When the crisis was set to begin, there seemed to be a sense in the air that after the crisis things would be different. Many agreed that what had brought us here in the first place was basicly the reckless behaviour of banks and that, among others, regulation was needed to fix the situation. The talk was mainly concentrated on financial institutions, yet other lines of business had their share as well. The enterprise of the next decade was prone to be more humane and less “greedy”.
Not that the idea was anything new, though. Corporate Social Responsibility (CSR) has existed for decades already, and most of the major corporations have had their departments of CSR already up and running for years. Social investment has also seen ready to skyrocket within the near future, and in many ways it also has. To complete this kind of development, the crisis was seen as the last necessary step for the companies to remake their skin, this time for good.
However, according to many, this has not really happened, almost the opposite. Among others this was noted by Obama in his speech earlier this month, stating that “instead of learning the lessons of Lehman and the crisis from which we are still recovering, they (finance enterprises) are choosing to ignore them”. A classic case of “everything has to change so that everything can stay the same”?
Not necessarily. The one thing that the crisis probably did change was the amount of angry people, angry in one way or another not only to banks and similars but also to other kind of enterprises. After all, it was not only banks who received financial aid in the form of tax-payers money, in the US the list also included car makers etc.
These angry people are likely to view the corporate world more critically from now on. In practise, this might mean they opt to buy the products of the company who are, well, better behaving than someof the other one. They are likely to be less forgiving to the misbehaviour of businesse. In any case, I do not see too many wanting to spend more of their money to pay the bonuses of the directors of companies such as AIG.
It is not that the companies are voluntarily willing to change to become more ethical or humane, even though some of their directors might actually even want so. It is more likely consumer preferences that force many of the companies to change course. That does not mean that companies will make Greenpeace and co. redundant, but in order to stay in business the worst bullies cannot survive, everyone has to play at least a little bit nice.
What is true, though, is that people tend to have ashort memory, and things have a habit of returning back to the “normal”. However, within our near future we are likely to face events that will remind consumers/voters over the importance of ethical behaviour on the part of the companies. For one thing the climate change will probably intensify this development. Furthermore, it is not that all this started from the crisis either, the talk of ethical enterprises has been going on for years and has made some results as well already.
In the end companies as well will contribute to the process. The constant search for new markets will lead to a situation where companies have to start making them, also to the poorest areas of the world. This does not only mean making their products cheaper, but also taking more actively part in making the living areas and local societies better as a whole. This might mean giving funds, building infrastructure or providing personnel in forms of nurses and teachers. This so called market making will be carried in groups of corporations in order to share the costs, and has an aim that is shared by all of the participating enterprises: to create consumers who are able to consume companies products. In the meantime before that happens, these projects make wonderful PR.
The companies who manifacture goods and services sold directly to the consumers are the first ones to be impacted, that is, start behaving more ethically. The others, those who do business mainly with other companies, or who are hidden further along in the supply chain or situated in third world countries will resist the change longer. Eventually there is no escape for them either, globalisation does its wonders in many ways: not only companies outsource production or part of their services abroad, also the demands of the market areas can travel a long way. With time the consumer pressure will caught also those who are not directly linked to them.
The final pressure will come from governments, influenced by their voters. This in turn will probably mean more regulation, however it is likely to stay reasonable: the advantages of opening up the markets tend to be in general higher to those of putting barriers, at least when certain common frameworks and functioning regulation is in place.
Eventually, this ongoing process will effect the way we think about companies, or to put it another way, how we define them. Instead of just tools to make money companies need to do more, they need to accept a broader social/ethical role, and if not, they and their products run the risk of being deserted by the consumers. What is now known as socially responsible company turns out to be the normal company of tomorrow. Once our definition of the words company, enterprise or corporation has changed, the socially irresponsible company becomes if not extinct, at least rare. Company behaving unethically will cause just as big of a shock as Janet Jackson’s boob on TV.
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