This week’s HBS Working Knowledge newsletter starts off with an interesting proposition: what happens when a well-known socially responsible business is acquired by a multinational? Professors James E. Austin and Herman B. “Dutch” Leonard discuss their recent research, which examines such acquisitions as Ben & Jerry’s by Unilever, Tom’s of Maine by Colgate and Stonyfield Farms by Dannon. Their work suggests that it is possible for a company to stay true to its social mission after acquisition, presented in a working paper asking “Can the Virtuous Mouse and the Wealthy Elephant Live Happily Ever After?”
The discussion touches on some great questions, including why the elephants would want to acquire mice with a conscience and why it could be a good deal for the mouse (they’re not selling out – they’re scaling up).
An excerpt is below, but it’s totally worth your time to read the entire (brief) HBS interview with Austin and Leonard:
Q: How can elephants protect the mouse’s social value and brand integrity?
A: The more effective large companies have recognized that preserving the social icon’s distinctive culture and business approach is essential to preserving its key success factors. Consequently, they retain a large degree of organizational independence so as to prevent “contamination” of the social technology.
This stands in contrast to the common approach in acquisitions to integrate and rationalize the assets into the new owner’s systems, structure, and culture. Some of the specific mechanisms used in successful mouse-elephant agreements include governance structures and processes that give the “mice” review and even veto power over actions by the “elephants” that might jeopardize those elements that are deemed essential to the social values underlying the brand’s integrity.
Retaining the social entrepreneur in the joint venture is highly desirable…