What are the Obligations of a Global Company ?

A two page article starting on the front cover of the main section of Sunday’s New York Times addresses why the US lost out on the assembly work for Apple’s iPhone. The article raises some important questions about corporate responsibility, starting with the implied responsibility of a company to create jobs in its home country. In responding to the jobs going to China,  Betsey Stevenson, the chief economist at the US Labor Department until last September is quoted as saying


“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice. That’s disappeared. Profits and efficiency have trumped generosity”


I disagree.  I would argue that not only is it in the best profit and efficiency interests of a company to put work where it is done best, it is absolutely consistent with generosity. From an ethical perspective the individual in the least affluent country deserves the job the just as much as the worker in the more affluent home country,  and the positive impact on economic development is crucial.


The necessary note of caution though is characterized by an anecdote from the article; during a time of great need by Apple, a Chinese component assembly plant took the following action


“[Near midnight] A foreman immediately roused 8,000 workers inside the company’s dormitories, according to an executive [of Apple]. Each employee was given a cup of tea, guided to a work station and within half an hour started a 12 hour shift fitting glass screens into beveled frames.”


What developed economy worker would want that job ? Even if they did, is it fair treatment of a worker ?    For the record, the supplier Foxconn, disputed the story later on the article, but either way, it makes the point that at the same time as we help support economic growth and grow markets in emerging and developing economies we need to get the balance right with protecting the rights of the workers.


Unnamed Apple executives are then quoted explaining that


 “it is a mistake to measure a company’s contribution simply by tallying its employees”  


 “Apple’s success has benefitted the economy by empowering entrepreneurs and creating jobs at companies like cellular providers….”. 


“We don’t have an obligation to solve America’s problem. Our only obligation is making the best product possible”


I think the right answer sits somewhere between.  Companies all have an impact on society through the people they employ and how they are paid and treated. But impact is also through suppliers and through  products and services.  Companies have an impact through taxes and through the wealth created in society from dividends and share value. Each of these contributions can and should be examined and managed individually with a financial, compliance and moral component. But it is the interaction between them and the holistic impact of them all by which we should judge how responsible a company is and what it contributes to society.


If you don’t have the hard copy, you can read the full article in the NYT here. It is lengthy, but it makes a good read.

Postscript Jan 24th – Since writing this post only yesterday, I came across this case study of BT working through the supply chain on ethical workplace practises with Pace PLC and Flextronix  in China and Singapore http://www.pace.com/universal/responsible-business/supply-chain/socially-responsible-partnership/

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