Defending and promoting the role of the company

We are currently witnessing a movement which is promoting industry as a motor of transformation and of economic growth. Undeniably, industry plays an important role in generating stable and high quality jobs, not only because of its unique power in terms stimulating RD&i, but especially for the role it plays in social cohesion throughout a region.

Unfortunately, the true role of the company and businessperson has not been defended and promoted; quite to the contrary, they continue to be stigmatised. In fact, when we wish to portray a positive image of people in business, we speak of ‘entrepreneurs’, as though the company, the businessperson, and the entrepreneur existed in parallel worlds. Perhaps it is time to reclaim and promote their role and acknowledge the multitude of errors committed in recent years. In order to talk about defending and promoting that role today, we need to discuss two essential concepts.

In the first place, the concept of 'Creating Shared Value', by Michael Porter and Mark R. Kramer, who offer us a fresh perspective whereby the success of a business is closely linked to the social progress of the region it operates within. What they propose is that the solution lies within the principle of shared value, which involves creating value in such a way that value is also created for society, whose needs and challenges are dealt with. Essentially, companies need to reconnect their business success with social progress. 

The concept of shared value is not social responsibility as it has been understood until now. Nor is it philanthropy, or sustainability, but rather a new kind of ‘economic success’: shared success. The authors, therefore, propose three key ways in which companies could create opportunities leading to the creation of shared value:

1) Rethinking products and markets;

2) Redefining the productivity of the whole value chain;

3) Allowing the development of a local cluster, or concentrations of companies, and related companies, suppliers of products and services, logistic infrastructures in a specific area. 

If we believe that a company’s activity in a given region generates notable positive effects, then we will need to step up the rigour and transparency of the tools used for the analysis of that impact which would then allow us to present our findings both reliably and objectively. 

The following is the second concept I wish to put forward to prove the contribution that companies make in creating wealth and developing a region.  In general, these studies seek to answer the following key questions:

• Which economic streams are produced in a region’s economy as a consequence of the company’s activities? 

• How does the company contribute to job and wealth creation, as well as tax revenue? 

• To what extent does it contribute to promoting new economic activities and improving infrastructures, etc.? 

• Which sustainable practices contribute to the company’s energy efficiency and to a more sustainable environment? 

• How do the company activities contribute to the social development of the region? 

• What types of jobs does it generate? For example, are they stable and quality jobs? 

• How does it contribute to improving the social cohesion of the region? What is the level of commitment to the development of the region and what impact does it have on people’s lives? 

• How does it contribute to the generation and transfer of advanced knowledge, of technological development, to the improvement of balance of trade, and in general to social cohesion? 

Improving transparency, strengthening the relationship between the various players, and improving co-operation between the social fabric and the region are key elements which would help society to view its companies as true assets and motors of development. 

There is a maxim of business management that holds that 'what is not known is not appreciated'. I believe that acknowledging the contribution that companies make to economic and social development requires a new perspective, but it also requires new tools with which to prove that contribution with transparency and objectivity.

* Originally published in VíaEmpresa, 17/05/2014 (Catalan)

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Written by Montserrat Palet.