Value Matrix

HARVARD BUSINESS REVIEW

THE VIRTUE MATRIX

Calculating the Return on Corporate Responsibility

Most companies want to be good corporate citizens. But at what price? A new tool pinpoints when it's snnart business to do

Social Innovation Through the rightthing~and meetings concerning globalBusiness. It would be going when it's not. ization in Seattle, Davos, and much too far to say that our Genoa might seem to suggest that group arrived at any solutions to only the unwashed and the unruly these urgent problems. But prodare pressuring business to show a ^ ded by our discussion, I designed an angreater sense of social and environmental I ^ alytical tool that helps executives think responsibility. But it's increasingly clear that the about the pressing issue of corporate responsicalls are coming from mainstream quarters of society as bility. Having tested and refined it with my colleagues at well. Many consumers and investors, as well as a growing the institute, I'm confident that this tool, which I call the number of business leaders, have added their voices to virtue matrix, can help executives understand what genthose urging corporations to remember their obligations erates socially responsible corporate conduct. to their employees, their communities, and the environYou'll notice that I refer to corporate responsibility in ment, even as they pursue profits for shareholders. this article as if it were a product or service. That is no acBut executives who wish to make their organizations cident. It's my contention that, by treating corporate rebetter corporate citizens face significant obstacles. If they sponsibility as an artifact subject to market pressures, the undertake costly initiatives that their rivals don't emvirtue matrix reveals the forces that limit its supply and brace, they risk eroding their competitive position. If they defines measures likely to increase it. Before we turn to invite government oversight, they may find themselves the matrix, let's...