Does big business have the patience?

A friend recently shared with me the TEDx speech by Melinda French Gates: What non-profits can learn from Coca-Cola (watch below). But does big business have the patience to practice what they preach when it comes to corporate social responsibility?

Melinda French Gates makes good points about how Coca-Cola’s marketing techniques and ability to tap into local entrepreneurial talent have made them very successful in remote areas of the world. Whether or not these strategies translate into the not for profit sector is only part of the issue when it comes to CSR implementation. One example as to why it is more challenging in a not for profit environment is the amount of time and commitment needed to implement projects in the less developed world.

During my own research on the effectiveness of international aid in Laos one of my key findings was that there is not enough long-term commitment to make poverty alleviation programs a success. One interviewee highlighted the inadequate time frame given to development projects and the constant rotation of international development staff every two years as a key contributor to failed projects. They also suggested that a minimum of five years for a development project is necessary to achieve significant results in a country like Laos.

In Laos, a post communist country and one of the least developed in the world, there are various reasons as to why development/sustainability initiatives take longer to implement. Including:

  1. Significant lack of local capacity;
  2. Complex bureaucracy;
  3. Different cultural approaches to time;
  4. Limited education around issues of sustainability; and
  5. Importantly the fact that the industry of corporate social responsibility (or whatever you want to call it) is a relatively new concept.

Many of these points extend to other countries in the region including China, Cambodia, and Vietnam.

Does big business have the patience to commit the money and time needed to implement initiatives like ideas mentioned in Melinda’s speech as part of CSR?  I am still, for the most part, not convinced. If the motivations behind corporate engagement are genuine the commitment to long-term projects and the cost of this commitment will not scare business off.

So yes, companies like Coca-Coca demonstrate that aspirational marketing can be an effective marketing tool, but let’s not pretty things up to the point that it hides the hard work and commitment required to deliver genuine corporate social responsibility.

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  • Ben

    Studying Economics has drastically altered how I think about these topics with an appreciation of incentives and market forces (or the profit motive) really effecting the lens through which I view this subject of corporate social responsibility.

    I would love your thoughts on this article below. It is a famous article written by the Nobel Prize winning Economist Milton Friedman in The New York Times (in 1970!)
    http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

    This article was given to our class in the first day of a subject I took called “Economic Perspectives” and certainly left an impression on me. Probably also was the fact that our professor running the subject wholeheartedly agreed with Friedman; what I thought at the time was bizarre considering he did charity work for the Red Cross helping to increase blood donations!

    He asked us to argue one of two positions: Businesses should have social responsibility or Businesses should singularly focus on maximizing profits and shareholder wealth! After reading that article I argued for the latter ;) Interested in your take!

  • http://emilydath.com Emily

    Hi Ben,

    Thanks for your comment. I enjoyed reading Friedman’s article and it is as relevant today as it was then.

    On a philosophical level my response to this argument is the same as it was when I studied political economy at university. Economic theories are a basis for understanding how things work and how people want things to work. In reality nothing works as it should in theory. I disagree that “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

    Because business is not conducted in “open and free competition without deception or fraud” and it definitely does not “stay within the rules of the game”. Is buying conflict diamonds from rebel forces that rape girls and supply 8-year-old boys with AK-47s within the rules of the game? No.

    Who is responsible for stopping this from happening? Is it Tiffany & Co or the 30 year old fiancée from the Upper East Side with a 12 carat diamond on her finger? It’s both.

    I agree that being ‘socially responsible’ is an individual ‘responsibility’. I choose to invest in ethical businesses and donate to charities. But collective responsibility as a business is just as important. Regardless of what a business is suppose to do in theory. As a parent do you only have an individual responsibility to your child or is it both the mother and father who have a collective responsibility?

    On a practical level, I agree the role of a CEO these days is a difficult job for any man or woman in the hot seat. Unfortunately the bottom line is still predominately based on pursuing profit but not for every business and the concept of the Triple Bottom line is increasing (I’m sure Smith is turning in his grave). The tug of war on what, where and how to spend shareholders money is always going to be difficult.

    So yes, if I were in your class I would have argued tooth and nail for the former. Businesses should have social responsibility.