Friend or Foe?: The Role of Business in Development

In Hugh Whalan’s piece we read this week, he writes, “The absolute worst thing that can happen for the poorest people on Earth is that the next generation of superstar entrepreneurs ends up in Silicon Valley making iPhone Apps, rather than trying to address the problems of the 4 billion people who need them the most.” With my background in international development, that statement really hit close to home and I started thinking about the role that business strategies could play in development policy. Recently, there have been more and more discussions regarding the role of the private sector in development work. In fact, the UN Sustainable Development Goals (or Global Goals) have carved out more of a presence for public-private partnerships in order for the BoP to achieve sustainable development. [1] Moreover, the UN Global Compact and USAID Global Development Alliance are just two of many initiatives for private sector actors to strategically engage and participate in the economic growth of poorer nations. Therefore, seeing as this week is Global Goals week and our class’ theme for the week is ‘Venture Development and Growth,’ I asked myself: Do businesses have a responsibility to create and sustain ventures geared towards social impact and growth for the BoP? If so, what’s in it for them?

While there has been an increase in businesses embracing social impact initiatives and in social enterprises themselves, some may still be skeptical about including the private sector in development work. However, as Whalan mentioned in his article, considering the magnitude of the problems that the world’s poor face, it is vital that multiple stakeholders get involved so that the maximum number of resources can be devoted to these issues. Therefore, businesses should rise up to the challenge and make social impact in the BoP markets a priority by being inclusive and viewing these individuals as consumers and producers. Not only would this inclusivity benefit local communities in poor countries, but it has been argued that this kind of involvement is beneficial to companies from a business standpoint as well. [2]

          When discussing the presence of businesses in development, I was specifically interested in the Simanis and Duke piece, “Profits at the Bottom of the Pyramid,” where they wrote about strategies that multinational firms could adopt to ventures for the BoP, thus driving social impact while making profits. One example that the authors highlighted was SC Johnson and its business model in rural Ghana’s goal of preventing malaria by selling insect control products. Not only did SC Johnson contribute to the sustainable development of the area by helping to improve public health, but the venture worked to create the BOP’s closer ties to the company, while shedding a positive light on the company brand and acting as a plug for corporate social responsibility. Similarly, one could argue that the shelter IKEA designed for refugees that we read about last week also helped the company’s brand while creating social impact.

        Thus, one can see that the inclusion of businesses in development can have some positive effects both for the BoP and for the business itself. The resources and expertise that businesses bring to development work should continue to be a welcome addition to the current development policy discourse. However, I couldn’t help but wonder: How do we hold businesses accountable to the social impact that they both claim to and wish to generate?  How important is analyzing the motives of these businesses when they decide to undertake social impact initiatives?

[1] and [2]: http://www.ids.ac.uk/opinion/the-private-sector-and-the-sustainable-development-goals