Why Organizations Will Impact Politics

Why do organizations exist? It depends in which era we ask this question. A few decades back the correct answer to this question would have been to say that their sole purpose is economic. They exist to make money for all the stakeholders and to plough back the investible surplus to continue expanding their business. The definition of a successful firm was then purely around profitability. The better firms made better profits. The better leaders helped their firms make better profits.  If the executives responsible for making profits failed in this quest they were deemed to be a failure.Economic Impact Phase: The economic power of the firm cannot be underestimated. The larger they grew the more they impacted the lives of the communities in which they operated. It was all about running the business almost to the exclusion of any other motive. The economic power of the firm cannot be underestimated. The larger they grew the more they impacted the lives of the communities in which they operated. It was all about running the business almost to the exclusion of any other motive. The firms are the largest employers in the neighborhood. Their influence goes well beyond. They are the source of livelihood for families in that area and beyond. besides those directly employed in the company, the support services get a boost too. There are houses to be built, people to be fed and transported and so on. Shutting down of a firm can leave all the families economically ruined. When the Great Bombay Textile Strike was called on 18 January 1982 by the mill workers of Bombay (it wasn’t called Mumbai then) under trade union leader Dutta Samant, the purpose was to obtain bonus and wage increases. Nearly 250,000 workers in more than 50 textile mills went on strike. After protracted failure to agree on the outcome, the majority of the over 80 mills in Central Mumbai closed during and after the strike, leaving more than 150,000 workers unemployed. During this phase, the social impact of the firm was restricted to cuttng cheques to support charities in a sporadic fashion. There is no visible affiliation or desire to make a political impact.Social Impact Phase: Of course there was a minority in this scenario called the not-for-profit organizations. “Whereas for-profit organizations exist to earn and re-distribute taxable wealth to employees and shareholders, the nonprofit corporation exists solely to provide programs and services that are of self-benefit.” Many of the Not-for-Profit organizations are charities. This may well have been the basis of the firms to move into the second phase of impact – Social. This what led to the firms to differentiate themselves through CSR ie Corporate Social Responsibility projects. The more progressive firms have been using CSR as a way to differentiate themselves in the marketplace for attracting talent. (See article by Prof CB Bhattacharya in Sloan Review). This phase sees the blending of the economic goal and the social impact. With a generation that is increasingly keen to impact beyond their own ban balances, this is clearly a phase that will require companies to attract talent by social compensation by blending their CSR initiative into the economic goal. The firms still do not like to get involved in the political scenario beyond lobbying for their own economic interests – getting a tax write off, getting the right to use a specific plot of land to set up a factory. The political parties tango with the firms in the shadows. A decision in favor of a political party is always explained in terms of the benefit to the community, employment etc. A small percentage may even start some CSR project if the community has to be won over.Political Impact Phase: This was meant to be a one way street. The political environment determined the way organizations would do business in a country. That distinction is somehow becoming muddy. The equation is changing. China wanted Google to censor some of its search results. On 22nd March 2010, Google decided to say no to this. The New York Times reported, “Just over two months after threatening to leave China because of censorship and intrusions from hackers, Google on Monday closed its Internet search service there and began directing users in that country to its uncensored search engine in Hong Kong.” I believe this is maybe the tipping point. We are entering the phase where firms will slowly start becoming more overt in its political views. To take on the might of a government even when there is a potential economic downsize to it. Google has just initiated phase three. After all, Youtube, Facebook and Twitter are already blocked in China. Will it happen? A tipping point is always interesting to watch. What do you think? You can Google your query or just Go Ogle !