Saturday, 17 September 2016

Corporate Social Responsibility -the first casualty in Apple ‘truth fight’

Colm O'Doherty:  Viewed through a Corporate Social Responsibility lens the behaviour of the Irish State and Apple does not stand up to scrutiny.

Corporate Social Responsibility (CSR) is firmly on the agenda of companies across the globe. An increasing focus on the dynamics of social responsibility, sustainability and innovation informs business goals and strategies at all organisational levels. CSR has become a mainstream business activity providing an organisational mandate to tackle social and environmental challenges. The idea that business practices should yield social benefits is not a new idea.  Prior to the Industrial Revolution the separation of social and business activities was not so pronounced. Boundaries between individual and corporate social responsibility before and during the early phases of industrialization were blurred because businesses were often founded, owned and managed by the same person.  When one person owned and oversaw the relationship between the business and wider society a noblesse oblige- the obligation of the privileged to be generous-  social consciousness secured  public benefits.    

The march of capitalism, which had begun with the expansion of European power and technological and organizational innovation in the seventeenth, eighteenth and nineteenth centuries, oversaw the emergence of an economic system in the twentieth century driven by a new technocratic management system.  Under this system ownership and control functions were separated.  Management was delegated to new and emerging professional groupings.

A modern conceptual understanding of corporate social responsibility was produced by Howard Bowen in 1953.  His book Social Responsibilities of the Businessman (1953) cited the findings of a survey carried out in 1946 by Fortune magazine which investigated the “social consciousness” of the managers.  The study found general agreement amongst managers surveyed that their responsibilities extended beyond spheres of profit and loss statements. A new discourse focused on the compatibility of companies legal obligations and their social responsibilities emerged in the 60s and 70s.  Opposing perspectives were articulated by well-known economists. Milton Friedman (1970) contended that corporate officials who considered that they had a social responsibility alongside their responsibility to make as much  money for their shareholders as possible were likely to undermine the capitalist system, democracy and the free society.  Paul Samuelson, a distinguished economist, argued that large corporations should pro-actively engage in socially responsible activities (1971).

During the 1970s the concept of CSR was defined and its profile as a business strategy was raised. Contemporary thinking on CSR is focused on stakeholder theory. This theory challenges the shareholder view which separates economic and social issues. It rejects the belief that it is possible to separate the economic from the social, business from morality and the company from its shareholders. Businesses have purposive, beneficial and mutually advantageous relationships with   their employees, customers, communities, suppliers and wider society. Shareholders and stakeholders share significant common interests- they are both about value creation.

Stakeholder theory finds expression in the notion of shared value. Businesses concerns for stakeholders’ economic, social and environmental interests will generate long-term value for both business and society.

 Globalisation – the stretching, linking and expansion of connected human activities across regions and continents- creates a new imperative for corporate social and environmental responsibility while at the same time curtailing the influence of governmental regulation.  Companies can engage in questionable business practices in states where approaches to the enforcement of social and environmental responsibility are poorly developed.

The fight for the ‘truth’ about Apple’s commitment to CSR is taking place against the backdrop of the historical failure of the Irish State to implement progressive tax policies and its failure to implement its shared value strategy on Corporate Social Responsibility – Good for Business, Good for The Community- launched by Richard Bruton in 2014.

Fraudulent offshore bank accounts deprived the State of vital tax revenues in the 1980,s and the loss of national income translated into cut backs and retrenchment across education, health and welfare services.

The Apple debacle demonstrates the lack of political will to create a win win relationship between business and society. Maybe Apple are acting in accordance with societal norms, rules and values by not honouring their shared value obligations to Irish society.  Perhaps Irish citizens are merely bystanders in a corporate tax wheeze which has their tacit support.  However it is reasonable, under the circumstances, to question Apple’s assertion that it embraces socially responsible values and to question the Government’s commitment to the creation of a culture of CSR.
Colm O’Doherty  is Lecturer in Applied Social Studies, Institute of Technology Tralee and a member of TASC's Economists' Network.     

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