Yahoo Finance Big Business Social Responsibility Is Nothing New
Thomas C. Lawton is a visiting professor at Dartmouth's Tuck School of Business.
History has a way of repeating itself and few human actions lack historical precedent. Although terms such as "corporate responsibility" and "business interest representation" have only entered the management lexicon quite recently, enterprises, and those who lead them, have practiced these activities for much longer.
Business history is replete with examples of good deeds and noble causes conducted and funded by captains of industry during the Industrial Revolution and beyond. Evidence also abounds of business leaders leveraging their economic and financial power to gain political influence and favor so as to defend or extend their commercial interests.
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For instance, in the early 20th century, William Cadbury, the well known British chocolatier, influenced the Portuguese monarchy to end the policy of contract labor (de facto slavery) in Portuguese Africa, in response to accusations that slave-grown cocoa was being used in his British chocolate manufacturing facilities.
Yet despite this rich history, much of modern management theory and practice are ahistorical. Consequently, like Sisyphus condemned to an eternity of useless efforts and unending frustration, we are destined to never reach the summit of our understanding of the social engagement and political activism of business if we fail to capture and build upon knowledge of the past.
To illustrate this point, reflect for a moment on the phrase, "The man who dies thus rich dies disgraced." These appear to be the words of an early Fabian Society pamphlet or even a modern socialist activist. They were in fact written by U.S. steel magnate Andrew Carnegie towards the close of the 19th century and at the highpoint of an era of industrialization dominated by "the robber barons." The term most likely is derived from the practices of medieval lords (barons) who charged tolls on ships navigating the Rhine and offered neither security nor service in return. It was popularized during the Great Depression of the 1930s, most notably by U.S. author and commentator Matthew Josephson.
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Like the German forerunners, Josephson argued that America's big businessmen amassed enormous fortunes through immoral and unethical means. Those who were called robber barons included Andrew Mellon, Leland Stanford, and Andrew Carnegie. Today all three names are associated with renowned U.S. universities. Just as in the anticapitalist backlash that has followed the Great Recession of 2008-2011, big business was pilloried by the press, public, and politicians during the Great Depression almost eight decades earlier. Then, as now, there were cries for justice and fairness and people sought to demonize those who had accrued large fortunes while others languished on unemployment lines. The bankers and hedge fund managers of early 21st century global capitalism share the same ignominy as the robber barons of late 19th century American commerce. Of course, the truth is rarely so black and white, as Carnegie's aforementioned words indicate. Then, as now, capitalism and philanthropy were never far apart. There have always been those individuals who view personal success and wealth accumulation as obligating the subsequent giving of money, time, or expertise to worthy social causes.
An Andrew Carnegie or Henry Wellcome of the 19th and 20th centuries is matched in word and deed by Bill Gates and Richard Branson in the 21st century. Similarly, there are those in business who forge corporate cultures that encourage and even incentivize "doing good" within the communities where they operate. One example is Lorenzo Zambrano, chairman and chief executive of Mexican giant, CEMEX, one of the world's largest producers of building materials. Not long after taking on the chief executive role of his family's business in 1985, Zambrano began to imbue values of environmental responsibility and social progress into the corporation. Today CEMEX is viewed around the world as a leading example of a company that actively engages with and gives back to the communities and environments where it does business. It also values and invests in its employees, making jobs at CEMEX highly sought after in many countries.
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Despite the originality of many CEMEX initiatives, as well as its contemporary concern with environmental sustainability, the principle of corporate philanthropy is not new. As French philosopher Henri Bergson mused, "The present contains nothing more than the past, and what is found in the effect was already in the cause." In particular, post-Enlightenment Europe, most notably Great Britain and Ireland, witnessed the formation of numerous companies that "did well by doing good." Cadbury, Guinness, Rowntree's, and other enterprises were infused with social values and ethical behaviors to rival any of today's members of the Forbes list of 100 Best Corporate Citizens. The same held true on the other side of the world, as the late 19th century saw Jamsetji Tata establish India's largest conglomerate, where social responsibility and ethical behavior were at the core of corporate strategy from the outset.
By nature and deed, these leaders understood the importance of aligning political engagement and social activism with their commercial interests and market strategies. In many instances, their purposes and approaches were informed by their religious beliefs, underlining the moral dimension that has historically pervaded corporate social responsibility.
Thus, the concept and practice of corporate responsibility is not a 21st century phenomenon. New issues have arrived on the agenda, particularly environmental protection and sustainable business. But the need to ensure a strategic fit between business objectives and social imperatives has been around for several centuries. It may be worth the while of modern business leaders to reflect on and even emulate the approaches of old to deliver winning strategies in today's economy.
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