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.
