Starbucks and the New CSR Calculus

Starbucks is an interesting example of the role that modern corporate social responsibility can play in the reputation of a company. CSR has taken a turn from being solely an ethical consideration, to being somewhat essential to the success of many companies, especially those such as Starbucks who have intentionally put it at the forefront of their reputation, but also in the case of companies who are forced into adhering to CSR policies in order to appease their customer base. Prior to the 1970’s, companies appeared to have little ethical consideration for what their actions might do, as long as it would result in profit. Or, if they did take ethical considerations it was likely actually out of the goodness of the CEO’s heart, because there was little to be gained from it other than a clean conscience. In the 70’s, this changed. Consumers were demanding more from MNCs. More transparency, more ethical conduct, and more positive impact on the communities they operate in.

The interesting shift has been from the begrudging acceptance of CSR reform by MNCs to MNCs like Starbucks fully embracing CSR and going to great lengths to not only do no harm, but to do good in the world. If you walk into a Starbucks today you are craftily bombarded by signs of the company’s positive influence in the world. They make you, as a consumer, feel good about buying their product because by supporting Starbucks you are, in turn, supporting all the good work that they are doing. Their marketing strategists have perfected manipulating consumer emotion to convince them to pay a premium for their product because it makes them feel better to spend $2 extra than to purchase coffee beans harvested under unethical circumstances. Conveniently, the consumer also loves Starbucks coffee. Starbucks has effectively taken CSR to a new extreme and made it a motivator and a standard for consumers, so that it is not enough for other companies to claim that they have fair-trade beans, but they must also be socially progressive, even at a cost to their own profit. What Starbucks has gotten right is that it does not mean a cost to their profit. By closing for half a day to do mandatory racism training, they lose half a day’s profits but they will easily make that back by retaining customers who may have left due to their initial bad publicity, and even gaining customers who appreciate the company’s social awareness.

While reading the Hofferberth et. al article about constructivism and CSR, I was considering the Starbucks case and how it might fit into the paradigm of reasoning they describe. Yes, Starbucks is reacting to a a general trend towards CSR from before its time, but now it is setting a new standard for CSR in its industry which may even seep into others. However, their interest in raising the standard is profit. It appears to be a risk calculation in which they expect, rightfully so, the outcomes to be highly in their favor and keep them at the top of their contenders. In this light they are acting from the realist perspective, but the reaction they will induce in the long run seems more constructivist in that other actors will accept the norm and begin to do the same because it will then be what is appropriate.


Apple’s Taxes (or lack thereof) and the US government

In 2017, Tim Cook, the CEO of one of the worlds biggest MNCs, explicitly demonstrated his power in relation to the US government. He made comments about how Apple keeps large amounts of its profits in overseas tax havens and he will refuse to bring that money back into the US until they lower the tax rate. People are not allowed to do this. But, because Apple is a large and important American MNC, they are able to use loopholes to defer paying taxes. If an American citizen were to publicly announce doing the same exact thing they would likely be persecuted but Apple is allowed to do as they wish, while simultaneously sounding as if they are almost threatening the US government. Cook didn’t just remark that Apple wouldn’t bring the money into the US, but that that Apple wouldn’t bring the money into the US until the US lowered the tax rate on the money. Meaning that if the US wants this money brought back into their economy they will have to cooperate.

In a situation such as this one, it is clear to see the incredibly power of this particular MNC, but it is certainly not an anomaly. The lenient tax policies, lax restraints on capital flow, and overall economic policy of the US has made it incredibly easy for Apple to become a powerful MNC, but rather than be grateful to their home country and bring their profits home, Apple strategically keeps as much money as possible away from the US. This is possible because they are not on a level bargaining field. Apple can do nearly whatever it wants without the US interfering because all in all, the US needs Apple more than Apple needs the US. At this point in Apple’s maturity it could easily be headquartered somewhere else in the world if it felt the US was no longer the best choice. If the US were to lose Apple there would not much they could do except try to coerce them back with more favorable policies. In light of this, it would be easy to adopt the dependency theory. However, it is important to consider that though many American government officials are heavily influenced by MNC wishes, they do not cave to their every demand. On the whole, having a large amount of American MNC activity overseas is still in America’s best interest, even if every MNC is not working in direct tandem with the government. The sheer presence and power of Apple as a corporation does a lot to support traditional American state hegemony, and it does inevitably produce millions of tax dollars for the US government.