Read Dr. Noel Akpata's article introducing the concept of Corporate Nation Building on BUSINESSDAY
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FULL ARTICLE
From Corporate Social Responsibility to Corporate Nation Building:
By Dr. Noel Akpata
In recent years, we’ve seen a surge of interest in so-called “corporate citizenship” programs.
These initiatives may take a variety of forms, but they all seek to align the goals of corporate and social interests through measurable social impact objectives.
This is definitely an encouraging shift away from viewing corporations purely as profit-maximizing institutions. In fact, many corporations have been integrating sustainability principles into their business strategies in what’s become known as “CSR,” or Corporate Social Responsibility or Corporate social investments “CSI”
According to the Berkley economic review, Fortune 500 companies jointly spend 20 billion USD on corporate social responsibility-related activities.
This represents about 0.1% of total revenues and 1.8% of total profits.
How much progress have we really made?
Do these new perspectives on corporate citizenship signal a significant shift to a more enlightened understanding of the role corporations must play in society? Or are they just a passing fad, like so many trends that come and go?
What’s the Problem?
The world has more than a few pressing social and environmental problems. In fact, it’s hard to know where to begin.
From climate change to income inequality, from pandemics to the rise of authoritarianism, the list of issues we face is so vast it can almost feel overwhelming.
What unites all of these problems, though, is that they are all caused by or exacerbated by the nature and behavior of corporations. Corporations are clearly the most powerful institutions in modern society.
Their size and scale are almost unfathomable. The largest are bigger than most countries, and they have more economic and social influence than most governments. Indeed, corporations have achieved such great influence that they’ve essentially become a new kind of state, complete with their own laws, rules, and social contract.
Why We Need to Move beyond CSR
While the push for Corporate Social Responsibility is a positive trend, it still falls short of what’s needed.
Indeed, it reveals an assumption that corporate profit-maximization is still the primary goal that must be balanced with other social interests.
In this view, corporations exist to pursue profit in order to benefit society through philanthropic and other CSR initiatives. But we must go beyond this narrow view of corporations if we are to have any hope of solving our most pressing problems.
For one thing, the idea of CSR assumes that in many cases, corporations and society have opposing interests. Sometimes, for example, it may make more economic sense for a company to pollute or otherwise cause harm to the broader population due to a lack of regulation.
This is a feature, not a bug, of the profit-maximization model. The system has evolved to allow corporations to pursue their own profit at all costs, even if that brings harm to others. This is particularly problematic given the global economy as it exists today. After all, the largest corporations operate in every country and have influence over nearly every aspect of human life.
Corporate Nation-Building
This is why we need to move beyond Corporate Social Responsibility and toward what I call Strategic Corporate Nation-Building.
This is a more expansive understanding of what corporations must be and do. It recognizes the unique position corporations occupy in our society and seeks to use that influence to bring about positive change.
The goal of Strategic Corporate Nation-Building is to integrate social interests into corporate decision-making in a way that maximizes profitability and benefits all stakeholders, not just shareholders.
A truly socially responsible corporation would pursue profits not just for their own benefit, but for the benefit of all stakeholders, including the environment and society at large. This is what I mean when I say we need to expand the corporate social contract to include society as a whole.
What does it mean to be a Corporate Nation Builder?
To be a leading nation builder, you have to be willing to make big bets, take big risks, and be obsessed with making an impact.
While you don’t have to be a Fortune 500 company to be a nation builder, you do have to be prepared to make equally ambitious moves. This requires that you have a strong competitive advantage, a diverse portfolio of businesses, and the resources to invest aggressively in new opportunities.
Again, this is why companies need to embrace nation-building as a fundamental strategy for corporate growth.
Nation builders make an impact by creating positive change in the world. They are not just focused on making money; they are also focused on making a positive difference in their customers’ lives, communities, and the world.
This is why it is critical for corporations to embrace this mindset and become leading nation builders. Again, this will require companies to fundamentally change how they think about business. Their focus will no longer be on maximizing shareholder value; it will be on maximizing social value. With that mindset, they will be able to build a thriving culture and an organization that can last for decades and beyond.
Core strategy needed to Implement Corporate Nation-Building
The first step toward implementing Corporate Nation-Building is to change the way we think about corporations and the role they play in our society.
A total corporate culture overhaul is needed.
If we truly understand the potential of corporations, we can work to bring about a much more equitable and sustainable future. This will require corporate leaders to change their social contract with society in order to take on a new role and a new set of responsibilities.
Most importantly, they must take responsibility for the full economic impact of their decisions and the full consequences of their actions. This will entail a significant change in corporate culture and decision-making, but it is possible. Many corporations already have the potential to be agents of great good.
They have the potential to have a much greater positive impact on society through their investment and employment decisions, their procurement practices, and their philanthropic activities.
Conclusion
Corporations have immense potential to be forces for good.
Indeed, their size and reach are what makes them so powerful.
Through Corporate Nation-Building, we can harness that power to tackle the world’s biggest challenges. This will require us to expand the corporate social contract to include society as a whole.
Nation builders are not created or built overnight. They take time to grow and mature.
Ultimately, we must move beyond Corporate Social Responsibility and view corporations as something more than just profit-maximizing institutions.
Dr. Noel Akpata is the founder of drnoelakpata.com.
He is the Africa Director of Zurich-based international think tank, Horasis(www.horasis.org), and a member of the global steering committee of the World Social Innovation Forum (www.wsif.world)
You can reach Dr. Akpata via email noel@drnoelakpata.com