Microsoft Word 6-057 a gentler Capitalism Final version June 2006. doc

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06-057 

 

 

Copyright © 2006 Linda Hill and Maria Farkas 

Working papers are in draft form.  This working paper is distributed for purposes of comment and 

discussion only.  It may not be reproduced without permission of the copyright holder. Copies of working 

papers are available from the author. 

 

A Gentler Capitalism: 

Black Business 

Leadership in the New 

South Africa 

 

Linda A. Hill 

Maria T. Farkas 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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A GENTLER CAPITALISM:  BLACK BUSINESS LEADERSHIP IN THE NEW 

SOUTH AFRICA

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Linda A. Hill 

Wallace Brett Donham Professor of Business Administration  

Harvard Business School 

 

Maria T. Farkas 

Doctoral Student, Sociology, University of Michigan 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLEASE DO NOT QUOTE OR REPRODUCE WITHOUT PERMISSION   

 

© COPYRIGHT 2006 

                                                 

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We would like to thank Emily Stecker and Rakesh Khurana for feedback on drafts of this article. 

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Abstract: 

 

Through her efforts to recruit, hire and develop minority executives at MTN, a South 

African telecommunications company, Charnley attempts to bring a gentler capitalism to 

post-apartheid South Africa. Like her other colleagues on the Black Economic 

Empowerment (BEE) Commission, Charnley believed that each black business executive 

had a responsibility to effect positive change in their particular company, and that 

through their collective efforts they could have a powerful collective impact on the 

country. By the time of the BEE Commission Charnley found herself at the top of the 

pyramid, but she had come from the bottom, growing up in Elsies River – an Afrikaans-

speaking, Colored area outside of Cape Town. This paper begins with a description of the 

economic conditions in apartheid and post-apartheid South Africa, then details the BEE 

Commission, and finally narrates Charnley’s story.  

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The long walk is not yet over.  The prize of a better life has yet to be won. 

 

-President Nelson Mandela’s remarks at his final state of the union address 

 

If we want business to become a tool for alleviating poverty in a sustainable way, 

we must develop business leaders who are willing to ask normative questions about the 

means and ends of capitalism. The practice of capitalism and beliefs about the 

appropriate role of business vary across nations.

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  With this variation come different 

perceptions and strategies of how to address the tension between political equality and 

economic inequality inherent in capitalist democracies.  These perceptions and strategies 

are largely unexamined in the more stable economies.

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  They are more likely to be raised 

in transitional economies in which, by definition, new institutions are being designed and 

new policies and practices established.    

In the new South Africa, the influx of blacks into business has brought into sharp 

relief the fundamental tenets of capitalism.  In constructing a new social order, 

government, the private sector, and civil society are embroiled in a debate about the 

appropriate role of business in addressing social ills.

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  Many new black business people 

were activists during the struggle against apartheid holding leadership positions in 

organizations such as the African National Congress (ANC) or the union movement.

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For examples of the illustrative power of comparative work see for example, C. Handy, “What’s a Business For?”  Harvard 

Business Review, 80(12) (2002): 49-55.  Handy contrasts the Anglo-American notion of companies as profit-maximizing agents for 

their shareholders with the European notion of companies as communities and how that impacts how executives in each region think 

about outsourcing and layoffs, for instance.  Much of the comparative work on the role of business has been done in emerging 

markets.  See for example, V. Kasturi Rangan, "Lofty Missions, Down-to-Earth Plans," Harvard Business Review, 82(3) (2004): 112-

119.;  V. Kasturi Rangan, K. Sohel, and  S. K. Sandberg,  "Do Better at Doing Good," Harvard Business Review, 74(3) (1996): 42-51.; 

and V. Kasturi Rangan and J. Quelch, "Profit Globally, Give Globally," Harvard Business Review, 81(12) (2003): 16-17; and Lynn 

Sharp Paine, Value Shift:  Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance.  New 

York:  McGraw-Hill, 2003.

 

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Milton Friedman’s argument that the sole concern of business should be shareholder maximization is alive and well.  See for 

example, C. Crook, “The Good Company,” The Economist (Special Edition: “The Good Company: A skeptical look at corporate 

social responsibility”), 374 (8410) (2005): 9; M. Friedman, Capitalism and Freedom. Chicago: University of Chicago Press, 1962; and 

M. Friedman, “The Social Responsibility of Business is to Increase Its Profits,” New York Times Magazine, Sept. 13, 1970: 17-21.  

For readings which make the counterargument, see for example, A. Cadbury, “Ethical Managers Make their Own Rules,”  Harvard 

Business Review, 65(9) (1987): 69-73; M. Csikszentmihalyi, Good Business. New York: The Penguin Group, 2003; M. 

Csikszentmihalyi, W. Damon, and H. Gardner, Good Work: When Excellence and Ethics Meet. New York: Basic Books, 2001; W. 

Damon,  The Moral Advantage:  How to Succeed in Business by Doing the Right Thing. San Francisco: Berrett-Koehler Publishers, 

2004; J.K. Galbraith, The Affluent Society. Boston: Houghton Mifflin Company, Third Edition, Revised, 1976; W. George, Authentic 

Leadership: Rediscovering the Secrets to Creating Lasting Value. San Francisco: Jossey-Bass, 2003; W. Greider, The Soul of 

Capitalism: Opening Paths to a Moral Economy. New York: Simon & Schuster, 2003; C. Handy, “What’s a Business For?”  Harvard 

Business Review, 80(12) (2002): 49-55; A. Sen, “Does Business Ethics Make Economic Sense?” Business Ethics Quarterly, 3 (1993): 

46-48; and N. M. Tichy, and A. R. McGill, The Ethical Challenge: How to Lead with Unyielding Integrity.  San Francisco: Jossey-

Bass, 2003.

 

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 Certainly, many white businesspeople were very engaged in the anti-apartheid movement and are now quite committed 

to improving the lives of the previously disadvantaged.  In fact, initially we intended to profile one or two in our book; 

we have interviewed a number of them.  However, in the end we elected to focus on the transition experience into 

business so we will not profile white businesspeople.  However, these data will be included in the general background 

information in the book. 

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Drawing on the traditions of oral history and ethnography, this paper is adapted from a larger research effort to profile 

and examine South African black business leaders’ formative experiences and leadership.   In conducting this research, 

we initially interviewed more than two hundred black and white South African leaders in the business, government, and 

not-for-profit sectors over five years. Based on these interviews, we choose four black business leaders whose paths to 

business were representative of those followed by the majority of their peers (and representative of the race/ethnicity of 

Africans, coloreds, and Indians in South African).  We conducted an additional series of in-depth interviews and field-

based observations with our four protagonists, their colleagues, mentors, friends and sometimes families. 

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