What Exactly Is the Social Responsibility of Global Corporations?

It’s been awhile since my last blog, so there is much I could discuss. Just prior to taking a vacation in Mexico with my family, I published a post on Intel’s Classmate PC and how the press had so often characterized it as in competition with the one laptop per child (OLPC) initiative.

Well the world moves fast because by the time I got back, Intel had joined the OLPC initiative. There was a lot of press on that announcement but a fairly accurate description can be found here.

I wonder though, are actions such as these seen as a social responsibility? Or are they viewed as just day-to-day business? That’s the kind of discussion I want to have on this blog. As a global company, we do things all over the world that strive to leave a positive social impact – and we’re usually pretty quiet about it. In my mind, that’s operating a responsible global company that plans to be around for many, many years. I view CSR as considering impacts to society, the environment and communities when making business decisions. I also view that as just smart business.

One comment to my last blog pointed out that there are a lot of things people need to before they might need access to technology – things like clean water and basic health care. He asked why we don’t just take the money spent on an initiative like the Classmate PC and give it to people so that they can address their most important needs first. I thought those were very good points, but they left the Corporate out of CSR.

There have been a few stories and conferences about the next wave of CSR. I view it more as an evolution. I see the current leading edge as a place where global companies are able to apply their unique skills and capabilities to some of society’s toughest challenges as part of their business strategy. This has to come after, not before running their own business ethically, in an environmentally responsible way and while treating their employees and communities well.

Let me know if you agree.

5 Responses to What Exactly Is the Social Responsibility of Global Corporations?

  1. Lord Volton says:

    I was wondering if you were part of the decision to join OLPC. I’m glad you clarified things.
    I guess I don’t buy into the idea that the free market all on its own won’t get there without basically being forced to give away computers through non-profits. It’s a nice idea, but is it really the best way to do it?
    Forget about politics and the feel good aspect of the OLPC. Can Negroponte do it better than the free market?
    I think not. As seen by the ever rising cost of the $100 laptop which is now $175.
    Did Negroponte bring cheap cell phones to India or China? Last time I checked it was the free market and profit incentive that ultimately brought the prices down.
    I think there have not been a lot of fair comparisons drawn. Imagine an MIT professor championing cell phones all across China without the support of the free market.
    And then 1 million cell useless cell phones are delivered to people in China who have no way of using them because there is no infrastructure support as a result of their being no profit motive to do it in the first place.
    I think perhaps there is a better way to bring computing and the internet to people in third world countries and it looks like smart phones are a better path given the infrastructure that already exists.
    And that is why a cheap, cheap version of Silverthorne might ultimately do more for billions of people than a laptop that doesn’t have the infrastructure or software support that already exists in other markets where the market penetration is billions of devices.
    Separately, I’m not sure that Intel “gets it” either. U.S. cellular companies who were used to FAT profit margins got into the foreign markets late, which are the fasted growing and most profitable marketstoday.
    The margins are a lot smaller but we’re talking about billions of people. Hopefully their will be a mindshift, otherwise I predict we’ll see a surprise company nobody had heard of making a mint in smartphones and eventually challenging Intel in ways AMD has never considered.

  2. Lord Volton says:

    I decided to write a separate response regarding CSR.
    I view corporations through the same lens as I view individuals. I don’t believe they should be forced to be socially responsible beyond what an individual is required. And perhaps it’s more relevant since shareholders are probably better represented by a laissez faire attitude rather than a socialist mindset that attempts to do “do good” for its own sake.
    That’s why government is horribly inefficient.
    In the end I’m not investing in a company to be a do gooder, rather, I’m investing in them to make me money. However, I would expect them to engage the world in such a way as to not prevent others from their God given right to life, liberty, and the pursuit of happiness as outlined in the Declaration of Independence.
    So the first internal check should be perhaps the only one, “Does this prevent an individual from enjoying life, liberty, and the pursuit of happiness?”
    In some cases the answer is obvious. A corporation’s desire to save money by not properly disposing of their waste and dumping it free of charge into the river ends where the rights of the local citizens to drink water and not get leukemia starts. That would violate their right to life and the pursuit of happiness.
    That corporation would need to be severely punished and possibly shut down completely.
    However, if a company hordes its cash and doesn’t help the homeless that is not necessarily a bad thing. In fact, by choosing to feed the homeless the corporation is effectively stealing from the shareholders who would otherwise get the benefit of that money through dividends or a higher stock price when they sell.
    Corporations still have the collective aspect to consider. So if there are members within the corporation who want to be “do gooders” which is a very nice thing and should be encouraged – then they should use their dividends to help the homeless. And perhaps where CSR can be useless is making shareholders aware of others who want to be socially conscious with their money.
    But that is quite separate from using the “corporation” as an agent of “social responsibility” on behalf of others who might prefer to spend their money in other ways. Remember, if it’s the corporation’s money going toward personal pet projects then it’s just another example of socialism that loves to tell people how they should spend their money, rather than allowing those individuals to spend it themselves.
    Ultimately I have more faith in the shareholders who want to be socially responsible making those investments than third parties doing it for them. However, I believe CSR can be very useful making sure bad actors in corporations don’t violate the principles upon which this country was founded (a highly likely event) and to a lesser extent directing shareholders who wish to pool their own proceeds together toward a common cause.
    But it should be a choice and not a corporate directive.

  3. George says:

    There is serious concern in India that the Classmate PC is just for publicity. INTEL had promised to sell it for around $100 and finally they launched it for $450(Rs 18,000). Is it just Marketting strategy or you consider them FOOLS! Shame on you INTEL.

  4. Hi Dave,
    Just got back from Europe where the OLPC project and Intel’s participation was big news. I’m going to be talking about the differences between U.S. corporate citizenship and European CSR on our website, but to answer your question, I think OLPC falls into the corporate citizenship category rather than business as usual because if you were to look at the numbers you might not get an IRR that would justify it without some kind of fill # for the intangible contribution.
    That being said, there are types and types of corporate citizenship. I would say that operating ethically is part of “business as usual” for the vast majority of companies we deal with — it’s a question of culture, mores, attitudes, behavior. Intel’s commitment to making computing as efficient/effective as possible, is an integral part of its business activities, and its greatest contribution to society as well.
    Engaging in X, Y or Z activity is discretionary and optional, and I would say OLPC falls into that category. You could make the case that it falls into the “long-term development” category, but I’m sure there are some folks internally who would probably have liked to use the cash for their particular projects instead.
    The folks I talked with in Europe feel like elements of the current CSR debate are going down a rabbit hole, and we need to refocus more around words like long-term (ie sustainable) development, what it means to “thrive”, and the importance of building trust and social capital. We’ll see.
    I’m glad you’re doing this blog. Good luck with it.

  5. Hey Dave and Gary! I just learned of your blog this morning – welcome to the world of CSR blogs! Now that I know you are here, I’ll be sure to check back often and hope we can get some good exchanges and idea-sharing going.