Tuesday, February 28, 2012

"Ethical Capitalism"...The Next Big Thing in Corporate Profitability

Corporate America is the foundation of America's strength.  The greatest hope for America are its corporations...really!

Many people would likely argue that corporations are self-interested, money-grabbing organizations devoid of any human empathy.  And, this is in fact in most instances is probably quite true. But, embedded inherently within that attitude lies the potential for that self-interest to make a significant positive impact on Americans.

The business movement that is currently evolving is that corporations will see increased profits as the direct result of benevolent actions. I refer to this as "ethical capitalism".

Case in point is the "green" movement.  As public pressure and business opportunities are created due to a demand for cleaner environmental initiatives then it has been demonstrated that this is an area where companies will focus their attention.  The decision by corporations to pursue profits in the environmental arena is a business one and not personal.  To my earlier point, businesses will naturally gravitate to the revenue opportunity and therefore environmental initiatives have become part of the American corporate mindset thus providing a strong sustainability platform for long into the future.

What should be the next step in the green revolution of profitability is that corporations profit more from doing societal-friendly activities.  From a marketing perspective, companies have long known that being seen as part of the community and a good corporate citizen is good for business. Companies will line-up for opportunities to sponsor charitable causes and to provide safe products because the consumer population demands them and it is good for their brand building objectives. Therefore, corporations know that the appearance of being a good citizen is good for business in terms of building brand value and from a product standpoint safety leads to a reduction in the number of law suits and reducing insurance premiums.

The next tactic then in the evolution of corporate contribution is to go well-beyond charitable support, fund-raising and brand building and to make resources and expertise available to the public at large.  For an easy example, one area where corporations can have a dramatic and immediate impact is in terms of disaster relief.  Whenever something happens around the USA the corporations should be the first ones on the scene to help.

The Hurricane Katrina flood in New Orleans could have benefited dramatically from local and national corporations by having access to their expertise in order to provide relief, rebuild the city and care for those affected by the devastation.  A wide variety of companies could easily have pitched in by providing human expertise, labor, supplies, management coordination rather than just providing funds or basic supplies like water and blankets.  Further, corporations are used to working within an integrated network of other companies and suppliers to achieve their goals which is something that governmental agencies cannot claim.  It would have been much easier for a home improvement retailer to work with engineers and contractors to rebuild parts of the city rather than having to wait for governmental resources to coordinate the effort.  Corporations also have the luxury of operating by objectives and have to be less considerate of public attitudes.

If corporations actually pitched in first-hand to actually address the immediate problems then they would be rewarded by increased brand recognition, sales increases and consumer loyalty...all of which which would lead to enhanced profitability and stock price for the company. The result of "ethical capitalism" is increased corporate benefits to the bottom-line through benefiting America.

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