Conscious Capitalism Creates Sustainable Competitive Advantage, says CEO

Conscious Capitalism Creates Sustainable Competitive Advantage, says CEO

Momentum gathering to flow capital towards social businesses: Murphy

David Murphy sees a “great vision” for the future of business with for-profit businesses being run by enlightened leaders that embrace the power of conscious capitalism.

Murphy, CEO and president of Better World Books, says it is a competitive advantage when businesses view capitalism as more than profit for shareholders and as an ability to balance different stakeholder interests.

“It’s a sustainable competitive advantage for capitalism today to be looking at how it balances its interests across different stakeholder groups and to begin to use the stakeholder terminology more than the shareholder terminology,” he tells Axiom News.

He adds while this concept may seem simple it is also quite revealing.

Better World Books is a founding B Corporation (B Corp) partner, an international network of purpose-driven businesses dedicated to setting a new standard for social and environmental performance.

Murphy says a key of the B Corp movement is member organizations change their articles of incorporation to include not just financial return to shareholders but also responsibility to take care of the Earth, employees and communities in which the business operates.

“If it’s conscious capitalism, if it’s enlightened leadership in a for-profit setting I think you can actually say in the end we can probably make more profit if we’re doing the right thing so we are creating value across those stakeholder groups that consumers will be attracted to,” he says.

Looking at Better World Books, a U.S.-based global bookstore that collects and sells books online to fund worldwide literacy initiatives, Murphy says donors continue to provide books because the organization has earned people’s trust in what they do with the donations and its resources.

Better World Books has 100 non-profit partners that receive funding, which is a major part of the businesses’ social impact. The organization generates approximately $10,000 a day in cash funding for its non-profit partners to support literacy.

There are five primary non-profit partners that Better World Books has a close and strategic relationship with, and in early 2008 the organization opened its incentive stock option plan that is available to its employees to the five partners.

“If there’s ever down the road any kind of a wealth creation event not only do our employees win but our non-profits win, which is really innovative,” says Murphy, adding he is unaware of other structures where a non-profit becomes an owner in a for-profit enterprise.

Murphy says at times there is a notion that social business is the “feel-good, left-wing thing,” and envisions in the next five to 10 years the “most hardened capitalists” begin to appreciate that even if all they want to do is make money that there is an enlightened path to get there.

“There are some very exciting developments going on today with regard to how we bring more capital to the space,” he says.

Called impact investing, people are looking for returns, measurements and standards for putting their money towards a social cause. The capital can come from a variety of lenders such as institutional capital from Wall Street, venture capital or private equity landscape, banks and bank lending.

Murphy was among the presenters at the third annual Social Capital Markets Conference 2010 in San Francisco, and says coming out of the event he is very encouraged by the activity taking place in social finance.

“There is a huge amount of positive momentum in this space that ultimately is going to result in more capital flowing to the space, and I think that’s the key,” he says.

A common question Murphy is asked is whether the B Corp community will become more than a fringe and will conscious capitalism ever really take off, and he says his answer is yes — if it can be figured out how to move capital to the space.

“The signs right now are very encouraging that that is going to happen,” he says.

Related Stories:
Better World Books Embeds Social Mission in Business

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Jennifer Neutel's picture
Jennifer Neutel

Jennifer Neutel is a Story Advocate and Generative Journalist at Axiom News. She completed her Bachelor of Journalism at Carleton University in Ottawa in 2006, and joined Axiom News in 2007. She has taken on a variety of roles at Axiom including new social media intiatives and has a passion for creating strengths-based questions that can lead to positive change.

Contact Jennifer: jennifer@axiomnews.ca, or 705-741-4421 ext. 26.

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