With Great Power Comes Great Responsibility:

Can Corporations Become the Modern Day Superheroes?

Abstract:

From the Dutch East India Company to Standard Oil to Google, corporations have played a shaping role in American history. And as they have grown, society has demanded that they play some role in mitigating the harm they cause, particularly in pollution and maltreatment of workers. Today, corporations have such a significant influence that we expect them to enact Corporate Social Responsibility (CSR) standards so as to not cause harm to our society. However, today's tech powers have a much more complex effect on social issues, contributing to problems such as inequality and gentrification. Can corporations be trusted to implement CSR initiatives to mitigate these effects, or should there just be stricter government regulation on these corporations? Are there CSR policies that could benefit both corporations and society? And if CSR strategies were to be implemented, what forms should they take?

 

Keywords: business, corporate social responsibility, corporate history, technology, technology corporations, gentrification, inequality, corporate governance, social sector, history, inequality, gentrification

 

Introduction

 

The power of tech corporations appears vast and ever-growing. Giants like Apple, Google, Facebook, and Amazon have vast shares of the market and significant influence over what people can see, purchase, and perhaps even think. With this great power comes the question of whether these corporations should be regulated, and/or if they can regulate themselves through Corporate Social Responsibility (CSR). Corporate models have developed throughout U.S. history, typically operating in a relatively free-market economy, with limited regulation from the government. Corporations began implementing CSR initiatives primarily out of labor union and environmental movement pressure. CSR has largely become the standard today, but it remains predominantly focused on the labor and environmental issues of the manufacturing age, rather than adapting to the new complex issues of the tech era, such as inequality and gentrification. Can tech companies utilize their unique capabilities to reinvent CSR to address modern social sector problems, and furthermore, can they be trusted to do so? With promising strides already being made by some tech companies towards more contemporary CSR initiatives, there is hope that the innovation that has caused tech companies to prosper can be utilized to mitigate the social issues of today.

 

 

 

History of Corporations and Emergence of CSR

 

Corporations play a large and shaping role in U.S. history, both influenced by and influential in politics and social movements. The first corporations were created in Europe prior to the 17th century, as non-profit entities tasked with building institutions for the public good (“A Short History of Corporations”). Then beginning in the 17th century, profit became a major aspect of corporations, with wealth used to finance colonial expansion and control trade, resources, and territory in Asia, Africa, and the Americas. In 1600 the East India Company was granted a Royal Charter by Queen Elizabeth I and became the world’s first commercial corporation, with partners buying company stock. The East India Company traded in Asia and conquered India with a monopoly on trade, a private army, and the territorial powers of a government.

 

 

The American colonies were run by British monopoly powers for corporate interests (“A Short History of Corporations”). British royal charters declared that raw materials would be shipped from the colonies to Britain for manufacture, and that the colonies must then purchase Britain’s finished goods. Resentment with this arrangement contributed to the American Revolutionary War in 1776. After Independence, American corporations were chartered for specific public functions, requiring termination of the corporation when the task was complete, and limiting commercial interests and corporate participation in politics. But in 1886, a U.S. court ruled that corporations are a “natural person” under law, using the 14th amendment (adopted to protect emancipated slaves) to defend corporations and fight regulation. By the end of the 19th century free trade ran wild, leading to monopolies and cartels amongst massive labor unrest. So antitrust laws were implemented to break up monopolies and taxes and tariffs were raised. In the 1960s, social activism in the U.S. led to the implementation of environmental and labor standards, and between 1950-1980, social welfare provision and state intervention were the standard. But in the early 1980s, free-market ideas resurged, and then-President Reagan made tax cuts, rolled back social welfare, and increased privatization.

 

“Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable”

-Investopedia

 

Looking through the lens of Corporate Social Responsibility (CSR) offers further insight into the development of corporate power. Modern CSR began in the U.S. around 1950 due to the growth of trade union and environmental protection movements, which put pressure on corporations to enact labor and environmental protections (Madrakhimova). It began during a time of powerful manufacturing companies, when labor and environmental abuse were significant. CSR also took the form of corporate philanthropy. However, CSR has largely evolved since then to become essential to corporate practices, “Since the early 90s corporate social responsibility is no longer just a matter of intra-or just a question of relations with the trade unions or charitable organizations. Increasingly, companies are combined to develop common principles and approaches to social responsibility, the sharing of experiences. The policy of social responsibility has become an integral part of the evaluation activities, and the success of corporations” (Madrakhimova). It appears that CSR has become the standard for many companies, and there is now an expectation for companies to be socially conscious.

 

An interesting aspect of CSR development in the U.S. is that responsibility for ethical practices is placed on the corporations themselves, rather than on government regulation: “Because of the nature of American entrepreneurship based on the maximum freedom of subjects, many spheres of social relations are still very controlled… Thus, the American model of CSR is initiated by the companies and provides for maximum autonomy in determining their corporations of the Public input, but the legislation promotes social investment in areas favorable to society through appropriate tax incentives and credits, with minimal government regulation of CSR” (Madrakhimova). CSR in the U.S. is largely the responsibility of corporations themselves, rather than outside regulation, which Madrakhimova attributes to the individualist nature of Americans. This is opposed to European CSR, which tends to be more collective and regulated. Since CSR initiatives have historically emerged from within U.S. companies, does that mean they should continue to do so? Or instead, should the government set certain CSR requirements? Furthermore, the aforementioned CSR initiatives and corporate history have largely been products of trade and manufacturing powers. How does the situation change in the modern age, when tech corporations dominate the economy?

 

 

Another development to consider is the opposition to CSR. “Technology and Business: Rethinking the Moral Dilemma” argues that since corporations are primarily interested in economic goals, they neglect the safety and practicality of the technology they produce (Buchholz). It says this is a structural problem inherent in the capitalist system, and one way to solve it is to encourage engineers' whistleblowing. This is an interesting idea to consider: is there an inherent connection between something being profit-driven and being immoral? Buchholz argues that businesses tend to be immoral, while individual engineers in them tend to be moral. If this were true, CSR would only occur due to pressure from outside forces or from its workers, and companies could not be trusted to enact CSR themselves. If corporations are immoral themselves, and only implement CSR out of sufficient pressure, perhaps the norm of CSR arising from within companies should be changed. Perhaps instead the government should enforce stricter legislation and be in charge of CSR initiatives.

 

A second opposition is the idea that CSR is only reactionary, implemented out of social pressures. “Public Relations and Corporate Social Responsibility: Some Issues Arising” argues that perhaps CSR is not created out of companies’ real feelings of accountability, but out of an effort to repair social relations and sales after damage has already been done (L’Etang). After all, the first CSR initiatives arose out of labor union and environmental movement pressure. If this is the case, perhaps there should be further government regulation on corporations, to limit certain damage before it can be done.

 

These oppositions to CSR are largely in regard to the era of manufacturing power, which had problems of labor and environmental abuse. How may these oppositions change or develop in the new age of tech powers, whose effects are arguably much more complex and multifaceted?

 

III. Today’s Tech Corporate Powers

 

Tech corporations today have enormous power. In terms of market value, the top five companies are Apple ($926.9 billion), Amazon ($777.8 billion), Alphabet ($766.4 billion), Microsoft ($750.6 billion), and Facebook ($541.5 billion) (“The 100 Largest Companies in the World by Market Value in 2018”). Not to mention the immense social influence these corporations have through their data collection, with targeted ads and perhaps even the use of personal information for political purposes, as was the accusation in the Cambridge-Analytica case (Elliott).

 

Due to the immense power of corporations, some have argued that there should be government regulations and anti-monopoly laws to break up these companies, as occurred in early 20th century with Standard Oil. In the article “Is it time to break up the tech giants such as Facebook?” Larry Elliott argues, “Data is as vital to the modern digital economy as oil was a century ago. The tech giants have the same sort of monopoly power that Standard Oil once had (Google and Facebook accounted for two-thirds of online advertising spending in the US last year and Amazon was responsible for 75% of online book sales). Mark Zuckerberg might wear chinos rather than the top hat sported by Rockefeler but a robber baron is a robber baron. It is time for anti-legislation to be used to break up Facebook, Google, and Amazon” (Elliott). Tech corporations do have immense power, and perhaps anti-monopoly laws are in order. But as seen throughout U.S. corporate history, companies can initiate Corporate Social Responsibility practices to help mitigate their damage, and these usually involve little government regulation. Can the new problems of the tech industry be resolved in part by CSR, perhaps in addition to government regulation? What are the problems the tech industry should address? And how can it go about solving them?

 

CSR initiatives in the manufacturing age arose largely in response to labor unions and environmental movements, so they focused primarily on these issues (Morfit). However, labor and environmental laws, as important as they are, are not central issues in the modern-day era of tech powers: labor laws are less of an issue, as the workforce is largely well-compensated programmers, and much of the work is digital, not producing as much pollution and waste. Although these issues should still be considered and addressed, CSR should evolve to encompass the new issues in tech companies, among them inequality and gentrification.

 

In the past, movement of a manufacturing plant to a city often meant new jobs were available for the nearby citizens. Today, movement of a tech company to a city means creation of jobs only for the highly educated, who tend to displace the existing citizens by driving up rent prices. This gentrification not only removes people from their homes, but also arguably eradicates the diversity and culture of some areas. In the article “The tech industry is stripping San Francisco of its culture, and your city could be next,” Ryan Bort says, “So flush has the Bay Area become with tech money and young transplants chasing it that the six square miles of San Francisco, once a haven for diversity and freedom of expression, have been taken over by developers. The city’s once-vibrant culture has been paved over to cater to the sleek, homogenized tastes (and budgets) of a single demographic.” The issues of gentrification and inequality are very complex, perhaps requiring a greater reach than current CSR initiatives, which are more about internal regulation than external developments. Labor regulations and environmental standards are generally issues that can be solved by a corporation regulating itself and its workers, but how can a company help reduce the growing inequality and gentrification in society it contributes to by its own success? Is there a way that tech companies can help solve these issues, besides choosing to not expand? Can this problem be solved with CSR, rather than intense government interference? And inequality and gentrification are immense, multifaceted issues, do corporations have the capacity to help reduce them?

 

Tech corporations are in fact already making CSR efforts to address social issues, both issues they help cause and other issues in the world. With some innovation, these efforts may be expanded to help mitigate the complex problems of inequality and gentrification. One of Google’s core values is environmental responsibility, it has been carbon neutral since 2007 (Pratap). This has lead to higher energy efficiency and less consumption and costs for Google, demonstrating how CSR initiatives can be mutually beneficial to society and the business. Amazon and Microsoft have also made serious investments and efforts in sustainability. However, again, these companies are mostly focusing on the environmental concerns borne out of the manufacturing era, rather than the big issues of the tech era. But some companies are making strides towards a new generation of CSR, such as IBM. IBM has invested in learning, working with educators to create technology and education models, as well as educating military veterans to help fill in skill gaps and find them employment. Another example is Intel, which has developed technology to help manage air quality in cities, and has invested in transportation and lighting around the world. The work of IBM and Intel in particular demonstrate some of the ways in which the tech industry has developed new CSR initiatives that utilize the capabilities of technology to help mitigate inequality and other social issues. And the work of these tech companies overall show how CSR can help businesses reduce costs, minimize waste, and gain a positive reputation, thus being mutually beneficial to the companies and society. Perhaps this work can be expanded to make new strides in mitigating the issues of the tech sector and modern society.

 

 

IV. CSR for the Future

 

From the rise of tech corporate powers comes new, more complex social issues. But this rise is also in an industry defined by innovation and problem-solving. In the article, “What Does Corporate Social Responsibility Mean for the Technology Sector?” Simon Morfit argues that the unique capabilities of the tech industry allow it to contribute to social issues in new ways. One development is hackathons, contests for computer programmers that involve creating a product or solving a challenge in a set amount of time (Morfit). Cloudera applied this idea to helping solve social issues by hosting a hackathon that focused on creating solutions for a nonprofit partner. Another organization, the San Francisco Citizens Initiative for Technology and Innovation, has partnered with government offices to help address city problems through technology. It has improved data collection and analysis, allowing city departments working on transportation and public safety to become more efficient. Google has also made strides towards social sector contribution through its Person Finder web application, which allows individuals to search for friends and relatives after natural disasters or other emergencies. It also allows nonprofits and government agencies to contribute and receive data. In addition, Google shared mapping data with the United Nations and other relief agencies following the 2010 Haiti earthquake.

 

“These examples represent what the technology sector excels at: capturing, analyzing, and sharing data. They also exemplify the greatest value-add that the technology industry can offer the social sector: data analytics. The ability of social sector organizations to obtain, handle, and act on information remains somewhat underdeveloped, especially in comparison to their for-profit counterparts…A stronger information capacity can help social sector organizations understand the needs of beneficiaries and communities, target resources effectively, evaluate the impact of programs and services, and leverage big-data to anticipate and respond to challenges,” Morfit says. In these ways, through partnerships with non-profits, these tech corporations can make a significant impact on social issues. Perhaps eventually, these tech companies can incorporate non-profit goals into their own missions.

 

But the possibility of implementing CSR initiatives such as these brings up again the issue of whether these companies can be trusted to enact such policies. The issues mentioned earlier, such as the idea that many firms are primarily profit-driven and won’t enact responsible practices unless pressured to do so, if true, would mean companies are more likely to find the cheapest and quickest way to accommodate pressure to do good, rather than creating innovative ways to build CSR into their business model (L'Etang). If this were the case, it seems government regulation would be the best solution. There was also the idea brought up that many corporations are immoral themselves, but the individual workers inside are moral (Buchholz). If at least this were the case, then perhaps at least the initiative of these workers would be enough to persuade companies to integrate CSR into their business.

 

Silicon Valley does have a reputation for being liberal. One example of this is organizations like Tech Equity Collaborative working to unite members of the tech industry to instigate change in the issues of inequality and gentrification (Tech Equity Collaborative). This demonstrates that there are a number of workers in the tech industry who want to help mitigate problems that tech contributes to, and they already are beginning to unite for this purpose.

 

 

However, initiatives to help social issues can sometimes go awry. For instance, in “The Silicon Valley Billionaires Remaking America’s Schools,” Natasha Singer describes how some business leaders are getting involved in reinventing the school system by applying start-up techniques to education. Singer says, “In the space of just a few years, technology giants have begun remaking the very nature of schooling on a vast scale, using some of the same techniques that have made their companies linchpins of the American economy. Through their philanthropy, they are influencing the subjects that schools teach, the classroom tools that teachers choose and fundamental approaches to learning.” Although this involvement in education likely comes from good intentions, there is a problem with people who have little teaching credentials assuming their experience in business will carry over (Singer). Furthermore, the interference of these tech billionaires is largely unchecked and implemented fast, with little data to substantiate their strategies. These students became essentially guinea pigs for billionaires to test their startup-turned-education techniques on. Here is an instance when business involvement in social issues has perhaps gone too far.

 

The question of whether CSR should be initiated depends on if companies truly want to enact social change, and if so, whether their plans would be beneficial. As demonstrated through the history of corporate power in the U.S, CSR has largely been initiated by pressure from the social sector and actualized by corporations, rather than through government regulation. But with the rise of the tech industry comes new, complex problems. If corporations are to help mitigate the social issues they contribute to, they should readjust their CSR initiatives to utilize their strengths in innovation and data management, but if they cannot be trusted to do so, then perhaps government anti-monopoly intervention is necessary to break up these powers. With great power comes great responsibility, so will these tech companies become the heroes or the villains?

 

 

Works Cited:

 

“A Short History Of Corporations.” New Internationalist, 5 July 2002, newint.org/features/2002/07/05/history.

 

BÉNABOU, ROLAND, and JEAN TIROLE. “Individual and Corporate Social Responsibility.” Economica, vol. 77, no. 305, 2010, pp. 1–19. JSTOR, JSTOR, 

Bort, Ryan. “The Tech Industry Is Stripping San Francisco of Its Culture, and Your City Could Be Next.” Newsweek, 1 Oct. 2015, 

 

Buccholz, Rogene A., and Sandra B. Rosenthal. “Technology and Business: Rethinking the Moral Dilemma.” Journal of Business Ethics, vol. 41, no. 1/2, 2002, pp. 45–50. JSTOR, JSTOR, 

De Colle, Simone, et al. “The Paradox of Corporate Social Responsibility Standards.” Journal of Business Ethics, vol. 125, no. 2, 2014, pp. 177–191., 

Elliott, Larry. “Is It Time to Break up the Tech Giants Such as Facebook? | Larry Elliott.” The Guardian, Guardian News and Media, 25 Mar. 2018, 

Epstein, Marc J., and Bill Birchard. Counting What Counts: Turning Corporate Accountability to Competitive Advantage. Perseus Books, 2000.

 

Goodman, Amy L. Staff Report on Corporate Accountability: a Re-Examination of Rules Relating to Shareholder Communications, Shareholder Participation in the Corporate Electoral Process and Corporate Governance Generally. U.S. G.P.O., 1980.

 

Kerlin, Janelle A. “A Comparative Analysis of the Global Emergence of Social Enterprise.” Voluntas: International Journal of Voluntary and Nonprofit Organizations, vol. 21, no. 2, 2010, pp. 162–179. JSTOR, JSTOR, 

L'Etang, Jacquie. “Public Relations and Corporate Social Responsibility: Some Issues Arising.” Journal of Business Ethics, vol. 13, no. 2, 1994, pp. 111–123. JSTOR, JSTOR, 

Madrakhimova , Firuza. “History of Development of Corporate Social Responsibility.” Journal of Business and Economics, vol. 4, no. 6, June 2013, pp. 509–520.

McBarnet, Doreen J., et al. The New Corporate Accountability: Corporate Social Responsibility and the Law. Cambridge University Press, 2009.

 

Morfit, Simon. “What Does Corporate Social Responsibility Mean for the Technology Sector?” Stanford Social Innovation Review, 3 Oct. 2014, ssir.org/articles/entry/what_does_corporate_social_responsibility_mean_for_the_technology_sector.

 

Pratap, Abhijeet. “CSR and Sustainability in the Technology Industry.” Cheshnotes, 8 Oct. 2018, www.cheshnotes.com/2017/10/csr-sustainability-technology-industry/.

 

Singer, Natasha. “The Silicon Valley Billionaires Remaking America's Schools.” The New York Times, The New York Times, 6 June 2017, 

Smith, N. Craig. Morality and the Market: Consumer Pressure for Corporate Accountability. Routledge, 2016.

 

Steyaert, Chris, and Daniel Hjorth. Entrepreneurship as Social Change a Third Movements in Entrepreneurship Book. Edward Elgar Publishing Limited, 2007.

 

Stevens, Laura, et al. “Tech Giants Power to New Heights.” The Wall Street Journal, Dow Jones & Company, 12 Feb. 2018, 

“The 100 Largest Companies in the World by Market Value in 2018.” Statista, The Statistics Portal, 2018, 

Figure 2: Political cartoon depicting the discontent of the working class during the "Occupy Wall Street" protest, objecting to inequality. Source: The Telegraph

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Figure 3: Link to a Bloomberg article describing the Facebook-Cambridge Analytica scandal, an example of alleged data misuse that demonstrates the great power of tech companies, which can be very harmful if used in the wrong ways. 

Figure 4: A video of Dropbox employees who "rented" a field trying to kick off kids who had been playing there for years, an example of the effect of gentrification, with incomers challenging and pushing out residents not only from their homes, but also their recreational spaces. 

Figure 5: A member of Tech Equity Collaborative, a coalition of tech workers who aim to use technology to mitigate social issues, speaks about how workers in tech industries want to do good in the world. 

Figure 1: A timeline of some of the key events in U.S. corporate history and CSR, using information from "A Short History of Corporations."