Thursday, May 26, 2011

New Ideas for the Economy: Christ-Followers Broadening the Purpose of Business

Traditional economic theory argues that the chief aim of business is to maximize value for its investors. A capitalist economy achieves the best use of its resources when businesses increase their economic value. In the era of Wal Mart and the outsourcing of jobs it’s easy to see this idea at work in our economy. But I believe there is a quiet revolution occurring in the background that is challenging how we think of economic value and providing tremendous ministry opportunities for innovative followers-of-Christ.

On the one hand, non-profit organizations are discovering the value of earned-income ventures to support mission. Instead of relying totally on financial donations, these non-profits are entering the world of income earning businesses discovering that in many ways these ventures increase the effectiveness of their mission activity. Some non-profits are exploring purchasing franchises and others are developing new ways to access capital through their own investment securities. At a time when many non-profits were curtailing activities during the recession, many of these organizations were able to continue to expand mission. Social Entrepreneurship is probably the biggest development in non-profit funding in decades.

At the same time, some for-profit businesses are discovering that social values have a positive impact on profits. Companies like Stonyfield Farms understand that promoting environmentally and socially conscious products provides economic value. Consumers are willing to pay a premium to purchase organic yogurt produced by small family farmers without the use of growth hormones. The lowest cost doesn’t always drive consumer behavior.

Finally, capital markets are discovering that social values can produce economic rates of returns on investments. Churches and philanthropic foundations are beginning to grow uncomfortable with investments that support values that run counter to their own. Other funds like CalPers are discovering that promoting corporate values through their investment philosophy provides investment return benefits while positively impacting the business community at large by forcing change.

What is occurring is a blending of the economic sectors around the idea that value is more than just economic. Jed Emerson, in an exciting report called the Blended Value Map, argues that value includes indivisible economic, social, and environmental components. I like his argument because I have always felt that real positive change for disadvantaged communities will come not from non-profit initiatives but only when for-profit businesses blend mission with their inherent superior ability to develop community capital. Though my economic background makes me sometimes uncomfortable with the idea of value being more than the profitable use of resources, it’s hard to overlook the evidence that social values have a positive impact on economic value.

And I believe that followers of Christ should be at the forefront of this movement. But in many ways Christians have ceded the development of this philosophy to secular organizations. It is time for us to reassert our moral leadership in the economic arena by starting innovative businesses that initiate economic opportunity for disadvantaged communities while sharing our values. Creating businesses with moral voices should be a natural process for spirit-led business leaders following Jesus.

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