Looking at the role of corporations in society, we have entered a new era. The model previously taken for granted, one guided by a philosophy of passive shareholder value creation, has increasingly been called into question and replaced by more activist models of corporate citizenship, such as corporate social responsibility (CSR) and triple-bottom-line economics, as well as newer models of an even more activist mode. In the previous model, a corporation’s good was seen to have been derived from its ability to enrich shareholders, whose wealth would in turn trickle down through the rest of society.
By contrast, corporate activism as we observe it uses the bedrock of company value systems to actively fight obstructions in the market and issues in society at large that run against these value systems, thus going even further than CSR and triple-bottom-line models, which seek to balance financial results with environmental and societal ones. Social equilibrium (especially on financial matters) is one thing; corporate activism, on the other hand, often puts otherwise rational economic firms at risk of eroding short-term shareholder value —hitherto their raison d’être, at least for those companies publicly-listed.
This new breed of corporation is driven as much by market forces, such as consumer consciousness and pressure, as it is by strong, value-based leaders.
Thomas Friedman’s “hot, flat, and crowded” world, combined with hyper-transparency and market speed, creates conditions favorable to firms that stand for something, who are likely to enjoy a competitive social advantage that may translate into higher long-term returns and customer loyalty.
