There has been some recent controversy over a quote from the CEO of Abercrombie & Fitch, a popular teen clothing brand, Michael Jefferies which gives some insight into the company’s attitude, culture, and marketing strategy. Seven years prior, Jefferies stated, “In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.” There has been backlash, boycotts, and outrage across the United States. While we are on the topic of stakeholders verses shareholders, we are confronted with the question—should we take a Freeman, stakeholder capital, view in which there is no separation of business, ethics, and society or take Friedman’s side and reject “social responsibility” spending if it doesn’t up profits and serve shareholders?
Abercombie is taking more of a Friedman approach and concerning themselves with the fundamental capitalistic notion that what is good for business is good, period. They may argue that strategically targeting a specific audience and excluding another is simply marketing. It’s possible that creating larger sizes or altering their image could cause a decline in their stock, repel their target market, and have shareholders up in arms. Here, ethics takes a back seat to profits. Is positive body image for all teens really Abercrombie’s concern? Do they have a social responsibility to ensure every sized teen in America is accommodated?
Stakeholder capitalism considers business, ethics, and society as a whole. A stakeholder in the most basic sense is anyone who can affect or can be affected by an organization’s actions. There are countless stakeholders affected by Abercrombie’s “exclusionary” actions. However, excluding current and potential customers’ takes on the company’s values, employees’ morals and values come into question. Freeman’s idea that Separation Theory leads to an employee’s inability to find meaning and purpose, low motivation, resistance to change, and robotic leadership, is fundamental to the Abercrombie controversy. How can employees continue to work for this polluted culture and still be healthy, happy, and successful? Should business go beyond profit and serve society’s ethical needs, rather than simply make money? When does financial capital become more valuable than human capital?