The Higher Purpose of Business: A Historical Case from Norway
What is the role of business in our society in 2022? Should that role in any way be related to social issues like alleviating poverty, providing nutritious food, and securing a more sustainable society? An interesting example from Norwegian history can perhaps shed some light on these issues.
The role of business in society, and thus its social responsibility, has long been a topic of discussion, both within academia and in the business community. The famous economist Milton Friedman (1912-2006) argued that companies should concentrate on increasing its profitability, and through this contribute to job creation and tax revenues to the state. This can perhaps be described as the classical answer to this question in the field of Economics. However, researchers and business professors like Michael E. Porter and Alex Edmans claim, through their concepts "Creating Shared Value" and "Pieconomics", respectively, that companies will in fact often benefit from creating both financial and societal value. Especially if we consider value creation in a long-term perspective. This approach is also foundational and central in UN's sustainability goals, which today serve as a catalyst for global efforts to ensure a more sustainable and environmentally friendly future. A basic premise to reach these goals is the active participation of the business community, together with the public and non-profit sector, in creating social value. Business models that both create value for the business and contribute to reach social goals like reducing poverty and improve local communities are powerful tools in this regard. Moreover, a business model is often scalable and can become a self-sustaining force for good. Thus, we are not dependent donors and public funds alone to fund different social projects and fulfill a worthwhile social mission.
Fortunately, there is a growing number of companies doing some of the things described above. However, we can also learn from what has been done in the past. Consequently, we will now turn to a historical case to illustrates this. In the 1800s, an unlikely network of entrepreneurs emerged throughout Norway. Almost out of nowhere, Hans Nielsen Hauge (1771-1824) started or restarted around 30 companies and was involved in some 150 business endeavors together with his friends. Estimates provided by professors Fritz Hodne and Ola H. Grytten at the Norwegian School of Economics (NHH) indicate that Hauge and his friends, often called Haugeans, directly or indirectly created between 7,000 and 8,000 jobs in Norway in the period from 1801 to 1828 (with a population of approximately 900,000 in the same period). Undoubtedly, this makes Hauge one of the greatest serial entrepreneurs in Norwegian history.
Moreover, Hauge started a movement about 200 years ago that contributed to the empowerment of common people, the development of democracy, as well as literacy skills training in Norway through his massive book production and extensive letter writing with his friends throughout the country. As the nation's most read author, lay preacher and serial entrepreneur, he traveled all over Norway, challenging those he met to live a committed Christian life and be responsible stewards of everything God had given them. Together with his followers, the Haugeans, he created a network of entrepreneurs with businesses that were both profitable and socially responsible. For them, creating jobs and benefitting society through business was a matter of practicing their faith. They wanted to be “good housekeepers,” or stewards, and wanted to do so in a way that served a higher purpose. Thus, they wanted to both serve the Lord, and benefit their neighbors, and through this the local communities of which they belonged.
We find several historical examples of companies with such a twofold purpose, focusing on both creating financial and social value, in Norway. Both the early mining companies in cities such as Kongsberg and Røros and clothing manufacturers such as Dale and Devold, contributed in various ways to the development of their local communities. The Haugean companies, however, were important contributors and pioneers in this way of thinking. This was evident, among other things, through their commitment to alleviate poverty, their radical policy of inclusion, demonstrated for instance through employing people with disabilities and appointing female leaders (which was highly unusual at this time), and their contribution to education and literacy skills training in the 19th century. They were committed to a higher purpose for their businesses and found ways to integrate social and financial goals. Today, we can find the same approach in modern business theories and fields of study such as social entrepreneurship and corporate social responsibility.
The Haugean businesses were highly influential in several local communities in Norway in the 1800s. By combining financial and social missions for their firms, they were leading the way in what we today would call sustainable business and community development. In 2021, we celebrated the 250-year anniversary of the birth of Hans Nielsen Hauge, which provided a great opportunity to give credit to the Haugeans and honor their great service for our country. Even today, Norwegian entrepreneurs follow the Haugean example and find inspiration in their approach to business as they seek to build sustainable, innovative, and profitable businesses that will benefit society.
The material in this post is based on the author's article «Den gode husholder som modell for bedrifters samfunnsansvar: Haugiansk samfunnsengasjement for vår tid».
