The Role of Business in Development

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2002-11-18

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In recent times, the role of business organizations in development has come under greater scrutiny. The shift of resources for development from official development assistance and loans to foreign direct investment and outsourcing by business has meant that at a practical level, economic development has become more intimately linked with the policies and practices of large business organizations. Economic, technological and cultural globalization is largely driven by multinational companies (MNCs). Many corporations command resources – technological and financial – far in excess of those enjoyed by many of the countries and communities in which they operate around the world. This has not always been seen as a positive trend, and opponents of globalization have typically targeted ‘business’ as both a cause and an accelerator of negative social and ecological outcomes of economic development. In contrast, even the most trenchant critics of globalization recognize the need for economic development at the local or regional community level. Many social and environmental advocacy organizations and international development agencies are researching and publishing material on the importance of sustainable livelihoods – where economic, social and ecological factors are integrated to the benefit of society and nature. In this paper we describe the response of ‘business’ and provide a contemporary perspective on development which acknowledges the importance of economic development and entrepreneurship to community development. We introduce the notion that ‘business’ might be better defined as a creative, entrepreneurial act involving multiple collaborating partners rather than as an institution associated with particular multinational interests, and we describe a number of cases that help illustrate why this is relevant to the notion of development. Finally, we reprise recent developments in the management literature which envisage a new role for multinational corporations in development and add some conclusions about how new perspectives on business might resolve some of the current tensions and ambiguities about the roles of different actors.

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