Business organizations are all kinds of things
When we discuss business and sustainability, we often think about large companies with lots of shareholders and perhaps even listed on stock exchanges. These companies are often “designed” for profit, the shareholders expect a return on their investments, the management gets rewarded based on financial results, and so on. However, this is far from the only way that business can – and does – operate. Lots of different types of firms exists and thrive, with different consequences for sustainability.
Smaller, privately owned companies
Most companies (as measured in the number of companies) are small companies and privately owned. This means that they have one or a few employees, and one or a few owners. Many of them are family businesses, meaning that a family controls and often manages the business.
Are these companies different when it comes to sustainability? It is not clear. Each company might have a smaller individual impact (both positive and negative), but it is not obvious that the sum of lots of small companies producing something is different from one large company producing the same amount of output. The large company may have some advantages, such as resources and competences in sustainability, but also some disadvantages, the small company may have a “feeling” of its impacts on stakeholders that large bureaucracies may lack.
An advantage of privately owned companies (meaning – not listed on a stock exchange) is that they can prioritize as much sustainability as they want and do not have to take short-term perspectives to satisfy shareholder interest or to increase the stock price. On the other hand, competition is often tough and they also have to make sure that the products and services provided are not too expensive.
Cooperatives
A cooperative is an organization that is owned and controlled by its members, to provide products/services/benefits to its members. Cooperatives are democratic (typically one member = one vote), benefits are shared with the members based on their contribution or use of the services. In Norway, some well-known cooperatives are Coop (food retailing++, owned by the customers), Tine (dairy products, owned by the farmers that supply the milk), Nortura (meat and eggs, owned by the farmers that supply the company), Landkreditt Bank, and Bilkollektivet (Car sharing/rental in Oslo).
Since cooperatives exist not to maximize profits but to serve its members, they may have some advantages when it comes to sustainability, compared to for-profits. On the other hand, the interests of the members may not be aligned with sustainability in general either. Cooperatives also typically must compete with for-profits, meaning that they must take the needs and interests of the market into account, and cannot always prioritize sustainability.
Social entrepreneurs/enterprises
Social entrepreneurs try to combine social value and positive societal impact with profitability (Saebi et al 2019). Social enterprises are often started with the ambition of both solving social problems and achieving a sound financial situation. This is different from for-profit companies, which are started with profitability as a primary goal and do not have solving social problems as a primary goal. Social entrepreneurs often explore new business models and try to find new ways of raising income. A challenge is to balance the two purposes and not let one take over for the other, then the positive social impact will disappear, or the financial situation become unsustainable (Saebi et al 2019).
Unicus: Consultants with autism
Unicus is a Norwegian IT consulting firm established in 2009. The company specializes in employing individuals on the autism spectrum, leveraging their unique skills to deliver high-quality IT services. Unicus focuses on areas such as data engineering, data science, software development, and quality assurance.
In 2023, Unicus merged with Auticon, a global IT consultancy with a similar mission of employing people with autisms. This merger created the world’s largest company where most employees are on the autism spectrum, operating in 15 countries with over 600 employees. The company aims to improve their social impact and provide a wider range of IT services to clients worldwide after the merger.
Sources: Wikipedia, Auticon, Ferd
Degrowth (or green growth?)
Degrowth challenges the mainstream paradigm of eternal economic growth and suggests a deliberate (i.e. politically decided) downscaling of production and consumption to improve the environmental and social situation. Degrowth theorists argue that infinite growth is incompatible with the finite resources of the Earth and that degrowth/negative economic growth is the only known way of reducing environmental problems and degradation. Important ideas in degrowth include prioritizing environmental regeneration, reducing wasteful consumption, fostering localized economies, and focusing on non-material measures of progress. The degrowth movement is also concerned with social equality and justice and wants degrowth to contribute to a better distribution of wealth and resources (Edwards 2021).
For business, degrowth will pose several challenges. For-profit companies typically want to grow (since this increases profits), and in a situation with politically determined de-growth they will have to adjust in many ways. In degrowth, one can imagine that businesses will thrive by redefining success beyond profit maximization. Firms will have to provide value through taking care of the environment and meeting real needs. Firms will have to adopt circular economy principles, such as designing for durability, repairability, and resource efficiency to minimize waste and extend product lifecycles. Businesses also will have to shift from products to services, and towards local solutions and less dependence on global supply chains. Sharing economy initiatives may also be important under degrowth.
Increased salaries or reduced working hours?
For the individual worker (and society in total!), economic growth can be used to increase salaries in real terms or to reduce working hours. In 1930, Keynes famously predicted that the working week in 2030 would be around 15 hours due to economic growth (Crafts 2022).
As can be seen from the figure, working hours were reduced considerably in the 19th and 20th century. However, the last decades the reduction seems to largely have stopped/the number of working hours to have plateaued, although the exact situation varies from country to country. In Norway, the summer holidays were increased from 4 to 5 weeks in most sectors around 2000. Others have noted that the total amount of working hours in the lifetime has gone down due to increased life expectancy (Crafts, 2022). Still, it is clear that Keynes’ prediction has not become reality, yet. The number of working hours is decided by a range of different factors, such as individual preferences for income, the joy of working, status considerations, and structural forces such as political decisions, public regulations and employer demands (Golden 2009).
In Norway, some political parties have suggested a 6-hour working day (instead of the 7,5 which is standard now). Some companies or factories have also experimented with a shorter working day. Examples are Tine’s Heimdal factory (which went back to 7,5 hours) and some kindergartens. These experiments test whether the productivity can be the same but with shorter working hours.
Green growth
Green growth is an alternative to both the current situation and to degrowth, and believes that economic activity can continue to grow while reducing greenhouse gas emissions, pollution and resource use. The “decoupling” of growth and environmental problems can happen through technological innovation and government regulation. Green growth is a current popular approach among governments, businesses and other policymakers (Capasso et al 2019).
What role for the business school?
Business schools educated a considerable amount of students that go into businesses. How should business schools change (or, should they at all change?) to take the sustainability crisis and challenges into account? Unsurprisingly, this is and has been debated for some time in business schools and academic communities (e.g. Painter-Morland et al. 2016, Akrivou et al 2015). The debate is both about what should be in the curriculum so that students have the necessary knowledge to work in a business world where sustainability is more important, and whether business schools contribute to the problem by emphasising economic growth and profits over sustainability. There is some evidence that business schools shape student attitudes and business behavior (Lämsä et al 2008, Jung and Shin 2018).
A logical step is to include learning about sustainability in the curriculum. This can be done in different ways, with specific courses on sustainability or throughout the whole curriculum (integrated in every course), or both. For business schools, this can be difficult enough, since it means reducing other parts of the curriculum and building up new competences. Sustainability is important in existing areas in business schools, such as accounting, but business schools may also have to bring in new courses and faculty from the natural sciences (Painter-Morland et al 2016).
Others say that the problem in business schools is not as much what is not taught about sustainability, but what is taught about other subjects. If business schools in the majority of courses teach that the purpose of the corporation is purely profit-maximization, it does not help to include small amounts of sustainability knowledge (this then becomes a type of greenwashing). Following this logic, the business school becomes one of the problems regarding sustainability, because the business school educates new generations of businesspeople armed with the tools to build down or destroy nature (as a side-effect, not as a purpose). This point of view argues for a more radical reorganization of business schools, with much more emphasis on how business should contribute to a better world through integrating knowledge from other fields and by new methods of teaching and learning (Acrivou et al 2015).
References
Akrivou, K., & Bradbury-Huang, H. (2015). Educating Integrated Catalysts: Transforming Business Schools Toward Ethics and Sustainability. Academy of Management Learning & Education, 14(2), 222–240. https://doi.org/10.5465/amle.2012.0343
Capasso, M., Hansen, T., Heiberg, J., Klitkou, A., & Steen, M. (2019). Green growth–A synthesis of scientific findings. Technological Forecasting and Social Change, 146, 390–402.
Crafts, N. (2022). The 15-Hour Week: Keynes’s Prediction Revisited. Economica, 89(356), 815–829. https://doi.org/10.1111/ecca.12439.
Edwards, M. G. (2021). The growth paradox, sustainable development, and business strategy. Business Strategy and the Environment, 30(7), 3079–3094. https://doi.org/10.1002/bse.2790.
Golden, L. (2009). A brief history of long work time and the contemporary sources of overwork. Journal of Business Ethics, 84, 217–227.
Jung, J., & Shin, T. (2018). Learning Not to Diversify: The Transformation of Graduate Business Education and the Decline of Diversifying Acquisitions. Administrative Science Quarterly, 000183921876852. https://doi.org/10.1177/0001839218768520
Lämsä, A.-M., Vehkaperä, M., Puttonen, T., & Pesonen, H.-L. (2008). Effect of business education on women and men students’ attitudes on corporate responsibility in society. Journal of Business Ethics, 82, 45–58.
Painter-Morland, M., Sabet, E., Molthan-Hill, P., Goworek, H., & de Leeuw, S. (2016). Beyond the curriculum: Integrating sustainability into business schools. Journal of Business Ethics, 139, 737–754.
Saebi, T., Foss, N. J., & Linder, S. (2019). Social Entrepreneurship Research: Past Achievements and Future Promises. Journal of Management, 45(1), 70–95. https://doi.org/10.1177/0149206318793196