Michael E. Porter of Harvard Business School and Mark R. Kramer, the managing consultant, have articulated a concept they call "shared value," which is based on the belief that companies can increase their profits while also addressing pressing social problems. Several large businesses have attempted to do so. For example, Exxon Mobil put $125 million toward training teachers in science, technology and engineering so that it has a larger pool of skilled workers to higher from in the future. Another example, studied by Harvard Business School, is Southwire, a family-owned maker of wires in Georgia which staffed an entire factory with students at risk of dropping out of high school, requiring them to stay in school in order for them to keep their jobs. The county's high school graduation rate increased by 10% and within 5 years the factory was adding $1.7 million to earnings.
While these businesses had successful experiments with incorporating social issues into their businesses, social and corporate objectives are most often not aligned. However, it has been found that many executives believe that the growing gap in income and opportunity is not only bad for the country but for business as well, as it curbs consumer spending, undercuts worker morale and can produce political polarization. Businesses are starting to realize that low wages can be costly in that they drain motivation and increase worker turnover. Additionally, companies are beginning to reevaluate outsourcing to cheap labor markets in light of the growing importance of flexible production schedules and proximity to customers, as well as an increase in piracy among outsourced labor.
While these prospects for social change through changing business dynamics look somewhat promising, addressing the U.S.'s income inequality may also require higher taxes, more stringent regulations and other changes that high-income corporate leaders would most likely not support. Robert M. Solow, a Nobel laureate in economics, believes that changing the determination of income should entail changes in corporate governance. These examples show that it is possible to merge business and social issues, however large companies like fast food chains do not appear to show much support for "shared value" initiatives, as displayed on a billboard in New York with the message: "What, I get 30,000 a year with no experience or skills? Who needs an education or hard work?"
http://www.nytimes.com/2015/09/09/business/economy/corporate-efforts-to-address-social-problems-have-limits.html?ref=economy&_r=0
1 comment:
I feel that this idea of shared value is something of great promise for small and even large companies. Working in a large international company this last summer as a business development intern, I saw this idea first hand of uniting employees and raising moral to increase profits over time. As employee motivation began to rise due to an increase in wages, this lead to an increase in productivity and in turn, sales for the company. So, yes, I do think It is important for social and corporate objectives to be aligned because if it does not, it could be devastating for the business and the country as a whole... But I also feel that to make social and corporate objectives align, it will take a lot of effort on the side of the employer to make sure this actually occurs, which is something many may not feel like putting their time into.
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