Tesla Motors demonstrates a balance between R. Edward Freeman’s stakeholder theory views and Milton Friedman’s “the social responsibility of business is to increase profits” mindset in terms of business ethics.
In 2013, two battery fires caused by road debris affected Tesla’s Model S, sparking investigations by the National Highway Traffic Safety Administration and floods of negative media coverage. After the federal investigation closed on March 26, 2014, it was confirmed that the damage occurring in the collisions was not caused by Tesla being at fault; no recall was ordered, and Tesla was not required to take any further actions.
However, despite the ruling in Tesla’s favour, the company voluntarily decided to provide solutions such as “retrofit[ing] Model S cars with new [battery] shields, at no cost to owners” and issuing a “software update that raised the Model S ride height to help deal with this issue”.
This “ethical” decision plays into Friedman’s views that the responsibility of a business is to “make as much money was possible while conforming to the basic rules of the society” (Friedman, 174), due to the fact that by repairing Tesla’s damaged reputation and attracting media coverage on their goodwill, Tesla is in fact increasing profits for its shareholders.
The decision also follows Freeman’s stakeholder theory by honouring many of the different stakeholders of Tesla; the customers, the shareholders, employees, governmental bodies, etc. By valuing the different stakeholders and treating them ethically, such as voluntarily fixing this issue, Freeman maintains that “the organization will survive longer and perform better compared to organizations that don’t”. (Freeman, R.Edward. “Stakeholder Theory”)
Article:
The Associated Press. “U.S. Closes Investigation into Tesla Electric Car Fires.” CBCnews. CBC/Radio Canada, 28 Mar. 2014. Web. 17 Sept. 2015. <http://www.cbc.ca/news/business/u-s-closes-investigation-into-tesla-electric-car-fires-1.2590116>
Additional Sources:
http://site.ebrary.com/lib/ubc/reader.action?docID=10187339&ppg=171
https://www.youtube.com/watch?v=Ih5IBe1cnQw&feature=youtu.be