Balancing profitability, Corporate Social Responsibility and Sustainability
Entrepreneur Richard Branson noted recently in his LinkedIn blog that, �The entrepreneurs who will
succeed in 2014 will need to focus upon having a purpose beyond profit for their business.� To what
extent do you agree or disagree with this? Justify
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Balancing Profitability, Corporate Social Responsibility and Sustainability
Richard Branson is an internationally recognized British entrepreneur who has developed
a significant brand called Virgin, which has operated across multiple sectors ranging from record
stores, airlines, trains and even a bank. Branson in his Linked In column is utilizing his role as a
respected leader with a reputation for an interest in corporate social responsibility to stimulate
the readership with his commentary on emerging market opportunities and entrepreneurial
behavior. Historic thought expressed by Friedman, as cited in Svensson, Wood and Callaghan
2010, p. 342) was that profit was the goal and once that goal has been attained in a legal manner
the company should be allowed to proceed ahead relatively unchecked. Branson presents a more
modern commentary, which demonstrates the importance of entrepreneurship, job creation and
its impact on the world economy, linking his predictions for 2014 with the importance of
considering the sustainability agenda and the rapid changes generated by technological
advancement (Blaga 2013, p. 13). This essay will argue that Branson is smart in advocating the
importance and of highlighting the increasing awareness of corporate social responsibility to
entrepreneurs and his readers. It will explore the role of Richard Branson as a thought leader and
his awareness of increased education among stakeholders in societies plays a role in influencing
the expectations and perceptions of sustainable business practices, based on a critical analysis of
particular sources.
Background
It will be argued that Branson is demonstrating emotional intelligence with regards to his
evaluation of what stakeholders are looking for, sensing a need for purpose beyond profit. Daniel
Goleman (1999, p.133) describes such intelligence as a ‘social radar’. Evidence of such is
demonstrated within the Branson blog by his decision to operate a Branson Centre of
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Entrepreneurship, which offers start up loans to socially responsible companies. This position is
supported by Blaga (2013, p. 2), who argues that the two core issues facing contemporary society
are the Global Financial Crisis and global warming. Global financial crisis can be explained as
the emergence of unstable economic environments which negatively impact on the growth curve
of world economies. Just to mention but an example, the 2007-2008 Global Financial Crisis
becomes the latest crisis that affected most countries whose currency is pegged on the dollar. The
immediate effect of this crisis was the collapse of companies, which had to lay off employees
because of the decreasing demand for their products. This led to a reduction in the purchasing
power of the customers as well as a reduction in the propensity to purchase. From this example,
it is made evident that the goal of profit making might fail to sustain a company if it does not
leverage itself by use of lean production, sustainability and corporate social responsibility.
McCleskey (2014, p. 9) notes that Branson is further demonstrating leadership within
corporate social responsibility by utilizing his brand to facilitate change while simultaneously
solving both human problems that are both social and personal in nature. As a result, a deeper
exploration of finance, capital, technology, generational changes with Generation Y and the
importance of stakeholders, particularly customers, influencing the behavior of entrepreneurs to
consider more than simply profit. Based on the commentary by Richard Branson, I agree that
organizations need to focus beyond the profit maximization objective as this will facilitate their
giving back to the community in which they operate. The thought of sharing in the success or the
struggles of the society resonates towards the principle of corporate social responsibility (CSR).
According to Goleman (1999, p. 34), this principle defines the ability of a company to self-
regulate its activities by integrating business models where businesses can monitor and ensure
that its activities comply with the laws, international norms and ethical standards. The
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hypothecation of corporate social responsibility principle is grounded on the need for companies
to go beyond compliance and actively engage in promoting social good, which is beyond the
profit making objective. It is argued that CSR triggers companies into engaging in actions that
promote environmental conservation and this has a widespread impact on the stakeholders who
include employees, customers, the communities and investors.
The applicability of CSR into the contextual statement presented by entrepreneur Richard
Branson is supported by the opinions voiced by critiques of this business principle because it
derails a business from its economic goals and roles. On the other hand, the proponents of CSR
posit that it increases the long term profitability of a business by creating a long term relationship
with the society so that it can enjoy a long lasting loyalty which in essence translates into
increased profitability (Svensson, Wood, & Callaghan 2010, p. 10). There are other econometric
researchers who conducted empirical researches and analysis which led to the conclusion that
CSR has a neutral impact on the finances of a business thus companies can either embrace it or
shun it depending on their preferences. Acting as a seasoned venture capitalist, Branson, acting
as the director of the Virgin Group of businesses has in the past used CSR to bond with the
people (Svensson, Wood, & Callaghan 2010, p. 10). This exercise dates back to the 2008 report
when the company benefited by increasing its global awareness and customer base by being a
part of CSR initiatives.
On the other hand, political sociologist who showed interest in the topic researched on
the context of neoliberalism, capitalism and globalization. To some extent, the statement by
Branson depict a scenario equivalent to capitalism where the objective of profit making is
clouding the vision of companies into making them capital oriented. By referring to 2014,
Branson refers to a futuristic period where companies that invest in creating social movements to
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brand their products and services are likely to be more successful that capitalistic companies that
only focus on increasing their profits. Looking at CSR from a consumer perspective draws a
different picture. As cited by Goleman (1999, p. 80), consumers are likely to acknowledge and
support companies that achieve their targets while conforming to helping the society in which
they operate. The customers believe that these companies have to fund charities and support
sporting activities among other social activities that will win over their loyalty. In the long run,
the companies have nothing to lose if they failed to participate in CSR activities but they stand to
gain for a relatively longer period of time when they go an extra mile into acting beyond the
profit motive. In spite of my support for the statement voiced by Branson, it is still contentious
on the position of an organization that stops pursuing profitability in order to support the growth
and development of the society. This dilemma is noticeable especially in the companies that
could embrace emerging technologies as tools for profit maximization (Weerawardena et al
2010, p.99). By following the advice given by Branson, it becomes impossible for a company to
satisfy the needs of the society while taking advantage of technological advancement especially
those that demand laying off of employees so as to create space for automation.
Apart from the growing need to invest in social corporate responsibilities, Branson brings
out the importance of entrepreneurship and job creation and how it is likely to impact on global
economies. The ability for a company to invest into bettering human resource through job
creation resonates to the need for sustainability among industries. According to Friedman, the
sole purpose of beginning a business is to make profits. The other side goals include the need to
be an own boss, create employment and practice entrepreneurial skills. These are collective
possibilities why people create businesses. On the side, modern businesses are looking for ways
to form and promote businesses that conserve resource use. This concept is not only applicable in
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eco-businesses but all over the world. The current trend revolves around the need for
sustainability. The concept goes further into seconding the need for lean production which has a
direct correlation to sustainability. The technological agenda further supports the achievement of
sustainability. According to Goleman (1999, p. 29), the term sustainability business is
synonymous with green business. It describes the ability for a business enterprise to minimize on
the negative impact of its operations on environment, the economy, society and community. The
concept demands that a successful business has to meet a triple bottom line by making provisions
for progression of human rights policies as well as the environment.
For a business to be described as sustainable or green, it has to meet the following
criteria. First, it has to incorporate sustainability principles into its decision making processes.
Second, it has to consider supplying environmental friendly services or products. These services
have to be differentiated and innovative so as to replace the demand for non-green products and
service (Weerawardena et al 2010, p. 99). Third, the business has to participate in activities that
promote the attainment of a better environment as compared to its competitors while fourth, a
sustainable business venture is that which has made a commitment to abide by environmental
principles in the course of conducting its business operations. Apparently, the statement made by
Branson has a direct reflection towards the emergence and increase of such business ventures in
the year 2014 and the years to come. He suggests that instead of these companies chasing after
profit maximization as their sole purpose of operation, they have to participate in bettering the
environment by promoting the innovation and production of environmental friendly products
(Michalewicz 2013, p. 91). They have to ensure that their industrial processes, manufacturing
processes and products have to address the current environmental problems arising from global
warming and an increase in the emission of carbon gases.
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Branson does not disqualify the objective of profit maximization. In fact, organizations
have to make profits for them to survive global competition and the uncertainties that come with
global financial crisis. For instance, during the 2007-2008 Global financial crisis, companies that
were not properly leveraged by maintaining proper financial back-ups plunged into deeper
economic uncertainties. At times, the profits could be re-invested into the business so as to
ensure that the organization survives economic uncertainties. Nonetheless, sustainability could
usher in a new revolution that could provide a balance between profit maximization and caring
for the environment since it defines the ability of a company to “meet the needs of the present
world without compromising the ability of the future generations to meet their own needs”
(Weerawardena et al 2010, p. 99). The sentiments made by Branson identify the inert abilities for
companies to design business processes that make provision for the business to take advantage of
environmental situations so as to promote social welfare by producing renewable resources.
Apparently, the Brundtland Report seconds these statement as the report emphasizes on the need
for a company to balance between profits, the planet and people (Priestley 2011, p. 55). In the
words of Richard Branson, the ability for a company to be objective on other activities rather
than profit making insinuates the need to balance the triple bottom line concept which revolves
around balancing profit, people and the planet/ environment. This can be attained by revamping
of the supply chain, and the distribution systems so as to promote business growth while
ensuring that the environment and the society gain maximally from the process rather than
engaging in activities that maximize profit at the expense of the environment and the society.
The convergence of sustainability and corporate social responsibility initiates a new
dimension to the whole topic of profitability for businesses. This is because these two concepts
are voluntary but have enormous impact on the name, the brand and the loyalty of the customers
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towards the business. Both sustainability and CSR create value for the customers, the suppliers,
the investors and the environment thus it provides a balance that surpasses any economic benefits
that can be derived from increasing profit margins. In the end, Branson shows his concern for
two major concepts that are hardly advocated for by entrepreneurs because of their sensitivity
(Branson 2013, p.20). These two act as economic mediators, thus, initiating a proliferated
diversity towards business management and profit maximization. In conclusion, a critical
analysis of the sources referenced above justifies the position of the Branson’s quote, and
through that, the paper has managed to establish a multi-faceted perspective regarding the factors
that are influential in the current economical field.
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References
Blaga, S 2013 ‘Rethinking Business Sustainability’, Review of Economic Studies and Research,
Vol. 1, pp 5-21.
Branson R, 2013, Big Ideas 2014: The Year of the Entrepreneur, LinkedIn Influencers, blog
post, 11 December, viewed 20th August 2014.
Goleman D, 1999, Working with Emotional Intelligence, Bloomsbury Publishing, London. Great
Britain.
McCleskey, J. 2014 ‘Emotional intelligence and leadership: A review of the progress,
controversy, and criticism’, International Journal of Organizational Analysis, vol. 22 no.
1, pp.76 – 93.
Michalewicz M, 2013, Life in Half a Second, Hybrid Publishers, Melbourne, Australia.
Priestley D, 2011, Become a Key Person of Influence, E-academy Press, St. Albans. Great
Britain.
Svensson, G, Wood, G & Callaghan, M 2010, ‘A corporate model of sustainable business
practices: An ethical perspective’, Journal of World Business, Vol. 45, pp 336-345
Weerawardena, J, McDonald, R E & Sullivan Mort, G. 2010, ‘Sustainability of non-profit
organizations: An empirical investigation’, Journal of World Business, vol. 45, pp.
346–356.
