Research has increasingly highlighted the importance of business and society working together in reducing the growing income disparities across the world. Despite considerable efforts by non-governmental organisations, private and public companies, and individual giving, approximately 20% of the global population is still living on less than US$1.25 per day. One of my research contends that large companies—given their economic power—can play an important role in bridging the gap between the disenfranchised and the workforce. In the midst of the controversial role of large companies, there is a growing expectation for them to involve the poor and socially-excluded in their business operations.

Based on a community psychology perspective and an in-depth case study of one of the largest pulp and paper companies in the world, my research as published in Business and Society introduced four managerial accountabilities for creating community-inclusive companies. Managerial accountability is regarded as managers’ norms and structural interventions that “bind social systems together” and responsibility for their own actions. By using the following four principles of managerial accountability, stakeholders (e.g. a manager, an employee, a student or a community member) can assess the degree of inclusiveness of a company:

1. Cultural accountability: “As communities prosper, the company will become stronger” is a common mental assumption that guides managerial norms (i.e. values, beliefs and attitude). This, in turn, empowers employees’ attitudes and behaviours inside and outside companies. By contributing to the prosperity of a community through inclusive projects (e.g. sponsoring the education of poor children), for example, employees can feel empowered in their jobs, creating a sense of empathy for others and extending helpful behaviour to their family members. Therefore, cultural accountability refers to the integrated values of a community business via the creation of community-inclusive projects that not only empower employees and beneficiaries, but also strengthen business and community growth. A manager can ask: Do I have a mindset that ties community prosperity with company prosperity?

2. Collective accountability: This refers to companies collectively enhancing valuable resources such as employment and education for the community which, in turn, benefit the business. The company examined in my study, for example, developed a vocational school for the poor community that teaches the subjects/skills needed for its business operations (e.g. machinery, computing and forestry). While these initiatives helped the community to become more skilled and employable, they also provided skilled and trusted workforce to the company. A manager can ask: Do I seek resource maximisation for business and community through a common resource maximisation activity (e.g. infrastructure, education and waste management)?  

3. Relational accountability: This promotes the affirmative diversity of companies in using their power to maximise the special qualities (or skills) of community members for the mutual benefit of the business and community. By considering how the company can work in equal partnership with the community members, the company moves its position from accepting a society of conformity to accepting one of diversity through inclusive and reciprocal relationships between the privileged and less privileged. A manager can ask: Do I seek to maximise the special qualities of community by reaching out to the members within the community for creative business opportunities?

4. Structural accountability: This signifies the managerial structural governance in coordinating inclusive activities between the company and local communities by trying different managerial accountabilities mentioned earlier. Ensuring the means of communication between the company and local communities provides a systematic operation that equalises the power in decision-making for the collective prosperity of businesses and communities. Managers may emphasise the importance of structural alignment of the company and local community and across supply chains by setting community development targets, executing planning cycles, assessing deliverable projects and selecting sustainable, inclusive projects. A manager can ask: Do I have a structural governance to ensure that there is a top-down, bottom-up process that can contribute to the prosperity of the business and community?

In order to develop a community-inclusive company, these concepts of managerial accountability are presented as a potential platform for stakeholder dialogue to hold organisations or communities accountable for their actions and plans. Reported managerial accountabilities can help people focus on joint evaluations and find mutually beneficial and sustainable outcomes for communities and businesses. In order to make a significant turn away from accepting companies based on market capitalism to creating organisations with inclusive capitalism, society needs more managers and leaders who can promote a fresh organisational approach by doing good.

Professor Yuka Fujimoto
Head
Department of Management

Originally published in The Edge, April 2017