A recent opinion piece in a Wall Street Journal special section by Dr. Aneel Karnani, an associate professor of strategy at the University of Michigan, has created a stir. In the item headlined “The Case Against Corporate Social Responsibility”, Karnani asserts that the notion companies can pursue profits and the public interest concurrently is an “illusion” that is “potentially dangerous.” He goes on to say that “companies that simply do everything they can to boost profits will end up increasing social welfare,” and that when profit and public interest align “the idea of corporate social responsibility is irrelevant.”
While the headline of that article is admittedly unfortunate, Karnani is not advocating for irresponsible behavior by corporations. He advocates for aligning business strategy with the public good when possible. He touts government regulation as the “ultimate solution” to balancing profits and the public interest when profit-seeking methods may be at odds with the public good. “The only sure way to influence corporate decision making,” Karnani wrote, “is to impose an unacceptable cost – regulatory mandates, taxes, punitive fines, public embarrassment – on socially unacceptable behavior.”
We all long for a world where alignment of interests is so great, regulation so effective, and social and environmental ills so minimal that corporate social responsibility is assumed and examination of its role is irrelevant or obsolete. In the meantime, Dr. Karnani himself points out significant deficits in our current legal, regulatory and social paradigm and proposes ONE solution out of many possible by emphasizing regulation. We are working today under assumptions about markets and social norms that evolved in a simpler time and that may not be true in the 21st century of “too big to fail,” environmental stress, and globally networked corporate operations (read people). With all of the complexity, potentially conflicting values and norms, and resulting ambiguity that exist in our globally networked world, any discussion that seeks to establish productive strategies for sustaining business and society or minimum standards of acceptable behavior is welcomed by leaders and employees of corporations alike.
Companies are full of people who work to deliver long-term value and preserve the natural and social environment that makes value-creation and enjoyment of life possible. At the Boston College Center for Corporate Citizenship at the Carroll School of Management, more than 350 member companies and thousands of individuals participate in programs, access research, and share best practices that they can use to align their CSR and profit strategies. Dialogue about how to achieve the greatest value most effectively is part of the process of determining what actions we can take to serve our mutual interests. No company can solve all the world’s ills, but each can contribute a bit by focusing on where they or their employees can make a difference, whether it is by being a better employer, a more responsible steward of resources, a contributor to healthy and safe consumer habits, or as a supporter of community needs.
Companies can and do make positive contributions whether they are B Corporations or publicly traded giants. Any examination of ideas that creates dialogue that helps us figure out how we make business and society better – together – is good.