How to keep social objectives from going adrift in daily business

More and more companies want to strategically integrate social objectives like addressing global health or climate change into their business models. But how can they ensure that their commitment survives the daily negotiations, approval processes and conflicting interests that are part of any business? A recent study by Hertie School researchers, including Professor of Organisation, Strategy and Leadership Johanna Mair, PhD graduate Dr Tobias Bünder and former postdoctoral researcher Dr Nikolas Rathert, has found some answers.

The study examines how two pharmaceutical companies, GlaxoSmithKline (GSK) and Novartis, successfully integrated the aim of expanding access to their medicine in low- and middle-income countries into their commercial activities over a twenty-year period. The article, “Sustaining the Integration of Social Objectives Over Time: A Case-Based Analysis of Access to Medicine in the Pharmaceutical Industry”, was published in Business & Society in June.

Companies addressed both internal and external pressures on corporate social responsibility

While many companies struggle with it, GSK and Novartis, were able to integrate a social objective, improving access to medicine in low- and middle- income countries, into their commercial activities between 2000 and 2019. What did they do that other companies did not?

The study shows that they both:

• aligned product features with access objectives and partnered with external stakeholders to reach those goals, and
• integrated access objectives into certain teams’ day-to-day activities and tasked them to develop new social business models. 

To sustain these efforts, the companies actively addressed both internal resistance within their organisations, and outward uncertainty around the impact of their integration efforts. Internal resistance to anchoring social objectives in a company’s business can occur, for instance, when high-ranking employees are at odds with the project or do not understand its importance. Outward uncertainty, on the other hand, can occur when monitoring the impact of a project: reducing the price of a drug, for example, might not automatically improve access for patients. 

“When companies want to become serious about substantively integrating a social objective into their business strategy, inward resistance and outward uncertainty are serious threats,” says first author Bünder. “Reducing them is crucial for the success of these initiatives.”

Getting management on board and making HIV medicine more affordable

To reduce internal resistance, the companies relied both on internal lobbying and aligning structures and processes. At Novartis, for instance, members of the financial and corporate responsibility units worked to convince company leadership of the merits of their pilot project Healthy Families, which aims to improve access to healthcare in rural areas of developing countries with a sustainable business model. Among other things, they invited leadership to field visits in India, where the programme was being implemented. The CEO eventually agreed to centrally cover the costs of the programme to decrease conflicts between financial and social objectives.

To reduce external uncertainties, companies relied on partnerships, developing partners’ capacity and getting involved in their steering structure. GSK, for instance, improved access to its HIV treatments and vaccines by providing preferential prices to international health partnerships such as the Global Fund and Gavi. GSK, as well as Novartis, invested in partners’ capacities to bring these products to patients and took an active role in the governance of these partnerships.

Examples of best practice – not only for the pharmaceutical industry

Although the findings provide useful insights for pharmaceutical companies committed to corporate social responsibility, the authors stress that their research is relevant for companies in other industries as well. “Financial service providers and technology companies also offer products and services that could help to solve social problems if only people had access to them,” says Professor Mair. “Our findings could aid these companies in committing to their social objectives, too.”

Read the full article in Business & Society.

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