What is the Value of Values?
We did a case study about Nike in our corporate strategy class today. Not the glitzy glamorous athletic side personified by Michael Jordan, but the seedy darker side that exploits child labor in low wage countries personified by the thirteen year-old child stitching Nike soccer balls in Pakistan. The question essentially boils down to this – what is the responsibility that companies bear for the social problems in the world (e.g., poverty, pollution, child labor, human rights)? Nike encountered this issue in a big way in the late 90’s, due to negative publicity about the labor practices of its contract factories in Indonesia. On the one hand, you could argue, as economist Milton Friedman does, that the only responsibility that corporations have is to their investors and employees (and I suppose even that is arguable vis à vis Enron, and MCI). However, companies like Starbucks and Reebok have built successful brands on doing the right thing with their suppliers and contractors. Our professor quoted Angel Martinez, the former Chief Marketing Officer at Reebok and Executive Producer of Reebok's 1988 Human Rights Now! Tour, saying that as a company, you have to set your values and act in a way that is consistent with them.
I found myself pondering this issue after the Tsunami disaster hit Indonesia, Sri Lanka and Thailand late last year and claimed hundreds of thousands of lives and exacted an even greater toll on people’s property and livelihoods. As an executive at a small start-up company, what is my proper response to this human tragedy? If I have employees in or do business with companies in the affected countries, it is undeniable that my company should respond immediately and deliberately (e.g., Starbucks donating funds from sales of their Sumatran coffee for Tsunami relief). But if I don't have any direct ties to that region, what is my company's responsibility to our employees and/or customers who want to help? Should I offer a donation on behalf of my company to the American Red Cross or some similar relief agency? As a pre-revenue development stage company, what would my shareholders say about that? In the end, I decided the right thing to do was to send a list of relief organizations out to my employees and let them choose how best to help. My wife and I donated our own funds to American Red Cross and Stop Hunger Now, a non-profit charity organization that partners with aid organizations worldwide.
All things considered, there is a value to values. While we live in a capitalistic society, we are all citizens of the world and should have an obligation to leave the world a better place than when we found it. While it may sound hokey to an economist, ultimately we are all driven by forces beyond what Michael Porter or any pointy headed economist can come up with.
We did a case study about Nike in our corporate strategy class today. Not the glitzy glamorous athletic side personified by Michael Jordan, but the seedy darker side that exploits child labor in low wage countries personified by the thirteen year-old child stitching Nike soccer balls in Pakistan. The question essentially boils down to this – what is the responsibility that companies bear for the social problems in the world (e.g., poverty, pollution, child labor, human rights)? Nike encountered this issue in a big way in the late 90’s, due to negative publicity about the labor practices of its contract factories in Indonesia. On the one hand, you could argue, as economist Milton Friedman does, that the only responsibility that corporations have is to their investors and employees (and I suppose even that is arguable vis à vis Enron, and MCI). However, companies like Starbucks and Reebok have built successful brands on doing the right thing with their suppliers and contractors. Our professor quoted Angel Martinez, the former Chief Marketing Officer at Reebok and Executive Producer of Reebok's 1988 Human Rights Now! Tour, saying that as a company, you have to set your values and act in a way that is consistent with them.
I found myself pondering this issue after the Tsunami disaster hit Indonesia, Sri Lanka and Thailand late last year and claimed hundreds of thousands of lives and exacted an even greater toll on people’s property and livelihoods. As an executive at a small start-up company, what is my proper response to this human tragedy? If I have employees in or do business with companies in the affected countries, it is undeniable that my company should respond immediately and deliberately (e.g., Starbucks donating funds from sales of their Sumatran coffee for Tsunami relief). But if I don't have any direct ties to that region, what is my company's responsibility to our employees and/or customers who want to help? Should I offer a donation on behalf of my company to the American Red Cross or some similar relief agency? As a pre-revenue development stage company, what would my shareholders say about that? In the end, I decided the right thing to do was to send a list of relief organizations out to my employees and let them choose how best to help. My wife and I donated our own funds to American Red Cross and Stop Hunger Now, a non-profit charity organization that partners with aid organizations worldwide.
All things considered, there is a value to values. While we live in a capitalistic society, we are all citizens of the world and should have an obligation to leave the world a better place than when we found it. While it may sound hokey to an economist, ultimately we are all driven by forces beyond what Michael Porter or any pointy headed economist can come up with.
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