This is an explanation and further exploration of Rosabeth Moss Kanter’s article: How Great Companies Think Differently, as published in the Harvard Business Review. This elaborates on the concept of institutional logic and its six facets, with examples of companies such as GE, Unilever, Heinz, P&G and more.

1. How Great
Companies
Think
Differently
Dia Lao and Nicole Lingham

2. Friedman, M. (1970, September 13).
The Social Responsibility of Business Is to Increase Its Profits. New York Times Magazine.

3. Social/Institutional Logic
Focus on generating money and on their
choices of how to do so, they consider people
and society as core to their purpose
Invest in them in building enduring institutions
Accompanied with economic and financial logic
it is used as a guiding principle behind the
practices of many widely admired and high-
performing companies
They are also vehicles for accomplishing
societal purposes and for providing meaningful
livelihoods for those who work in them

4. Six facets to
Institutional
Logic
1. A common
purpose
2. A long-
term view
3. Emotional
Engagement
4. Building
Communities
5. Innovation
6. Self-
organisation

5. A Common Purpose
A buffer against uncertainty and change by providing
corporations with a coherent identity
Purpose and values enforced by management at the core of an
organization’s identity
Clear institutional values when established can help with
challenges of globalisation

6. A Long-Term Focus
Willing to sacrifice short-term financial opportunities if
incompatible with institutional values.
E.g. HEINZ
Developed guidelines for sustainable tomato production and
processing in California
Member of the Business Coalition of Sustainable Food Lab, whose key
objective is to promote sustainability throughout the supply chain
Expanded the market through community development and
improving quality of life
Heinz Micronutrient Campaign (HMC)-2001-present
Waste reduction through packaging innovation and recycling

7. Well-understood values and principles can increase
employee engagement, as it can be a source of
emotional appeal.
Adhering to institutional logic makes the regular
articulation of values core to the company’s work.
Investing resources and time in communicating values
keeps social purpose at the forefront of everyone’s
mind. Work is made emotionally compelling.
This ensures that employees use the organizational
values as a guide for business decisions.
Emotional Engagement

8. Emotional Engagement
The transmission of institutional values can evoke:
positive emotions
stimulate motivation
propel self-regulation or peer regulation
Emotion is one of the forces governing corporate
performance and behavior inside organisations.
Moods are contagious and can affect such issues as
absenteeism, health, and levels of effort and
energy.

9. P&G’s Best Job Commercial
www.youtube.com/watch?v=8ywO8DR-5NY

10. Partnering with the Public
Bring business and societal interests together
Formation of public-private partnerships
Partnerships can take many forms: International
activities, large domestic projects, product or service
development to address unmet societal needs or
short term volunteer efforts
It’s NOT sales or marketing; it’s a high-level
conversation to demonstrate commitment to
furthering the development of countries it is
operating in

11. Hindustan Unilever – transformed
village life in India
Raised the incomes and living
standards of the 45000 female
micro-entrepreneurs
Reduced the spread of a contagious
disease by increasing access to
hygiene products
Centered on partnerships with the
government-supported and
microcredit-financed village self-help
groups
Project Shakti

12. Innovation
Become credible when leaders allocate time, talent and
resources to national or community projects without seeking
immediate returns
Encourage people from one country to serve another
Institution building helps connect partners across an
ecosystem, producing business model innovation
Creating opportunities for individuals to use company resources
to serve society furthers institution building goals

13. Aligning purpose to societal interests
Product offerings include health care, water
treatment, lighting, energy and more
Market positioning is in a large intersection with
societal interests
Its core values is on the notion of using imagination
and innovation “to solve the world’s biggest
problems”
$80 million workshop facility and training centre at
Jandakot in West Australia to will address one of
Australia’s big challenges, its engineering skills
shortage
Supports many local organisations whose goals it
aligns with through its Ecomagination and
Healthymagination initiatives (ex. McGrath
Foundation, Lupus Association for medical
research, and Engineers Australia)

14. Self-Organisation
Institutional logic assumes that people can be trusted
to care about the fate of the whole enterprise
Employees make their own choices
Managers in great companies understand that formal
structures can be too rigid to accommodate
multidirectional pathways for resource and idea flow
E.g. EDS – came together outside formal structures
to transform their business model

15. Kanter (2011) argues that great companies:
Are more than money-generating machines
Operate on “institutional logic”
Are vehicles for accomplishing societal purposes
Create frameworks using social value and human values as decision making
criteria
Build enduring institutions by aligning a company’s purpose with her six
facets of institutional logic
Urip (2010): Companies should consider profit, people and planet as values of
creation to ensure sustainable growth opportunities.
Porter & Kramer (2006) adds that business and society are interdependent.
Companies act as vehicles for accomplishing societal purposes ---in a way
that’s most appropriate to each firm’s strategy to optimise these
investments in people and society.
Conclusion

16. References
Competing for the future. Hamel, G., Prahalad, C. K., Powderhouse Productions, Harvard
Business School Management Productions and Harvard University. Graduate School of
Business Administration (Directors). (2006).[Video/DVD] Boston, MA: Produced by Harvard
Business School Management Productions in association with Powderhouse Productions.
Czinkota, M. R., & Ronkainen, I. A. (2013). International marketing 10th Edition. Cengage
Learning.
Firms who drive for a better world. (2012). Strategic Direction, 28(5), 26-29.
doi:http://dx.doi.org.ezproxy.bond.edu.au/10.1108/02580541211222988
Friedman, M. (1970, September 13). The Social Responsibility of Business Is to Increase Its
Profits. New York Times Magazine. Retrieved from: http://www.nytimes.com
General Electric Company (2014). GE Australia: Our Company Citizenship.
Retrieved January 27, 2014, from http://www.ge.com/au/company/citizenship/index.html
Giffords, E. D., & Dina, R. P. (2003). Changing organizational cultures: The challenge in
forging successful mergers. Administration in Social Work, 27(1), 69-81.
doi:10.1300/J147v27n01_05
Gillier, T., Akin Osman Kazakci, & Piat, G. (2012). The generation of common purpose in
innovation partnerships. European Journal of Innovation Management, 15(3), 372-392.
doi:http://dx.doi.org.ezproxy.bond.edu.au/10.1108/14601061211243684

17. Heinz Company (2013). Heinz Micronutrient Campaign. Retrieved January 29, 2014, from
http://www.heinz.com/sustainability/heinz-micronutrient-campaign.aspx
Kanter, R. M. (2011). How great companies think differently. Harvard Business
Review, 89(11), 66-78.
Leavy, B. (2012). Getting back to what matters - creating long-term economic and social
value. Strategy & Leadership, 40(4), 12-20.
doi:http://dx.doi.org.ezproxy.bond.edu.au/10.1108/10878571211242902
Porter, M. E. K.,Mark R. (2006). Strategy & society: The link between competitive
advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.
Procter & Gamble. [hepimordkaTV]. (2013, February 17). Cool Ads - Best of 2012 - (P&G)
Procter & Gamble - Best Job - HD. Retrieved January 29, 2014, from
http://www.youtube.com/watch?v=8ywO8DR-5NY
Urip, S., & EBL Ebook Library. (2010). CSR strategies: Corporate social responsibility for a
competitive edge in emerging markets. Hoboken: John Wiley & Sons, Inc.