Corporate Interest

Why business should stop apologising

9 July 2010

Ann Bernsteinis the  executive director of the Centre for Development and Enterprise.

The perspectives and interests of those who live in rich, western countries dominate the global conversation about business and society. Activists, analysts and others – however well intentioned – do not grasp the realities of poverty and the hard choices of development outside the rich industrialised world. As a result, the debate about business, “œresponsibility” and corporate involvement in development is distorted with few voices from developing countries being heard. As a consequence the positive contribution of “˜just doing business’ is almost completely ignored.

This is according to Ann Bernstein, head of the Centre for Development and Enterprise and author of the internationally acclaimed new book, The Case for Business in Developing Economies.

Speaking at a GIBS-Tshikululu Social Investments Development Intelligence Series breakfast recently, Bernstein urged business not to let such attacks stand unchallenged. “œBusiness must find the confidence and strategic vision to stop apologising, develop its own public agenda and start propagating the phenomenal benefits of competitive capitalism for the less developed countries of the world.”

According to Bernstein, all too often a good company in the West is viewed as one that complies with the ideas and standards devised by activists and governments in the world’s richest countries on how to behave in poorer countries.

“œYou can participate in conversations in London, Brussels, Washington and New York and it is totally taken for granted that uniform global standards are a good thing throughout the world. Global standards are the social, environmental and labour standards developed in rich countries. Very few people seem prepared to listen to voices from developing countries,” says Bernstein.

Take the experience of Ernesto Zedillo, former Mexican president, who asked: “œWhy is it that just as goods and services from poorer countries are starting to become globally competitive, rich countries want us to conform to standards that have taken them centuries to reach?”

Or the view of Indian economist and cabinet adviser Vijay Kelkar: “œWe got more done for the poor by pursuing the competition agenda for a few years than we got done by pursuing a poverty agenda for decades.”

These and similar insights led Bernstein to write The Case for Business in Developing Economies which aims to construct a developing country perspective on business and its role in society.

According to Bernstein, companies are continually being pressurised to “œdo more” and to demonstrate what benefits they provides society in addition to “˜just doing business’. Critics aren’t interested in what the company actually does or contributes in itself. And its as though profit making entities need to redeem themselves through good works, “˜ pay reparations’ to society for their very existence.

Business leaders and their companies have mostly responded to the attacks on profit-making as a respectable contribution to society by “œintellectual collapse”. In almost all cases business leaders have given in without a struggle and accepted the general charge that companies need to “œdo more” than “œjust” business in order to contribute to society. Instead of boldly and persuasively making the case for business, we have seen a process of appeasement.

“œThe current conversation about business is fundamentally flawed,” says Bernstein.

“œWe need to start the conversation by looking at the positive benefits that successful modern business contributes to society. The dominant conversation in very many countries is partial, anti-business and takes for granted the positive contribution that “˜just’ doing business has for society.  Companies are increasingly called upon to demonstrate “˜what more’ they are doing for society. This one-sided conversation generally ignores the massive contribution that companies and entrepreneurs already make to the public good.”

The debate about “œresponsible” corporations takes for granted the everyday activities of companies and their contribution to society. This makes it possible to focus so much attention on what else a company must do to contribute to the social good. Bernstein argues that modern business has direct impacts on countries and communities (creating jobs, providing training, paying taxes, creating wealth). It also has indirect impact – predominantly positive – on the societies in which it operates. This “˜invisible corporate citizenship’ is not discussed in boardrooms but can profoundly alter the future direction and prospects of countries.

“œA new approach and new discourse is required to cut through an increasingly flawed conversation with potentially dangerous consequences for the poor and for developing countries in particular,” she says.

Bernstein is unapologetic about her stance. She cautions her audience not to misunderstand  the comprehensive nature of what she is arguing.

“œI am not a business fundamentalist who argues that the business of business is only business. And I am not a business apologist. Like any other human institution there are bad companies. Business leaders should speak out about those companies that do bad things, for example collude to keep the price of bread artificially high with detrimental effects on the poor. And if you look at what I am calling the Real Business Agenda there is a strong argument that a concern with the society in which they operate is of fundamental interest to business and its leadership. They should speak out about – because it is in their own interests to do so – about more effective development strategies, the need for better education and how to achieve this and the national crisis of unemployment.

“œI am arguing that business is good for society and essential for sustained development. Companies, business leaders and their organisations should  play a much more thoughtful, strategic and involved role in the societies in which they operate. The book is a call to “˜arms’ as Martin Wolf of the Financial Times has described it. A call on business leaders to stop apologising and stand up for competitive capitalism especially in developing countries. The facts are undoubtedly on their side.”