From Pine View Farm

Corporate Citizenship 0

No. Really.

Back in the olden days, when I was a beardless boy, it was taught that the purpose of a business in a capitalist system was to provide goods and services of value, act as a responsible corporate citizen, and, in the process, make a profit.

That has morphed into provide goods and services of value, act as a responsible corporate citizen, and, in the process, make a profit.

This happened coincidentally with the rise the idea that “management” was a profession somehow separate from “production.” We started to see professional “managers” who would flit from industry and industry, often leaving havoc in their wakes while raking in the bonuses and stock options.

There was the rise of the “conglomerates” in the late 1960s, followed by the stall of the conglomerates in the 1990s, as companies started to realize that, to be effective in a line of business, they needed to know something about the business, not just about the balance sheet. (Contemporary congomerates tend to focus on related lines of business, rather than completely unrelated ones. cf. Viacom today and ITT back then.)

The rise of the MBAs followed–MBAs, empty dark-colored suits with yellow power ties. Then everyone and anyone seemed be getting MBAs and the degree lost its cachet.

Came also the “private equity funds” and the “hedge fund manager,” along with the cult of the CEO.

Throughout this, the view became more and more that profit was everything and that value and responsibility were nothing, that profit was, indeed, the only measure of value and responsibility, as American as suburbia and as pure as peanut butter.

But some business persons, including some big business persons, do still get it, get that there is more to corporate responsibility than earnings reports and executive bonuses.

Here’s an example. (Note: if you follow the link, you will find that the Wilmington paper got Mr. Korman’s name wrong, at least as of the time I write this; this is one example of why I subscribe to the Philadelphia paper. I was tempted to link somewhere else, but, then thought, nah.):

Chief Executive Officer [Steve Korman–ed.] of Plymouth Meeting-based Korman Communities has placed $16,000 worth of ads in The Philadelphia Inquirer and The New York Times objecting to job cuts to improve the bottom line. As a stockholder in many companies, he says he would prefer a smaller profit or lower stock price “rather than affect the lives of our neighbors and their families as jobs are lost.”

Steve at ASZ has a much more detailed treatment of the story here.

He also explains how Mr. Kindler, whose name was used in the item in the Wilmington paper in place of Mr. Korman’s, helped inspire Mr. Korman’s actions.


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