Do businesses have a soul or a conscience? Can a business express a belief and if so, who determines that belief? These questions and more come to mind when Hobby Lobby refuses contraception coverage or Pepsi gives to a homosexual cause.
First, as Christians, God instructs us (people) to serve others, to give and to be fair in our dealings. But, does the Bible say anything to business entities? Does God hold businesses or people accountable? What is a business entity and what makes some types of businesses different? These are the questions I began asking myself over the last year, as more and more businesses on both sides of the issues find themselves struggling to serve their markets without alienating substantial portions of their market.
Perhaps the most important element for us to consider is the legal structure of the business and how that impacts a business' social activism. Businesses can be organized in any number of formats, but at the end of the day, one factor seems to draw a distinction in whether or not a company can legitimately and fairly express itself in the social arena. That is who owns the business? In its simplest form, a business could be a sole-proprietor, LLC, or even corporation, that is owned by a single person. A slightly more complex company might be owned by a family or a smaller group of associated people. On the more complex side, you would have companies that are owned by large groups of stockholders, or perhaps even other companies.
In the simplest of those business forms, it would be fairly easy for a business owner to make a moral decision regarding his company - it is, after all, 100% his company, his values, and his risk. One such example might be a local baker that chooses not to cater homosexual weddings, or another that elects to refuse service to a local company that isn't considered environmentally-friendly. In the middle you have a company that, while its ownership pool is a little wider, could still reasonably make decisions base on its ownership's values - think Hobby Lobby, which is family owned. On the far end of the spectrum, however, we have companies that typically have thousands of shareholders (owners); companies like Apple, whose CEO, Tim Cook, recently said, "We want to leave the world better than we found it." That is certainly a nice soundbite, but according to whose standards? His? Shareholder #213,549? Who decides how Apple makes the world better? Can companies like Apple reasonably reflect the values of all their shareholders (owners)?
Here is my bottom line. I don't think a publicly-traded company can have a values system. Values are a creation of the mind, heart and soul, not an assembly line. Values are human and should always be expressed by humans. Economist Milton Friedman famously said in 1970, "There is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits." Companies should generate their profits, return them to the shareholders and allow the individuals to make decisions about how and what they will support with their profits. Publicly-traded companies that do otherwise are robbing owners of their possessions and their right to determine what those possessions support.
Publicly-traded companies would do themselves (and their bottom lines) a major favor by refusing to become activists (on either side) and avoiding alienation of potential buyers. This is what they owe their ownership (you). On the other hand, when privately-held (closely-held) companies want to stray into those waters, that is within their rights. After all, they own 100% of the company and assume all the risks of activism.
I'd love to hear from you. What are your thoughts?
If corporate activism concerns you, then you should learn what the companies your mutual funds and retirement accounts are supporting. Visit www.StorehouseAdvisors.com to learn the details.
First, as Christians, God instructs us (people) to serve others, to give and to be fair in our dealings. But, does the Bible say anything to business entities? Does God hold businesses or people accountable? What is a business entity and what makes some types of businesses different? These are the questions I began asking myself over the last year, as more and more businesses on both sides of the issues find themselves struggling to serve their markets without alienating substantial portions of their market.
Perhaps the most important element for us to consider is the legal structure of the business and how that impacts a business' social activism. Businesses can be organized in any number of formats, but at the end of the day, one factor seems to draw a distinction in whether or not a company can legitimately and fairly express itself in the social arena. That is who owns the business? In its simplest form, a business could be a sole-proprietor, LLC, or even corporation, that is owned by a single person. A slightly more complex company might be owned by a family or a smaller group of associated people. On the more complex side, you would have companies that are owned by large groups of stockholders, or perhaps even other companies.
In the simplest of those business forms, it would be fairly easy for a business owner to make a moral decision regarding his company - it is, after all, 100% his company, his values, and his risk. One such example might be a local baker that chooses not to cater homosexual weddings, or another that elects to refuse service to a local company that isn't considered environmentally-friendly. In the middle you have a company that, while its ownership pool is a little wider, could still reasonably make decisions base on its ownership's values - think Hobby Lobby, which is family owned. On the far end of the spectrum, however, we have companies that typically have thousands of shareholders (owners); companies like Apple, whose CEO, Tim Cook, recently said, "We want to leave the world better than we found it." That is certainly a nice soundbite, but according to whose standards? His? Shareholder #213,549? Who decides how Apple makes the world better? Can companies like Apple reasonably reflect the values of all their shareholders (owners)?
Here is my bottom line. I don't think a publicly-traded company can have a values system. Values are a creation of the mind, heart and soul, not an assembly line. Values are human and should always be expressed by humans. Economist Milton Friedman famously said in 1970, "There is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits." Companies should generate their profits, return them to the shareholders and allow the individuals to make decisions about how and what they will support with their profits. Publicly-traded companies that do otherwise are robbing owners of their possessions and their right to determine what those possessions support.
Publicly-traded companies would do themselves (and their bottom lines) a major favor by refusing to become activists (on either side) and avoiding alienation of potential buyers. This is what they owe their ownership (you). On the other hand, when privately-held (closely-held) companies want to stray into those waters, that is within their rights. After all, they own 100% of the company and assume all the risks of activism.
I'd love to hear from you. What are your thoughts?
If corporate activism concerns you, then you should learn what the companies your mutual funds and retirement accounts are supporting. Visit www.StorehouseAdvisors.com to learn the details.
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