Business and Society: A Multidimensional Perspective
(Published in SAMSMRITI, Journal of Sambhram Academy of Management Studies Bangalore)
A promising trend in the present corporate scene is the growing acceptance of the concept of Corporate Social Responsibility, CSR. This concept has great potential for steering the higher evolution of business. But to harness fully this evolutionary potential of CSR it has to be viewed in a total ecological perspective, which means not only interms of the ecology of physical nature, but also in the context of social, moral and spiritual ecology of human and terrestrial life. In otherwords CSR has to be understood and implemented holistically in all its dimensions: social, moral, ecological and spiritual. This is because there is interdependence between business and society at all levels. This article examines CSR from such a holistic, spiritual perspective.
The Emerging Perspectives
Broadly speaking, there are three major schools of thought on CSR: moral obligation,¾which includes environmental preservation and sustainability¾license to operate and reputation.
The first one, concept of moral obligation, is based on the principle that commercial success have to be achieved in ways that honor ethical values, respect people and communities and preserve the natural environment. The second, license to operate is based on the idea that every company needs tacit or explicit permission from government, communities and numerous other stakeholders to do business. The third, reputation, is based on the rationale that CSR improves company’s image, strengthen its brand, enliven morale and even raise the values of its stock.
There is at present a growing awareness among corporate leaders that business is an integral part of human society and the resulting recognition of the interdependence of business and society. However, many entrepreneurs and executives, especially in the West, view this interdependence pragmatically as part of the enlightened long-term interest of business. For example, when Mervyn E. King, the head of an investment bank and chairman of South Africa’s king committee of corporate governance was asked. “Isn’t it too much to ask the members of the board to monitor social responsibility” his reply was “A good corporate citizen can improve its image, motivate its employees, raise capital cheap and make its business more sustainable. What I am advocating is not a moral crusade, its good business” which is more or less belongs to the “reputation” school. Similarly Debra Dunn, a Vice-president1 of Hewlett-Packard, talking about her company’s ‘E-inclusion’ project says, “The initiative isn’t really about philanthropy. It’s about trying to bring viable sustainable solutions that not only address the problems of the community we are talking about but also create ongoing business opportunities for HP2.”
The most recent and latest school of thought on CSR, propounded by Michel E. Porter and Mark Kramer, deftly combines the moral, social and pragmatic perspectives. Porter and Kramer call their perspective as “Shared Values.” According to this school of thought competitiveness of a company and the health of the communities are closely intertwined. A business needs a successful community not only to create demand for its products but also to provide critical public assets and supportive environment. A community needs successful business to provide jobs and wealth creation opportunities. This mutual dependence of corporation and society implies that both business decisions and social policies must follow principle of shard value, which benefits both sides. Each company has to identify a social problem or need, which when solved or fulfilled, creates shared value for the company as well as the society. So, as Porter and Kramer conclude, “purpose of the corporation has to be redefined as creating shared value, not just profit perse3.”
In contrast to this predominantly pragmatic approach of the west to CSR, most Indian and Asiatic businessmen view the consequences of this interdependence of business and society in moral terms, as a moral responsibility to give back to the society which in terms of philosophy belongs to the “moral obligation” school… A Business Today-Ernst & Young study on India’s best-managed companies makes the following interesting observation:
“—we noted one key difference that distinguishes the approach of Indian companies from those of others. This difference lies in their inclusive nature and manifests itself in the way Indian companies deal with their stakeholders—Indian companies often engage in social upliftment and nation-building projects not due to any regulatory pressures but from a natural sense of duty. We believe that this inherent trait of inclusiveness could well be the defining factor of their tremendous success in the years to come4.”
The Deeper Moral Dimension
Here comes the importance of the deeper Indian perspectives on the moral dimensions of CSR. This trait of Indian companies and the final observation regarding their future success reflect more or less a subconscious perception of the deep insight of Indian thought on the subject. Some of the emerging imperatives in business like ethics, social responsibility and sustainability, are in their essence moral ideals which can lead the corporate world to a quantum leap in evolution to a higher level of consciousness, which in the long-term will have its corresponding positive impact on the bottom-line. For an idea or ideal is not an abstraction, but mental energy or a thought-force. Therefore a moral or spiritual ideal lived in action releases a moral and spiritual force, which has its eventual material results. This is the deeper insight behind the dictum of Mahabharata, “Dharma is the basis of Artha,” which means, roughly translated, ethics is the basis of wealth. Interestingly, this spiritual insight of Indian seers is getting validated by modern empirical research. There is at present a growing body of research, which indicates that moral ideals can lead to financial and business success. For example, Patricia Aburdene, in her well-known book, “Megatrends 2010,” states:
“Socially responsible firms repeatedly achieve first-rate financial returns that meet and often beat the market and their peers, proving morals and money may be curiously compatible, after all. For example, Governance Metrics International rated public firms on governance, labor, environmental and litigation policies. Top-ranked firms substantially outperformed the market, while poorly rated firms significantly trailed it5.”
Here are some more examples given by Patricia to illustrate her hypothesis:
- A 2002 DePaul University study found that the Business Ethics 100 Best Citizens (the 2001 list) outperformed the mean of the rest of the S&P 500 by ten percentile points. The DePaul study tracked total returns, sales growth and profit growth.
- When researchers studied firms that honor stakeholders, not just shareholders, the results were particularly striking. Tower Perrin studied 25 firms that excel in relationships with stakeholders—investors, customers, employees, suppliers and communities. From 1984 to 1999 the “stakeholder superstars” beat the S&P 500 by 126 percent. The “superstars,” including firms such as Coca Cola, Cisco, P&G and Southwest Airlines, showed a 43 percent return in total shareholder value versus 19 percent in total shareholder return for the S&P 500.
But to realize fully the moral and spiritual potential of ideals like ethics, social responsibility or sustainability they have to be pursued for their own sake, as a selfless service for the well being and progress of the larger whole of life. But if we pursue these ideals with an eye on some pragmatic gains it not only diminishes their uplifting, evolutionary potential but also restricts their material results. There is an element of truth in the pragmatic attitude of people like Merlyn King and Debra Dunn who regard social responsibility as good business because in the long-term goodness pays. But the Indian perspective on corporate responsibility is not based on commercial considerations but on a higher pragmatism rooted on the universal laws of nature, Dharma. The Indian giver gives selflessly without seeking anything in return, but at the same she knows in the depth of her heart, she gives not in vain. The Indian giver knows intuitively that, in the long-term, higher laws of Nature reward generously the unselfish giver.
The other important and emerging attitude on social responsibility is the professional approach to philanthropy. According to this new thinking, social responsibility is not merely throwing money in the form of charity. Philanthropy must transform itself into an art and science of creative giving and has to be done with the same level of professional competence as is bestowed on pursuing bottom line business goals like profit or productivity. For example Bill Gates, the founder of Microsoft, writing on his philosophy of charity says:
“Carnegie believed the wealthy are custodians of society’s resources and have a moral obligation to spend altruistically and wisely——I am a steward of some of society’s resources and I take the responsibility seriously—-I believe in bringing the discipline of business to the art of giving. In practical terms it means doing as much as possible with every dollar and partnering with groups doing excellent work6.”
However, in a holistic perspective, the social responsibility of a company has to be assessed by the total impact of its products, services and practices on the long-term well-being of the society as a whole and not solely by its isolated CSR projects. A company may do great work through its CSR projects, but if its products or its practices are harmful to the peace and well-being of the society or environment, like for example, cigarettes, guns or weapons of mass destruction or reckless downsizing, then the good work done through its charitable initiatives are annulled by the harm done through its products and practices. As ArunMaira, Chairman of the Boston Consulting Group, India rightly points out:
“What the world needs is accountability from businesses for how they make their profits. Imagine a business that makes large profits from selling hard drugs, whose owners then set up trusts with some of these profits to build charitable hospitals. They may be admired for their philanthropy, but did they run a responsible business? This is an extreme example, but it serves to make the point that 21st century society expects businesses to be accountable for the effects their products and their operations have on the condition of communities and the environment7.”
And to comprehend fully the nature of this net positive impact of a company on society, we have to understand the social matrix in which business functions.
The Social Ecology of Business
The concepts we have discussed so far can be understood better if business is viewed as part of a system of social ecology. Some of the orthodox schools of economics and management which do not agree with the concept of CSR, like for example that of Milton Friedman, argue that business is an economic organism and therefore it must confine itself to its core economic activity of creating wealth for the shareholder and should not get into any social activities. But in our present globalised world, where we are becoming increasingly conscious of our interdependence, such a rigidly compartmentalized approach is not valid.
The holistic view admits the fact that a business organization is a part of the economic life of the community and therefore wealth-creation and improving the economic life of the community is an indispensable and irrevocable dharma of business. But business also draws its material resources from Nature and generates a lot of waste. So it has a paramount ecological responsibility to preserve the natural environment. Business is not only an economic entity but also a social organism, or a community, which is part of the surrounding social environment, and from which it draws its social resource like human capital, infrastructure and education. So it has a communal responsibility to improve the quality of social life of the community.
Moreover the qualities of the economic, social, cultural, psychological and spiritual environment are closely inter-related and interdependent. Quality of the economic life depends on the quality of the social factors like education, health care, family support-system, social security, communal harmony, equity and gender relations. Similarly quality of the social environment depends on cultural values and ideals. And finally, the quality of the psychological and spiritual environment of the community depends on the moral and spiritual content of its values, not merely professed in thought and word, but lived in action. But the external social environment is only one aspect of the ecology of business. A business organization is sustained by other stakeholders like shareholders, employees, suppliers, customers.
The concept and practice of corporate responsibility must include and embrace all these factors, which sustain the organization. This organic interdependence of the various dimensions of the corporate life of humanity must be the basis of social responsibility. Every socially sensitive organization should have a CSR strategy, which provides clear guidelines on the nature of corporate responsibility to all these stakeholders, their priorities and how to discharge these responsibilities. These guidelines have to be based on a clear perception of the total long-term impact of business, not only on the physical ecology of Nature but also on the social ecology.
The other aspect of social ecology is the dependence of society on business. As Porter and Kramer¾whom we have quoted earlier¾rightly points out not only the health of business depends on the health of society but also the economic wellbeing of society depends on the values of business. What are the practical implications of this interdependence? Civil society must support good, ethical and responsible business. Here comes the role of NGOs, which are in our contemporary world, a powerful and influential force in civil society.
This cooperation between business and NGO’s may not be easy to achieve because most of the NGO’s view big business with suspicion and mistrust. Such an attitude is to a certain extent justified when we look at the past history of big business in its attitude to the poor and the environment, which is much to be desired. As long as the dominant attitude of big business to the poor is selfish and exploitative or pretending to be benevolent but with an ulterior motive, then NGO’s hostile and suspicious postures against big business is not altogether unjustified. We can even say that NGO activism and its vigilant, critical and militant attitude to big business had helped in checking the rapacity of the rogues in the corporate world. But at present great winds of change are blowing over the corporate life. Business ethics is one of the seriously debated subjects in the corporate world and in B-Schools. The concept of corporate social responsibility is on the threshold of becoming one of the dominant values of business. So NGO’s should not cling to the prototypal thinking that all big business is an evil monster bent on exploiting the poor. When there is a positive change in the corporate world and a sincere commitment to the poor, then NGO’s have to collaborate, even while keeping a vigilant eye and a long-term perspective on the impact of the activities of business on the lives of the poor, especially in the domains of environment and culture. In fact co-creative interaction between the NGO and big business can lead to much mutual benefit and learning, if both display sufficient maturity to understand each other’s perspectives and interests. NGOs can learn a lot from the professionalism and the managerial and technical capabilities of big business. And big business can learn much from the humanistic, environmental and cultural sensibilities of the NGO.
This need for co creative relationship between NGOs and Civil Society is now beginning to be recognised by progressive thinkers in management. For example, Jeb Brugmann and C.K. Prahalad in an article in Harvard Business Review discuss this subject extensively with many examples. As Brugmann and Prahalad points out:
“Realizing that they each possess competencies, infrastructure, and knowledge that the other needs to be able to operate in low-income markets, companies and NGOs are trying to learn from and work with each other. For example, Danone has set up a joint venture with Bangladesh’s Grameen Bank to manufacture and sell bottom-of-the-pyramid dairy products. Microsoft has tied up with the NGO Pratham to deliver personal computers to Indian villagers, while Intel and two large Indian information technology firms, Wipro and HCL Infosystems, have launched the Community PC in partnership with other NGOs to do the same. Nestlé has joined hands with health professionals and NGOs in Colombia, Peru, and the Philippines to deliver educational programs on nutrition and nutritionally fortified food products to the poor8.”
The Spiritual Foundation
We are now brought to the question what is the deeper and inner source of this interdependence between business and society? Here comes the need to understand the spiritual foundation of corporate responsibility. Economic, social or cultural interdependence is only the outer expression of the inner, psychological and spiritual unity of all human and terrestrial life. The New Physics has perceived a “non-local” unity and connectedness of all matter at the subatomic level. The modern science of ecology has perceived a similar unity and connectedness among biological organisms in Nature. Globalization is making us aware of the unity, interdependence and connectedness of our economic life. But all these unities are the outer manifestation of a deeper and inner unity of the human and terrestrial life at the psychological and spiritual level of our being. Our bodies are part of the universal physical energies of nature. Our individual bodies are linked together with the bodies of all others, human and non-human, material, biological and animal. Much before the advent of modern science of ecology, Sri Aurobindo expressed this ecological unity in a pregnant verse:
“Atom and molecule in their
Buttress an edifice
of strange oneness,
Crystal and plant, insect
and beast and man,
Man on whom the
World-unity shall seize9”
Similarly our vital and mental energies, made up of our thoughts, feelings, sensations and vitality are part of the universal unity of the vital and mental energies of Nature. Our individual minds and hearts are inseparably interlinked with the minds and hearts of others. The outer economic, political and cultural life of humanity is only the external expression of the collective vital and mental energies of man.
As we plunge still deeper into our being, at the inner most core of our individual self, we will find a spiritual unity, an indivisible unity of consciousness in which we can feel our oneness with all existence and know all others as part of our own highest universal self, not merely in thought or feeling, but as concretely as we feel our body as part of our self. If we are able to shift our consciousness and the centre of our life and action from the egoic mind to this unity-consciousness then we will know that our own well-being and progress very much dependent on and related to the well-being and progress of others and the larger whole. We also know that whatever we do or give for the well-being and progress of others or the whole ultimately returns to us manifold enriching our own well-being. Similarly all hurt or violence we inflict on others or the larger whole also returns upon us. Ultimately, all the higher and broader ideals emerging in the corporate world like ethics, social and ecological responsibility or globalization, to realize their highest potential have to be based on the perception of this integral unity of all life. All our actions have to be a movement towards a progressive attunement of our inner being and outer life to this inescapable law of unity.
Interestingly the importance of this unity-consciousness for ethics and ecology is now beginning to be recognized in modern thought. The physicist and author, Fritjof Capra writes: “Within the context of deep ecology, the view that values are inherent to all of living nature is grounded in the deep ecological or spiritual experience that nature and self are one” and quotes from Arne Naess, the founder of the deep ecology movement.
“Care flows naturally if the self is widened and deepened so that protection of free Nature is felt and conceived as protection of ourselves—-Just as we need no morals to make us breathe—so if your self in the wide sense embraces another being, you need no moral exhortation to show care—-you care for yourself without feeling any moral pressure to do it—if reality is like it is experienced by the ecological self, our behaviour naturally and beautifully follows the norms of strict environmental ethics10.”
The highest spiritual realization of unity is perhaps a distant and difficult goal to achieve for most of us. However if we are able to perceive this integral unity and its pragmatic consequences with a certain amount of intuitive concreteness or vividness in our mind or heart then it will lead to an inner transformation which will bring a much greater selflessness, integrity, spontaneity and insight to our moral or spiritual idealism, impulses, behavior or action. It will also infuse our idealism with an attitude of spiritual pragmatism, which knows with conviction that in a life-system governed by the laws of unity, mutuality and interdependence, “grow by giving” is the only sustainable strategy. We also know deep within us that to give without seeking anything for the self never goes in vain because, as Sri Aurobindo points out, “For even though no return is demanded, yet there is the knowledge deep within us that a marvelous return is inevitable11.”
- E, Merlyn, ‘This is Not a Moral Crusade’ Business Today, 2005, September, p.22
- Dunn, Debra, (2002), ‘Technology Should Become Less Visible,’ Business Today, March, p.74-76.
- Porter, Michael and Kramer, Mark, ‘Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility’, Harvard Business Review, December 2006, p. 10-22
- Chawla, Devender (2008), ‘Mantras of Management Success’, Business Today, March, p.53-60
- P (2005), Megatrends 2010, The Role of Conscious Capitalism, Hampton Roads, p. 29
- Gates, Bill, Business Today, 2009, January, p.15-16
- ArunMaira, ‘21st Century Business Responsibilities,’ Economic Times, 22 Jan 2009
- Brugmann, Jeb and Prahalad C.K, Cocreating Business’s New Social Compact, Harvard Business Review, February 2007, p. 26-39
- Sri Aurobindo, (1972) Synthesis of Yoga, Sri Aurobindo Ashram, Puducherry, p.101.
- Capra Fritjof, (1996), The Web of Life, Flamingo, London, pp.29-35, 11-12
- Sri Aurobindo, (1972), Collected Poems, ‘Electron’ Puducherry, Sri Aurobindo Ashram, Puducherry, p. 130