1. Business as a Change Agent
for Economic and Social Good
Dr. Joseph Williams
Dean
School of Business, Government, and Economics
E N G A G I N G T H E C U L T U R E , C H A N G I N G T H E W O R L D .
7. Business as a Force for Good is on
the rise
Don’t be evil
The rise of Benefit
Corporations
Environmental
Activism
Invest in people and
communities
Healthy outcomes
Sustainability
Eradicate Poverty
Public good and Business have been intertwined since the dawn of civilization. Producers and merchants historically operated in a context where individual initiative was encouraged by grants from a ruler or government of some kind and, in return for the right to keep profits, producers and merchants were expected to provide value that contributed to the vitality of the empire or kingdom.
Roman wine or olive oil producer
Marco Polo – merchant opening new markets for Venice
A long historical record of business structures being created to attract private money to fund public projects for the “greater good” that dates back to the Greek and Roman empires The evolution towards the modern corporation found profound expression in the 1602 creation of the Dutch East India Company that was chartered to further Dutch colonial interests in Asia without putting a strain on the Dutch government’s coffers. In addition, the DEIC was able to return an annual 18% dividend to its Dutch shareholders for 200 years, creating enormous prosperity back home.
Prior to the 1929, US business typically focused on achieving a reasonable profit while ensuring the livelihood of its employees and the well-being of the community.
Many companies were either founded to provide economic prosperity to a community and/or to further a specific cause.
1851 – Corning- founded as a science company for scientists to sell innovation
1905 – HEB Grocery Stores, Community flourishing & Christian company
1927 – Marriott founded on business principles that support church, charity, and country
The crash of 1929 led to a serious debate in this country about the purpose of business between profit maximization versus social service but companies were still being founded with a social agenda.
1929 – ServiceMaster (Terminix) founded as a Christian company
1938 – REI founded as a coop to support the climbing industry
1950 – Interstate Battery founded as a Christian company and for community flourishing
Since Milton Friedman and the 1960s, focus has shift to profit maximization for the benefit of shareholders and/or management. Corporations have increasingly divorced themselves from obligations to their employees, their communities, or social purposes. And now many of them are divorcing themselves from national interests.
GE – Jack Welch (“we are a global company that just happens to be headquartered in the US)
* Ford: Alex Trotman, CEO (90s): Ford isn’t even an American company, strictly speaking
* IBM VP Ralph Gomery (2007): “the interests of companies and counties have diverged”
Koch / Grover Norquist – shrink government so you can drown it in the bathtub and let business operate unfettered
IBM: Relentless cost-cutting, offshoring, lack of R&D investment to boost stock price
* IBM tried to patent its offshoring blueprint in 2009
* In 2013 IBM lost huge CIA cloud deal to Amazon because “not technically competitive” even though cheaper
** Cutting costs without innovation eventually fails; look at HP
Walmart: 80% of its products now made in China; many employees on government assistance
Sunbeam: Al Dunlop (cut so much the company went bankrupt in 2001)
Google: wording in their 2004 IPO filing
Benefit Corporation: Adds consideration for social and environmental outcomes to corporate charter
Patagonia: 100% recycleable materials; 1% of revenue / 10% profits to environmental causes
Costco: Living wages, “duty to give back” – Charlie Munger: “COSTCO does more for civilization than the Rockefeller Foundation”
O Revolution Foods: trying to ignite a healthy food revolution for children in school food programs; food education
Biogen idec: Focus on unmet medical needs (orphan drugs) and massive investment in sustainable footprint
Produits du Sud (Root Capital): invest in gum and sesame processing plants in Mali