04/1/19

Devolution of Responsibility: An Analysis into Socially Responsible Investing

Corporate social responsibility (CSR) was shown in class to be a burgeoning field of ethics for MNCs to adapt to with varying effects. However, I want to highlight a new field of CSR concerning financial MNCs that have begun to transition them into a new era of responsibility.

Socially responsible investing (SRI)  is a result of financial firms choosing new approaches to how portfolios manage portfolios. They encourage strong practices that promote things like environmental sustainability, diversity and inclusion, and human rights. Traditionally, these exclude social “bads” such as firearm companies, tobacco companies, and fast food manufacturers to choose other stocks and bonds that have a gentler impact socially. This can be viewed as a new form of how corporations are looking to take responsibility for their firms investment procedures, as they understand their role in promoting problematic, or unsustainable business practices.

For such wealth management firms such as Wealthsimple,  they prominently use SRI in order to advertise their firm as different from others. They highlight the differences in a typical portfolio compared to their SRI portfolio, even stating that over a quarter of Wealthsimple clients have chosen an SRI portfolio. They tout the sheer number of funds invested in SRI around the world, which they label at $22 trillion but the number could be quite higher (Wealthsimple, 2019). For new investment firms, SRI is seen as a new way forward, breaking apart from the mould of older investment firms that both evasive in their ability to accept responsibility in the past.

While some see SRI as a new means for the firm to exercise responsibility, they really represent the individualization of investing but in a new way. Firms in the past through devolution and deregulation were able to move risk toward the individual as the hollowing out of the state occurred, removing responsibility from the state. The rise of SRI instead can be seen as the devolution of responsibility from the firm to the consumer, where it’s the consumer’s choice to make socially inclusive decisions (O’Rand and Shuey, 2007). For that reason, the actions of firms to offer SRI is a good step toward responsibility for their investment practices, but it shouldn’t be on the consumer to make those decisions; firms are still dodging the bullet.

While CSR is a new arena for the corporation, true responsibility will occur when the firm, not the consumer, takes the agency to move toward more sustainable business practices.

References

O’Rand, A. M., & Shuey, K. M. (2007). Gender and the devolution of pension risks in the US.Current Sociology, 55(2), 287-304. doi:10.1177/0011392107073315

Wealthsimple: Socially Responsible Investing. (n.d.). Retrieved from https://www.wealthsimple.com/en-ca/feature/socially-responsible-investing/

03/31/19

Internalization of Competition: A Case Study into the Walt Disney Company

In class, we covered the discussions between horizontally and vertically integrated MNC’s, but I wanted to take a special look at a conglomerate that recently grew enormously in size due to a recent acquisition.

The Walt Disney Company recently acquired 20th Century Fox, including their film and television studies, various stakes in different international networks and the streaming service Hulu. While some politicians have praised the merger, others have come out staunchly against it, stating that “threatens to put control of even more television, movie, and news content into the hands of a single media giant” (Variety, 2017). Disney’s acquisition of this company has resulted in their status as the largest media conglomerate in the world.

Disney’s status as a media mogul is a hot topic of conversation and a clear example of the ability for MNCs to internalize competition rather than directly conflict with them (Spero and Hart, 1997). Aside from 21st Century Fox’s status as a rival, it also held notable items that would’ve strengthened Disney’s future media plans. With the recent jump toward streaming services, Disney required a large repertoire that would draw consumers from standards like Hulu and Netflix, before the acquisition, Disney branded media would’ve barely sweetened the deal. Now, Fox television, ABC, and Disney television all are under the control of a single corporation, with significant discretion for their ability to restrict or permit what can be shown. Disney+, a recently announced streaming service designed to be a competitor to Netflix, will receive a significant boost in content from this acquisition, borrowing greatly from Hulu’s library of family oriented content. When supplemented with various additions of original content, Disney+ will be a strong competitor in streaming services, an arena that are previously seen as difficult for media companies to rival tech companies like Netflix.

Disney’s ability now to influence media in the United States and beyond is potentially problematic given their ability to influence or steer industry forces based on what interests are held. With over 39% in theatrical market share forecasted for following their merger, smaller films and directors may begin to be crowded out of the market, as the sheer size of their operations strangle existing studios (Variety, 2017). Theatres already feel the significant burden that is accommodating Disney films however their retaining of studies such as Fox Searchlight point to the inclusion of smaller directors in these larger corporations.

Disney began as “Laugh-O-Gram”, however with their substantial marketshare and limited debts, they’re laughing now.

References

Spero, Joan, and Jeffery Hart. The Multinational Corporation and the Issue of Management. New York, NY: St. Martin’s, 1997.

Johnson, T. (2017, December 15). Disney-Fox Deal Lands at Uncertain Time for Antitrust Enforcement. Retrieved March 17, 2019, from https://variety.com/2017/politics/news/disney-fox-deal-antitrust-enforcement-1202637338/