Patagonia and Social Responsibility

After last week’s session about stakeholder and shareholder managing and reading Jensen’s writings, I really started to think about business ethics and social responsibility in both types of managing. It dawned on me that maybe Jensen had a point when he was mentioning value maximization. It started to make me think that maybe profit maximization isn’t the only type of maximization that can occur and that maximizing something else may lead to make a company or firm so successful.

For my blog this week I read another blog post about social responsibility and sustainability within Patagonia. Patagonia is a company that pries themselves on being socially responsible. Whether it’s using an environmentally friendly material to manufacture their clothing, or ensuring that employees have safe and good working conditions, Patagonia makes sure they do all those things. They base their whole survival on ensuring that the world is safe and clean in the future, not just now for us. They want the world to be sustainable in the future, and that is what they try to maximize. Yes of course they want to increase their profits, but the way they achieve their goal is by maximizing their social responsibility and ensuring that they don’t threaten the environment or treat workers poorly.

In the blog that I read, there was a mention of Patagonia having a problem with workers getting headaches. Instead of trying to fix the circulation problem, Choirnard the founder decided to find out the cause of the problem, which was formaldehyde. Instead of taking the easy way around the solution, he decided not to take any shortcuts and instead to fix the problem in a different way to ensure it didn’t happen again and to eliminate the threat to the environment and workers. Not taking shortcuts around these types of problems is what customers who wear Patagonia value. They appreciate their mission, and stand by it, and that is what helps Patagonia maximize profits. Yes they want to increase profits, but not if it means skimping out on their mission and goals.

In the blog I read, there was a quote that really intrigued me. It is from the founder, Choinard, and he says, “We [Americans] are addicted to consuming.  If we can change ourselves, corporations will change and the government will follow.” I guess I always thought it was the job of the CEO or manager of a company or firm to be the one who is socially responsible, but maybe it is really up to us consumers. I immediately thought of shareholder vs. stakeholder managing and how we consumers can change the values of firms and company’s if we take the first step. Sure, shareholder managing can still exist that way, just their maximizing value may be viewed differently.

Original Blog Post: http://brownflynn.wordpress.com/2013/09/16/patagonia-founder-reaches-a-new-peak-and-challenges-others-to-follow/

6 thoughts on “Patagonia and Social Responsibility

  1. Dear en006,
    After reading your post and the original blog I couldn’t help but juxtapose Patagonia’s reactions to poor factory conditions and Apple’s reactions. While Patagonia directly addressed the problem, prioritizing their employees, Apple failed to assertively eliminate factory dust that lead to the eventual explosions. We champion Patagonia and Apple as excellent companies that provide unparallelled service and products. Both companies have amble resources to audit and address problems, yet it looks like Patagonia places their stakeholders (at least in this particular example) on a higher level than short-term profitability.

  2. Ev,
    The last part of your blog was what really made me reflect upon my personal actions. As a consumer, I do have the choice to support whatever company I choose. Instead, I’ve focused more on the responsibility of the company to be ethical, neglecting to consider my own actions as a consumer. If given more product choices do you think that consumers will choose a more ethical product, especially if the cost is greater?

  3. I too also thought about the theory of profit maximization and wondered if there were firms and businesses somewhere that maximized other aspects of their operations. I feel that corporations like Target, who has much higher employee satisfaction and average wages than Walmart, focused on keeping their employees happy which in turn will result in improved performance on the job. It seems that Patagonia has successfully maximized their social responsibility by paying close attention to the conditions of their manufacturing plants, their employees’ satisfaction, and the company’s impact on the environment. Your statement in the last paragraph about the consumer mindset changing was very interesting in that it addresses the problem about social responsibility and accountability in corporate America. The corporate culture needs to change and it needs to start with the consumers.

    • I think Jensen means long term value as reflected in today’s stock prices is the best measure. I see where you all are wondering if other measures can be maximized, but that is what he has in mind.

  4. I like that you bring up the example of how Patagonia does business, because they are a perfect example of how a business can operate with more than just stakeholders in mind. Jensen and Friedman seemed to believe that it would be too complicated operate under a goal that wasn’t quantitative and profit oriented. It seems like a cop out to say that stakeholder management is too difficult and therefore should not be practiced. Patagonia shows that a purpose of a business can be something other than making profit.

  5. Although I know you said you also read the blog I wrote about, I am so glad you wrote about Patagonia instead! I have always thought of Patagonia as a company with great morals that strives to appeal to a customer base that cares about other factors besides the product they are buying, and it seems Patagonia is sticking to this! I also really enjoyed the comment you included about how consumers actually have the most power. I think sometimes we feel as though we are taking a back seat and just enjoy whatever products are made for us, but we really have the most control. Also, I find it interesting that the founder admits to the idea that the governments follow the corporations. This just shows that everything really is run by money, and although we want to believe the government stays separate from business, we all know it doesn’t.

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