Episode #40 – Kimberlee Josephson: A Better Understanding of the Role of Business in Society

Kimberlee Josephson is an associate professor of business at Lebanon Valley College, and an insightful and energetic promoter of entrepreneurship and free markets at The American Institute For Economic Research. 

Resources: 

Connect with Kimberlee Josephson on LinkedIn 

Read Kimberlee Josephson’s articles at AIER

Connect with Hunter Hastings on LinkedIn

Learn Entrepreneurial Value Creation with our Value Creators Online Course 

Show Notes:

0:00 | Intro
2:02 | Kimberlee Josephson’s Background
3:53 | Big Picture of Capitalism
8:16 | What was the Problem?
11:34 | How Kimberlee Teaches Power Structure and Other Programs
17:19 | Companies Prioritizing Morals Over Profi.
19:55 | Maximizing Shareholder Value: Research Perspective
23:04 | Antitrust: Government’s Role in Business Scrutiny
28:15 | Monopoly as a Business Goal: Darker Motives
33:15 | Critics of Capitalism: Distorted View of Competition
37:21 | Focus on Positive Business Dynamics, Not the Destruction Part
39:44 | Value Creators Online Course
40:57 | Business Education 
44:23 | Redefining Entrepreneurship 
46:44 | Academia Being Non-Dynamic: Where to Get Business Education? 
51:38 | Wrap-Up

Knowledge Capsule:

Critics of capitalism and of business are misdirecting us with their concerns about business morality and resource allocation:

• It’s a mistake to put companies in the role of becoming moral arbiters and shifting focus from profit-oriented to purpose-oriented strategies.
• Kimberlee raised caution against organizations diverting resources towards social causes, potentially at the expense of core competencies and shareholder interests.

CSR and the Stakeholder Mindset are detrimental to the true role of business:

• Kimberlee discusses her skepticism about corporate social responsibility (CSR) and the stakeholder mindset.
• She expresses concerns about the effectiveness of CSR and its potential for harm, such as dependency-based relationships and rent-seeking behavior.

• CSR became even worse when it evolved to Environmental, Social, and Governance (ESG) initiatives – a more specific set of interventions in the conduct of business.
• Measuring and implementing imposed ESG standards are problematic, and there are great concerns about regulatory power.

The true role of Business in Society:

• Kimberlee explores the multifaceted role of business in society, including addressing negative externalities and creating positive externalities.
• Reference is made to Archie Carroll’s CSR pyramid, emphasizing economic, legal, ethical, and philanthropic responsibilities of businesses.
• Business increases well-being for customers, and therefore for society.

Criticism of Government Intervention and Antitrust Measures:

• Kimberlee expresses frustration with government intervention in business, particularly regarding antitrust measures and criticisms of large-scale companies.
• Antitrust regulations hinder businesses’ ability to compete and innovate freely.

Differentiation is strategic, high market share is not a problem: 

• Through excellence in differentiation, it’s possible to create a market space with little to no competition (Blue Ocean strategy).
• Regulators express concerns about such market activity, as evidenced by the concerns raised by Lina Khan about excessive market share.
• Large firms achieve dominance through profitability, attractiveness, and scalability, which reflects consumer choices. High market share simply means more customers are happy.

Government Intervention in Mergers and Acquisitions: 

• Anti-trust legislation and actions are examples of government interference in business transactions, in this particular case,  mergers and acquisitions.
• Kimberlee is an advocate for the separation of politics and economics: The marketplace will sort out whether mergers and acquisitions are good for customers.
• It can be inefficient to have multiple providers. Kimberless discusses Milton Friedman’s perspective on the inefficiency of having multiple providers for essential services like telephone poles.

Monopoly Power and Innovation: 

• Monopolies seldom last long in the market. Kimberlee reflects on past concerns about monopolies such as Netflix and the rapid emergence of numerous competitors and customer options..
• Competition drives businesses to innovate and improve efficiency; Kimberlee cited case studies such as Dyson’s disruptive innovations in the vacuum cleaner industry.

We can change attitudes through business education at every point in the education pipeline:

• From High School to community college to university undergraduate and graduate streams to executive and entrepreneurial education, it’s the task of business education to re-establish principle-based understanding of the role of business.
• Kimberlee Josephson is an active leader in this space.
• Value Creators is trying to help: https://thevaluecreators.mykajabi.com/value-creators