only infrequent choices at election time, whereas “pressure groups permit citizens to express their views” on important issues at any time (Grant, 2000, p. 35; see also Epstein, 1969; Heclo, 1977; Richardson & Jordan, 1979, pp. 171 ff.). The political function of lobbying in liberal democracies is therefore to generate better political frameworks. At a deeper level, it is to facilitate, and even safeguard, the functioning of democracy. Corporate lobbying is thus an essential component of a pluralist system. Coen argues that the EU policy making environment is a kind of elite pluralism (Coen, 1997, p. 20). Pluralism can be understood as
a system of interest representation in which the constituent units are organized into . . . multiple, voluntary, competitive, non-hierarchically ordered and self-determined (as to type or scope of interest) categories . . . not . . . controlled . . . by the state and . . . which do not exercise a monopoly of representational activity within their respective categories. (Schmitter, 1974, p. 96, cited in Richardson & Jordan, 1979, p. 163)
From a societal perspective, the function of lobbying in a liberal democracy should be to improve the decision-making process in policy making and thereby enhance society’s legislative and economic framework, thus ensuring the most socially beneficial outcomes possible. However, firms that lobby simultaneously enjoy huge influence in the marketplace and the possibility to reinforce this influence through political engagement (Grant, 2000, p. 36). There is therefore a risk that their political engagement generates precisely the sort of concentration of power against which a pluralist dispensation is supposed to guard. Grant provides three reasons why firms should nevertheless be involved in the political process (2000). As organizations that will be affected, companies have a right in a liberal democracy to participate in those decisions that will affect them; and their doing so leads to better legislation, which is better implemented. Nevertheless, this special status does generate tension, which may result in firms coming under greater scrutiny than noncorporate political actors (Worstlobby.eu, 2007). Arguably, it also means that firms will find it easier to lose reputation than noncommercial actors when engaging in lobbying, endangering their legitimacy (Suchman, 1995).
Corporate Citizenship Is Political
There is a distinct and growing body of literature within the broad field of CSR (Lockett, Moon, & Visser, 2006) that treats corporations as political actors (Crane & Matten, 2005; Crane, Matten, & Moon, 2004, 2008; Matten & Crane, 2005; Moon, Crane, & Matten, 2005, 2006; Palazzo & Scherer, 2008; Scherer & Palazzo, 2007, 2008a, 2008b; Van Oosterhout, 2005; Willke & Willke, 2008). This literature acknowledges that firms are “increasingly part of the authoritative allocation of values and resources” (Crane et al., 2008, p. 1) in society, and argues that the concept of citizenship “offers a way of thinking about roles and responsibilities among members of polities and between these members and their governing institutions” (Crane et al., 2008, p. 2). Corporate citizenship (CC) is thus a normative, political concept, as opposed to the instrumentalized version of CSR that has currency in much CSR literature (see Scherer & Palazzo, 2007).
Firms’ political activities extend across a spectrum of activity. Their political role is perhaps most clearly evident in the developing world, where CC scholars have explicitly considered the role of the firms in the face of public sector retreat, or even absence. Well-known examples are based on research in Kenya, where firms essentially provide local government (Muthuri, 2007; Valente & Crane, 2010). This substitution is the most spectacular example of firms taking on political roles, involving the provision of essential services in the absence of government. Firms also take on such functions in the west, albeit to a lesser extent and with greater oversight (e.g., running private prisons on behalf of government). Participating in the political arena through lobbying is much less spectacular. Yet by lobbying, firms are clearly engaging in political activity, as their actions contribute to societal discourse—framing issues (Ferraro, Pfeffer, & Sutton, 2005)—and thus cocreate the conditions under which they may operate and in which social intercourse can occur.
One can conceptualize corporate citizenship as a top-level term, finding expression in various activities. One such is the government-like activities, such as in Kenya. Another is in situations in which the firm is both government-like and citizen-like. In lobbying, the firm is government-like because it is in a real sense cocreating the regulatory environment in which it will operate, but citizen-like because it will be bound by the laws thus created and is ultimately subject to government. The focus of the research presented here—carmakers’ narratives as a means of making sense of their political engagement—helps highlight this relationship between CC and lobbying, both as alternative forms of political activity. A firm-internal perspective helps understand carmakers’ CSR character (see next section).
Citizenship is a contested term: its nature and purpose have transformed over time, and continue to change (Crane et al., 2008, pp. 5-7). Nevertheless, the dominant Western understanding of citizenship—however its properties are defined—is that of liberal minimalism (Stokes, 2002), 2 with its strict separation of public and private and compatibility with liberal and neoclassical economic theory (Ferraro et al., 2005; notably also Friedman, 1993, 2002). Liberal minimalism stresses the protection of “individual citizens from arbitrary rule and oppression by government as well as from infringements upon individual liberty from other citizens” (Stokes, 2002, p. 28). Here, “placing limits on government serves to expand the space for personal freedom and especially the operations of markets” (2002, p. 28.). 3 The result is a political view focused on the notion of individual freedom to pursue self-interest. This perspective is arguably evident in the individualistic identity orientation Basu and Palazzo (2008) identify as one possible element of the cognitive dimension of CSR sensemaking.
If a firm understands the political environment through a liberal minimalist lens, then it is likely to approach the authorities with skepticism and with the aim of minimizing the role of the state. Seen in this way, such a firm is practically bound by its character to seek legislation only as a last resort, and to promote voluntary and/or market-based solutions. As society changes (see Zadek, 2004), such an approach may threaten a firm’s legitimacy. Yet change is not easy, as it requires firms to start to change the way they make sense of the political environment.
Sensemaking
“Sensemaking involves the ongoing retrospective development of plausible images that rationalize what people are doing” (Weick, Sutcliffe, & Obstfeld, 2005, p. 409). It is an attempt to plausibly answer the questions, “What’s the story here?” (Weick et al., p. 410) and “Now what?” (Weick et al., p. 413). Boje argues that narratives are acts of sensemaking in social constructionist approaches (2001, pp. 15-16), suggesting that a sensemaking perspective is well suited to the narrative approach taken in this article (see Method section). Critically, “processes of sensemaking within an organization lead the organization to view its relationships with stakeholders in particular ways, which, in turn, influence its engagement with them” (Basu & Palazzo, 2008, p. 123). Sensemaking is thus relevant to all arenas in which the firm engages with the “world out there” (Cumpsty, 1991). 4
In the context of this research, Basu and Palazzo’s (2008) work on a process model of sensemaking for CSR research is most useful. The point they make is that examining “CSR-related activities without understanding their precipitating causes is unlikely to reveal real differences among firms” (2008, p. 123). Studying internal institutional influences on firms and their CSR activities, they argue, could lead to “an alternative and potentially richer description of CSR” emerging (2008, p. 123). Such internal factors include “mental frames and sensemaking processes within which CSR is embedded” (2008, p. 123). Such a sensemaking analysis has been largely missing from the literature. Basu and Palazzo go on to develop a process model of CSR, which takes a tripartite view of essential processes (2008, pp. 124 ff) and which together form “an intrinsic part of an organization’s character (i.e., the way it goes about making sense of its world)” (2008, p. 124). The metaphor of character is most interesting, not least because it is related to trust and reputation, which are crucial elements in lobbying (Anastasiadis, 2006). The dimensions of the sensemaking process are cognitive (thought), linguistic (speech), and conative (action), and each dimension has several permutations (Basu & Palazzo, 2008), several of which are relevant to the present research.
In the cognitive dimension, the individualistic and collectivistic identity orientations are of particular relevance. These refer, respectively, to an emphasis on individual liberty and self-interest, and on belonging to larger groupings that extend beyond the immediate business (Basu & Palazzo, 2008, pp. 125-126). In the linguistic dimension, the legal justification is a particularly relevant element (2008, p. 127), in which the focus is on drawing support from “officially permitted arguments” that can be criticized for their criticism-silencing intention. Finally, in the conative dimension the defensive and open postures, as well as instrumental and normative commitment seem most relevant (2008, pp. 128-130). 5 In a defensive posture, the firm accepts no feedback from others and may fail to adapt to environmental changes, whereas with an open posture, the firm has a learning orientation and willingness to use input from others. Instrumental commitment is based on external incentives, whereas normative commitment reflects an intrinsic commitment to responsible actions.
Crucially, once a firm has constructed a story—a narrative—to make sense of a given event or circumstance, the story can be fairly stable: “we expect to find explicit efforts at sensemaking whenever the current state of the world is perceived to be different from the expected state of the world” (Weick et al., 2005, p. 414). This stability may make change difficult if a firm does not easily permit new narratives (note the defensive posture just mentioned, and see the discussion on polyphony, below). The question of company character is critical in understanding CC, as it provides a means of analyzing and predicting actions independently of a firm’s CSR record. In a government-like circumstance, for example, the character of the organization will be critical in predicting whether a firm will abuse its power or seek to provide a decent service when providing essential government-like services, or whether a firm with a good CSR record is likely to “do an Enron” in interactions with other political actors or being upright. In lobbying, this possibility means distinguishing between cooperative and suspicious/instrumental approaches.
It is therefore clear that an “inside out” approach to investigating company processes on lobbying promises fruitful results. From the foregoing, the author posits the following, which leads to two subsequent research questions:
A firm’s basic approach to lobbying is determined by its implicit view of the nature of citizenship, which is expressed in the narratives used by the firm’s employees to make sense of the firm’s political engagement. The more unitary the firm’s understanding—that is, the more there is a hegemonic narrative on citizenship—the stronger this influence.
This study investigates the following research questions:
Research Question 1: How do carmakers make sense of their political engagement, notably on lobbying?
Research Question 2: What are the consequences of firms’ narratives on their political engagement?
This article has so far explained the context of the research, briefly discussed lobbying, corporate citizenship and sensemaking, and developed the research questions. The next section presents method. The rest of the article is then taken up with presenting findings and discussing their consequences.
Method
This section starts by explaining my narrative method. I then set out the practical elements of this research, and end by describing the data analysis. The research seeks to generate rich data to gain insight into individual firms. I consider that participants in my research are influenced by the “frames of reference” (Brown, Stacey, & Nandhakumar, 2008, p. 1038) in their organizations (see also Baumgartner et al., 2008, pp. 166-189). A narrative perspective is thus theoretically appropriate, as it promises insight into “inscriptions of past performances and scripts and staging instructions for future performances” (Czarniawska, 1998, p. 20). I understand narrative as a means of retrospective sensemaking through social construction. Stories or narratives are key to understanding a range of organizational factors (Brown, Humphreys, & Gurney, 2005, p. 313), and are both powerful and durable. However, they are also subject to change, as different actors tell, retell, and reinterpret stories, and as circumstances shift. Stories are the “preferred sense-making currency of human relationships” (Boje, 1991, p. 106). Boje (1995, p. 1000) identifies a continuum of types of storytelling organizations: on the one extreme, he says, “the storytelling organization can oppress by subordinating everyone and collapsing everything to one ‘grand narrative’ or ‘grand story.’ At the other extreme, [it] can be a pluralistic construction of a multiplicity of stories, storytellers and story performances.” The data show that individual carmakers tend to engage a “grand narrative” in respect of their political engagement, but these are different from company to company. Moreover, a narrative approach permits the researcher to be open to “fragmentation of meaning,” or “polyphony,” even in the face of “managerial monologues” that seek to construct social reality within an organization (Salzer-Mörling, 1998, p. 113). An important element of the narrative method is that it does not claim to generate findings with broader generalisability: this research is located in the context of the auto industry in Europe, and I make no claim to broader generalization. The research outcome is neither “true” nor “false” but rather useful (following Silverman, 2001, p. 4). The research and analysis do, however, have a “wider resonance” (Mason, 1996, p. 6), and I am therefore able to use my research for broader theoretical discussion.
I started with a list of original equipment manufacturers (OEMs) selling cars in Europe, and applied three filters. The first was market share. OEMs with sales of more than 200,000 new cars in 2006 (see Table 1) dominate in the EU (Association des Constructeurs Européens d’Automobiles [ACEA], 2007, p. 2; T&E, 2007, p. 7). 6 The second filter was functional independence. For example, Mazda was excluded, because of Ford’s controlling stake (Datamonitor, 2006, 2007a). The final filter is direct, easy access to EU policy makers, defined as having an EU Affairs office in Brussels and/or at least one lobbyist accredited with the European Parliament in 2006. Firms can hire a third party to lobby on its behalf, but this practice is “viewed with some skepticism by both companies—wary of delegating their interests to independents—and Commission officials who prefer to avoid speaking to ‘hired hands’” (McLaughlin, Jordan, & Maloney, 1993, p. 194). This winnowing process resulted in a pool of nine firms: BMW, DaimlerChrysler, Fiat, Ford, General Motors, PSA Peugeot Citroën, Renault, Toyota, and Volkswagen. 7
Large-Volume Original Equipment Manufacturers (OEMs) in Europe (Sales Above 200,000 Units in 2006).
Note. Modified from European Federation for Transport and Environment (T&E, 2007, p. 7). Carmakers are ranked according to the “improvement (or lack of it) in the fleet-average CO2 emissions” in 2006, compared with the previous year 2005.
The author approached all nine OEMs for interviews, and gained access to seven. The number of people involved in lobbying is low: only a small number of staff engage in lobbying; and even fewer in Brussels. As one corporate respondent put it, “In companies the size of the auto industry . . . there’s lots of jobs where your impact is relatively small. In this area of the business, you can have pretty big impact.” Given both the relatively small number of people relevant to this research, and the challenges associated with gaining access, it was therefore appropriate to speak with anyone working on the issue of climate change who had professional contact with political Brussels. In some respects, the timing of the research made gaining access to respondents more difficult: by mid-2006 climate change had become a widely salient issue (Bonardi & Keim, 2005) and political actors were reluctant to participate in the research, even under conditions of strict personal and organizational anonymity. Thus I conducted five interviews in March 2006, two during 2007, and twenty-six in the first half of 2008. 8 Eighteen of these interviews were with respondents from seven carmakers. Of these, twelve respondents were in a lobbying function, four in environment, and two in CSR departments. 9 The remaining interviews were with respondents from stakeholders (e.g., EU institutions). All but three interviews were one-on-one, and most interviews took place in respondents’ offices. Twenty-one interviews were in Brussels; the rest in various locations in France, Germany, and the United Kingdom. Nearly all were conducted entirely in English. 10 The Appendix contains a detailed summary of the interviews.
I make the crucial assumption in the analysis that an individually expressed view is likely to represent company opinion. This assumption is for both empirical and theoretical reasons. It became clear during the research that corporate respondents frequently perceive no clear distinction between the individual and their employer on issues around their political engagement. Thus it was not unusual for a question about a respondent’s personal opinion to receive the response, “we think like this.” For example, Matthew was unusual in explicitly saying at the start of his interview that he would “try and differentiate where I’m giving you the company view and my personal view”; yet he seldom succeeded, typically providing opinions in the “we” form. This form is congruent with the finding that narratives were consistent within organizations, suggesting hegemonic narratives. Theoretically, this phenomenon is to be expected in such organizations, and fits with Daft and Weick’s argument that there is a strong interrelationship between individuals and the organization as a whole in terms of sensemaking (Daft & Weick, 1984). Cohen’s (2003) research on the impact of group influence on political beliefs is also useful in explaining this phenomenon. He shows that the position of one’s political party effectively overwhelms individual party members’ beliefs, without their being aware of it. Although his research was on parties, he argues, his findings are relevant to political engagement more generally.
Data analysis involved engaging in “retrospective meaning making” (Chase, 2005, p. 656). Since the linguistic turn, however, it has become clear that social realities cannot be understood independently of the observer: researchers are not separate from the research process. As Cunliffe puts it, “we construct intersubjectively the very objective realities [emphases in original] we think we are studying” (Cunliffe, 2003, p. 988). Reflexivity is therefore essential. Weick (1999, pp. 802-803) cautions both against excessive reflexivity—which can lead to narcissism, self-indulgence or exaggerated worry about making mistakes—and against insufficient introspection. The key, he suggests, is to be “mindful of the reflexive turn, but not overwhelmed by it” (Weick, 1999, p. 803). To promote appropriate reflexivity during the research process, the author kept a research diary, revisited the data at regular intervals, and constantly subjected the analysis to challenges. In analyzing the data, I sought to strike a balance between conducting clear, orderly, and well-documented data analysis—thereby “providing justification and grounds for one’s claims” (Wood & Kroger, 2000, p. 163)—and on the other hand, being “too systematic, too mechanical” (Phillips & Hardy, 2002, p. 74), and thus inducing a reification of concepts that would undermine analysis.
I have “tidied up” the quotes used in this article “in the interest of providing a more readable text” (Poland, 2003, p. 272). Crucially, however, this modification occurred after the analysis had been done, and with “care that what is removed does not appreciably alter the meaning of what was said” (Poland, 2003, p. 272). This “tidying up” also involved careful removal of identifying information from quotes, in line with a commitment to respondents to full anonymity. This section has set out theoretical and practical elements of the research method. The rest of the article is now dedicated to the findings and their consequences.
Findings
This section presents the research findings. It starts by discussing the divide between CSR and lobbying departments. The article then turns to exploring company narratives; first to narratives used to make sense of the political arena and then to how carmakers understand their own role in society.
CSR in Carmakers
All the carmakers in my research claim to want to be “good citizens.” As Scott argues, organizations are part of broader society and are therefore “under normative pressure to ensure that their goals are congruent with wider societal values” (Scott, 2008, p. 151; see Zadek, 2004, for a five-stage model of CSR development). Acting in such a manner can be said to confer legitimacy (Suchman, 1995). Carmakers’ claims to legitimacy are lent weight by features like formal CSR departments and projects, and by the annual publication of CSR reports, which among other issues address CO2 (BMW Group, 2007; Ford, 2007; GM, 2007b). Moreover, carmakers collaborate on sustainability projects, such as the World Business Council on Sustainable Development’s “sustainable mobility project” (WBCSD, 2004). Some have even engaged publicly with issues around environment and climate change (BMW Group, 2002; Volkswagen, 2007).
Unsurprisingly, therefore, carmakers frequently appear on socially responsible investment (SRI) lists. Many of their programs in day-to-day activities are indeed good indications of a commitment to CSR, and relations with employees and local communities are often excellent. None of this positioning is surprising: carmakers employ hundreds of thousands of people and they and their products are highly visible wherever they operate. There can be few industries with a greater interest in being seen to be operating in line with society’s expectations; a view supported by the respondents, both generally and with specific regard to CO2. Table 2 provides an illustration of carmakers’ publicly expressed rhetoric on CSR.
Selected Statements on Corporate Responsibility.
On the surface, all the carmakers interviewed have the same basic approach to their internal decision making on lobbying, which in theory involves all affected departments, from engineering to sales and marketing. 11 CSR departments were a notable absence in this process. Indeed, it became evident during the research that the CSR function has no role in lobbying. That is to say, firms’ CSR departments were not involved in developing their lobbying positions; nor did they influence individual lobbyist behavior. Indeed, the CSR and lobbying functions appear to be entirely separate in practice, even when they are located in the same department. This functional separation is because CSR is not seen as being relevant to lobbying. Atlas has perhaps the closest working relations between departments of the companies with which I spoke. Yet, on the specific issue of CO2, Atlas’s CSR department was “absolutely not involved in this discussion. . . . It has nothing to do with CO2 discussions” (Nigel). More broadly, Esther’s (Himalayan) is a typical view, “the corporate social responsibility of the company is . . . linked to a budget” and is consistent with “the roles a company plays as a social actor” on the “local or national” stage.
This finding is not surprising: the gap between CSR departments and the rest of the firm is well-known. In a practitioner presentation to MBA students, Smith (2009) argued that CSR in most companies is treated as separate from the firm’s daily business and concerns. Moreover, it reflects a perceptual gap in the literature, in which CPA researchers often neglect issues around the common good, while CSR researchers tend to neglect the lobbying context. It is, nevertheless, a significant finding because if a firm’s CSR function is not involved in lobbying discussions, then the company’s formal understanding of CSR—its policies guiding CSR actions—plays no role in the political arena, clearing the way for other factors to determine the firm’s approach. I argue that the firm’s character is a good way to understand the firms’ approach in lobbying and also its development in terms of CC. The differences between carmakers’ lobbying approaches 12 could be due to a combination of structural factors and organizational character. Structural issues, however, are less significant than may be expected. As a result, the character of the firm emerges. In addition, lobbying departments tend to operate largely separately from the rest of the firm, 13 as a kind of professional services firm, a point to which I return later.
Making Sense of the Political Arena
Some noncorporate respondents were convinced that senior management at carmakers have no interest in lobbying, their sole concern being to “keep these people off our backs” (Paul, Euro-NGO). This statement does describe the approach of some companies, but firms make sense of the political process, running from broadly cooperative to broadly suspicious of politics. This section is about that spectrum, which illuminates how the firm and its employees regard the political world. To this end, it examines company sensemaking on the political process, other actors—particularly political actors—and then consequences of the resulting narratives.
Narrative of legitimacy
Some carmakers consider the political process to be a legitimate exercise, deserving active engagement and dedication of company resources. One such company is Atlas, which clearly understands the political process in this way.
[T]he political process is going about it in the right way. . . . [I]t should be a pan-European process. It is. It should be vigorous and challenging. It is and will be. And I think it should be broadly based with a very wide range of stakeholders being involved, and on the whole that is the case. (Richard, Atlas)
At the other end of the spectrum, other companies see the political process not simply as a hindrance, but rather as illegitimate meddling in corporate affairs. From a corporate citizenship perspective, they clearly subscribe to the liberal-minimalist approach. One can consider it an individualistic identity orientation manifesting, in extreme cases, in a defensive posture (Basu & Palazzo, 2008, pp. 125, 129). The attitude associated with such a narrative is clearly visible, and produces a reaction in noncorporate actors, which can be summed up by citing David (Euro-NGO): carmakers “are typically . . . just too arrogant to think that politics could ever change anything about the way they [act].” If a company sees the process as illegitimate, then it may withhold resources from the individual lobbyists, in extreme cases even making it difficult to operate in Brussels. Thus, for example, Cedarberg appeared to hold the political arena in such low regard that the company lobbyist had to struggle to be taken seriously within the firm (a constant theme in that interview), and a good example of a firm treating its lobbying function as a kind of separate entity.
[Cedarberg] conceives, it produces, and it sells cars. . . . everything that has to do with European Affairs is supposed to be a service. So, it’s very difficult for people that are working inside [Cedarberg] to understand . . . It’s not in the core activities of [Cedarberg]. So, this is why we are supposed to explain in more ways and to motivate them, so as to be in the European agenda. (Virginia, Cedarberg)
The picture is not as extreme with other companies: they understand the significance of the political process for the company even if they do not accept the legitimacy of the political process to govern it. Two quotes amply provide the tenor. The first illustrates the view that policies are only legitimate if they are based on fact, which they tend not to be (the relevant facts being best judged by the company). The second illustrates the view that interference is illegitimate but that companies have no option but to accept the state monopoly of power.
[A]s long as you have adequate lead time and there’s been, you know, due scientific consideration of how those standards were set so they’re not “pick a number” there [laughs] but based on some science and sound economics, then, you know, then that is what it is. (Jane, Carpathian) [W]e realised that it doesn’t make any sense to be against the target as such. Because there is unanimous support at all political levels . . . Therefore, we agree with the 120g target . . . . We disagree with the logic of that approach. But, fighting windmills has its limits. (Nicholas, Ural)
14
Suchman’s influential article on legitimacy argues that legitimacy is socially constructed and thus “dependent on a collective audience, yet independent of particular observers” (Suchman, 1995, p. 574). The point here is that some firms are conceiving of themselves as the sole judge of a socially constructed phenomenon. The argument is that the view of legitimacy adopted by firms treating the political environment as illegitimate is most closely related to Suchman’s ”pragmatic legitimacy,” not least because this form of legitimacy “rests on audience self-interest” while moral and cognitive legitimacy do not (Suchman, 1995, p. 584). Legitimacy is thus an operational resource with a high level of managerial control over the process (1995, p. 576). It is “is purposive, calculated, and frequently oppositional” (1995, p. 576). However, society is moving increasingly toward moral legitimacy as the basis for corporate legitimacy (see Palazzo & Scherer, 2006); firms judging others’ legitimacy on a pragmatic basis may be missing the boat with respect to their own legitimacy. The article returns to the question of legitimacy later. This section has so far presented one of the two types of narrative evident in carmakers’ view of the political process; the next section sets out the other type.
Narratives of competence
Firms’ attitudes to the political arena in general were broadly reflected in the attitudes to individual actors in the political environment: linked to the narrative of legitimacy is an understanding of who is best qualified to create rules to guide corporate actions. This summary moves the discussion on from structural legitimacy to individual competence. Here, interview attitudes can be summarized as falling along a broad scale running from respect to condescension, based on perceptions of interlocutors’ competence. Several respondents even impute bad faith on the part of politicians and decision makers. Where the attitude is negative, a number of negatively evaluated traits are evident: the others are unpredictable, ideological (for which, read “anti-facts”), “simply do not understand market economy” (Mark, Alpine, 2008), or even “bloody lazy” (Matthew, Alpine, on journalists). The underlying assumption is that economic arguments should have precedence. The overall perception is that others—notably policy makers—do not understand economic arguments and are not competent to regulate carmakers; the underlying narrative is one of condescension. The corollary is that it is companies themselves that should regulate carmaker emissions.
[T]o get majorities of people in the Parliament, Council and sometimes the Commission to that understanding is very, very difficult; because they are coming ideologically from somewhere else. (Mark, Alpine, 2006) There was no debate, it was impossible to debate. . . . I’ve seen this, this stubborn attitude on some of those points. Absolutely resistant to any advice and argument. (Nicholas, Ural)
Note that this type of attitude is independent of products on the market. The characteristics of officials, in this view, are of unrealistic and ideologically motivated people who do not really understand the issues at stake. Under this view, it is very easy to see how a company might choose to engage with the political process in an instrumental manner that outside observers would characterize as unethical. One practical consequence of such a perspective is that mutual trust is likely to be missing, given the limited effort to understand the other side.
At the other end of the spectrum, other firms approach policy makers with the assumption that their interlocutors are competent, generating an attitude of respect. One could label this view a narrative of competent partnership because here the firm sees interlocutors as legitimate and on an equal footing with the company. Policy makers may make mistakes or engage in foolish activity from time to time, but such errors will not be taken as evidence of incompetence or lead to a condemnation of the system as a whole. It also means that political engagement is on a basis of respect. Atlas is once again an example of the more constructive, cooperative end of the spectrum. In this view, the company has a responsibility to be credible when interacting with interlocutors who are deemed to be competent and respectable.
Having a dialogue with key stakeholders . . . it’s not just going to NGOs or politicians or officials like a dry sponge and sucking up the information, then coming back and wringing it out . . . It is about developing communication with them and a relationship with them, and making them feel that we can be trusted and that we have something to contribute to their concerns, and to solving them. (Richard, Atlas)
The narratives are evident in respondent comments on the process leading up to the Commission’s proposed legislation on CO2 from cars. Recall that the voluntary agreement was signed in 1998/1999, for delivery in 2008/2009. By 2005 it had become clear that the industry was likely to miss its target, and discussions on a replacement policy led to a regulation being proposed in December 2007. Some carmakers enjoyed greater success than others in reducing their emissions, but all manufacturers were unhappy with that regulatory proposal. This dissatisfaction took two forms. The first type was directed entirely at the process itself and asserted, for example, that the proposed Regulation constitutes a form of unfair punishment (i.e., injustice), or that the process did not take all facts into consideration. This type of objection reflects the narratives of condescension and illegitimate meddling. Respondents displayed strong feelings of dissatisfaction when talking about the legislative proposal.
Well, the story is. Starts, basically, with something that I personally consider to be quite an unfair move by the European Commission. . . . I’m happy with regulation that is fair and achievable. But, but the whole set-up of this is, “We want to punish you and you will have to comply.” And, and this is not the way it works. (Mark, Alpine, 2008 interview)
A common complaint was that the European Commission was acting in bad faith, not respecting the terms of the agreement. This complaint was because, although the industry would fail to meet its promised targets, it had kept to the letter of the agreement and should therefore be considered to have met it.
If you look at the ACEA agreement, . . . it was aiming to get to 140 g, we’ll end up probably in the 156 g range and there’s something like eight grams’ worth of size and features and six grams’ worth of regulatory. . . . That means essentially that ACEA has met the 140 . . . on average, the industry actually has come very close and will come very close to meeting the 140 gram. (Jane, Carpathian)
In the same vein, national governments were seen to have failed the industry by not providing “a somewhat harmonised fiscal policy . . . across the EU, in such a way that demand was steered away from gas guzzlers towards more efficient vehicles” (Nicholas, Ural). The common thread is that the industry has at most limited responsibility for the outcome. This thread reflects a focus on legal justification, on the linguistic dimension of Basu and Palazzo’s (2008) sensemaking model.
The second type of objection to the legislative proposal was consistent with a cooperative view of the political environment: legitimate politics and competent partnership. It was aimed partly at the political process, but partly also at other firms: here, the view was that the Regulation created unfairness within the industry because the legislative proposal did not take into account progress toward reducing CO2 emissions made under the voluntary agreement. This ignoring of progress was seen as unfair because some carmakers made significant CO2 cuts over the lifetime of the voluntary agreement, whereas others made substantially less progress. This ignoring of progress would lead to a double burden on those who had been a “good student” (Adam, Himalayan).
[W]e don’t want the one who have improved much more than the others, don’t want now to pay . . . [There’s no question: some were able to do 18%, others did 4% or 5% cuts. We would like that the starting point is taken into account, so as to not penalise everyone in the same way. (Esther, Himalayan) I think a serious analysis should have been done, which automotive companies . . . really did an effort. And rewarding and recognising those companies for doing so, and having a separate discussion with them on how to move forward. Now those companies that have done, I’m sorry, it’s, I’m going to say, fuck-all, yeah. Those are the ones who get tackled with regulations. Wouldn’t that be fair? (Craig, Atlas, 2008 interview)
The reaction to the regulatory proposal provides insight into respondents’ perception of the role of their own firms in society; notably their view on freedom (see next section). Having thus looked at companies’ perspectives in the external political environment, and applied it to the specific case of the voluntary agreement follow-up, this article turns now to companies’ understandings of their own role in the political process.
Making Sense of Firms’ Own Role in Society
The previous section looked at perceptions of the political environment. This section now turns the perspective around, examining firms’ view of their own role in society. This approach provides a more detailed view of the narratives that influence political engagement, and unsurprisingly yields a similar picture to firms’ perspectives on the outside world. All the participating firms had a view on their broader role in society, through the lens of political engagement. Sometimes this view was implicit, but it was also often explicitly expressed. Here, two types of narrative can be discerned with respect to the political process: entitlement and respect. I set these narratives out first, and then argue that they converge on one factor: the company’s understanding of freedom.
Narrative of entitlement
Many carmakers appear to conflate the good of the firm with the good of society. This conflation goes beyond the perfectly legitimate desire to get the best results for one’s company in a lobbying situation of equally legitimate actors (i.e., “fighting one’s corner”). Rather, the view underlying this perspective is that the concerns of the company are more legitimate than those of other participants in the process: companies feel that their rights exceed their responsibilities in the political environment and that their concerns should be central to the process. This view is the most common narrative, as evidenced by the reactions of nonindustry actors in Brussels. Chris (MEP) certainly understands carmakers’ attitude in this way: in response to a question about argumentation around responsibility, he replied, “The industry has been very self-centred on that score,” before outlining the arguments that they use in lobbying. Related to this view is a legalistic approach, where companies focus on the responsibilities of others. Jane’s comment about differing responsibilities provides a good example.
It’s pretty clear to us that we have lead responsibility to develop and bring to market technologies. Whether it be safety or in this case, lower CO2. The CO2 from the products in use is primarily the responsibility of the customer . . . “he who buys the energy owns the emissions.” (Jane, Carpathian)
Such a statement may be correct, but it is also a device to reduce the company’s commitments in the political realm. The subtext is that “we should be left alone on CO2.” This posture is not in line with the debate around corporate responsibility for CO2 emissions. It certainly weakens the argument for Carpathian’s needing to take action beyond its existing technology trajectory. The underlying view is that carmakers are entitled to special treatment by virtue of their particular status as an economic actor with large numbers of staff. It belies companies’ own public communication on responsibility and places responsibility for CO2 emissions at the feet of customers, planners, noncorporate actors, and others. As earlier, this view reflects a legal justification approach in the linguistic dimension of Basu and Palazzo’s model (2008). While individual customers do clearly have a responsibility for their own behavior, in a political discussion about systems and structures, such an approach is the equivalent of denying responsibility for changes. While there is nothing wrong with promoting one’s own interests, to act as if one has limited responsibility at most is to deny the legitimacy of the political process. A different way of engaging—indicative of an ethical justification approach in Basu and Palazzo’s linguistic dimension—is for the firm to not only concede that it is “part of the problem” but also seek to be “part of the solution” (Esther, Himalayan).
Narrative of respect
Others are more modest toward the political process, perceiving themselves as (an important) part of the process and having certain responsibilities toward other participants; notably the duty to engage in the process, in an honest manner. Atlas is the clearest example of this perspective.
What I mean by appropriate engagement is . . . respecting the nature of the meeting, respecting the nature of the information, respecting confidentiality, not sharing information beyond the boundaries of the discussion that should not properly be shared . . . (Timothy, Atlas) [I]n a political environment such as we have in Brussels where people are desperate for information, we have, frankly, a duty to express our views. Now, we also of course have a duty to express them fairly and honestly and decently, and all the rest of it. (Richard, Atlas)
All actions are in line with the company’s global vision. The company culture applies equally to lobbying as it does elsewhere. Andrew (Atlas) illustrated this application with a short story about Atlas’s logistics department, which was faced with a dilemma: the department had defined a new route “where we can save costs, but maybe CO2 emissions are increasing.” The result was internal discussion, followed by a decision to not adopt the new route. The point is that Atlas makes conscious choices based on a collectivistic identity orientation, ethical justification, and normative commitment in terms of Basu and Palazzo’s model. This approach to politics is consistent with the company’s perspective on its long-term self-interest.
. . . in the long run [it’s] much more important to build trust and confidence in the company. I have seen this with other companies at a certain point [laughs]. Politicians, they don’t trust you any more. . . . [S]o they add ten percent, or whatever, because they know, you are not honest . . . And then you come into a really difficult area. (Andrew, Atlas)
Atlas clearly understands its actions as providing better long-term perspectives. This summary leads nicely to the next section, which discusses narratives around freedom, as the last narrative affecting carmaker engagement in the political process.
Narratives of freedom
In addition to their understanding of the role of different actors, and the proper place of the company in the greater scheme of things, respondents also had strong views on freedom; the topic of this section. All respondents wanted freedom for their companies, but the nature of the freedom sought differed. Companies made sense of freedom with reference to one of two basic narratives: freedom as flexibility (freedom from Leviathan) and freedom as certainty. The former is linked to a liberal minimalist perspective on citizenship, and an individualistic identity orientation, while the latter is linked to a cooperative or collectivistic identity orientation. The pattern across the different sides of the spectrum is quite consistent.
Freedom from Leviathan
In this first version, the understanding is that freedom means enjoying the liberty to pursue one’s own interests unhindered by onerous regulations. “Freedom” means freedom from government; it is flexibility, and it is individual. The script that follows from this understanding is that legislation is to be resisted as a matter of principle even if (as Matthew later concedes), the company has come to agree that the policy is “about right.” This view is because regulation is seen as a straitjacket, crushing and bureaucratic; and a barrier to beating the competition.
[Lobbyists] don’t want to tell you anything you don’t already know, right? . . . their job is to make things go away. . . . The lobbyist might be trying to make the 130g or the 120g go away. . . . That’s because we want to give us the maximum flexibility. So I’m not. Please don’t understand that I, we’re, [Alpine]’s ever gonna say to government, “Yeah, sure. OK. No problem.” . . . [I]t’s never gonna happen . . . [W]e’ve gotta make money. . . . this is a war for us, right? And so we would always try and give ourselves the maximum space to operate in . . . the maximum flexibility. That’s, we have to do for our shareholders. (Matthew, Alpine)
In this story, it also follows that voluntary approaches are always the better alternative to regulation. As Jane (Carpathian) says, “Conceptually, voluntary agreements will always be preferable in that you have maximum flexibility.” Voluntarism is an emotive topic. For example, in an otherwise unemotional interview, Barry became animated when asked why a voluntary approach is preferable to regulation.
I think that we have a very strongly-regulated environment in Europe already. And the company’s room for action is increasingly being constrained by this limiting body of regulations . . . And so it’s becoming increasingly difficult to differentiate oneself in competition. . . . we’re rather strongly regulated in environment policy; emissions standards, all that sort of thing, employment protection, employment standards: all that exists already. And that’s a good thing, it’s part of our European model. But we’ve reached the edge, well, I’d personally say we’ve gone beyond an appropriate level of regulation, but OK, perhaps it’s still just about acceptable. (Barry, Rocky)
Such a perspective is compatible with a liberal minimalist understanding of citizenship (Stokes, 2002) and with individual identity formation in the sensemaking model (Basu & Palazzo, 2008). It is also in alignment with the sentiments of leading liberal economists, such as Friedman, whose arguments about “freedom as the ultimate goal” (Friedman, 2002, p. 6) and characterizing of government as ”the problem” (Friedman, 1993) have gained currency (see Ghoshal, 2005). It is no coincidence that Barry, an economist, became highly animated when discussing this issue. Accordingly, respondents from companies with this view of freedom were highly skeptical of the political process. However, while it is clearly right and proper to resist overweening government power, the logic of the ”freedom from Leviathan” narrative is that practically any regulation is overweening, whereas cooperative engagement with the political process presumes an acceptance of the basic assumption that government is legitimate in setting boundaries to action. Indeed, Friedman would agree, arguing (for example) that “there is a real function for government in respect to pollution: to set conditions . . . to make sure that the costs are borne by the parties responsible” (Friedman, 1993, p. 7). Conservatives argue that liberals “display a juvenile hostility toward hierarchy and authority” (Festenstein, 1998, p. 29). While this argument may be a little harsh, it is surely difficult to seek freedom from government influence while at the same time actively participating constructively in the process by which one is governed. This argument is one view of freedom. For other companies, however, freedom has a different meaning, which permits more constructive engagement.
Freedom as certainty
In this second version, freedom means the liberty to innovate along a clear and defined path. Freedom is a form of certainty, and it is collective. Regulatory constraint is perfectly acceptable, desirable even, provided it is fairly applied. Thus it was important for Himalayan that the political process in Brussels be fair. However, unlike others’ concerns that the automotive industry was being treated as a scapegoat, Himalayan was more concerned that any legislation should provide a level, predictable competitive playing field.
Well, we’re not against regulation, because regulation means also consistency, visibility. . . . So we like it in the end. . . . And competition comes after, and we see where we can do better than the others. But we know what are the rules the shared rules, the mandatory rules for everybody. (Esther, Himalayan)
This understanding of freedom as a clearly defined set of conditions for all can be seen in stark contrast to previous situations that were not clearly defined.
I don’t know if you remember the ACEA, the discussions back in ’95, but it was a strong battle between different companies. And still they are dragging their feet, in order to reduce CO2. We say, “Look, if that’s the interpretation of the rules by the different players, we prefer that this interpretation no longer exists and that the rules are the same for everybody, and the only way to do that is legislation.” Then it’s clear. (Nigel, Atlas)
Under this view, freedom comes though participation in the process.
[T]he benefit is, to have the relation, to be asked by the Parliament. . . . [It’s] in the long run much more important to build trust and confidence in the company. (Andrew, Atlas)
So far, this article has explored the role of carmakers’ lobbying offices in Brussels, shown that there is a separation between lobbying and the formal CSR function, and presented different factors that influence carmakers’ engagement in the political process in Brussels. The final section now discusses the consequences of this research, particularly with respect to corporate citizenship.
Discussion
This article has argued that carmakers’ CSR functions play no part in their political engagement and has identified four types of narrative that do influence these engagement, summarized in Table 3. This concluding section now draws out four points: the link between CC and lobbying; dealing with competing narratives; legitimacy and the need to change; and polyphony as a step toward change.
Summary of the Influences on Corporate Lobbying.
CC-Lobbying Link
The paper has shown that company narratives are a major factor in carmaker lobbying. These narratives can be divided into cooperative and instrumental approaches. The instrumental approaches are congruent with a liberal minimalist understanding of citizenship. The research shown here indicates that carmakers have strong, internally coherent narratives to explain their engagement with the political process. They make sense of their political engagement in an internally consistent manner. Their firms’ “character” is fairly well-developed, and is based on the way they make sense of the world-out-there. This character is an underlying feature and not unique to the lobbying environment. This internal consistency being so, the following consequences are evident. First, firms with strong (hegemonic) narratives in lobbying are likely to apply those narratives to other areas of operation, as they are an expression of company character. It should therefore be possible to predict a firm’s internal perspective on lobbying on the basis of close attention to narratives on related phenomena. It should also be possible to predict firms’ approaches to other manifestations of CC. Future research in this area might fruitfully examine other industries that more frequently play such a government-like role; the extractive industries being one such example. Other questions for future research include “How can such a claim be tested?” and “How might such a finding inform models of political strategy?”
Second, if citizenship-related narratives predict a firm’s approach to lobbying, then introducing specific CSR tools—such as codes of conduct—are unlikely to lead automatically to significant changes in behavior, unless the tools are congruent with the firm’s existing character, or are accompanied by a change in the firm’s character. Such tools are therefore likely to have at most symbolic and/or marketing value, the value of which will be undermined in the absence of accompanying action. Further research could seek to answer questions such as “How could a firm change its dominant narrative, or allow different voices, without threatening its stability?” and “How might a firm develop a meaningful code of conduct?”
It is in the character of most firms in this study to rail against politics and political control. Such firms may well have a great deal of difficulty in taking on the new government-like roles that corporate citizenship theorists argue are becoming part of their corporate activities. To be clear, this finding is not to argue that they would be technically incompetent, but rather that they may experience difficulties with stakeholders and face significant reputational risks arising from actions informed by a character that is inappropriate for the position being filled. The organization may also face significant internal tension. In this respect, a greater amount of organizational hypocrisy may be useful, both within the firm and in generating legitimacy (see below).
Dealing With Competing Narratives
The lobbying (and CSR) functions of the firms in the research presented here have access to different narratives than those within the “core” firm. Yet these narratives appear to have no impact on the firm as a whole, nor within the departments themselves, because the lobbying and CSR functions are frequently separate from the rest of the firm. 15 Each brings with it alternative possible narratives with which company members can make sense of their circumstances, but these narratives are easy to ignore as irrelevant, thus having no impact on the firm’s institutional identity or any other dimension making up the firm’s character.
To better understand this phenomenon, it may be useful to highlight the distinction between the nature of the firms in the research and that of their Brussels lobbying offices. The core business of the companies is making cars to sell. The Brussels environment, on the other hand, produces talk and deals in stories. Von Nordenflycht (2010) identifies three characteristics of professional services firms, namely, knowledge intensity, low capital intensity, and a professionalized workforce. Firms’ lobbying offices and CSR departments are clearly not classical professional services firms (PSFs), but following von Nordenflycht’s approach, they can be understood as neo-PSFs, a category that includes management consultancies and ad agencies (von Nordenflycht, 2010, pp. 165-166). Neither is conducting work that is directly related to the core business—and staff in the main company may have difficulty understanding its value (recall Virginia’s comment, above, in the narratives of legitimacy section). In the case of CSR departments, this work may even be seen as being without a business-case justification (Porter & Kramer, 2011, p. 76), further softening the power of any stories entering the firm through the CSR department. The relevance is that seeing them as such—separate from the company, though technically part of it—explains why competing narratives that reach the firm via these departments can be prevented from gaining ground within the firm. This mechanism may be particularly strong in carmakers, which are traditional manufacturers and thus likely to have a reductionist perspective (Brunsson, 2002).
Legitimacy and the Need to Change
It now becomes relevant to discuss the role of legitimacy and contradicting logics within one organization, and I do so with reference to Brunsson’s (2002) concept of organizational hypocrisy. Historically, hypocrisy has made it “easier to maintain the legitimacy of organizations, even when they are subject to conflicting demands” (Brunsson, 2002, p. xv; see Suchman, 1995). In terms of firms’ CSR commitment, however, such a dislocation presents a problem that critics have pounced on (AccountAbility & The Global Compact, 2005; Caulkin & Collins, 2003; SustainAbility & GPC, 2000; SustainAbility & WWF, 2005). Furthermore, following Palazzo and Scherer’s (2006) argument, changes to society are leading to pragmatic and cognitive legitimacy falling away in favor of moral legitimacy as the company’s basis for legitimacy, which needs to be secured communicatively. This change suggests that the characters of some firms are in danger of not being adaptive to the changing realities.
Put another way, firms whose character leads them to reject a political role, while nevertheless inhabiting one, are in danger of losing legitimacy, and therefore need to change. This danger is particularly the case with firms that are involved in the more spectacular political roles, such as providing government-like services. However, the strong, consistent character of firms in the research presented here suggests that such change will be challenging. A firm with a strong individualistic identity orientation that takes a defensive posture may well be highly resistant to change, even in the face of evidence of the need for change. Change to organizational character is messy and emerges over time, as the way the firm makes sense of its environment changes. For such change to happen, therefore, different narratives need to gain currency.
Brunsson (2002) identifies two ideal types of organization: “action” organizations (the traditional model of companies), which produce goods and services; and “political” organizations (e.g., a city council), which produce talk, decisions, and products. As an ideal type, action organizations have “powerful organisational ideologies” which are “instrumental in coordinating action” (Brunsson, 2002, p. 17). They also have consistency between ideology and action, and limited rationality as a means of dealing with a complex world (2002, pp. 14-19). This depiction of the “action” ideal type resonates strongly with carmakers. Such organizations seek agreement as a principle of recruitment and organization, and have a strong organizational ideology (Brunsson, 2002, pp. 15 ff). Recall that respondents frequently perceived no clear distinction between the individual and their employer on issues around their political engagement. Action organizations have greater difficulty in dealing with inconsistent environments than more “political” organizations. In Brunsson’s context, firms’ increasingly political role would require “action” organizations to incorporate “political” elements: a difficult feat. This requirement suggests that change will be especially difficult for carmakers. By contrast, political organizations have conflict and multivocality built into their structures (Brunsson, 2002, pp. 19-26). Further research should test whether more “political” firms, in Brunsson’s typology, face similar challenges to the auto industry when they lobby in Brussels.
Polyphony and Facilitating Change
An organization that allows different voices—a “pluralistic construction of a multiplicity of stories” (Boje, 1995, p. 1000)—is one that has an open posture and which is open to change and learning (Basu & Palazzo, 2008). To get there from an existing defensive posture—which suggests a firm may be deeply resistant to change—is not a simple matter. Polyphony opens the firm up to different narratives—in a “fragmentation of meaning” (Salzer-Mörling, 1998, p. 113)—and thus starts to address underlying sensemaking and through it the way in which the firm sees the world-out-there. This opening up makes it possible to have several narratives operating simultaneously and still emerge with a coherent story. For a firm to change, though, the firm needs to tell itself a different story; and a crisis may be necessary for that process to start. The present divide between carmakers’ departments suggests there is no meaningful internal tension, even when the departments provide completely different messages. Future research could usefully adopt a narrative sensemaking approach to firms—particularly those with a strong “action orientation”—that have undergone changes.
The corporate citizenship literature suggests that a change to a more deliberative perspective is one way in which the process of change could develop (see Scherer & Palazzo, 2007). Deliberative processes liberate employees to dissent from the hegemony of dominant company narratives, by allowing and giving weight to alternative voices. These processes thus provide the space for polyphonic narratives (Gurney & Humphreys, 2006; Sullivan & McCarthy, 2008) on the nature of the political environment and the position of the firm in society. Thus, for example, a carmaker’s dominant narrative on liberty as freedom from Leviathan could over time be superseded or tempered by competing narratives, including, for example, the narrative of freedom as certainty. Similarly, a narrative of entitlement may give way to a narrative of respect, as the company comes to see its own role differently. Such changed narratives speak of a deeper change in the firm’s character. Firms that have undergone such changes would be a most interesting research venue.
Concluding Remarks
The implications of this research are far-reaching. This article has shown—for action-oriented organizations, at least—that a firm’s basic approach to lobbying is determined by its character, which is expressed in the narratives it uses, and carries with it an implicit view of the nature of citizenship. It provides a new field for investigation into corporate legitimacy. Consequently, theorizing on corporate citizenship needs to be enlarged to include lobbying. One of the implications for corporate practitioners is that, if they wish to ensure legitimacy, they will need to pay close attention to the internal processes by which lobbying positions are reached and to the stories that inform them. CC and lobbying are both political. It may have been strategically useful for firms to hold their CSR and lobbying functions at arm’s length in the past, but in contemporary society, which is increasingly demanding, it is a recipe for reputational disaster. This research is an early attempt to reconcile CC and lobbying into one spectrum of political activity, and to put some empirical flesh on the bones of Basu and Palazzo’s (2008) model, which has shown itself to be useful. More thorough testing will be needed, in particular on a larger scale and in different industries.
Footnotes
Appendix
Detailed Overview of the Interviews.
| Number | Interview date | Duration | Location | Participant(s) | Organization |
|---|---|---|---|---|---|
| 1 | 15 March 2006 | 54 min | Brussels | Paul | Euro-NGO |
| 2 | 16 March 2006 | 29 min | Brussels | Jonathan | European Commission |
| 3 | 28 March 2006 | 37 min | Brussels | Craig | Atlas Motors |
| 4 | 28 March 2006 | 42 min | Brussels | Jacob | Alpine Automobile |
| 5 | 29 March 2006 | 46 min | Brussels | Mark & Peter | Alpine Automobile |
| 6 | 10 September 2007 | 37 min | Not Brussels | Barry | Rocky Motors |
| 7 | 19 November 2007 | 49 min | Brussels | Jane | Carpathian Cars |
| 8 | 15 January 2008 | 94 min | Not Brussels | Matthew | Alpine Automobile |
| 9 | 17 January 2008 | 61 min | Brussels | Andrew | Atlas Motors |
| 10 | 18 January 2008 | 18 min | Brussels | Marianne | European Commission |
| 11 | 22 January 2008 | 19 min | Brussels | Luke | European Commission |
| 12 | 28 January 2008 | 85 min | Not Brussels | John | Rocky Motors |
| 13 | 30 January 2008 | 61 min | Not Brussels | Simon | National NGO |
| 14 | 7 February 2008 | 72 min | Not Brussels | Adam & Ralph | Himalayan Motors |
| 15 | 11 February 2008 | 49 min | Brussels | Patrick | Atlas Motors |
| 16 | 11 February 2008 | 55 min | Brussels | Timothy | Atlas Motors |
| 17 | 11 February 2008 | 44 min | Brussels | Richard | Atlas Motors |
| 18 | 12 February 2008 | 84 min | Brussels | Paul & David | Euro-NGO |
| 19 | 12 February 2008 | 40 min | Brussels | Dexter | European Commission |
| 20 | 20 February 2008 | 56 min | Not Brussels | Ferdinand | National NGO |
| 21 | 18 March 2008 | 47 min | Brussels | Eric | Media |
| 22 | 7 April 2008 | 19 min | Brussels | Lauren | Media |
| 23 | 8 April 2008 | 54 min | Brussels | Craig | Atlas Motors |
| 24 | 8 April 2008 | 22 min | Brussels | Chris | European Parliament |
| 25 | 9 April 2008 | 67 min | Brussels | Nicholas | Ural Motor Corporation |
| 26 | 9 April 2008 | 51 min | Brussels | Mark | Alpine Automobile |
| 27 | 14 April 2008 | 48 min | Not Brussels | Daniel | National government |
| 28 | 7 May 2008 | 50 min | Not Brussels | Milton | Industry association |
| 29 | 29 May 2008 | 51 min | Brussels | Virginia | Cedarberg Cars |
| 30 | 30 May 2008 | 105 min | Brussels | Nigel | Atlas Motors |
| 31 | 3 June 2008 | 63 min | Brussels | Esther | Himalayan Motors |
| 32 | 13 June 2008 | 56 min | Not Brussels | Axel | National government |
| 33 | 27 June 2008 | 30 min | Not Brussels | Hugh | Industry analyst |
Note. Duration is rounded up or down to the nearest minute.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The author received financial support for the research presented in this article from Nottingham University Business School and the UK’s Economic and Social Research Council.