The Changing Relationship between the Business Sector and Society

We had the opportunity to meet prof. Benjamin Gidron in occasion of a seminar held in Genova, in October 2015, in the Department of Economics of the University of Genova.

Introducing Professor Gidron is really hard. His curriculum vitae is particularly rich.

He pioneered the study of the Third (Nonprofit) Sector in Israel, founded the Israeli Center for Third sector (ICTS) Research at Ben Gurion University and directed it for 12 years (1997-2009). During this period ICTS was the major source of data, knowledge and insight on the Sector in Israel and in comparative fashion, knowledge that is being used to develop comprehensive government policy towards the Third Sector.  He also pioneered in the training of nonprofit organizations managers. He founded (2004) and directed the first Graduate Nonprofit Organizations Management Program in the Faculty of Management.

Ay present, prof. Benjamin Gidron is Professor Emeritus, Ben Gurion University of the Negev, Beer-Sheva, and Professor of Social Enterprise, School of Business Administration, College of Management Academic Studies Rishon LeZion, Israel

His speech focused on a real interesting topic -The Changing Relationship between the Business Sector and Society. At the end, we asked him to answer some questions for our Journal, considering that his contribution could be interesting for our readers. 
 

In your research activities, the relationship between business sector and society plays an important role. Will you explain us the reason of this interest?

While I teach in Business Schools – currently the College of Management Academic Studies and before retirement at Ben Gurion University of the Negev, I come from a “social” background – sociology and social work. I see my role in the Business School to show the students the social context in which they operate, which both impacts their activities and is impacted by these activities. This is often difficult because business students are taught to think primarily about the business world, which has a different “language” than the world outside it, both in terms of values and forms of behavior. This was much more difficult about ten years ago; nowadays business students are more open to such ideas. It is important to do this because in the past the state played a central role in steering society, whereas now it is clear that the state is retreating from this role, which leaves a void. The business sector, being large and powerful, is, whether it wants it or not, a key player in society. I am interested in this dynamic relationship (between society and business sector), which can have very positive or very negative consequences.

Why do you consider Corporate Social Responsibility unable to face with present challenges, even if it continues to represent a flat to show? See European Union indications, for examples …

There is nothing wrong with CSR. It gives business entities a platform to be engaged in society. It usually means that a small portion of the profits of the firm (often very small I may add) go to some social cause outside of the business entity. While it can have many forms, in the final analysis it be seen as a form of philanthropy. It gives the firm an opportunity to look good to the outside world and such activities are often used for marketing purposes. Yet, its very definition relates this activity to the firm’s profits, and can very easily be eliminated when there are no profits or profits are low. Furthermore, we have to understand what it can and what it cannot do. It clearly cannot create significant social change: It cannot deal with the major problems of the world – inequalities, environment, health, etc. In all those issues it can at best do some fascinating projects, which will need follow-up and dissemination, for which there are no funds. Also, it cannot (and is not interested) to transform the business sector, so that it has some built-in limitations, for example regarding exorbitant salaries paid to executives, which contribute to inequalities in the world and which indirectly threatens its stability.

Obviously. CSR is better than total disregard by the business sector of society, but painting it in bright colors and exaggerating its potential is false, in my mind. The fact that the EU supports it does not change those truths.

You use the concept of social business: what does it mean exactly? And, why is it so relevant according to your opinion? Moreover, you identify a new paradigm: perhaps, isn’t it too strong? In literature, the change of paradigm represents a rare event …

The main point in the social business paradigm is to include social and environmental considerations in the heart of the business activities, in the way it conducts itself. Unlike CSR, where the social activity is taken place outside the business entity – in nonprofit organizations or in the community, in the social business concept the social activity has to be built-in, in the heart of the business activity. The details are not clear yet as it is a new concept and of course different business entities will have different models in introducing social considerations into the business activities. There are of course differences between the developing and the developed world in implementing such a notion. But the main point is to include social considerations in the center of the business planning and activities.

Changes of paradigms indeed represent rare events but they happen, and it indeed takes a long time for them to ripen. We are at the beginning of a process that, if successful, will involve changes on many levels: In policy, consumer behavior, educational practices, etc. Obviously there will be opposition to it, as in all change processes. Yet, as I believe that the business sector is beginning to realize that its own activities and the ways it conducts those are threatening society and the globe, and indirectly – itself, it will have to develop a new paradigm.

In your papers you propose some examples of this new way to support your proposition. Will you tell us which are the most relevant? How do you find them?

The cases are described in the paper I attach: A Call Center employing handicapped persons; a museum in the dark that uses blind persons as their guides; a software developer who uses Asperger’s Syndrome workers as its Quality Assurance (QA) staff. Since I wrote the paper we can find many more examples; they can be easily found in the internet under the terms “social businesses” or “social enterprises”

Finally, the evolution you propose has lights and shadows.  Will you describe them? and what are your personal opinion for the future?

The ideas I try to promote will, in my opinion, help society and the business sector. It will create a more compassionate and creative business sector and will enable society to benefit from its tremendous resources. It has some dangers as well – if we introduce the business sector into social life, even if it considerate and compassionate, we run the danger of commodification of our social life, of creating a society that values only things that are for sale. What this means is that we need to steer this process carefully and involve policy-makers and consult with a diversity of stake-holders. It also involves consumer education. In the final analysis consumers will have to decide which products/services they prefer and how much they are willing to pay in order to help companies to become more “social”.

Regarding the future – we have a saying in Hebrew: “Prophecy was given to prophets or to stupid persons”. I am clearly not a prophet and I hope I am not stupid, so I will not try to foresee the future. I learned that society develops in ways that are totally unpredictable, because it is influenced by political developments, scientific and technological developments, etc. What this means is that academicians have the duty to promote their ideas, on the basis of their understanding and analyses, which sometimes may look as if they are out of context. If the analysis is correct, such ideas will be adopted, at least partially, by society in a long process of negotiations with many stake-holders. This is how social change is taking place.