How business can save
the world
A provocative study
suggests that enlightened management
Philosophies can
spread from the office -- and change societies.
By Matthew Battles,
boston.com from the Web, February 17, 2008
When Milton Friedman famously stated
that "the social responsibility of business is to increase profits," he
furnished ammunition to both free market evangelists and their critics.
Where libertarians see profit as the basis of stability and opportunity, others
see only greed and rapine. The relationship between the bottom line and
the betterment of society is a fraught one, and politicians, social critics, and
tycoons have long battled over where the proper nexus of ethics, philanthropy,
and profitability lies.
All have tended to agree, however, that the effects of business are primarily
driven by economics: nations that are trading partners are unlikely to
risk wealth by waging war on one another; rising salaries offer workers welfare
and security; increased profits lead to flourishing philanthropy.
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| Christoph Hitz |
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But new research suggests that
business can have an important -- and positive -- cultural impact as well.
Companies that empower their employees to cut costs in the workplace not only
improve their bottom lines, but also may foster civic engagement and contribute
to peace in the societies where they operate, according to research published in
the November 2007 issue of the Journal of Organizational Behavior.
Author Gretchen Spreitzer, a professor at the University of Michigan's Ross
School of Business, examined survey data from 65 countries around the world,
comparing detailed measures of employee workplace empowerment with broader
measures about the quality of civic life. Her analysis, based on surveys
taken between 1981 and 2001, shows that empowered, satisfied employees tend to
live in open, peaceful societies -- and that improvements in workplace
empowerment often precede social changes. Employees, it seems, can take
lessons learned in the workplace and apply them to social and political life.
Spreitzer's research is preliminary, and does not prove that workplace changes
lead to social changes, but it does suggest an important new way of
understanding the interplay of business and society. Rather than assuming
that peace and civility will provide the necessary platform for economic
development, economists and policy makers would do well to consider the role
that business can play, even in the most strife-ridden places, in starting
positive social changes. Businesses can bring jobs, yes, but they may also
ignite other kinds of progress that have nothing to do with money.
"The idea that business organizations can be a sort of olive branch for peace
rather than just a harbinger of excess and exploitation is attractive,"
Spreitzer writes.
Other scholars see the work as opening new avenues of research. In a commentary
on Spreitzer's article, Jone L. Pearce of the University of California, Irvine,
points out that the central assertion that "empowerment [in the workplace]
provides the training and confidence needed to peaceably settle disputes"
represents a new way of thinking about the relationship not only between
workplace and the wider world, but about the influence of individual persons on
society as well. And while Spreitzer's data can't prove that worker
empowerment directly causes drops in violence, Pearce predicts that researchers
will be interested in tackling the question of causality in years to come.
Thinkers since the Enlightenment have been intrigued by the link between
business and society. Montesquieu famously stated that "the natural effect
of commerce is to lead to peace." This happens, he argued, not merely
because commerce thrives in peaceful times, but because trade creates a kind of
wealth insusceptible to conquest -- in trying to take trade-based wealth by
force, the conqueror can only destroy it. But Montesquieu also argued that
desire for profit imperiled what he called virtue -- the concept of equality
that lies at the heart of participatory democracy.
In the 1980s, Montesquieuan virtue emerged in the workplace in the form of Total
Quality Management (TQM), which originated in the Japanese automotive industry
to encourage all employees to contribute ideas. While TQM developed as a
way to increase profits, its advocates contend that businesses that encourage
workers to voice their opinions also enjoy heightened job satisfaction.
Along with such management-theory buzzwords as reengineering and knowledge
management, TQM had its faddish side; it was the topic of many books, seminars,
and training manuals in the 1980s and early 1990s. Enthusiasm for TQM
subsequently ebbed, but its central tenets remain influential not only in
American business, but in the nonprofit sector as well. It's these
practices that Spreitzer believes offer the most hope for social change.
Spreitzer is not alone in arguing that enlightened management is good for
society. In a number of articles in business and law journals, Timothy L.
Fort and Cindy A. Schipani have argued that businesses that employ, train, and
empower women, foster attitudes of civil engagement in the workplace, and
encourage stability in governance can produce positive effects on environmental
stewardship and civic life. Between 2001 and 2003, they organized a series
of conferences, with the support of the Aspen Institute, devoted to the question
of how business contributes to peace.
Spreitzer sought to put some empirical weight behind Fort and Schipani's
theories. She took measures of employee satisfaction from the World Values
Survey at the University of Michigan, which collected data in 65 countries, from
Argentina to Slovenia to Venezuela, for 20 years beginning in 1981. The
survey consisted of some 200 questions such as "How free are you to make
decisions in your job?" and "Do you follow a superior's instructions only when
you feel they are correct?"
She then compared this with data collected by the Economist Intelligence Unit on
levels of corruption and violent conflict. Spreitzer found that countries
where workers reported having little voice in decision-making had higher levels
of unrest, and that as measures of workplace satisfaction improved, over time,
indications of contentment with civic life rose, too.
Spreitzer also documented three case studies, which confirmed the results.
One company, Rainforest Expeditions, built a lodge with an indigenous community
in Peru, employing community members in jobs ranging from housekeeper to guide
and lodge manager. As Spreitzer writes, the "sense of collective agency"
gained by community members working together to solve business problems "has
spilled over into civic matters as well ... [resulting in] strategic plans for
sectors such as agriculture, education, ecotourism, and handicrafts." The
community used its share of lodge profits to build a school and fund a medical
clinic.
It's important to note that the question of causation remains open.
Spreitzer uses indirect evidence of empowering practices -- measures of job
satisfaction, not tallies of the number of companies that have adopted specific
practices. And there are other questions to consider: Do
participatory management practices result in open societies, or are the
businesses that use them simply more abundant in healthy, peaceable communities?
And do positive changes in society reflect enlightened business practice or the
impact of politically motivated changes induced by organized labor and other
social movements?
There is also the possibility that companies can drive bad social changes,
according to Charles Derber, a sociologist at Boston College and author of "The
Wilding of America: Money, Mayhem, and the New American Dream" (2006).
Empowerment at work may lead to engagement in society, but employees who feel
that their company pays mere lip service to participatory management are likely
to become cynical about participation in civic life as well. In large
corporations, where participatory management may be no more than a flurry of
buzzwords and employee participation is diluted due to the sheer size of the
company, the results may be detrimental.
"The central question, in an age of large organizations" according to Derber, is
this: "Is a viable model of democracy possible?"
And then there is this question: Can businesspeople really be counted on
to foster virtue? It's a shaky proposition when profits are at stake.
In a 2005 debate in Reason magazine, Whole Foods founder and CEO John Mackey
articulated his vision of virtuous, socially responsible business.
"Human nature isn't just about self-interest," Mackey wrote, paraphrasing Adam
Smith. "It also includes sympathy, empathy, friendship, love, and the
desire for social approval. As motives for human behavior, these are at
least as important as self-interest. For many people, they are more
important."
In July of last year it was revealed that Mackey used a pseudonym in numerous
online posts critical of Whole Foods' competitor Wild Oats, a chain of natural
supermarkets Mackey was in the midst of trying to acquire.
Encouraging employees to practice virtue in factory and community is one thing;
getting CEOs to do the same may be a challenge of a different order.
Matthew Battles is a freelance writer in Jamaica Plain the
author of "Library: An Unquiet History" (Norton, 2003).
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