Business and Society

PUBLISHED Jul 15, 2022, 1:51:57 PM        SHARE

imgpiggybank advisor

One great discussion topic and area of study has to do with defining exactly what a business is and what its obligations are to society at large and to the many stakeholders (customers, shareholders, employees, suppliers and policy makers) participating in the business environment. For most businesses, the focus has been first and foremost on serving the customer. For others, the focus is on the shareholder. More recently, we have seen a broadening of the discussion to recognize the importance of multiple stakeholders and the need to promote social, environmental, and financial value. In 1970, Milton Friedman argued that the only social responsibility of business was to maximize profits. Levitt (1958) captured this perspective succinctly when he wrote, “the business of business is profits.” However, in the real world, there is a lot of failure in the delivery of public goods, schools, infrastructure and healthcare. As a result, corporations are being required to participate in broader societal advancement not only by regulators but by investors and other stakeholders— employees, customers and communities. Piggy believes that most business leaders must navigate this line, making sure companies remain profitable enough to fund R&D, innovation and future proofing—while making the world a better place.

A practical example was the outbreak and spread of the Covid-19 pandemic. Globally, it turned out to be a race between injections and infections as governments focussed on vaccination programmes. In Zimbabwe, the government ramped up vaccination programmes and the business community were engaged in a bid to mobilise resources to acquire more vaccines to cover the entire country. The important question is whether there is any value for businesses in Zimbabwe to fund or support such programmes? While the business of business is indeed business, it appears that there are compelling reasons companies should seize initiatives to drive social and business benefits. In an interconnected world facing unprecedented environmental and social constraints, society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors.

Delta Corporation Corporate Social Responsibility Campaign

Delta employees volunteered to participate in the national clean-up campaign

Picture: Delta employees volunteered to participate in the National Clean-Up Campaign launched by His Excellency the President of the Republic of Zimbabwe on the first Fridays of the month as part of the Delta

But can firms do well by doing good?

There are numerous research papers that try to estimate the effect of corporate social responsibility on financial performance. However, the results are mixed. The more recent work of Nyborg and Zhang (2013) shows that firms with a strong reputation for social responsibility pay 38% less than firms with a weak reputation for CSR. Hong and Kacperczyk (2009) contend that companies involved in the production of alcohol, tobacco and gaming have higher expected returns than otherwise comparable stocks, suggesting that investors pay a financial price for a higher social return. A meta-study by Margolis et al. (2007) covering 167 papers concludes that corporate social responsibility has a small, positive effect on financial performance.

Overall, while CSR initiatives do not immediately affect a firm’s profitability through higher product revenues or lower costs, there are other reasons why it might increase value. Corporate social responsibility can be a strategic asset that firms use to build a reputation with key stakeholders. Firms invest in CSR to purchase a form of insurance against negative firm events. The idea is that by engaging in CSR, firms create a reputation for behaving in line with other actors and this creates “moral capital” that the firm can draw upon in times of adversity. For example, companies like Delta Corporation and BAT Zimbabwe are affected by tax policies and regulations related to the marketing and distribution of products. There is indeed a strategic logic in maintaining a good relationship with the government. This, however, calls for a shift to long-term strategic thinking amongst business leaders. Piggy has consistently insisted investors on our market to gain exposure in companies with solid business models and proven management teams. Based on leadership assessments, Piggy remains a long-term bull on Delta Corporation, Old Mutual Zimbabwe Limited and NMBZ Holdings. Get more tidbits on the stock market by joining a PiggyBankAdvisor Telegram Group (+263 78 358 4745).

Originally Posted on piggybankadvisor.com

Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
Frenzied Week Ending with a Quieter Tone

After a frenzied week, the markets appear to be going into the weekend more subdued.

Gas Fees: Everything you need to know

You've probably heard about crypto gas fees and their role in the blockchain process. In this post, we'll tell you everything you need to know about it.

The Hundred 2022| Squad & Men’s Team List The Hundred

The Hundred team list 20222 London Spirit, Welsh Fire, Manchester Originals, Northern Superchargers, Oval Invincibles, Trent Rockets, Birmingham Phoenix, Southern Brave


Is Visa stock a buy? Let's discuss why it is a strong buy and why it is not due to the pro-cyclical nature of the stock!

Is Rivian a Buy Right Now?

Take a Look at the Hot New EV Release

Ledger Launches NFT Marketplace, Enterprise Platform, and other Web3 Services

Ledger has announced the launch of a non-fungible token (NFT) marketplace and web3 services platform for enterprises...

Summer Doldrums

market commentary

Will There be a Recession?

June Jobs Report Seems Positive, but Could Trigger Interest Hike

Decentralized Autonomous Organizations (DAOs): Here is Everything you need to know

The advent of web3 brought about sets of technologies and principles such as blockchain and the concept of decentralization, providing a way for us to

How’s Web 5.0 Different From Web 3.0

For those who are still trying to get their heads around Web 3.0 and wondering what all the fuss is about, we've put together a fascinating update....

The "Holy Grail" of Portfolio Management

Portfolio Managment from Ray Dalio

Basing and "Going 4th" :)

stock market commentary

Binance vs Kraken: Which is superior?

Binance and Kraken are leading crypto exchanges that have millions of users from different parts of the world that trade on their platforms every day.

Does Remote Work Affect Stock Value?

Elon Musk Has Renewed the Debate Over Work-From-Home

Best 2022 Crypto Research Tools You Should Have as an Investor

The market is a large part of the financial system in which principles, processes, and stakeholders interact in various ecosystems.

Should You Buy Tesla Stock?

Should you buy Tesla Stock right now or after the much-awaited Tesla Stock Split expected in August?


Pfizer, the world top class company, develops and manufactures drugs or medicine and vaccines, having approximately 3.7 billion shares on NASDAQ.

Why Should You Know About Amazon Stock?

Amazon issued its IPO at $18 per share trading under the NASDAQ with symbol AMZN. Subsidiary companies Zoox Kuiper System Amazon Lab126 Amazon Web Service.

Resources for Publishers
Resources for New Investors