Inclusive Growth Drivers: The Anatomy of a Corporation

Morgan Stanley Institute for Sustainable Investing, October 2017

Inclusive Growth drivers: The anatomy of a corporation

• 15 pages • Morgan Stanley Institute for Sustainable Investing

This paper is a high-level 'anatomy of a corporation' that explores the business considerations of a company. It also maps the ways in which those factors impact inclusive growth and achieve business benefits. This framework is intended to help businesses think about their activities, choices and strategies through the lens of inclusive growth. Investors, for their part, can use this framework to evaluate risks and opportunities related to inclusive growth.

The Morgan Stanley Institute highlights long-term advantages resulting from inclusive growth practices within a company’s core strategy. These practices are consistent with inclusive business models. The framework presented in this article shows that corporations can contribute to social and environmental gains, while achieving business benefits.

Key recommendations

  • Expanding global economic activity to include more people may benefit long-term growth—and corporate performance
  • Corporations can increase profits and achieve inclusive growth through choices across all functional areas of a business

Importance of the publication for businesses

  • Introduces a new framework for companies how inclusive business models and other practices can become an unambiguous win for a company
  • Evaluates risks and opportunities related to inclusive growth

Importance of the publication for policymakers

  • Gives insights how policy makers should collaborate with corporations to open up access to consumer goods and basic services for underserved populations


The Morgan Stanley Institute for Sustainable Investing published the report Inclusive Growth Drivers: The Anatomy of a Corporation to illustrate the role of businesses in inclusive growth, which is defined as “economic growth that creates opportunity for all segments of the population and distributes the dividends of increases prosperity, both in monetary and non-monetary terms, fairly across society” (OECD). Inclusive practices can promote business aims in two key ways: (1) First, they can improve the operating environment with lower levels of social resentment and social unrest and (2) second, they can enhance the consumer purchasing power. The ‘Anatomy of a Corporation’ framework identifies possibilities for action and maximise benefits, which include greater employee attraction, retention, engagement and productivity as well as improved product innovation, quality and market access. The framework contains four parts:

  • Human Resources: fair and collaborative labour relations help to achieve more equitable compensation and increase employee engagement, leading to improved productivity, customer service and retention. Companies increase productivity if also low-wage employees receive benefits. A workforce that reflects a broader population can better reveal consumer needs and expectations; companies with diverse workforces achieve superior performance.
  • Products and services: through design, production, marketing and sales, corporations can reach untapped populations and expand their customer bases. Inclusive Business models strengthen value chains through market analysis and pricing, product advertising and costumer relations. The Base of the Pyramid (BoP) represent spending power of $5 trillion per year.
  • Operations management: inclusive logistics systems enable affordable distribution across the value chain and have appropriate back up and response systems to ensure continuity for all customer bases during business interruptions. U.S. studies suggest that socially responsible supplier selection can lead to increased revenue through reputational advantages. Operational decisions can begin with procurement and supply chain management. Business levers of IB models are supplier qualification, procurement and supply chain monitoring and supplier capacity building.
  • Firm Management and Governance: transparency and strong governance systems promote ethical decision-making and long-term thinking across organisations. Responsible lobbying should be consistent with an organisation’s stated policy, with commitments to all stakeholders and with the core strategy and actions. Lobbying should also advance the implementation of universal principles and values in business practice.

Pioneers in inclusive business need to counteract the perception that inclusive growth practices inevitably damage the bottom line. The overall confidence in companies is low and therefore, corporations need to reconsider their actions to restore confidence. “This paper is the beginning of a broader body of work, in which the Institute for Sustainable Investing will continue to explore the role of corporations and investors in fostering inclusive growth, deeper understanding of the intersection of corporate performance on inclusive growth and financial factors and of the when and how inclusive practices generate business value.” This report should be read together with the Kaplan et al article on inclusive growth in the Harvard Business Review, which focuses on external strategies concerning the whole ecosystem, whereas this report concentrates on specific internal actions to promote inclusive growth.