Business and Society

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

img
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
IS VISA STOCK A BUY? WHY & WHY NOT?
Image

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?
Image

Take a Look at the Hot New EV Release

Should You Buy Tesla Stock?
Image

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

PFIZER COMPANY AND ITS STOCK ANALYSIS AND FORECAST
Image

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?
Image

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.

ETSY: A TOP GROWTH LONG STOCK
Image

ETSY is a well-run company and a reasonable investment for a long-term investor. The company's unique business model is increasingly taking it to the top of the game. ETSY has become the top e-commerce go-to for consumers in many categories, especially hand-made and vintage collections.

Why Adobe is a Long Buy and Analysis of Q2 Fiscal 2022
Image

When considering to purchase, it is wise for an investor to analyze a stock's past performance. Adobe stock has been growing steadily and consistently in the past. As expected with any stock, it has fluctuated from time to time, depending on the market factors, but the performance has been good overall.

With Oil Sky High, is Exxon a Buy?
Image

Pain at the Pump May Tempt Investors to Grab Big Oil

Here's How You Can Pay Your Utility Bills With Sempra Energy Stock Dividend
Image

Amid rising energy prices and the inevitable recession, the Sempra Energy Stock dividend is something you can rely on.

Why is Dominion Energy Stock Dropping? Is It Still Safe to Invest?
Image

Dominion Energy Stock is dropping for a long time, yet its dividend has not stopped attracting investors.

NIO STOCK FORECAST
Image

NIO is a multinational automobile manufacturing company. It is a Chinese company. Its headquarter is in Shanghai China.

Dow Jones & Company
Image

Dow Jones & Company is considered one of the world's largest business and financial news companies.

IS IT GOOD TO BUY OR SELL AMC STOCK NOW?
Image

AMC (American multi-cinema) Entertainment Holding, Inc. is an American movie theater chain. AMC is one of the largest movie theater chains in the world.

Why you should invest in Middlesex Water Company
Image

Water is life. With inelastic demand, the potential in the utility industry is inexhaustible. Therefore, investing in a water services company is a good bet. But why invest in Middlesex Water Company?

Astra Space Inc. NASA Rocket Failed to Deliver
Image

What is likely to happen in the next 72 hours is a further bludgeoning of Astra's Stock Price. But is it still a long term opportunity?

Is Disney a Buy?
Image

Post-Pandemic Entertainment vs Inflation/Recession

IS ZOOM STILL A BUY?
Image

During the pandemic, Zoom experienced fast accelerated growth with spectacular earnings. Its stock traded at among the highest prices in the market. Today, pre-pandemic cultures have resumed, and the video communications growth has slowed down. Is its stock still a buy?

Resources for Publishers
Resources for New Investors
Boosted with BossCoin
Financial Literacy Leaders
user_profile
Tom Hamilton
user_profile
Wise Intelligent
user_profile
Mark Robertson
user_profile
Kevin Matthews II
user_profile
Akeiva Ellis
user_profile
Brendan Dale
user_profile
Kenneth Chavis IV
user_profile
Sharita Humphrey