This scientific composition is setting to explore, discuss and critically examine the various theories and perspectives regarding the social responsibility of corporations and the practices of stakeholder management. It establishes interrelations between these two concepts whilst linking in the current societal context that is prevalent at the present day. The notion of public empowerment and the advancements in globalization and technological factors is also taken into consideration- especially with the increasing participation of social media platforms with media channels. It recognises the strategic benefits of implementing certain theories into practice, how it can be achieved and what implications may challenge the process. These concepts are then applied to the practical case of ‘Uber’. Through the consideration of the theoretical and practical implications of various stakeholder and CSR theory the aim of the paper is to conclude the current practices implemented by Uber; providing the clearer, bigger picture into whether or not suggestions and improvements can be made.
Table of Contents
Introduction: A Paradigm Shift in Global Society
‘The Call’ for Corporate Social Responsibility & Stakeholder Management
The Significance of Stakeholder Management
Limitations to Stakeholder Theory & CSR: In & Out of Practice
Sustainability Management: The Green Initiative
UBER: The case of the ‘Black Swan’
UBER: ‘most ethically challenged company in Silicon Valley’
Social Responsibility vs The ‘Entrepreneurial mind-set’
A Critical Reflection:
Is the Damage already done?
Introduction: A Paradigm Shift in Global Society
Over the past two decades with advancements in globalization; global society has witnessed businesses expand onto an international level creating jobs, economical boosting and inter/multi-cultural management environments; it is fueling the evolution of hybridized societies and business management alike. However the undeniable characteristic of political discourse has been an increased focus on the ethics of business corporations; since the mid 1990’s with the exposure to some of the biggest scandals and global crisis in history which has not only changed general public perception and attitudes of businesses but also introduced a shift and transformation of management techniques within businesses- holding a new focus on the issues of liability and responsibility.(Laplume, A. 2008) The prime example of a Global Scandal is the 2001 ENRON Scandal which exposed CEO Jeff Skilling for disguising the company’s huge debts off their balance sheets. The company filed for bankruptcy and Shareholders lost $74 Billion. This extreme case of business malpractice and unethical behavior triggered a worldwide discussion and reform of how management should operate, control and be controlled/ governed by society.
Since the 2007 Global Recession; issues of bank lending in the sub-prime mortgage crisis during economic instability, the vast amount of bonuses paid to bank executives, tax avoidance of huge corporations, exploitation of cheap labour off-shoring and an increasing level of environmental degradation, has introduced the creation of a ricochet effect; with a sense of ‘lack of trust’ amongst big corporations across the world, leading many to question the social role and responsibility that businesses are obligated to fulfill, especially with an increasing number of scandals and global crisis’s that are merging into the spotlight. Not only has this shifted perceptions of the general public but it has also transformed the management of business introducing new factors which now hold a higher importance than the pre-recessional period.
The increasing control of economic wealth and security by corporations has led to a public outcry for a new foundation of regulation and governance of that similar to the framework which controls national governments. (Mansell, S. 2013 p2)
The ‘post-recession’ consumer has seen a shift into behavior where hesitation and smart thinking are something more common as people are more reluctant to spend money in times of economic insecurity, even though economic health is improving throughout the EU- especially in Germany. People are still concerned of history repeating itself again with global crisis such as the one which is currently in Spain and Greece with high deficits and bank bailouts. We can identity that consumers are becoming more interested not only in the products and services they consume; but also the interest in the actions and intentions of corporations. CSR is growing in societal importance due to scandals and crisis’ like that of ENRON; furthermore with the advancing developments in globalization the rise and control that global businesses have is becoming wider; as companies such as Ford, Wal-Mart and General Motors currently have a higher turnover than the GDP of Greece. (Mitchell & Sikka, 2005). With this high amount of wealth and economic control over the market the responsibility for ethical commitments and obligations has been called upon.
This paper will be delving into stakeholder and CSR concepts; discussing its history and their approaches- pinpointing the transformation that has occurred over the last decade; adding to these concepts the use of media coverage from various platforms will also be included to portray the current depiction of CSR practice within global society to differentiate between practical CSR and forms of ‘green-washing. As we can observe from representation through media there is an increase of public influence through pressure being put on companies when negative depictions are formed which will be later discussed. There will be a reflection with the case of UBER- a logistics platform development company that has been faced with countless accusations of business malpractice and unethical behavior since its start-up in 2009 but still continues to radically and violent expand on an international level with a valuation of $52 billion; this will develop a reflective conclusion on implications and perspectives on a more integral and responsible practice in organizations and management. It will also question the contrasting elements of a Unique Service Provider that is operating maliciously with the implications and importance of taking on the social responsibility. The question introduced within in this paper is- why does UBER continue to grow and expand when there CSR and stakeholder managing practices face a copious amount of scrutiny?
‘The Call’ for Corporate Social Responsibility & Stakeholder Management
CSR is considered a set of moral guidelines, a manifestation of normative and instrumental rules that communicate, regulate and govern transparently; their responsibilities of organizations and its managers in relation to their internal and external environment. The World Business Council of Sustainable Development (WBCSD) state their definition of CSR as ‘[…]the continuing commitment by business to behaving ethically and contributing to economic development while improving quality of life of the workforce and their families as well as of the community and society at large[…]’ (WBCSD, 2000). It is the notion that CSR carries which obligates businesses to have a responsibility of entities in their environment; on a Macro, Micro and Meso level. CSR arguably doesn’t underlie ‘hard-law’ in the sense of regulations and governance, but instead provides the opportunity for businesses to respond to society in contributing to the environment it has influence over. As the importance of CSR to society has significantly increased since the beginning of the 2000’s; so has it’s usage by companies. It has developed into a ‘fashionable’ asset that can be used to boost or re-configure the reputation of a business; strategically shaping its image and brand to the public eye. It can be used as a communicative tool to address stakeholders and audiences with company values, a mission and self-perception. From a positive perspective CSR is a technique that can help build relationships with stakeholders- however as it’s been addressed previously; negative perspectives entail exposure of business malpractice and unethical behavior. This re-iterates the fact of the founded empowerment which lies within the public eye in the present; as discussed earlier having negatively formed media against business practice can put pressure on management within a company. The importance to initiate and implement an effective and communicative CSR strategy carries high significance in depicting an accurate (and positive) message of your business in global society.
As aforementioned, ‘Corporate social responsibility’ has become a practice that is now something central in the global spotlight of perception and attitude towards the reputation and management systems of businesses. CSR is the responsibility and liability of a business to ensure that all activities and business conducted not only fits within regulation and guidelines of law; but also confines within environmental, social, economic, and ethical morality in society. As Küpers discusses the dependence the social and market systems have on ‘[…] responsible practices, sustainable business models and proactive management of the impact of business on society […]’ (Küpers, W. 2011. p137) we should explore the effect the global recession towards societal discourse and business. As we are now in the post-recession period; there are still major insecurities and untrustworthy attitudes towards businesses, especially within the financial sector.
As discussed before societal behavior has shifted to entail more ‘wariness’ in this post-recession era. Consolidation is identified as one of the main impacts of the recession due to consumer wariness, where especially in the UK; consumers are using services and buying products from bigger/more recognized companies rather than those which they don’t trust (Berger 2009). After the exposure of several scandals combined with economic crisis consumers are choosing to dedicate their loyalties to businesses which are perceived as transparent, demonstrating good business practice. It is evident that awareness of CSR and obligations of businesses has significantly increased and as a sort of coping mechanism social responsibility is a new ‘edge’ in the social and competitive markets.
However when addressing the term of ‘CSR’ it can be ambiguously suspicious as it may be perceived as a representation of hypocrisy or ‘green-washing’ for a business to disguise malpractice or improve a negative brand perspective. Moving back onto the previous discussion; although CSR does not underlie hard-law it may have the ability to control the empowered public eye that we have established has now more influence over business operations than ever before. This may insinuate that CSR as a practice may carry superficial meaning; spending money on campaigning about the ‘good’ which is being performed instead of actually carrying out the actions in question. This is a debate that stands which are these actions (the actual doing good) enough to justify the intentions of profit within the global public community. Especially at a time where it is established economic insecurity and untrustworthy business practice is something prevalent and exposed to society.
CSR and its definition have become diversified as Dahlsrud discusses that it is not so much about the true definition of CSR; but more about how CSR is socially constructed in a specific context (Dahlsrud. A, 2006); it may be so that CSR is dependent on discourse in the situation. So arguably now in this post economic recovery businesses are trying to cater to the attitudes and behaviors of its stakeholders and predominantly the general public and the media.
The Significance of Stakeholder Management
Stakeholder theory stands as the contrary to the Classic Liberal economic theory approach; Classical Liberalists argue that the only ethical obligation and responsibilities businesses and managers have is to ‘increase their profits, provide stockholders a high return, obey the law and avoid deceptive business practices.’ (Engster, D. 2011). This contrasting notion of Classic Liberalism, known as ‘shareholder theory’ is arguably outdated in present society; especially whilst ‘the call’ for CSR is becoming increasingly louder as previously discussed.
CSR and Stakeholder management run parallel within business management; Stakeholders are individuals or groups who are directly affected or affect the performance of an organisation; both internally and externally. The nature of the relationship between a business and its stakeholder can be legal, moral or strategic and have some form (direct or indirect) of influence when the business operates. As Hannagan explains; Stakeholder Theory ‘[…] can be described as individuals and groups who are affected by the activities of an organization […]’ (Hannagan, T.2008). Stakeholders form under a diverse and general umbrella of entities which contest influence and power over a business and its actions; sometimes making it difficult to manage all with ease. Stakeholder theory can be seen as a direct response to the aforementioned ethical controversies identified, described that the primary responsibility of a corporation is not to maximize shareholder wealth, but to instead serve the interests of a range of stakeholders that make up the society in which it operates (Mansell, S.2013) this is not only shareholders but as described; every entity/group which is directly affected by business operations within its environment.
The stakeholder concept is originally a framework of negotiation and decision making to deal with conflicts and resolutions when fulfilling the needs, requirements and expectations of all parties involved with the company. When comparing the values of shareholders; stakeholder management has an emphasis on ‘Responsibility over profitability’ which is an encouraging discourse that takes into consideration the satisfaction of all parties; instead of profit over responsibility. The latter is interpreted by Mansell as one of the underlying reasons for recent corporate scandals arguing that as long as companies remain accountable to their shareholders alone, responsible business conduct is impossible. (Mansell, S. 2013). If an approach for the maximization of profits is priority then the fulfillment of other stakeholders needs is ‘unobtainable’. This can to some extent justify corporate scandals and white collar crime; as PWC released in a report that the main motivation for white-collar crime and fraud was due to ‘high expectations from shareholders’ and ‘high budget and revenue targets’ (PwC, 2014). Linking this back to the example of the collapse of ENRON; it is evident that its executives had a mindset to pursue shareholder value as the main objective with business operations, an obsession to profits and share prices; with a disregard towards its stakeholders and lack of concern for legalities. This orientation toward increasing shareholder value and share prices evidently came at the expensive of other stakeholders which resulted in collapse.
The stakeholder theory is the notion of a joint-venture; to serve all the parties involved as Mitchell et al describe stakeholder management as ‘[…]intended to broaden management’s vision of its roles and responsibilities beyond the profit maximization function to include interests and claims of non-stockholding groups[…]’ (Mitchell,A.1997 p855)
Furthermore an analysis of articles performed by Laplume of Stakeholder Theory between 1984 and 2007 find that ‘[…]a fundamental thesis of stakeholder based arguments is that organizations should be managed in the interest of all its constituents, not only in the interest of stakeholders[…]’ (Laplume, A. 2008 p1153).
This shows the contradictions between shareholder value and stakeholder value sparking the question that stakeholder management is significant in the present context of global society, with discourse narrowing towards ethical business practice. However it may be debatably harder for companies to focus on all stakeholders involved whilst effectively keeping them all satisfied meanwhile maintaining shareholder value of profit and growth.
A stakeholder approach to business management may enable the opportunity to build a persona of trust and loyalty towards a business brand or reputation; linking back to the concept of CSR it is an effective technique to polish the image of a company through communicative techniques of a mission, goal or self-perceptive ritual. It also works to build value for its stakeholders; an example would be satisfying customers in delivering a unique product/service which is sustainable or produced in a ‘fair-trade’ environment.
It may significantly increase value in the stakeholder which in turn builds positive reputations and brand loyalty to the business. Furthermore; it seems that keeping shareholder value maintained whilst focusing on stakeholder value may be proven challenging and limiting. But this may work in conjunction toward each other. As Freeman discusses the concept of the dichotomy that is ‘shareholder vs stakeholder’, he provokes the idea of profit being ‘better thought of as a result or an outcome’ (Freeman et al, 2010. P12).
This undermines the classic shareholder theory but instead introduces the notion of working towards stakeholders and their requirements as a priority. It can carry as a significant advantage as there are certain stakeholders that are also closely related to each other-i.e. media and the customers. If customers remain satisfied then that is directly portrayed through positive media attention; especially with rapid advancements of social media and technology businesses are very much in the spotlight in positive or negative perspectives. Stakeholder management can be used to control stakeholders effectively whilst depicting the self-perceived image of the business in the process.
Increasing expectations can be understood to be in relation to the globalization process, applying especially to international companies; as jurisdictions of labour and production regulations may be different depending on the country of operation. Looking at examples of bad stakeholder management would be the classic example of Primark- having accusations made against them regarding cheap labour and borderline exploitation of off-shoring production; in particular the exposure of the ‘Sweatshop Scandal’ involving the deaths of more than 70 workers at a factory in a production factory due to a structural collapse.
This highlights the significance of good stakeholder and CSR management; as this scandal directly shunted the reputation as Primark an international retailer. As it stands today there is still controversy surrounding the brand even after attempts were made by the company to shift perspective into their favour. It is the outcome from a process where a lack of consideration towards its stakeholders- the employees and the suppliers; created a downward spiral of negative press and opinion, not just to its other stakeholders- customers, shareholders but also to the rest of the world.
Limitations to Stakeholder Theory & CSR: In & Out of Practice
We have established that the debate between the dichotomy of ‘shareholder vs stakeholder’ in practice is swinging more to the side of stakeholders when considering social and market environments in the present; businesses are more focused on its stakeholders and their needs; the question stands- is this because they had chosen to do so, or is it because of the change in discourse which made them do so? The fact that an empowerment of the general public on a global societal scale is becoming more prevalent with the rise in technological and media platforms means there is now no stone left unturned.
Disgruntled employees and whistle-blowers are becoming all the more common because now there is an opportunity to raise the issues and arguments against corporations through a global channel of media. With the increase in global capital and economic wealth being controlled by global corporations (20% of global assets owned by global business) (Mitchell & Sikka.2005); it may be a possibility that an era of regulation and governance (by not only institutionalized authority) is following after a period of corporate scandal-‘ism’ and white collar crime.
Considering this perspective it may be a factor that stakeholder management and its increased focus may spark limitations to a business. Applying stakeholder theory to practice; the concept is positively well formed, an ideology of keeping every possible entity, group, individual satisfied whilst operating a business whilst executives bear witness to continuing growth is something of a Eutopia. This being said, in reality it is arguably difficult to achieve such a notion, within stakeholder management lies a vast and diversified mix of different groups with different expectations, requirements and intentions.
Trying to satisfy a stakeholder may dis-satisfy another- this is where careful and well-thought management needs to be initiated to negotiate and mediate all those involved. In this context it could be feasible to categorise stakeholders based on their ‘stake’, taking into account and identifying the ‘importance’ on said stakeholder. Using the attributes of ‘Legitimacy’, ‘Power’ and ‘Urgency’ an analysis can be formed of the different stakeholders based on characteristics such as power, influence and control when decision making. (Carroll & Buchholtz, 2014).
Carroll & Buchholtz present the concept of stakeholder attributes as follows:
- Legitimacy refers to the perceived validity of the stakeholder’s claim to a stake
- Power refers to the ability or capacity of a stakeholder to produce an effect
- Urgency refers to the degree to which the stakeholder’s claim demands immediate attention
(Carroll & Buchholtz, 2014 p69)
These attributes can be displayed to form a stakeholder map which visualizes the requirement for action and/or communication to certain stakeholders which have a higher stake than others. However this being said, it is important to note the spontaneity of stakeholder attributes which can be a potential limitation when decision making; secondary stakeholders can swiftly become primary stakeholders.
When performing a stakeholder analysis it is a step by step process which requires data collection and constant communication with the stakeholders in question, during this time the environment, the interests, positions and influences of the stakeholders may change as Varvasovszky states ‘[…]The political context of policy is frequently unstable…. and can be subject to sudden, unexpected transformations. […]’ (Varvasovszky, Z. 2000 p344-345).
This could occur through a protest or boycott for example where it catches within the media and then a secondary stakeholder instantly becomes that of an ‘urgent primary’ stakeholder; an animal rights group for example. Reiterating the fact of empowerment within the public eye with technological advancements in the present societal environment enables media and social media to transform the reputation, image or brand of a business instantaneously; furthermore transforming the status of stakeholders through the same process.
This not only encourages the practice of effective stakeholder and CSR management; but also highlights its potential weakness/limitation. If stakeholders considered themselves as a primary stakeholder and a company considered them on the contrary as a secondary stakeholder does this exempt the original categorisation? Cownie discusses this problem and argues ‘[…] The needs of stakeholders should be attended to, it would seem, whatever the nature of their connection with the business.[…]’ (Cownie, F. 2010 p231)
This forwards the notion that stakeholder management as an entire concept could deliver problems or limitations when relating to directly or indirectly accommodating- accordingly, to identified stakeholders who have expectations that hinder business goals and/or targets.
With regard to the aforementioned challenges of Stakeholder theory, its primary goal is to provide ethical guidance to business activities fulfilling their requirements and expectations as an entity which has a valid stake in the company. Classical stakeholder theories are critiqued for giving definitions which are too vague and general regarding who ought to be considered a stakeholder in the first place, how power and attention ought to be distributed among the stakeholders and how managers are supposed to behave when having to make decisions in cases of conflicting interests of different stakeholder groups.
The process of how to categorize stakeholder is still questionable because of the constant change in context and situation. This can forward the notion that Stakeholder management into practice can potentially be a limitation in itself; alike how the concept of Social Responsibility amongst corporations has seen controversy over true intention of business practice. Scepticism has arisen regarding the authenticity of the attempt to manage stakeholders in some cases, with the perspective that a deeper intention is hidden within a public display of ethical commitments that relate to the traditional performance objectives; profit, growth, shareholder values. (Mansell, S.2009 p41). Furthermore if business decisions are formed on the basis of a stakeholder analysis that prioritizes a certain group(s) with regard to attributes, if those attributes are subject to change it may push a perception of mistrust or dishonesty.
Sustainability Management: The Green Initiative
Sustainability and being ‘sustainable’ is now political discourse which is becoming prevalent and integrated within CSR and business strategies as the concern for the global environment is rising. But the term sustainable and sustainability management carries aspects on several levels; the General Assembly of the UN recognized that environment problems were developing and on a global scale, they determined it was within interest of all nations and published the report ‘Our Common Future’ to establish policies for all, it stated: ‘[…]Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs[…]’ (Brundtland, WCED. 1987 p41).
This statement carries with it two concepts; the first to consider the ‘needs’ of the world’s poor and poverty to which priority should be focused. Secondly, to ensure that limitations imposed by technology and social organizations are not hindering the environment’s ability to meet and present their needs. Sustainability management is taking into consideration the different aspects- social, environmental and economical schemes when defining the economic and social goals of business strategies. It is intended to be a means of aligning human activity so that society and its economies are able to meet their needs and strive to their greatest abilities in the present; whilst conserving natural environments and eco-systems; all the while planning to maintain these processes indefinitely.
We have established the introduction to sustainable development but now we must explore the perspectives of its significance. Environmental sustainability is entwined within the strategies and techniques of CSR; on several levels. It is arguable that corporations firstly have a social responsibility to ensure the environment in which they operate is preserved and protected against any lasting effects or damage; as identified by the WCED, with the use of natural resources and materials in particular.
Looking at this aspect from an entrepreneurial perspective on the other hand; CSR and sustainability can be integrated to also gain trust and control over stakeholders and society alike, linking back to CSR being utilized to ‘polish’ a reputation or gain trust in the current context. Laughland & Bansal argue that traditionally, ‘sustainability is not an area of business opportunity’ which can be a hesitant argument for investment towards sustainability as current financial decision making does not capture fully the value of sustainability-related investments (Laughland & Bansal, 2011). However accordingly, it can be argued that sustainability and its implementation can result in enhanced brand reputation, political support and brand equity- thus resulting in more profit. (Nastanski, M. 2014 p165)
On the contrary, the mentioned notion can also be a undeniable use of ‘Corporate Greenwashing’ with the concerns of global warming as previously identified people are becoming more focused for environmentally friendly products; Green-washing can be a technique where a self-perceived communication is relayed by an organization to present an environmentally or socially responsible public image.
A reason for this is as Laufer explains; ‘[…] Corporations turn to greenwashing to make themselves look more environmentally friendly so that they can keep their customers coming back. If corporations were up front with their environmental wrongdoings, customers would most likely take their business elsewhere. […]’ (Laufer, S. 2003)
This links back to the classic business perspective of ‘profit over responsibility’ and is seen as a deceitful way of controlling consumers and stakeholders. Corporate Green-washing is something all the more common in the present as the call for CSR has come to light; this is something I will be discussing using the chosen example of UBER in the critically reflection of their CSR and business strategy.
UBER: The case of the ‘Black Swan’
UBER has been identified as a case subject to controversy and in some aspects an example of extreme business mal-practice, saying this however; it is ranked as one of the highest grossing business start-ups since its creation in 2009 currently with a net-worth of $40 Billion (Statista, 2015). Even after a chain of events resulting in deaths, assaults of customers and serious injury the company still continues to operate with their unchanged CSR and stakeholder management strategies whilst they continue to violent expand globally.
This paper will begin analyzing Ubers’ current strategy with social responsibility and stakeholder management and then critically reflect within the current social context of their company. This reflection will be linked back to previous sections regarding the significance of CSR and Stakeholder management provoking the question raised previously; is there any limitation of what a company, classed as a USP (Unique Service Provider) can do (or not do), even after the examples discussed with the empowerment of the public eye and the media; is it enough to regulate a company which continues to influence the global society with a product so effective that it remains in operating?
UBER: ‘most ethically challenged company in Silicon Valley’
When looking at Uber’s Code of Conduct, Code of Ethics and ‘Quality Assurance’ it is first necessary to identify the status of its CSR practices before March 2015 (as a new strategy was integrated at this date to present). During 2014 there were countless cases of controversy and business malpractice against Uber as a company, even though it was a year for the company which saw unprecedented growth. Uber can be considered as a ‘start-up success story’ completely revolutionizing how people transport between locations but 2014 also saw an endless string of scandals and P.R disasters. Being called the ‘most ethically-challenged company in Silicon Valley’ (Thiel, P, as cited by Segall, L. 2014)
So when looking into these scandals and mishaps we have to consider where the opportunities arose for them to exist; which firstly brings us onto their ‘limitation to liability’ and safety terms and conditions (see appendix 1.)
‘YOU ACKNOWLEDGE THAT UBER DOES NOT PROVIDE TRANSPORATION OR LOGISTICS SERVICES, OR FUNCTION AS A TRANSPORTATION CARRIER. UBER DOES NOT GUARANTEE THE SUITABILITY, SAFETY OR ABILITY OF THIRD PARTY PROVIDERS. IT IS SOLELY YOUR RESPONSIBILITY TO DETERMINE IF A THIRD PARTY PROVIDER WILL MEET YOUR NEEDS AND EXPECTATIONS’
This contractual agreement is arguably a controversial practice of stakeholder management and commitments to social responsibility in a way that limits the liability to Uber if an incident would happen; furthermore it is the third party responsibility- i.e. the drivers, to ensure their vehicle is roadworthy and that they are insured with commercial transportation insurance. It could be argued in defence of UBER who, accordingly, do background and vehicle checks on their drivers before they provide their services (UBER, 2015).
However this being said there are several reports published by drivers and watchdogs arguing that the company did not take appropriate measures in these checks, and that they only provide background checks within the states where it is required by state law (Koundinya, K. 2014). This business practice goes against Cownie’s aforementioned notion of ensuring all requirements and expectations of stakeholders are fulfilled; as it is evident for scandals including rape, abuse and even death has occurred involving Uber drivers.
There has been several scandals which have, accordingly, scaled ‘wars’ between Uber and its stakeholders; Uber against its drivers as there has been recent protest to ‘unfair wage cuts and ‘all-round bad business practice’ (Forbes, 2015. see appendix 2). Uber against its competitors as cases of business sabotage has been reported by a main competitor lyft, where according to the article; 5000 lyft rides were arranged and cancelled by Uber employees since October 2013. (Silman, A. 2014).
Uber against journalists, as a senior executive accordingly hired private investigators to ‘dig up dirt’ on a journalist publishing controversial articles about the company. (Smith, B. 2014). And finally, Uber against legality and regulators, as the service is now banned in Germany and another 8 countries for not abiding by transportation legislation (BBC, 2015). All of these examples highlight the malpractice which the company have been exposed for in the space of several years.
In March 2015, a new CSR strategy was implemented by Uber in order to improve the safety and regulations with everyday business practice with their services, these new policies are as follows:
- ‘New Code of Conduct’
- ‘Quality Assurance’
- ‘Incident Response Teams’
- ‘Working with Law enforcement’
- ‘Background Checks’
- ‘Safety Product Updates’
(Cardenas, P & Uber. 2015)
When looking at these new initiatives we will now explore into whether or not they are presented, organized and implemented effectively within the present context of the business. It is arguable that these policies have been created to genuinely try and improve customer and driver safety within operations, the new code of conduct has been reformed to focus more on customer safety and driver safety, with an improvement of background checks into the vehicles, the driver and their commercial insurance policies.
If organized correctly this can effectively reduce the level of incidents and scrutiny which Uber have received, however it can also be argued that the rules are only subject to compliance only being perceived as a ceremonial façade in response to accusations and tight regulations aiming to stop business operations of Uber. To support these new policies a presentation of an integrated focus on safety would be effective in changing the perception of the media and its spectators. Although a ‘revised’ code of conduct has been initiated there is not much difference in regards to the ‘limitation of liability’ and safeguarding of customers; as Uber still take no responsibility and provide no legal support in case of personal injury to customers (Uber, 2015).
For Uber to present a more responsible practice of CSR and stakeholder management within their business foundation a strategy similar to that of a ‘traditional’ transportation company can be considered, this integration will shift responsibility from the ‘Third Party’ entity which are the drivers to the company itself. This notion consists of the company having a legal obligation for ‘duty of care’; The taxi service commission states its regulations ‘ensuring the vehicle is fit, serviceable and clean’ (TSC, 2015).
This obligation shifts the responsibility to the taxi company to ensure a vehicle is roadworthy which if regulated can encourage several outcomes. It first provides a sense of security for the customers and the drivers, knowing that they are safe to use and provide a service and secondly it encourages a positive reputation and brand image with a perception of good ethical practice.
Social Responsibility vs The ‘Entrepreneurial mind-set’
The case of UBER is unique, especially when looking how its CSR strategy and stakeholder management practices are presented to society. It is argued by Austin & Macmillan in their published blog article that ‘Uber’s biggest rival is itself’ (Austin, S & Macmillan, D. 2014). In the present context of UBER, the validity of this argument is well presented when looking at the characteristics and mind-set of the company and it’s CEO- Travis Kalanick.
As the company expanded through 2013 it was in a ‘battle with itself’ with the tactics and strategies that sparked the danger towards its reputation and becoming a liability to itself. This can be linked back to the debate of ‘shareholder value vs stakeholder value’ as previously described; it seems as the CEO has been described as a ‘fiery entrepreneur’ (Swisher, K. 2014) who would go to the extreme to achieve goals and meet targets. CSR can be perceived as ‘entrepreneurial hypocrisy’ and when relating this to Uber and its practices it seems to be an example with the use of aggressive business tactics and strategies to maximise profit with responsibility in the side-line.
A Critical Reflection
“black swan theory” refers only to unexpected events of large magnitude and consequence and their dominant role in history’(Krogerus & Tschappler, 2012 p112) Uber is one of many businesses to receive scrutiny and accusations in business history; however critically reflecting the current practices of Uber within the context of present societal discourse; combined with its significant growth and expansion internationally, it may be argued that Uber is the start of something that if not regulated effectively soon may lead to an era of businesses moving forward through countless loop-holes in regulations and legislations to achieve their end goal of shareholder value.
Uber, as an ‘app-development company’ is something of a new wave of hybrid companies which are arguably outdating current business regulations in global society. This sparks the question of whether or not technological advancements and new products which aren’t regulated are potentially evolving too fast for governments and states to keep up with. It is evident that Uber have a clear code of conduct, code of ethics and a CSR strategy but it is also evident that these rules and regulations do not sufficiently assign responsibility; whether on an individual or collective level.
This is one main limitation of CSR as highlighted earlier and can result in lack of trust within an organization. However; this being said consumers still choose to use the services of Uber and its third party entities; arguably, this is because of the sheer ease of use the service has and attractiveness the concept of Uber offers. Their services are innovative and are evolving transportation networks to something never seen before.
As aforementioned, Uber have attempted to implement new P.R and CSR strategies in an attempt to drive away their current image of being a controversial and unethical company, reflecting on their previous and current stakeholder, CSR and sustainability strategies it is clear they have identified the need for change, however, it may be possible too late for the company to renegotiate the image of their company as the control of media and stakeholder perception is out of reach.
Regulators are also responding to their malpractice by attempting to shut down services for breaching terms and conditions. Currently Uber is illegal in 8 countries and the number is increasing (Koundinya, K. 2014). It may be the case that all the counts of unethical and illegal behavior; which are undeniably examples of how not to manage stakeholders and how not to formulate P.R & CSR strategies have totaled up into something unfixable.
Furthermore the reception from media which circulated after new policy was integrated perceived the actions as a ‘reaction’ from depicted controversy Uber has faced; one article publishing ‘Uber announced a series of new initiatives aimed at making riders feel safer after a bout of controversial incidents have wracked the car-hailing service’ (Synder, B. 2015).
This can be a defeating limitation of CSR as previously stated for consumers and the general public may perceive changes as something of a façade in nature.
In this paper, we have examined the implications and limitations of CSR concepts from different angles through different examples of academic literature; practical cases have also been presented which show to have made an effect on these theoretical perspectives in global society such as the case of ENRON and Uber. It is evident that there is now a direct necessity for businesses to reflect upon their practices and deal with the challenges, confrontations and importantly social responsibilities that they are faced with.
Global society; including stakeholders and consumers have gained aspects of power which can be controlled positively or uncontrolled negatively in business management. This empowerment has granted the influence and opportunities to change how companies operate through the process and platforms of technology, social media and communicative channels. From this, a more integral and responsible approach for businesses today is the need for transparency, to communicate the self-perceived ideas a company has through the depiction of an ethical, honest and humble CSR strategy.
This perspective is renowned in the business world today surrounding the present societal context; but there is arguably a difference from businesses which claim to the aspiration of ‘good’ and those which implement ‘good’ into practice. To practice social responsibility that is genuinely perceived as honest and authentic a company needs to develop self-perception in order to develop a picture which is conclusive to the wider audience. A positive ‘self-perceived’ image could be achieved by depicting authenticity not just externally but internally, throughout all aspects of the business and its environment.
Linking this to Uber and their current CSR practices; although there has been changes to policy to help improve safety and become more ethically practicing; scandals are still being exposed accusing Uber of not doing enough, consequently damaging their image as a company. A report published August 2015 accused an Uber driver in China of raping and robbing a female customer (Chang, L. 2015), as this is still a regular occurrence it has to be considered are Uber doing enough to protect and secure relationships with its stakeholders?
From the evidence presented about Ubers business practices combined with CSR and stakeholder concepts/approaches it can be substantial to argue that they are not doing enough to ensure all requirements and expectation of stakeholders are fulfilled- primary groups with high power and influence can be identified as the customers, the drivers and the media after a stakeholder analysis, it is clear that customers’ needs are not being met and the media are highlighting the scandals, thus damaging the reputation and image of the company. This supports the argument of building ‘self-perception’ which will be relayed externally once it is solidified within the business internally.
It is evident that appropriate measures need to be implemented. This paper will suggest the following:
- Create a new job role for UBER drivers; implementing a new regulated safe guard system for all drivers where background checks are necessary along with a vehicle inspection before working for UBER; similar to operating taxi firms.
There are several challenges that Uber faces today that it will have to overcome as it continues to expand. Most importantly, Uber will need to address the negative attention it has received in the media regarding legal issues its strategies of CSR and stakeholder management.
As Uber continues to expand it will be best served by coordinating entry into new markets in concert with local regulatory officials to ensure the firm is in compliance and not creating a negative perception of their business practices. The relatively covert entry in the D.C. market created uproar from the Taxi Commission, and much of the issue could have been prevented if Uber maintained closer coordination with the commission prior to their launch. Now that Uber has precedence in San Francisco, Chicago and Washington D.C., it can reference its success in these markets to government stakeholders as they continue to launch in new areas.
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Appendix 1: Uber’s Disclaimer
Uber’s Disclaimer source: https://www.uber.com/legal/usa/terms
Appendix 2: Forbes (2015) Survey
Source: Forbes. (2014). Uber Drivers Weigh in on Uber Scandal. Available: http://www.forbes.com/sites/ellenhuet/2014/11/25/uber-driver-survey/. Last accessed 23rd August 2015.
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