Is "corporation" a dirty word?

I was at a social event recently in suburban New York where a group discussion turned to current affairs. I was stunned by the depth of negative feeling toward "corporations." One person said corporations were the reason there is so much conflict in the world. Another said, "I think the reason the U.S. government is doing so poorly is that the big corporations dominate it." Some corporations "do good things," another said, but she still seemed to believe that, in general, they were the very root of evil.

There are two possible responses to hearing those arguments. One is to resolve never to be exposed to those sorts of people again. But the wiser response, as we contemplate 2006, is to recognize that these feelings exist in the general public (and certainly in the media) and then to find ways to change a few minds.

The place for all of us to start is explaining what a corporation is. It might go like this: A corporation is an entity that must make money, over time, to survive. Corporations form the bedrock of our economy and hence our relative prosperity. Every piece of food we eat, each garment we wear, each medication we take, and each telephone call we make is the result of something that a corporation did. Corporations also are the engine of all our incomes. Even if the average Joe works in a government or an educational institution, tax dollars from corporations and from the individuals who work there help pay the bills.

The notion that corporations ought to be "doing good things" in terms of addressing social and environmental issues is also wrong. Here's what we need to explain: Corporations yield benefits to customers, employees, shareholders, partners and other constituencies, but it is not part of their mission to cure poverty or save the whales. That's where governments, nonprofits and other organizations are supposed to take over. That's how our system is organized.

Of course, a lot of the animosity toward corporations and CEOs was triggered by the spectacular abuses at Enron and similar companies, where many individual investors lost money. And headlines about CEO compensation continue to rile the body politic (even though people seem to accept the fact that the New York Yankees had a payroll of more than $200 million and couldn't win a pennant).

At the social event, I tried explaining that corporations now are much more transparent and much better-managed than ever before and that they are far more efficient than governmental and educational institutions. Although I have been critical of Sarbanes-Oxley for costing too much and being far too invasive, I told people it has had a dramatic impact on governance in many companies. Funnily enough, no one had heard of Sarbox. They've seen the perp walks, but the broader story of change isn't getting out to the general population.

I suspect most of you just shake your heads in disbelief when you hear how deep the general hostility toward corporations is, assuming it will never affect your bottom line. But I think these attitudes are corrosive. To make the United States a better place to do business, and to safeguard its prosperity, they must be confronted head-on. That is a worthy New Year's resolution.