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Given that many organizations are failing the stakeholder capitalism test, bold steps are needed to turn capitalism into a more compassionate economic system. In 2019, signatories of the Business Roundtable’s Statement on the Purpose of a Corporation committed to serve all of their stakeholders, not just shareholders, by investing in employees and compensating them fairly, fostering dignity and respect, and supporting the communities in which they work. But a recent study found that these companies have done no better than nonsignatory organizations at protecting jobs, supporting labor rights, and ensuring workplace safety during the global pandemic.
To genuinely support employees and other stakeholders, corporations need to reconceptualize their purpose and focus on obtaining cooperative advantage. An approach rooted in African traditions of cooperation such as ubuntu (which translates to “I am because we are”), cooperative advantage describes the benefits that an organization possesses and accrues due to its people-centered approach to development and sustainability. This encompasses engendering a spirit of care and meaningful dialogue among employees, customers, and community.1
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One approach to gaining cooperative advantage is to appoint community development and sustainability advocates to a company’s board of directors. Ideally, these individuals will have genuine interest and experience in fighting against social injustices, with consistent records of passion for and dedication to solving big problems. In order to meet the Business Roundtable priority of promoting “an economy that serves all Americans,” traditional board members must be challenged by colleagues who bring new perspectives on community advancement, social justice, and sustainability. Highlighting accountability in this way may compel other members to deliver on their still unmet commitments to all stakeholders.
A recent PwC survey found that 41% of U.S. board members cite a lack of “qualified” candidates to increase board diversity — a finding that necessitates a reconsideration of a member’s ideal qualifications. Certain steps to diversify boards are in progress — for instance, a new California law requires publicly traded corporations based in the state to include corporate board members from underrepresented communities, and Nasdaq recently proposed a rule that would require most companies listed on the exchange to have at least two diverse directors. But corporations should go further. To build sustainable communities, their boards must be both diverse and passionate.
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1. L.C. Prieto and S.T.A. Phipps, “African American Management History: Insights on Gaining a Cooperative Advantage” (Bingley, United Kingdom: Emerald Publishing, 2019).
2. V.P. Franklin, “Pan-African Connections, Transnational Education, Collective Cultural Capital, and Opportunities Industrialization Centers International,” The Journal of African American History 13, no. 3 (January 2011): 39-43.
3. L.H. Sullivan, “Moving Mountains: The Principles and Purposes of Leon Sullivan” (Valley Forge, Pennsylvania: Judson Press, 1998).
4. Franklin, “Pan-African Connections.”
5. J.A. Levy, “Black Power in the Boardroom: Corporate America, the Sullivan Principles, and the Anti-Apartheid Struggle,” Enterprise & Society 21, no. 1 (March 2020): 170-209.
6. Sullivan, “Moving Mountains,” p. 66.
7. Levy, “Black Power.”
8. K. Paul and S. Duffy, “Corporate Responses to the Call for South African Withdrawal,” Research in Corporate Social Performance and Policy 11 (1988): 211-240; and R.A. Jackson, “The Multinational Corporation and Social Policy: Special Reference to General Motors in South Africa” (New York: Praeger Publishers, 1974).
9. D. Malone and R.W. Roberts, “An Analysis of Public Interest Reporting: The Case of General Motors in South Africa,” Business & Professional Ethics Journal 13, no. 3 (fall 1994): 71-92.
10. D. Kearns Goodwin, “Team of Rivals: The Political Genius of Abraham Lincoln” (New York: Simon & Schuster, 2005).
11. R.D. Bullard, “Confronting Environmental Racism: Voices From the Grassroots” (Boston: South End Press, 1993).
12. D.P. McDonnel, E.C. MacKnight, and H. Donnelly, “Co-Operative Entrepreneurship: Co-Operate for Growth” (Glasgow, Scotland: Co-Operative Education Trust Scotland, 2012).
13. Sullivan, “Moving Mountains,” p. 67.