Global corporations and their system of market-driven capitalism have generated tremendous growth since World War II, considerably reducing overall rates of poverty.
That growth, however, has not benefited everyone. In developed economies, a small fraction of the population has captured the most recent gains, while many people in working-class rural and especially urban communities have experienced socioeconomic decline.
The situation is far worse in the developing world. Although growth has raised the standard of living in Africa, Asia, and Latin America, more than a billion people remain in extreme poverty and outside the formal economy. This is especially true in countries with large rural populations, where smallholders are shut out of the supply chains of nearby food companies because they lack knowledge of modern agricultural practices and the means to access and finance needed technology inputs. Developing nations also suffer from massive talent gaps. Large numbers of young adults are unemployed, while corporations find planned expansions stymied by a shortage of skilled local workers.
To be fair, companies have tried to upgrade their traditional corporate social responsibility (CSR) programs to sustainability and shared value strategies designed to deliver positive economic returns while improving the quality of life in low-income, distressed communities. But those programs have had a limited impact and rarely produce transformational change…..
About the authors
EDUARDO TUGENDHAT is the director of thought leadership at Palladium, the global consulting firm whose work is discussed in this article. ROBERT S. KAPLAN is a senior fellow and the Marvin Bower Professor of Leadership Development, Emeritus, at Harvard Business School. GEORGE SERAFEIM is the Jakurski Family Associate Professor at Harvard Business School.