The constituents of corporate responsibility: separate, but not separable, interests? - shareholder and societal interests not mutually exclusive

Business Horizons, July-August, 1991 by Dan R. Dalton, Catherine M. Daily

of business and society have been

mutually improved. There is no necessary

trade-off. There would, no doubt, still be

a controversy over what point on the

new dotted line is appropriate. Still, any

point on the dotted curve is an improvement

over its corresponding point on the

initial curve. (Dalton and Cosier 1984;

emphasis added)

There are a number of ways in which this can actually be accomplished. A growth strategy, for example, comes to mind rather quickly and may, at least in part, account for its popularity. The growth of an organization is not a random event; it is not spontaneous. Rather, it is the product of an elected strategy. For any organization to grow, some surplus must be generated. Of course, such a surplus need not necessarily be contributed to growth. Instead, it could have been distributed in dividends to shareholders, used to augment employee wages and benefits, held in income-generating reserve, or used to reduce the price of goods and services in some future period.

In many ways, however, growth itself may be considered a compelling strategy that reasonably balances the preferences of its constituencies. This is not a startling perspective; indeed, J. K. Galbraith (1967) noted nearly 25 years ago that growth may well be consistent with the competing demands of constituencies. More recently it was noted that, "given the nature of growth, it is not surprising that along with survival, it is considered a universal goal of organizations. ... It is a goal which can serve, at least does not disserve, most influential constituencies" (Dalton and Kesner 1985).

Who is not served by a corporation's growth? It would seem that the associated higher employment levels are in the interests of the government, public-at-large, employees, and organized labor. A related area might be the promotional opportunities for employees who assume expanded roles and responsibilities in the growing organization. A host of benefits brought about from growth strategies could be noted for every constituency. It may be, then, that these strategies move us onto the "dotted line" - more favorable conditions for both parties.

In our view, there are companies that have used creative strategies to (arguably) move the parties to the new line. A few years ago, American Express (AMEX) pledged to make a donation for restoration of the Statue of Liberty with every purchase charged to its credit card or with the purchase of AMEX travelers checks. In addition, it would make further donations for every new American Express credit card issued. During the AMEX national campaign for this program, card usage was up some 28 percent; new card holders increased by some 45 percent. In fact, it was the best fourth quarter in the history of AMEX's credit card division. Not incidentally, AMEX also donated $1.7 million to the Statue of Liberty-Ellis Island Foundation over this same period.

Frankly, we do not know at what point along the "continuum" AMEX would be as a corporation. We do believe, however, that an activity as described has the clear effect of improving a firm's operations while at the same time providing support to the society in which it operates. Certainly, such promotional activities - even given the positive social consequences - could be criticized as being relatively short-term in nature. We would concede that these approaches are less likely to service the problems of urban blight, poorly trained workforces, pollution, and other serious business and societal challenges. Are there strategies with similar impacts that are longer-term and somewhat more inclusive in their societal scope?