Socially Conscious Corporations in the UAE Context Case Study
The general argument of the article “Corporations Must Become Socially Conscious Citizens”
Companies are ultimately concerned in making profits for their shareholders. In pursuit of this quest, companies will often impact on diverse groups of people and environments. Such groups of people, often referred to as stakeholders, include employees, communities, investors and clients amongst others. In the prevailing economic hardships, companies concentrating on maximizing profits at the expense of stakeholders contribute to the poor perception of the corporations and executives who run them. In some extreme cases, such poor perception and social anger may lead to social unrest such as occupy Wallstreet movement. In this context, corporations are viewed to be overly concerned with sales and the resultant profit making at the expense of value creation for the stakeholders and a sense of responsibility towards them.
Emerging notion of capitalism holds the view that a corporation’s guiding compass ought to be value creation for the stakeholders as well as a duty of responsibility towards them. This notion of capitalism is aptly named ‘conscious capitalism’, ‘enlightened business’ or in a derogatory form ‘enlightened self-interest’. It maintains that a corporation’s existence ought to be more than just a profit-making mechanism for shareholders. In this model of business, profit making is viewed as a byproduct of the creation of value for the shareholders. In the long run, conscious capitalism contributes to profit making in a win-win scenario for the stakeholders on one hand and the shareholders on the other hand. Proponents of conscious capitalism maintain that it serves the interests of the shareholders better.
Some of the major benefits of conscious capitalism include increase in efficiency in running social programs and humanitarian based programs. Such programs often pay administrative and logistical skills amongst others. Some of this skills can be obtained free of charge from companies in which the same set of skills form the core competence of the companies.
The relevance of the article to the UAE
Due to the low uptake of practices that demonstrate “socially conscious citizenship” among United Arab Emirates (UAE) companies, conscious capitalism is as relevant to UAE as it is to the United States of America (USA) if not more. There is a generally high awareness on “socially conscious citizenship” concepts among companies’ executives and stakeholders in the UAE. Most corporations’ executives do agree in principle that “socially conscious citizenship” or corporate social responsbility (CSR) initiatives are a good thing.
However, there is a dysfunctional between corporation’s awareness of CSR concepts and its implementation of the same.Many companies in the UAE practice CSR initiatives as a peripheral activity in their business strategy.This contrasts with the American companies that view CSR as a primary strategic business initiative.
Dubai and Abu Dhabi lead the other UAE countries in the implementation of the “socially conscious citizenship” among their companies.
“Socially conscious citizenship” among the UAE companies is practised in its basic form. In this context, UAE companies often lack a CSR budget, policy and auditing mechanisms. UAE companies are often concerned with offering solutions to immediate problems as opposed to putting sustainable long term solutions to social problems. In this context, UAE companies often practise CSR activities in form of cash aids to institutions or offer free services and products. In contrast, US companies are interested in offering long term solutions to identified social problems. Sustainability of the project(s) is often a major consideration for eligibility of the project(s) to a given company’s CSR initiative. In addition, US companies often join hands to tackle challenging social problems by undertaking joint CSR projects.This is something that UAE companies need to emulate.
In a competitive business world, corporations are often looking for an edge over their rivals in their marketing strategy execution. “Social conscious” initiatives when correctly undertaken can create value for the corporation’s shareholders as well as generate good publicity for the business.
“Socially conscious” initiatives should target a subject in which the corporation has an authority on or is capable of hiring experts in the given field.For example, a banking institution offering financial literacy skills to a self help group looks more credible than a bakery doing the same thing. Poorly executed “socially conscious” initiatives can be counterproductive. In looking for an ideal project for CSR projects, corporations must evaluate the sustainability of their initiatives. This means that the initiatives must be able to idependently function without any more funding or skills dependance on the sponsoring company. In this context, the companies must adequately train the beneficiaries on the running of the inititive(s).
Another major consideration for ideal “socially conscious” initiatives is the impact of the initiatives to the stakeholders. Initiatives must have a lasting impact on the lives of the beneficiaries. These intiatives must not seek to solve immediate problems but always seek to provide long term solutions to a given problem. In order to ensure that the “socially conscious” initiatives are sustainable and have a lasting impact on the society, companies put a monitoring and evaluation mechanism in place. Monitoring and evaluation mechanism involves building a consensus on indicators of success within specified periods.These indicators help the company gauge whether the CSR project is having the desired effects.
Thoughts, feelings, reactions after reading the article
To a larger extent, I do agree with the author’s view on the notion of conscious capitalism and the need for it. I do agree that corporations’ that do practice “socially conscious” initiatives do put a human face to their profit making enterprise. In this context, CSR initiatives do serve the interests of both the stakeholders and shareholders in a win-win situation. Putting into perspective CSR initiatives in which companies freely share their core compentencies, I think the world be a far much better place.
However, I strongly disagree with the level and depth in which the individuals and society would go to force conscious capitalism practices on corporations. Events such as Occupy Wallstreet Movement might be popular among the low and middle class people. However such events may serve to destroy the foundations in which capitalism and a functional economy are founded. Conscious capitalism attempts to give capitalism a moral face. Ironically, capitalism is founded on selfishness and thrives best under it. It is this selfishness and the potential to economically advance an individual, even at the expense of others, that has nurtured creativity and innovations that have generally improved the lives of mankind.
Capitalism is founded on the free buyer free seller concept. This concept assumes the two parties will strike a balance at a fair price and conditions to both parties. Once in a while the government steps in to regulate this relationship and process. This regulation helps remove trade barriers such as monopolistic tendancies that may put one party at a disadvantage. The government also taxes the business and individuals in order to provide social goods. I think that events such as Occupy Wallstreet Movement do occur because this relationship between free buyer, free seller and the government is not working as it should. The tough economic times, a condition in which some companies may still make huge profits, may understandably cause some public anger against those companies. However, what actions may the individuals and society who feel aggrieved by these companies take?
While some people may argue that such movements as occupy Wallstreet do provide a justifiable and radical avenue to bring a solution to the problem, I do differ. The destruction of properties and the economic waste that accompanies such movements do negate any benefit (s) that may be acquired. As such I don’t see a scenario in which such a movement is justifiable. I would rather ask myself, are there other peaceful options that express the social anger without the same destruction? How about boycotting their products and services of the companies’ en mass? Would it force them to act?