Beyond Economics and Values: Why do companies really behave in socially and environmentally responsible ways?

By now, most managers are familiar with the rhetoric of sustainable business practices. In books, conferences, MBA programs, and business journals, the “buzz” around the 3P approach has helped raise the consciousness of the business world. There are two main arguments often cited for why a company should implement sustainable practices: (1) companies can save and/or generate more revenue and (2) values matter and operating in a socially and environmentally responsible way is the “right” thing to do. To date, many Fortune 500 companies have made significant steps towards implementing sustainable business practices. But are ethics and financial self-interest primarily responsible for this transition?
Companies do not exist in a vacuum. They are greatly influenced by what others in the business world are doing. Businesses learn to “walk the talk” by operating in an environment where others are doing the same.


John Campbell, a sociologist at Dartmouth College and Copenhagen Business School, helps us understand how normative pressures in the sustainable business world influence a company’s social and environmental perfomance. (See his recent article published in the Academy of Management Review), These include effective and organized industry self-regulation (like Fair Trade or Forest Stewardship Council certification); monitoring by NGOs, investors, and the press; institutionalization of the 3P approach in business curricula; institutionalized dialogue with stakeholders; and membership in 3P trade associations (like BSR, Co-Op America, and SVN).
The main idea behind this research is that normative pressures to behave in socially and environmentally responsible ways matter. Absent government regulation, influence from industry associations, civil society, and the education sector serve to motivate companies to adopt the 3P approach.
However, the big question remains – is this type of pressure significant enough to create large-scale “enlightened capitalism,” or will federal/state regulation facilitate this process faster? Tell me what you think…

Shannon Arvizu, Ph.D., is a clean tech educator and cutting-edge consultant for the auto industry. You can follow her test drives in the cars of the future at www.misselectric.com.