By C. Don Adinuba, Ph.D
Perhaps unknown to Fred Chukwolobe, he has, in this brief article, highlighted a topic that has in recent times been of utmost interest to business practitioners, researchers, scholars, and policymakers: what is the purpose of business?
Milton Friedman of the University of Chicago and a Nobel Prize winner in economics whose thoughts shaped the Ronald Reagan administration, the UK government in the Margaret Thatcher era, the World Bank Group, and generations of economists across the globe, once wrote famously, “the business of business is business”.
Friedman was saying that a business exists to “maximize shareholder value,” that is, to post as much profit as possible for the shareholders or investors and nothing else.
Given his larger than life image, this proclamation was for several years regarded as an oracular declaration, the gospel truth. But this is no longer the case.
Most people do not accept that a business exists just to make maximum profit for the investors. A business also exists for the organizational members, the host community, the government, the company’s distributors, suppliers, etc.
Its employees have left everything to stake their future and that of their family and other dependants in the company. They can’t be dismissed as no stakeholders in the enterprise.
In the same manner, Chisco Transport, for instance, has expended a fortune on acquiring a large fleet of the state-of- the art trucks to move Nigerian Breweries products from one end of the country to another. No one can dismiss such transporters as no stakeholders in the Nigerian Breweries.
How about the government that depends on enterprises for employment generation and for tax revenue?
When Boeing Corporation announced a few decades ago it was relocating its headquarters from Seattle to Chicago, there was an uproar in Washington State because the people knew the immense benefits they were deriving from hosting Boeing.
All this is to prove that the essence of business is not to maximize profit. Businesses are also about relationships. Ichie Obiekunie’s anecdote has demonstrated this fact sufficiently. Hence, the focus in business schools has shifted from the bottom line to relationships, and the new school of thought is referred to as the relational school.
Finally, it is worth bearing in mind that businesses are now encouraged to think more of societal well-being than just corporate profits. Philip Kotler, the world’s most engaging marketing management researcher, has just published a book entitled “Advancing the Common Good: Strategies for Businesses, Governments, and Non profits.”
Kotler has a compelling personal story. He was still an undergraduate at DePaul University in Chicago when he was given admission to study for an MSc at the University of Chicago on account of his extraordinary brilliance; he went to graduate school with no bachelor’s degree, a feat. He later obtained a PhD. at MIT and a certificate in mathematics at Harvard. When he pivoted to the new academic discipline of marketing, he deepened it significantly and moved it in a new direction.
I thank Fred Chukwulobe for his absorbing anecdotal article on things that matter in business outside immediate profits. Thanks, Ichie Obiekunie, for calling our attention to this critical phenomenon.
C. Don Adinuba , public intellectual and former Commissioner of Information and Public Enlightenment in Anambra State, is the Okemmili Ihiala.
