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With Globalization Here to Stay, Giving Back to Local Communities Makes Good Business Sense

May 2004

STANFORD GRADUATE SCHOOL OF BUSINESS—In a poor rural area of Western China, 600 children—most of them young girls—are now receiving an education they otherwise would not have been privy to thanks to a volunteer effort spawned by the Hewlett-Packard spinoff Agilent Technologies.

Agilent CEO Edward Barnholt enthusiastically described how global companies can help improve the world, citing similar endeavors created by some of the 30 Agilent subsidiaries. In Penang, Malaysia, for instance, employees have adopted a nearby fishing village where they work with local authorities to help build houses, purify the water supply, and improve the infrastructure. "We encourage our employees to spend a certain percentage of company time working on volunteer initiatives in local communities," Barnholt told the Conference on Global Business and Global Poverty at Stanford Graduate School of Business. "It's part of our commitment to make a contribution both socially and economically to countries in which we participate."

It's also part of Agilent's shrewd long-term global business plan. Currently, the $6 billion diversified technology company derives about two-thirds of its business, more than half of its employees, and approximately 67 percent of its revenue from business outside of the United States. Such numbers make good corporate citizenship not only a nice idea, but, in the end, a necessity.

"The goal is to build a business to have a presence in these economies," Barnholt explained at the May 19 conference organized by the Center for Global Business and the Economy at the Stanford Graduate School of Business. "To do so, you have to help local economies become successful by employing their people, by bringing your technology to customers in a way that allows them to build their local capabilities, and by improving education."

Other direct philanthropic activities foster the innovative use of technology to help solve global problems, he said. One such program, run by the Tech Museum of Innovation in San Jose, grants substantial cash awards to projects that use basic technology to improve the quality of life, the environment, and the health-care system in underdeveloped regions. A recent winner was the Free Play Foundation in South Africa which provided small solar-powered radios to people in some of the continent's poorest regions, thereby providing access to important information about AIDS education, world news, and information on how citizens can improve their lot.

By raising the quality of life for underprivileged people around the world, Barnholt argued, the business community can cultivate entrepreneurship and creativity—benefits that will produce long-term benefits to corporations. "It's difficult to calculate the exact return on investment for Agilent, but we get tremendous benefits from this activity in terms of greater employee morale and motivation, the ability to attract and retain top talent, and the long-term benefit to future students," he said. "The little kids to whom we teach math and science today might be inspired to become our engineers and scientists 10 to 15 years from now."

In responding to an audience question about current pressures within the United States to keep jobs on home turf instead of shipping them abroad, Barnholt averred that globalization is here to stay. "The model we still have in the United States is that 'we' develop technology here and then move it to different parts of the world," he argued. "That model is out of date. Today there is outstanding engineering talent in China and India, for example, and there are certainly big markets there. Keeping most of our resources in the United States is not a winning strategy. The way we'll win is by having presence in the various countries and in low-cost areas of the world."

As to where that may leave domestic workers, he predicted that the resilient U.S. economy would bounce back and perhaps channel the workforce into emerging areas in biotech and health care. "The aerospace defense industry basically fell apart in the late 1980s, and hundreds of thousands of people lost their jobs when the Berlin Wall came down, but within three to five years, most of those people were re-employed, and the country went through one of the best decades we've ever seen in 1990s," he concluded optimistically.

—Marguerite Rigoglioso

Stanford GSB News

With Globalization Here to Stay, Giving Back to Local Communities Makes Good Business Sense

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