The Moral Purpose of Business
y providing jobs, investing capital, purchasing
goods, and doing business every day, corpora-
tions have a profound and positive influence on
society. The most important thing a corporation can do
for society, and for any community, is contribute to a pros-
perous economy. Governments and NGOs often forget
this basic truth. When developing countries distort rules
and incentives for business, for example, they penalize
productive companies. Such countries are doomed to
poverty, low wages, and selling off their natural resources.
Corporations have the know-how and resources to change
this state of affairs, not only in the developing world but
also in economically disadvantaged communities in ad-
vanced economies.
This cannot excuse businesses that seek short-term
profits deceptively or shirk the social and environmental
consequences of their actions. But CSR should not be only
about what businesses have done that is wrong – impor-
tant as that is. Nor should it be only about making phil-
anthropic contributions to local charities, lending a hand
in time of disaster, or providing relief to society’s needy –
worthy though these contributions may be. Efforts to find
shared value in operating practices and in the social di-
mensions of competitive context have the potential not
only to foster economic and social development but to
change the way companies and society think about each
other. NGOs, governments, and companies must stop
thinking in terms of “corporate social responsibility” and
start thinking in terms of “corporate social integration.”
Perceiving social responsibility as building shared value
rather than as damage control or as a PR campaign will re-
quire dramatically different thinking in business. We are
convinced, however, that CSR will become increasingly
important to competitive success.
Corporations are not responsible for all the world’s
problems, nor do they have the resources to solve them
all. Each company can identify the particular set of soci-
etal problems that it is best equipped to help resolve and
from which it can gain the greatest competitive benefit.
Addressing social issues by creating shared value will lead
to self-sustaining solutions that do not depend on private
or government subsidies. When a well-run business ap-
plies its vast resources, expertise, and management tal-
ent to problems that it understands and in which it has
a stake, it can have a greater impact on social good than
any other institution or philanthropic organization.
1. An early discussion of the idea of CSR as an opportunity rather than a cost
can be found in David Grayson and Adrian Hodges, Corporate Social Opportu-
nity (Greenleaf, 2004).
2. For a more complete discussion of the importance of competitive context
and the diamond model, see Michael E. Porter and Mark R. Kramer, “The
Competitive Advantage of Corporate Philanthropy,”HBR December 2002. See
also Michael Porter’s book The Competitive Advantage of Nations (The Free
Press, 1990) and his article “Locations, Clusters, and Company Strategy,” in The
Oxford Handbook of Economic Geography, edited by Gordon L. Clark, Maryann
P. Feldman, and Meric S. Gertler (Oxford University Press, 2000).