In technological industries, patents have traditionally been a keystone for maintaining an innovator’s sustainable competitive advantage. Patents have even been remarked by many SWOT analysts as a strength for producers, ensuring that a company can maintain a monopolistic hold in its niche in the market and therefore maximize revenue.
However, last summer Tesla Motors Inc. seemed to have acted against business logic by sharing its cutting-edge electric car patents to other companies. While this seems counter-intuitive for a relatively small-sized innovator seeking leadership in its industry, Tesla’s actions demonstrate how corporate social responsibility (CSR) and business opportunity aren’t necessarily “a zero-sum game.” Elon Musk’s blog post to customers explains that Tesla’s open source strategy does a variety of things that benefits the company:
- It allows more companies to participate in the development of emission-less transportation, spreading Tesla’s vision for a green and environmentally sound world.
- It expands the domain of Tesla’s leadership. By allowing competitors into the electric car niche, Tesla has the opportunity to prove to customers that it really is the paragon of technological innovation in the transportation industry.
- It encourages more of the world’s brightest minds to participate in the process, accelerating the process of development and expanding the pool of talent that Tesla can access.
- The seemingly altruistic nature of the act gives Tesla an image of a socially responsible organization.
“All our patent are belong to you.” Pool photo by Steve Jurvetson
The pluses of satisfying all stakeholders (customers, communities, the business) to progress the whole of society are affirmed in Freeman’s Stakeholder Theory. Furthermore, Milton Friedman’s argument that companies only incorporate CSR when it helps maximize profits is also exemplified in this case. Reconciling these two viewpoints with Musk’s initiative testifies how businesses can thrive by incorporating business ethics into their model, seeing CSR as opportunities for private gain.