A Global Village
Issue 5 » Researching Development

Could For–Profits Have a Greater Role to Play in Global Health?

Thomas Cowling, Imperial College London

The global health stage is entertained by the well-meaning strides of numerous non-profit organisations; governmental, non-governmental and inter-governmental. Yet, more potent and thrilling actors are hesitantly waiting in the wings with the potential to take centre stage: the for-profit organisations. A emerging concept termed shared value insists that firms are not required to make trade-offs between their social impact and financial success, instead emphasising the opportunities and benefits that improving social impact can confer on profits.

Consumers are increasingly expectant of firms with regard to their societal obligations and impact. These obligations may be seen to encompass health improvement of populations worldwide. Some firms have acknowledged and reacted to these expectations in the hope of meeting them. However, the true players in this game are not only meeting these expectations, they are surpassing them. To do so, they act in self-interest by delivering a wide range of benefits to society that simultaneously enhance their competitive advantage. The resulting positive feedback loop centred on the exchange and sharing of value between firms and society is intriguing, and greatly promising for global health. Is a new day about to dawn, bringing together two seemingly disparate worlds?

Traditional business and economic thinking views the purpose of the firm as resting with the creation of value for its owners or shareholders. Social issues fall outside its scope. If the rarity arises such that its impact on society is considered, any worries are quickly alleviated upon realisation that the firm employs, invests and pays taxes. This line of thought is gradually being superseded, although its advocates remain1. The annual reports of the majority of the largest companies assert commitment to social purposes alongside the maximisation of profits.

In recent years, firms have become increasingly viewed as potential sources of major social, environmental and economic problems. The financial crisis of 2008 and the BP oil spill provide two salient reminders of the damaging effects firms can have on their external environment. This realisation has contributed to the advent and increasing prominence of the notion Corporate Social Responsibility (CSR), broadly defined as a company’s ‘status and activities with respect to its perceived societal obligations’2.

A Question of Motivation
Why do we concern ourselves with global health, in the first instance, and expect firms to contribute to improvements in it thereafter? One may assume that the answer to the former lies with the natural tendency to be altruistic but issues of equity and equality may be equally pertinent. The answer to the latter is more difficult, but perhaps of lesser importance. It is the existence and extent of expectation, and not its origin, which is of superior significance. Either way, consumers’ awareness of firms’ activities is unprecedented thanks to the intensifying sharing and access of information on the Internet. It is also important to acknowledge the power of the media in transmitting ideas and messages to a large, receptive audience. 

The picture painted is that firms have been forced to pursue CSR initiatives. Indeed, some firms seem to reluctantly acknowledge CSR and treat it as an unavoidable mandate. Others ignore it completely, perhaps to their disadvantage, as it seems that firms are able to benefit from their investment in CSR through improved brand image and subsequent relationship formation with consumers3,4. An example of a high profile CSR campaign is that of Coca-Cola’s Exercise is Medicine program which is designed to encourage the medical community of the United States to advise patients on the importance of physical activity. It also sponsors more than 150 physical activity programs in more than 100 countries and aims to have at least one physical activity program in every country where it operates by 2015.

Pause for thought. A moment’s reflection will allow you to question the real effect of these initiatives and/or the underlying motives. On the surface intentions are good – promoting physical activity and resultant health improvements – but could a multinational organisation with one of the world’s leading brands do more? Consider the distribution channels that Coca-Cola exploit to transport their products to some of the world’s poorest countries, such as Mozambique and Uganda, as well as the marketing know-how to sell them. Could the same channels, operations and logic be leveraged to distribute and ensure uptake of medicines in communities that could otherwise not access or be educated about them? A UK-led initiative, Colalife, aims to do just this and is planning a pilot project in conjunction with Coca-Cola to distribute simple medicines in AidPods in Zambia which is due to start by the end of 2011.

The question of concern surrounds the use of CSR as a superficial veil disguising otherwise unethical organisations. Is it a peripheral activity of most organisations, rather than a core one? Do these initiatives only achieve marginal and incremental improvements in areas such as global health? The key issue is then, if the notion of CSR fails, what can replace it?

Profit-Driven Development?
The concept of creating shared value is currently hailed as the most sophisticated thinking in the domain. It has been defined as ‘policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates’5. It pays close attention to the intricate relationship between a firm and its environment, and their interdependency in the generation of prosperity. It insists that firms are not required to make trade-offs between their social impact and financial success; it instead emphasises the benefits that improving social impact can confer on profits.

Shared value is not a new guise for social responsibility or philanthropy, but is a new way to achieve economic success. It is a core strategic focus of firms, rather than a peripheral afterthought. And this is the key. The notion of CSR emerged out of a sea of stakeholders’ expectations and some firms reacted. Shared value, on the other hand, is a proactive stance taken by firms as they seek to maximise their competitiveness in increasingly global markets. It is company-driven – all it requires is for firms to behave as firms – and herein lies the concept’s greatest strength.

The benefits of a shared value approach can be enjoyed by economies of all development statuses around the globe. Unilever is aiming to get 1 billion people to add at least one more hand-washing occasion to individuals’ current daily tally by 2015. In order to achieve this, they are rolling out the Lifebuoy brand of soap in tandem with hygiene promotion programmes across Africa, Asia, Latin America, Middle East and Turkey. This has helped them to enter new markets such as Nigeria and Latin America, whilst experiencing double-digit growth in the last four years. Meanwhile, hand washing at key moments throughout the day, according to a clinical trial conducted by Unilever in Mumbai, can reduce diarrhoeal disease by 25% and eye infections by 46%. Both society and Unilever benefit. Meanwhile, in more advanced economies, food and drink companies such as KFC and PepsiCo are refocusing their products to be more nutritious and less damaging to consumers’ health, whilst capitalising on an emerging market of health-conscious consumers.

A new type of hybrid organisation has emerged, blurring the traditional distinction between for-profit and non-profit organisations, that best exemplifies shared value. WaterHealth International (WHI) is a for-profit firm that uses innovative water purification techniques to distribute clean water to millions of people in countries that include Ghana and India. By using a sustainable, low-cost model, water is distributed at a low price to some of the most needy communities. In India, it is estimated that 170 million people lack access to safe drinking water and the water-borne diseases that result cost an annual $600 million USD in medical treatment and lost economic output6. WHI sells clean water to its 250,000 customers for 4 Indian rupees per 20 litres that equates to less than $0.01 USD per litre6. This venture is effectively an example of social entrepreneurship. Although various definitions and nuances in the use of this term exist, it generally refers to the identification and pursuit of opportunities that can provide societal and environmental benefit.

No False Dichotomy
The importance of business leaders in embracing and promoting the shared value concept within their organisations cannot be understated. A tendency to focus on short-term performance in response to stakeholder pressure negates the likelihood that the potential long-term benefits of a shared value approach will be truly appreciated by executive teams. It is important not to create a false dichotomy between core profit-driven economic activity and shared value. It is not the distinction that should be emphasised, but the subtle connections, mutualisms and healthy co-existence. While this approach may not be applicable in every conceivable instance, the scope for implementation of this concept is immensely wide-ranging.

Government intervention is frequently employed in markets to allow them to function equitably. In order to promote socially responsible behaviour and/or a shared value approach, meaningful regulatory changes that incentivise firms to act accordingly may be an option. Appropriate regulation may focus setting clear and measurable social goals that stimulate innovation in a competitive environment5.

The tentative evolution of the manner in which firms approach and think about their relationship with society provides a degree of promise for global health. In order for this promise to be realised, a facilitative environment must be created by regulators and governments. Yet the most important ingredient may be one that is inherent, and becoming increasingly pertinent, in markets tending towards globalism: competition. If so, this powerful force will compel, and even oblige, many firms to help develop society in ways that benefit all parties; improving global health to an undeterminable extent in the process.

Thomas Cowling has just graduated from Biomedical Science and is about to study for a Masters in Public Health at Imperial College London.

Leave A Comment

[1] Karnani A. (2011) Doing Well by Doing Good: The Grand Illusion. California Management Review. 53(2): 69-86.
[2] Bhattacharya C. B. & Sen S. (2004) Doing Better at Doing Good: When, Why, and How Consumers Respond to Corporate Social Initiatives. California Management Review. 47(1): 9-24.
[3] Du S., Bhattacharya C. B. & Sen S. (2007) Reaping Relational Rewards from Corporate Social Responsibility: The Role of Competitive Positioning. International Journal of Research in Marketing. 24(3): 224-241.
[4] Eisingerich A. B., Rubera G. (2010) Drivers of Brand Commitment: A Cross-National Investigation. Journal of International Marketing. 18(2): 64-79.
[5] Porter M. E., Kramer M.R. (2011) Creating Shared Value. Harvard Business Review. 89(1): 62-77.
[6] Acumen Fund (2011) WaterHealth International. [Online] Available at: <http://www.acumenfund.org/investment/waterhealth-international.html>