Private Sector Helps the Public

business-of-doing-wellDo businesses have a responsibility to help the social good of the communities in which they operate? The Harvard School of Business is exploring that idea with a new seminar series. Rebecca Henderson, a Harvard professor started asking these types of questions a few years ago, which prompted the series. Henderson said that when she began asking colleagues and business executives, “they say the answer I regulation or that the answer is taxation. The idea that firms can set themselves up for public good is viewed with suspicion-in my view for very good reasons.”

The first workshop in the series took place on January 30 and involved three-dozen faculty and doctoral students from multiple colleges. The seminar series entitled “Business and the Public Sector” runs through May and is seeking to spark conversation and unpack ideas of the role the private sector may play in shaping capitalism. Henderson stated at the conference that businesses have to incentive to deal with public sector problems. She also noted that businesses becoming involved in public projects bay be seen as misuse of shareholders funds or as trying to be subversive when it comes to democratic institutions. It is a difficult thing to maneuver, but there are reasons for businesses to pursue this idea. One reason is the growing rate of global corruption.

Additionally, there are environmental pressures and inequality and poverty to consider. The government should handle these issues, but sometimes action is not taken. The private sector has more resources than the government does and could make more of an impact. In some cases helping the public sector can also be beneficial to the company. For example, IBM reduced their energy consumption and saved $477 million between 1990 and 2012.

Henderson identified two areas that need to be explored. One area is inducement methods for businesses like regulations and taxes. The second is whether it is desirable for businesses and firms to change and regulate themselves when considering helping the public good. Could helping the public be part of a new standard for business practices? Historically in the United States government and business worked together to help the public. This changed around the 1980s when businesses became less localized and tied to communities. This series will continue the discussion and possibly bring about change down the road for businesses and the public.