A Third Way for Business, Too

By Roddick, Anita | New Statesman (1996), April 3, 1998 | Go to article overview
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A Third Way for Business, Too


Roddick, Anita, New Statesman (1996)


Firms must attend to the needs of all their stakeholders, if they are to meet the globalisation challenge

These days we are all searching for a Third Way, business included: a way of behaving and a way of surviving economically which does not depend on the old antagonistic assumptions of capital versus labour, east against west, head versus heart. Must increasing economic prosperity always be at the expense of human rights and the environment? In my view, most definitely not. Must business always be seen as the exploiter of people and natural resources rather than the provider of honourable livelihoods and enhanced quality of life for this and future generations? I fervently hope not.

Economic globalisation presents a particularly urgent challenge. Benjamin Franklin once said: "No nation was ever ruined by trade." But the free market hyper-enthusiasts Lowell Bryan and Diana Farrell, in their Market Unbound: unleashing global capitalism, warn chillingly of "significant social, labour and political turbulence as nations grapple with cutting entitlements and liberalising product and market restrictions."

John Gray advanced an equally pessimistic analysis in the pages of the New Statesman three weeks ago. As if the reputation of business were not bad enough, there is a real danger that the side effects of globalisation could make it far worse.

The unpalatable truth is that business is not trusted as an institution in this country, or indeed anywhere else on the planet. Fifty-one of the world's top 100 economies are companies. Mitsubishi, General Motors and Shell all have larger turnovers than Norway. Is this level of power and influence matched by public esteem? Hardly. According to MORI, 15 per cent of the British public trust multinational business to be "honest and fair". Are business leaders doing enough to demonstrate their belief in public accountability? Not really, if one considers the relative timidity of the Hampel report. But it does not have to be like this.

Happily there are business leaders in this country who are ready to seize the challenge. Sir Iain Vallance of BT and John Browne of BP are two senior British business people who regularly speak out on issues of social and environmental accountability in commerce. Companies are also engaged on multiple levels. The RSA Tomorrow's Company process is promoting various initiatives such as ethics in the workplace. The director general of the Institute of Directors, Tim Melville-Ross, has even pitched his organisation into an activity called "HUB", which will try to engage business leaders more in education. I never imagined I would be applauding the IOD for such an enlightened initiative.

And last but not least, the Body Shop has joined with seven other companies - BP, BT, Diageo, NatWest, Tesco, Wessex Water and Unipart - to launch a committee of inquiry on a New Vision for Business, which is exploring the public policy implications of the new agenda. The committee has already commissioned research from eight leading independent think-tanks and hopes to report on progress in the autumn.

What might a "Third Way for business" represent? Personally speaking, I feel it must be distinct from previous models. One could characterise mainstream Anglo-American business as having already passed through two distinct phases: the early industrial and the late industrial. The dominant behaviours of the early industrial period were mostly to do with the creation of economic wealth for owners, with robber barons such as Rockefeller and Carnegie at one end of the moral spectrum and paternalists such as Ford and the Rowntrees at the other.

In the later industrial period power passed to managers and technocrats. Shareholders were increasingly represented by less-than-accountable institutions charged with looking after their cash, and workers got trampled. The characteristic mismatches between short-term and long-term strategy in this phase led to the downsizing and delayering mayhem of the 1980s and the fat-cat scandals of the 1990s.

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