Why Should Business Leaders Invest in their Communities?

Building a Culture of Civic Entrepreneurship

Spiegelman on the streetMany leaders think in terms of products and profits. Fewer focus on their employees. And even fewer may think about the communities in which they operate and their impact on these communities. Lacking a focus on local communities can actually impair business success.   However, practicing good corporate citizenship can add to the bottom line.

Good business social responsibility or citizenship involves businesses making contributions to the public good that go beyond providing goods and services to the marketplace. Contributions to the public good are available to all and are not diminished by others’ enjoyment of them.  Clean air can be a public good.

Research by Gerald Keim and others has shown that good business social responsibility can lead to well-educated, stable, satisfied work force, a healthy environment, and a thriving community in which to live and do business. There is also the possibility that socially responsible behavior can enhance a firm’s public image. This can increase the probability of customers buying its products, of bank officers giving it attractive rates on loans, of suppliers treating it fairly, and of collaborators seeking it out as partners on lucrative ventures. In essence, entrepreneurs who make non-market contributions to their community and whose community supports them are more likely to consider their businesses to be successful.

Leaders and employees alike should consider becoming involved in local communities in which they operate. Researcher Douglas Henton and others are calling this involvement civic entrepreneurship. According to Henton, civic entrepreneurs have five common traits. They (1) see opportunity in the new economy, (2) possess an entrepreneurial personality, (3) provide collaborative leadership to connect the economy and the community, (4) are motivated by broad, enlightened, long-term interests, and (5) work in teams, playing complementary roles.

Driving Powerful Change

These civic entrepreneurs are forming new and powerful linkages at the intersection of business, government, education and community. These linkages can inspire people to solve complex issues facing both businesses and communities today. As a result, economy and community are tied together for mutual benefit. Civic entrepreneurs usually take the following approach to drive positive change in the communities in which their businesses operate

  1. Initiation – Civic entrepreneurs are motivators and networkers. They take on responsibility for the future responsibility of their communities. They also bring together other leaders of the community to act as sponsors of positive change.
  2. Incubation – Civic entrepreneurs are teachers and conveners. By helping to educate the community to make sure that the facts are on the table in ways that are meaningful to participants and that people are aware of the local implications of global forces. Once this is done, stakeholders can be convened to begin an informed decision-making process.
  3. Implementation – Civic entrepreneurs are integrators and drivers. By facilitating the move from the decision-making process to collaborative action, change starts to become reality. They assemble the necessary ingredients for successful implementation of tangible initiatives.
  4. Improvement and Renewal – Civic entrepreneurs are mentors and agitators. As mentors, some help establish organizational platforms for the community to continue working together on important issues. As agitators, some fight complacency, reminding people that change is a continuous process, that it is important to keep scanning the community for new issues and trends, and that an even better future is possible for the community.

Leaders and employees alike can participate in community renewal, paving the way for better business and better lives.

Dr. Kevin Lynch is Leadership Executive-in-Residence at the Center for Values-Driven Leadership. As a practitioner, academic and consultant, Kevin specializes in assisting organizations that are experiencing rapid change, particularly with regard to strategic growth decisions, and the implementation of appropriate organizational infrastructure. Before joining the Center, Kevin was a senior executive in the real estate industry. He also is co-owner of Williams and Hall, a wilderness canoe outfitting business in Ely, Minnesota.

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