PULA GROUP

The Stith Doctrine

In doing business in emerging market countries, it is not enough for corporations to do "well" by their shareholders; they are also expected to do "good" in the markets where they are present. Corporations that understand this as an opportunity will be poised to do business anywhere in the world and be welcomed anywhere.

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Most emerging market countries (EMC's) now have a baseline of expectations (i.e., regulatory requirements) for companies wanting to do business in their countries. In addition to taxes (and royalties, where applicable), those expectations include a company providing employment opportunities, procurement opportunities, and strategies to mitigate environmental degradation. Good corporate citizenship requires more. The Stith Doctrine is that companies that are prepared to do well while doing good will have a distinct market advantage and will be more profitable.

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Today's global marketplace is defined by a number of characteristics - the fluidity of capital, the portability of production, the transferability of labor, and universal media coverage. All of these elements expose every company to a new and heightened level of scrutiny as to where and how they do business. They combine to require a greater level of accountability for businesses beyond their shareholders and the regulatory bodies to which they report.

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In this more transparent era, companies are accountable to the public, multilateral organizations, and nongovernmental organizations to an unprecedented degree. In emerging markets, the level of scrutiny is even greater. Against the backdrop of colonial exploitation, liberation, and the push for democratization and development in such countries, there is an expectation that the governments of EMC’s will (and should be) more concerned with economic development and how the private sector aids or impedes that development.

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Toward this end, I have developed a dynamic model for corporate citizenship that provides a conceptual framework for crafting a strategy for a company "to do well, while doing good." This model reflects insights gleaned over three decades as a civic leader, diplomat and businessman.

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-Ambassador Charles R. Stith, Chairman