In a recent interview with this newspaper, Nikesh Arora, president of global sales operations and business development at Google Inc., was asked about his company’s ubiquitous mantra, “Don’t be evil”. Arora explained, “Not being evil is part of our company DNA. Today, you can sit during a product meeting at Google and someone will suddenly ask if we are being evil with this product or service.”
Illustration: Jayachandran / Mint
Google isn’t the only firm preoccupied with issues of good and evil. A fresh injection of moralizing has seeped into boardrooms and made its way onto B-school blackboards. In the aftermath of the crisis, many blame the excesses of Wall Street and companies’ fixation with maximizing profit. At the height of the crisis, Reuters reported in January that according to the Edelman Trust Barometer survey, 62% of surveyed adults worldwide trusted companies less than they did in 2007. The decline was more pronounced in the developed world: 77% of surveyed Americans trusted business less, while 49% of Indians had lowered their confidence in business.
The question now is, should companies rethink their role in society? The corporation has existed for more than 100 years, but many wrongly view profits as a zero-sum game: If a company profits, the thinking goes, then someone else loses. The truth is that corporations provide all sorts of social good in creating employment and utilizing capital productively. But ultimately, companies are driven by their profits—not a nebulous sense of social altruism.
Profit maximization must be a starting point for thinking about companies. When populists clamour that government funded bailouts underwrite bonuses on Wall Street, they miss the point. Investment banks are in the business of making money, and their employees respond to incentives. Is it any surprise that they used taxpayer funding to further this aim?
When companies toss around hazy catchphrases such as “corporate social responsibility”, they’re not motivated by pure goodwill. Such projects are, often, thinly veiled public relations efforts. Morality has no role in a market if transactions are executed legally.
As newly minted MBAs talk about “responsible business”, it is helpful to remember that there will always be public goods that a market will not regulate—externalities such as climate change, for example. The private sector can accomplish much, but certain functions are the responsibility of the state and society—not corporations.
Should the corporation rethink its role in society? Tell us at firstname.lastname@example.org