Executive Summary

A Self-Interest Case For
Corporate Responsibility And The Minnesota Principles

Robert W. MacGregor
President of MCCR

March 1995

A recent MCCR product, The Minnesota Principles: Toward an Ethical Basis for Global Business, presents a guide to business behavior founded on honesty, fairness, human dignity, and respect for the environment.

Since publications, The Principles have generated a reassuring response locally, nationally, and internationally. Although pleased, we worry that the interest in corporate responsibility is too often crowded aside by the exigencies of competition. That is a mistake because ethics and responsibility issues are related to the bottom line and can, in fact, be critical.

The basic function of business is to provide society with goods and services and, in the process, generate wealth. This said, a strong case must be made for business's role in meeting other societal needs as well. Business incurs this obligations for a variety of reasons.

First, the right thing. No society can operate without agreed-upon rules of behavior, and what applies to society at large applies with equal force to whatever subsidiary institutions a society creates.

Second, public expectations. In democratic capitalism, the "franchise" for business to operate is ultimately granted by the public. For this reason, business's long-term acceptance - if not endorsement - by public opinion is critical.

Studies document that the public expects corporation not only to act legally and ethically but also to be involved in solving societal problems. If business turns its back on social problems, the vital support of public opinion will eventually be withheld.

Third, well-functioning communities. Unstable and fractionalized societies do not provide a setting for prosperous business. Business may survive in such communities, but it rarely prospers. Poorly run communities and hyperactive governments impose higher costs on every sector. It's in the self-interest of business to free up talent and resources for good governance at all levels.

Fourth, social costs. In too many of our communities, the costs of law enforcement, health care, education, and welfare are mounting at alarming rates. These costs must be deducted ultimately from society's productivity, and in a global economy, such deduction reduce our competitive strength.

Fifth, fairness and honesty. Dishonesty and corruption increase costs, distort the market, undermine governments, and lead to a misallocation of scarce resources.

Sixth, equal opportunity. Ethnic and gender groups that have been shut out of economic and social life represent an enormous pool of untapped talent needed by business. Business's ability to widen access to decent jobs for such groups will determine the peace and prosperity of many communities in the future.

Seventh, borderless issues. Health, pollution, and weaponry know no borders. Victims of unemployment migrate to richer nations where they add to the social costs and business costs. Helping the "have-nots" of the world must be done if the poor are to prosper and if we are to open new markets for goods and services.

In sum, if business is to grow and prosper (and in some cases, just maintain what it now has) it must commit financial resources, volunteers, and leadership on a daunting range of societal issues. It's the right thing to do, and it's in business's self-interest to do it. To come to any other conclusion is to ignore the lessons of history and the conspicuous evidence all around us.

Center for Ethical Business Cultures

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