Systems Theory and the Triple Bottom Line Theory

Triple Bottom Line and Systems Theory

Triple Bottom Line Theory

Triple Bottom Line (TBL) Theory is a contemporary approach to modern business organizations that greatly expands the scope of their focus beyond the traditional bottom line of financial profits (George & Jones, 2008; Robins & Judge, 2009). Whereas the traditional corporate business organization was designed to benefit the interests of shareholders, the TBL approach is designed around the effects of corporate activity on stakeholders, a group that includes shareholders along with people, communities, and entities outside of the corporation. More specifically, the TBL concept applies to the so-called "Three Ps" for People, Planet, and Profit (George & Jones, 2008; Robbins & Judge, 2009).

In principle, TBL dictates corporate actions and decisions in light of all of the direct, indirect, short-term, and long-term consequences on all of those who could potentially be affected by the business and interests of the organization (George & Jones, 2008; Robbins & Judge, 2009). At the level of people, TBL emphasizes fair wages, safe working conditions, and fair returns for all of the remote (i.e. external to the organization) contributors to the supply chain that supports the organization's businesses. At the level of the planet, TBL requires business organizations to consider and make decisions based on the foreseeable consequences of their operations on the local, regional, and global ecological environment. That includes evaluating their products and services from a life-cycle-based perspective that considers the consequences to the external environment of every product from the processing of raw materials, to its use, and through its eventual disposal after its useful life is over. Finally, under TBL, the concept of profit is also much broader because it includes the net profit to the external society as well as the traditional bottom line financial focus of business organizations (George & Jones, 2008; Robbins & Judge, 2009).

Conceptual Consistency or Inconsistency with Systems Theory

In principle, Systems Theory is a more general expression of a very similar idea that supports and does not negate Triple Bottom Theory. Generally, systems theory recognizes that few (if any) events or processes take place in the proverbial vacuum and that virtually everything affects all other things, at least indirectly (George & Jones, 2008; Robbins & Judge, 2009). In the context of modern business, systems theory would apply to the way that the myriad individual internal components of organizations affect one another and determine the overall success of the organization in ways that might not be predictable or even recognizable through isolated analyses of each of the individual components without considering their mutual influences upon one another (George & Jones, 2008).