Last week we learnt that, despite “Project Merlin”, bank lending to small and medium sized enterprises fell short of expectations by some £2bn in the first quarter of this year, only adding to fears that we are set for a sluggish recovery. This together with the news that the Chief Executives of both Barclays and HSBC have been awarded £9m in pay apiece will have done little to assuage public anger over bankers’ behaviour. What is so strange in all this is that the banks are apparently oblivious both to the public mood and to what seems to be the makings of an emerging consensus amongst politicians and policy makers that business must urgently rediscover its social purpose. Suffice it to say that when as luminous a business luminary as Harvard Business School’s Michael Porter argues that capitalism is facing a crisis of legitimacy you know that something is up.
By Martin Vogel
Since the start of 2011, I’ve been noticing increasingly common references to the social purpose of business – an idea which, until recently, many would have regarded as an oxymoron.
The first sighting was a Harvard Business Review cover article by Michael Porter and Mark Kramer called Creating Social Value. This argues that capitalism is facing a crisis of legitimacy which can be overcome only if businesses put aside the notion that there is an inherent trade-off between profitability and attention to social needs.
After that, references came grouped together like buses. Matthew Taylor referred to Porter and Kramer in a blog post he wrote on the contribution businesses could make to David Cameron’s Big Society (they have potential to deploy their brands and their product development on encouraging socially desirable behavioural change).