Profitable corporations are more aligned with the sufficiency economy (SE) philosophy than unprofitable ones, according to new research by the Sasin Centre for Sustainability Management.
Evaluating the top 50 companies on the Stock Exchange of Thailand (SET50), the pilot project found that firms applying SE principles performed better in terms of net profit, debt-to-equity ratio and company value, said project head Nick Pisalyaput.
The Sasin study is believed to be the first to use financial data to reveal the implications of SE.
The companies were judged on 63 criteria in five key areas: moderation, reasonableness, self-immunity, knowledge and integrity.
For instance, moderation looks at how efficiently companies use resources, while reasonableness deals with making decisions for long-term benefit.
"Everyone believes that SE practices are effective and that it works, but there had been no clear supporting evidence to back the claims," said Mr Nick.
Initiated by His Majesty the King, SE stresses the balance between craving too much and having too little. The idea has been heavily promoted in Thailand, but there are questions over the extent to which it is carried out.
Elements of SE were incorporated in 1997's National Economic and Social Development Plan and remain in the current 2012 plan.
The companies most aligned with SE include Advanced Info Service Plc, Bangchak Petroleum Plc, PTT Plc and Siam Commercial Bank.
"Sufficiency does not mean you aren't growing, but a lot of people misunderstand," said Mr Nick, also president of the Corporate Responsibility & Ethics Association for Thai Enterprise (Create). "What we mean is sustainable and stable growth."
But Sumit Champrasit, secretary-general of the Institute of Sufficiency Economy, said tying SE performance to financial data could lead to a wrong impression SE success is all about cash.
There is the possibility that the SET 50 firms were already successful and might not have been driven by SE in the first place. "Also, it is not certain that the board of directors is a sufficient representation of SE practices in organisations, as self-reliance of employees is the core essence of a firm's sustainability in the long run," said Mr Sumit.
He said further studies could capture a longer period of evaluation and use internal data rather than announcements to the public.
Gayle Avery, author of Honeybees and Locusts: The Business Case for Sustainable Leadership, said the family businesses that tend to take a honeybee track actually make more money, contrary to the perception that one needs to be profitable first in order to become sustainable.
Honeybees and SE firms are much alike because they have the ability to withstand crises.
"Many CEOs have been through conventional business schools that continue to preach short-term shareholder returns, which is such a false way of looking at it," said Prof Avery, who teaches at the Macquarie Graduate School of Management and is chief executive of the Institute for Sustainable Leadership.
"If these CEOs look at the evidence, they will start to say it [sustainability] is in the interest of my investors," she said.