Category Archives: academic research

What leading business academics are talking about, from EABIS 2011

Don’t have time for the latest academic conference on sustainable business? Well, I’ve just been to one, so you don’t have to. Below are the rising themes of business accepting the world is changing, partnership as the mode of delivery and the continuing rise of shared value.

I’m on my way back from two days at INSEAD, the gorgeous business school in the Parisian suburbs. The occasion was an academic conference grandly entitled ‘A new era of development: the changing role & responsibilities of business in developing countries’. It was the tenth Colloquium  of EABIS, the main network for business schools and companies around ‘business in society’. Here’s my take on the themes from all the papers, presentations and chatter.

For me, the first theme was an acceptance at the heart of companies and business schools that the world is changing profoundly, and that business would need to change too. A host of senior business speakers – the Chief Executive of Accenture, the Chief Human Resources Officer of Unilever, a VP of IBM and more – all spoke about the shift of economic power to what we’re used to calling the ‘developing world’, but now is being thought of as ‘the growth markets’. Also, there was acceptance that we’re entering a period of resource scarcity, and the most precious resource is people. One startling fact makes plain why: the CEO of Accenture said they added 70,000 staff last year (yes, seventy thousand!), the vast majority in India, China, Brazil, Russia and so on. Nurturing talent that is capable of succeeding in this new world – people who are comfortable across sectors and cultures – is the dominant issue for many businesses.

Two speakers put this shift into historic perspective. The Chief Economist of the French development agency showed that China and India were the dominant world economies five hundred years ago. The Dean of INSEAD claimed that capitalism had gone through stages of colonialism (16-18th centuries), free markets (19-20th centuries), and was now entering a century focused on developing human capital for success.

The main corporate speakers from IBM, Accenture and Unilever said they were fundamentally changing their business in response. They saw business as central to the success of developing economies (as does Forum). The CEO of Accenture went as far as to say that “profit, sustainability and responsibility are the same thing.” I look forward to seeing those words backed up with evidence of making hard choices. That Chief Economist also had a nice line about why people distrust business, “After decades of pursuing profit without a purpose, business needs to work hard to really show it is now pursuing purpose through profit”.

The second theme was partnership as the means of delivering. The vast majority of examples on how business was contributing to development involved some sort of partnership, with NGOs, government or both. Now, Forum is founded on partnership as a way of delivering change. Back in the nineties it was novel; now it is ubiquitous. I have to say that troubled me a bit. Are all of these relationships really partnerships? Do they share enough commonalities that we can bracket them all together, or are we going to find that there are sub-types which are really so different from each other that calling them all ‘partnerships’ actually hinders progress?

What about the very different level of power, the very different interests, and the very different modus operandi of, say, an oil extraction company and a community self-help group? Some people were claiming that we are moving to a ‘convergence economy’, with shared issues, shared interests and shared solutions. While we all have a shared interest in, say, preventing runaway climate change, the different possible solutions will favour different sections of society.

The third theme was the continued rise of ‘shared value’, which cropped up in quite a few presentations. This concept was coined by Michael Porter, the Harvard Business School Professor who more-or-less invented modern strategy management. Shared value is: “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates”, that is to say value is created for, and shared between, shareholders and other stakeholders. One of the speakers claimed that Porter had operationalised stakeholder theory, which is indeed a service to the world. However, some of you may have spotted that one of the three sustainability dimensions is missing (hint: it begins with ‘e’ and isn’t ‘economy’). There are also challenges about the boundaries drawn here (why only the conditions in the communities in which it operates?), and whether shared value dissolves questions about power, justice and governance.

Whatever you think of it, there is going to be a book coming out from Porter and his researchers probably next year. And there were a number of academics who used the notion, freely admitting they were opportunistically adopting it to gain credibility. What with Porter’s credibility and the Harvard Business School megaphone, it’s going to keep on rising.

Three more reflections. First, about business schools. They play a central role forming the mindset of executives through MBAs, courses and more. EABIS was set up ten years ago in part to make Corporate Responsibility (as it was then) mainstream in business schools. Many business school academics at the conference were unhappy at the rate of progress, but there hints of patches of really pioneering practice. I hope that EABIS can find a way of bringing those leading practitioners together, supporting them as change agents and diffusing the best practice to a wave of fast followers.

Second, INSEAD knows how to put on events. The staff were amazing (I turned up without booking accommodation, but it was sorted out in a jiffy). However, the French simply don’t do veggie. And I thought the dancing girls were deeply inappropriate (although confirming a particular stereotype of France).

Finally, the real value from the conference was from the connections I made. I have in front of me a stack of business cards, including the Executive Coordinator of Rio+20. There were people who could help Forum’s work on rebalancing fairness in food supply chains, or in disruptive innovation and more. I even spoke to some academics about using our experiences with partners to create cases, teaching modules and research papers, which could in turn influence the next generation of business leaders. That’s worth the ‘slog’ of 2 days in a leafy Parisian suburb…

The challenges of answering “Does CSR matter?”

Good luck to a new research alliance looking at whether CSR can deliver competitiveness, jobs and environmental protection for EU policy makers. They’ll need it – their research has big challenges of definition and causation.

Yesterday I spent a day at the first stakeholder roundtable of the CSR IMPACT research project. The alliance of 16 universities and research institutions across the EU has 3 years to answer a simple question: does CSR matter? Or, as they put it:

  • what benefits and impacts does CSR actually bring beyond company borders to the economy and society at large?
  • How can managers, policy makers and stakeholders better measure and evaluate its impacts?
  • What does this mean for smart mixes of public policies and corporate strategy?

All of which is very laudable. Throughout the day I was struck by the immense challenges of definition and causation they face.

1. what is CSR? They chosen to use the European Commission definition, sensibly given they are the intended audience for policy recommendations. See if you can spot the problem with it:

the voluntary contribution of business to competitiveness, social cohesion, and environmental stewardship.

Well, the problems are legion. As Nobel prize-wining economist Amartya Sen says in The Argumentative Indian, ‘within the limits of feasibility and reasonable returns, there are substantial choices to be made.’ Isn’t very nearly everything a company does voluntary? Even with compliance, there many be many ways of complying with the law.

The researchers have tried to overcome this by creating a conceptual framework that proposes a combined definition and  causation: sustainability trends drive a CSR response (eg a motivation to do something about climate change), which drives a CSR strategy (“let’s do this”), which drives CSR performance in the firm (reduced carbon emissions, reduced costs), which in turn drives CSR impact on the rest of society (environmental protection).

But the problem of separating the voluntary CSR response from the involuntary response remains. You could take a narrow reading: the CSR strategy has to be called a CSR strategy at the time. But then you would miss out on lots of responses to sustainability trends that happen in the mainstream of the business without ever being labelled CSR.

Or you could take a wide reading: the CSR strategy is truly all responses to sustainability trends.  Then you’ve just changed the definitional challenge to ‘what counts as a sustainability trend?’ It could be everything the company does in response to an external stimulus. That would make CSR into good management. Good to have that validation, but not good if you’re trying to identify the particular impact of CSR.

2. what is competitiveness? A few years ago I published a booklet on sustainability and competitiveness for the ICAEW, Europe’s largest accounting institute. In the research I discovered that there is no agreed meaning for competitiveness. It is applied liberally for companies, cities, regions and countries but is very nearly meaningless. If you don’t believe me look at this FT article by renowned economist John Kay.

If you’re measuring a firm’s competitiveness, why not just measure its returns on investment or economic value add? If you’re measuring the competitiveness of a country why not just look at GDP growth? If you’re measuring the contribution of a firm to EU competitiveness, why not scratch your head a lot?

3. how prove causation? Finally, there is the challenge of causation. How can you prove that CSR has driven some aspect of corporate performance and that performance has created some direct impact and link that direct impact to a ‘meta-impact’ when your definitions of CSR and meta-impact are so fuzzy?

Obviously, the researchers are aware of these challenges. They may even overcome them. I’m struck that they will be reporting in March 2013. By then it will be 4 years since they first framed their research. An awful lot has happened in the last 4 years of CSR – not least, a shift to ‘sustainability’, not ‘responsibility’ (in my view).

As i say – good luck!