Author: Gentile, Mary C.
Source: The Aspen Institute Business and Society Program
Number of pages: 14
Social Impact Management is the field of inquiry at the intersection of business needs and wider societal concerns that reflects the complex interdependency between these two realities. It is a critical part of contemporary business because without an understanding of this interdependency, neither business nor the society in which it operates can thrive. In fact, this understanding is becoming increasingly more essential as private corporations grow in size and influence, and public pressure intensifies for corporations to address pressing social and environmental concerns.
Research, teaching and practice of social impact management consider the social context within which a business operates. The intersection between traditional business concerns and the social context has important consequences for both the present and future viability of a business's activity, and also for the society within which that business has, by necessity, to operate. And both sets of consequences matter to business. In other words, there are social impacts of a business, as well as on a business.
Social impact management is about asking a new and broader set of questions regarding the traditional terrain of business. For example, it is common for a business strategy discussion to explore a firm's purpose in terms of its vision for competitive positioning. What is less common is for that discussion to consider the firm's intentions and the implications for consumers, employees, and community members, given the different choices around growth objectives and product development. These broader questions consider both short and long term views, a wider set of actors and stakeholders, and a more complex set of metrics.
Indeed, social impact management, as way of thinking about business activities, explicitly considers and evaluates three aspects of a business:
1. Purpose: What is the purpose – in both societal and business terms – of a business or business activity?
2. Social Context: Are the legitimate rights and responsibilities of multiple stakeholders considered? Is a proposed strategy evaluated not only in terms of predicted business outcomes, but also in terms of its broader impacts – for example, on quality of life, the wider economy of a region, and security and safety?
3. Metrics: How is performance and profitability measured? What is being counted and what is not being counted? Are impacts and results measured across both short and long term time frames?
On the reverse, we list examples of social impact management topics by discipline. This list, while not exhaustive, provides an illustration of the kinds of issues that surface when we apply the lens of social impact management to traditional business topics. While many questions raised in social impact management are difficult to answer, they are not significantly different by nature from the kinds of judgments and choices business managers make all the time. Business practitioners are familiar, if not comfortable, with decision-making under conditions of incomplete information, asymmetrical information, time pressures, multiple party negotiations, and so on.
The reality is that wider society has impacts on business functioning and business has impacts on wider society – whether or not those impacts are actually identified, quantified and incorporated into an organization's decision-making processes. Aspen BSP is simply encouraging conscious choice. We believe business and society are both better for asking these questions in business research, business education, and ultimately business practice.
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