Responsible Entrepreneurship: Business and Society: Bridging the Gap

By Verlag Bertelsmann Stiftung

Meeting the societal effects of demographic change, globalization, digitization and growing social inequality requires collective action on the part of government, civil society and the private sector. But what do businesses offer in developing effective solutions to the challenges we face as a society? The Bertelsmann Stiftung conducted global research on this question for the Reinhard Mohn Prize 2016. The findings presented here are accompanied by contributions from experts on the role of business and entrepreneurship in society. They examine how businesses are integrated into international networks and how they help advance society through social innovations. As a contribution to debates on these issues, this volume offers recommendations for a blueprint of responsible entrepreneurship and a policy framework designed to promote it.

• Language: English
• Publisher: Verlag Bertelsmann Stiftung
• Release date: May 18, 2016
• ISBN: 9783867937559

Book preview

2010.

Part 1: Business as a Sociopolitical Agent of Change – Examining Responsible Entrepreneurship

Public Value – the Contribution of Organizations and Companies to the Common Good

Timo Meynhardt

What do Google, Airbnb and WhatsApp have in common? All three companies are striking examples of innovative business models that intervene in the fabric of society in new ways, thus changing living conditions and ultimately affecting social values. Google’s products and services drive our collective approach to the handling of information and data protection; online marketplace Airbnb facilitates overnight stays in private lodgings, thus ushering in a notable shift in the relationship between privacy and commerce; and, finally, the WhatsApp messaging service enables hitherto unknown possibilities for exchange within social groups. At first glance, all three companies can be said to provide services that promise benefits in our everyday lives; however, upon closer inspection, their influence on the social fabric is not directly evident.

The social dimension of these and other innovations also involves questions relating to their contribution to the common good – their so-called public value. For example, Google promises to make information accessible to everyone across the globe; Airbnb advertises that it can find us a place to stay anywhere in the world; and WhatsApp is more than just a cool and affordable messaging service.

And yet, although a company can set out to provide a value contribution and benefit to society, the only entity that can actually create such value is society itself. In fact, whenever and wherever the common good is affected, any responses to such developments are generated within society itself. This means that responses cannot be unilaterally determined by a company in advance. Indeed, leaders active in the fields of business, politics and civil society are often faced with the old and painful truth that the recipients of a message are the ones who decide how to classify and evaluate that message. In other words, perception is reality. Public value is the result of individual and collective evaluation processes through which value is generated collectively, in the sense of a co-creation.

One thing is certain: Today, in a public sphere marked by strong and self-propelling media dynamics, what counts more than ever is the perception and interpretation of facts and figures. The success or failure of business activity depends on social processes of opinion creation that can only to a limited extent be gauged in advance. In such processes, it is often difficult to determine whether the debate is dealing with supposed objectivity or deceptive subjectivity.

The new element in today’s world is the vulnerability to loss of reputation and trust that can impair any business activity. This is no doubt one strong factor in the increased awareness of issues relating to legitimacy and responsibility in business. For this reason alone, companies have great interest in demonstrating their common good contribution (public value), as a corporate purpose legitimized in this way serves to establish their social acceptance. Without this support among society, a company will not be able to achieve long-term success or grow in a sustainable manner.

And yet, from a company’s perspective, this type of risk assessment clearly falls short. It also fails to do justice to the efforts made in many companies to face the great challenges of our times, tackling these in an entrepreneurial manner and thus attempting to contribute to the common good. One example of this can be found in the move toward ecological- and social-sustainability standards. Other examples can be seen in the various approaches to social entrepreneurship in which the explicit goal is to contribute to addressing societal challenges.

The public value approach presented here offers a perspective that accommodates both the logic of risk minimization/avoidance as well as the contribution to the common good. This approach sees the public value of companies, public-administrative bodies and nongovernmental organizations (NGOs) as value creation for the common good (Meynhardt 2009; 2015). Recent surveys also suggest significant popular concern regarding organizations’ compatibility with or even promotion of the common good; indeed, according to the 2015 Public Value Atlas Germany (www.gemeinwohlatlas.de), 85 percent of almost 8,000 individuals surveyed were concerned that too little attention is being paid to the common good.

Public value – creating value for the common good

The social function of Google, Airbnb and WhatsApp cannot be fully understood if we examine them solely based on criteria relating to their economic importance (taxes, fees, jobs, etc.), social responsibility or contribution to sustainability. While all of these elements are indeed important, they fail to fully capture the related social value. In fact, these companies would be truly undervalued if they were evaluated based solely on these criteria. Nor does this apply only to the three organizations mentioned here; indeed, it pertains to organizations of all shapes and sizes, from the small corner bakery to medium-sized businesses and international