Nokia Siemens Networks is denying a WSJ report questioning whether it provided Iranian authorities with the technology to engage in "deep packet inspection, which enables authorities to not only block communication but to monitor it to gather information about individuals, as well as alter it for disinformation purposes."
This story got me thinking about the distinction between corporate social responsibility and corporate citizenship. I define CSR using the draft ISO 26000 standard to mean "actions of an organization to take responsibility for the impacts of its activities on society and the environment, where these actions: are consistent with the interests of society and sustainable development; are based on ethical behaviour, compliance with applicable law and intergovernmental instruments; and are integrated into the ongoing activities of an organization.
In contrast, I would define corporate citizenship more narrowly. Unlike the affirmative obligations suggested by CSR, my view of good corporate citizenship is most negative. When dealing with state actors, for example, the corporation should not take actions that violate the human rights of the state's citizens directly nor should the corporation knowingly facilitate human rights violations by the state.
This is not a new idea. In the 1930s, GE CEO Owen D. Young famously opined that General Electric functions “in the public interest…performing its duties as a great and good citizen should.” Or, going back even further, as As stated by Judge Spencer Roane in 1809, if “associate individuals [want] to have the privileges of a corporation bestowed upon them; but if there object is merely private or selfish; if it is detrimental to, or not promotive of, the public good, they have no adequate claim upon the legislature for the privileges.” Currie’s Administrator v. Mutual Assurance, 14 Va. 315, 347 (1809). Even Milton Friedman recognized certain social restraints. He said that corporate managers and directors are “to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” He also stated that pursuing profits was responsible “so long as it stays within the rules of the game."
To be clear, the argument is not that corporations should perform acts that are good for society; the claim is only that they should refrain from acts that are bad for society.
How do we operationalize such a proposal? In general, the business judgment rule should (and does) protect from judicial review board of director and manager decisions to decline business opportunities that pose a clear ethical or moral concern. Also, in general, however, there should be no affirmative obligation to do so. Certainly, neither a corporation nor its directors and officers should be held liable for engaging in lawful but ethically dubious conduct. They can be help up to social disapprobation, but not liability, except where their conduct violates domestic or international law.
If I were on the board of directors of Nokia Siemens Networks I probably would not have opposed providing cellular and internet services and equipment to Iran so long as the surveillance and censorship components of such technologies were no greater than the generally established needs of law enforcement. OTOH, I certainly would have objected to selling Iran technology that allows them to censor its citizens or repress them. Because the line between those two positions might turn out to be unclear, my thumb would be on the side of the scale weighing against doing business with a repressive regime.
