The project adopts the Business Systems framework for comprehensive and comparative analysis across Asian economies. The research delves into the interconnected roles of managers’ rationales, firm structures, and institutional settings. Taking into account Asia’s diversity, the project includes economies from advanced city-states, post-socialist countries, as well as industrialized Northeast and emerging Southeast regions in Asia.
The research project is structured into three layers, each constituting a vital component of the business system and contributing to initiating transformative changes.
Layer 1: MEANING
How do individuals think about the idea of purpose and mutuality?
Because senior managers occupy the most important role in the arena of business decision-making, it is pivotal to understand how Asian managers look at the role of business for society. We developed a Leadership Survey that inquires about respondents’ values beliefs of how business decisions are currently made (the “is”), versus their personal sentiments of how decisions should be made (the “ought to be”). The survey is carried out in collaboration with different partner universities in Asia.
LAYER 2: COORDINATION
Which types of firms enable mutual value creation?
The private sector is increasingly important in promoting sustainable and inclusive growth, where firms strive to create mutual benefits for business and society. However, there is limited understanding of how the wide array of sustainability issues find common ground. To address this, we developed a novel methodology to business-society alignment using materiality matrices from sustainability reports. Initial results from 130 Korean firms (57% of Korea’s market cap.) show that more profitable (5-year average ROA > 5%) and larger (>$100 billion) firms are more closely attuned with societal expectations and needs.
LAYER 3: ORDER
Which institutions provide a hospitable environment for mutuality?
The growing role of the private sector in fostering inclusive growth is highlighted by the emergence of dual-purpose firms that combine social and financial objectives. We hypothesize that in liberal economies, such firms may face greater challenges due to prevailing market forces and social norms prioritizing financial success over social performance. This is especially relevant for Asia, where variation in economic liberalism is high. Our preliminary regression results from a global sample of 2000+ firms show that the financial performance of dual-purpose firms is negatively affected by a higher level of economic liberalism in the firms’ country of domicile, while single-purpose firms benefit from higher economic freedom.
Outcomes and implications
The results from this multi-country project will be widely disseminated with policymakers, civil society organizations, and business leaders in Asia and beyond.
RESEARCH AND ADVISORY TEAM
- Dr. K. (Kees) Krul – Lead Researcher at Erasmus University Rotterdam and Hanyang University.
- Prof. dr. W.M. (Martin) de Jong – Scientific Director of the Erasmus University Rotterdam (EUR) Research Initiative ‘Dynamics of Inclusive Prosperity’
- Prof. dr. H. (Hyun) Shin – Professor at School of Business, Hanyang University
- Mr. K.W. (Kwang) Kim – Advisor at Economics of Mutuality (EOM) Platform
- Dr. A. (Arleen) Westerhof – Director at the Rotterdam Center for Economics of Mutuality
- Mr. J. (James) Lee – Program Officer at The Asia Foundation