Can Businesses Do Well and Do Good? Yes.
In this post Edward Glaeser asks if businesses can do well and do good. The answer is, of course, yes. This is a no-brainer; or rather, businesses have to embed "goodness" in their business practices in order to succeed.
For example, in order for businesses to be able to sell their products more than once, they have to establish trustworthiness. Every time you buy a Kraft product or a McDonalds hamburger, or a Coke, you expect it to have high quality. Companies have to embed quality and care for the consumer into their products.
In order for Occidental Petroleum or ConocoPhillips to operate in places like Colombia or central Africa, they have to build roads, infrastructures, schools and clinics as part of their concession. Who do you think is one of the largest health care providers in Africa? ExxonMobil. Improving local communities is part of the cost of doing business for many extractive industries and large-scale infrastructure projects.
Why does Target give away over $3 million a week to community projects or Office Depot invest so much in helping local businesses recover from disasters? Because they have a vested interest in the customers living in the communities in which they operate thriving or recovering.
Profit is just a description for creating more wealth from combining two or more inputs than existed before, best captured by the saying: "the whole is worth more than the sum of the parts." Inherently this kind of creativity and productivity should be considered a good thing. Companies have to maximize their strengths and opportunities and minimize their costs and their threats to stay in business.
Why do you think theologians and sociologists like Michael Novak and Max Weber have consistently linked the development of capitalism to moral and religious systems? Businesses can't flourish without the virtues of customer service, discipline, hard work, foresight, trustworthiness, reliability, reciprocity, and accountability.
What is interesting about Glaeser's op-ed though, is not this question about doing good and doing well, but why we have such a tough time talking about morality and economics, specifically corporate social responsibility.
The reason is that many people define how businesses "do good" as something that is separate and apart from their business operations. Social responsibility is in many ways, in the eye of the beholder. A Muslim, a union activist, an environmentalist, or a nun might have very different definitions about what it means to "do good." Do you focus on LEED certification or affordable housing? Do you worry about pollution or do you worry about jobs? Do you create jobs in the U.S. or invest in poverty-stricken countries?
How can anyone please anyone all of the time? Given their finite resources and specific purposes, businesses can't be all things to all people. The purpose and designs of business doesn't make them good or evil. It makes them human.
The desire to achieve a social good through business is really a public policy debate, not an economic debate, isn't it? And in some regards, corporate social responsibility or business ethics or whatever you want to call this field becomes a Trojan Horse for different agendas that may not have anything to do actually with the morality of business.
In this regard, the question really isn't how ethical business should be, but rather, are our expectations appropriate? As Glaeser suggests, maybe we should not ask businesses to do things they are not designed for, and rather take another look at the non-profit sector and see if these organizations are meeting their social goals.
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