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Monday, March 12, 2018

Strategic CSR - Corporate activism

The article in the url below comments on the recent surge in corporate activism on a range of issues that firms suddenly find themselves having to help solve:
"In the weeks since the Parkland school shooting, big U.S. companies have found themselves in a familiar position: pressured to act on controversial social and political issues where government won't. It's a trend currently manifested by firms cutting ties to the National Rifle Association and efforts by large investors to reduce exposure to gun-makers. But with U.S. politics more polarized than ever, moving forward on issues that Washington has failed to tackle is increasingly routine for corporate America, from coastal tech giants like Alphabet Inc. to heartland icons including Walmart Inc."
One assumption that underpins this argument, therefore, is that it is the government that is the super-ordinate entity and companies are subservient to it. In other words, the government 'should be' taking the lead and, when they don't, companies 'have to' step up:
"Whether that means more generous benefits for working mothers, support for politically vulnerable groups, or intensifying efforts to fight climate change, companies are stepping into a void once filled by political rhetoric and leadership."
In the Strategic CSR framework, it is the other way around. The government is a stakeholder in the company and brings pressure to bear via regulation. The company is the preeminent organizational form in a capitalist society and all other organizations are subservient. They have their role, but it is the for-profit firm that creates the most value in society:
"There are a variety of reasons companies are taking on the additional costs -- including the bottom line. Consumers, employees, and to some extent even shareholders are newly insistent that companies adopt progressive policies. Some 60 percent of consumers in the U.S. and U.K. say their decisions have been influenced by a company's politics, according to research by public relations firm Weber Shandwick; among them, buying products to show their support is an increasingly popular response."
In this framework, firms 'should be' reacting to the signals/demands/expectations sent by their stakeholders - including the government, but also consumers and everyone else, too. It is central to the job of the manager to understand these expectations. This is difficult. What makes it more so is that the goal should be to remain just a little bit ahead of these evolving demands. What is important, however, is that this is not new. Society has always made claims on firms, from environmental pollution, to the minimum wage, to healthcare and pensions, and today it is guns and gender and sexual equality. As societies become more affluent, the nature of their expectations evolves:
"Polling data suggest that millennials, who will make up 50 percent of the global workforce by 2020, are more attuned to social and environmental issues than their elders. A 2016 study of young employees by Boston-based Cone Communications found that 76 percent consider a company's social and environmental commitments when deciding where to work, compared with 58 percent of the workforce as a whole."
However, I do not buy that Millennials 'care' more than previous generations – they just care about different things, a luxury that reflects our current stage of economic development. In other words, previous generations have tackled many of the basic serious problems (with varying degrees of success), which allows subsequent generations to tackle the problems that remain, or those that have arisen as things like new technology is invented. What is interesting and adds another layer of complexity to the manager's job today is the rise of social media. This democratizes public opinion, which makes it easier for firms to interact with their stakeholders but, ultimately, makes it harder to satisfy the variety and multitude of demands.
Take care
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Corporate America Is Taking On Guns and Climate—Issues the Government Won't
By Matthew Campbell and Jackie Simmons
March 1, 2018
Bloomberg Businessweek