Lynn S. Paine

During the past few years, as evidence of climate change and its effects has mounted, many corporate boards have added climate governance to their agendas. But the maturity of boards’ climate-oversight processes and activities varies widely. To better understand how climate issues are being handled in the boardroom and to determine what good climate governance looks like in practice, the authors interviewed 20 directors who hold leadership positions on the boards of S&P 500 companies. Drawing from those interviews and other research, they identify eight hallmarks of meaningful climate oversight.

Business leaders are being urged to adopt a multistakeholder approach to governance in place of the shareholder-centered approach that has guided their work for several decades. But through hundreds of interviews with directors, executives, investors, governance professionals, and academics over the years, the author has found wide differences in how those leaders understand stakeholder capitalism. That lack of clarity can put boards and executives on a collision course with one another when decisions requiring difficult trade-offs among stakeholders’ interests arise. It also creates expectations among stakeholders that if unfulfilled will fuel cynicism, alienation, and distrust.

To help reduce the risk of such negative consequences, the author has created a guide for corporate leaders that illuminates four versions of stakeholder capitalism: instrumental, classic, beneficial, and structural. They reflect significantly different levels of commitment to the interests of stakeholders and rest on very different rationales.

Q. Who should take the lead in fixing market capitalism? A. Business, not government alone. The spread of capitalism worldwide has made people wealthier than ever before. But capitalism's future is far from assured. Pandemics, income inequality, resource depletion, mass migrations from poor to rich countries, religious fundamentalism, the misuse of social media, and cyberattacks; these are just a few of the threats to continuing prosperity that we see dominating the headlines every day. How can capitalism be sustained? And who should spearhead the effort? Critics turn to government. In their groundbreaking book, "Capitalism at Risk," Harvard Business School professors Joseph Bower, Herman Leonard, and Lynn Paine argue that while robust governments must play a role, leadership by business is essential. For enterprising companies, whether large multinationals, established regional players, or small startups, the current threats to market capitalism present important opportunities. In this updated and expanded edition of "Capitalism at Risk," Bower, Leonard, and Paine set forth a renewed and more urgent call to action. With three additional chapters and a new preface, the authors explain how the eleven original disruptors of the global market system clash with the digital age, and they provide lessons on how to take action. Presenting examples of companies already making a difference, Bower, Leonard, and Paine show how business must serve both as innovator and activist, developing corporate strategies that effect change at the community, national, and international levels. Filled with rich insights, this new edition of "Capitalism at Risk" presents a compelling and constructive vision for the future of market capitalism.

The spread of capitalism worldwide has made people wealthier than ever before and raised living standards to new heights. But capitalism’s future is far from assured. The global financial meltdown of 2008 came within a hair’s breadth of triggering another Great Depression. Despite stirrings of recovery, economies in Europe are still teetering. And powerful forces—income inequality, resource depletion, mass migrations from poor to rich countries, and religious fundamentalism, to name just a few—continue to pose a serious threat to the prosperity capitalism engendered.

How can the future of capitalism be secured? And who should spearhead the effort? Many observers point to government. But in Capitalism at Risk, Harvard Business School professors Joseph L. Bower, Herman B. Leonard, and Lynn S. Paine argue otherwise. While the authors agree that governments must play a role in saving capitalism, they maintain that businesses should lead the way. Indeed, for enterprising companies—whether large multinationals, established regional players, or small start-ups—the current threats to market capitalism present vital opportunities.

Drawing on discussions with business leaders around the world, the authors identify ten potential disruptors of the global market system and diagnose the causes behind existing institutions’ inability to combat them effectively. They argue that companies must stop seeing themselves as bystanders and instead develop innovative business strategies that address the disruptors, produce profitable growth, and strengthen institutions at the community, national, and international levels. The authors then present examples of companies that are already making a difference.

Filled with rich insights, this provocative new book presents a compelling and constructive vision for the future of market capitalism.

More and more companies recognize the importance of corporate responsibility to their long-term success—and yet the matter gets short shrift in most boardrooms, consistently ranking at the bottom of some two dozen possible priorities. Many years ago labor conditions in Asian contract factories prompted Nike board member Jill Ker Conway to lobby for a board-level corporate responsibility committee, which the company created in 2001. In the years since, the committee has steadily broadened its purview, now advising on a broad range of issues including innovation and acquisitions in addition to labor practices and resource sustainability.

A close examination of Nike’s experience has led HBS professor Lynn S. Paine to conclude that a dedicated board-level committee of this sort could be a valuable addition to many if not most companies in at least five ways: as a source of knowledge and expertise, as a sounding board and constructive critic, as a driver of accountability, as a stimulus for innovation, and as a resource for the full board.

In an accompanying interview with Paine, Conway discusses the committee’s creation and provides an insider’s perspective on what has made it so effective.

Today, corporate accountability is as vital to the bottom line as an effective business model.  Value Shift makes a strong case for the merits of corporate responsibility and shows how a value-positive orientation contributes to superior performance through better risk management, improved organizational functioning, increased shareholder confidence, and enhanced public standing.  Lynn Sharp Paine offers strategies for implementing an enterprise-wide value system and provides the tools need to build companies that can prosper in the new era of corporate accountability.

Value Shift articulates exactly why the superior performers of the future will be those companies that can satisfy both the social and financial expectations of their constituencies.  By explaining the larger forces driving the current focus on scandals and ethics, Value Shift points to a new era in the corporation’s development and shows what managers can do to align their companies’ performance with the higher standard expected today.

An extensive global survey by three Harvard Business School professors finds that employees agree on core standards of corporate behavior; but meeting those standards will require new approaches to managing business conduct. The compliance and ethics programs of most companies today fall short of addressing multinationals' basic responsibilities, let alone such vexing issues as how to stay competitive in markets where rivals follow different rules. Companies must bring to the management of business conduct the same performance tools and concepts that they use to manage quality, innovation, and financial results.

To achieve growth and profitability in the world's third-largest economy, multinationals need strong leadership--but China is tough on top executives. Pulsating with opportunity, China attracts foreigners, yet HR professionals continue to rank it as one of the most challenging destinations for expatriates. Many executives sent to lead operations in China are ill equipped to tackle the country's unique challenges. And it's hard to overcome that handicap, because leading in China calls for skills that go beyond--and in some cases conflict with--standard business teaching and practice. Foreign executives must be adept at reworking management orthodoxies in real time to do well there. Success requires cultural understanding and adaptability, market knowledge, the ability to sense and respond to rapid change, and support from headquarters. Most importantly, effective leaders have the crucial ability to play roles that Westerners often view as contradictory: they are strategic yet hands-on; authoritative yet nurturing; and action-driven yet circumspect. Above all, they have the intellectual dexterity to develop new frameworks and capabilities to meet China's particular circumstances. This article illustrates how CEOs have modified accepted wisdom to tackle their biggest challenges in China. Though some of the lessons may seem like common sense to experienced China hands, they're anything but to a freshman expat.