Essay: Businesses and Corporate Social Responsibilities

Businesses are profit-making machines: this is maybe the first impression that many people have about corporations; but, is this only all they actually are? Today’s business world expects companies to go past this point, to look beyond the “fillthy lucre”, and to conduct business ethically. Of course being profitable is still a top priority for every business, but new trends show that companies are actually moving away from Friedman’s narrow perspective of social responsibility to only increase profits (Friedman, 1962). Nowadays, there is a strong expectation for corporations to align their economic objectives with sustainable practices; to act in an ethical manner towards their stakeholders.
This is where Corporate Social Responsibilities (CSR) come into play: economic, legal, ethical and philanthropic expectations are placed on organisations by society, and more specifically by their stakeholders (Carroll, 1991). The rationale behind this shift (or better, amplification) of focus is mainly found in globalisation, population growth and weak political power to influence social changes. This scenario pushed corporations to strive to become truly accountable for citizens (Crane & Matten, 2005) and behave as good corporate citizens themselves (Wood & Logdson, 2002): here and now, businesses are working hard to engage in socially responsible activities, such as reducing negative impacts on the environment, raising awareness on certain social and political issues, fostering employees’ rights, and taking on philanthropy.
In the long run, these are the factors that are going to have an effect on the fate of company and determine its success or failure, and for this reason, they have become the object of many investigations: not enough care for these new elements that have become an essential part of the business world may lead a company to adopt inefficient CSR practices, thus triggering the severe scrutiny by the media. The unavoidable outcome of this unwanted attention is a spotlight on cases of corporate social irresponsibility that put companies under a microscope that only uses one lens, the “socially responsible” lens. One of the businesses which ended up being the object of such analysis is Apple, particularly after a series of suicides at one of its suppliers’ facility in China in 2010.
After a brief introduction of Apple as a multinational company, this essay will attempt to use some theoretical frameworks to fathom the CSR practices adopted by the company before the 2010 incident took place. Secondly, the paper will focus on the study of this particular conflict that became, so to speak, a turning point for the CSR policies of Apple: the response that the company offered will be scrutinised and it will be investigated whether and to what extent the corporation implemented new and specific CSR policies to tackle the issues raised by this event. Finally, this discussion will lead to the final section of the essay that will take into account the current CSR practices at Apple and their effects to argue that, even though Apple has taken some good steps in the right direction, there is still a long road ahead.
“Don’t settle”: what happened when Apple left its garage
Nowadays, Apple is a multi-national company involved in the production and sale of innovative electronic goods, and it is the world’s leader in this industry; but, once upon a time, this giant was just a little baby in a small garage in Cupertino, CA. It was only in the late 1990s and early 2000s that the company released the first iMac, beginning its move from zero to hero: this was the moment when the founder (and CEO, at that time) Steve Jobs took the company global. This change sparked a massive increase in the demand for Apple products, hence pushing Jobs to resort to the widespread practice of “outsourcing”, which meant that, from that moment on, the company started to manufacture its products overseas, especially in factories located in Asia. Despite the fact that this decision brought great advantages to the company (e.g., it allowed labour costs minimisation), it also raised several issues, especially when it came to ensure a respectful treatment of the workers at its suppliers’ facilities.
This was the reason that inspired Apple to introduce a Supplier Code of Conduct in 2005: the document lays out the company’s expectations for the suppliers that are engaged in the manufacturing process; thus, the pre-requisite for doing business with Apple is for each and every supplier to commit to the Code. The main objectives of this sort of charter were towards the protection of the workers, preventing discrimination, underage labour and excessive working hours; however. there was little to no mention of social responsibilities nor to the consequences of any non-compliance to these rules. Despite this latter account, the 2005 Supplier Code can be interpreted as a strong proactive response to social concerns about  the rightful treatment of workers: the rules drafted by Apple were described as the strictest in the industry (OpenDemocracy.net, 2016) and they required practices that went above and beyond the law of the country were the suppliers’ facilities were, almost anticipating future expectations (Carroll, 1979). Hence, if were to measure Apple’s Corporate Social Performance at that time (Wood, 1991), we could observe that the company engaged in CSR through the process of issues management via the Code of Conduct, a widespread approach to managing business ethics.
Nevertheless, despite the attempts to guarantee workers’ welfare, issues with unfair treatment of workers arose in 2006 when a British newspaper published an article denouncing the unpleasant situation at some of the Apple’s manufacturing facilities (BusinessWeek.com, 2006). Right after the news went public, Apple refused to comment on the issue, almost moving backwards on its social responsiveness, from proactive to reactive; nonetheless, a response came in 2007, when the company decided to start auditing the facilities and to publish reports on supplier responsibility. Audits were prioritised based on the concerns brought up by those investigative reports and external stakeholders, such as NGOs involved in the fair treatment of workers; instead of penalising its partners, Apple decided to work closely with facilities’ management to improve the actual conditions. The rationale behind this behaviour is the fact that terminating contracts with big manufacturing facilities where the violations took place would entail the loss of business-related benefits for the firm, i.e. damaging the supply chain; thus, the only alternative is to strategically cooperate with management, which will also help a firm to keep up a good reputation.
Taken together, Jobs’ actions provide evidence that while he was Apple’s CEO, the company’s approach to CSR can be described as strategic (Burke & Logsdon, 1997):  Jobs “felt the company was there just to build products and that is what it focused on, the rest was just noise” (Enderle, 2015). Overall, centrality was the strategy dimension, and the responses given by the firm show a willingness to support core business activities, thereby contributing to the company’s effectiveness in accomplishing its mission of basically satisfying the customers’ demand for high quality and innovative products. If we were to analyse Apple’s social responsiveness under the pyramid of CSR built by Carroll, we would conclude that the company has a firm base, but the point is missing: in fact, Apple was economically responsible and also upheld its legal responsibilities; however, it was ethically responsible only on a product level, since it cared about environmental impact and responsible sourcing only to address the customers’ demands, and discretionary responsibilities were completely left out of the picture (“avoided like plague”, Enderle, 2015). During Jobs’ days, Apple has never been recognised as a philanthropic corporation, and for those who wanted an overarching social responsible company, its practices simply failed to fit the template of “best practice”: generally, the company’s approach to CSR was dated, and there was even only a little commitment to stakeholders engagement (NYTimes.com, 2014). Customers were the top stakeholders that Apple addressed when devising CSR strategies, and other stakeholders were left out most of the time: for instance, the company was ranked at the bottom of the 2006 Greenpeace sustainability ranking in terms of environmental performance, and it did not respond to Chinese environmental groups investigating pollution issues within its supply chain. On the account of these examples of challenging relationships (Mitchell et al., 1997), it can be inferred that Apple is very reluctant to engage with any stakeholder that may have a critical perspective of the company.
Taking all these elements together, it can be argued that the strategic approach to CSR chose by Apple during its Steve Jobs’ years did not contemplate sustainability as a goal for the business: it completely lacked a triple bottom line thinking (Elkington, 1998), since environmental and social concerns were only addressed as long as they did not significantly impact Apple’s income; while the company provided itself with a very progressive code of conduct, it did not build any relationship with its most important stakeholders, suppliers, allowing them slim profits, hence opening up to the risk of them cutting corners.
“Human costs are built into an iPad”
Steve Jobs’ response
The criticism that started in 2006 worsened as the years went on and Apple’s CSR  (in)actions became the centre of media attention when in 2009/10 the news about workers’ suicides at  the Foxconn facility in Shenzhen, China spread all around the world. Unlike some of its competitors such as Nokia and Motorola, Apple’s manufacturing is entirely outsourced, thus exposing the company to more issues and increasing the risk that events like this may happen, if measures are not correctly implemented: surely, Apple’s practices failed, resulting in this tragedy that caused a drop in the company’s shares and in its reputation. As a NYTimes report explained, the suicides were mainly caused by harsh labour conditions: in fact, the internal management of that particular Foxconn facility had a military-style approach, and, in order to meet the unceasing demands of the company, workers were forced to work up to 70 hours per week, which is 10 hours above the maximum set by Apple’s supplier code (NYTimes.com, 2012).
CEO Steve Jobs responded to these deaths in a profoundly underwhelming fashion: the first suicide took place in 2009 was completely ignored by the company; then, 14 additional workers killed themselves and Jobs “reactively” responded by denying any responsibility. Whenever Jobs was asked to comment on the Foxconn incident, he would reply in terms of average, denying the sweatshop nature of the facility, and merely accepted the episode as unfortunate. Despite this first reactive behaviour, Apple later switched to a defensive CSR strategy, doing the very least that was required (Carroll, 1979): for this reason,  after the criticism spread, Jobs decided to visit the facility himself to show that the company did care for the heath of its workers, and along with Foxconn, Apple built a net around the whole perimeter of dormitories and facilities. Nevertheless, Jobs continued to defend his idea that the Shenzhen campus was not a sweatshop given the amenities available to workers.
After this event, the relationship that Apple had with its stakeholders became even more challenging and there have been some protests against the way the company dealt with the situation at hand. An instance is the non-violent direct action taken by the Student and Scholars Against Corporate Misbehaviour (SACOM) group: they led a protest against the company complaining that the ultimate goal of Apple’s CSR practices is mere profit-maximisation and that their minimum engagement in any social or environmental issue is just strategic and aimed to please consumers; workers’ dignity and well-being is completely disregarded, thus leading many young employees to commit suicides. The actions taken by SACOM and other protesting groups have been catalytic, helping to raise awareness and more questions on the company’s practices, and encouraging Apple to take steps in the right direction.
Tim Cook’s response
Steve Jobs was famous for its reactive strategy and was referred to as the “Little Dutch Boy” (Harvard Business Review, 2012), since he responded reactively to each individual activist or community complaint. Despite the fact that he was able to fill the holes of the company’s reputation thanks to his innovative ideas and vision, this approach to CSR could not hold back the rising criticism anymore and a change was duly needed. This movement was actually triggered by Steve Jobs’ resignation at the beginning of 2010: due to his poor health, he decided to step down as Apple CEO and left his place to Tim Cook. It is thanks to him and to his more open and engaged attitude towards CSR if the company started to diverge from its previous course of action.
When Cook became CEO, his first duty was to clean up the mess of his predecessor, i.e. to address the issues that were the consequence of Jobs’ approach, particularly he had to deal with the investigations and pressing media attention attracted by the Foxconn incident. Therefore, he immediately decided to re-tour the Shenzhen facility and taking full responsibility for the suicides, he pledged to improve workers’ conditions across the supply chain. As the current Apple’s senior director of supplier responsibility said in an interview, “Foxconn made the company realise that reality is different [from what Jobs perceived]; perfection in products has to be replicated in the perfection of the supply chain, even though this is hard” (Haynes, 2015).
Under Cook’s leadership, Apple actually became accountable for the suicides and decided to adopt a more accommodating strategy, thus accepting full responsibility and doing what was demanded by relevant groups and stakeholders (Carroll, 1979): an actual proof of this shift is found in the 2010 Supplier Responsibility Report (published in 2011), where a whole paragraph is dedicated to give explanations and outline new policies in light of the event. Finally, Apple has accepted its “extended responsibility” (CRANE AND MATTEN, 2016??) towards its suppliers since it is indeed a company that completely resorts to outsourcing: the company’s stakeholders, and society in general, expects that a multinational corporation like Apple would take responsible action for the safety of their suppliers’ workplace. Furthermore, Cook’s response showed that Apple wants to have more stakeholders’ engagement, thus committing more to the safeguard of its suppliers who have facilities in countries with less regulated workplaces: in fact, the Chinese regulations on employee protection has been either lacking or poorly enforced, leading companies such as Foxconn to have little encouragement to actually commit to Supplier Codes set by other outsourcing firms like Apple; for this reason, since the Chinese government did not induce CSR practices, these have to be adopted by companies in order to provide alternative protection.
Other tangible examples that can be considered to prove Cook’s concern for social issues are both the increase in audits at various suppliers’ facilities and the affiliation with the Fail Labour Association (FLA).