C.K. Prahalad is tired of waiting for scandals to break out to bring about corporate responsibility.
"We need to move away from an adversarial and scandal-driven regulatory process," he said.
Prahalad, who authored the bestselling Fortune at the Bottom of the Pyramid spoke yesterday to Penn students in Vance Hall.
Prahalad said that the soybeans that are used to make tofu -- a staple of the American vegetarian's diet -- are produced through the controversial process of genetic modification.
The United Kingdom, however, put severe regulations on genetically modified foods giant Monsanto after the press dubbed the company "Frankenstein."
Another example of the lack of corporate responsibility, Prahalad said, is manufacturers' use of child labor overseas.
The suppliers of labor to large corporations, such as Nike, use child and prison labor in abysmal conditions, Prahalad added.
"Corporate conduct should transcend national boundaries," he said.
Prahalad also urged that legislation against harmful products be written with a view to the reactions of the consumer.
He cited the example of a GlaxoSmithKline product that helped women tackle irritable bowel syndrome. Because of the drug's serious side effects, the Food and Drug Administration moved to ban it.
Consumers, however, petitioned for continued use of the drug, being ready to accept the risks involved.
As a result, the FDA has instituted a new clause in its regulations.
Consumers can purchase a drug if they sign a document that attests their awareness of its side effects.
Prahalad expressed his view that corporations are barely global, even today.
"Eighty percent of humanity is excluded from purchasing their products. Five billion people make less than $3 a day," he said.
The social benefits of a product are often compromised by pricing policies, he said. An increased demand leads to an increase in price.
"Companies need to balance the profit motive with an effort to address the needs of the community," he said.
The audience was clearly impressed with Prahalad's presentation.
Wharton junior Havy Nguyen was particularly struck by the lecture.
"It was really interesting. He brought up a lot of issues," she said.
