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Tuesday, September 26, 2017

Strategic CSR - Apple

The article in the url below uses the economist, Thorstein Veblen's concept of "conspicuous consumption" to discuss the release of the latest iPhone. Contrary to most goods (which decline in price over time, even while improving in quality), those goods that are seen by consumers as status symbols (so-called "Veblen goods") will tend to rise in price:
"Now, Apple and Samsung are testing whether the social commentator's theory on what has come to be known as the 'Veblen good' can work for one of the most common of all consumer products: the phone."
The article continues that, according to economic theory, this kind of price competition is more likely to happen in a mature industry. Whether the smartphone industry is mature is up for debate. Either way, the speed of the rise in price is notable when compared to previous models:
"The starting price of the new flagship iPhone X is about 50% more than the $650 starting price of last year's iPhone 7. The most expensive version of the iPhone X, with 256 gigabytes of storage, will cost 19% more than last year's most expensive device, the iPhone 7 Plus, with the same memory."
What I found interesting about the article, though, was the numbers it uses to convey the suspicion of saturation in this market:
"Data from IHS Markit estimates there are just under 100 smartphones per 100 people in the U.S. and about 92 smartphones per 100 people in Europe. (Many people own more than one phone.) By 2020,there will be about 84 smartphones per 100 people globally, IHS projects."
I think this trend has many implications for the CSR debate. For one, all the drivers of greater transparency in life today (for good and bad) will continue, if not strengthen as smartphone ownership embeds itself even more firmly around the world. The speed (and volume) at which we communicate will only increase, helping to further flood our mental inboxes with information we (for the most part) do not need. Expect to see a corresponding drop in attention spans. Most important for companies, however, they will continue to be forced to react at lightning speed to complex issues that often require greater reflection. While this matters directly in terms of product-related issues that arise, it will also include national (or global) debates that suddenly become a universal dialogue, and which CEOs have traditionally sought to avoid. The speed at which the narrative around this past weekend's NFL games evolved here in the U.S. was truly amazing to watch. I have no idea where this is taking us, but it means the need for effective stakeholder relations and responsiveness will move ever-closer to the heart of the modern corporation.
Take care
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New iPhone Tests Economic Theory
By Josh Zumbrun and Tripp Mickle
September 18, 2017
The Wall Street Journal
Late Edition – Final
Apologies: The NYT article in Monday's post contained an incorrect url. The correct url is: