7 - Challenges Facing Willing Firms

Summary

In Chapter 5, we mainly focussed on small businesses, ‘notfor-profit’ enterprises and social innovations primarily centred on integrating business activities with creating social value. In this chapter, the focus is much more on the corporation, in the broader institutional business sense of the word. Corporations are usually a large group of companies and may be involved with a very disparate host of activities, primarily seeking to achieve a central set of objectives, and having shares which are usually traded on public exchanges. By generalizing our discussion in this way, this chapter can treat the broader and often conflicting goals of creating value for shareholders versus creating more comprehensive societal (that is, stakeholder) value. This is perhaps the largest systemic obstacle to the particular configuration of social change represented by responsible stagnation (RS).

Corporate innovation in the current globalized market economy promotes a reward system with questionable social norms. It is a system where meta-national corporations expect to retain the positive returns accruing from their risk-driven investments. These corporations, however, also assume that the commons will resolve most of the negative consequences associated with these investments (as discussed in Chapter 3), for example problems such as waste and pollution, which are left for society to solve. As a result, some private companies accumulate wealth disproportionately compared to the negative public consequences of their actions, indeed often because the costs of those same actions have been passed on. The implications of such a system are vast because it propagates inequality while increasingly privatizing public wealth. It also fosters other undesirable economic outcomes, such as corporate tax avoidance, environmental degradation, wage deterioration and an increasing potential for the abuse of power as some corporations now control more wealth than many nation-states.

But what about the possibilities for actually trying to be a good, responsibly innovating business? This chapter explores some of the challenges companies who wish to adopt a more socially responsive business model face in free-market economies: the intangibility of capital, corporate accountability, and stockholder interests versus those of broader stakeholders.