Chapter One - INTRODUCTION
"Make Poverty Business" is about using an understanding of poverty to develop profitable business opportunities. There is no new paradigm here, no re-definition of the corporation, no need for a business revolution. Business people can go on serving their managers and their shareholders in the same way, seeking to make maximum profits at minimum risk. We follow Adam Smith when he says: ‘It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest’, but we also argue that by actively seeking to be benevolent we can sometimes identify new routes to satisfying our self-interest.
We make the simple claim that you will be a better international manager if you understand the dynamics of income, opportunity and wealth within your host country. Just as you would want to understand something about local law before signing a joint venture contract or something about local culture before you approve an advertising campaign, we believe that you should understand more about the lives of your customers, suppliers and employees before you do business with them. We assume you do not want to become an economist or a development guru, just as you don’t want to be a lawyer or a marketing expert. But you might feel that, if you know a bit more about these subjects, you’ll understand better where your business is now, what risks it faces and what it could do to spend less and earn more in the future.
This is predominantly a book for business managers who want to increase their profits and reduce their risk. But we are not totally cold-hearted. We’ve written this book because we believe that, if we can incentivise you to think about the poor, then the poor will benefit. If you think the same, if you sometimes look through the plate glass windows of your hotel to the people beyond and you wonder what you can do for them, then so much the better. We hope this book will reassure you that you’re already doing a lot, just by doing business, and give you some ideas for doing even more.
We’re also writing this for people starting from the converse position, who want to help the poor and hope to use business as a tool to do so. If you work for a development organisation or a government and want to involve business in reducing poverty, we hope this book will help you to make the case to companies and to develop practical partnerships. If you can understand the concerns of business people and make cases for co-operation based on real-life examples and clear business incentives rather than moral exhortations, then surely you will be better at your job. With all the talk of corporate social responsibility, licences to operate and the moral responsibilities of business, it is easy to forget that business people don’t have total freedom to follow your ideas and indeed have a legal responsibility to serve the best interests of their shareholders before anyone else. But we believe there are some areas where their interests and yours converge, and this book is about identifying and developing them.
Thank you for reading the first few paragraphs of this chapter. For more, you can click here to order "Make Poverty Business" from Amazon.
Chapter 1 - Links and resources
Empires of Profit: Commerce, Conquest and Corporate Responsibility
by Daniel Litvin, published by Texere (London and New York) in 2003, gives cautionary tales from four centuries of attempts by Western companies to operate effectively abroad. Case studies include: Nike’s attempts to practise corporate social responsibility in its factories in Asia; Shell’s problems handling protests and attacks in Nigeria; and Rupert Murdoch’s efforts to adapt to local politics and culture in China and India.
Inevitable Surprises
Enterprise Solutions to Global Poverty by the Shell Foundation discusses the misunderstandings that donors have of business.
The World Bank's Voices of the Poor report emphasised that poor people worry about much more than economic indicators.
UNCTAD's World Investment Report 2001 discusses the benefits of backward linkages from multinational corporations to local suppliers.
Dr Marcel Fafchamps of Oxford University Economics Department gives a brilliant overview of the causes of economic growth in "Engines for Growth".
"A Richer Future for India" from the McKinsey Quarterly discusses the positive impact of outsourcing.
"‘Localization: The Revolution in Consumer Markets", by Darrell Rigby and Vijay Vishwanath discusses the benefits of a local approach.
