Goizueta Effect - Reimagining Business as a Catalyst for Social Change

Reimagining Business as a Catalyst for Social Change

05/26/21 • 29 min

Wes Longhofer, Executive Academic Director at The Roberto C. Goizueta Business & Society Institute, joined The Goizueta Effect Podcast to discuss business and the critical role it plays in driving societal change.

His work has been funded by the National Science Foundation and featured in the Washington Post, American Sociological Review, and American Journal of Sociology. Most recently, Longhofer co-authored Super Polluters: Tackling the World’s Largest Sites of Climate-Disrupting Emissions.

The Role of Business in Driving Societal Change

Business and capitalism are tremendous engines of prosperity and innovation. Organizations provide much-needed jobs and countless goods and services that undoubtedly make our lives better.

We're also living in an incredibly challenging time. Climate is in crisis. There's mounting inequality. Political polarization seems to be at a peak. Not to mention an ongoing pandemic that's shown us the power of business to urgently create a vaccine, but also raises important questions about the equitable distribution of it.

Recognizing the role of business in driving positive social change begins with acknowledging that there is no business without society. Too often, we think of markets as existing outside of people and the society that comprises them, but no market can exist without a society that sets the rules of the road, without a government that sets up things like property rights, or without an environment that provides natural resources that, if exploited, will threaten the ability of the market to function.

If we start by recognizing that business exists in society and that markets are designed for and in the interest of people, then, we can begin to think about how to reimagine business. This view will help us as we work to redesign markets to serve both more of society and the natural world. It's about recognizing business not just as economic actors, but as civic and environmental actors as well.

Stakeholder Capitalism

Stakeholder capitalism is messy. Primary stakeholders of a firm include employees, customers, investors, the firm itself, and the community in which the firm is located. That only scratches the surface. There's also government, the media, social movements, competitors, and the earth itself. So how do you make sense of this and which stakeholders matter the most? The classic professorial answer...it depends.

The History of Corporate Responsibility

Throughout history, there is a constant push and pull between business and society - from the expansion of the railroads, to the growth of U.S. steel, to the creation of the automobile.

In the post-World War Two period, there was this idea that companies would provide jobs, not just for a few years, but for an entire career. They would provide opportunities for mobility over the life course. They would give you pensions. They would employ not just you, but a lot of your friends. A handful of large corporations really shaped and defined not just business in America, but civic life as well.

As the years progressed, the U.S. began to see momentous social movements and transformative public policy that raised awareness of things like civil rights and environmental degradation. Investors began to look at the old way of companies and decided they were not very profitable. In the late 1970s and 1980s, investors decided it might be better to break up those companies. They identified managers as a problem because companies were trying to do too much. Organizational scholars called this the garbage can theory of decision-making - you throw a bunch of strategies at the wall with ill-defined goals. Some said, "Well, maybe managers should just focus on maximizing profit rather than getting involved in all these other distractions."

Very quickly, the idea of the company started to change. Employees started to spend less time at any one company, ownership became more centralized, companies began to invest more in financial markets and less on their own assets and R&D, and managers were compensated for maximizing profit. Companies began to view societal issues, like pollution, as externalities.

Purpose-Driven Organizations Today

Today, a number of organizations are embracing purpose as part of their culture and their brand.

Patagonia's the obvious one that comes to mind. They have a deep commitment to sustainability in their supply chain. They work with industry pa...

The Role of Business in Driving Societal Change

Business and capitalism are tremendous engines of prosperity and innovation. Organizations provide much-needed jobs and countless goods and services that undoubtedly make our lives better.

Stakeholder Capitalism

The History of Corporate Responsibility

Throughout history, there is a constant push and pull between business and society - from the expansion of the railroads, to the growth of U.S. steel, to the creation of the automobile.

Purpose-Driven Organizations Today

Today, a number of organizations are embracing purpose as part of their culture and their brand.

Patagonia's the obvious one that comes to mind. They have a deep commitment to sustainability in their supply chain. They work with industry pa...

Previous Episode

Racial Bias is Everywhere

Dr. Erika Hall, assistant professor of Organization and Management at Emory University's Goizueta Business School, focuses her research on the influence of race, gender, and class-based biases on interactions within the workplace and more broadly within society.

Racial Bias in the Workplace

Bias is an instance of prejudice and racial bias is an instance of prejudice based on a person’s race or perceived race. In the workplace, racial bias manifests in a number of ways such as lower wages, higher job loss, being passed over for a promotion, and so on. It is important to understand the difference between bias in the workplace versus an anomalous outcome versus a true deficiency in performance that led to an outcome. With a sample size of one, that determination may be difficult but Hall has looked at hundreds and sometimes thousands of people and companies in her research studies which enables her to identify trends in discrimination.

Organizations can use control groups to evaluate whether or not an instance is due to racial bias. This means looking at a situation and determining if there was another person that had the same type of qualifications, who had the same résumé, would that person suffer the same outcomes as the Black person is right now.

Hall says hiring biases are quite common. There are negative stereotypes associated with Black candidates regarding future performance. Many résumé studies show that bias is in play with hiring managers if the name on top of that résumé is perceived to be black versus white. In these studies, a fictitious résumé is created with all the qualifications necessary for a position. Two copies of the résumé ─ one version with a stereotypically Black or Asian or Latino name on it and the other a name that is stereotypically white ─ are submitted to actual companies for real positions. Even though it is an identical résumé except for the name at the top, the callback rate for candidates with names that are stereotypically Black or minority, in general, tends to be lower than for candidates with “White” names.

Code-Switching

Hall notes that it is not uncommon for people of color to change their name or go by their middle name in order to not be discriminated against when applying for a job. A study published in Administrative Science Quarterly suggested that both Black and Asian employees tend to change their names in a way that will make it whiter, a behavior known as résumé whitening.

Making your name seem more “white” is related to code-switching or when a person adjusts their style of speech, appearance, behavior, or expression based on the setting they are in (home vs office, for example) or those who are around them. Hall says everyone has to code-switch to some degree between their personal and professional lives, but it seems to be more distinct and more disparate for Black Americans.

Racial Bias Misconceptions

The biggest misconception about racial bias in the workplace, says Hall, is that you have to be a racist to be biased. A racist is someone who is prejudiced against people on the basis of their racial or ethnic group.

If you don't hire someone who is Black because you are fearful that your customers would respond better to someone that is white, you have introduced racial bias into the hiring process, even though you personally may not hold any negative feelings toward Black people.

Another example of racial bias can be found in the real estate industry. While companies that value homes for sale are bound by law not to discriminate, there are reports that it happens often. Homes in predominantly Black neighborhoods or homes that have evidence of Black owners (such as family photos) are appraised at lower rates than homes with white owners. Hall references an article in which a professional appraiser said that appraisers try to mirror the market. Buyers are less willing to purchase a home that was previously owned by a Black person and their valuation of the home reflects that. The appraisers may not be racist but they are contributing to discrimination and in doing so are disadvantaging Black home sellers.

Black vs African American

The terms Black and African American often are used interchangeably within the United States but there is a literal difference. Black refers to the entire diaspora of people with ...

Next Episode

Building an Equitable Workplace: Why Social Class Should Be a Critical Component of Your Diversity Strategy

Andrea Dittmann, Assistant Professor of Organization & Management at Emory University’s Goizueta Business School, joined The Goizueta Effect Podcast to discuss the role that social class plays in both career success and team performance, and how to build a more equitable workplace. Her work has been featured in the Harvard Business Review, Politico, and Journal of Personality and Social Psychology.

Defining Social Class and Its Impact on Business

Social class depends on the context that people grew up in: blue-collar environment or white-collar environment, especially in the United States. In blue-collar environments, people tend to have less than a college degree, lower incomes, and blue-collar type jobs – this is the bottom half of the social class. Whereas in middle and upper-class contexts, people tend to be college-educated, have higher incomes, and white-collar jobs.

In recent years, employers have started to incorporate gender, race, and other identities into their diversity strategies. However, the social class context that people are raised has largely been ignored. Social class contexts shape an individual’s values and outlook on life and these differences persist enduringly across the lifespan, from college to the workplace. While this is not as visible as race or gender, that doesn't mean that it's any less important.

Different Values are Socialized in Different Social Class Contexts

According to cultural and social psychology research, working-class contexts foster interdependent norms and values. Parents convey to children that they should recognize their place in the hierarchy, follow rules and norms, and be responsive to others' needs. In contrast, middle-class contexts foster independent norms and values, through which parents convey messages to children about a sense of self-importance and individual entitlement, emphasizing that their voice matters. Repeated exposure to these different messages fosters different norms that shape people's outlook on life.

These abstract concepts manifest in a number of ways in the workplace. When compared to middle-class individuals, people from working-class contexts tend to be more empathetic and more attentive to others in social conversations. They are better able to integrate different perspectives in conversation. This makes sense considering their understanding of themselves as connected to others. This differs from the classic American focus on individualism, which is characteristic of middle-class individuals who are agentic, have strong personal preferences, make their voices heard, and prefer to be unique from others. Thus, these values affect people's behaviors and approaches to interactions.

Due to their relational nature, people from working-class contexts engage in more behaviors that make teams work together effectively. These behaviors include attending to others, integrating people's opinions, and engaging in turn-taking more often. The result is more balance and information-sharing amongst group members, while working together. Thus, organizations that work collaboratively can benefit by bringing in more people from working-class backgrounds.

Barriers Faced By Employees from Working-Class Backgrounds

Many people from working-class backgrounds do attend college, but this does not necessarily level playing field. Even with the same college credentials, people from working-class backgrounds are less likely to receive a callback for an elite job, less likely to advance to a leadership position once they're in a job, and on average are earning about 17% less than their counterparts from middle-class backgrounds.

Employees face barriers in the workplace at several different levels, starting with hiring. According to sociologist Lauren Rivera’s work, hiring managers tend to unconsciously discriminate against applicants from working-class backgrounds because they hire based on cultural fit, or employees that they feel they would enjoy spending time with and who would fit into the company’s culture. While this does not sound harmful, this means hiring managers select people who are similar to themselves, often from higher class backgrounds. Potential employees from higher class backgrounds who grew up with similar travel, sports, and leisure experiences can therefore relate to hiring managers. Meanwhile, people from working-class backgrounds are less likely to have had those same experiences. This disparity in “cultural fit” produces discrimination in hiring.

In addition, the culture of many modern workplaces is not set up to enable differing relational strengths to s...