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Tuesday, December 12, 2017

Can a Government run like a Corporation?

Perhaps these two entities should stick to their core competencies and not imitate each other

The global shift to the right has resulted in governments of countries trying to run themselves like corporations; Dubai and Singapore are examples that come to mind. Privatization, less government, less taxes, and less social benefits are in fashion. And yet some governments are on the verge of bankruptcy, if not broke already. Is this due to the cause of “more government” or the effect of “less government”? Let’s look at these two entities a bit closer…

A corporation is organized to run an economic activity that provides a return to its shareholders. Beyond this important but narrow focus, a corporation need not exist. And in the process of increasing shareholder value, the corporation provides a product or service to its customer base and pays wages to its employees. In today’s globalized environment, a corporation does not have to respect national borders and could source its capital, labour and supplies from almost anywhere. Corporations are also ruled by fear and could shut down operations or move them across borders at the first sign of national instability. Oh yes, there are new roles within its community being ascribed to the corporation today such as Corporate Social Responsibility and Shared Value, but these appear to be more like checkmarks on a corporate scorecard, or the latest hook in a lecture that a professor at B-school has come up with to bolster his flagging class attendance; they are not yet intrinsic components of corporate culture that flow into society at large to enrich the whole rather than just some of the privileged parts.

A country’s government, on the other hand, has a larger role: it is circumscribed by national borders and lays down the rules by which corporations operate within; it collects and deploys taxes towards important activities that do not always provide an economic return on investment (how can everything in life be valued in $$$?), it ensures the re-distribution of wealth that leads to social stability and fairness within its borders, and it upholds the national brand that embodies the collective aspirations and behaviours of the nation, some not always rational or pleasant.

In terms of perception, corporations are able to manipulate public opinion by resorting to spin and positioning (“smoke more cigarettes!”), something come to be expected of them by an advertizing-addicted society. Can governments resort to this strategy without coming across as insincere, and thus undeserving of the next vote? They have tried rather ineptly with the dreaded “attack ads” in recent times, but these have now paled, trailing the mid-day soaps. Hopefully, in time, voters will forgive their governments this transgression into an area “they know not of.”

Despite their differing missions however, governments need corporations, and vice versa, but at arm’s length. Corporations drive the economic engine of society while governments lay down track for that engine to run along. Governments also make sure that the tracks are clear, that the engine does not jump tracks and barrel over people and their rights. Therefore, when governments start to act like corporations they blur the lines and abdicate their larger role. Yes, they may end up balancing their budgets and streamlining their service offering by playing Big C (a.k.a. reduce their offering) but they will fall short of their extended purpose.

Perhaps, corporations and governments should respect their differences and not try to imitate each other. Perhaps a huge sign on Parliament Hill should read, “Dear Corporations, please keep out of the hallways of Government. We will try our best to keep out of yours.”



About the Writer

Shane Joseph is a writer for BrooWaha. For more information, visit the writer's website.
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3 comments on Can a Government run like a Corporation?

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By Angie Alaniz on October 29, 2011 at 05:40 pm

Great insightful views on both sides.

I think thats a great last line though I doubt each side will respect it.

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By Uttam Gill on November 06, 2011 at 06:35 am

Shane as regard CSR I beg to differ with your views that “they are not yet intrinsic components of corporate culture that flow into society at large to enrich the whole rather than just some of the privileged parts”…It is changing and many big corporate houses are making CSR as an integral part of their strategy…They are making inroads in small villages…One example is that of Wipro…there is great churning which is taking place…I know these business houses mean business and that’s how they are now in big way involved as far as allocating the funds under CSR.

Yes government has got the role to play but if it does not have the critical ability then surely one need to see the alternatives that how well the country can be administered, governed or managed…As long as it fetches desired results even rudimentary techniques are welcome

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By Shane Joseph on November 07, 2011 at 02:42 pm

Uttam - I take your point. The test for me of a corporation's committment to social responsibilitiy is not when there are growth opportunities but when there are disasters (ecological, civil or economical). As we saw in the downturn of 2008, when governments rushed in to prop up ailing economies, corporations asked for bailouts for irresponsible behaviour. The corporation is very effective at exploiting growth opportunities, I don't think it is very effective at providing disater relief if there is no WIFM - that's better left to governments and NGOs. And that is why Governments and Corporations should stick to their core competencies, which are different.

Thanks for your feedback.

Shane

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