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Corporate (social) responsibility in state-business relations from the perspective of critical state theory: a historical case of early modern China
International Journal of Corporate Social Responsibility volume 9, Article number: 14 (2024)
Abstract
This article presents a theoretical framework for analysing corporate responsibility through the lens of critical state theory, focusing on the dynamic interplay between state and business. Traditionally, corporate responsibility is seen as voluntary corporate actions for public welfare. However, it is increasingly viewed as integral to business strategy and subject to regulatory oversight. Utilizing Jessop’s strategic-relational approach, this study underscores the state’s role in structuring corporate behaviour, revealing how shifts in political elite networks influence corporate responsibility practices. A historical analysis of early modern China highlights these dynamics within specific national contexts characterized by developmentalism and authoritarianism, demonstrating the profound impact of state-business symbiosis on corporate responsibility. This analysis contributes to a deeper understanding of corporate responsibility in diverse political and economic settings, demonstrating how state power, corporate influence, and social welfare are mutually reinforcing and shaped by broader socio-political dynamics.
Introduction
With the development of the global economy and changes in the political landscape, the understanding and implementation of corporate social responsibility (CSR) have undergone significant transformations. Initially seen as voluntary actions by companies to contribute to public welfare beyond legal requirements, corporate responsibility is now increasingly viewed as an integral part of corporate strategy and a growing focus for regulatory authorities (Aseeva, 2021; Lin, 2021). The concept of corporate social responsibility involves a complex web of interactions within the context of state-business relations, reflecting the power and limitations of both state and corporate entities in addressing social issues such as labour rights, environmental protection, and ethical governance. From the perspective of critical state theory, these interactions are not merely about aligning business practices with social values but are deeply entangled with the dynamic strategic relationships between state power, corporate influence, and societal expectations. This article argues that the evolution of corporate responsibility can be best understood through the lens of critical state theory, which reveals how intertwined and reactive business-state relations have shaped corporate responsibility over time.
In this article, I sometimes use the term “corporate responsibility” in the analysis instead of CSR to emphasize a broader concept. While CSR often indicates the voluntary nature of corporate awareness of social issues (Carroll, 1979, 2008; Scherer & Palazzo, 2007; Wettstein, 2012), corporate responsibility encompasses a wider range of activities and obligations that businesses may undertake, including both voluntary and regulatory actions as advocated by business and human rights scholars. This broader perspective allows for a more comprehensive analysis of the interactions among corporate entities, the state, and society.
Critical state theory is a conceptual framework that seeks to understand the role and function of the state in society, particularly in relation to power, inequality, and social change. It has been predominantly influenced by Marxist literature, while also incorporating other theoretical paradigms. The most influential and classic works in this field include those by Antonio Gramsci, Nicos Poulantzas, and Michel Foucault. From the perspective of critical state theory, the state is not merely a static set of institutional agencies but a dynamic network of relations spanning social, economic, and political domains that requires critical investigation (Jessop, 2019). This provides an analytical framework for understanding corporate responsibility within the state context. This perspective challenges the traditional view of the state as a monolithic entity or a neutral arbiter between the public and businesses (Jessop, 2019). Instead, it examines corporate responsibility within the dynamic balance of political forces. Through this lens, corporate responsibility can be seen as a response to the shifting dynamics of state-business relations, influenced by trends such as deregulation, market liberalization, and the internationalization of business norms brought about by changes in political elite networks at both local and global levels.
This article aims to explore how a critical state theory framework can reveal the influence of state-business relations on the evolving field of corporate responsibility. By introducing Jessop’s strategic-relational approach (SRA), the article examines the role of dynamic state-business relations in the evolution of corporate responsibility in the historical context of the modern Chinese state. This analysis is crucial not only for understanding the global evolution of corporate responsibility but also for providing insights into corporate responsibility within specific national contexts, especially those nation-states characterized by developmentalism and authoritarianism.
Corporate (social) responsibility as a manifestation of state-business-society relations
Corporate (social) responsibility manifests the relationship between business, state, and society. Existing literature implies an assumption that CSR is an intersectional issue between business and society, wherein the operations of business organizations impact society both positively and negatively, and vice versa, particularly concerning public legitimacy (Brammer et al., 2012; Carroll, 2008). The discourse around CSR often revolves around reconciling the profit-oriented goals of business logic with societal values (Crane et al., 2014; Porter & Kramer, 2019). The outcome is to base and even aim business performance on social responsibility. Strategic CSR (SCSR), a concept developed within this framework, aligns with the neoliberal economic principles represented by Milton Friedman (although some of the SCSR scholars may not agree with this), suggesting that profitability drives the motivation for businesses to undertake social responsibility (Chandler, 2022). Ultimately, this still adheres to the fundamental pursuit of profit inherent in the rational economic actor assumption.
The role of the state in the business-society relationship has been highlighted in CSR literature (Eberlein, 2019; Johnston et al., 2021; Scherer & Palazzo, 2011). On one hand, the state provides the context for CSR activities, where public authorities inevitably intersect with business operations through regulation or support. On the other hand, CSR activities of business organizations influence state actors, potentially complementing or undermining state governance of society, as exemplified by the literature on political CSR (Scherer & Palazzo, 2007, 2008, 2011). As a political entity exercising political power, the state acts as a legal regulator between business and society. Tracing back to the origins of corporations, the state played a significant role, with early corporations originating from state (or royal) authorizations for trade activities (Gelderblom et al., 2013). The relaxation of state regulation over corporations allowed them to evade responsibilities, making public interests more susceptible to harm (Banerjee, 2008; Perrow, 2002). The legal revolution of the 19th century, which birthed modern corporations, fundamentally removed major restrictions on corporate activities and establishment rules and reversed the oversight of corporate behaviour by the state who represents the public (Banerjee, 2008; Perrow, 2002).
In the United States, the landmark 1819 Dartmouth College v. Woodward case saw Chief Justice John Marshall declare that “…a corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.” This affirmed the legal status of corporations as “fictional persons,” distinct from their owners and employees (Banerjee, 2008; Perrow, 2002). In 1886, the Santa Clara County v. Southern Pacific Railroad Company case implied that corporations are “natural persons” under the law, granting them rights under the 14th Amendment of the U.S. Constitution, originally passed to protect freed slaves in the South (Perrow, 2002). This allowed artificial legal entities like corporations to be protected, often at the expense of public interest (Banerjee, 2008).
By the late 19th and early 20th centuries, business corporation laws in Britain, the United States, and Europe had become highly homogenized in terms of limited liability (Harris, 2020). The world’s first modern limited liability law was enacted by New York State in 1811. In the UK, the 1844 Joint Stock Companies Act and the 1855 Limited Liability Act granted shareholders limited liability, protecting their personal assets from company liabilities (Watson, 2019). The German Reichstag also passed similar legislation in 1892, the Law on Limited Liability Companies. Large commercial enterprises were established in major trading nations in corporate form, with functional characteristics aligning across countries. These characteristics, still present in today’s corporations, although slightly vary among different countries in terms of specific contents, include: (1) complete legal personality, enabling companies to contract and pledge company assets rather than owner assets; (2) limited liability for owners and operators; (3) shareholder ownership; (4) authorized management under a board of directors; and (5) transferable shares (Hansmann & Kraakman, 2004; Hansmann et al., 2006).
Literature has been arguing that the institutional inventions brought by forementioned legal revolutions spurred economic growth by facilitating investment and trade (Getzler, 1996). Yet others argue that the core features—legal personality and limited liability—endow corporations with the ability to act irresponsibly towards external societal stakeholders while prioritizing shareholders and self-interests (Johnson, 2011). Under the global wave of liberalism, capitalist markets expanded rapidly globally, with state power’s acquiescence or encouragement. As CSR discourse emerged and developed, the state’s role was gradually reshaped. As shown in Table 1, under public pressure, intergovernmental organizations and states began to enhance the regulation of corporate irresponsibility while encouraging voluntary industry initiatives since the 1970s (Latapí Agudelo et al., 2019). Yet Transnational regulation of corporate irresponsibility still relied on industry self-regulation and international organization coordination. Before 2010, most corporate responsibility-related governance tools were non-binding soft laws. Post-2010, there has been a trend of legal regulation of corporate responsibility, with legally binding tools for transnational supply chain governance emerging at national and regional levels.
In shaping corporate responsibility governance, states exhibit different practices as legal regulators. Existing CSR instruments can be categorized based on their governance domain and substantive requirements, as shown in Table 2. Governance domains focused by different states can be primarily divided into supply chain regulation and public welfare provision. Supply chain regulation focuses on preventing, mitigating, and compensating for human rights and environmental violations in host and home countries by domestic corporations or foreign ones which have business relations within the country (Schilling-Vacaflor, 2021). Public welfare provision often aligns with developmental agendas, encouraging or mandating companies to assist in public welfare provision to promote social governance (Maier, 2021; Scherer & Palazzo, 2007, 2011). Existing CSR tools can also be classified based on their substantive requirements—whether they impose concrete operational requirements on companies or merely require symbolic commitments.
The state’s role in corporate responsibility reflects the dynamic relationship between business, state, and society. Understanding corporate responsibility within specific contexts requires examining the dynamic state context. Why does corporate responsibility differ in different state contexts? Existing research often analyses specific contexts of countries from judicial or corporate governance perspectives (Kang & Moon, 2012; Matten & Moon, 2008; Moon & Shen, 2010). These analyses tend to be time-insensitive and lack explanatory power over long periods. Moreover, the static examination of state’s governance system in the literature is insufficient. Historical and dynamic perspective on state context—state-business-society relations—is needed. Therefore, this article adopts a critical state theory perspective to dynamically examine state-business relations and analyse the evolution of corporate responsibility.
Critical state theory and strategic-relational approach
The contemporary construction of a universal concept of the state largely draws from the constitutional legitimacy perspective rooted in European constitutional, judicial, and state theory traditions (Glasberg et al., 2018; Jessop, 2015). Weber’s theoretical viewpoint is particularly representative in this regard. Weber defined the state as a “human community that claims the monopoly of the legitimate use of physical force within a given territory” (Weber, 1994, p. 310) and explored the legitimacy of state organization and power: “A compulsory political organization with continuous operations will be called a ‘state’ if and insofar as its administrative staff successfully upholds a claim to the monopoly of the legitimate use of physical force in the enforcement of its order” (Weber, 1978, p. 54).
This concept of the state has been summarized by Jessop as the three-elements approach: modern states comprise three necessary elements: (1) a politically organized coercive, administrative, and symbolic apparatus endowed with both general and specific powers; (2) a clearly demarcated core territory under more or less uncontested and continuous control of the state apparatus; and (3) a permanent or stable population, on which the state’s political and authority and decisions are binding (Jessop, 2015). This approach to constructing the concept of the state has increasingly faced criticism, especially by post-structuralist and feminist scholars (Glasberg et al., 2018). The state should not be understood as a static entity with concentrated power in specific institutions but as a dynamic process with power dispersed throughout social life. It is important to note that the state discussed in this chapter is distinct from the government. The government refers to the institutions of the state and the individual’s holding office within them. While government institutions and officeholders may change, resulting in policy changes influenced by individual backgrounds such as ideological views and party affiliations, the fundamental political structure of the state (election mechanisms, policy-making and implementation mechanisms, and relationships between the government and other societal interest groups such as businesses and labor) generally does not undergo fundamental changes in the short term (Jessop, 2015).
The first element concerning state power and organization is the most complex. It represents the organizational structure and physical and symbolic power by which the state monopolizes rule-making and enforcement (Jessop, 2015). Power exercise exists within an institutional context, while institutions are shaped by political power activities. All state theories revolve around this point, hypothesizing and exploring the nature of state organization and power. I briefly review mainstream state theories in the literature, reflecting on them and clarifying the theoretical framework of Jessop’s strategic-relational approach, which views the state as a dynamic process and relational structure.
For decades, pluralist state theories, often based on the Anglo-American model, posited that the capitalist economy sees the state as the embodiment of the power of all citizens, unaffected by interest groups (Dahl, 1967; Dahl & Shapiro, 2015; Truman, 1971). In the assumption of state neutrality, power is dispersed, with various interest groups competing fairly within a democratic political structure, and the state legislates and formulates policies for the common interest (Dahl, 1967). Elections are the key mechanism in this system, allowing voters to influence political decisions through elected political elites representing their interests(Dahl & Shapiro, 2015). However, the political balance touted by pluralist state theories is questioned. Not all voters and interest groups are equal in a pluralist system. Some groups, such as the homeless and minors, do not have voting rights (Manza & Uggen, 2006). Additionally, some key political and economic positions are not elected, such as Supreme Court judges and senior bureaucrats in government departments. More importantly, some interest groups, particularly those representing economic entities, have significantly greater influence on political agendas due to their resources and capabilities, especially through lobbying activities (Austen-Smith, 1993; Gilens & Page, 2014). The assumption of state neutrality, considering the inherently unequal socio-economic structure, is untenable. Individuals within the state are inevitably influenced by their socio-economic positions, shaping their decisions and understanding of “public interest.”
Business dominance state theorists and state-centered structuralist theories in state-society relations literature focus on the structure of concentrated state power, contrary to the pluralist assumption of dispersed power. Inherent in Marxism, business dominance state theorists start with the premise of inherent class conflict in the capitalist political economy, with one faction arguing that the state is captured by capitalist (Domhoff, 1990; Dye, 2002; Scott, 1991). Capitalists exert control over the state by participating in elections and assuming political office, or by infiltrating and influencing the political system through various indirect means. This analysis oversimplifies by ignoring the role of symbolic power in shaping public opinions and state policies and the impact of working-class resistance (Glasberg et al., 2018). Some theorists argue that the state is fundamentally capitalist, constrained by the need to promote capital accumulation and prevent economic crises to maintain legitimacy (Mandel, 1975; Poulantzas, 1969; Wright, 1978). It provides a macro explanation for the state’s pro-capitalist operations but lacks micro-level descriptions of how state actors align their interests with capital accumulation (Glasberg et al., 2018). Yet both of the above fail to convincingly explain non-economic policies and ignore the influence of external actors such as other nations, international organizations, and transnational corporations on state actions (Glasberg et al., 2018).
State-centered structuralist theories view the state as a site of bureaucratic politics. Unlike pluralist theories, which see the state as neutral and above class interests, they argue that state activities are based on the interests of bureaucratic institutions themselves, such as expanding bureaucratic power (Amenta & Halfmann, 2000; Amenta & Parikh, 1991). While this theory can explain some non-economic policies as bureaucratic efforts to expand their domain, it faces similar issues to pluralism, questioning the neutrality of bureaucratic elites, and business dominance state theorists, omitting a discussion on the impact of opposition and struggles initiated by the masses or the working class (Glasberg et al., 2018).
Despite differences in interpreting the nature of the state, the above theories treat the state as an entity or static structure, with power located in specific institutions or groups. The state’s operations are simplified into a closed, top-down process, even under the pluralist view of the state as an embodiment of public interest.
Strategic-relational approach
The critical perspective applied in this article is constructed on the foundation laid by post-structuralist theorists who propose that the state is not a single, centralized power structure or a sum of multiple institutions but a decentralized, ongoing dynamic process. Post-structuralist theorists argue that dynamic power relations, rather than static state analysis, are fundamental because the boundaries of the state and politics are dynamic and shaped by discourse (Foucault et al., 1991; Foucault & Gordon, 1980). The boundaries and relationships between state and society, public and private, are continuously redefined through discourse and meaning construction. Post-structuralist scholars emphasize discourse analysis and meaning construction, revealing the dynamic process of state-society power relations. Examples include Foucault’s concept of governmentality and Gramsci’s concept of hegemony, which highlight how dominant cultures and values become naturalized and disciplinary through knowledge and discourse frameworks (Foucault et al., 1991; Gramsci et al., 1971). The state, to some extent, is both a stage for and a result of discursive meaning creation. Based on this understanding, Jessop proposed the Strategic-Relational Approach (SRA) to the state theory (Jessop, 2015). This approach no longer views the state as a static, substantial entity but as a dynamic expression of the balance of various social or political forces (Glasberg et al., 2018; Jessop, 2015). By identifying the state as a social relation, this approach shifts the focus from the state apparatus itself to the exercise of state power.
The SRA redefines the relationship between structure and agency by emphasizing their interconnectedness. It focuses on how the strategic context shapes actions and how these actions, in turn, can transform that context. Structures create different constraints and opportunities for various agents, while agency depends on the strategic capacities of these agents, influenced by the structures they operate within. In contrast to traditional views that see structures as uniformly affecting all agents, the SRA asserts that constraints and opportunities are biased, shaped by specific strategies of particular forces. This approach suggests that actors strategically analyze their contexts rather than acting out of habit, considering the changing ‘art of the possible’ over different time horizons. The strategically selective nature of structures means that while they impose constraints, they also provide opportunities for actions that can bypass or challenge these constraints (Jessop, 2015). The evolving identities, interests, resources, and strategies of various forces continuously modify the constraints and opportunities within structures.
In summary, the SRA underscores the importance of the strategic context and the relational dynamics between structure and agency in understanding political actions and outcomes. This approach requires researchers to consider how political actors inside and outside the state continuously evaluate changing conditions and act accordingly, rather than assuming they merely act passively according to institutional settings and routines. According to Jessop, it is essential to consider three interconnected aspects to analyse specific political contexts or periods. Firstly, examine the state’s historical and formal development as a complex institutional structure, which has a unique pattern of strategic selectivity that influences and alters the balance of power. Secondly, investigate how political forces are organized and operate within particular contexts, including their strategies and their ability to adapt to the strategic selectivities embedded in the state apparatus. Lastly, study the interactions of these forces within the strategically selective environment, focusing on their immediate objectives or their efforts to change the balance of power and transform the state and its inherent strategic selectivities.
Despite viewing the state as a social relation, it can still be identified through certain ideal-typical dimensions to analyze state forms and dynamics among various political forces according to SRA. Jessop proposed a framework comprising three formal institutional dimensions and three substantive dimensions. The three formal institutional dimensions are modes of representation, modes of articulation, and modes of intervention. Modes of political representation refer to the actual political representation modes of different positions in the social structure and the formal or informal mechanisms through which political forces access the decision-making center (state apparatus and its capacities) to promote their interests (Jessop, 2015). Political representation can occur both within formal channels inside the state apparatus and informally outside it, such as business communities establishing connections with politicians or bureaucrats (Jessop, 2015). Modes of articulation involve examining the vertical, horizontal, and transversal organization of the state system and the distribution of power within and between its parts (Jessop, 2015). This examination always considers the dynamic distribution of power within and between institutions. Modes of intervention concern the state’s foundational power to intervene in the division of public and private boundaries, penetrating society and organizing social relations, involving mechanisms and resources (Jessop, 2015). Intervention methods may include legislation, coercive means, and shaping knowledge.
The three substantive dimensions are the social basis of the state, state project, and hegemonic vision. The social basis of the state involves the specific combination of social forces reflected in the state’s institutions, supporting the state’s basic structure, operational modes, and goals (Jessop, 2015). The state project defines and regulates the boundaries of the state system relative to society, providing internal operational coherence for the state apparatus to perform socially accepted tasks (Jessop, 2015). The state is not a coherent, purely organized, and closed system but a contradictory, mixed, and open relational structure influenced by multiple conflicting institutional logics and political imaginations. A state project provides a coherent template or framework, often linked to various policy paradigms guiding specific policy fields, enabling state agents and institutions to coordinate and integrate different policies and practices in pursuit of an often-imagined national or public interest. Jessop argues that the state’s successful establishment and operation must align its institutional logic and national interests with a hegemonic or dominant state project of the time. Hegemonic vision can be understood as an overarching vision articulating the state’s current nature and purpose, linking them to principles of justice, goodness, morality, and other social organizational principles, providing overall guidance for state policies (Jessop, 2015).
To further demonstrate how the strategic-relational approach can be applied to analyze the dynamic evolution of corporate responsibility from a state-business relations perspective, the next section uses this framework to examine the case of corporate social responsibility evolution in early modern China (late Qing to Republican era). By analyzing the evolution of political forces’ equilibrium of compromise in China’s state-business dynamic relations during this historical period, it shows how the dynamic state-business relations in a nation-state context characterized by authoritarianism and developmentalism influenced the evolution of corporate responsibility.
Corporate (social) responsibility under state-business symbiosis: a historical case of early modern Chinese state
From the late Qing period, coinciding with China’s early attempts at modernization, modern corporate organizations began to emerge in Chinese society. The government quickly became an important, and possibly the most crucial, external political stakeholder for Chinese businesses, a role that still persists in contemporary context (Hofman et al., 2017; Situ et al., 2020; Yin, 2017; Zhao, 2014). This characteristic is also evident in other late-developing countries, especially in the Global South, with authoritarian and developmentalist features (Kourula et al., 2019; Maier, 2021).
As discussed earlier, this article avoids a static analysis that entirely opposes the state institutions and business operation. Therefore, analyzing the dynamic relations between political and economic power becomes particularly important. In the late 19th and early 20th centuries, the governance capacity of the Manchu nobility, who had ruled China for over two centuries during the Qing Dynasty, was greatly weakened by internal rebellions and colonial interference from Western powers. During the Taiping Rebellion, Han officials who organized local militias to help the empire suppress the rebellion gradually rose in political and economic power, eventually overshadowing the imperial court (Schoppa, 2002). This situation was vividly illustrated by the Southeast Mutual Protection incident during the Boxer Rebellion, where powerful southern and coastal officials, led by Li Hongzhang (1823–1901), Sheng Xuanhuai (1844–1916), Liu Kunyi (1830–1902), Zhang Zhidong (1837–1909), and Yuan Shikai (1859–1916), defied orders from Empress Dowager Cixi (1835–1908) to declare war on foreign powers and instead signed non-aggression treaties with consular officials.
The rise of these powerbrokers was, to varying degrees, connected to the Self-Strengthening Movement (Also known as the Westernization or Western Affairs Movement) of the late Qing Dynasty, which involved establishing modern industrial and commercial organizations. It was a period of institutional reforms initiated in China during the late Qing dynasty following several military defeats and internal uprisings. The primary goal of the movement was to modernize the country’s military capabilities by adopting Western military technology and training methods. This initiative also extended to broader industrial and economic reforms aimed at strengthening China’s overall state power. Self-Strengthening Movement was distinctly marked by a strong government-business nexus, exemplified by figures such as Li Hongzhang, the then Viceroy of Zhili Province and Beiyang Trade Minister, who founded organizations like the China Merchants Steam Navigation Company and the Jiangnan Manufacturing Bureau. Similarly, Zhang Zhidong, who became the then Viceroy of Huguang and initiated enterprises such as the Hanyang Iron Works, and Zuo Zongtang (1812–1885), the then Grand Secretary who established the Fuzhou Shipyard, had close ties with the commercial and industrial elites of the time, even directly engaging in business ventures themselves. Many of the era’s prominent businessmen were elevated to political status by these political elites, a group often referred to as the ‘red-hatted merchants’ who operated under the official protection and endorsement of the state (Mann, 1987). They wore red hats as a symbol of their official status, which distinguished them from ordinary merchants. A notable example is the Hangzhou merchant Hu Xueyan (1823–1885), who made his fortune in finance before assisting Zuo Zongtang, the then Viceroy of Minzhe, with post-Taiping Rebellion relief efforts in Hangzhou and procuring munitions on several occasions, which earned him a promotion to the second rank of the imperial bureaucracy as a Commissioner of the Revenue. The intricate entanglement of politics and business in the late Qing period became a key factor influencing national governance. The end of Qing rule in the early 20th century was not only due to the activities of revolutionary parties influenced by a global wave of nationalist ideology but also due to the disillusionment of these powerful political and economic elites with the Manchu noble rulers. Since then, Chinese business elites became embedded in the late Qing state power network, aligning themselves with emerging political elites driving reforms and exercising their agency amid significant social and political changes.
From the perspective of SRA, the phenomenon of state-business symbiosis in early modern China, as discussed above, represents one of the most important manifestations of the social basis of state power. This mode of representation of state power is characterized by political elites using industrial and commercial actors to expand their political influence, and conversely, by merchants depending on political elites to gain access to political decision-making, thus acquiring a certain degree of political power. The mode of articulation of state power, based on interests and personal relationships, also profoundly influences the dynamics of state-business symbiosis. It is displayed as political elites often weave their influence within the state power network vertically, horizontally, and transversally, based on kinship ties and personal relationships, as seen in the Hunan Army factions led by Zeng Guofan (1811–1872) and Li Hongzhang’s leadership of the Huai Army. Originated by Zeng Guofan, the Hunan Army faction was deeply intertwined with the governance structures of the Qing Dynasty. Following the suppression of the Taiping Rebellion, this faction did not simply demobilize but instead transitioned into a potent political force. Zeng Guofan and his protégés including Zuo Zongtang and Liu Kunyi, often referred to as the “Hunan clique,” used their military success to secure high-ranking administrative positions within the empire. This faction advocated for and implemented a series of reforms that emphasized strong central governance, the revival of Confucian values, and the modernization of China’s military and industry. Similarly led by Li Hongzhang, the Huai Army faction emerged as a dominant force in the latter part of the Qing Dynasty. Li Hongzhang and his protégés utilized their military reputation and political acumen to influence both domestic policies and foreign diplomacy of the empire. The Huai faction pushed for the adoption of Western technology and administrative methods, central to the Self-Strengthening Movement. Its approach was more pragmatic, focusing on economic development, military modernization, and strengthening China’s international position. Members leveraged their military accomplishments to forge substantial political careers, influence Qing dynasty policies, and direct the socio-economic transformation of China. This entrenched their legacies as key architects in the transitioning landscape of Imperial China towards modern statehood. These factions secured key resources and power through alliances with specific merchants, allowing them to intervene in the activities of other state actors using both formal and informal modes, including the initiation of various state projects, for example, westernization in technology through Self-Strengthening Movement, under the construction of a hegemonic vision of a “imagined” Chinese nation-state. The vision of an “imagined” Chinese nation-state was marked by intense internal conflicts, especially between the ruling Manchu elite and the predominant Han ethnic group. As such, discussions about this vision during the late Qing period were often deeply entangled with Han nationalism. Han intellectuals, who controlled the main channels of public opinion, unconsciously promoted the restoration of the Han’s central role in the traditional Chinese state while introducing Western nationalism, often reflecting their dissatisfaction with the Manchu imperial rule. Building on this, the following text introduces the dynamic evolution of state-business relations in early modern China, highlighting chambers of commerce as a key mechanism and discussing the impact on the formation of frameworks for corporate responsibility.
Early legal reforms and business elite mobilization
During modern political and legal reforms, Chinese business elites, much like their Western counterparts, sought to secure a more favorable institutional environment. This effort is reflected in the legislative history and evolution of modern Chinese company law and the organization and activities of chambers of commerce. In the late Qing period, Chinese merchants lacked legal protections for commercial trade, business operations, and investment rights, often facing obstacles from various powers, especially the imperial and local government. Many had to rely on working for foreign companies, which enjoyed extraterritorial judicial rights in China, or collaborate with government-supervised enterprises (Feuerwerker, 1958; McWatters et al., 2016). Extraterritoriality in China originated from treaties such as the Treaty of Nanking (1842), which were among the many unequal treaties that Western powers enforced on China. These treaties granted foreign nationals immunity from Chinese legal jurisdiction, meaning that if a foreign national committed a crime or was involved in a legal dispute in China, they would be tried not by Chinese courts but by consular courts from their respective nations. It created a dual legal system within the country, where Chinese citizens were subject to Chinese laws—which were often harsher—while foreigners enjoyed the protection and often more lenient treatment under their home states’ laws.
In early 1904, the imperial government rapidly enacted China’s first company law, the “Great Qing Commercial Law,” within just nine months. The hasty legislation aimed to address foreign powers’ refusal to relinquish extraterritorial judicial authority over China, a situation highlighted in the 1902 Mackay Treaty between China and Britain. Article 12 of this treaty stated that if China reformed its judicial system to align with Western standards, Britain would relinquish consular jurisdiction in China.
The state’s legislative measures, reflecting the modes of intervention and aimed at shaping business behavior, were ultimately unsuccessful. Despite the Great Qing Commercial Law defining companies as any capital-aggregating trade entities and ensuring equal legal protection for various business structures (government-run, privately-run, government-supervised, and joint ventures), business elites criticized the law for merely copying foreign legal systems without involving business representatives in the drafting process or considering China’s commercial traditions. In response, on 16 December 1906, the Constitutional Preparation Association, formed mainly by officials and business elites from Jiangsu, Zhejiang, and Fujian province, collaborated with the Shanghai General Chamber of Commerce and the Shanghai Business Association to launch a movement for self-legislated commercial law. The initiative gained support from chambers of commerce nationwide and overseas, for example, Chinese chambers in Japan and Southeast Asia. Although the revised law was never promulgated due to the Qing government’s collapse in 1911, it was later slightly modified and issued as the “Company Ordinance” by the Beijing government of the newly established Republic of China in 1914, meeting the needs of the developing capitalist economy advocated by business elites with strong political influence. It is evident that the establishment and dynamic reform of commercial regulations in the late Qing period encapsulate the political mobilization of business elites within the framework of the then scattered state power relation network, situated against the backdrop of the nascent while chaotic modern nation-state. A principal mechanism facilitating this process was the creation and functioning of chambers of commerce.
Chambers of commerce during political change
The role of chambers of commerce in state-business relations in early modern China demonstrates how different social elites (merchants, officials) were represented in the state’s decision-making processes. These representations evolved over time, ultimately influencing the norms and practices of corporate responsibility in China. The development and expansion of chambers of commerce also illustrate the increasing involvement of business elites in national political and social affairs. Chambers of commerce were China’s first officially recognized non-governmental organizations and legally sanctioned associations (Chen, 2011). The first chamber appeared in Shanghai in 1902, approved by the imperial government to assist in commercial treaty negotiations with Britain. These chambers not only connected merchants through modern organizational structures but also linked various social elites, including gentry-merchants with official positions or retired officials engaged in commerce, influential bankers, academic and educational figures, local officials, and landed gentry. Some chambers even organized armed forces to maintain local order and self-defense during the late Qing’s social collapse.
Chambers of commerce played critical roles in major political and social reforms as shown by their aforementioned efforts to revise commercial law. During the Xinhai Revolution, which led to the end of imperial rule, chambers of commerce that once collaborated with the imperial government to promote reforms shifted to support revolutionary activities (Chen, 2011). For instance, in Shanghai, some of them assisted in capturing the Jiangnan Manufacturing Bureau, one of East Asia’s largest military factories. Some supported local officials’ declarations of peaceful independence from the empire, for example, in Suzhou.
Despite this increasing influence, state actors never relinquished control over merchants and enterprises within the context of the developmentalist nation-state. This reflects the articulation of state power distribution, particularly during the transitions from Qing to Republican rule and the later Kuomintang (KMT) regime. In the early 20th century, to promote industrialization and national revival, the merchant class was imbued with a unique historical and national responsibility and mobilized to develop agriculture, mining, transportation, and other sectors. Influenced by Western mercantilism, government-supervised commercial bureaus and pro-government journals vigorously promoted the idea of industrial salvation, viewing merchants as corporate citizens contributing to national development, with political and social roles often outweighing profit motives. The Republic an leaders also restructured spontaneously formed chambers of commerce to exert political influence.
After the first president Yuan Shikai’s death in 1916, China descended into warlord conflicts until the nationalist KMT unified the country in 1928 and established its capital in Nanjing. In 1929, the Nanjing government drafted a “Company Law” based on the “Company Ordinance.” During this period, the state-business relationship increasingly resembled contemporary authoritarian capitalism. The “Company Law” emphasized state capital’s primary and leading role, implementing policies to regulate private capital and expand state capital, aiming to protect small shareholders and limit the power of large shareholders. Influenced by the KMT’s statist ideology and economic strategy, the Nanjing government’s “Company Law” reflected enhanced government control over enterprises, such as requiring government officials to attend and sign off on the establishment meetings of joint-stock companies.
Concurrently, chambers of commerce representing business elites became targets for the new regime. The KMT initiated a political movement to mobilize small merchants and the public, establishing merchant associations directly organized and guided by local KMT branches, thereby limiting and even replacing the original chambers dominated by major merchants. As business elites’ interactions with the KMT deepened, the chambers underwent restructuring. Meanwhile, state-owned enterprises received conscious support, leading to widespread rent-seeking and collusion between officials and merchants. The 1929 “Company Law” introduced the concept of corporate shareholding, initially not designed specifically for state-owned enterprises but providing institutional support. In the early Nanjing government period, state-owned enterprises primarily operated industrial and mining businesses. By the mid-1930s, the government, aiming to control the national financial lifeline, began forcibly acquiring shares and controlling key financial institutions, such as the Bank of China and the Bank of Communications, through joint-stock companies.
With the outbreak of the Second Sino-Japanese War and the implementation of wartime economic policies, the national economy became fully subordinated to the war effort, leading to the rapid development of state-owned enterprises. During this period, the KMT government expanded provincial and national enterprises through joint-stock companies. The inadequacy of the 1929 “Company Law” to meet the specific needs of government-established companies led to the issuance of the 1940 Special Joint-Stock Company Ordinance in Chongqing, catering to the establishment of joint-stock companies involving central and local governments, private sectors, and foreign capital, thus promoting state-owned enterprise development.
Following the war, the Nanjing government continued to expand state intervention in the economy, influenced by American New Deal policies and the need to rebuild and stabilize the post-war economy. The government rapidly expanded state-owned enterprises by taking over assets in former Japanese-occupied territories. The corporate structure remained the preferred organizational form for state-owned enterprises. To further support this growth, the government revised the 1929 “Company Law” in 1946, introducing limited liability companies. This allowed the state to participate as a shareholder, facilitating investment and furthering the development of state-owned enterprises.
The role of chambers of commerce in early modern China demonstrates how various social elites (e.g. merchants and officials) were represented in the state’s decision-making processes, highlighting the evolving nature of corporate responsibility and political engagement. Established as China’s first officially recognized non-governmental organizations, chambers of commerce played pivotal roles in major political and social reforms. The inaugural chamber, established in Shanghai in 1902, not only facilitated treaty negotiations with Britain but also became a central hub linking diverse social elites, thereby enhancing their involvement in national affairs. This involvement proved crucial during events such as the Xinhai Revolution, where chambers supported revolutionary activities and significant political transformations. The persistent influence and control exercised by state actors over these entities illustrate the complex interplay between commerce and state power, especially during transitions from Qing to Republican rule and under the KMT regime, where chambers were further restructured to align with national development goals and state-driven industrialization efforts. The establishment of the first chamber of commerce encapsulates the business elites’ significant agency in driving institutional changes, while the subsequent interactions and restructuring of these chambers underscore the considerable influence political elites and state actors had in steering these mechanisms, namely, attempting to reconstruct the business-state dynamics during regime change, to align with broader state agendas and political transformations.
Corporate (social) responsibility in early modern China
The state-business relation in early modern China exhibited a contradictory duality: on one hand, the government, through legislation, encouraged the development of private capitalism, creating favorable macroeconomic and social conditions; on the other hand, the ideology of state capitalism profoundly influenced and even dominated policy directions. This contradiction persisted through the transition from the Beijing government to the Nanjing government, but the balance of power within these governments shifted. Initially, the Beijing government was largely unable to manage enterprises directly, resulting in encouragement of private industrial development. Later, the Nanjing government, upon achieving national unification and relative stability, focused on expanding state capital with private capital as a supplementary force. This policy not only facilitated the emergence of official-merchant capital but also provided conveniences for it. Apart from a few purely state-owned institutions such as the Resources Committee and the China Textile Corporation, official-merchant capital leveraged its advantageous position in policies to form a monopoly interest structure involving senior bureaucrats and large capitalists in industrial, mining, and trade sectors.
Against this backdrop of state-business relations, early Chinese corporate social responsibility was not only reflected in contributions to national industrialization but also in public services and charitable activities. These contributions often benefited political and economic elites through networks of official and merchant protection. From the Song to the Ming and Qing dynasties, China saw the emergence of officially sponsored charitable organizations known as “charity halls” or “charity society”. By the late Qing period, due to declining government capabilities, local gentry and merchants established numerous charitable institutions, especially in the Yangtze River Delta, Pearl River Delta, and Beijing areas, providing aid to the poor, disabled, children, and abandoned infants. These charitable institutions often relied on the chambers of commerce, becoming arenas for cooperation between merchants and bureaucratic elites. They served as platforms for expanding social connections among merchants and gentry, where leaders could coordinate local charitable affairs. Many charity halls initially undertook roles in political missions including promoting political ideology, for example, imperial moral teachings on Confucianism, reducing social conflicts, and maintaining order. For example, the Guangren Charity Hall, established in Guangzhou in 1890, prioritized the preaching of imperial edicts, employing scholars to compile instructional materials. This resembles the contemporary practice of promoting Chinese Communist Party ideology in grassroots organizations. On the other hand, charity halls were also used by political forces to promote social change in line with their interests. For example, Kang Youwei (1858–1927), a prominent political thinker and reformer, with the support of some merchants, used the Guangren Charity Hall as a foundation to establish the Shengxue Society in 1897, promoting his loyalist ideology for political reform.
Early Chinese corporate social responsibility practices were not merely pure acts of charity but were institutional efforts by political elites to mobilize and control emerging economic forms to maintain their dominance. As noted at the beginning of this section, the close coupling and dependence of emerging commercial elites and contemporary political elites since the late Qing period destined the collusion, both active and passive, between the business community and government actors. Consequently, corporate responsibility inevitably carried the connotation of a nationalist discourse on industrial development driving national revitalization. This connotation, to some extent, has been inherited over time and can be observed in many contemporary late-developing countries, for example, India and Indonesia. Beneath the veneer of developmentalist discourse, the extent to which public interests are genuinely served by corporate responsibility actions in these authoritarian nationalist contexts remains debatable. Public interests are often, to some degree, subverted in the interactions between political and business elites’ networks of mutual patronage.
Conclusion and discussion
The discourse on corporate responsibility has largely evolved in the context of Western liberal market economies, where the interactions between the state, business, and society are significantly influenced by a predominantly liberal capitalist doctrine (Brammer et al., 2012). This framework has often failed to adequately address the realities of corporate responsibility in contexts where state dynamics, business practices, and societal norms do not align neatly with liberal democratic models. This article’s exploration of corporate responsibility from the perspective of critical state theory using the historical case of modern China serves as a broader critique and expansion of the traditional CSR narrative, revealing the deep interdependencies between state power and business activities that shape corporate responsibilities in developmentalist and authoritarian national contexts.
This article has utilized Jessop’s SRA to delve into the intricate interplay between state, business, and society in the regime of corporate responsibility. The analysis has underscored the significance of state-business relations in shaping corporate responsibility practices, revealing how these dynamics are deeply embedded within broader socio-political structures and historical trajectories. From a theoretical standpoint, the SRA framework provides a robust lens for examining the state not as a static entity but as a dynamic network of relationships. By focusing on the modes of political representation, articulation, and intervention, this approach highlights the strategic selectivity and relational nature of state power.
The review of early modern China, spanning the late Qing period through the Republican era, illustrates how these theoretical dimensions manifest in practical governance and corporate behavior. The historical evolution of state-business relations in China showcases the complex and often contradictory nature of corporate responsibility. During the late Qing period, the emergence of modern corporate organizations and the state’s role as a crucial external political stakeholder exemplified the interconnectedness of business and state interests. The rise of local Han elites and business leaders within the state power network illustrated the social basis of the state, where political and economic elites collaborated to shape national policies as exemplified in corporate responsibility. Chambers of commerce emerged as pivotal institutions representing the interests of business elites, further embedding them within the state apparatus. These organizations played significant roles in national political and social reforms, illustrating the modes of representation within the state’s decision-making processes. The involvement of business elites in legislative reforms and revolutionary activities underscores the fluid and dynamic nature of state-business relations.
The historical case of China provides critical insights into the implications of corporate responsibility in contemporary contexts, particularly in authoritarian and developmental states. The alignment of corporate responsibility with state objectives and the strategic mobilization of business elites highlights the potential for corporate responsibility to be co-opted by political and economic interests. This raises important questions about the genuine impact of corporate responsibility initiatives on public welfare and human rights. In many late-developing countries, the developmentalist discourse continues to shape corporate responsibility practices. The extent to which these practices serve public interests versus the interests of political and business elites deeply roots in the dynamic state-business relations in these contexts which need to be further explored case by case. Ensuring that corporate responsibility contributes meaningfully to social welfare and human rights requires robust governance frameworks based on the principles of transparency and democracy through vigilant scrutiny of state-business interactions.
The application of Jessop’s SRA to the historical case of early modern China offers a nuanced understanding of corporate responsibility within the context of an authoritarian and developmentalist nation state. By viewing the state as a dynamic and relational entity, this analysis has illuminated the complexities and contradictions inherent in corporate responsibility practices. In early modern China, the interplay between state strategies, business interests, and socio-political transformations shaped the development of corporate responsibility. The integration of business elites into state governance, the legislative and policy interventions, and the mobilization of corporate actors for national development illustrate the multifaceted nature of corporate responsibility which, on the one hand, aligns with state elites’ interests to promote the state’s developmental projects for national revival, on the other hand, mobilizes social forces in their different kinds of state projects for social and political change, in this context. The insights gained from this historical analysis are relevant for contemporary discussions on corporate responsibility, particularly in authoritarian and developmental states. The strategic use of corporate responsibility by the state, the potential for elite co-option, and the implications for public welfare and human rights are critical considerations for policymakers and scholars alike. Future research should continue to explore the dynamic and relational aspects of state-business interactions, utilizing frameworks like the SRA to deepen our understanding of corporate responsibility. By doing so, we can better address the challenges and opportunities of corporate responsibility in promoting social, environmental, and human rights outcomes in diverse political and economic contexts.
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Kang, X. Corporate (social) responsibility in state-business relations from the perspective of critical state theory: a historical case of early modern China. Int J Corporate Soc Responsibility 9, 14 (2024). https://doi.org/10.1186/s40991-024-00102-1
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DOI: https://doi.org/10.1186/s40991-024-00102-1