Corporate Governance: The international journal of business in society

Business and development: making sense of business as a development agent

Michael Blowfield

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To cite this document:
Michael Blowfield, (2012),"Business and development: making sense of business as a development agent", Corporate Governance: The
international journal of business in society, Vol. 12 Iss 4 pp. 414 - 426
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Academic paper
Business and development: making sense
of business as a development agent

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Michael Blowfield

Abstract

Michael Blowfield is a
Senior Research Fellow at
the Smith School of
Enterprise and
Development, University of
Oxford, Oxford, UK.

Purpose The purpose of this paper is to provide a framework for understanding and analysing
businesss role as a development actor, and the distinction between development tool and development
agent.
Design/methodology/approach The paper presents a theoretical analysis based on secondary data
and empirical research.
Findings Business has various roles to play in the social and economic development of poorer
countries, but are all of them equally important and laudable? Mainstream economics has long held that
the private sector is essential to economic prosperity, and this has led policy-makers and neoliberal
thinkers to treat it as a tool for development. But under what circumstances does business go beyond
acting out its assigned role as a tool of development to become what this article calls a development
agent something that consciously strives to deliver, and moreover be held to account for,
developmental outcomes?
Research limitations/implications The article presents a framework for a more structured approach
to further empirical research, but does not claim to apply that framework in empirical situations.
Social implications Despite the considerable literature advocating why business should be a
development agent, much less attention has been paid to two more fundamental questions: whether and
under what circumstances business will take on such a role; and what being a development agent
means. These are the central questions of this article. Answering them enables business practitioners,
policy-makers and academics to predict more accurately when business engagement is likely to deliver
genuine development value and be sustainable, and hence when it is a worthwhile business, advocacy
or policy objective. It also enables improved decision-making by non-private sector partners such as
development agencies and NGOs.
Originality/value The article addresses the above questions in turn with reference to empirical
research by the author over nearly two decades, and both the corporate responsibility and the
international development literature. It discusses what being a genuine development agent means, and
provides a framework for understanding the business-poverty relationship based on business as a
cause, a victim, and a solution in international development terms. It concludes with a discussion of how
well business is performing as a development agent, and the future potential and limitations of this role.
Keywords Corporate responsibility, International development, Bottom of the pyramid,
Social enterprise, Social responsibility, Economic development, Poverty
Paper type Research paper

Introduction
Since the early-2000s, there has been a flurry of research activity around the role of business
in advancing social and economic development in what are variously called emerging or
developing economies (e.g. Raynolds, 2000; Barrientos et al., 2003; van Tulder, 2006; Kolk
and van Tulder, 2006; Koppell, 2010)). This mirrors growing interest from the private sector

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VOL. 12 NO. 4 2012, pp. 414-426, Q Emerald Group Publishing Limited, ISSN 1472-0701

DOI 10.1108/14720701211267775

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itself in the relationship between business and societal concerns such as poverty alleviation,
human rights, democracy, and human development, evident, for example, in initiatives such
as Creating Shared Value (Nestle), the Cocoa Partnership (Cadbury), the Ethical Trading
Initiative, and the Extractive Industry Transparency Initiative.
There has been strong advocacy for business to take a proactive role in what is loosely
termed international development (i.e. improving the quality of life of all people, particularly
the poor and marginalised in developing economies) (e.g. Prahalad and Hart, 2002; Patricof
and Sunderland, 2006; Nelson, 2007; Brainard, 2006; Jackson and Nelson, 2004), as well as
caution about the consequences of business taking on such a role (e.g. Newell and Frynas,
2007; Rajak, 2009; Jeppesen and Lund-Thomsen, 2010; Blowfield and Dolan, 2010a). No
longer is it the case that business and international development is focused on a narrow
range of issues such as worker rights in supply chains: nowadays, the issues are as likely to
include girls education and financing enterprise as they are overtime and child labour.
Similarly, business interest in international development has expanded from a relatively
narrow group of industries (e.g. apparel, food, mining) to include sectors from tourism to
electrical goods, and from forestry to pharmaceuticals. Although the most famous initiatives
involve multinational corporations (and they are the focus of this article), small and medium
sized companies are also involved, either through their own initiative (e.g. Lyon and Vickers,
2009; Lyon and Moberg, 2010) or because of their position in development-conscious
supply chains (e.g. Nadvi, 2008).
In short, business is being depicted as a consciously engaged agent of development, and
has become a preferred actor when it comes to lifting people from poverty has entered the
political economic mainstream (e.g. Easterly, 2006; Moyo, 2009). The actual impact of
business interventions has not been measured systematically (Khan and Lund-Thomsen,
2011; Blowfield, 2007), and empirical case studies have revealed a complex and by no
means clear picture of the benefits (e.g. Idemudia, 2009; Barrientos, 2007). However,
despite the considerable literature advocating why business should be a development
agent, much less attention has been paid to two more fundamental questions:
1. whether and under what circumstances business will take on such a role; and
2. what business being a development agent means.
These are the central questions of this article. Answering them enables business
practitioners, policy-makers and academics to predict more accurately when business
engagement is likely to deliver genuine development value and be sustainable, and hence
when it is a worthwhile business, advocacy or policy objective. It also enables potential
non-private sector partners such as development agencies and NGOs to recognise when
their investment of funds, human resources, social capital is justified in terms of
development value-added, and when business is likely to make that investment regardless.
The article addresses each question in turn with reference to empirical research by the
author over nearly two decades, and both corporate responsibility and international
development literature. It begins by exploring the nature of the development agent.

Business as a development tool

International development emerged as a distinct area of study and policy after World War
Two when the European empires unravelled, former colonies gained their independence,
and the Bretton Woods institutions notably the IMF and World Bank paid particular
attention to what were considered underdeveloped countries. There has been a succession
of dominant development theories (e.g. basic needs, core-periphery, livelihoods), but these
have tended to concentrate on the role of government and more recently civil society, rather
than the private sector. Sometimes this resulted from a distrust of business, but it was also
due to a reluctance to make business accountable for development outcomes. Liberal
economic purists who advocated the Washington Consensus in the 1980s, for example,
considered the very idea that companies should be mindful of their responsibilities to society
as dangerous. In line with a Friedmanite notion of the company (Friedman, 1962), they
argued that by creating value for shareholders, companies contribute to the public good:

VOL. 12 NO. 4 2012 CORPORATE GOVERNANCE PAGE 415

creating jobs, supplying goods and services, and helping to fund necessary social
institutions. Value creation, it is argued, creates growth-driven development: it goes without
saying, therefore, that business as the primary creator of wealth has a central role to play in
development.
The Washington Consensus model, which led to a contraction of government and an
expansion of private sector activity, was controversial, not least because its benefits were
unevenly distributed (Rodrik, 2006; Collier, 2007). However, even if it had been an
unmitigated success, would that justify the private sector being heralded as a development
agent, consciously striving to deliver and moreover be held to account for developmental
outcomes? Or should it be considered a development tool, no more responsible for positive
or negative outcomes than a hammer is for a carpenters thumb?

Business as a development agent

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When business acts as a development tool, the outcomes can be positive as, for instance,
economic impact studies by Unilever and more recently Puma have shown (Clay, 2005;
Kapstein, 2008). However, the significant question is not simply whether business has an
impact on human development, but whether or not it can and should be accountable for
enabling or preventing development. For instance, as development tool, business might
create jobs, but business as development agent takes responsibility for the number of jobs it
creates, their location, and the quality. The development tool might make products available
in poor countries, but the development agent makes products suited to the needs of and
accessible to poor segments of the population. And whereas the business-as-usual
approach to development emerges from managerial calculations related to costs, returns
and competition, business as a development agent is also motivated by stakeholder
concerns, pressures and demands.
As we will see, the development agent can be a company, an industry, an inter-company
alliance, a multi-sector partnership, or any other entity where the actions of the private sector
are influenced by an awareness of development. It is not a new idea as studies of colonial
India and Zambia, (Robins, 2007; Noyoo, 2007) and early management theory (Khurana,
2007), for instance, demonstrate. However, any notion of business as a development agent
faded as companies overtly focused on managerial efficiency, narrow definitions of
instrumentality, and shareholder value. Even as companies later started to take a broader
view of corporate responsibility than the Friedmanite one, the emphasis remained on an
instrumental justification, adopting what van Tulder and Kramer and Kania have respectively
called reactive and defensive approaches (van Tulder, 2010; Kramer and Kania, 2006). More
recently, though, reactive/defensive approaches have been joined by active, proactive and
offensive ones whereby companies seek to burnish their reputations rather than just protect
them, and take on problems not necessarily of the companys own making (van Tulder, 2010;
Kramer and Kania, 2006).

Business objectives: development objectives

The distinction between reactive/defensive and proactive/offensive approaches helps
explain company decisions, but in isolation it does not allow us to distinguish between
companies acting as development tools and development agents. It explains the
instrumental value of actions, but says nothing about their developmental value or
companies willingness to be accountable for development outcomes. The potential trap
here is that the scope of companies responsibilities comes to be defined from within the
framework of management theory, rather than that of development; prioritising, for instance,
revenue generation, return on investment, and efficiency, over development objectives such
as social protection, human rights, empowerment, and redistribution (Utting, 2007). In
consequence, there is often a mismatch between the development priorities of business and
those of the wider international development community. The array of substantive issues
being addressed is incomplete, and process issues (e.g. capacity building, empowerment,
governance) are largely absent (Kolk and van Tulder, 2006). This was predicted in early

PAGE 416 CORPORATE GOVERNANCE VOL. 12 NO. 4 2012

discussions of business and development (Fox and Prescott, 2004; Blowfield, 2004a), but in
order to understand how this situation has arisen, we need a more nuanced understanding
of the circumstances under which business engages in development, and what this implies
for the possibilities and limitations of acting as a development agent. This using poverty as
an example is the focus of the next section.

The business-poverty framework

There are multiple facets to the business-poverty relationship. As noted, companies typically
pursue and instrumental rationale in considering poverty, but even from this perspective,
there are different types of relationship, and as we will explore these have important
implications for how business behaves. In particular, business approaches poverty
differently when it is alleged to be a cause of poverty, its victim, or its solution.

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Business as a cause of poverty

In the free market system, an inefficient company has the potential to cause poverty if it fails
to generate wealth, create jobs, and provide goods and services (i.e. when it fails as a
development tool). However, it is the way seemingly efficient companies can cause or
exacerbate poverty that is of interest here. Advocates of free markets having a singularly
important role (see the Washington Consensus), make the case that business cannot cause
poverty if it acts rationally because the market is the most effective way of determining price
and allocating resources. Even if one accepts this, power asymmetries that favour certain
business actors mean that there are wide disparities in how the proceeds of trade are
distributed, and that poor producers in particular (e.g. marginal smallholder farmers) can
find themselves selling their produce for even less than the cost of production (Raynolds
et al., 2004). Similarly, the power some brand-owners hold as gatekeepers to lucrative
consumer markets means that manufacturers can have limited bargaining power regarding
price or specification, making labour one of the few areas where management can influence
profitability. Hence, low wages, long hours, and other abusive labour practices are the norm
in places where low-skilled labour is plentiful, the opportunity cost of relocation is low, and
law enforcement is lenient (Graham and Woods, 2006)). As one buying agent in Hong Kong
said of Chinese manufacturers, Suppliers still have places where they can cut fat, but the
easiest fat to cut is workers wages (Chan and Siu, 2007, p. 8).
Sudden injections of wealth, and unequal distribution, can also have long-term
consequences. For example, the promotion of cocoa production in parts of Sulawesi,
Indonesia, in the 1990s together with weak enforcement of traditional land rights, allowed
certain migrant ethnic groups to prosper using land alienated from the indigenous
population ((Blowfield, 2004b). Other impacts of private sector activity are also experienced
differently by different sections of the population. For example, labour markets are gendered
institutions that impact differently on women than men, not least because of the formers
need to balance productive and reproductive responsibilities (Pearson, 2007).
Bad (i.e. corrupt) and weak (i.e. ineffective) government is one cause of poverty, and
business has variously supported, tolerated, and resisted such practices. Corporate
ambivalence in this regard can be seen from the positions taken by the private sector during
the apartheid era in South Africa where parts of the business community both supported and
undermined the government (Fig, 2007). While good public governance is generally
accepted as essential to successful development, it remains to be seen if that is true of the
alternative models of governance that business is increasingly part of. Companies have
played a part in the process of deregulation, and the subsequent emergence of an
international regulatory system that is highly skewed toward the protection of capital and
non-human corporate assets (Graham and Woods, 2006). For Ruggie, companies must play
a role in redressing the imbalances of the global governance system, and the key
governance question before us is how much burden companies, and in particular the kind
of voluntary efforts associated with corporate responsibility management, should bear
(Ruggie, 2003). Wrapped inside that question are issues of regulatory capture by the private
sector, and how well self-regulation and voluntary regulation protect the interests of the poor.

VOL. 12 NO. 4 2012 CORPORATE GOVERNANCE PAGE 417

Responding to accusations of being the cause

The specific relationships between business and poverty or any other major dimension to
development are important to understand because they affect how companies behave as
development agents. For example, the relocation of factories in contexts of deregulation can
have serious impacts in terms of lost employment and downward pressures on wages and
working conditions in former host countries. The lifting in 2005 of the Multi-fibre Agreement
(MFA), which had helped developing countries build up export-oriented garment industries,
threatened to have negative consequences for workers, communities and local and national
economies, as competition from China forced factories to close in several countries.
This in turn allows us to critically examine company responses, and evaluate their relevance
in development terms. The lifting of the MFA, for example, prompted the formation of the
MFA Forum, a multi-stakeholder initiative that ran a six-year programme of development
solutions for garment industries in countries such as Bangladesh, Morocco, and Lesotho.
Although its impact has never been independently assessed, the Forum was clearly
intended as a response to anticipated criticisms of company actions that would result from
the end of MFA.
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Another area of criticism that has engendered corporate responses has been the perceived
bias of markets against the poor, in terms of both the difficulties small producers have in
accessing international markets, and the unequal distribution of value along the trading
chain. This is addressed by Fairtrade, a development oriented model which involves the
payment of a premium price to small producers and the organization of producers into
associations. Elements of this are now finding their way into large companies trading
practices such as Starbucks Coffee and Farmer Equity (C.A.F.E) Practices (Macdonald,
2007; Nicholls, 2008).
To date, when business has been accused of causing poverty, if it has not denied the charge
(as has typically been the case with regard to disinvestment, relocation, and corporate tax
avoidance and evasion), it has for the most part sought to protect its reputation, notably by
adopting new regulatory systems such as company, industry or multi-stakeholder codes of
conduct that promise some form of social accountability. The most significant approach in
the development context is the use of multi-stakeholder or non-governmental systems of
regulation involving multiple actors in new roles and relationships, and new processes of
standard-setting, monitoring, benchmarking and enforcement. Examples include the
Extractive Industry Transparency Initiative, the Fair Wear Foundation (FWF), the Ethical
Trading Initiative (ETI), and the Fair Labor Association (FLA).
Business as povertys victim
One only needs to look at the facets of poverty set out in the Millennium Development Goals
(MDG) to see how business can be a victim of poverty. The goals are indicators of human
development, and failure to achieve them is indicative of the insufficiencies that can hamper
business in developing economies. For example, the fact that half the world lives on less
than two dollars a day, and 1.1 billion people live in extreme poverty less than a dollar a
day shows how much greater the market for goods and services could be if only people
had more income. The number of children who do not finish primary school is a warning of
how difficult it can be for companies to fill even relatively low-skilled positions. Women are
less likely to get education, more likely to work at home, and less likely to obtain full-time
salaried positions, and this gender inequality and disempowerment can harm companies
that need educated and independent workers and consumers.
Goals 4, 5, and 6 of the MDGs concern health (child mortality, maternal health, and major
diseases such as HIV/AIDS respectively), and high morbidity, failing health care systems,
malnutrition, and disabling or terminal diseases can all harm business. Companies such as
SABMiller in South Africa have invested in programmes to prevent AIDS and provide
anti-retroviral drugs because of the attrition the disease was causing amongst experienced
personnel. Wall (2007) shows how in Kazakhstan, oil companies are having to compensate
for the declining quality of state health care provision.

PAGE 418 CORPORATE GOVERNANCE VOL. 12 NO. 4 2012

Weak public governance and the failure of government as development agents are
underlying themes of the MDGs. They are equally factors in business being a victim of
poverty. Though not explicit in the goals themselves, the idea that the private sector can
compensate for weak government is evident in crucial agreements and policies surrounding
the MDGs. For example, the 2002 Monterrey Consensus, which announced US support for
the MDGs, bound the MDG implementation process to the mainstream neo-liberal strategic
and policy framework (Bond, 2006). To some degree, the distrust of government has been
beneficial for business because important elements of the MDGs such as the provision of
safe drinking water (Goal 7: Sustaining the environment), have in part become the
responsibility of the private sector. However, to the extent that weak governance is
associated with poor health and education, inadequate infrastructure, corrupt institutions,
poorly managed economies, and under-developed small and medium-sized enterprises, it
can be viewed as harmful to business (Nelson, 2007).

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Responding to being the victim

There are innumerable examples of companies addressing issues which could affect their
long-term prospects. Mining companies in Africa, such as Anglo American, have had to
engage seriously with the issue of HIV/AIDS (Connelly and Rosen, 2008; Karim and Karim,
2010). In addition to investing in human capital, companies respond to other weaknesses in
their value chain. The Forest Stewardship Council (FSC), for example, has enabled
companies to reduce reputational and supply risks arising from weak governance of forest
resources (Leigh-Taylor, 2005). Cadbury launched its Cocoa Partnership to address the risk
of long-term shortages of cocoa should a lack of investment continue, and there are similar
elements in Nestles Creating Shared Value initiative.
Such examples show that the response to being a victim is different to when it is a cause of
the development problem. A code of practice, for instance, no matter how well devised and
enforced, and irrespective of any associated enablement activities for workers, etc is
regarded as inappropriate in the context of being a victim. Rather than taking on a policing
role, victim companies are more likely to take on the role of enablers, and this requires a
different array of initiatives.
Business as povertys solution
Increasing attention is being paid to the idea of business as a solution to poverty beyond
simply being a generator of wealth in the conventional sense. Instead of incidental
developmental benefits, there is a belief that business can consciously invest in ways that
are simultaneously commercially viable and beneficial to the poor. This relates to and
overlaps with ideas of social entrepreneurship, a concept with many definitions, but where
typically business methods are employed for social development ends but profitability is not
a defining criteria (Dees, 1998; Bornstein, 2004).
In contrast, Hammond, Hart, and Prahalad in their influential work on the fortune at the
bottom of the pyramid (BOP) emphasise that there are genuine commercial, market-based
opportunities to be had by targeting the poor (Prahalad and Hart, 2002; Hammond et al.,
2007). The exact size of this market is not known for sure, but the insight that the poor control
considerable wealth is important because it suggests that what is considered the untapped
purchasing power at the BOP provides an opportunity for companies to profit by selling to
these underserved markets. However, if that was the extent of the BOP models proposition,
it would have little direct relevance to the idea that business can be a development agent
because all it would imply is that the poor represent a rational, if overlooked, business
opportunity. However, bottom of the pyramid advocates say that by meeting the needs of the
poor, business can increase their productivity and incomes, and be an engine of
empowerment, not least by allowing them to enter into the formal economy. In other words,
by selling to the poor, companies can help eradicate poverty. Prahalad in particular,
emphasises the role multinationals can play in this by allowing the poor to benefit from both
the quality of their products and the efficiencies of their systems (Brugmann and Prahalad,
2007).

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Responding to the chance of being a solution

A large number of companies invest in building the capacity of local entrepreneurs, for
example, in response to government policy such as the Black Economic Empowerment
(BEE) programme in South Africa or as a result of business initiatives such as Business
Action for Africa), and creating markets for their produce. Organisations such as Market for
Change, and the Shell Foundation are building on this by helping link small businesses with
buyers. In a different way, the consultancy Accenture is giving the private sector in
developing economies access to management and technological expertise through its
Accenture Development Partnerships programme.

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Microfinance is perhaps the most widespread example of business providing a solution to

the problems of the poor. Put simply, it is a system that enables poor people without
conventional collateral to access loans at affordable rates of interest, making them less
dependent on traditional moneylenders, and providing them with a form of savings,
insurance, and investment. In recent years, several commercial banks have offered
microfinance services including Citigroup, Deutsche Bank, and ABN Amro. There are a
number of examples such as ICICI Prudential, Hindustan Lever Limited (HLL), and Grameen
Phone where the infrastructure developed for microfinance has been used to develop other
services such as retail and distribution.
BOP has been criticised for envisaging the poor as consumers when in fact they might be
better served if they had better jobs or access to markets as producers (Karnani, 2007).
However, BOP does not entirely ignore the role of the poor as producers. Indeed,
organisations such as the Shell Foundation (e.g. through their collaboration with the retailer
Marks & Spencer to promote flower growing groups on the Agulhas Plain, South Africa), and
others involved in Business Action for Africa are focused on the production opportunities for
the poor, and especially the promotion of entrepreneurship.
However, within BOP theory and practice the role of the poor as consumers is very important.
Many companies that identify with the BOP approach emphasise precisely this aspect.
Companies such as Coca Cola and Procter & Gamble have invested in making their
products available to the poor, and organisations such as KickStart (capital equipment) and
Aravind (healthcare) specialise in serving poor communities. Vodafone is amongst the
telecommunication companies that has recognised the need of migrant workers to remit
money home, and has launched its mobile phone-based M-Pesa remittance system in
Kenya, and is exploring a system for international remittances with Citigroup. Companies as
diverse as Philips, Intel, Infosys, and Godrej have also developed new products tailored to
the needs of poor communities.
One of the issues with the BOP model as a conscious approach to tackling poverty is the
degree to which, having identified the opportunity, the market alone will deliver
developmental benefits. The difference between certain proponents and critics of BOP is
to a degree a moral one, with the former reluctant to make choices about what the poor
should have access to, and the latter arguing that high spending by some poor people on
tobacco, alcohol, and gambling suggest they do not always make wise purchasing
decisions. This tension is evident in case studies of the BOP (see for instance the
contributions to (Rangan, 2007), but if we are thinking of business as a development agent,
then it is important to distinguish between companies that serve the poor, and ones that
factor poverty alleviation outcomes into their decisions and strategies. This is not
straightforward. For example, at first glance it may seem that HLLs supply of shampoo to
rural women is less beneficial than Aravinds provision of low cost cataract surgery, yet this
conclusion ignores the increase to rural womens incomes arising from new opportunities to
sell shampoo and other household items. However, if business is to be taken seriously as a
development agent, the key point is that financial performance ultimately should be no more
important an indicator than social outcomes.
This is not to say that companies should approach poverty as a social enterprise where
profits are unimportant, although successful examples of targeting the poor such as Aravind
in India, HealthStore Foundation in Kenya, and the Grameen Bank in Bangladesh have been

PAGE 420 CORPORATE GOVERNANCE VOL. 12 NO. 4 2012

run on a not-for-profit basis, or involve some form of subsidy or alternative funding (Yunus
et al., 2010; Hall et al., 2010). However, to be profitable can require unconventional business
models, not only in terms of understanding the market, or designing products, but equally in
the collaborations that are required. There are various examples of companies collaborating
with non-government organizations (NGOs) to identify needs, and deliver products: these
include Telenor and Grameens collaboration to create Grameen Phone, ICICI Prudentials
with womens groups in India on insurance products, and Accion Internationals
collaboration with ABN Amro on microfinance. Brugmann & Prahalad ((Brugmann and
Prahalad, 2007)) view these collaborations as part of a trend towards co-creation where
business and NGOs or grassroots organizations create hybrid business models suited to the
very different conditions for commercial and social success when dealing with poverty.

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Assessing business response

The above discussion shows that business from an international perspective is a complex
and often problematic institution. This article shows that there are many examples of
business aspiring to be than an indifferent development tool; but to what extent do the
current responses support the claim that business is a development agent? In other words,
although companies actions are not devoid of instrumental motives, do they provide
evidence of consciously striving to deliver and be held accountable for developmental
outcomes?
We have seen that company engagement in the development agenda varies depending on
whether a firm or industry is seen as the cause, victim or solution to an international
development issue. Irrespective of context, however, there are identifiable circumstances
that determine whether or not business will take an a development agent role. First, business
is more likely to act when poverty is associated with an identifiable risk to a company or
industry, including risks to reputation, the availability of commodities, and production. This
accounts for genuine innovations with respect to supply chain governance, and
responsibility towards producing communities. It also accounts for some of the links
created between companies and development organisations.
Second, business is more likely to act when poverty offers a favourable financial return on
investment. This accounts for services to underserved markets, new market opportunities for
the poor, and in some cases a reengineering of the benefits of trade in favour of the poor.
Initiatives that seek to deliver social return on investment (SROI) in addition to ROI can
position the poor as producer or consumer.
Third, business is more likely to act when poverty is associated with inefficiency. This
accounts for initiatives to combat corruption, enhance the poors productive capacity,
increase health and safety standards, invest in education, and improve living environments.
The business initiatives discussed in this article can all be explained by appeal to one or
other of the above three conditions. Likewise, dimensions to development that do not meet
these conditions are unlikely to be addressed overtly (e.g. redistribution through corporate
taxation). Other issues important to the development agenda and which also relate to
business, are similarly absent in current initiatives. For instance, the consideration of power
and conflict, even though some of the areas where business affects development are
historically the sites of dispute and tension (e.g. relations between buyers and small contract
farmers or outgrowers). Likewise, the gender dimensions of poverty are frequently ignored
reflecting broader patterns of preferencing where the individual good is preferred to the
communal good, financial wealth is favoured over non-financial, and issues such as class,
ethnicity, sexuality, and other determinants of privilege are discounted or isolated from their
wider context.
These observations deserve a fuller examination than there is space for here, but they are
raised because ultimately assessing business as a development agent requires a more
comprehensive understanding of business influence on the development discourse than we
have at present. Similarly, a full assessment would require a comprehensive analysis of what
development issues are included and excluded when business acts as an agent. What is

VOL. 12 NO. 4 2012 CORPORATE GOVERNANCE PAGE 421

more pertinent for this article, however, is whether this situation undermines claims that
business can be a development agent. The evidence presented demonstrates that business
is willing to factor development outcomes into its decisions within the limits imposed by
certain instrumental factors (risk, return, efficiency). This has led to genuine innovations that
go beyond what could be achieved if business considered itself to be a passive
development tool. However, it opens business to accusations that it is co-opting the
development discourse, and ignoring aspects that were central to previous iterations of that
discourse. The fairness of this depends to a degree on whether one sees business primarily
as a driver of or a beneficiary from a wider neoliberal globalisation programme: something
that is beyond the scope of this article (see Harcourt et al., 1997; Scholte, 2000.) What is
apparent, however, is that business engagement as a development agent is predicated by
an instrumental rationale, and this rationale itself is not synonymous with international
development as a whole with the result that key elements of what might be called
mainstream international development are not (and are unlikely to be) included in business
actions as a development agent.

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Moreover, insofar as our definition of business agent included accountability for outcomes as
well as performing actions, the evidence shows there is a marked instrumental bias to
responsibility for outcomes. Initiatives are lauded if they find a sweet spot that conjoins
instrumental benefit and clear developmental benefit, but there is little sign that the latter is
preferenced if it puts the former at risk. Thus, any developmental benefit is ultimately only as
valuable as the risk, return, or efficiency benefits it delivers. Furthermore, there is little energy
invested in assessing developmental benefits so that even in a longstanding development
agent initiative like fairtrade, impact for the poor and marginalised is only crudely assessed
(e.g. Blowfield and Dolan, 2010b).

Conclusion
Companies are not under any compulsion to be agents in international development.
Nonetheless, many of them are taking on this role to a degree; and have done so despite
recent economic downturns and financial instability. Some might consider this role to be
subversive, but the main focus of this article has been on the possibilities and limitations of
business current and likely contribution. While many of the arguments for business to
become engaged stress the generic strengths of private enterprise, the role any single
company or industry will play is greatly affected by the type of relationship it has with
development issues (e.g. povertys cause, victim or solution). These each have their own
implications for how business should respond in order to be considered a credible
development agent. However, the fact that business has a relationship with development
issues, does not mean that it will respond. This is rather dependent on three determining
conditions: the association of development issues with risk, opportunity, and inefficiency.
The examples of business responses in this article demonstrate that at least one of these
instrumental conditions needs to be met for companies to act as development agents.
Furthermore, they indicate that if the conditions are met, company commitment and
engagement will prove quite resilient, even during times of general economic adversity.
Equally, when business acts as a development agent, genuine innovations can result (e.g. in
supply chain governance; responsibility towards producing communities; new products and
services; linkages between business and development organisations). Therefore, any call
for more information to understand the potential of business as development agent should
not be treated as criticism or with suspicion: rather, it expresses a genuine need to know
about the possibilities, limitations, and conditions of business role, so that in turn
opportunities can be exploited, hazards contained, and the complementary contributions of
different types of agent optimised.
To date, there is evidence that some companies are mindful of development issues, and
showing a degree of innovation in how they respond. What is still lacking, however, is any
meaningful accountability for development outcomes, especially in the context of business
as victim or solution. The codes of conduct used in the context of business as cause of
development problems have proved more robust than some suspected, but overall there is

PAGE 422 CORPORATE GOVERNANCE VOL. 12 NO. 4 2012

little drive to encourage accountability. At present, the conditions under which business
engages in poverty alleviation are ones rooted in self-interest. By clarifying how business
relates to poverty, and under what conditions it chooses to act as a development agent, we
may establish a more solid base for holding companies to account, and making it in their
interests to be more accountable. Without this accountability there will always be a
randomness and unpredictability to business interpretation of its responsibilities, leaving
open the possibility that for all of the justification for business to be a development agent, it
will remain a development maverick.

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About the author

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Mick Blowfield is a Fellow at London Business School, and Senior Research Fellow at the
University of Oxfords Smith School of Enterprise and the Environment, where he researches
business transformation in an era of climate change and resource constrained economies.
He has worked as an academic and consultant in the field of corporate social and
environmental responsibility with a particular focus on the socio-political context of
corporate responsibility, and the role of business in society. Building on extensive
experience in international development, including living and working in 20 different
countries, he began a critical examination of corporate responsibility in global supply chains
in the late 1990s. He was principal investigator and programme manager for a portfolio of
government and corporate-funded projects that analyzed the field of corporate
responsibility in the context of developing countries. More recently he has worked with
CEOs and other senior executives on the role of business as change agent in twenty-first
century society. As well as a number of policy papers for the British government, the
European Commission, the United Nations and the World Bank, he has published
extensively in peer-reviewed journals for business and development audiences. He is
currently working on a new book on Transformation for Oxford University Press, and one on
business and sustainability will be published in 2012. The second edition of his Corporate
Responsibility was published by Oxford University Press in 2011 and won the CMI/British
Library management book of the year award for textbooks. Michael Blowfield can be
contacted at: mick.blowfield@ smithschool.oxac.uk

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