Emerging Multinationals Use

Purpose for Growth

Integrating a strong, cohesive purpose can ignite employee passion and drive growth, something

emerging market companies have become good at.

The Florida Ice and Farm Company (FIFCO), a Costa

Rican food and beverage company that counts

famous drinks labels Labatt beer and Milory

carbonated drinks among its products, says it brings

“a better way of living to the world.” It’s not a

mission statement or a contrived corporate value.

The company’s CEO, Ramon Mendiola calls this its

purpose.

FIFCO’s purpose is about more than just words. The

company has used the idea to energise its workforce

and define its place in the community; essential

foundations for its growth. In fact, Mendiola says the

company’s financial performance has been

strengthened by its “purpose and its triple bottom

line way of doing business.”

It’s not the only emerging firm that’s doing well by

doing good. Natura Cosmeticos, a household name

in cosmetics in Brazil calls itself the “wellbeing well”

company. In 2014, Natura attained “B Corp” status,

joining a community of organisations (and the first

publicly traded company) to reconcile economic

growth with the promotion of social and

environmental wellbeing. It’s no coincidence that

Natura is growing aggressively, with over 1 million

sales representatives across Brazil and increasingly

more in other countries.

Meanwhile in India, Tata Motors’ motto, “leadership

with trust”, defines its growth model, anchoring its

ambition to be a global company operating in

multiple countries, and at home anywhere in the

world, whilst carrying this sense of trust wherever it

goes.

Learning from the emergent

Firms around the world can learn about enterprise

purpose, its role and its power, from the experience

of these emerging multinationals, according to a

report from the World Economic Forum’s (WEF)

Global Agenda Council on Emerging Market

Multinationals.

The idea of a public role for enterprises, and hence

enterprise purpose, is spreading as governments

are increasingly being challenged to deliver the

progress that society is seeking. This may be

especially true in emerging markets, says Subi

Rangan, INSEAD Professor of Strategy and Chair of

the WEF Council on Emerging Multinationals.

Although it’s too early to say definitively, business

leaders believe that the energy of enterprise

purpose is reflected in stronger employee

engagement, greater productivity, greater trust in

society (potentially less costly regulation), and a

more adaptive and sustainable enterprise.

At a recent offsite of the WEF council on emerging

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market multinationals, CEOs from various sectors,

academics and management consultants determined

that a purpose can help firms in three key ways.

Good for society

Organisations in both emerging and developed

markets are facing a more sceptical public and

regulatory environment, making a firm’s license to

operate more important. According to the WEF

report, a purpose-led approach can provide

consumer-facing companies with a strong

reputational advantage, entrenching them in the

community.

According to a study by communications

consultancy, Cone, when consumers are given the

choice between similar products produced in either

socially responsible or non-socially responsible

ways, 92 percent will choose the product produced

in a responsible manner. This effect was more

strongly felt in the millennial age group.

Natura knows this well. The company is dedicated to

using indigenous natural ingredients in its products

and holds strongly to its natural positioning in

beauty and personal care products. It is also the

founding member of the Union for Ethical BioTrade.

Natura’s respect for local knowledge and

ingredients in its supply chain ensures its stands out

among foreign competitors, helping it expand

globally. It now has over 1 million direct resellers

around the world.

Global players have noticed, and are now trying to

emulate its success. L’Oreal and Unilever have set

up R&D centres in Brazil to localise their recipes

with indigenous ingredients.

For Indian IT giant Infosys, reputation was central to

the company’s rapid expansion at home and later

overseas. Co-founder and former CEO, S.D.

Shubulal, notes that when Infosys was launched in

India it was generally accepted by corporations that

money and political clout were the only way to get

things done. “It was a practice we, as co-founders of

Infosys, were determined not to follow,” he said.

“What kept us together was our common desire to

gain respect from international markets. It was the

passion for this purpose that gained us a reputation

for integrity and trustworthiness at home and

overseas.”

Infosys’ purpose took on further dimensions. “From

building a company, we helped to build an industry

and further, to build credibility for our country,

changing in some ways, the manner India was

projected,” he added.

Good for talent

One of the biggest challenges facing both local and

foreign firms operating in emerging markets is

talent. There is a lack of skilled talent and, as a

consequence of this skills shortage, high turnover of

those in demand. Ramon Mendiola, the CEO of

FIFCO encapsulates the challenge in his dealings

with millennial staff members who are idealists and

want to make a difference but will move if they don’t

have the opportunity to do so: “they are loyal

leaders, but not necessarily to the organisation,” he

said.

Research has shown that millennials want to work

in jobs that give them meaning and allow them to

contribute to society. If emerging multinationals can

offer purpose-driven motivation, they can draw top

talent and align employees to common causes. This

makes purpose an even more important

differentiator to emerging firms, which have little

brand awareness and visibility to talent.

Good for management

Lastly, defining and implementing a sense of

purpose can have tangible effects on the functioning

of an organisation. As emerging multinationals are

increasingly competing with the global

multinationals, which are constantly getting better at

embedding themselves in foreign markets and

snatching talent from local rivals, purpose can give

emerging firms a local edge.

Communities and employees have a closer

affiliation with local brands that are doing good

locally, giving firms a perfect opportunity to loosen

up their existing management practices and move

away from the KPI systems of the MNCs.

In FIFCO’s case, before the company defined its

purpose, rapid international growth had led to a

proliferation of KPIs and an obsession with data

collection. After the restructuring of the company

around purpose, many of these control methods no

longer played a central role. According to

Mendiola, purpose allowed a number of control

mechanisms to melt away, giving employees

“continually evolving motivation”. He notes that the

company’s work around purpose enhanced its triple

bottom line approach and gave it an advantage over

its many competitors.

Purpose has become a crucial edge for emerging

market firms. It can change how a company is run,

how it attracts talent and how it is positioned from a

branding perspective, all essential elements for

growth given the shift in consumer attention to

responsible products in both developed and

developing markets.

This article is part of a series in partnership

with Knowledge@Wharton and the World

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Economic Forum Global Agenda Council on

Emerging Market Multinationals.

Subramanian Rangan, the chair of the council, is a

professor of strategy and management at INSEAD and

The Abu Dhabi Crown Prince Court Endowed Chair in

Societal Progress. He is also the programme director

of AVIRA: Awareness, Vision, Imagination, Role,

Action, one of INSEAD’s executive development

programmes.

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