Wal-Mart: Rolling Back on Ethics
Transcription
Wal-Mart: Rolling Back on Ethics
Wal-Mart: Rolling Back on Ethics By Alexander Crofoot Introduction Born on March 29, 1918 in Kingfisher, Oklahoma, who could have guessed that Samuel Moore Walton would one day grow up to build the retail dynasty that is Wal-Mart. After leaving the military in 1945, Walton took over management at his first variety store at age twenty-six. By 1962 Walton and his brother owned sixteen stores and decided to take it one step further by opening the first Wal-Mart in Rogers, Arkansas. The store was originally known as Wal-Mart Discount City store and it was located on 719 West Walnut Street. In 1972 K-Mart had already expanded nationwide; meanwhile Walton only had enough money to produce fifteen Wal-Mart stores. Soon Wal-Mart stock was offered for the first time on the New York Stock Exchange, and that infusion of capital gave Walton the ability to expand to 276 stores in eleven states by the end of the decade. In 1983 the first Sam’s Club opened, and by 1989 Wal-Mart had expanded to 1,402 stores nation-wide. This decade was a prime example of how popular Wal-Mart had grown from $1 billion in profit in 1980, to a $26 billion profit in 1989. Today, 8,416 Wal-Mart stores are located in fifteen countries that serve over 176 million people per year (Corporate Wal-Mart- Suppliers, 2010). The success of the Wal-Mart franchise is unparalleled in the retail industry. The secret to Wal-Mart’s success can be summed up in a quote from Walton himself. “You love it when a store exceeds your expectations, and you hate it when a store inconveniences you, gives you a hard time, or pretends you’re invisible” (Corporate 1 Wal-Mart- Suppliers, 2010). And that is exactly how Wal-Mart has operated, by exceeding customer expectations and raising the bar for retail stores everywhere. In business, however, success is not just measured by profit; relations are essential to the operations of a successful company as well. As an organization that is in the top of the Fortune 500 list of companies each and every year, Wal-Mart is constantly under public scrutiny. Many hold the view that Wal-Mart has been an unethical company for several reasons, related to its supplier, community, and employee relationships. It is important to remember that there are two sides to every story, and it is no different when it comes to the ethical evaluation of Wal-Mart. Is Wal-Mart being completely honest? Are its critics stretching the truth? In order to decipher the truth behind these stakeholder relationships both sides must be taken into consideration. Doe v. Wal-Mart Stores, Inc. In each of the 8,416 Wal-Mart stores that are located across the globe, there are over one million products featured. With that being said, it is no surprise that Wal-Mart has approximately 57,000 United States suppliers under contract (Schmitt, 2009). In 1994, Wal-Mart created a supplier diversity program with the intention of increasing the amount of women and minority owned suppliers of Wal-Mart (Corporate WalMart- Suppliers, 2010). This program has allowed Wal-Mart to conduct business with more than 2,500 Minority and Women-Owned businesses with which it spends approximately $9.2 billion annually (Corporate Wal-Mart- Suppliers, 2010). There are eleven standards that a company must comply with in order to be chosen as a supplier of Wal-Mart. 1. 2. 3. 4. 5. 6. 7. 2 Compliance with Laws Voluntary Labor Hiring and Employment Practices Compensation Freedom of Association and Collective Bargaining Health and Safety Environment 8. No Gifts or Entertainment 9. Conflicts of Interest 10. Anti-Corruption When it comes to suppliers and Wal-Mart, much of the controversy that enters the conversation is associated with overseas suppliers. Today, 85 percent of the products that are on the shelves of Wal-Mart stores are from China (PBS, 2010). From 2001-2006, Wal-Mart cut 196,000 United States employees as it shifted the majority of its business operations towards importing products from China (Making Change at Walmart, 2011). Conversely, Wal-Mart’s imported products make up an estimated 11 percent of the United States trade deficit with China (Making Change at Walmart, 2011). Table 1 illustrates data from the U.S. Census Bureau that explains the trade deficit with China through July 2011. The main reason that Wal-Mart conducts the majority of its business with overseas suppliers is cost. China is willing to sell Wal-Mart products at a much cheaper price than United States suppliers. This helps Wal-Mart maintain a large profit margin while remaining consistent with its mission statement of “Saving people money so they can live better” (Wal-Mart Stores Inc., 2011). Table 1. US Trade with China NOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Month Exports Imports Balance January 2011 8,078.1 31,349.6 -23,271.5 February 2011 8,437.2 27,278.7 -18,841.5 March 2011 9,518.8 27,601.4 -18,082.6 April 2011 7,971.0 29,567.1 -21,596.0 May 2011 7,817.8 32,781.3 -24,963.5 June 2011 7,729.9 34,387.4 -26,657.5 July 2011 8,170.9 35,125.5 -26,954.7 TOTAL 2011 57,723.6 218,090.9 -160,367.3 Source: U.S. Census Bureau, 2011 3 As a result of this import relationship, Wal-Mart has also developed a large presence in China, and as of 2006 had 68 stores with 36,000 employees in China (Associated Press, 2006). But how does China provide Wal-Mart with the products it needs at such low prices? Several Chinese suppliers of Wal-Mart failed to pay required pay or provide mandatory benefits to their employees (Associated Press, 2006). This controversial practice brought Wal-Mart to the courts in 2006 in the case Doe v. Wal-Mart Stores Inc. The plaintiffs of this case included former employees from several foreign countries that are suppliers to Wal-Mart – China, Bangladesh, Indonesia, Swaziland, and Nigeria (Washington Legal Foundation, 2009). These plaintiffs proposed that Wal-Mart knew full well of the failure of these foreign suppliers to comply with the minimum standards of labor and human rights, but continued to conduct business transactions with them anyway (Washington Legal Foundation, 2009). After three years of hearings and debate, the United States Court of Appeals mandated a ruling that offered workers of U.S. companies, protection from lawsuits over working conditions. However, they came to the conclusion that companies overseas that supply U.S. companies do not qualify for this protection. The argument that WalMart presented to the courts was that it should not be labeled as a joint employer simply because it has no control over the condition of the facilities in which the overseas employees worked or the wages and benefits that they did or did not receive (Washington Legal Foundation, 2009). Today Wal-Mart has more than 281 stores and 10,000 suppliers in China (Mufson, 2010). These statistics indicate that not only has WalMart continued to conduct business with China and other foreign countries since the Doe v. Wal-Mart Stores Inc. trial, but in fact Wal-Mart has quadrupled its presence in China. Rather than lobby for improved working conditions, benefits or wages, Wal-Mart has been focusing on the environmental safety and conservation in its overseas facilities (Mufson, 2010). This decision will certainly provide Wal-Mart with positive publicity, but diverts public attention away from Wal-Mart’s 4 seeming indifference to workers’ employment conditions in their overseas suppliers. Dukes v. Wal-Mart Stores Inc. Wal-Mart currently has 2.1 million employees that are located across the globe. In an effort to diversify the make-up of the company, Wal-Mart has successfully made fifty seven percent of their workforce women and thirty five percent minorities including African Americans, Hispanics, Asian Americans, Pacific Islanders and Native Americans. Wal-Mart also believes that they provide their employees with the equal opportunity of a promotion and quality benefits. “Our world-class employment practices ensure nondiscriminatory treatment of all associates.” (WalMart Corporate- Associates, 2011). This is how Wal-Mart believes they treat their employees, as evident by the information on their corporate website. But much like their supplier relationships, Wal-Mart’s relationship with their employees is rocky to say the least. In 2001, six women from California decided to sue Wal-Mart, claiming that the company discriminated against women by systematically denying them promotions and paying them less than men. The charges against Wal-Mart were associated with discriminating against women in promotions, pay, and job assignments in violation of Title VII of the Civil Rights Act of 1964. The case started in 2000, when a 54-year-old Wal-Mart worker in California named Betty Dukes filed a sex discrimination claim against her employer. She claims that, despite six years of hard work and excellent performance reviews, she was denied the training she needed to advance to a higher paying position. The case, Dukes v. Wal-Mart Stores Inc., expanded to include 1.6 million current and former female associates and in 2004 the lawsuit was certified as the largest class action lawsuit in history. Data collected in 2001 indicates that Betty Dukes and the other 1.6 million current and former employees of Wal-Mart had a strong case against Wal-Mart. For instance, in 2001 women held only one-third of salaried positions and made up only fifteen percent of store managers (Wake up Wal-Mart, 2010). 5 Finally in 2011, Dukes v. Wal-Mart Stores Inc. was presented to the United States Supreme Court. The 1.6 million female plaintiffs accused Wal-Mart of alleged discrimination against women and claimed the company was in direct violation of Title VII of the Civil Rights Act of 1964 (Lennard, 2011). Furthermore, many of these current and former female Wal-Mart employees claimed that Wal-Mart managers exercised sexism by over paying or promoting disproportionately in the favor of male employees (Lennard, 2011). However, on June 20th, 2011, the Supreme Court ruled in favor of Wal-Mart stating that the 1.6 million plaintiffs did not have enough in common to institute a class action lawsuit. As a result, the court decided that the variability of the plaintiff’s circumstances were sufficient enough to stop the case from proceeding as a class action lawsuit (Lennard, 2011). Employee Treatment Although this lawsuit was primarily concerned with the treatment of Wal-Mart’s female employee’s, Wal-Mart is also known for its poor treatment of all employees. In fact, the average Wal-Mart hourly sales employee earns under $250 per week. Most full-time employees are working for $7.50 per hour for 28-40 hours a week. As a result of this pay scale, the majority of Wal-Mart employees are living well below the poverty line (PBS, 2010). Part of the reason that that Wal-Mart’s employees receive such low pay is that Wal-Mart is a notoriously antiunion company. The unionized retail workers in the United States that do not work at Wal-Mart on average make 25 percent more annually than those employees that work the same job at Wal-Mart (PBS, 2010). The benefits of the employees at Wal-Mart have also been criticized. After several years of trying to silence the critics of its employee benefits program by improving the plan offered to employees, Wal-Mart instituted a huge cut back on employee health-care in October 2011. The new employee health-care program states that any employee that works less than 24 hours per week will lose all health insurance plans that the company may be providing them. In addition any future employees that work an average of 24 to 33 hours a week will no longer 6 be allowed to include a spouse as a part of their health care plan (Abelson and Greenhouse, 2011). Wal-Mart will continue to do its best to put a positive spin on the way that it treats their employees, but these facts cannot be denied. As a result of Wal-Mart’s tendency to overlook the importance of taking care of its employees, the company’s image has been permanently damaged. The Community Effect Despite these controversies, Wal-Mart still finds itself in favor with many of the communities in which it is located. As one of the largest corporations in the United States, Wal-Mart claims to understand the importance of giving back in each of the local communities in which it is established (Wal-Mart Corporate- Community & giving, 2011). In fact, Wal-Mart’s community relations have extended to over 100,000 charitable organizations and over $2 billion in fighting hunger in the United States (Wal-Mart Corporate- Community & giving, 2011). For a majority of consumers, the primary focus is the fact that Wal-Mart provides them with lower prices than that of any other retail store At a first glance, it may seem that Wal-Mart provides a plethora of jobs for citizens of a community. On deeper analysis, however, it becomes clear that Wal-Mart can run smaller, family run retail stores in the area out of business. Even if someone is lucky enough to get a job with Wal-Mart, on average the individual will be are paid 18 percent less than he or she would be at the family run retail store. Furthermore, a 2007 study that found that the presence of Wal-Mart in a community reduced the retail employment rate by 2.7 percent (Neumark, 2007). As a result, many communities cannot make up for this lost income. In 2004 Wal-Mart stores and associates cost the state of California approximately $86 million (Dube and Jacobs, 2004). Another argument often made against Wal-Mart establishing itself in a community is the opinion that they do not actually support issues that are important to the community. Some would go as far as to say Wal-Mart is not interested in what is best for the community at all. Jeff Doss is the real estate manager of Wal-Mart, and in 2005 he was 7 asked about a quote by Sam Walton that stated Wal-Mart would never build stores in towns where residents did not want them. He responded with the statement, “if that was the case, we would never build a store anywhere” (Meekel, 2005). The implication is that Wal-Mart management is well aware that many communities do not want WalMart stores locally, but Wal-Mart will build a store in those communities, regardless. Wal-Mart has an effect primarily on rural communities of the United States, but also on some major cities, specifically New York City. In 2011, the Alliance for a Greater New York (ALIGN) and the Murphy Institute at the City University of New York projected that if Wal-Mart were to achieve its goal to open 159 stores in the area, 14,000 retail jobs and $353 million in total wages would be lost due to the Wal-Mart openings (Norman, 2011). Community: The Effect on Taxpayers This raises another important issue that has been brought about due to the nation-wide spread of Wal-Mart stores – the effect Wal-Mart has on local taxpayers. Studies have shown that a large number of number of Wal-Mart associates qualify for Medicaid and other types of subsidized public care, at the expense of taxpayers. An example of this is the state of Ohio where, in 2009, in excess of $44.8 million in taxes was paid out specifically due to this phenomenon. Not only does Wal-Mart pass these bills onto the communities in which it locates, but in 2008 and 2009 Wal-Mart managed to fail to make payment on an estimated $3.4 billion in taxes (Office of the New York City Public Advocate, 2011). This community versus Wal-Mart fight has actually risen to a moderately intense level. So much so that one of the well-known websites against Wal-Mart, www.wakeupwalmart.com, has actually developed a five-step plan that is meant to keep a community Wal-Mart free. It consists of a strategy for success, planning tactics, using legislative tools, location resources and allies, and finding others in the community. The site also serves as a place for infuriated community members to blog about their opinions on Wal-Mart. This is just one 8 example of how passionate the combat has gotten between Wal-Mart and the community. Superficially, Wal-Mart can appear to be the ideal store for a community, but in reality many communities do not want the stores because of the detrimental effects associated with having a WalMart store within its borders. The Reality of the Situation The injustices that Wal-Mart has been associated with are no secret and as a result, many people have developed a negative view of Wal-Mart. Unfortunately, consumer behavior directly contradicts this negative view. In fact, Wal-Mart has continued to prosper in light of the hundreds of trials and studies that have given the company negative publicity. Wal-Mart currently has market capitalization of $191.5 billion and holds the majority of the retail market share at 13.5 percent (Yahoo Finance, 2011). Wal-Mart’s closest competitor, Target, cannot hold a candle to these statistics, as their market capitalization is barely one fifth of that of Wal-Mart’s, at $35.7 billion (Yahoo Finance, 2011). How has Wal-Mart been able to maintain its success? It is argued that the company is far from ethical, hurts the United States economy, and negatively affects communities in which the stores are located. The truth is that the United States recession of 2008 created the perfect environment in which Wal-Mart thrives; consumers with tight budgets look to the retailer with the lowest prices. Ironically, this same recession has exacerbated two of the most detrimental impacts of WalMart’s business practices: these practices impact on unemployment and household income. The United States Unemployment Rate Between January 2001 and January 2008 the unemployment rate ranged between 4.2 percent and 6.3 percent. Since that time, the rate has reached a high of 10.1 percent in October of 2009, leveling off at around 9percent since (Bureau of Labor Statistics, 2011). Table 2 illustrates this impact of the 2008 economic recession on the American unemployment rate. 9 The rise in the unemployment rate works to Wal-Mart’s advantage, contributing to the chain’s continued success during the past few years. As Wal-Mart has expanded nationwide, it has continued to take away jobs in the retail sector by driving out small retailers wherever it goes. However, even as Wal-Mart takes away jobs in an area, given the current economic situation people are less reluctant to take a job with Wal-Mart in spite of the controversy surrounding the company. Prior to the recession, a majority of these workers might have compared available salaries at other employers and opted against working for WalMart; now these same individuals find themselves comparing taking a job with Wal-Mart to not having a job at all. Table 2: United States Unemployment Rate 2001 through September 2011 Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2001 4.2 4.2 4.3 4.4 4.3 4.5 4.6 4.9 5.0 5.3 5.5 5.7 2002 5.7 5.7 5.7 5.9 5.8 5.8 5.8 5.7 5.7 5.7 5.9 6.0 2003 5.8 5.9 5.9 6.0 6.1 6.3 6.2 6.1 6.1 6.0 5.8 5.7 2004 5.7 5.6 5.8 5.6 5.6 5.6 5.5 5.4 5.4 5.5 5.4 5.4 2005 5.3 5.4 5.2 5.2 5.1 5.0 5.0 4.9 5.0 5.0 5.0 4.9 2006 4.7 4.8 4.7 4.7 4.6 4.6 4.7 4.7 4.5 4.4 4.5 4.4 2007 4.6 4.5 4.4 4.5 4.4 4.6 4.7 4.6 4.7 4.7 4.7 5.0 2008 5.0 4.8 5.1 4.9 5.4 5.6 5.8 6.1 6.2 6.6 6.8 7.3 2009 7.8 8.2 8.6 8.9 9.4 9.5 9.5 9.7 9.8 10.1 9.9 9.9 2010 9.7 9.7 9.7 9.8 9.6 9.5 9.5 9.6 9.6 9.7 9.4 2011 9.0 8.9 8.8 9.0 9.1 9.2 9.1 9.1 9.1 9.8 Source: Bureau of Labor Statistics, 2011 Income and the Recession Much like the unemployment rate, the income of the average United States household has been negatively affected by the current economic environment. In fact, the two can be viewed as inversely related in the sense that as companies continue to decline in this “survival of the fittest” economy, they are forced to downsize and impose pay cuts on 10 workers simultaneously in an effort to avoid going under. This means that unemployment will rise as household income declines. The relationship between unemployment and household income can be seen in Figure 1 below. Starting at the left side of the graph, the lower, finer line represents the unemployment rate from January 2000. The higher, heavier line represents a household income index, beginning also in January of 2000. The two lines appear to directly relate to each other up until January 2008 (the second shaded region on the graph) when household income drops off and unemployment rises and the two lines cross. More recently, household income and unemployment are both dropping and both are at points on their respective scales that are significantly different from where they started in 2000. The behavior of the measures during the 2008 recession indicates that both are affected by the recession itself. This clearly illustrates what has happened to household income and unemployment during the recession. Figure 1: Unemployment and Income in the United States Source: Sentier Research, 2010 11 The research from which this data is drawn was conducted in 2010 and reviewed income by type of household as well. The conclusions of this study can be summed up in the following six points. 1. Real median annual household income has fallen significantly more during the economic recovery period from June 2009 to June 2011 than during the recession lasting from December 2007 to June 2009. 2. During the recession, real median annual household income fell by 3.2 percent, from $55,309 in December 2007 to $53,518 in June 2009. During the economic recovery, real median annual household income fell by an additional 6.7 percent, from $53,518 in June 2009 to $49,909 in June 2011. 3. For the entire period from December 2007 to June 2011, real median annual household income has declined by 9.8 percent. A decline of this magnitude represents a significant reduction in the American standard of living. 4. Real median annual household income for family households with a male or female head and no spouse present (many with children in the household) declined by 7.3 percent (from $39,321 to $36,465) compared to a decline for married-couple households of 4.5 percent (from $76,783 to $73,324). 5. Real median annual household income for households with a head under 25 years old declined by 9.5 percent (from $32,123 to $29,060) compared to a decline for households with a head 45 to 54 years old of 5.5 percent (from $65,911 to $62,315). 6. Real median annual household income for households with a head looking for work or on layoff (unemployed) declined by 18.4 percent (from $41,037 to $33,487) compared to a decline for households with a head working full-time of 5.1 percent (from $72,104 to $68,454) (Sentier Research, 2010). The common thread in all six of these conclusions is decline. But in a time when citizens in virtually all socioeconomic statuses continue to suffer, Wal-Mart continues to thrive. The conditions that so negatively affect peoples’ lives appear to work to Wal-Mart’s advantage. Over this recessionary time period, an accurate revision of Wal-Mart’s mission statement of “saving people money so they can live better,” might be saving people money, so they can continue to live the lifestyle 12 they have become accustomed to. (Wal-Mart Stores Inc., 2011). If there is one thing that Wal-Mart is good at, it is providing millions of products for consumers to choose from, all at lower prices than other retailers. The American Consumer and Ethics Despite its best attempts to cover its tracks, it has become abundantly clear that Wal-Mart is indeed a questionable business in terms of ethics. The retail giant continues to hurt its suppliers, communities, employees and ultimately the United States. However, the unfortunate truth is that as American citizens have lost an average of three to four thousand dollars from their annual incomes, they have also become increasingly indifferent to the effect of Wal-Mart’s unethical practices in an attempt to maintain their respective living standards. While individual consumers continue to save money at WalMart, collectively the American consumer does not appear to fully understand that money saved personally directly stunts the growth of communities and the United States economy as a whole. The prevailing attitude of every man and woman for him- or herself has resulted in the America people learning how to turn and look the other way while WalMart continues to operate unethically. This phenomenon has contributed to Wal-Mart’s continuing success since the economic recession of 2008. In fact, since the recession began, Wal-Mart has increased revenue and profit each year, as indicated by their annual income statements, seen in Table 3. There are many industries that win consumers by being aware of stakeholder theory and becoming highly active in corporate social responsibility. But because the retail market has ultimately become something very close to a monopoly, Wal-Mart sits atop the proverbial food chain and seems to be impervious to business ethics; the corporation is able to continue to maintain the highest market share and sales, while remaining unethical. It is true that no business can be successful without their consumers, and American consumers have a share of the responsibility in allowing this seemingly unstoppable conglomerate’s behavior. But while consumers deserve a share of the 13 blame for Wal-Mart’s success in spite of poor ethics, other parties have some responsibility as well, including the United States government. Table 3: Wal-Mart Income Statements, Years Ending 2009 through 2011 Period Ending Total Revenue Cost of Revenue Jan 31, 2011 421,849,000 315,287,000 Jan 31, 2010 408,085,000 304,444,000 Jan 31, 2009 404,254,000 303,941,000 Gross Profit Operating Expenses Research Development Selling General and Administrative Non Recurring Others 106,562,000 103,641,000 100,313,000 — 81,020,000 — — — 79,639,000 — — — 77,546,000 — — — — — 25,542,000 24,002,000 22,767,000 201,000 25,743,000 2,205,000 23,538,000 7,579,000 (604,000) 181,000 24,183,000 2,065,000 22,118,000 7,156,000 (513,000) 284,000 23,051,000 2,184,000 20,867,000 7,133,000 (499,000) 15,959,000 14,962,000 13,734,000 Total Operating Expenses Operating Income or Loss Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops Non-recurring Events Discontinued Operations Extraordinary Items Effect Of Accounting Changes Other Items Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares Source: Yahoo Finance, 2011 14 1,034,000 — — — (79,000) — — — 146,000 — — — 16,389,000 14,370,000 13,381,000 — — — 16,389,000 14,370,000 13,381,000 The American Government’s Role in Business Ethics Over the past decades, many governments across the globe have realized that they have a significant role to play in the adoption and implementation of business ethics. In a study that examined the role that European governments played in corporate social responsibility (CSR), several interesting results become evident. The study focused on two specific areas in which increased CSR has become evident in the governments examined, globalization and political initiative (Albareda et al., 2008). There has been a change in the center of economic power where increasingly the state has a dependent role and business a dominant one (Albareda et al., 2008). The increased globalization that the power of technology has inspired, has indirectly presented governments with new political challenges that force big business and government to cooperate with one another. Several nations have used the concepts of CSR as a framework for the collaborative efforts of governments and businesses to follow (Albareda et al., 2008). For instance, Italy has been able integrate the social and environmental concerns of their country into the everyday operations of businesses nation-wide. The government has been able to build the perception that CSR is a competitive opportunity for companies in Italy to earn success. On the other hand, the United Kingdom government found the adaptation of CSR policies justifiable during a time where Britain was faced with a high unemployment rate, social poverty and lack of economic development, a situation that the United States government faces now (Albareda et al., 2008). The controversy that arises when governments become involved with CSR is whether or not officials of that government should take it upon themselves to regulate and enact laws to make CSR actions mandatory within businesses (Albareda et al., 2008). In Europe, CSR public policies have taken hold in fifteen of the twenty seven nations of the European Union. These nations have found that there is indeed a clear role for government in the development of CSR in business, in their efforts to address the socioeconomic issues that their countries 15 may face (Albareda et al., 2008). In the conclusion of this study, the relationship between government, civil society, and business was summed up in the following diagram, seen as Figure 2. It is important to note that in this diagram, although the process begins with government instituting CSR within public administration, if and when CSR is correctly implemented into the three interrelated realms of government, business and civil society, it becomes a renewable and beneficial process for the given economy as a whole. This particular study is interesting because it was conducted by observing three Europeans countries implementing CSR successfully in different ways – those countries being Italy, Norway, and the United Kingdom. Although the governments in these countries mandated CSR in different ways, there was a common result indicating that CSR is a strong force for sustainable economic development. Figure 2: The Relationship between Government, Civil Society, and Business Government 1 2 Business 1. 2. 3. 4. Civil society CSR in public administration CSR in administration-business sector relationships CSR in administration-society relationships Relational CSR Source: Albareda et al., 2008 16 3 4 Conclusion: Together We Stand, Divided We Fall One of the downfalls of a capitalist society is the frequency with which businesses become virtual monopolies, and consequently, make the given industry ultimately inefficient and dangerous to the country’s economy. Perhaps there is no better example of this situation than Wal-Mart’s domination of the retail industry for the past several decades. Although Wal-Mart may claim that they believe in, and participate in, a stakeholder welfare view of management, a closer examination of the statistics has revealed an approach that has achieved the opposite result. The reality is that Wal-Mart has developed a proverbial stranglehold over its employees, suppliers and the communities in which it operates. Furthermore, the lingering effects of the economic recession of 2008 have left American citizens with significantly lower household income and in many cases, jobless. The combined effect of the current economic conditions of the United States, and the unethical operations of Wal-Mart, has been to present the retail giant as a hazard to its stakeholders and also to the United States economy as a whole. Trapped in a struggle for survival, the American consumer has been forced to hold the savings they incur at Wal-Mart, more valuable than the economic condition of their respective communities and nation. This circumstance makes it seem that a boycott or decline in Wal-Mart’s sales is far from a realistic expectation to hold for consumers nationwide. Government intervention, however, could force Wal-Mart to behave in a more ethical manner. In most cases government interference in realm of business is unnecessary and a hindrance, but in this specific case governmental implementation of CSR (corporate social responsibility) in the form of legislation is necessary. The experiences of several European nations bear out the conclusion that forcing a corporation to behave in a responsible manner can benefit all parties. 17 References Abelson, R. and Greenhouse, S. (2011). Wal-Mart cuts some health care benefits. The New York Times: B1. Albareda, L., Lozano, J. M., Tencati, A, Midttun, A. and Perrini, F. (2008). The changing role of governments in corporate social responsibility: drivers and responses. Journal of Business Ethics. Associated Press. (8 December 2006). 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