Where the rubber meets the road: CSR and shareholder value

Where does the rubber meet the road when it comes to corporate social responsibility versus maximizing shareholder value?
The current Forbes on-line column about entrepreneurship features an interview with Paul Herrling who heads corporate research at Novartis and chairs their Institute for Tropical Diseases – a $200 million Institute for developing drugs for dengue fever, tuberculosis, malaria. See: http://blogs.forbes.com/helencoster/2011/02/07/novartis-institute-tackles-unprofitable-drugs/ When asked to respond to those who say $200 million is a small percentage of Novartis’ $7.5 billion dollar R&D budget, Herrling replies:

“We are a commercial organization and we are responsible to shareholders. We also believe that one of our missions is contributing new medicines to society, which is horrendously expensive. There is a limit to what we can do if we want to maintain profitability as a company. It cannot be a commercial organization’s responsibility to solve access to medicine problems where there is no market.…We would go out of business if we tried to address this problem on our own.”

Herrling restates what we already know: there are constraints on how much corporations, especially publicly traded corporations, can invest in community. But his comment about not bearing responsibility to solve problems “where there is no market” begs the question: where does that responsibility lie?

That’s a fundamental question I seek to explore in The Imaginations of Unreasonable Men – seeking the answer at the intersection where science, philanthropy and entrepreneurship are beginning to converge in unprecedented ways. Join the discussion at http://imaginationsbybillyshore.tumblr.com/

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