Different studies have highlighted the advantages bring to society by purpose-driven companies not only on their direct positive impact to society, but on internal performance measures such as employee satisfaction, profit, and consumer loyalty to the brand. Purpose-driven companies seek actions that have a positive impact on society, and though their objectives go beyond maximizing profits for shareholders, the objective of this chapter is to undertake an empirical study focus on identifying the dimensions of competitiveness in which is more urgent that Colombia improves. The results obtained will provide Colombian SMEs a clear picture of goals to go after, in addition to that of maximizing profits for shareholders, and therefore facilitating their transition into purpose-driven companies.
TopIntroduction
Change is inherent to humankind and the world we live in. In the last 100 years, our civilization has experienced changes at a faster speed than any other time in human history. We have passed from the time of industrial revolution to an era in which automation and artificial intelligence are called to bring faster changes cannot yet be foreseen. Societies have also changed and people now adopt new trends and are worried about problems and issues not considered in the past. In this era, addressing issues not considered important before such as inequality, empowerment, poverty, climate change, and sustainability, among others is critical for the survival of the human race and the preservation of the planet. In the same way that technologies, societies, individuals, generations and governments change, so do enterprises. Enterprises are evolving to adapt to new realities.
Many have argued that the business world of the twenty-first century has undergone dramatic change. The rise of globalization, the dominance of information technology, the liberation of states, especially the demise of centralized state planning and ownership of industry, and increased societal awareness of the impact of business on communities and nations have all been suggested as reasons to revise our understanding of business (Freeman, Harrison, Wicks, Parman and De Colle, 2010, p. 3).
It is clear that conditions have changed. As Sabeti, (2017, p.1) states:
Today’s dominant economic systems and organizational models around the world have become outdated. They were born in the industrial age, at a time when natural resources were relatively abundant, human rights were narrowly conceived and globalization was in its infancy. These realities have shifted dramatically in the past few centuries and especially in the past few decades, creating immense pressure to adapt.
As the previous quotes indicate, it is necessary to reconsider the way enterprises operate as well as their priorities. Business owners and managers must understand that they have a responsibility with the societies in which they have been able to be successful. The idea that the only goal of companies is to maximize profits regardless the way and the consequence of their acts has become obsolete. Sustainability and Corporate Social Responsibility have gained importance and customers may base their loyalties based on how enterprises apply these principles. Also, social media network services play an important role in the world of business today; information is widely spread through these services and customers get informed not only about products but also about practices used by enterprises, sympathizing with those that share their values and that behave respecting workers’ rights, practicing sustainability and being friendly with the environment and the planet. Overall, enterprises must be aware of the growing importance of these topics and adopt new ways of doing things in order to show their concern and responsibility for the environment, the future of next generations and their stakeholders.
This by no means implies that enterprises must sacrifice or renounce to financial profits. As Levillain and Segrestin (2019, p 87) state, “Today, it is mostly acknowledged that financial value doesn’t contradict the aim of creating other types of social, cultural, scientific or environmental values”. An example of it is the Fair Trade Certification, which looks for better conditions for farmers and workers in developing countries. According to Fair Trade International (2018), in 2016, 82% of the organizations that have implemented their certification feel that the benefits of the implementation outweigh the costs of it; this is just one example of how implementing fair practices and being more socially responsible is not only good for society but that there is no reason to believe this may take a company out of business. It also shows that enterprises are understanding that there are economic and social benefits when behaving responsibly.
In this changing context, in which being responsible with the environment and the society is gaining relevance, purpose-driven enterprises are born. A purpose-driven organization goes beyond just having profits. “A higher purpose is not about economic exchanges. It reflects something more aspirational. It explains how the people involved with an organization are making a difference, gives them a sense of meaning, and draws their support” (Quinn and Thakor, 2018, p 1).