Resources > APICS Operations Management Now > September 3, 2010, edition
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APICS Operations Management Now
September 3, 2010, edition
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APICS CEO
Abe Eshkenazi
CSCP, CPA, CAE |
The Case Against Corporate Social Responsibility?
Last week, the Wall Street Journal ran an interesting piece titled “The Case Against Corporate Social Responsibility.” In the article, Dr. Aneel Karnani from the University of Michigan’s Stephen M. Ross School of Business makes the case that corporate social responsibility (CSR) is either irrelevant or ineffective. It is irrelevant if a corporation’s profit motivation aligns with societal interests and ineffective if it does not.
CSR is a movement that encourages companies to integrate socially responsible business practices into their organizations. “People, planet, and profit” is the rallying cry of those who believe corporate self-regulation can protect the public interest and the environment. But, according to Dr. Karnani, providing shareholder value is the singular motivation for publically traded companies—and therein lies the rub. “The movement for corporate social responsibility is in direct opposition, in such cases, to the movement for better corporate governance, which demands that managers fulfill their fiduciary duty to act in the shareholder’s interest or be relieved of their responsibilities.“ In other words, if public corporations “do well by doing good,” Dr. Karnani believes it is not their intent; rather, it is a happy coincidence.
Dr. Karnani further suggests that, to strike a balance between the public good and profits, “the ultimate solution is government regulation.” He acknowledges that “various nonprofit organizations and movements provide a voice for a wide variety of social, political, environmental, ethnic, cultural, and community interests,” but goes on to say these organizations do not exert enough influence, especially in developing countries.
It is an interesting perspective, but ...
Of course corporation leaders are highly motivated by profits. However, very few successful chief executive officers (CEOs) take a short-term approach to corporate viability, especially in publically traded companies. The current balance sheet does not tell the whole story. When determining long-term corporate strategy, businesses have to take into account sweeping forces including responsiveness to customer demand, trends in the marketplace, and supply chain co-destiny. Many CEOs believe CSR makes a positive impact on all these areas, especially when consumers are seeking out brands they can trust and that reflect their values as people. The same can be said of companies evaluating supplier-partners. Corporate values are more important than ever to decision-making processes.
This year, the 2010 APICS International Conference & Expo in Las Vegas will feature a World Café event open to all participants on October 17 at 8:00 a.m. This is the third year for the APICS World Café. In 2008, approximately 250 conference participants from around the globe engaged in interactive small-group discussions on the impact of changing labor demographics on both the demand and supply sides of the industry. In 2009, more than 400 participants discussed the balance between economic development, realization of human potential, and environmental sustainability. This year, participants will explore the effect of aligning supply chain practices with 10 universally accepted principles of the United Nations Global Compact—and how this may impact human rights, labor, the environment, and anticorruption.
I logged back onto WSJ.com today to look at reader comments to Dr. Karnani’s article. As you might imagine, the debate has been vigorous. I am looking forward to hearing directly from APICS conference participants on this subject at the APICS World Café in Las Vegas. See you there.
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How APICS Operations Management Now relates to you
Operations management is everywhere. Today, operations management professionals have unprecedented impacts on the global economy. Consider these questions and how today's edition of APICS Operations Management Now relates to you and your career.
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What is your organization’s stance on corporate social responsibility?
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How do your company’s strategies align with the “people, planet, and profit” aspects of the bottom line?
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In what ways does government regulation affect your company decision-making processes? How does this compare to what your company’s corporate values accomplish?
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