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4.7. Governance and stakeholders

A company's structure is nowadays more complex than before and there are other people, in addition to owners, directly or indirectly implied in the company's operations - known as stakeholders. Multinational corporations have sometimes even more power than governments in their influence, and stakeholders have gained more power through the media and public opinion in order to require some kind of specific behaviour from companies. Within this new environment, although explained in a very simple way, the primary objective of the company has become wider. Although generally speaking, the assumption may be that the first goal is to get financial performance in the company, after that the next step will be to comply with other socially responsible policies.

This is because to pay attention to social objectives, or to show an orientation to multiple stakeholders group, could be considered a luxury, because it must have meant that the other basic company's goal had been met. This argument is the basis of the first hypothesis about the relationship between CSR, linked to pay attention to stakeholders, and business success: "Better performance results in greater attention to multiple stakeholders" (Greenley and Foxall, 1997: 264). While the other hypothesis about this relationship will run in the opposite direction: "that orientation to multiple stakeholder groups influences performance" (Greenley and Foxall, 1997: 264), which means to "attend" to social policies in a better way.

This double-side relationship increases the difficulty to try to empirically prove it. Intuitively it seems as if there is a clear relationship between CSR and business success, but although the measurement of business success may be easy, through different economic and financial tools, such as ratios: the measurement of the degree of compliance of a company with social policies is really difficult. We can have in mind some kind of indicators such as funds donated to charitable objectives, but a company can spend immeasurable quantities of money on charitable questions and have problems in the relationship with labour unions because of bad working conditions, or low wages, for example.

In this sense there have been for many years some companies whose objectives include philanthropic aims. We can cite examples of the Quaker companies - such as Cadburys13 and Rowntrees - which emerged in the UK Industrial Revolution or the Spanish saving banks, which emerged with the peculiar distinction of including in their aims charitable purposes. But finally, if they want to survive in the competitive market they have to bear in mind the conventional objective of profit maximisation. It may be considered that the initial values of the company are ones promoting concern, and then the market and the capitalism forces the firm to change them in order to survive in this maelstrom. Although at the same time the double sided relationship operates, because people socially concerned bear in mind these basic aims and the image of such a company is improved, which provides a direct relationship with economic performance.

In this attempt to satisfy the necessities of the stakeholders there can appear other conflicts between the interests of the different groups included in the wider concept of stakeholders. Sometimes due to this conflict of interests and to the specific features of the company it tries to establish different levels between the stakeholders, paying more attention to those ones that are most powerful, but are there some goals more socially responsible than others? In the end the hierarchy will depend on the other goals of the company; it will give an answer to those stakeholders that can threaten the performance of the economic goals.

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