Forbes: Why Corporations With a Social Purpose Perform Better

Nov 22, 2011 3:30 PM ET

Why Corporations With a Social Purpose Perform Better

“The companies that perform best over time build a social purpose into their operations that is as important as their economic purpose.” —Harvard Business Review, November 2011.

PepsiCo is gradually shifting its resources from “fun for you” to “better for you” to “good for you”. IBM celebrated its 100th anniversary in June 2011 by offering service to the world that involved over 300,000 employees performing 2.6 million hours of service in one day. Cemex is addressing social gaps with innovative products such as antibacterial concrete for use in hospitals and farms.   These examples are drawn from an important new article by Rosabeth Moss Kanter in the current issue of Harvard Business Review, titled “How Great Companies Think Differently”.   This article is required reading. It substantiates the emerging thinking that corporate social responsibility (CSR) as it has become known has hit a wall. The people, processes, and programs are in place, but the results aren’t good enough. Why? CSR is neither informed by, nor contributing to, the social purpose of business.   Prof. Moss Kanter’s piece is based on a concept called institutional logic “that holds that companies are more than instruments for making money; they are also vehicles for accomplishing societal purposes and for providing meaningful livelihoods for those who work in them.”  According to Prof. Moss Kanter, there are six interrelated ways that great companies use institutional logic: A Common Purpose, A Long Term Focus, Emotional Engagement, Partnering with the Public, Innovation, and Self-Organization. Here are a few big ideas from her article that I found remarkable:   A Common Purpose: “Purpose and values—not the widgets made—are at the core of an organization’s identity, and they can guide people in their efforts to find new widgets that serve society.”   To continue reading Klein’s review of Prof. Moss Kanter’s Harvard Business Review article, click here.   About PepsiCo 
PepsiCo offers the world's largest portfolio of billion-dollar food and beverage brands, including 19 different product lines that generate more than $1 billion in annual retail sales each. Our main businesses -- Quaker, Tropicana, Gatorade, Frito-Lay, and Pepsi Cola -- also make hundreds of other enjoyable foods and beverages that are respected household names throughout the world. With net revenues of approximately $60 billion, PepsiCo's people are united by our unique commitment to sustainable growth by investing in a healthier future for people and our planet, which we believe also means a more successful future for PepsiCo. We call this commitment Performance with Purpose: PepsiCo's promise to provide a wide range of foods and beverages for local tastes; to find innovative ways to minimize our impact on the environment, including by conserving energy and water usage, and reducing packaging volume; to provide a great workplace for our associates; and to respect, support, and invest in the local communities where we operate. For more information, please visit