Insights from “Function of Business in Modern Society”
Dr. Niceto Poblador said that business today needs to go beyond self-interest, which he explained further in his online lecture “Function of Business in Modern Society” held on 07 June 2021 which was co-organized by the UP Mindanao School of Management and the UP Diliman Cesar E.A. Virata School of Business.
Firms traditionally had only one goal, he said, which has been shareholder wealth maximization. "To survive today the firm must create economic value for all stakeholders, " he said. He enumerated these as creating value for customers, investing in employees, fair and ethical relationships with suppliers, support to communities, and value for shareholders.
“By implementing the allocation of value to its other stakeholders—its workers, customers, suppliers, other entities it does business with, and the community—we contend that the residual value accrued to shareholders (owners) will be consequently maximized,” he said.
Department of Trade and Industry-11 Regional Director Ma. Belenda Q. Ambi, in her reaction, said the talk affirmed some of the strategies presently being undertaken by the government for businesses to adopt an inclusive position to be sustainable and relevant. “The DTI will always champion business for its job creation, use of materials produced, use of skills and talents of individuals, production and sales, and taxes for government services,” she said.
UP Diliman Professor Aliza Racelis, in her reaction, said, “The new business of business is the world’s well-being, the business of future generations, and the planet itself.” The field of business ethics has arisen to balance business with ethical practice and humanistic management which upholds the dignity of employees, the application of practical wisdom, and the values of industriousness and similar values. She introduced the social solidarity economy or SSD which offers economic alternatives such as cooperatives, local currency, local financial social investment, eco-industrialization, and the commons movement.
“Business can produce good goods, good work, and good wealth,” she said.
UP Vice President for Academic Affairs Cynthia Bautista, in her welcome remarks, recalled the pragmatic lessons for the Philippines to overcome the middle-income-country trap in UP’s engagement with the Asian Institute of Technology, University of Rotterdam, and the Erasmus School of Economics.
UP Mindanao Chancellor Larry Digal, in his remarks, said Dr. Poblador has been consistent in generating new ideas, most especially needed now that business had to adapt due to the pandemic. The limitless potential of information technology has transcended geographic boundaries and enable everyone to partner with anyone everywhere in the world. “Dr. Poblador’s idea of dissecting the core concepts of stakeholder maximization can create major economic impact for the Fourth Industrial Revolution or FIRE 4.0 and INDUSTRY 5.0. We are looking forward to his new book `Strategies for the New Age of Capitalism' which the UP Mindanao SOM can use as a reference in our classes,” he said.
Cesar Virata School of Business Dean Joel Tan-Torres, for his part, said this momentous activity is something to pursue in the months and years to come. Which can be replicated among the ten business colleges and centers across the UP System. “To collaborate and create joint activities such as the sharing of faculty and resource persons as an opportunity for the students of all units to gather in academic and non-academic events. These can lead to win-win outcomes especially for the students whom UP envisions to be good citizens and businesspersons in the future,” he said.
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