State-Corporate Social Developmenuh South Africa: the Role of the State in Advancing Corporate Social Engagement

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State-Corporate Social Developmenuh South Africa: the Role of the State in Advancing Corporate Social Engagement STATE-CORPORATE SOCIAL DEVELOPMENUH SOUTH AFRICA: THE ROLE OF THE STATE IN ADVANCING CORPORATE SOCIAL ENGAGEMENT KIM RAEL SEGEL SUBMITTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE UNIVERSITY OF LONDON 2004 UMI Number: U194783 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Disscrrlation Publishing UMI U194783 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 Library ünifâTi uttw y Of Hoiitica F <?ê5gia ABSTRACT State-Corporate Social Development in South Africa: The Role of the State in Advancing Corporate Social Engagement The contemporary South African state seeks to ensure economic growth and global competitiveness whilst simultaneously redressing apartheid legacies. These are its twin imperatives to effect social and economic transformation. This thesis advances the framework of State-Corporate Social Development (SCSD) to describe and explain policies developed by the post-apartheid government to regulate the social and economic practices of business, and policies adopted by businesses in response. The thesis explores state-market dynamics as these relate to policies promoting black economic empowerment (BEE) in South Africa. Against this broad policy rubric, the research explores, within a wider nexus of stakeholder relationships, the interactions between business and government with reference to two sectors: investment companies and tourism. Extensive legislative and institutional mechanisms have been established to ensure a business environment conducive to government’s political agenda. A key driver is the imperative to accelerate the integration of black South Africans into the economic mainstream through BEE policies. The state uses multiple levers to offer incentive or apply sanction. It is shown that the state, as a major consumer of goods and services, is itself a primary agent in transforming socio-economic patterns along market principles. SCSD also includes the response of business to evolving policy and environmental conditions. These responses vary according to the business size, nature, sector and value placed on various stakeholding relationships. The thesis employs stakeholder and social contract theory, and qualitative methods, including 135 interviews, to develop and explain SCSD as it pertains to BEE. Using formal and informal social contracts, it is shown how BEE policy shifted from emphasising equity ownership to a broader-based strategy. The strategy relies on multi­ stakeholder relationships and drivers offering economic market-based incentives. The thesis draws conclusions regarding the centrality of the state in providing incentives for corporate social development policy in South Africa. It also suggests broader policy lessons relevant to state-corporate relations and the viability of the SCSD approach. Ill This thesis is dedicated to the memory o f Peter Esterhidysen (1963-2004). IV ACKNOWLEDGEMENTS I wish to express my debt and gratitude to Dr Jo Beall, my supervisor and mentor, for her exceptional support and guidance throughout. Her enthusiasm, intellectual agility and, most of all, integrity, are a continual source of inspiration. I am thankful to Dr. Edwin Ritchken, my friend and advisor, for being so generous with his time and counsel. His incisive guidance was equal only to his unstinting support of me both intellectually and personally. Many other people facilitated my efforts. I am indebted to my friends Jeremy Baskin, Chantai Cuddumbey, Karen Jtese, Bronwyn James, Tanya Murphy, Emily Sims and Courtenay Sprague for commenting on draft chapters. I would also like to acknowledge the backing of Professor Nick Segal who placed faith in my ideas and confidence in my ability; Victoria Freudenheim for her encouragement and pride in me; Kirsten Harrison for her soul-sustaining friendship; Marie-Helene Rousseau for helping me in countless kind and practical ways; Philipp Dorstewitz for his support and good humour; Shireen Khanji for emotional generosity and her level headedness; and Tonette Tokura and Beatrice Keefe for being such nurturing companions. I would also like to thank David Medalie for his astute editing of the final draft. During my years in England, I was fortunate to become part of a community of friends who made London a home. In particular, I wish to thank Aline Laengle, Andrew Cantwell, Kevin Chang, Meg Rickards, Meli Costopoulos, Paul Schweinzer, Richard Dickman, Tara Helfinan, Wenche Torrissen and Yolande Knight. I would also like to acknowledge Andras Rona, Annie Thomas, Azlina Sharim, Bilijana Stajanovic, David Becker, Carine Clert, Christian Conti, Christine Scheiber, Greg Hopf, Jason van der Poel, Jessica Hughes, Noor Ampssler, Rachel Schipper, Sara Baldo and Trevor Appleson. I wish to express my gratitude to Tom Toyne Sewell, and staff and friends at Goodenough College. In South Africa, friends were endlessly supportive. I wish, in particular, to acknowledge the late Peter Esterhuysen, Lisa Ruch, Monie Naidoo, Stuart Woolman, Clive Glaser and Claudia Braude. Across a continental diaspora, my family has buoyed me. I am most grateful to them. Special thanks to Tracey and Graeme, Beryl and Lew, Stephen and Fiona for sharing their homes at different times, and Yvonne, Robyn and Jonathan for their morale- boosting encouragement. I am deeply indebted to Paul Darnell, who read, commented on and edited every chapter and who offered unfailing love and support. This research could not have been achieved without the generous financial assistance of the Commonwealth Scholarship (1999-2002), the Ernest Oppenheimer Memorial Trust (2002-2003), the Titmuss Fund (2003-2004), the London School of Economics Studentship (2003-2004), the Abe Bailey Trust (2002-2004) and Goodenough College Bursary (2004). A special recognition is due to my interviewees for so generously sharing their views and insights; without these, this research would not have been possible. Finally, I wish to acknowledge my father, Lew Segel, whose love and pride make me strive to be deserving of them. VI TABLE OF CONTENTS ABSTRACT.....................................................................................................................ii ACKNOWLEDGEMENTS............................................................................................ v TABLE OF CONTENTS................................................................................................ 1 LIST OF TABLES AND FIGURES...............................................................................5 ABBREVIATIONS AND ACRONYMS........................................................................6 LIST OF LEGISLATION............................................................................................... 10 CHAPTER ONE: INTRODUCTION.............................................................................11 St r u c t u r e o f t h e c h a p t e r .......................................................................................................................................... 12 P a r t O n e : T o w a r d s a n appropriate s o c ia l p o l ic y ...................................................................................... 12 So c ia l development : m a r r y in g s o c ia l a n d e c o n o m ic development ...............................................14 St a t e -c o r p o r a t e so c ia l development ...............................................................................................................17 A QUESTION OF IDEOLOGY...............................................................................................................................................20 C o n t e x t u a l s y m p a t h y : s w in g in g t h e p e n d u l u m ..........................................................................................22 U nderstanding t h e s t a t e - m a r k e t relationship a n d c o r p o r a t e s o c ia l e n g a g e m e n t 23 C o n t e x t u a l d il e m m a s : T h e a r t o f b a l a n c in g d isp a r a t e p r e s s u r e s ................................................29 T h e motivations f o r c o r po r a t e s o c ia l e n g a g e m e n t ................................................................................31 B u s in e s s , so c ia l development a n d s o c ia l j u s t ic e ......................................................................................33 P a r t T w o : T h e st u d y a n d s it u a t in g t h e r e s e a r c h ......................................................................................35 A im s o f t h e r e s e a r c h .................................................................................................................................................... 37 R e s e a r c h a g e n d a a n d f o c u s .....................................................................................................................................38 R e s e a r c h s t r a t e g y : t h e c a s e s t u d y ...................................................................................................................
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