Accounting: Better Business

Name
Instructor
Course
Date
Better Business
According to John Mackey "business is the greatest creator of value in the world. But it needs to rediscover its higher purposes." He explains that Conscious Capitalism is a paradigm for entrepreneurs to ensure that they achieve their overall goals. In this framework, profit, social responsibility, and business sustainability are not opposed to one another. The entrepreneurs through Conscious Capitalism should maximize the value of the firm for all stakeholders including the partners, broader community, suppliers, shareholders, team members, and the environment. This can only be achieved if they use this Conscious Capitalism framework by viewing the business in a holistically.
Those entrepreneurs who use this framework are termed as ‘radical social entrepreneurs' recognize the importance of social entrepreneurship in realizing the social good of the society. Despite that NGO's, charities and other non-profit organizations are essential in the society, radical social entrepreneurs would like to use business in improving the world as a whole. However, much has been written about business and has always created a divide between social responsibility and running a profitable and sustainable business. Through Conscious Capitalism, entrepreneurs are reminded that for the firm to prosper it should not sacrifice its social mission but maintain an allegiance to a deeper mission in the community is the major key to succeeding in the market.
For a better business to exist it must be based on the following principles:
* Businesses have great purposes beyond profit maximization.
* Businesses should be managed to maximize the value of all stakeholders.
* The businesses should have ‘Conscious Leadership' with a holistic view that stretches beyond the traditional business metaphors.
* The businesses should have a tangible Conscious Culture.
Profit maximization is an old metaphor that was used by the economists of the 19th century. They believed that successful businesses should be profitable since those that make losses have short term survival in the market. Therefore, profit maximization was perceived to be a primary objective for companies. Economists of the later years incorporated ‘profit maximization' into the primary goals of firms as their main framework of modeling markets. This ‘profit maximization' metaphor of taking businesses as machines of maximizing the outputs and profits from little inputs blinded the entrepreneurs and did not observe the human element of firms. However, this metaphor was a useful tool in explaining the primary purpose of enterprises in models, but it does not guarantee that they should work for profits only.