Evaluating the Impact of Private Law-Making in Corporate Social Responsibility
| Autor | Gloria Ramos |
| Cargo | Is a Costa Rican qualified lawyer. She holds a Bachelor in Laws and a Licenciate Degree in Law from the University of Costa Rica. Gloria holds a Master's Degree in Commercial and Corporate Law from Queen Mary University of London, and has been working in London since 2016 as an international commercial contracts negotiator |
| Páginas | 67-93 |
67
IX Edición, II semestre 2018
Evaluating the Impact of Private Law-Making in
Corporate Social Responsibility
Gloria Ramos*
Resumen:
A través del estudio de la responsabilidad social corporativa (RSC), este artículo explora las maneras en que los
actores privados de la sociedad tienen la habilidad de modificar el comportamiento corporativo sin requerir la intervención de instru-
mentos jurídicos vinculantes (hard laws). El artículo expone cómo la teoría de la empresa sienta las bases de la RSC y cómo la
globalización ha detonado su progreso en el ámbito de derecho internacional, así como el surgimiento de instrumentos jurídicos no
vinculantes (soft laws). La evolución de los procesos de creación de leyes es analizada a la luz de la RSC y la globalización y, a
través de una serie de argumentos, se puede apreciar que estamos frente a una tendencia a regresar a tiempos más simples. Por
tiempos más simples, se pretende hacer referencia a tiempos en que el honor es valorado, y la palabra tiene mucho peso, así como a
tiempos en los que no se requieren actores gubernamentales para modificar la conducta de una persona, otorgándole así gran eficacia
a este código de conducta informal.
Palabras claves:
Responsabilidad social corporativa – hard law – soft law – teoría de la empresa
Abstract:
This article explored the way in which private actors have the ability to modify corporate behavior without the intervention
of hard laws through the study of corporate social responsibility (CSR). It outlines how the theory of the corporation sets the
foundation for CSR, and how it has progressed into the international arena, where soft laws have arisen as a result of globalization.
By means of an analysis of CSR and globalization, the article presents a series of arguments to explain the evolution of the law-
making process, and how it seems to be reverting to simpler times – times in which honor is highly regarded and promises are kept,
times where no government actors are required to modify anyone’s behavior, and how, in certain ways, that informal code of conduct
can still be applicable and enforceable.
Keywords:
Corporate social responsibility – hard law – soft law – theory of the corporation
* Gloria Ramos is a Costa Rican qualified lawyer. She holds a Bachelor in Laws and a Licenciate Degree in Law from the University
of Costa Rica. Gloria holds a Master’s Degree in Commercial and Corporate Law from Queen Mary University of London, and has
been working in London since 2016 as an international commercial contracts negotiator. Contact: glo.ramos.r@gmail.com
Fecha de postulación del artículo: 31 de octubre de 2018. Fecha de aprobación del artículo: 3 de diciembre de 2018
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IX Edición, II semestre 2018
I. INTRODUCTION
Development of the Theory of the Corpora-
tion
For whom are managers trustees? This interroga-
tion developed a debate in the 1930’s regarding
theories of the nature of corporations and the
managers’ accountability, between two Ameri-
can law professors Adolf A. Berle and E. Merrick
Dodd. Shareholders suffered a transition from
being entrepreneurs to becoming “passive inves-
tors who placed their economic interests in the
hands of professional managers.
1
” Berle be-
lieved that society should be based on the protec-
tion of private property. He split property in two
classes: a) Active: referring to tangible property
and b) Passive: “a set of economic expecta-
tions,
2
” the latter would be represented by a stock
certificate or bond. Shareholding would fall un-
der the passive type of private property, and the
disadvantage that it has is that “it leaves him [the
shareholder] in the hands of the factual posses-
sor or administrator of the massed wealth.
3
”
Berle recognized that corporations were “eco-
nomic institutions which have a social service as
well as a profit-making function
4
”. However, he
decided to favor the “profit-making” part of the
1
Millon, D. (1990) ‘Theories of the Corporation’, Duke
Law Journal, 1990:201, pp. 201–262.
2
Berle, A. (1932) ‘For Whom Corporate Managers Are
Trustees: A Note’, Harvard Law Review, XLV(7), pp.
1365–1372.
business as its main purpose, and managers had
to make sure that this purpose was being ful-
filled. Berle developed the Shareholder Primacy
Theory which established that “corporate pur-
pose rejected any notion of management’s power
to engage in socially responsive activities.
5
”
Management’s exercise of power and control
found its legitimacy on the protection of the
shareholders’ wealth maximization. Berle ar-
gued that managers’ accountability was to share-
holders, and as trustees they “must act only in a
way that furthered shareholder financial inter-
ests, because to countenance anything else would
be to allow conduct no different from outright
embezzlement of shareholder property by the
trustee.
6
” As it can be perceived, Berle chose the
shareholders’ interests above all, rejecting the so-
cial conception of the theory of the corporation,
considering that a business is created to generate
profits for the owners, and managers must safe-
guard their wealth no matter what, due to the
agency relationship they perform. Dodd was op-
posed to this line of thinking, as he insisted that
“an individual who carries on business for him-
self necessarily enters into business relations
with a large number of persons who become ei-
ther his customers or his creditors […] He con-
ducts it solely for his own private gain and owes
3
Ibidem
4
Ibidem
5
Millon, D. (1990) ‘Theories of the Corporation’, Duke
Law Journal, 1990:201, pp. 201–262.
6
Ibidem
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