These workhorses of the economy could be key to building inclusive prosperity

The recent Business Roundtable statement redefining the purpose of a public corporation has been rippling through the national conversation. At a time when economists, hedge fund billionaires, and political candidates are openly discussing the excesses of capitalism and the need for reform, the statement was met with a mix of enthusiasm, skepticism, and cynicism.

At the center of the Business Roundtable’s statement is the need to shift away from an exclusive focus on shareholders to a wider focus on employees, communities, suppliers, and customers. Their statement outlines a broad set of commitments, from delivering value to customers to respecting the people and environment of the local community, to fostering inclusion, dignity, and respect among their employees.

Perhaps the biggest response to the Roundtable’s statement is, “Now what?” How will some of the nation’s largest corporations walk the talk to reform capitalism for an economy that works for everyone?

There is no shortage of recommendations. In October, JUST Capital published a CEO to-do list to advance a vision of stakeholder capitalism. They call on business leaders to conduct a living wage audit, to create education and training opportunities in their communities, and to commit to diversity and inclusion.

The 181 co-signers of the Business Roundtable statement all head major corporations. What if the Amazons of the world put their values into practice with the Optimaxes of the world?

There are an estimated 30 million small and medium businesses in this country, and they employ about 47% of all Americans. These businesses fuel innovation and are responsible for most job creation. What if large companies, like the ones who signed the statement, set an example by declaring they will choose as their small business suppliers, contractors, and consultants those companies who commit to good jobs for their employees?

The National Fund for Workforce Solutions works with thousands of small and mid-sized employers every year, and many of these firms are as committed to stakeholder capitalism as the BRT members.  Yet in the competition for contracts, they are often judged solely on cost. This may reduce their motivation to invest in workers and leaves them vulnerable to low-road competition that cares little about the impact on workers. Besides considering cost, big companies could take into account factors such as turnover, job growth, training and education investments, diversity, wages and benefits, and worker safety.

If the Business Roundtable set strong guidelines and made opportunistic investments in intermediaries who work with their small business suppliers and contractors, there would be significant and far-reaching impact. There is plenty of evidence that a good job reduces errors, increases productivity, and keeps experienced workers on the job and committed to continuous improvement. Across many sectors, employers who design quality jobs gain a competitive advantage. These suppliers will provide better quality and better reliability at — very likely — a better cost.

If we are going to course correct on capitalism, the biggest companies certainly need to commit to a new purpose. But to achieve transformative changes that will improve the lives of millions of workers, small and medium businesses are key. Many of them are ready to lead the charge.