Social Responsibility is not about Exploiting an Untapped Market
Cognitive dissonance this morning: it seems that the Wall Street Journal has fallen behind Business World Philippines in understanding Corporate Social Responsibility (CSR). The Wall Street Journal Monday editoin provided a thought piece on “selling to poor consumers“. Dr. Erik Simanis, a senior researcher at the Center for Sustainable Global Enterprise at Cornell University Johnson School of Management, began his article with:
Around the world, four billion people live in poverty. And Western companies are struggling to turn them into customers.
Meanwhile, one of the CSR RSS feeds we use at FreeBalance for Google News included articles from these so-called emerging nations. It seems like companies in the West are trying to create markets rather than address social problems. Examples from Google News included:
- CSR needs to be part of company business models from the Philippines
- A critical review of social responsibility in State-owned enterprises in China
- CSR efforts by a Bank in Nigeria
To be fair to Dr. Simanis, his case studies are for products that are socially responsible. Perhaps the article was designed to appeal to CSR skeptics. As we suggested in our previous blog post, it seems odd that social responsibility needs to be justified in so many businesses.
Nevertheless, it should be crystal clear. One should not create markets in order to separate poor people from their money. If there is a need, then there should be a business model that enables overcoming this social problem at the lowest net cost to poor people. As Dr. Simanis points out, companies should modify products to best meet customer needs.
On the other hand, “to change people’s mind set and behavior”, can be ethically problematic. For example, replacing locally grown food or manufactured products can have dire economic consequences.
We’ve found that there is a need to adapt to the local environment. Our products have changed to meet the needs of emerging economies. The business model has changed to support more local employment and improved civil service capacity. We partner with local companies and encourage these organizations to take a larger services footprint in order to make our Government Resource Planning (GRP) solutions sustainable.