Can big business be inclusive?

Are our big business conglomerates widening the gap between rich and poor Filipinos? While big business empires in rich countries seem to have fostered growing economic concentration and widened inequality, the outcome need not be inevitable. But the big business leaders themselves must have the mindset (and the heart) to consciously avoid this undesirable result. Conversations with some prominent big names in Philippine business for a forthcoming Ateneo book give me hope that we do have a new breed of business tycoons who could make big business instrumental to more inclusive development, rather than the enemy of it.

How do we define “inclusive development”? The Asian Development Bank (ADB) has characterized it as “the equitable distribution of economic growth, with particular concern for the most marginalized and vulnerable sectors of society … (and) can be achieved through job creation, as well as the development of human capital and social infrastructure that will allow these sectors to have more direct participation and benefit from the development process.” Jaime Augusto Zobel de Ayala (Jaza) of the Ayala business empire adds that “the overall well-being of a person and the different components that make a good life possible” must also be part of it, and “includes, among others, access to quality health and education, dignified shelter, gainful and fulfilling livelihood, and a safe and secure environment.” Josephine Gotianun-Yap of the Filinvest group adds social participation and engagement to the list.

How are they leading their respective conglomerates to make a conscious contribution to inclusive development? Their most obvious and direct contribution, as highlighted in the ADB definition, would be in the thousands of jobs they create for our ever-growing labor force. On the other side is the multitude of customers who patronize their products and services, with which the companies can help improve their welfare and quality of life, especially when provided at low cost and high quality. For Lance Gokongwei’s JG Summit group, “providing better choices for customers” is one of two goals defining their avowed company purpose. The other is “creating shared success for our stakeholders,” noting how this now goes well beyond the traditional focus on customers and shareholders but also includes employees, suppliers, and the surrounding community.

Jaza recounts how their products and services in the early years catered mostly to higher income segments, but have since steadily broadened their core offerings all the way to serve the “base of the pyramid.” Ayala Land now has products spanning the various tiers of the market, and prepaid technology transformed Globe Telecom’s erstwhile higher-end customer base to one dominated by a mass market now empowered by access to digital communication. Manila Water substantially widened its subscriber coverage in Metro Manila even within the same fixed service area, by employing business models that enabled them to pipe water even to most depressed neighborhoods, including of informal settlers. It also deliberately sourced plumbing materials, components, and labor from some 1,600 community-based small enterprises and contractors that they trained on the production of such products and on business management. Altogether, Ayala counts hundreds of thousands of micro, small, and medium enterprises (MSMEs) within its ecosystem spanning all its business units.

Sabin Aboitiz takes similar pride in how the Aboitiz Group integrates large numbers of MSMEs in its value chains, most prominently through Pilmico, whose feeds business sources locally grown corn from small farmer cooperatives to supply their feed mills. These in turn provide a vital input for the livestock and poultry industry, thereby contributing to both sides of the agriculture supply and demand equation.

Meanwhile, the group’s banking units UnionBank and City Savings are the acknowledged industry leaders in digital banking services nationwide, boasting a clientele spanning generations of microentrepreneurs, employees, public school teachers, companies, and professionals.

Being big need not mean being bad, after all.

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