Course Overview and Objectives
Perhaps the most difficult challenge for managers is to sustain their idealism and noble aspirations with the practical demands of getting their work done and satisfying their shareholders. A broad framework for understanding the role that companies play in society, and the expanded role that they are being asked to play, is indispensable for sorting out the questions and challenges leaders face. These challenges may be most acute for people as they begin their careers. We will consider these challenges and work to develop a philosophy of management that will guide day-to-day decision making for years to come.
To begin, we will see that questions about the proper place of the corporation in society have bedeviled scholars, policymakers and business leaders for many years. We can trace the debate about the purposes and accountability of the firm back to Roman times. As the debate unfolded, a commitment to social and environmental issues was typically treated as extraneous to the purview of the firm. Government may step in with its regulatory apparatus if firms cause trouble but as a whole, the U. S. government, for example, has worked to enable fairly unfettered free enterprise. Yes, firms do have a history of making (sometimes very public) philanthropic donations but these investments can be very limited; moreover, they do not challenge the fundamental contractarian model of the firm. It is fair to say that corporate concern about our social well-being has been fairly peripheral to business life. This situation is changing.
The globalization of factor and product markets brings worldwide differences in health, wealth, and well-being into sharp relief. It certainly brings these issues to the attention of business leaders. Human problems might be exploited as a source of competitive advantage (the “race to the bottom” hypothesis) or they may simply be a novel challenge that business leaders must learn to address (say when a firm chooses to site its facilities in locales with a rudimentary education and health care infrastructure). More broadly, weak nation-states and the erosion of sovereign borders leaves multinational corporations as perhaps the only transnational institution in the world that is capable of addressing problems of human misery (whether rooted in corporate practices or not). What was once an interesting theoretical debate, worthy of passing executive interest, is fast becoming a compelling business concern. Like it or not, businesses are often asked to invest in our social life. There is new life in this old debate. The historical separation between business and social life is breaking down. Indeed, some firms are even finding ways to build competitive advantage and create shareholder wealth by attending to social and environmental problems.
We will review the classic debate and in this light, examine the contemporary practices of corporations (largely American corporations at this point) as they choose to act or not act in our social and environmental world. We will discover that there are no simple prescriptions for what corporations can do to make a difference, much less how to make a difference. There are complex theoretical questions to answer here. Unfortunately, we do not have much time to answer them. Human misery cries out for relief.
We will consider these issues both from a theory and a practice point of view. Coming to terms with the theoretical issues, we will leave the course with a much deeper understanding of business. We will all develop a quality of mind and a philosophy of management that will help us work our way through these issues in the coming years. In the end, this course is for all of us. People who work in and lead corporations of all sizes and types can only benefit from such a thoughtful consideration of the purposes and accountability of the firm. People who interact with the corporation, either as public servants, members of the nonprofit and NGO community, and even corporate activists, will benefit from such a consideration of their partner (or adversary). And of course, those who create and lead corporate citizenship initiatives will come away with a much greater appreciation for the opportunities and challenges they encounter when they marshal their corporation’s resources to make the world a better place.