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- Introduction to business,
- Management and leadership
- Three views of csr (corporate
Operating in a corrupt environment
- A big challenge facing multinational corporations is how they should respond to local corruption. Both Shell Oil and Exxon/Mobile sought to carry out drilling operations at sites plagued by corrupt local and national governments.
- Shell took a shareholder approach arguing that their primary CSR was to their stockholders and that involvement in corrupt local politics would be tantamount to paternalism.
- Exxon/Mobile, on the other hand, adopted a more active approach. They took expensive measures to mitigate the environmental impact of their operations. They also hired and provided technical training to local residents. Finally, they worked to ensure that the revenues they introduced into the local communities were not lost through political and business corruption.
- What are the CSRs of multinational corporations that operate in corrupt local environments? Are these fashioned around the minimal obligation of creating no additional harm? Or should they expand to preventing harm (if possible) that others are about to inflict? To move even further up the ladder of responsibility, do multinational corporations have positive, supererogatory responsibilities that consist of adding value to the communities they do business in?
Vicarious csr: responding to supplier sweatshops
- Vicarious responsibility occurs when one agent accepts responsibility for actions executed by another. For example, under agency theory, the principal bears overall moral and legal responsibility for the action since he or she has originated it. Although the agent executes the action, he or she is responsibility only for executing the action faithfully and treating the principal's interests as his or her own.
- In this context, can we hold corporations such as Nike and Wal Mart vicariously responsible for the morally questionable actions of their suppliers? If so, then under what conditions?
- Nike fell under siege when the press found out that its suppliers based in the third world imposed harsh, sweatshop conditions on their employees, including child labor. Nike could have argued that this was beyond the scope of their repsonsibility. How could
they be held
vicariously responsible for the actions of another? Their job was to produce shoes at the lowest possible price to deliver an affordable quality product to customers and to maximize shareholder value. But Nike went beyond this minimal responsibility to carefully vet suppliers and to work with them to improve working conditions. Thus, they expanded the scope of their CSR to include improving working conditions for, not only their employees, but also the employees of their suppliers.
- Wal Mart has been identified by Collins and Porras (Built to Last) as a highly successful and visionary company. It has certainly led the way in providing consumers with high quality products at surprisingly low prices. But the savings it provides to customers and the high returns it guarantees investors are purchased at a high price. Wal Mart prevents its employees from joining unions which has lowered their wages and restricted their health and retirement benefits. Wal Mart employees are also expected to work long hours for the company. While it provides cheap, high quality products to its customers, Wal Mart pushes suppliers narrowing their profit margin and placing upon them the responsibility of supplying product just-in-time to meet demand.
- In its earlier days, Wal Mart targeted small towns. Their competitive practices forced less aggressive, local business to leave. While they have brought considerable benefits to these communities, they have also seriously changed established business and social structures.
- Finally, Wal Mart, like Nike initially, exercises minimal supervision over their suppliers many of whom are oversees. Wal Mart suppliers also have been known to impose harsh working conditions on their employees.
Source:
OpenStax, Introduction to business, management, and ethics. OpenStax CNX. Aug 14, 2016 Download for free at http://legacy.cnx.org/content/col11959/1.4
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