On being a responsible business: Developing Extrinsic Values

by Jay Mitra

Milton Friedman never really understood the difference between shareholding and ownership, that is the difference between acquiring a stake in an organization, as a form of possession, and owning it as if were yours to decree what should happen or not to its fortunes. Even if shareholders were considered owners, the sense of collective responsibility has never really galvanized the testosterone driven movers and shakers among stock brokers, private equity merchants, and financial management experts in business schools.  After all even Jack Welch, the grand custodian of shareholder value rejected it as the “dumbest idea in the world.

Given an ineluctable sense of economic suffocation holding back businesses globally from reinventing themselves it is time perhaps to reconsider a different approach to responsible business. Corporations will not live by ethics or gender-based diversity programmes alone, or by self-righteous corporate social responsibility agendas. None of them seems to gain any traction as far as responsibility for a moral code of conduct, to women and their evolving status as leaders, and to social change, is concerned. Simply put not one of the issues (and many beyond them) forms part of an organization strategy or informs the metrics by which business performance is judged. They emerge as “issues” to assuage a sense of collective guilt not as a vehicle for collective, permanent responsibility. Industry leaders and status-quo analysts, and established researchers, would back the “issues” and appear on social media or television to promote them, but the same group of people might consider weaving them into the fabric of strategy and operations, as a possible distraction from ROI, quarterly returns, investment appraisals and even equal pay statistical returns.  

Action, following the critique above could include a pronounced move towards embedding the organization in the economic and social environment in which they are located. Sociologists have long discovered that embedding was given, especially when firms are created, but we find little by way of practice by firms at either the local or international level. So would it too far- fetched to expect organisations to embark on a new mission which argues for:

  • A limited voting rights seat on the board for a specific numbers (at least one) from each community in which it located (including branches, subsidiaries and associates) with representatives from community organisations, universities and small firms;
  • Select (based on local feedback) and incorporate at least a set of local economic and social objectives of the region in which it is based;
  • Advocacy of an internationalization plan which engages with the economic priorities of the region in which it intends to operate;
  • Connect the choice of priorities mentioned above with actions plans for delivering the appropriate sustainability development goals  in the regions of corporate activity;
  • Encourage and allow the supply chain players to develop a collaborative agenda for community-based business activity (not separate community business or social enterprise).

Fortunately, in Ford’s recent engagement with MIND to tackle mental health issues at work, we can see the possibility of change. So can we in the numerous small firm-based initiatives at the local community level, by the firms themselves. But these have to be more than extra initiatives or projects. They need to be part of a new, networked organizational agenda, the development of which may be referred as the extrinsic values of an organization. The avalanche of technology and the sweeping changes to industry structure and business models calls out for a change of vision, mission and action. Just as organisations need to sharpen their intrinsic values of employee involvement and diversity, they could do so much more than simply seek egregious monetization of every piece data they acquire, and be responsible business leading economic and social change.      

Jay Mitra: Professor of Business Enterprise and Innovation and Doctoral Supervisor, Essex Business School, University of Essex, UK. Email: jmitra@essex.ac.uk / jaymitrauniverse@hotmail.com