Tuesday, August 15, 2006

The power of corporations

Business leaders today say their companies care about more than profit and loss, that they feel responsible to society as a whole, not just to their shareholders. Corporate social responsibility is their new creed, a self-conscious corrective to earlier greed-inspired visions of the corporation.

Joel Bakan an internationally recognized legal scholar and professor of law at the University of British Columbia, takes a powerful stab at the most influential institution of our time, the corporation; in his book "The Corporation, The pathological pursuit of profit and power."

He writes that corporations have always been philanthropic. They have donated to charities, sponsored Little League teams, and helped to build theaters. Traditionally, such generosity was quietly practiced and peripheral to their main goal of making money. Now, however, large corporations such as Pfizer have put corporate good deeds at the core of their business plans.

A sense of responsibility to society, not just to a company's shareholders, has come to define the very nature of the corporation, what it is supposed to be and what it must and cannot do. Corporations are now often expected to deliver the good, not just the goods; to pursue values, not just value; and to help make the world a better place.

But why do these corporations donate to charities and engage in environmental programs?

Their primary goal is still to make money for their shareholders. The world they operate has now changed; they cannot pay slave-wages to employees who are expected to deliver customer satisfaction. Customer is the king. Many of the biggest corporations are financially more powerful than the governments of some the host countries they operate in.

Therefore today, corporations sign up to abide by the UN Universal Declaration of Human Rights and agree to uphold environmental standards in their own interest to continue making higher profits. These corporations need to be held accountable for the welfare of workers and the environment they operate in by demanding transparency and good governance from them.

Technorati tag: Social commentary

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