Strategic Corporate Social Responsibility: 4/1/17

A key to understanding the full implications of Strategic CSR is the theory that corporations reveal our values; they don’t shape those ideals. Quite simply, corporations reflect the aggregated values of their collective set of stakeholders (internal and exterior). An expansion of this basic idea is that corporations aren’t the problem; they are the solution. The for-profit firm is simply an instrument that we have devised to resolve a specific problem – how to allocate scarce and valuable resources.

There is a finite set of resources open to us. How to allocate these resources in a manner that produces ‘optimum’ value for the majority is a problem that has challenged mankind throughout our existence. The best solution we’ve found to day is for-profit firms operating within a market-based, democratic form of capitalism. Once you understand companies are merely a tool, you understand that they can do what we ask of them. If we ask them to pollute the planet (as we are, at the moment), they will do that efficiently. Equally, if we ask them to preserve the earth, they will find the most efficient means of attaining that goal.

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They can do what we wish them to do – they reveal our collective set of values. I had been thinking about this again in light of United’s recent issues. To what level is United shaping the airline industry and to what extent could it be merely providing us what we, collectively, want – cheap tickets and bare-bones service?

The most recent crisis going to United is manufactured even more apparent as opposed to last week’s information about the airline industry’s latest performance ratings. The main one headline that caught my attention there – the reduced budget carrier, Spirit Airlines, happens to be the most profitable U.S. I fail to understand how that may be. If people want the absolute cheapest tickets, why would they complain if they receive poor service then, or their bags get lost, or whatever caused these to complain? If we wish good service, we must understand that there is a cost associated with that.

And, if we are prepared to pay for good service, we ought to believe that there are many business owners out there who be more than willing to provide it to us. Clearly, as it pertains to airlines, however, the majority of us do not need to pay for that service. This brings me back to United.

I don’t necessarily buy into the overall firmness of this article in the url below, but it’s the most unique perspective I’ve seen in the acres of coverage on this issue. Moreover, I believe it catches effectively the idea that United is only a reflection of a broader system that people have shaped through our day-to-day decisions. In other words, while it feels satisfying to shoot the messenger, we ought to always remember that it is we (the firm’s collective group of stakeholders) who are sending the message. Obviously, on the flip side, the actual fact that so many passengers sensed outraged at the occasions and spread the word so quickly suggests a determination to stimulate change, ….

We’ll have to see if there are any long lasting effects for United. Past performance suggests we will ignore and move on. But, it will probably be worth keeping in mind the next time you get an airfare ticket. Will you demand better service and pay for it, or are we all heading towards another filled with variations of Spirit Airlines or Ryan Air (or your lowest-cost carrier of preference)?