Let’s send Freeman to Apple

For the purposes of class assignments and in preparation for his lecture, I lately have read a lot of Ed Freeman’s publications about stakeholder management. When I watched Bucknell’s adaptation of “The Agony and Ecstasy of Steve Jobs” with a filter of focusing my thoughts on the actual issue rather than the play itself or Mike Daisey’s indiscretions, I found myself believing more and more in the thought leadership of stakeholderism. If we consider this case through the lens of the stakeholderism vs. shareholderism debate, it becomes very clear to me that a different managerial mindset for Apple would amount to a tremendous amount of value creation and satisfaction to so many more people.

To first consider the other side, I don’t think Friedman would condemn what Apple is doing. He would see them as simply pursuing maximum labor efficiency so as to minimize production costs and increase profit for the firm and its shareholders. Alleviating pressure on the workers to work so quickly and for so many hours would mean it costs just as much to produce fewer devices in the same amount of time, and would therefore increase costs to produce the volume required to keep up with consumer demand. That leads me to believe that, were Friedman to weigh in, he would see Apple’s strategy as justified.

Freeman, on the other hand, would identify this situation as the exemplification of the toxicity of shareholderism. A strategy so clearly geared towards the financial profitability of the company at the expense of ethics is clearly not one of mutual value creation. This is what might conventionally be labelled a “business decision” that is considered to be independent from the constraints of morality, abiding by the “Separation Theory.” Jobs says in an interview during one of the “interruptions” that Apple’s labor conditions are not worse than those of others in their industry, but this should not matter. This pattern of injustice is the result of a pattern of keeping conversations of business and ethics separate, and resolving this injustice must therefore require their integration. Whether you consider these workers to be employees or suppliers to Apple (since technically they work for FoxConn), they still have a huge stake in the operations and ultimately the success of the company. Continuing to ignore the interests of the workers prevents the best solution from being made and does nothing to bridge the conversation between business and ethics, so no precedent will be set for ethical decisions to be made in the future either.

Not only is Apple ignoring the interests of these stakeholders, but I would contend that he’s also underestimating the interests of the consumers as a stakeholder group. Of course one of our interests is getting these products as quickly and cheaply as possible, but reducing us to that sole interest is incredibly myopic. This again brings up one of Freeman’s points that stakeholders have a variety of interests that they are willing to call to the forefront at different times depending on the situation, such that an effective solution may create value for them in one way even if not in another. A major concern of the consumers (that has become particularly obvious to me in our recent blog discussions) is feeling comfortable with where our products come from. After hearing Mike Daisey’s monologue, many of us expressed discord between loving our Apple products and having tacit intentions to continue to purchase them while simultaneously knowing the inhumanities that are behind its production, and this discord may even be enough to cause some of us to refuse to continue purchasing from Apple. If this is the case, then Apple’s narrow understanding of consumer values would actually cause them to lose business. For these reasons, I think Apple needs a serious lesson from Freeman in stakeholder management.