Corporate Responsibility

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Inspired by Darkwolf's thread about the woman suing Coors because her drunken son died in a car accident, I am thinking about what a for-profit Corporation’s responsibility is to protect us from ourselves. (I'm using the word “Corporation”, although it applies to any “for-profit” operation, incorporated or otherwise.)

So, the possibilities as I see them (and these are not necessarily mutually exclusive, nor all-inclusive) are:

1. A Corporation’s responsibility is to make a profit for its owners.
2. A Corporation’s responsibility is to provide society with products it wants and/or needs.
3. A Corporation’s responsibility is to ensure that it’s products are, well, socially responsible.

This raises a number of sub-questions:

- Who gets to decide what society wants or needs?
- How far can a Corporation go in trying to sell it’s products?
- What kind of outside regulation is fair and/or reasonable to ensure a Corporation’s products are safe and are used responsibly?
- What other considerations are involved?
- How can we find a way to blame George Bush when things go wrong?

OK, so other than that last part, what are your thoughts, opinions, etc?

 

Corporations are run by men and women. They have a reponsibility to their shareholders, their employees and their customers. As private citizens they also agree to live by the same laws and ethics as the rest of society. They should always conduct themselves and their businesses as any other group of citizens would.

Unfortunately, many of them seem to feel that their power and wealth puts them above the law, which means the rest of us. There have been so many corporate scandals in the last few years that I have stopped tracking them. Just today, Shell is in the news with another corporate scandal.

I'm sure in your business dealings you always conduct yourself with the utmost integrity and character. This speaks to what kind of man you are and your busniess reflects that. This is how it should be.

As for the lawsuit, on the surface it appears as just another scam. But what has been happening at the top of these corporations gives me little sympathy for them. What does one call it when the scammers are getting scammed? It's a perverted sort of justice. Yet, if things reek at the top, then it's little wonder that things reek at the bottom too where the smalltime scammers and bottom-feeders occasionally feed off the big fish.

The answer is a return to excellence and virtue. Especially, those who are in a position of authority and power who can prove that character and integrity are virtues that are no longer to be mocked and scorned as they are now, but again to be emulated and ultimately an inspiration for others who quest for excellence. Character, reputation, the achievement of excellence, these are the things a man carries with him wherever he goes; it defines him as a person.

Our society is corrupted from the top down. Not only on both the coporate side, but the government side also. Once the top is cleaned-up, it will be easier to "clean house" on the bottom as well. It will never be perfect, but that does not mean that we should give up the quest for excellence.

[ April 22, 2004, 03:43: Message edited by: Chandos the Red ]

 

I say #1 only.

If the market economy works properly then the other objectives should be met as well. Where they aren't, additional mechanisms should be put in place by central government to correct for major market flaws (for example, levies on pollution that help pay for cleanup costs).

 

2 and 3 are sadly conflicting in quite a few cases. Alcohol and smokes for example. Okay by quite a few I mean just a few... alcohol and smokes are the only ones I can think of right now.

If a product is harmful it should provide a warning label. If someone uses that product anyway it's their own fault and the company should not be held responsiable.

Alcohol can be exempt from this rule because it's common knowledge what it can do if consumed in excessive amounts.

 

The way a corporation decides if the public wants it is if it sells I think. The amount of rubbish you can buy on channels like QVC is enormous, yet there is obviously a market for it.
As for point #3: I don't see how a corporation can poilce the abuse of its product. They can provide warnings, but if people choose to ignore them there's nothing they can do. I like to drink, but not get paralytic. That's sensible use, yet many people abuse it.
Same goes for any product.(maybe not smoking) Nobody can prevent Joe Bloggs going "hmm lets inhale a can of furniture polish". You can't blame corporations for the inherent stupidity of mankind.

 

True; no one would set up a company if s/he did not think that there would be income.

Wrong, wrong, wrong... Companies do not set up factories because it's "fun" or because they have a "responsibility;" they are set up because the corporate government thinks the output can be sold, thus making part 1 possible. If people do not want something, they do not pay, thus there will not be unwanted products (for long -and venturing is another matter).

BS. It's money that matters, and everything else is just extra-value to the product. If you think that particular car is safer than others, that creates competetive pressure for others to meet. *Basically,* there is just three things the corp.gov. have to remember: meet the threshold requirments (law and customer expectations), differentiate, and maintain it. Everything else is optional.

The first question answer can be found in part 2

Corporate can go as far as law allows, and even then it can consider sacking it. Just imagine what would happen if Microsoft and other big corporations decided to join and *make* their own laws -M$ alone makes more money than several smaller countries combined!

Regulation. Any smaller corp can be, of course, bullied to implement any kind of safety measures. But in the end, it is YOU who will pay of it -either in jobs or increased price (most likely in both). Every country has a less strict neighbour -remember?

 

Everyone has raised good points, and these and generally in line with my thinking here. If I might, I’d like to focus on one aspect of this discussion (but feel free to comment on the other aspects if you wish).

To what lengths does a Corporation need to go to ensure its products are safe and/or used safely? Let me give an example that I have used previously on these Boards:

A man had a step ladder, and he put the feet of it in a pile of manure; when he climbed the ladder, the feet of course slipped, causing him to fall and injure himself. He sued the ladder manufacturer for not putting a warning label on the ladder that the feet should not be put in manure (or something to that effect; the lawsuit probably said the warning should be more general). He won the lawsuit, and won a large sum of money (I forget how much).

The example in Darkwolf’s thread that I referenced in my first post would be another instance.

In other words, how far should a company have to go to, in effect, protect us from ourselves?

Again, however, I'm not looking to confine the discussion to just this issue.

 

A corporation is a moneymaking entity, to demand that they have selfimposed limits on how they make money is extremely naive. A corporations sole responsibility is to survive and to survive it need to make money. However, the state can and should decide withing which parameters a corporation is allowed to survive. It is up to the government decide, and thus the people who elect the government to dictate what a corporation can and can't do.

 

A corporation's sole purpose is to maximize shareholder wealth. There are actually historical instances when corporations have gone out of business, sold their assets, paid of the creditors and distributed the residual value to the shareholders. There are college courses that spend an entire semester studying corporate ethics and the conflict of interest between corporations, their shareholders and the board of directors.

A small part of such study looks at the problem in that corporations are in many cases tied very closely to government, for instance Halliburton/Bush/Cheney or Heinz/Kerry.

I would argue that it must come down to consumers and investors having to take responsibility for the companies that they do business with. In my opinion, the government's role in this is primarily to make sure that the corporations provide full and accurate disclosure. The marketplace can then decide the fate of the business. After all, the marketplace is the ultimate form of democracy.

There are of course exceptions to this, such as necessary monopolies (some utilities), businesses that are essential for the security of the nation (defense contractors), and those cases where corporations have failed to disclose severe violations (environmental destruction, major accounting fraud, etc.), and quite a few more that I don't have time to list (or remember at the moment ).

 

Corporate responsibility is also a matter of size.

When dealing with non-public (otherwise known as private) corporations the owners and officers are held to a much higher standard for they tend to be more involved on a day to day basis.

I have always wondered about what the top people know at the larger corporations. As an example; it is universally accepted that Ken Lay knew about all the shenanagins going on at Enron. He claims he had no idea that everything they were doing was in violation of generally accepted accounting principles (GAAP) and therefore he did nothing wrong.

Now on the other hand I think back to the 70s when Ford was making exploding Pintos. I don't think it was ever found out where the decision was made to keep making them because of "acceptable risk". Could it have been the CEO? Maybe, but how many other layers of management must a company like Ford have that the decision could have been made at.

I am having a moral crisis over if corporations have an obligation to their society/community. I still buy software from Microsoft even though they are outsourcing work to India. However, this past year my company started outsourcing tax preparation to India also. Now I'm not a preparer, but I have seen people laid off because we are getting things done cheaper overseas. I have to be honest that I'm not exactly thrilled about it.

 

@Darkwolf- "Heinz/Kerry" as a kind of collusion between business and government? I can understand giving Kerry (and Bush) a bit of a hard time for representing something of a plutocracy, but I hardly think that Kerry will be put into office by a greedy food industry bent on winning all of the ketchup contracts in Iraq!

 

@Bion: John Kerry's wife is Theresa Heinz, the widow of John Heinz, former senator from Pennsylvania and heir to the ketchup fortune. Some say that Theresa was grooming John for a run at the White House before he was killed in that helicopter crash, and that Kerry had no such aspirations until she glommed onto him.

As other have said, the SOLE responsibility of a company is to make money for its shareholders. Period. No one goes into business for any reason other than to make money, folks. Someone sees a hole and thinks they can make some money by filling it, and a business is born. Perhaps some people have an idea that they can do something in a socially-responsible way, but that's going to happen after the bills are paid - and the dividend on the stock is just another bill.

Compliance with fundamental safety principles or government regulations is just another cost of doing business. When the consumer has a choice between a safe product and a hazardous one, which one will they choose (assuming all other things are equal)? A certain level of product safety is just good business practice. So is avoiding lawsuits.

People are choosing to forfeit their personal responsibility to government and corporations for the sake of greed. If we're not careful, we're going to follow Homer into the retirement home: "And here I am, using my own lungs like a sucker."

[ April 20, 2004, 21:32: Message edited by: Rallymama ]

 

@Rallymama- yeah, I understand the Kerry family business, and I understand that an effort is underway to make a Lady MacBeth out of Ms. Heinz-Kerry, a la Hillary Clinton, but I just find it hard to believe that the motive for the Kerry run would be tied to some kind of food service politicking. That there's at least a little bit of noblesse oblige behind the Kerry (and Heinz-Kerry) run, I don't doubt for a moment. But I can't see this as part of some sort of "ketchup konspiracy."

 

Heinz is a rather large conglomeration with over $8 Billion in sales for 2003. I am not implying anyting unethical here, but they do have large contracts with the US military, and they probably sell to the military of quite a few nations.

This is not a big conflict of interest IMO, as Theresa is only thought to control approximately 4% of the Heinz. The Heinz trust, which she is a beneficiary of, sold of most of its interest in Heinz a while back.

Still, Kerry has a vested interest in the company...

It would be an interesting study to look at the companies that the trust decided to invest in. I would say the Heinz family could afford the best of financial advisors, becuase they appear to have done very well. Of course they have also refused to disclose her taxes and holdings, so we won't have that opportunity.

I wonder if Theresa Heinz has any Halliburton in her portfolio?

Wow some of you have gotten punchy. I am not implying anything negative about Kerry here. I am simply pointing out that it is impossible to completely separate politicians and corporations. Kerry and Bush were just convenient names as they have been in the press lately, I could have gone out and found some obscure Senators, but then a lot of people would have been asking questions like "who is Bob Graham and why do I care that he holds some Royal Dutch Petroleum?".

[ April 20, 2004, 22:16: Message edited by: Darkwolf ]

 

Who is Bob Graham and why should I care that he's got Royal Dutch shares ? Ahm... maybe because he wants a fair deal for nations that invaded Iraq, I.E. fair share of the plunder for British Petroleum and Royal Dutch ?

As for the responsibilites of a company. The prime goal is to stay in business. Shareholders are only one of the groups a company has to care for. The key is the right balance between all the groups, the holders of share, the clients/customers, the public image, the employers. The employers are very important, most companies are very dependent on the skill of the employes. High fluctuation may spell dead. Or what about a clothing store, that sells clothes made by children in Burma ? That may end in heavy losses.

Companies that cared for Shareholder value too much and lost the focus on the important things, ended up buried, like the Ebner group.

 

Morally, socially and semi-legally:

The key is not basic honesty and basic decency. No cheating. Bringing profit to shareholders stops being a priority if cheating on customers comes into question.

Cheating on customers includes, but is not limited to:

• Misleading advertisement. Any sort of false or incomplete or inaccurate information. Especially wrong if it's some form of a manual.
• Small print. If something is written in a smaller font than the rest, it's obviously the most important part of the whole contract There's no way smallprint is construed as honest and forthright. Hardly good faith. No protection for cheaters and their cunning clauses.
• Breaking contracts just because it's more profitable to break it and face the legal consequences of contract breach than to keep it and honour your damn obligations. Especially if it's meant to harm the other party.
• Abusing loopholes in the law. Especially in legal procedure, in the interest of acquiring profit at someone else's loss. A good old Roman rule: whatever you do to go around law is not valid. In short: if you try to outsmart the law, you don't get legal protection for that.
• Frivolous lawsuits, especially bogus ones. They should be more serious about contempt of court and abuse of legal process charges. Plus, if the lawsuit is frivolous and was meant to be that way (in bad faith), the plaintiff should be ordered to pay damages to the defendant for all reasonable fees, loss of profit, loss of time, petrol or tickets etc
• Love it or leave sort of contracts. Called adhesion contracts. Especially license agreements. Those suck profoundly.
• Fiction of civil law relations when a private company does public job. It's not all that really civil if you deal with a monopolist or public space private administrator, or private municipal transport, or privately owned prison, or whatever. Should be administrative, with its system of protecting the weaker party, aka poor oppressed citizen.
• Charging prices like 1000% the real value. We all know who I'm talking about.
• Enforcing obligation not to sue the company for any contract breach, tort or whatever. Some of them even put in clauses excluding liability for malice aforethought - just in case it might be legal to do so in some countries.
• Trying to maneuvre people into obligations. "By use of..." etc is a good example, if it goes further than it should.
• Any and all monkey business with public money.

 

You have all said a lot of things here, but it all comes back to that the corporation has no obligations except its own survival except what the politicals powers presiding over the market which the corporation is moving around in. Those restrictions can be more or less none-existant or very severe depending on what kind of politicians have been voted into power.

 

In legal sense, everyone has an obligation to obey the law (the very base of penal law and torts). Plus, if someone has a right, everyone else is obligated not to infringe on that right (the very base of private law). Therefore, companies are obligated to obey the law just like everyone else.

Plus, companies are obligated to respect your legal rights, like property rights, right to accurate information and whatever else.

Legally, obligation to act lawfully overrides all other obligations, therefore a company's obligation towards its shareholders not only isn't the only one, but it isn't even the top priority one.

 

Slightly but if that's his defense, he's screwed. Ignorance is no excuse for breaking the law. If it was, you could just say, "Oh, killing someone is illegal? I had no idea."