Business profits versus societal good
“The concept of a B-corporation is the fundamental idea of redefining the way we do business,” says BCorp research leader Martina Pasquini. “They compete, not to be the best in the world, but for the best of the world.” The BCorp project set out to learn how these B-corporations, which currently number around 2 300 worldwide, are able to profit from socially responsible activities, and how they construct their values and their identity. “On the one hand, entrepreneurs invest in classical profitable business-oriented actions, while, on the other hand, they also might engage in non-profit social values,” explains Pasquini. Known as hybrid companies, these organisations are a new phenomenon in that they compete for profits while also realising non-profit social issues beyond typical corporate social responsibility initiatives. This research project studied the global B-corporation community to understand how they balance the dual objectives of profiting from value and pursuing identity-based business strategies. BCorp conducted a survey of B-corporations to understand their values and what effect community-based strategies have on their profits. The researcher interviewed founders of companies from Europe, South America, Canada, the United Kingdom and the United States. Most of the B-corporations surveyed were founded in the year 2003, and they had an average of two founders. The companies were relatively small, on average, boasting between one and five employees in their founding stage. Of the companies surveyed, 72 % were born as B-corporations, with initial motivations to address societal needs over market needs. The researcher found that these companies typically choose to differentiate themselves within the market using a community-focused strategy instead of a cost advantage. Survey results also showed that the companies relied on an average of three values each to set themselves apart. BCorp then conducted experiments to understand the impact of different values-based strategies and the power that a company might have over consumers. The researcher wanted to see the effects of community engagement on how consumers saw a product. Evidence from an experiment with 230 ‘hybrid consumers’ showed that the power a company has in the market predicts the value that consumers place in the company. The greater the power, “the more likely that a consumer will buy a certain product from a company,” notes Pasquini. The researcher found that a company’s power can influence consumers to accept a higher reservation price when they see the product as a symbol of good values. The results also show that if a company diversifies its portfolio, a consumer will continue to purchase these different products if the company stays true to its values. BCorp also completed a multimedia case study in which the researcher identified how these companies differentiate themselves using community-based strategies. The researcher studied a craft beer producer that was able to compete with established players using a values-based strategy to appeal to consumers. Moving forward, the researcher hopes to continue making these results public knowledge, using different dissemination methods. “I do not consider my project finished. This is not over. The grant gave me the opportunity to start a piece of work that has really fascinated me,” concludes Pasquini.
Keywords
BCorp, consumers, B-corporation, business, social values, community-based strategies, social responsibility, values-based strategy
