Q&A: Darden Professor’s Documentary a How-To for More Ethical Business

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“Fishing With Dynamite” argues that focusing solely on shareholders is unhealthy for businesses and for society. (Photo courtesy Virginia Film Festival)

Volkswagen. Boeing. Wells Fargo. Enron. Purdue Pharma.

All of these companies have been accused of putting profits over people, whether misleading patients about the addictive nature of OxyContin or signing people up for credit cards they did not request. They are, as University of Virginia Darden School of Business professor Bobby Parmar’s new film puts it, “fishing with dynamite.”

The feature-length documentary “Fishing With Dynamite” will premiere Sunday at the Virginia Film Festival. Parmar helped produce the film with Academy Award-winning filmmaker and UVA drama professor Paul Wagner and Olsson Center for Applied Ethics senior researcher Jenny Mead. Darden faculty members Ed Freeman, Andrew Wicks and Joey Burton, director of Darden’s Institute of Business in Society, were also involved on- or off-screen. (Get “Fishing With Dynamite” tickets here; find a full festival schedule here.)

Bidhan “Bobby” Parmar headshot

Bidhan “Bobby” Parmar is the Shannon Smith Emerging Scholar in Business and an associate professor of business administration at UVA’s Darden School of Business. (Photo courtesy Darden School of Business)

In the film, Parmar and his colleagues argue that many ethical failures in business often come down to a shareholder-first mindset, in which companies myopically focus on returning profits to their shareholders. Parmar, who teaches business ethics, adamantly insists that is not how business can or should be done.

Instead, in the film, in their books and research, and in talks from Silicon Valley to Wall Street and beyond, the Darden faculty members advocate for “stakeholder theory,” the idea that a business is beholden to not just shareholders, but also to consumers, employees, the environment – anyone or anything affected by what a business does.

We caught up with Parmar before the premiere to learn more.

Q. Film is perhaps not the usual mode of expression for business professors. Why did you choose the silver screen?

A. A few years ago, we had a stakeholder theory conference at Darden, with leading academics from around the world studying interesting questions about why companies exist and their purpose in the world. Those ideas are so important, and when we looked around the room, we realized that we could not keep those ideas cloistered in the conversation of academics. Every issue we care about – climate change, human rights, health and safety – all of that is impacted by companies. If we believe companies only care about profit, it becomes hard to solve those problems effectively.

The film was born out of this idea that we need to take these ideas into the mainstream and have a more productive conversation about business. There are terrible business leaders, certainly, but there can also be great and good ones. Business can be a tool for making our democracy and society better.

Q. Can you briefly explain the two theories the film explores – shareholder and stakeholder?

A. Shareholder value maximization, as it was called in the 1970s, is the idea that the purpose of the company is to increase shareholder value or returns on stock. Every decision is viewed only from the lens of how it affects those returns.

That is where our title comes from. If you fish with dynamite, you might get a lot of fish in your net, but you will destroy the environment, and over time, the number of fish will dwindle. I think a lot of evidence suggests that our corporate sector is not as healthy as it used to be, in part because of that phenomenon.

Stakeholder theory, on the other hand, is the idea that leaders are beholden to many groups, including shareholders, but also employees, communities, customers, vendors, governments, the environment. When business leaders take those stakeholders into account, they can make healthier, more sustainable decisions.

Q. Has there been a shift away from the shareholder-first mentality?

A. I think so. This fall, for example, Business Roundtable issued a statement redefining the purpose of a corporation for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders. That organization has gone back and forth over the decades, from very stakeholder-centric in the 1980s, to more shareholder-centric in the booming 1990s, and back again.

Of course, the most important piece is how companies actually change their behavior. So far, that shift has taken several forms. There are companies that are curious about stakeholder theory, but have not really changed their policies, and companies that are using these ideas in their marketing and communications, because they find it attracts higher-quality employees and investors.

Then, there is a class of firms that are actually changing their practices. These are the firms I find most interesting.

Q. What are some examples of companies that are doing this well? 

A. One I discuss a lot is Salesforce.com, a company that takes great care of its employees and communities and has made the stakeholder model a central part of its business model. It’s working; the company has grown a lot and is something of a darling among investors.

In the film, we profile The Container Store, which has been on Fortune’s “Best Places to Work” list for 17 years and recently went public. When you go public, you have investors looking at every decision, and while The Container Store has grown its revenues every year, its stock price has lagged because it has not met investors’ growth expectations. It offers an interesting look at differences in what businesses and investors prioritize.  

Q. Overall, what do you hope audiences leave the theater thinking about?

A. I hope they examine what they believe about business and business’s role in society, and I hope they think about supporting companies that they find to be responsible. As customers, investors or employees, all of us have a role to play in helping business as an institution become more responsible.

This is such an important issue. It can seem esoteric and academic, but it hits all the things troubling our society – health care, income inequality, sustainability and so much more. The role of corporations is essential to those debates, and if we don’t tackle that, it will be hard to tackle everything else.