The British Academy has released a ground-breaking report on the future of the corporation, backed by a statement of support from leading figures in business and academia. It identifies a need to re-think radically how business will meet 21st century environmental, social and economic demands, as well as the challenges of technological advances and globalisation.
The report is part of the British Academy’s privately funded Future of the Corporation Programme, which considers how business will be conceived, managed and regulated in coming decades. It was launched at an event at London’s Guildhall this morning at which Rt Hon Greg Clark MP, Secretary of State for Business, Energy and Industrial Strategy gave the introductory talk.
The research which forms the foundation of the report calls into question the notion in the widely accepted Friedman Doctrine that the only social responsibility of business is to increase profits while abiding by laws and social norms.
It finds that the way corporate purpose has come to be equated solely with profit has damaged corporations’ role in society, as well as wider trust in business and social cohesion. Professor Colin Mayer, academic lead on the Programme and Peter Moores Professor of Management Studies, Saïd Business School, University of Oxford, said: “What emerges is a profoundly novel and insightful perspective on business that lays the foundation for a radical reformulation of the concept of the firm.”
The report finds that the future of business should be based on three interconnected principles (corporate purpose, a commitment to trustworthiness and an enabling culture) and that stakeholders can deploy five main ‘levers’ to achieve change:
- corporate governance
Professor Sir David Cannadine, President of the British Academy, noted that previously proposed solutions to issues of corporate purpose and trust have been “found wanting”: “The report exploits the British Academy’s convening power in the field of business and policy to engage leading thinkers in business and government in ensuring the relevance of our research for business practice and public policy.”
He added: “We are committed to this dialogue, but we cannot do it alone. It will be a hard road that requires leadership, audacity and clear-sightedness about the challenges ahead. We call on all business leaders, politicians, civil society actors and fellow academics to take note and join us in collectively working out the solutions.”
The first phase of the Future of the Corporation research programme has identified the nature of the problems and a framework for addressing them. Detailed policy recommendations will be the focus of phase two, which will start in 2019.
The statement of support is as follows:
Business’ new contract with society
“There is a widely held view that, with the right rules, business and society’s interests can be aligned.
“But this is incomplete - a combination of market, government and regulatory failures have left a void between what markets achieve and what governments can correct.
“Technology is making this problem more acute by creating tensions between the new digital businesses operating across borders and nation-based political and legal systems. The pace of change also means policy responses are coming too late.
“We think that change is needed. Business itself must recognise the role it needs to play in pursuing purposes beyond profits. The corporation of the future must combine purpose, trustworthiness and culture.
“To set in motion this change, governments and business need to use multiple levers. We have identified five: ownership, corporate governance, regulation, taxation and investment. In the coming year, we will be putting together detailed policy proposals under these headings.
“Today we start a new global conversation about the future of the corporation.”
- Mohamed Amersi, Chairman, The Amersi Foundation; Trustee, Prince's Trust International; and Member of the Global Leadership Council, Saïd Business School, University of Oxford
- Göran Ando, Chairman, Novo Nordisk
- Mike Barry, Director of Sustainable Business, Plan A, Marks and Spencer
- Dominic Barton, Managing Director, McKinsey
- Eric Benedict, Managing Director, Alix Partners
- Luke Fletcher, Partner and Head of Social Finance, Bates Wells Braithwaite
- Richard Gillingwater CBE, Chairman, SSE
- Peter Norris, Chairman, Virgin Group
- James Perry, Founder and CEO, Cook Foods
- Stuart Roden , Chairman, Lansdowne Partners
- Lucy Parker, Partner, Brunswick Group
- Phillip Ullman, Chief Energiser, Cordant Group
- Daniela Weber-Rey, Attorney and Member of the Government Commission for the German Corporate Governance Code
- Professor John Armour FBA, University of Oxford Law Faculty
- Professor Julian Birkinshaw FBA, London Business School
- Professor Jo Beall, Director of Cultural Engagement, British Council
- Professor Sir David Cannadine, President, British Academy; Dodge Professor of History, Princeton University; Editor, Oxford Dictionary of National Biography; Visiting Professor, University of Oxford
- Professor Peter J. Buckley FBA, University of Leeds Business School
- Professor Colin Mayer CBE FBA, Saїd Business School, University of Oxford
- Baroness Onora O’Neill FBA, Professor Emeritus, University of Cambridge; past President of the British Academy
- Professor Mike Wright FBA, Imperial College
Notes to Editors:
About the British Academy
The British Academy is the voice of the humanities and social sciences. The Academy is an independent fellowship of world-leading scholars and researchers; a funding body for research, nationally and internationally; and a forum for debate and engagement. www.britishacademy.ac.uk
For further information or interview, please contact the Naomi Joyner, Head of Media & Public Affairs at the British Academy on firstname.lastname@example.org or 07500 010431.
About the Future of the Corporation
The Future of the Corporation is a British Academy multi-disciplinary research programme that is examining how business should adapt over the coming decades to address the economic, environmental and social challenges it faces and take advantage of technological opportunities. In the first phase of research, thirteen research groups investigated ten themes, guided by a Corporate Advisory Group of business leaders to ensure the practical and policy relevance of the work.