Insiders, Outsiders and the Rules of the Game

At a talk by Prof Steven Friedman I was asked to moderate yesterday, in the build‑up to the CSI Indaba in July, the Prof described South Africa as a country still run by insiders, while a vast number of outsiders live with the consequences but not the voice. That framing stayed with me.

Photo credit: Polity.org.za – Steven Friedman interview feature (2017).

It's a diagnosis of how our institutions actually work: who sets the rules, who plays the game, and who never makes it onto the field. Some of this is an echo of the work of Douglass North landed in the South African reality.

North famously described institutions as the “rules of the game in a society”: the formal laws and informal norms, the written policies and unwritten codes, that structure political, economic and social interaction. These rules are not neutral.

They decide whose expectations matter, which transactions are easy or expensive, and what kinds of futures feel possible for different groups of people. In other words, they create insiders and outsiders, not just socially, but institutionally.

South Africa’s insiders are those whose lives are largely organised through the formal economy and its institutions. They earn salaries, hold contracts, pay mortgages, navigate HR systems, and appear in the statistics as properly employed.

Outsiders, by contrast, survive in the spaces the formal system does not quite know how to see: the informal trader, the backyard mechanic, the home‑based entrepreneur, the person stitching together grants, piece jobs and side‑hustles. Yet it is this “outside” economy that now provides about a fifth of all jobs and supports millions of lives.

Seen through Friedman's lens, the insider/outsider divide is not just about income. It is about which rules were written with you in mind. For insiders, the rules of the game broadly fit the realities of their lives; for outsiders, those same rules often function as obstacles, blind spots or, at best, distant background noise. Institutions are humanly devised constraints. They can be inclusive, but they can also be designed, or simply allowed, to serve an elite.

This is where corporate social responsibility and corporate social investment enter the picture.

Corporate social responsibility operates squarely in the institutional domain. It is a company’s answer to North’s question about the “rules of the game”: What norms will guide our behaviour? How do we understand our obligations to workers, communities, government and the environment? Which voices count when we make decisions?

CSR is about the social compact a firm chooses to enter into. It sets the internal rules – the values, policies and expectations, that govern how the organisation relates to the society around it.

Corporate social investment, by contrast, lives in the realm of resources and execution. CSI is what happens when those institutional commitments are translated into budgets, programmes and partnerships.

It is the deployment of capital, skills and relationships into specific geographies and issues. Where CSR defines the “why” and the “with whom”, CSI carries the “how much”, “where” and “through which mechanisms”.

Foregrounding insiders and outsiders changes how we judge both.

If a company’s CSR is crafted entirely from an insider’s vantage point, assuming, for example, that the primary route to dignity is a formal job in a large firm, or that “community” is the formal ward committee and the registered NGO, then its institutional commitments will reflect that bias. Its rules of the game will be written for people already inside the formal system. Its language may be inclusive, but its imagination is narrow.

CSI then risks becoming the operational wing of that insider bias. Funds flow to well‑structured partners who speak corporate language. Interventions aim to “bring people into the mainstream” without pausing to ask whether the mainstream itself is fit for the realities of those people’s lives.

Informal economies are tolerated at the margins or framed as stepping‑stones to something more respectable, rather than recognised as legitimate, complex systems in their own right.

Friedman’s work pushes us to ask more uncomfortable questions.

If institutions are the rules of the game, who wrote them, and for whom?

If organisations are the players, how are they using their power: to defend the existing equilibrium, or to negotiate a different one?

In South Africa, this means confronting the fact that our dominant rules still reflect the interests and experiences of insiders, even in spaces ostensibly dedicated to inclusion.

From this perspective, CSR is not just an ethical add‑on. It is an institutional choice: to either affirm the existing insider‑centric rules, or to consciously re‑write them in ways that acknowledge and include outsiders.

That could mean redefining who counts as a stakeholder, expanding whose knowledge is considered valid, and treating informal economic actors as partners rather than problems.

CSI then becomes the test of whether that institutional shift is real.

If a company claims, at the level of CSR, to value inclusion but directs the bulk of its CSI into initiatives that primarily benefit people already inside the formal economy, it is reinforcing the old settlement.

If, however, its investments deliberately strengthen informal‑formal linkages, support township and rural enterprises, and help build local systems around how people actually survive and trade, then CSI begins to look like institutional reform in practice.

Put differently:

• CSR is where a firm declares which insiders and outsiders it is willing to recognise.

• CSI is where it spends money in line with,or in contradiction to, that declaration.

  
  

Foregrounding insiders and outsiders also reframes the familiar “jobs versus livelihoods” debate. A CSR stance shaped by insider norms naturally gravitates towards formal job creation as the highest good. Friedman's institutional lens, combined with South Africa’s employment data, suggests a more sober view: the formal labour market is not designed, and is unlikely, to absorb everyone.

A more honest CSR would acknowledge this and embrace decent, diversified livelihoods, many of them informal or hybrid, as a core development outcome. CSI would then follow suit, backing ecosystems of small, flexible, locally rooted economic activity rather than only chasing large, formal job numbers.

In this light, the insider/outsider divide is not a rhetorical flourish. It is a map of how institutions currently allocate possibility.

Prof Friedman reminded me of that map; the conversations lined up for the CSI Indaba helps us see where South African business is still standing on it.

And that leads to a sharper standard for corporate practice:

A company’s CSR should be judged by the social compact it is willing to renegotiate, whose rules it is prepared to question, whose realities it is prepared to centre.

Its CSI should be judged by whether its resources are used to widen the circle of insiders, not by forcing outsiders to mimic them, but by reshaping the rules of the game so that more ways of living and working are treated as legitimate.

This is how we #GrowZA