In our last post, we touched on the social responsibility of big business. We addressed concerns that, although outsourcing jobs overseas hurts a portion of the American workforce, it benefits the country to trade new ideas and innovations with other cultures. We even touched on how many lives are affected by struggles and tensions that result between the corporations and individual workers. However, we left something out, something vital. The sheer, disturbing fact is that social responsibility is simply not cost effective. Many people want to argue that we need a business with a conscience. To them, businesses should stay “at home” so to speak and bring American jobs to American workers. However, no one wants to pay the extra 20 cents to give these companies support. Take this example, excerpted from “Limits to the Social Responsibility of Business”:
“The Stride Rite Corporation, a shoe company, was known for a number of years for its policy of locating plants and distribution facilities in some of America’s most depressed inner cities and rural communities to revitalize them and provide secure, well- paying jobs for minorities. Arnold Hiatt, Stride Rite’s CEO, had a strong personal commitment to this policy. In 1984 competitive pressures caused the company to experience a 68 percent drop in income, its first drop in thirteen years. Over Hiatt’s strong objection, the board decided that the company could remain competitive only by contracting out production abroad to low wage countries—as their competitors were doing. The board reasoned, probably correctly, that if they did not move production abroad, the company would be subject to a hostile takeover by a buyer who saw an opportunity to reap significant profits by taking that step. Hiatt resigned and production was moved to China.”
This is just one example. There are hundreds more, and the number will only increase as companies become more competitive. Of course, some may take this post as some form of twisted defense of globalization. “Well, the companies have to go overseas. They can’t survive here.” That is, in no way, what we are saying. What we are saying is that, to all who want business to stay at home, to take responsibility for society and the environment, and to maintain high quality, you should be prepared to pay the extra costs. What we do not want is for people to say that everything in life is business’ fault and, as such, the companies mess to clean up. We want people to take personal responsibility for whom they purchase from and actually work for all those changes they want. Do not demand that business step up if you are not willing to do the same. This hypocrisy only causes more jobs to be lost, more companies to go under and more outsourcing.
“Limits to the Social Responsibility of Business” by David C. Korten