April 04, 2017
Author: Christopher Cox
The New York Times had a front page article Friday, “Brands Wrestle With Whiplash of Viral Anger,” that explores the requirement for increased nimbleness on the part of brands as activists pressure them concerning the placement of their advertising. While the article is concerned with advertising, it has an important quotation that speaks to something deeper:
“Americans are now demanding that their brands articulate their values and weigh in on political issues, and I think the degree to which they are expecting that is really quite new,” said Kara Alaimo, who teaches public relations at Hofstra University.
The consumer demand stands in sharp contrast to the claim by Milton Friedman in the same newspaper almost fifty years earlier: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (NYT, Sept. 13, 1970).
While today’s article is quite good, giving the context of a handful of current controversies, it misses a more crucial question: Why do Americans demand more of their brands? Why do Americans now expect CEOs to speak out about presidential executive orders, state laws, and a myriad of concerns that, at first blush, seem removed from their corporate responsibilities?
One macro explanation is that the social contract has changed. While numerous philosophers have described the “social contract,” Jean-Jacques Rousseau’s Du contrat social (1762) may be the canonical description of the concept. Rousseau’s concept included business but his notion of the social contract was largely a consideration of individuals and the government. An individual yields sovereignty to a government that in turn provides prosperity, security, and health. Rousseau’s concept did not envision the circumstance we have today. Corporations have evolved such that they wield enormous resources and, thereby, influence. Multi-national corporations now have annual sales that dwarf the economies of many nations. The graphic below shows that, if the largest corporations’ annual sales were considered alongside the GDP of nations, more than 40 corporations rank in the top 100. In 2016, Wal-Mart ranks #21, with an economy larger than that of Sweden.
The enormous size and scale of multinational corporations fittingly drives the desire on the part of consumers that these corporations express the values of those consumers. Hence, a controversial state law may spark statements from large employers in that state. Further, leading institutions, like the United Nations, via the Global Compact which engages more than 9,000 global companies in support of the U.N.’s Sustainable Development Goals, and the Catholic Church, in documents like Laudato Si’, attempt to persuade the corporate community that business must attend as well to the care of creation and concern for the most poor on the planet.
A changing landscape with greater concentration of power in large, multi-national corporations brings greater responsibility for attending to matters that were once not a day-to-day concern in the operations of a corporation.