Harvard Study Bodes Ill for Corporate Social Responsibility

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February 6, 2012; Source: Triple Pundit | For all of the corporate sector’s hoopla regarding metrics showing increasing corporate social responsibility, one critical component seems to be on the wane: corporate responsibility to local communities. The decline in this kind of social responsibility is seen via corporate willingness to pack up their business operations in American cities and towns and move manufacturing or processing overseas. According to a study designed by Harvard Business School’s Michael Porter, two-thirds of American businesses want or plan to move their facilities out of the U.S. Just over one-fifth of U.S. businesses think that a business doing good for its communities translates to doing well for the bottom line. 

Porter is the competitive strategy theorist known in nonprofit circles for his co-founding role in the Foundation Strategies Group (now FSG-Social Impact Advisors), the Center for Effective Philanthropy, the Monitor Group, and the Initiative for a Competitive Inner City, as well as his co-authorship (with Mark Kramer) of iconic articles such as “Philanthropy’s New Agenda: Creating Value” (1999), “The Competitive Advantage of Corporate Philanthropy” (2002), and most recently, “The Big Idea: Creating Shared Value” (2011). Porter has long been a critic of the ad hoc and non-strategic uses of corporate social responsibility (for which Porter prefers the terminology “shared value”). The study seems to imply that corporate leaders may not necessarily follow the prescription of doing well by doing good.

Has the nation’s corporate sector moved into a dark alley of talking about social responsibility more so than practicing it? Or are corporations sensing a new recessionary attitude from consumers—or investors—pushing them to focus more than ever on corporate profitability over corporate citizenship? Or has the nature of the world changed, as the Triple Pundit author suggests, such that the competitive posture of state capitalism in China has induced corporations to redefine the communities that they serve to be the communities in which they have offices and plants? —Rick Cohen

  • Amy OLeary

    “Two-thirds of American businesses want or plan to move their facilities out of the U.S.” is not what the study said at all. Triple Pundit misreported it. Just follow Carol Pierson Holding’s link to the actual study report in Harvard magazine and you’ll see a much different statistic. Of the 10,000 Harvard alumni who responded to the survey, “more than 1,700 respondents were personally involved in decisions about whether to place business activities and jobs in the U.S. or elsewhere. In these choices, the United States competed with virtually the entire world and fared poorly, losing two-thirds of the decisions that were resolved.” That’s a depressing statistic, but it’s a far cry from “two-thirds of American businesses want or plan to move their facilities out of the U.S.”

  • rick cohen

    Dear Amy: Thanks for the correction. That was the way it appeared in Triple Pundit which was a pretty surprising statistic. Yes, the actual number is depressing as well. We should have gone to the source report. Thanks again for taking the time to make the correction.

  • Dave Stangis

    A fan of Porter and Harvard, but a few leaps here. Perhaps I need to read the whole study – but the reality is that fiscal/tax policy drives the economic reality of these decisions. Ask any CEO in the country where they’d invest if all things were even close to being equal. I know what their answer would be…

  • John Fike

    My take on it is that corporations that do not have a strong sense of corporate responsibility are not good corporate citizens for a democracy. Perhaps they should move to other regions where they can institute private government as they buy legislation and legislators that allow them to do whatever they want. They are not suitable for civil society. Meanwhile, we need to support all entrepreneurs and corporations that do have a keen sense of community responsibility, and we need to work harder to ensure open markets that are well-regulated and can sustain the growth of such businesses over time. These are the sorts of firms we want and need in our democracy. These are the firms who will find reborn enthusiasm in their employees and managers; they will be companies for whom we all want to work and do our best — the firms that care about us, and our neighbors, and our society.

  • Yolada Ortega

    I had a hunch decades ago when the trend of outsourcing began that the nation couldd be left with no jobs. Family members were starting to lose their jobs. I was a journalist. I never imagined corporate greed would go as far as it has. The only thing that can bring jobs back is threats abroad toward companies, tax consequences imposed by the U.S. or rewards for U.S.-based companies, or a strong nationwide protest with a buy American-made only buy-in by consumers of products in the United States.