The Stanford Graduate School of Business recently announced that, with a $150 million donation, it will launch a new institute that will help alleviate poverty. Called the “Institute for Innovation in Developing Economies,” its aim is to develop research that can help business leaders innovate products and services that will build infrastructure and economic growth, which, according to the school’s website, will help relieve poverty in developing countries.
While relieving poverty may seem like a lofty goal, it might also be based on good business sense. Globalization and increased economic activity in developing countries have created and expanded markets for international business in ways that will play out for years to come. For example, a recent population report released by Goldman Sachs speculated that, because of explosive growth and continuing development in China, the Chinese middle class may be four times as large as America’s by 2030, and will undoubtedly represent a huge business market. It would be logical to assume that efforts to minimize or alleviate poverty elsewhere could generate a whole new class of consumers and associated business opportunities.
The Aspen Institute’s recently updated Beyond Grey Pinstripes, the list of top 100 top socially- and environmentally- conscious MBA programs, has generated a lot of interest in how business schools are (or are not) developing curriculum that will foster socially sustainable thinking. Fast Company recently interviewed Judy Samuelson, Aspen’s director of business and society, who said that, while b-schools are providing a more ethical and socially-conscious framework for students, in general, they’re still not leading. That may be true, but if anything, Beyond Grey Pinstripes shows that many business schools are starting to take the ideas of corporate social responsibility (CSR) seriously, and that many students are being exposed to this thinking throughout their MBA programs.
So, is this kind of thinking rubbing off on students?
A glance at some recent projects and startups created by MBA students and recent graduates shows that this new type of thinking is indeed having a positive effect, and may be influencing a new breed of businesses that are, through innovation and the adoption of traditional business principles, tackling social and environmental problems.
Social entrepreneurship is an increasingly popular focus for MBA students, but what exactly does the term mean? We spoke to Pamela Hartigan, director of the Skoll Centre for Social Entrepreneurship at the University of Oxford’s Saïd Business School.
Can you briefly define social entrepreneurship?
Social entrepreneurship is entrepreneurship that fuses innovation, resourcefulness, and opportunity to create new systems or practices – or improve on those that exist – that instead of being focused on just making a profit are focused on transforming society in a positive way.
How does that differ from the work of charities? Social entrepreneurship defines an approach; it’s not a legal structure. You can be a social entrepreneur who is focused on creating change through a non-profit, or through a for-profit structure.
People get caught up in this idea whether it’s a charity or not; it is independent of charity. And in fact, to make it sustainable, it should not be a charity. But it really is not about the legal structure, and that’s the main message here: it’s about an approach to how to create innovation in a way that changes systems and practices.
To conclude our series of interviews about CSR and sustainability MBA programs and the job market, we publish excerpts from our chat with Max Oliva, associate director of the Social Impact Management project at IE Business School in Madrid.
What is the mood of the CSR community in light of the financial crisis?
We will obviously be affected by the crisis, but it will also be a good opportunity to see which companies were “walking the talk” and doing CSR strategically. They are the companies expecting benefits in innovation and bottom-line business.
But some companies were doing it on the PR or marketing basis without having it integrated, and it makes sense for them to cut back on those types of programs. You will see cutbacks in the companies that have not integrated it. That’s good for the consumers, and an opportunity for maturity in the sector and for going ahead strategically and innovation-wise.
As someone who works at a European business school, do you notice any differences in how Europeans and Americans approach CSR?
There are some differences. For example, in Europe we have much stronger government support for social issues. In the United States, philanthropy relates much more to individuals and companies. Having said that, that is only a very small part of CSR. The strategic part of CSR has been driven a lot here in the United States, but has been certainly driven as well by several European companies.
I tend to think it depends on the company. Multinationals have companies in the US and Europe. There are some companies that are quite ahead in this conversation: several American companies, but also several European companies that are approaching it much more strategically. I think the UK is a couple years ahead of the rest of Europe. I would even say that they are ahead of the US.
After seven years directing a sustainability initiative at Coca-Cola Company, Dan Vermeer has joined Duke University as executive director of the new Corporate Sustainability Initiative. In our interview, he says the financial crisis will separate the truly valuable CSR initiatives from the superficial.
Will corporate sustainability survive the financial crisis?
There’s no question that there will be a whole lot of stress on the job market in general, and nobody is going to be exempt from that. There are a few things that give me comfort. One is that a good chunk of the environmental sustainability agenda has a cost-saving benefit immediately. I think efforts around reducing energy use, water use, waste are going to have very direct benefits on the bottom line in a more efficient kind of enterprise.
This is what some business schools are saying, but is this something companies actually believe?
I think so. I would differentiate the larger national and multinational firms where I would say that it’s pretty well understood that sustainability efforts have financial and strategic value. Most companies are pursuing them, and will continue to do so. I’m pretty confident about that.
I think it is less institutionalized in smaller firms that have less exposure, access to the tools, and expertise in this area. But, in general, it’s pretty well established.
There are a lot of things that go under the umbrella of sustainability, and I think you will see some aspects of that suffer. Things that are framed more in philanthropic terms, corporate social responsibility terms, or corporate affairs terms – those things are likely to suffer because they are seen as more ornamental or the kinds of things you do in good times to buff up your image.
San Francisco is considered one of the “greenest” cities in the world. So perhaps it’s no surprise that Bay Area business schools are among the leaders in teaching sustainability and CSR. One school – Presidio School of Management – specializes in it. We spoke to the school’s associate dean Nicola Acutt about the Presidio MBA program, and whether corporate sustainability will be the first victim of the financial crisis.
Will an economic downturn marginalize corporate social responsibility and sustainability?
I think it’s something that’s obviously on the forefront of a lot of people’s minds. I would say that now more than ever, there is a need for business leaders who have this kind of training and understanding. In an economic downturn, sustainability becomes even more critical. In strong economies, it provides opportunities. In weak economies, it provides opportunities, and can be central to survival and turnaround strategy.
In a downturn, one of the most important things is to tighten your belt and look at where you can be more efficient. That’s really at the core of an integrated bottom line: understanding how a sustainability-oriented strategy can reduce risk, cost, enhance reputation, ensure customer loyalty. Those are all key parts of the business case for sustainability and sustainable management.
His students may not be anything like Gordon Gekko, the ruthless antagonist of the film Wall Street. But Raymond Horton, the director of the Social Enterprise Program at Columbia Business School, says CSR- and sustainability-focused MBA grads will still be in demand in a tough economy.
How will the current financial turmoil affect the corporate social responsibility branch? I imagine that companies that have to make job cuts might look here first.
To the extent that CSR units are located in the public relations parts of businesses, you might be right. But I think there has been a sea change here. Most people from Columbia Business School who want to be social enterprisers and practice corporate social responsibility are going into operating divisions, and incorporating CSR into the basic routines and policies of the organizations. So they’re not going to get displaced. It’s just another way of saying that CSR has become a profit center in a lot of businesses.
Is now the the right time to get an MBA in this branch?
I don’t know what the experience is at other schools, but I know our applications are up over 25 percent this year. I think a lot of people figure this is a good time to get an MBA. For somebody who came out of college and went to work on Wall Street or management consulting for four or five years, if they figure they are going to get an advanced degree at some point – and maybe they’ve just gotten laid off, or they think they’re going to get laid off or not going to get a salary increase – it becomes a good time to go to school.