The Promise and Perils of Caring Capitalism
Are social and economic objectives compatible in big business? Corporate leaders like Dan Schulman, the CEO of PayPal, would answer “Yes.” “I think that this idea that profit and purpose are at odds with each other, inside of business, is ridiculous,” Schulman remarked on a panel about stakeholder capitalism in 2021. “In fact, I would argue that the two go hand in hand,” he further explained. Like the broader ethos of corporate social responsibility (CSR), stakeholder capitalism rests on the assumption that businesses should not only maximize profit, but also create positive social and environmental change. This ethos is a sharp contrast from shareholder capitalism which holds that maximizing profits for shareholders is the sole purpose of corporations. Schulman is not alone in publicly affirming the virtues of a presumably more caring form of capitalism. The CSR principle has also been recently endorsed by other prominent business leaders and groups such as Klaus Schwab, founder and Executive Chairman of the World Economic Forum, Larry Fink, Chairman and CEO of the investment management firm Blackrock, and the Business Roundtable, an association of CEO’s who lead the largest companies in the United States. In this moment when corporate leaders are increasingly advocating for CSR it is important to take a close look at what happens when businesses pursue social purpose. My new book, Black Culture, Inc: How Ethnic Community Support Pays for Corporate America », sheds light on this issue.
Today, tobacco companies continue to use Black cultural patronage to project an image of themselves as valuing diversity and caring about Black people.
Black Culture, Inc. uses the case of Black cultural patronage to cast light on ethnic community support, or corporate philanthropy and sponsorships related to ethnoracial minorities. Drawing on a wide array of data such as public relations and advertising texts on corporate cultural patronage and participant observation at cultural events supported by firms, I show how companies use ethnic community support as a form of diversity capital to project an image that they not only value ethnoracial minorities, but also equity and inclusion. In some cases ethnic community support is a win-win—businesses get a boost in their racial image and non-profits and others receive needed financial resources. But in other instances, profit and purpose are not neatly aligned—businesses benefit while stakeholders suffer. There are various ways that this mix of costs and benefits unfolds when firms get involved in social initiatives. For example, in some instances companies profit while a group of stakeholders benefits in some ways, but suffers in other ways. In other instances companies profit and some types of stakeholders also do well, while other types of stakeholders are harmed. The promise and perils of ethnic community support are brought into relief by looking at black cultural patronage in the tobacco industry which is one of the topics that I explore in Black Culture, Inc.
Chapter 4, “Cultivating Consumers,” looks at the Kool Jazz Festival (KJF) which took place in the 1970s and 1980s. This music festival, sponsored by Brown and Williamson (B&W), then one of the largest tobacco companies in the United States, featured prominent Black jazz and R&B artists. The company used the festival as a vehicle to promote the company and the Kool brand of menthol cigarettes to Black smokers. Back then (and continuing today), Black smokers used menthol cigarettes at a much higher rate than White smokers. Using editorial stories and advertisements in Black newspapers about the Kool Jazz Festival as a vehicle to reach the Black community, B&W cultivated an image of itself as a virtuous firm that produced good products. Indeed, the company did deliver social benefits to the Black community. For example, KJF provided an income stream for Black artists and gave African American audiences access to live Black music. At the same time, the festival was also used to promote cigarettes, a product that required a health warning by the Surgeon General, to the Black community.
is a surprising and fascinating look at how Black culture has been leveraged by corporate America.
Today, tobacco companies continue to use Black cultural patronage to project an image of themselves as valuing diversity and caring about Black people. In Chapter 2 of Black Culture, Inc, which investigates corporate philanthropy at the Smithsonian, I discuss Altria’s support of the National Museum of African American History and Culture (NMAAHC). Altria is a Fortune 500 company that manufactures tobacco and cigarettes along with other products. Phillip Morris USA (PM USA), which is the top manufacturer of cigarettes in the United States, is in the suite of Altria companies. PR texts outlining Altria’s $1,000,000 gift to NMAAHC and other black community support, such as a $1,250,000 grant to the Alvin Ailey American Dance Theater and a $500,000 gift to the Black History Museum & Cultural Center of Virginia, use diversity framing to highlight how these gifts are a reflection of the company’s long commitment to racial equity and the Black community. In some ways, these gifts accomplish these ends. The gifts help these cultural institutions to continue cultivating Black art and culture and serving racially and ethnically diverse audiences. But, they also have a less rosy side. When the PM USA logo is used in PR texts about giving to Black organizations, the PM USA brand may be indirectly promoted to the public by increasing brand awareness. Further, since PR texts about gifts highlight positive aspects of race at firms while downplaying or ignoring negative aspects, the public is left with an incomplete portrait of racial dynamics at companies.
In the case of Altria, PM USA manufactures menthol cigarettes under several of its product lines such as Marlboro, Virginia Slims, and Benson & Hedges. In 2021 the Food and Drug Administration (FDA) released a statement outlining its intention to ban menthol in cigarettes. Today, around 85% of Black smokers use menthol cigarettes, as opposed to about 30% of White smokers. Given this racial difference in use, legal bans on menthol cigarettes have been heralded by civil rights groups such as the NAACP and the National Urban League along with medical organizations like the National Medical Association, as a measure that will help to improve the health of African Americans. Altria opposes an FDA menthol ban and acknowledges that such a law could have an “adverse impact” on the firm’s tobacco companies.
Black cultural patronage by tobacco firms offers an important lesson about business participation in social causes. Involvement in social initiatives allows companies to project an image of being good corporate citizens even when their actions have negative social consequences. So, to answer the question posed at the beginning of this post, no, profit and purpose don’t always go hand in hand.
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