Do the Right Thing
It used to be enough for a company to provide a good product at a low price, but increasingly, consumers are concerned about how the company produces that product. They want to know that the company used fair labor practices and minimized its impact on the environment. In other words, they want to know that the company is socially responsible.
Jill Brown, assistant professor of management, studies corporate governance, social responsibility and how corporate boards respond to pressures to do good. She recently received a grant from the Center for Ethical Business Cultures (University of St. Thomas-Minnesota) to examine the relationship between corporate boards and corporate social responsibility (CSR). She holds the Axelrod Family Endowed Fellowship.
“Boards are becoming more responsible not just for financial performance, but also for social performance, at the request of shareholders,” she explains. “Businesses have an obligation to society. They have the power to make positive changes.”
Brown acknowledges that the primary responsibility of any corporation is still to make money for its shareholders, but her research has shown that companies that are good social performers also perform well financially.
“CSR is often used to bolster company reputation,” she says. “For example, in the midst of hundreds of discrimination lawsuits, Walmart has appointed a new vice president of stakeholder management and also stepped up their green initiatives.”
In other words, while companies must balance the short-term costs versus the long-term consequences, it pays to do the right thing.