At a recent public forum for local business owners, Olsson Center Senior Fellow Jared Harris asked, “what is the purpose of business?” The audience, made up of sustainable business owners responded with answers about passion, purpose and a need to fulfill in the community. However, one owner remarked “what about making money?” Harris, who teaches strategy and business ethics, opened the conversation more to talk about the tension between making money and filling a need. Ultimately Harris believes the purpose of business is to create value, and profits are outcomes.
The talk, “Lessons from Businesses That Have Weathered the Storm,” is part of the Charlottesville-area Better Business Challenge, a competition among local businesses to incorporate sustainable practices into day-to-day operations. In its second year, the competition also aims to promote companies that have green business models in the community.
Harris offered insights from his research on resiliency in small companies in Virginia. According to Sutcliffe and Vogus, resiliency is “the capacity to rebound from adversity strengthened and more resourceful.”
In his research, Harris and his co-author identified three ways that businesses achieve resiliency:
- Psychological strategy, i.e. having a positive attitude to cope
- Operational strategy, i.e. what can be changed
- Stakeholder strategy, i.e. engagement and cooperation with stakeholders
After analyzing responses from 150 small businesses, he found that there was a positive relationship between a stakeholder approach and profitable growth. “Engaging with external stakeholders pays off,” said Harris.