Covid-19, the foundational economy and 'rooted firms'.
| Author | Brett, Will |
| Position | LESSONS FROM THE CORONAVIRUS CRISIS |
Many of the businesses navigating the current crisis have something in common: they are what the Foundational Economy Collective describes as 'grounded' or 'rooted' firms: businesses with long-term links and relationships to their various stakeholders (customers, workers, supply chains and wider communities). (1) Some deliver 'foundational' goods and services, like healthcare and food, that we all rely on daily; others don't. But most do more than simply providing goods and services. They bring people together, invest in local skills, and give places a sense of meaning and distinctiveness. Their value goes well beyond their contribution to GDP. Many are small or micro businesses with an intimate understanding of their own communities (like many of the businesses I work with through the Guardians of the Arches). (2) Others are big firms, like Morrison's, which owns many of the farms, factories and processing units which supply its stores, putting it in long-term relationship with much of its supply chain, as well as its customers and staff, who benefit from this unusually stable business model. (3)
While many rooted firms are struggling, with turnover falling to zero in the lockdown, their longer-term value proposition is increasingly obvious to people starved of face-to-face connection with their local community. And the loyalty of their customer base, sustained through genuine relationships over the long term, puts them on course for a sharp rebound.
Most firms in the foundational economy, whether they previously behaved in a 'rooted' way or not, have been pushed by this crisis into closer relationship with their stakeholders and communities. Supermarkets have taken on the immense strain of this moment calmly; their social responsibility is an almost inevitable by-product of the fact they are offering essential goods and services. Whether a behemoth like Amazon comes out of the crisis with not only a strengthened bottom line but also a strengthened reputation will depend on whether it is able to balance the profit motive with social responsibility, the needs of customers with the safety of workers.
Companies that are not 'rooted', meanwhile, have been finding it harder to navigate the crisis with their reputations intact. In 2018, a controversial joint venture between giant private equity firm Blackstone and giant property management firm Telereal Trillium bought much of Network Rail's commercial property, mainly railway arches, for...
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