Introduction
The simple act of transforming our previous consideration as shareholders as the most important aspect in a corporation to integrating stakeholders as active contributors can work significantly toward establishing a culture of humane entrepreneurship.
This week, having started the New Professor Program, we have been reflecting much on the elements necessary as we build entrepreneurship that is focused on innovation for humanity and the pursuit of business opportunities for profit, society well-being, sustainability, and the integration of all people. To properly portray how community well-being can be illuminated in our new and humane normal, we need to examine our understanding of stakeholders’ and shareholders’ role and relationship to an enterprise.
Defining Humane Entrepreneurship
Humane Entrepreneurship can be thought of as the harmony of applied innovation, the pursuit of business opportunities for profit, and the sustainable well-being of society, which is for the people and by the people. It is, in essence, a humane way of treating entrepreneurship, where the well-being of each individual is paramount.
Historical Context: Friedman vs. Freeman
Returning to 1970, Nobel Prize winner Milton Friedman announced that any business who pursued a goal other than making money was “an unwitting puppet of the intellectual forces that have been undermining the basis of a free society.” For over 40 years, this view dominated, treating shareholders as the only group with a moral claim on the corporation.
Conversely, American philosopher Edward Freeman argued that many groups can make moral claims on the corporation because of its potential to harm or benefit them. These stakeholders—including owners, corporate managers, the local community, customers, employees, and suppliers—are essential to the survival and success of the corporation.
The Shift in Corporate Responsibility
A little over a year ago, 181 CEOs of American’s largest corporations (the Business Roundtable) overturned a 22-year-old policy statement that defined a corporation’s principal purpose as maximizing shareholder return. This transition marks a significant step toward a more humane-centered view of the enterprise.
The Challenge of COVID-19
Given the pressures of the COVID-19 pandemic, we must ask: how are these CEOs honoring stakeholders now? True commitment requires acting appropriately in communities when pressure tightens. We are not just asking for philanthropy; we are asking for a holistic approach that:
* Incorporates social achievements like the Sustainable Development Goals.
* Focuses on employees to accelerate solutions.
* Empowers current employees during crises.
* Ensures ecological policies that combat climate change.
* Advocates for inclusive policies for micro, small, and medium-sized enterprises (MSMEs).
We will continue to watch and wait as corporations navigate their commitment to Humane Entrepreneurship in these challenging times.