Harvard Business Review

The Good Company: Then and Now

Since the rise of the modern corporation, in the late 19th century, America has subjected the question of what a good company is — or ought to be — to near-constant debate.
The titans of American industry view the good company as part of an enlightened oligopoly, favoring cooperation over socially destabilizing competition.
Paternalistic corporations oversee their workers' health and moral improvement in company towns like Bisbee, Arizona, and Pullman, Illinois.
1906. Upton Sinclair publishes his exposé of bad corporate practices, The Jungle, provoking stricter food safety regulations but no improvement in working conditions.
1913. J.C. Penney introduces a code of conduct that urges employees "to serve the public, as nearly as we can, to its complete satisfaction."
1914. Henry Ford's "Five Dollar Day" dramatically increases paychecks, promising to turn workers into consumers.
At many large companies, mild profit-sharing and stock-ownership plans discourage unions and unrest.
Faced with a deep and long-lasting crisis, the public expects the government to ensure good corporate behavior.
1933.The New Deal restrains price competition, regulates banking, and forces companies to negotiate with unions. Most businesspeople oppose these popular measures.
1935. Congressional investigations reveal that on the eve of the Depression, executive pay ran high, igniting debates over how profits should be shared among investors, business leaders, and employees.
Supporting the war effort is seen as a duty—or at least as smart PR. Good companies limit profits on the matériel they supply to the government.
Technical innovation and creativity, crucial to military production, are important criteria in the public's definition of a good company.
When stability returns, employment is idealized as a compact between worker and employer: loyalty in exchange for a job for life.
Good companies make good products: appliances, cars, and other conveniences that improve the lives of the burgeoning middle class.
1955. For businesspeople, big becomes shorthand for good. The first Fortune 500 index of the largest companies appears, with General Motors at the top.
Even advertising is seen as playing a positive social role. By making people want more and better things, the argument goes, ads raise the standard of living.
1964. The Civil Rights Act passes, and lack of discrimination becomes the new ethical bar that companies must clear. A year later the first black director joins a major company board.
1965. Ralph Nader's Unsafe at Any Speed exposes disregard for safety concerns at car companies, raising consumer awareness. Product safety emerges as a new standard of goodness.
As companies struggle to survive "stagflation," efficiency becomes a mark of goodness.
1978. The Airline Deregulation Act introduces competition to an inefficient industry. Major airlines, unions, and safety advocates all oppose the act, but consumers like the prospect of lower fares.
Encouraged by the success of Japanese imports—and by Peter Drucker—good companies emulate Japan's quality-obsessed industrial practices.
Under pressure from global competition, business leaders focus increasingly on a single measure of goodness: shareholder value.
1981. President Reagan's firing of striking air traffic controllers, combined with widespread corporate layoffs, leads to a dramatic falloff in union influence over companies.
1983. Fortune publishes its first list of "America's Most Admired Companies," based on a survey of business leaders. The tech and pharmaceutical industries dominate the top 10.
The idea of corporate social responsibility, which has been stuck in academia for 40 years, goes mainstream. Now good companies create CSR departments.
Silicon Valley's success redefines the best companies as the most innovative. Intel and 3M draw envy for disrupting their industries.
1997. The public's rising awareness of sweatshop labor and environmental damage pushes corporations like Nike to keep a closer eye on their global supply chains.
In a decade bookended by burst bubbles, corporate reputations suffer as the public directs its anger at corruption and executive pay.
Social entrepreneurs and multinationals see opportunities to make money by finding innovative ways to solve problems in the developing world.
Companies from GE to Walmart redefine their missions to include producing social as well as economic value.


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