Limits of Social Responsibility
“It is not enough for business to do well; it must also do good.” But in order to “do good,” a business must first “do well.”
Whenever a business has disregarded the limitation of economic performance and has assumed social responsibilities that it could not support economically, it has soon gotten into trouble.
Union carbide was not socially responsible when it put its into Vienna, West Virginia, to alleviate unemployment there. It was, in fact, irresponsible. The plant was marginal to begin with. The process was obsolescent. At best the plant could barely keep its head above water. And this, inevitably, meant a plant unable to take on social responsibility, even for its own impacts. Because the plant was uneconomical to begin with, Union Carbide resisted so long all demands to clean it up. This particular demand could not have been foreseen in the late 1940s, when concern with jobs far outweighed any for the environment. But demands of some kind can always be expected. To do something out of social responsibility that is economically irrational and untenable is therefore never responsible. It is sentimental. The result is always greater damage.
Integrating the Economic and Social
It is this absence of a functioning industrial society, able to integrate our industrial reality that underlies the crises of our times.
Man in this social and political existence must have a functioning society just as he must have air to breath in his biological existence. However, the fact that man has to have a society does not necessarily mean that he has it. Nobody calls the mass of unorganized, panicky, stampeding humanity in a shipwreck a “society.” There is no society, though there are human beings in a group. Actually, the panic is directly due to the break-down of a society; and the only way to overcome it is by restoring a society with social values, social discipline, social power, and social relationships.
Social life cannot function without a society; but it is conceivable that it does not function at all. The evidence of the last twenty-five years of Western civilization hardly entitles us to say that our social life functioned so well as to make out a prima-facie case of the existence of a functioning society.
Common Core of Unity
There has to be a “common culture” or at least a “cultural affinity.”
Successful diversification by acquisition, like all successful diversification, requires a common core of unity. The two businesses must have in common either markets or technology; through occasionally a comparable production process has also provided sufficient unity of experience and expertise, as well as a common language, to bring companies together. With-out such a core of unity, diversification, especially by acquisition, never works; financial ties alone are insufficient.
One example is a big French company that has been built by acquiring producers of all kinds of luxury goods: champagne and high-fashion designers, very expensive watches and perfumes and handmade shoes. It looks like the worst kind of conglomerate. The products have seemingly nothing in common. But all of them are being bought by customers for the same reason, which, of course, is not utility or price. Instead, people buy them because they are “status.” What all the acquisitions of this successful acquirer have in common is their customers’ values. Champagne is being sold quite differently from high fashion. But it is being bought for much the same reason.
Respect for the Business and Its Values
The acquisition must be a “temperamental fit.”
No acquisition works unless the people in the acquiring company have respect for the product, the markets, and the customers of the company they acquire. Though many large pharmaceutical companies have acquired cosmetic firms, none has made a great success of it. Pharmacologists and biochemists are “serious” people concerned with health and disease. By the same token, few of the big television networks and other entertainment companies have made a go of the book publishers they bought. Books are not “media,” and neither book buyers nor authors – a book publisher’s two customer – bear any resemblance to what the Nielsen rating means by “audience.” Sooner or later, usually sooner, a business requires a decision. People who do not respect or feel comfortable with the business, its products, and its users invariably make the wrong decision.