Why Ben & Jerry maybe didn’t have to sell, cheating for collective benefit, and when government intervention can work
Ben, Jerry and new corporate forms
The sale of iconic US ice-cream brand Ben & Jerry’s to Unilever still rubs like an open wound for social entrepreneurs. Their beef centres on whether or not the deal was legally required. The official line at the time was that founders Ben Cohen and Jerry Greenfield had no choice but to sell. Unilever offered a tidy sum. As a public company, the directors of Ben & Jerry’s were obliged to consider any offer deemed to be in the interests of its shareholders. The sum of $326m is no small change. Like it or not, Cohen and Greenfield had to accept it.
But now comes a knotty legal rigmarole. Social enterprises are supposedly too vulnerable to capitalism’s “pathological” logic of profit maximisation. New corporate forms are needed, it’s said; forms that enable hybrid businesses to cling to their core social missions. And so the likes of low-profit limited liability corporations (L3Cs), benefit corporations and flexible purpose corporations have begun to crop up on the statute books of state legislatures across the US.
But what if Cohen and Greenfield didn’t really have to sell up? The authors show how that might well have been the case. This new wave of hybrid legal forms may be something of a distraction, therefore. Social entrepreneurship is viable under current rules. What the Ben & Jerry’s story teaches above all is that it’s the “people in control” that count. Social enterprises can sell up, for sure. But without the right decision-makers at the top, their social missions stand little chance of survival.
Page, A & Katz, R (Fall 2012), “The Truth about Ben and Jerry’s”, Stanford Social Innovation Review, 10 (4): 39-43.
Self-serving altruism
The notion of honour among thieves is well known. But the idea of group dishonesty? It’s strange, but apparently true. Harvard’s crack behavioural scientists would have us believe that we’re more likely to behave unethically if others – as well as ourselves – stand to benefit. And they have the facts to prove it. The paper details three related experiments. All involved groups of students who were set a mathematical task and were then financially rewarded according to their success in solving it. The rules were flexible enough to allow them to cheat. And cheat they did. The greater the financial reward and the larger the pool of beneficiaries, the more they cheated.
So what? So a lot. Most compliance regimes focus on picking out one bad apple. Yet what if group dynamics encourage good people to do bad things? It makes us look at team-working in a whole different light. Previous research shows the influence on honesty levels of demographic factors, such as gender, age and religion, and personal characteristics, such as ethical values and a person’s concern for self-presentation. Ethicists now have another factor to consider: the nature of our collaborations with other people who may benefit from our unethical behaviour.
Managers might want to think about removing certain individuals from the social circle of the self-managed teams that populate most modern corporations. Further examination of the influence of power positions within a group (ie are bosses or employees more likely to cheat?) could provide additional insights. So too the impact of friendship and familiarity among group members.
Gino, F, Ayal, S, and Ariely, D (September 2012), “Self-Serving Altruism? – When Unethical Actions That Benefit Others Do Not Trigger Guilt”, Harvard Business School, Working Paper 13-028.
Blessed are the policymakers
Today, one in five residents of rural India has a mobile phone. Economic studies repeatedly show that such connectivity helps increase individuals’ incomes, whether it’s a fisherman calling ahead to find the best price for his catch or a day-labourer learning about work in a neighbouring village. The turn-around is remarkable. Most rural Indians still have no fixed-line telephone. The authors credit the mobile boom on government regulation. Market-friendly economic reforms in 1991 removed government-controlled monopolies and encouraged domestic competition as well as foreign investment.
Today, international companies are increasingly looking to develop business models that alleviate poverty as well as elevate profits. Without government participation, the authors argue, this simply won’t happen. Had India’s telecoms regulator not decided to waive licence fees or introduce a “calling party pays” policy, for instance, the market wouldn’t have exploded into the $77bn industry it is today. Now, would India’s villages have been reached had policymakers not provided $5bn in subsidies to private players to establish rural infrastructure?
The corruption debacle of the sale of 2G licences, revealed in 2012, shows that government is no saint. Even so, the authors make a powerful case for the involvement of policymakers in the design of market-driven solutions for poverty reduction and economic inclusion.
VanSandt, C, and Sud, M (October 2012), “Poverty Alleviation through Partnerships: A Road Less Travelled for Business, Governments, and Entrepreneurs”, Journal of Business Ethics, 110: 321-332.
News from campus
Alberta-based oil company Talisman is investing $1m to fund a new chair of sustainability and the environment at Calgary’s Mount Royal University. Talisman is providing an additional $250,000 to support indigenous students studying science.
Finland’s Tampere University of Technology has created a new chair in sustainable water services. The Unesco-supported position will be occupied by Prof Tapio Katko.