The Goldilocks Principle

The Goldilocks Principle

Learn to set your company-community relationship to "just right."
Gareth Everard June 16, 2014
No company can function independently from the community in which it operates. This is especially true for small businesses. What’s more, a mutually supportive company-community relationship is critical to maximizing benefits for both parties. But how do business owners and managers view their role in community support? How does the community support they receive affect their interpretation of their role? Researchers at the University of Helsinki provide advice for getting the most from this relationship. Authors of a 2012 study conducted interviews with 25 small business owners and managers, representing a range of business types.

How “Close” Should Businesses and Communities Be?

Research findings suggested that three types of relationships can exist between businesses and their communities:
Cycle of Proximity
To achieve optimal social proximity, business owners must feel supported by their community. This motivates them to invest in community development and well-being. In this way, optimal social proximity maximizes the value that both business and the community reap from their relationship.

How to Create Reciprocity Between Small Businesses and Communities

Business owners and managers: A company’s community engagement activities are driven by enlightened self-interest. Owners and managers should understand that investing in the community can generate greater support that translates to economic benefit. Owners and managers can support their community by: Community stakeholders – Business developers, government and community organizations: It’s imperative that those with a role in business development understand that small business owners and managers will only invest meaningfully in the community if they feel supported in return. Engage directly to understand small business needs and work with these businesses to develop supportive conditions in which to operate.

Key Takeaway

Small businesses and their local communities both reap the greatest benefit when they have a mutually supportive relationship. When businesses owners and managers feel valued and supported, and have the space to thrive and innovate, they are more likely invest in community building activities. Both parties should make a concerted effort to strengthen their relationship.
Lähdesmäki, M., & Suutari, T. 2011. Keeping at Arm’s Length or Searching for Social Proximity? Corporate Social Responsibility as a Reciprocal Process Between Small Businesses and the Local Community. Journal of Business Ethics. 108: 481-493.

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