Personal thoughts on a keynote speech on social business

Last week I attended the Social Business Conference 2013 organized by the Swiss-based think tank ‘Social Business Earth’ in Lugano. The keynote speaker was none other than Muhammad Yunus, pioneer behind the microcredit movement and the idea of social business as well as Nobel Peace Prize Laureate in 2006 for his achievements in this context.

I have been told that the economics professor from Bangladesh is renowned for his vivid, inciting and authentic narrative speeches about the early days of microcredit. And indeed, Yunus first told the enthralling personal story of how it all began and how he came across the idea to grant a few dollars to a group of women in his hometown in the mid 1970s. At the center of his keynote speech were, however, a few more general arguments that sounded very familiar to me as a stakeholder theorist. Therefore, I would like to reflect on three basic thoughts raised by Yunus in this blog post, which I believe are universally valid and very much in line with the underlying aspiration of our ‘people for people’-initiative.

First, Yunus mentioned that it was a live-changing moment for these women to be able to lend money at reasonable interest rates in order to engage in income-generating activities. In this way, they became independent from loan-sharks and felt as equal business partners, respected and formally credit-worthy. According to him, their appreciation in return was the most rewarding part. This made me think; isn’t it essentially much more rewarding to make people or the natural environment a bit better off at the end of the day, rather than dedicating your time to the sole pursuit of money?

Against this background, the second central question raised by Yunus was about the purpose of business in principle. To put it simply, does society serve economy or does economy serve society? In this regard, I agree with Yunus that everyone needs to ask themselves the fundamental question of whether they want to work for a profit-maximizing company or engage in a business that is committed to solve a social or environmental issue, but like any other business is run financially sustainable. In simplified terms, the bottom line of this dilemma is the personal preference between worshiping financial enrichment versus social wealth. Having said that, attention needs to be drawn to the fact that most of the world’s population is not in a position to have this personal choice.

Finally, a crucial aspect with a look into the future is how we can promote the infiltration of the social business rationale in today’s economic system. Yunus argued that the vision should be to set up a social business sector parallel to the established, and currently transforming, capitalistic system, so that people are able to make their choice. However, I argue that the ultimate goal should be an economic system, which is based on a dual value proposition, insofar as it combines profit-seeking business with a positive impact on society and the natural environment.

Marc Moser

 Capitalism in Question

The Academy of Management (AOM) is a professional organization that strives to further the scholarship of management. It comprises twenty-five professional divisions and interest groups focussing on management problems. Examples of these divisions are „Business Policy and Strategy“, “Entrepreneurship“, “Human Resources“, or „Social Issues in Management“. Every year, the AOM carries out an Annual Meeting. Last year, more than 10,000 participants – primarily university professors – took part from all over the world. In numerous events, such as the Professional Development Workshops, Paper-Sessions, Panels and All Academy Symposia, the newest research and teaching methods were discussed. Also Switzerland was well represented, coming in at 10^th place with respect to the number of participants.

For each of the AOM annual meetings a theme is selected. For this year’s meeting that takes place between the 9^th and 13^th August in Orlando, Florida, the theme will be “Capitalism in Question”.  Indeed, following the financial crisis of 2008, the business schools are challenged to review the foundations and assumptions upon which their research and teaching are based on. Currently, this is the neo-liberal economic theory and the corresponding theory of the firm. Questions and problems that the organizers have put in the center are for example:

·        While it is recognized that the market competition during the last decades brought great benefits, material prosperity and much innovation, it has also become clear that there are serious down sides: economic, social and ecological “costs”.

 

·        Research questions are called for that deal with the question if and how the capitalistic economic system can and should be further developed.

·        In need are also contributions that elucidate what alternatives there are to the current system and what would subsequently change in a social, economic and ecological context.

·        Connected with the above is also the question of by what social and ecological components the objective of shareholder value maximization by firms need be complemented and what this means for the role and self-conception of managers and leaders.

·        Also the question how true innovation can be upheld in firms – as for example via a shift of focus from rivalry to cooperation with stakeholders – has been included in the call for papers.

It will be interesting to see what an event of this size and scientific reputation will bring forth in terms of insights and impulses for the academic research and teaching in the area of management. I hope to be able to report some of these interesting news in a later blog post.

Edwin Rühli

The first of May: Power, Legitimacy and Urgency

It’s the first of May and I am sitting in my office even though we have the day off. To get into my building I had to step over several union banners laying on the ground, ready to be taken to the official annual rally. I felt something like pride when I saw these committed people waiting to start announcing their demands. They could have just stayed at home and had a lazy morning, drinking coffee but they decided to put themselves out there. And I did feel a bit bad that I was ignoring this “Labor Day” and going to work but I am just not the rallying type. Apart from all the vandalism and violence that usually co-occurs on this day, I think it is good that workers use this day to say what they think they are entitled to. For at least one day a year it gives total legitimacy and power to the stakeholder employee and the “worker” in general. I think it is also a kind of celebration of the rights we do have here: Right of unions, freedom of association, right to strike, freedom of speech and so on.

 

When glancing over to Bangladesh, globally there is still an extremely long way to go. The claims workers have in Dhaka are not only legitimate but also very urgent. When a house is actually built on sand, shows obvious cracks, workers knowing about this danger but still going to work because they are worried to lose their job they are so dependent on, the disastrous absence of their power is evident. Yesterday the people of Dhaka went out on the street to demonstrate their anger. Demonstration and strike is their only means to counteract on their lack of power in hope to find leverage of their claims through other parties.

Looking out of the window I can see all the different concerns the people have. The concerns are not just about work, but about people living together as a society in general. Even though I don’t share all of the opinions and many demands are much too extreme for my taste, I want to go along. Here is my demonstration: People should take responsibility for what they do. Businesses should take responsibility for what they do. Not only power and urgency, but also legitimacy of claims should guide the way. Only by respecting and treating others as human beings and not as abstract figures in a long value chain can we work together to mutually create value for people.

Vanessa McSorley