Today, I came across a blog post by a professor from the University of Toronto arguing in favor of large corporations as the catalysts for innovation. In his post, he argued that large companies have better access to resources, greater brand strength, more talent, and more support and momentum for promising R&D projects. However, the Sharholders ethic expressed by Milton Friedman, makes me wonder whether big corporations are really suited for things that relatively make smaller profits but really beneficial to the society. If the main purpose of a corporation is to increase the wealth of shareholders, and if the monetary profit is something that they care most, is there really a chance for “socially responsible” projects to compete with projects that has potential for large profit margins?
Being trained to become a Biomedical Engineer in my first 3 years of college, I have come across many instances where a medical device has a small market but is a realistic remedy for the affected people who are having difficulty enjoying their quality of life because of the medical condition that they have. But since the market opportunity is small, the innovators of those “small” projects have a lot of difficulties in convincing the top management that their projects are “worth consideration”. On the other hand, the inherent uncertainty surrounding a R&D process make it really difficult for the main decision makers to accurately “measure” the consequences. Nobody knows for sure how much time it will take to get a medical device to market. And even after getting to market, new trials conducted over a longer time frame might suggest the device is inappropriate for use. Hence, the big question that the management faces is that “Is it really worth taking the risks?”
In my opinion, I think large corporations may not be the best place to undertake such a project. The government also has a responsibility to fund this kind of projects for the greater good of the society. But on the other hand, innovation should not be limited to the government labs only. Private corporations are more efficient at encouraging innovation and solution selling. The government should subsidize some promising projects to share the burden of the risks from the corporations. Thus, it should be a joint-responsibility of government and large corporations to bring the best out of the innovative ideas to promote the welfare of the society.