For as long as corporations have been in existence, they have been shrouded in controversy. With scandals ranging from Charles Ponzi’s infamous moneymaking scheme in the 1920’s to Pepsi’s gross miscalculation with their race-riot inspired ad late last year, it’s easy to see why. But are corporations as bad as they are made out to be by the media? As we prepare for the next in our Midtown Big Ideas debates on Business Values, we’ve examined the pros and cons of Big Business and their impact on the economy, the environment and the world beyond business.
For all they receive bad press, big corporations definitely can and do have a positive impact in many spheres. Corporations may not be perfect, but they do create a wealth of jobs around the world and benefit consumers by utilising their size and scale for economies of scale that result in lower costs. Those corporations that do particularly well – McDonalds, Coca-Cola and Apple – attain their market share by meeting and often exceeding their consumer’s needs.
Foreign investments too, allows capital to flow to developing economies, in turn creating jobs in poorer parts of the world. While some critics argue that the wages of those jobs created are too low, others argue that the job offerings are better than alternatives in the area and salaries will increase over time. Outsourcing of production is another facet of multinational trading which is often perceived to have positive impacts. Outsourcing enables lower prices which increases disposable incomes of households in the developed world and enables them to buy more goods and services – creating new sources of employment to offset the lost jobs from outsourcing manufacturing jobs. Not only that, but many corporations re-invest large profits into research and development. Oil exploration and research into new, potentially life changing and life saving drugs can only be done by corporations who are able to take financial risks.
But it’s unclear whether these positives outweigh the widespread and varied negative impact that larger corporations undeniably have. Issues range from corporations being interested in profit at the expense of their consumers, tax avoidance, cash reserves that aren’t re-invested into the economy, market dominance, massive contributions to pollution and job losses as a result of outsourcing.
In 2017, BP were the top UK company in terms of revenue, with $115m in profits recorded. Many argue that it’s unfair for companies such as BP to make such huge profits at the cost of the consumer when the cost of petrol remains so high in the UK. Tax avoidance is another hugely contentious issue with firms including Starbucks, Apple and Gap all doing their best to avoid footing massive tax bills. According to a report carried out by Pinsent Masons Multinationals avoided paying up to £5.8bn in UK tax in 2016.
In terms of cash reserves being held rather than reinvested, global giant Apple allegedly hold cash reserves of $250bn, 93% of which is banked overseas. Critics argue that this deadweight could be used to further benefit economies, research and development, rather than sitting untouched and unused. Pollution too is a huge issue and one which consumers are particularly hot on. The user of non-renewable energy sources and high levels of production as a result of Big Business is putting the environment at great risk.
But consumers are increasingly aware of the good, the bad and the ugly when it comes to big corporations, with huge numbers of people being more selective about the brands they use and purchase from. According to The Independent: “a survey of 2,000 consumers published on by media agency MediaCom found half of consumers said that they are willing to pay more for a brand that supports a cause that is important to them, while 63 per cent said that they believe brands have a responsibility to give back to society.” Social media is providing a platform for these opinions to be heard, whilst allowing consumers to call brands out in a way they’ve never been able to before.
For all the corporations who do “bad things”, there are others who strive to do good. Shoe brand TOMS works with 100s of NGOS to donate a pair of shoes for every pair sold across 60 countries, while outdoor company Patagonia commits 1 per cent of their total sales or 10 per cent of their profit to environmental groups.
The upshot? Corporations don’t do bad things – people do. And it’s how a corporation is run which makes all the difference to the world beyond business.
Join us as we discuss this and more issues surrounding Business Values on 21st March from 6.30pm at Mitsubishi Corporation. Grab your free tickets HERE – but be quick, the last two events have sold out over a week in advance!