How Did the Role of Companies in Society Change Over Years?

In Summer 2016, I participated at the CBS Summer University Programme in Copenhagen enjoying the lectures “Psychology and Decision-Making” and “Business and Society” over the course of six weeks. I met students from everywhere and learned in short everything related to business, human rights and sustainability. To finalise the courses, we were required to write an assignment which I will share now with you. I hope you enjoy reading it!

The role of business in society changed over the years and the milestones of this development are highlighted in the following.

Plato (427/428 B.C. to 348/347 B.C.) as a philosopher and citizen of ancient Greece defined a society where individuals can live freely next to each other without limiting their independence and individuality. He defined a just society where each individual seeks for the common good. The outstanding characteristic of the Greek was that philosophers were highly appreciated and their way of thinking ahead was a major contributor to society and politics.
Jean Jacques Rousseau (1712 to 1778), a French philosopher, wrote in his famous book “The Social Contract” that a civil society can only emerge if we agree to the social contract meaning to hold back our individuality and freedom to be able to live in community which gives us morality, rationality and finally freedom. His ideas led among others to the French Revolution through denying that monarchs have the legislative power over people.
It went on with the Industrial Revolution in the 18th/19th century in Great Britain, letting to the development of industries and firms. Urbanisation and population growth followed. Living conditions could been improved through generating prosperity. However, working in a factory meant a shift away from the former independence of workers. This is why workers union emerged to improve workers´ rights, labour and wage conditions and national laws forbidding associations. The inflection point is here the rise of the workers´ consciousness.
Andrew Carnegie (1835 to 1919), “He who dies rich, dies thus disgraced” introduced a philanthropic approach saying that the aim of a company is to generate profits in order to be able to donate money for those in need. Also, he believed that business leaders are stewards, holding prosperity in trust for the society. In his live he founded libraries, education and research institutions (Carnegie, Andrew, 1889, The Gospel of Wealth).
A milestone in history was the foundation of the United Nations in 1945. 51 founding States agreed to maintain peace and security and to enhance human rights to overcome the traces of inhumanity and destruction which were left after the Second World War. With a focus on overcoming poverty and generating wealth, they took on a leadership role in serving the society.
Bowen`s (1908 to 1989) book “Social Responsibilities of the Businessman” introduced for the first time the concept of a businessman´s social responsibility. However, the title suggests that he was not so progressive in regard to women´s rights, he saw the role of business in serving society.
A step back showed Milton Friedman´s approach (1912 to 2006) who suggested 1970 in his book “Capitalism and Freedom” that the company´s purpose is to increase profits and thus creating jobs which is fulfilling the company´s role in society. Governments should solely deal with social issues and socially responsible acting companies have the wrong intention behind it. As various CSR and human rights scandals occurred and tested the relation between companies, society and governments in the past, in the 80s and 90s a shift was visible.
In 1992 the non-profit “Business for Social Responsibility” organisation was founded in order to support companies to implement a socially responsible business strategy. On the same track was 1994 the William H. Gates Foundation which later became the Bill & Melinda Gates Foundation. It is the largest charity foundation in the world and was initiated by Bill Gates who founded Microsoft together with Paul Allen. Gates was quoted in the New York Times Magazine in 2000 saying that “From those who are given great resources, great things are expected.” The foundation works in the field of education and health as well as how technologies can improve people´s lives. He initiated a positive and altruistic movement towards charity in the 90s.
A step ahead were Mackey and Sisodia who introduced 2013 the concept of “conscious capitalism” meaning that the company´s role in society goes beyond simply pleasing stakeholders´ interests to conscious business leaders aware of ethical implications and truly aspiring the best for all stakeholders (Mackey/Sisodia, “Conscious Capitalism” Is Not an Oxymoron, Harvard Business Review, 2017).

To sum up, a shift of thinking can be seen over the decades. The traditional role of businesses in generating profits and preserving jobs does not meet anymore the demands of society. Many concepts exist out there and can be picked up by business leaders.

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