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Chapter from: "Capitalism at Risk: Rethinking the Role of Business"
Published by: Harvard Business Publishing
Originally published in: 2011
Revision date: 21-Jul-2020

Abstract

Two sets of forces - one from outside the economic system and one arising naturally from within it - have created a series of large-scale challenges that threaten the foundations and future of market capitalism. The threats come from many sources: lack of education and opportunity in some parts of the world, the rise of radical political movements in others, global climate change, and the growing disparity in the distribution of income in many countries, among others. The challenges are large and growing, and effective countervailing forces - and the institutions that support them - have yet to arise or to become effective. In this chapter, Harvard Business School professors Joseph Bower, Herman Leonard, and Lynn Paine suggest that, despite the prevailing opinion that governments and multilateral institutions are the only entities capable of managing risks of this magnitude, individual companies and entrepreneurs can make a significant difference. The chapter explains how businesses, by aligning their activities with the needs of a sustainable economy and bringing their distinctive skills and capabilities to bear on disruptive forces, can put market capitalism on a more secure footing. Using examples of companies - General Electric, China Mobile, India's Cipla Limited, and London-based Generation Investment Management - that have pursued innovation to achieve profitable results while improving the lives of the greater community, this chapter lends credence to the idea that business has a crucial role to play in strengthening the system of market capitalism and securing its future in the decades to come. This chapter was originally published as Chapter 6 of ‘Capitalism at Risk: Rethinking the Role of Business.’ This chapter is excerpted from ‘Capitalism at Risk: Rethinking the Role of Business'.

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Abstract

Two sets of forces - one from outside the economic system and one arising naturally from within it - have created a series of large-scale challenges that threaten the foundations and future of market capitalism. The threats come from many sources: lack of education and opportunity in some parts of the world, the rise of radical political movements in others, global climate change, and the growing disparity in the distribution of income in many countries, among others. The challenges are large and growing, and effective countervailing forces - and the institutions that support them - have yet to arise or to become effective. In this chapter, Harvard Business School professors Joseph Bower, Herman Leonard, and Lynn Paine suggest that, despite the prevailing opinion that governments and multilateral institutions are the only entities capable of managing risks of this magnitude, individual companies and entrepreneurs can make a significant difference. The chapter explains how businesses, by aligning their activities with the needs of a sustainable economy and bringing their distinctive skills and capabilities to bear on disruptive forces, can put market capitalism on a more secure footing. Using examples of companies - General Electric, China Mobile, India's Cipla Limited, and London-based Generation Investment Management - that have pursued innovation to achieve profitable results while improving the lives of the greater community, this chapter lends credence to the idea that business has a crucial role to play in strengthening the system of market capitalism and securing its future in the decades to come. This chapter was originally published as Chapter 6 of ‘Capitalism at Risk: Rethinking the Role of Business.’ This chapter is excerpted from ‘Capitalism at Risk: Rethinking the Role of Business'.

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