Introductory Abstract

This special issue addresses the ethical implications of revitalizing urban environments, and the roles that diversity and inclusion, as well as social innovation, play in this process. Currently more than half of the world’s population lives in cities. This is expected to rise to more than two-thirds by mid-century. Thus, our economic, social, and environmental challenges mostly and increasingly play out in urban settings. How can cities be strengthened to address the growing challenges they face? The five papers herein show that it is not easy to strengthen our cities, but with the right policies, political and corporate leadership, and depth of community grounding in ethical principles, it is possible.

The percentage of humanity living in cities is growing. Rising from 56 percent today, more than two-thirds of people are expected to live in cities by 2050 (World Bank, 2023). As a result, urban areas are currently, and are becoming more so, the spaces in which a myriad of our grand societal challenges unfold. Critical issues such as poverty, unequal education, environmental degradation, poor health and nutrition, discrimination based on race, ethnicity, religion, and gender, homelessness, physical insecurity, and lack of access to opportunity, among others, are playing out primarily and increasingly in cities.

Our cities are struggling to address the many and growing challenges they face. Though cities have diverse socio-demographics, many residents face barriers to inclusion that keep them from fully contributing to the life of cities or from reaping the rewards. Opportunities and resources are not equally distributed, but instead accrue to those who belong to social groups with more structural power and status (DiTomaso et al., 2007). Social challenges then fall disproportionately upon poorer, marginalized, and oftentimes minority or immigrant members of our urban communities, presenting a moral dilemma that both demands and defies quick resolution.

Given these dilemmas, how should we seek to support our cities? At the core of this special issue is the belief that addressing the societal challenges that our cities face requires the active and intentional engagement of business. Through the intrapreneurial ventures of existing corporations and the entrepreneurial creation of new ventures, innovative new business models have emerged, been implemented, and scaled in ways that have profitably addressed a variety of social problems (Barnett, 2020; George et al., 2019). Drawing in and drawing upon the untapped talents among the excluded, poor, and marginalized members of our communities have resulted in sustainable and inclusive urban policies and business model innovations that direct academics and policymakers toward new territory for research and practice (Robinson et al., 2019).

Businesses have the capacity to address societal problems. The rub, of course, is that they are also often their cause. Businesses create jobs of varying skill and pay that can include or exclude large swaths of a city’s diverse residents. Businesses build and occupy buildings that bring revenues to the city, but in doing so may change the fabric of a city, inviting new residents and pushing out more established ones. The externalities that businesses generate affect the commons of the communities where they are located, often contributing to social problems on many levels. This presents an intertwined set of ethical and practical complexities to be addressed if business is to achieve its potential to improve rather than harm urban environments. Yet too little is known about the ethical implications of business in urban revitalization and what roles diversity and inclusion, as well as social innovation, play in this process.

The five papers that constitute this special issue show that it is not easy to help our cities (Capo et al., 2023), but with the right policies (Wu et al., 2023), political leadership (Stajkovic & Stajkovic, 2023), corporate leadership (Devine et al., 2023), and depth of community grounding in ethical principles (Huang et al., 2023), it is possible. In this editorial essay, we next summarize the contributions of each of these papers to this important conversation. Thereafter, we explain what these contributions, collectively, tell us about improving our cities. Then, we close by clarifying the questions that remain and offer directions for future research.

Overview of Each Paper

Capo et al. (2023) examine how prosocial organizations—hybrid organizations that have both social and business goals—can convert areas of city centers that have been abandoned due to factors such as urban exodus or economic downturns, into art-related venues. Prosocial organizations are critical to the health of our cities because the sense of urgency with which they operate can raise awareness about urban issues. As such organizations become more salient, they can attract support—but they can also breed resistance. The authors conduct a qualitative analysis of a Sicilian city’s cultural center. In doing so, they identify forms of resistance to and support for the organization’s goal. They isolate four mechanisms (or tools) that organizations can use to effectively navigate coalitions of stakeholders who resist or support their goals: revitalization of a place’s materiality; revitalization of a place’s meaning; showcasing a place’s condition; and acquiring support for the organization’s work.

Wu et al. (2023) evaluate how organizational CSR practices—those that relate to a firm’s shareholders, employees, suppliers, customers and consumers, its environment, and societal context—contribute to sustainable urban development. Firms are an important force in promoting socially inclusive and environmentally responsible growth in cities; that is, growth that balances environmental conservation, social sustainability, and economic growth. Leveraging the introduction of a CSR policy pilot in China’s Jiangsu province as a quasi-experiment research design, the authors link the adoption of CSR practices among the firms in a city to city-level improvements in sustainable development. The authors analyze 2200 firms in 216 mainland Chinese cities, covering the years 2011 to 2019. According to their analyses, firms that adopt CSR practices foster the synergistic enhancement of the economy, the environment, and society in the cities in which they are located. They do so via three mechanisms: improved economic performance, innovation, and employment absorption. Notably, they show that government introduction of a CSR policy stimulates firms to adopt CSR practices.

Stajkovic and Stajkovic (2023) examine how a socio-demographic characteristic of mayors—their gender—affects racial inclusion and economic health in their cities. Mayors are critical to the health of cities because their priorities shape where resources are allocated. In many cities, mayors have significant discretion over substantial resources. The authors argue that female mayors are socialized to hold and value an ethic of care, which, the authors claim, causes them to use their discretion to promote more racial inclusion in their cities, which then improves the financial health of these cities. Racial inclusion helps cities socially and financially by reducing racial spatial segregation and homelessness, poverty, and education gaps, while also growing employment, easing housing vacancies, and boosting family income. Analyzing 528 mayors representing 272 US cities at 5 time periods between 1980 and 2016, the authors show that cities led by female mayors have more racial inclusion and, consequentially, better economic health than those led by male mayors.

Devine et al. (2023) explore how the socio-demographic make-up of commercial real estate investment companies’ (REITs) leadership—specifically, the representation of women on REIT boards and the REIT CEO’s gender—affects the quantity of real estate investment transactions, the geographic concentration of real estate investments, and investments into sustainable real estate. REITs are critical to the health of cities because they deal with the spaces where people work, live, learn, and play. The authors argue that, due to gender difference in risk-taking propensity (i.e., women being more risk averse), real estate investment firms with a female CEO and more women on their board make more sustainable real estate investments. Analyzing 179 US REITs from 2001 to 2018, the authors find that REITs led by a female CEO make fewer real estate investment transactions, geographically concentrate their investments, and promote more environmentally friendly real estate investments when their board has more female directors. This is important because a lower frequency of real estate trading helps promote stability in cities and neighborhoods. Having geographically concentrated investments enables REITs to develop local expertise and avoid making errors that may be detrimental to the neighborhoods and cities in which their assets are located. Finally, given the real estate industry’s carbon footprint, investing in green buildings contributes to making our cities more environmentally sustainable.

Finally, Huang et al. (2023) focus on how characteristics of the region in which a firm is located influence the firm’s participation in government-initiated poverty alleviation programs. Regional context is critical to the health of our cities because regions vary in norms and values, which can affect how urban actors think about their social responsibilities. The authors investigate how regional differences in Confucianism may explain variance in firms’ participation in poverty alleviation programs. The core tenets of Confucianism encourage attentiveness to the human condition (humanism), being oriented toward loving others (benevolence), virtues driven sense of obligation (obligationism), and a surrendering of one’s personal interests for the interests of society (collectivism). Analyzing 3237 Chinese firms from 2016 to 2019, the authors show that firms located in regions where Confucianism is deeply embedded (i.e., have a higher presence of Confucian temples) pay more long-term attention to poverty alleviation programs. This effect is amplified when the firm’s CEO has been steeped in Confucianism and when firms are under more media pressure.

What We have Learned in the Aggregate

As outlined above, the papers in this special issue each advance understanding of specific issues related to the improvement of cities. When their insights are combined, though, additional thematic takeaways arise from across the range of contributions, as we next discuss.

The Values and Meaning of Place Hold Sway

Several studies in this special issue support the idea that the health of cities depends on the prosocial actions of their firms. For example, in China, where business ethics and corporate governance practices vary, businesses are taking initiatives to address social problems in their regions. The Wu et al. (2023) and Huang et al. (2023) studies highlight the role of local culture in creating environments where business leaders develop a set of strong morals that move them to address social problems, as well as the role of legislation in promoting desired behaviors. Huang et al. (2023) address one of the most pressing issues in China—poverty alleviation—through a Confucianism lens, to determine whether firms in regions where Confucianism is deeply concentrated develop more initiatives to alleviate poverty. The core tenets of Confucianism, the authors argue, should elevate social needs such as poverty above corporate interests. Although Confucianism is common across China, it varies in intensity within regions, which the authors argue should explain differences in efforts to address poverty. Consistent with this expectation, the research showed more, more effective, and more long-term poverty alleviation initiatives in regions with a higher concentration of Confucianism. Their work also showed that when a firm’s CEO was born into an environment with strong Confucianism, the firm they led was more likely to engage in poverty alleviation initiatives.

Huang et al.’s (2023) work also emphasizes that corporate practices such as innovation, financial performance, and commitment to employment absorption can be used to foster inclusive green growth in regions. Innovation provides solutions to problems, strong financial performance enables firms to invest in solving problems, and a commitment to employing the workforce provides job opportunities for local residents, which enables them to support themselves and their families. These are but three ways that corporations can contribute to their local community, and it will be important for future research to uncover additional ways that firms can ensure that regional growth provides balanced opportunity and development for all residents.

Collaboration Across Urban Actors Requires Managing Stakeholders’ Interests and Resources

Effective solutions to social problems often require collaboration across business, government, and nongovernmental organizations (Barnett et al., 2018; Palomaries-Aguirre et al., 2018). The Capo et al. study (2023) illustrates how a prosocial organization, encountering resistance from the local population and from the local administration, can counter this opposition by leveraging the support of local entrepreneurs, artists, public opinion, and associations. The strategies they utilize, and that center around the materiality and meaning of the contested space, enable the revitalization of a historical urban center. The study points to the complexities organizations may face in attempts to renew urban spaces, to the critical importance of coalitions in addressing such resistance, and to the relevance of considering both culture and institutions in promoting such changes. Whether and how diversity and inclusion may enhance or hinder such interorganizational cooperation for social innovation is likely a rich avenue for exploration in future research.

Government Policy and Regulation

National and provincial government policies can effectively trigger firms to engage in CSR practices. The Wu et al. (2023) study implicates rapid urbanization in China for the unbalanced development that excluded significant portions of the population. Because the country is transitioning away from a system in which the central government fully allocates social resources, to one in which firms are expected to contribute, firms must now manage that responsibility. As firms begin to more fully engage with corporate social responsibility, we can see a set of practices that firms use to promote inclusive green growth within regions. Inclusive green growth implies that there are equal opportunities for green development in the region (Barbier, 2012). Their research makes it clear that legislation indeed changed the degree to which firms engaged in initiatives that advanced inclusive growth in the region. Importantly, they also found effects for firm size, with small firms engaging in more CSR behaviors than large firms.

The Jiangshu pilot for poverty alleviation that is discussed in Huang et al. (2023) similarly reflects the responsiveness of firms to legislation. The Chinese stock market requires firms to disclose their poverty alleviation efforts, and the results provide evidence of Chinese firms answering the call to eradicate poverty where it is particularly salient. Thus, through these studies in an emerging economy, we clearly see the importance of voluntary as well as involuntary initiatives for addressing social problems in regions. For communitarian nations in transition, government legislation can direct firms to engage in important prosocial behaviors. This finding raises a question about the extent to which legislation can or should be used in more individualistic countries to promote prosocial behaviors. It also raises a question about whether firms do more when legislation requires it, or if they are more generous when left alone to determine the contribution they will make. This question is an empirical one, but ultimately motivates us to consider that people develop moral compasses consistent with the area where they are located. Thus, those who are from areas where prosocial values are embedded in the culture will go beyond what others may do. But when firms are not engaged in prosocial behaviors in their regions, what can be done to develop regional values that motivate them toward this end, and how much time is required for it to trigger firm prosocial behaviors?

City governments that promote policies aimed at racial inclusion can also make cities financially healthier. From the Stajkovic and Stajkovic’s study (2023), one may extrapolate that racially inclusive mayoral policies (those that manifest in narrower racial spatial segregation, and narrower home ownership, income, and education gaps) increase employment, reduce housing vacancies, and improve median family incomes. As Stajkovic and Stajkovic (2023) argue, mayoral offices that prioritize inclusion—rather than economic development, as is often the case—can achieve societal and financial success. In the debate about whether pursuing societal benefits impedes or complements financial health, this study gives credence to the argument that cities can do well by doing good. Questions remain, however, around the possibility of feedback loops, whereby inclusive policies may be more successful in financially healthier cities, an issue the authors address but that is difficult to prove empirically.

Individual Characteristics of Decision Makers Matter

Wu et al.’s (2023) work highlights the effect of the moral compass of the CEO and the environment in which the firm operates on the likelihood that a firm will work to address social problems. In this research, the moral compass was based in Confucianism, which argues for the elevation of the needs of the community over those of the firm. The study found that Confucianism was more influential on CEO social actions than were Taoism and Buddhism. Perhaps other religions and philosophies provide more or less moral grounding for motivating CEOs to address social problems. Future research could investigate the value sets of CEOs in order to distinguish that which derives from certain philosophical perspectives relative to that which derives from religion, and how each contributes—or does not—to firm prosocial behaviors.

Two other papers in this special issue suggest that women’s leadership in political and corporate governance may be key to addressing urban challenges of inclusion and sustainability. Stajkovic and Stajkovic’s (2023) study shows that cities led by female mayors do better financially than those led by male mayors. They argue that this is partly because women leaders have a greater ethic of care. Devine et al. (2023) show that REITs with a woman at the helm and whose boards include more women make more geographically concentrated investments, hold their real investments for longer, and invest in more environmentally sustainable buildings; all of which, other research shows, benefits cities. To explain these relationships, they invoke research suggesting women corporate leaders are less overconfident than their male counterparts and more attentive to a wider range of stakeholders.

Because neither study includes measures of mayoral, CEO, and board member ethics, risk appetite, stakeholder orientation, or other individual characteristics, claims of individual differences should be tempered until future studies can shed more definitive light on these relationships. Crucially, both studies are conducted in the same country (United States), leaving the door open for new studies that may further examine how women’s governance leadership roles in support of cities might unfold differently in varying contexts. More broadly, it would also be helpful to understand what ethical frameworks are used by those who engage in prosocial activities, and how and to what extent these practices become part of organizational routines and capabilities that transcend particular leadership groups.

What We Still Need to Sort Out

While the collected papers in this special issue addressed many important issues, many key issues that will help to further strengthen our cities require more investigation. Below, we expound on some of the unanswered questions that we believe deserve further consideration.

Competing Employment Models

We know that firms implement a variety of employment practices, from utilizing hiring pipelines to certain universities (Brymer et al., 2014), to employing different strategies for compensating their employees (Williamson, 2000). While convenient for the firm, these practices can also inadvertently advantage certain populations over others and generate levels of inequality within regions where the firms are operating. Particularly with the US Supreme Court striking down the use of affirmative action in collegiate admissions, and the subsequent lawsuits that followed to challenge legacy admits to universities, it is time for businesses to examine their existing policies in order to ensure they are not engaging in inequitable hiring, promotion, or firing practices. Therefore, still needed are studies that investigate the ethical considerations encountered by founders and businesses that operate in competitive markets with a diverse workforce when formulating employment practices. Similarly, it would be helpful to know in what ways everyday ventures (Welter et al., 2017), which dominate the urban entrepreneurship landscape, build competitive success through diverse and inclusive employment practices. How does their approach compare to the choices made by most new ventures (which tend to value homophily)? What are the upsides and limitations?

Relationship Between Ownership and Ethical Behavior in Business Engagement with Cities

As the pandemic exposed the vulnerabilities of global supply chains, companies have begun to reconsider where they do business. Where this results in a retrenching of operations in a vulnerable country, it is important for companies to consider ways that will bring the least harm to the affected communities. The decision to enter or leave a city should always be undertaken with the utmost care, given the economic impact that multinational corporations can have. Therefore, we call for studies that explore how different ownership structures, such as closely held private firms (including family businesses), domestic companies, and foreign companies, manage their operations and choose the cities where they operate.

Impact of City Infrastructure on Work-Life Balance and Workforce Diversity

A city’s infrastructure shapes its citizens’ ability to effectively manage competing employment and family demands (Aryee et al., 2005). Unreliable Internet access, electricity, and water supplies adversely affect quality of life (McLean et al., 2017). The structure of public transportation networks may disproportionately affect commuting time, which can impact domestic and childcare responsibilities, with spillovers on work-life balance and work-family conflict (He et al., 2020; Jain et al., 2011). Hence, work is required to identify ethical designs or practices that can help businesses to minimize infrastructure effects on their workforce and local population and, more specifically, to alleviate the negative effects of city infrastructure on work-life balance.

Inclusive Measures of Success

We call for research on inclusive policies, practices, and measures of success that businesses and organizations can create or influence in their domains (Robinson et al., 2019). Improvements to a city’s quality of life, including lifestyle amenities such as museums, waterfront parks, and open‐air shopping centers attract more families and more highly educated employees, but displace racial and ethnic minorities (Carlino & Saiz, 2019). Social innovations that limit negative side effects can help to ensure that local neighborhoods become more diverse and vibrant. How can we measure success for cities and their citizens, and not just for firms, since revitalization is often accompanied by rising rents and gentrification (Barnett et al., 2020; Welter & Baker, 2021)?

Relational and Social Capital

Cities are often filled with enclaves of ethnic groups, each of which may have their own systems for operating in that community. Understanding how these communities interact, in-group as well as between groups, may shed light on the different power structures that exist within communities of cities. Moreover, a considerable body of work suggests a non-trivial correlation between a city’s design (e.g., how walkable it is) and social cohesion among its residents (Mazumdar et al., 2018). As Latham and Layton (2019, p. 1) wrote, “Cities are full of intricate and often surprising social networks—networks that help bind people together and provide important resources in times of stress.” How these connections are facilitated by and through businesses and other organizations can influence the opportunities available to stakeholders and the social and economic dimensions of the city. One area of investigation, for example, might be how executives’ decisions regarding remote work requirements, by altering the use of residential and commercial spaces, might reshape urban centers. Therefore, understanding the development and use of relational and social capital in urban areas is another underexplored area. We encourage further research in this area.

Entrepreneurial Ecosystems

Revitalizing cities entails a range of entrepreneurial endeavors and should involve the inclusion of the various actors in the region. Research that seeks to understand who has access to the entrepreneurial ecosystem and who does not can add value to the field. Moreover, stronger consideration of the types of ventures that can or cannot be supported in urban environments is another salient issue. And yet, research on urban entrepreneurial ecosystems is underexplored, despite its potential for significant research impact. Overlaying ethical and equity considerations on to an ecosystem approach could lead to inclusive urban innovation (Robinson et al., 2019) or policies and practices that broaden participation in entrepreneurship across socio-economic strata and lived experiences (Vickerie-Dearman et al., 2021; Baker & Welter, 2017, 2020). Studies that discuss the types of practices in which firms engage for poverty alleviation and their effectiveness would add important insights to the literature.

Further to the national settings discussed in this special issue, research that explores inclusive innovation in non-US or Chinese contexts would add significant value in the field. Specifically, research in the smaller nations in Asia, across Africa, the Caribbean, and Latin America, would greatly enhance our understanding of opportunities entrepreneurs have for strengthening our cities.

Conclusion

As city dwellers, most of our growing global population will benefit if we can find ways to strengthen the ability of cities to successfully deal with the growing challenges they face. The papers in this special issue found some answers. With the right policies, political and corporate leadership, and depth of community grounding in ethical principles, it is possible to strengthen our cities. But, as with any limited set of papers, many important questions remain unanswered. We hope that, with this special issue, we spur both broader and deeper research into this important topic. We thank the journal leadership, our authors, and reviewers for their help in assembling this special issue.