Entrepreneurship and innovation do not always go together. In many cases, one can find the speculative entrepreneur whose goal is to exploit profit opportunities using any means (destruction of the environment, production or sale of harmful products). Such persons do not create wealth but transfer wealth (capital flight), usually underpay their employees, treat them as objects of production (more interested in the work rather than the worker), and are only interested in ventures if it benefits them without regard to or concern for future generations. Such entrepreneurs can be described more as opportunists. On the other hand, innovative entrepreneurs or social entrepreneurs give first thought to service by producing and providing useful goods and services; they are intrinsically motivated and give second thought to profits. They are in the business of creating wealth, and promoting the common good. Sustainability and excellence are their guiding philosophy.
Changing the Mindset: Guiding Principles
Business operates in a dynamic and complex environment characterized by globalization, technological advancements, and the shift in the capitalist economy from production to finance. What is required for sustainable creation of wealth and societal well-being is a change in mindset, in particular, a revaluation of our mental models of learning experience to initiate creative thinking. This process ought to be guided by practical principles that are centred on human dignity in pursuit of the common good. At a conference on the Meaning of Business held in 2011, Peter Turkson, in collaboration with the John Ryan Institute (University of St Thomas), advanced six practical ethical principles to inform and guide the mindset of business and business leaders that fall under three broad business objectives:
Meeting the needs of the World through the Creation and Development of Goods and Services
1) Produce goods which are truly goods and services that contribute to the common good.
Organizing Good and Productive Work
3) Make a contribution to the community by fostering the dignity of work.
Creating Sustainable Wealth and distributing it justly
5) Model stewardship of the resources (capital, human, environmental).
Social Entrepreneurial Businesses: The Case of ExxonMobil
In her address entitled Globalization and its Challenges for Business Ethics in the 21st Century, at the Center for Business Ethics (Bentley University), Professor Patricia Werhane gave the following example of a business which engages in creative capitalism of social entrepreneurship that are guided by ethical principles. Partnering with the World Bank and two other oil companies, ExxonMobil began drilling for oil in Chad in 2000. This required building a pipeline through Cameroon to the west coast of Africa, which necessitated creating alliances with a number of NGOs and social workers to protect the rights of the indigenous people. By 2010, ExxonMobil had employed 6500 Chad and Cameroon nationals, about 85% of the total workforce. Nearly half of them held skilled or supervisory positions. The project purchased goods and services from local suppliers that totalled more than $231million in 2011. Healthcare clinics were provided for all employees, extensive malaria prevention programmes have helped to maintain the project’s low infection rate, the StopAIDS programme (begun by the ExxonMobil Foundation) provided preventative education for all employees, The Initiative for Economic Empowerment for Woman Entrepreneurs (a micro-lending initiative funded by a grant of $1.7 million from the ExxonMobil Foundation) has so far helped 83 cooperatives representing more than 1,600 women members. At the beginning of the project, Chad signed an agreement with the World Bank that its revenues from this project would go to improving its infrastructure, education and health care. To date, Chad’s total revenue from royalties from the project has reached $6.3 billion.
It is clear that ExxonMobil made efforts, in the spirit of creative capitalism that shed light in the application of the guiding ethical principles of human dignity, solidarity, subsidiarity, and the common good. However, one should note that there are moral risks involved in such ventures. According to Professor Werhane, moral risk can be defined as the likelihood of doing moral injury to oneself or to others where there is also the possibility of eliminating some moral evil or creating some positive outcomes. In this example, the benefits of upside risks are numerous and commendable; the downside risk, in this case, was that the country’s ruler took most of the royalties and invested in a stronger army to protect the country’s borders and promoted aggressive behaviour toward neighbouring countries. Although the World Bank has pulled out, ExxonMobil remains. Such business models guided by ethical principles ought to be supported and encouraged.
The 5th Biennial International Business, Banking & Finance Conference (BBF5) will be held over the period May 1-3, 2013 at the St. Augustine campus of The UWI. It is being jointly hosted by the Department of Management Studies, the Central Bank, the Caribbean Centre for Money & Finance and SALISES, and will feature discussions such as the above.