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Wal-Mart: Rolling Back on EthicsBy Alexander Crofoot

Introduction

Born on March 29, 1918 in Kingfisher, Oklahoma, who could have

guessed that Samuel Moore Walton would one day grow up to build the

retail dynasty that is Wal-Mart. After leaving the military in 1945,

Walton took over management at his first variety store at age twenty-six.

By 1962 Walton and his brother owned sixteen stores and decided to

take it one step further by opening the first Wal-Mart in Rogers,

Arkansas. The store was originally known as Wal-Mart Discount City

store and it was located on 719 West Walnut Street. In 1972 K-Mart had

already expanded nationwide; meanwhile Walton only had enough

money to produce fifteen Wal-Mart stores. Soon Wal-Mart stock was

offered for the first time on the New York Stock Exchange, and that

infusion of capital gave Walton the ability to expand to 276 stores in

eleven states by the end of the decade.

In 1983 the first Sam’s Club opened, and by 1989 Wal-Mart had

expanded to 1,402 stores nation-wide. This decade was a prime example

of how popular Wal-Mart had grown from $1 billion in profit in 1980, to

a $26 billion profit in 1989. Today, 8,416 Wal-Mart stores are located in

fifteen countries that serve over 176 million people per year (Corporate

Wal-Mart- Suppliers, 2010). The success of the Wal-Mart franchise is

unparalleled in the retail industry. The secret to Wal-Mart’s success can

be summed up in a quote from Walton himself. “You love it when a store

exceeds your expectations, and you hate it when a store inconveniences

you, gives you a hard time, or pretends you’re invisible” (Corporate

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Wal-Mart- Suppliers, 2010). And that is exactly how Wal-Mart has

operated, by exceeding customer expectations and raising the bar for

retail stores everywhere.

In business, however, success is not just measured by profit;

relations are essential to the operations of a successful company as well.

As an organization that is in the top of the Fortune 500 list of companies

each and every year, Wal-Mart is constantly under public scrutiny. Many

hold the view that Wal-Mart has been an unethical company for several

reasons, related to its supplier, community, and employee relationships.

It is important to remember that there are two sides to every story, and

it is no different when it comes to the ethical evaluation of Wal-Mart. Is

Wal-Mart being completely honest? Are its critics stretching the truth? In

order to decipher the truth behind these stakeholder relationships both

sides must be taken into consideration.

Doe v. Wal-Mart Stores, Inc.

In each of the 8,416 Wal-Mart stores that are located across the globe,

there are over one million products featured. With that being said, it is

no surprise that Wal-Mart has approximately 57,000 United States

suppliers under contract (Schmitt, 2009). In 1994, Wal-Mart created a

supplier diversity program with the intention of increasing the amount

of women and minority owned suppliers of Wal-Mart (Corporate Wal-

Mart- Suppliers, 2010). This program has allowed Wal-Mart to conduct

business with more than 2,500 Minority and Women-Owned businesses

with which it spends approximately $9.2 billion annually (Corporate

Wal-Mart- Suppliers, 2010).

There are eleven standards that a company must comply with

in order to be chosen as a supplier of Wal-Mart.1. Compliance with Laws

2. Voluntary Labor

3. Hiring and Employment Practices

4. Compensation

5. Freedom of Association and Collective Bargaining

6. Health and Safety

7. Environment

8. No Gifts or Entertainment

9. Conflicts of Interest

10. Anti-Corruption

When it comes to suppliers and Wal-Mart, much of the

controversy that enters the conversation is associated with overseas

suppliers. Today, 85 percent of the products that are on the shelves of

Wal-Mart stores are from China (PBS, 2010). From 2001-2006, Wal-Mart

cut 196,000 United States employees as it shifted the majority of its

business operations towards importing products from China (Making

Change at Walmart, 2011). Conversely, Wal-Mart’s imported products

make up an estimated 11 percent of the United States trade deficit with

China (Making Change at Walmart, 2011). Table 1 illustrates data from

the U.S. Census Bureau that explains the trade deficit with China

through July 2011.

The main reason that Wal-Mart conducts the majority of its

business with overseas suppliers is cost. China is willing to sell

Wal-Mart products at a much cheaper price than United States

suppliers. This helps Wal-Mart maintain a large profit margin while

remaining consistent with its mission statement of “Saving people

money so they can live better” (Wal-Mart Stores Inc., 2011).

Table 1. US Trade with ChinaNOTE: All figures are in millions of U.S. dollars on a nominal basis, not seasonally

adjusted unless otherwise specified. Details may not equal totals due to rounding.

Month Exports Imports Balance

January 2011 8,078.1 31,349.6 -23,271.5

February 2011 8,437.2 27,278.7 -18,841.5

March 2011 9,518.8 27,601.4 -18,082.6

April 2011 7,971.0 29,567.1 -21,596.0

May 2011 7,817.8 32,781.3 -24,963.5

June 2011 7,729.9 34,387.4 -26,657.5

July 2011 8,170.9 35,125.5 -26,954.7

TOTAL 2011 57,723.6 218,090.9 -160,367.3

Source: U.S. Census Bureau, 2011

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As a result of this import relationship, Wal-Mart has also

developed a large presence in China, and as of 2006 had 68 stores with

36,000 employees in China (Associated Press, 2006). But how does China

provide Wal-Mart with the products it needs at such low prices? Several

Chinese suppliers of Wal-Mart failed to pay required pay or provide

mandatory benefits to their employees (Associated Press, 2006). This

controversial practice brought Wal-Mart to the courts in 2006 in the case

Doe v. Wal-Mart Stores Inc.

The plaintiffs of this case included former employees from

several foreign countries that are suppliers to Wal-Mart – China,

Bangladesh, Indonesia, Swaziland, and Nigeria (Washington Legal

Foundation, 2009). These plaintiffs proposed that Wal-Mart knew full

well of the failure of these foreign suppliers to comply with the

minimum standards of labor and human rights, but continued to

conduct business transactions with them anyway (Washington Legal

Foundation, 2009). After three years of hearings and debate, the United

States Court of Appeals mandated a ruling that offered workers of U.S.

companies, protection from lawsuits over working conditions. However,

they came to the conclusion that companies overseas that supply U.S.

companies do not qualify for this protection. The argument that Wal-

Mart presented to the courts was that it should not be labeled as a joint

employer simply because it has no control over the condition of the

facilities in which the overseas employees worked or the wages

and benefits that they did or did not receive (Washington Legal

Foundation, 2009).

Today Wal-Mart has more than 281 stores and 10,000 suppliers

in China (Mufson, 2010). These statistics indicate that not only has Wal-

Mart continued to conduct business with China and other foreign

countries since the Doe v. Wal-Mart Stores Inc. trial, but in fact Wal-Mart

has quadrupled its presence in China. Rather than lobby for improved

working conditions, benefits or wages, Wal-Mart has been focusing on

the environmental safety and conservation in its overseas facilities

(Mufson, 2010). This decision will certainly provide Wal-Mart with

positive publicity, but diverts public attention away from Wal-Mart’s

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seeming indifference to workers’ employment conditions in their

overseas suppliers.

Dukes v. Wal-Mart Stores Inc.

Wal-Mart currently has 2.1 million employees that are located across the

globe. In an effort to diversify the make-up of the company, Wal-Mart

has successfully made fifty seven percent of their workforce women and

thirty five percent minorities including African Americans, Hispanics,

Asian Americans, Pacific Islanders and Native Americans. Wal-Mart also

believes that they provide their employees with the equal opportunity of

a promotion and quality benefits. “Our world-class employment

practices ensure nondiscriminatory treatment of all associates.” (Wal-

Mart Corporate- Associates, 2011). This is how Wal-Mart believes they

treat their employees, as evident by the information on their corporate

website. But much like their supplier relationships, Wal-Mart’s

relationship with their employees is rocky to say the least.

In 2001, six women from California decided to sue Wal-Mart,

claiming that the company discriminated against women by

systematically denying them promotions and paying them less than men.

The charges against Wal-Mart were associated with discriminating

against women in promotions, pay, and job assignments in violation of

Title VII of the Civil Rights Act of 1964. The case started in 2000, when a

54-year-old Wal-Mart worker in California named Betty Dukes filed a sex

discrimination claim against her employer. She claims that, despite six

years of hard work and excellent performance reviews, she was denied

the training she needed to advance to a higher paying position. The case,

Dukes v. Wal-Mart Stores Inc., expanded to include 1.6 million current

and former female associates and in 2004 the lawsuit was certified as the

largest class action lawsuit in history. Data collected in 2001 indicates

that Betty Dukes and the other 1.6 million current and former employees

of Wal-Mart had a strong case against Wal-Mart. For instance, in 2001

women held only one-third of salaried positions and made up only

fifteen percent of store managers (Wake up Wal-Mart, 2010).

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Finally in 2011, Dukes v. Wal-Mart Stores Inc. was presented to

the United States Supreme Court. The 1.6 million female plaintiffs

accused Wal-Mart of alleged discrimination against women and claimed

the company was in direct violation of Title VII of the Civil Rights Act of

1964 (Lennard, 2011). Furthermore, many of these current and former

female Wal-Mart employees claimed that Wal-Mart managers exercised

sexism by over paying or promoting disproportionately in the favor of

male employees (Lennard, 2011). However, on June 20th, 2011, the

Supreme Court ruled in favor of Wal-Mart stating that the 1.6 million

plaintiffs did not have enough in common to institute a class action

lawsuit. As a result, the court decided that the variability of the plaintiff’s

circumstances were sufficient enough to stop the case from proceeding

as a class action lawsuit (Lennard, 2011).

Employee Treatment

Although this lawsuit was primarily concerned with the treatment of

Wal-Mart’s female employee’s, Wal-Mart is also known for its poor

treatment of all employees. In fact, the average Wal-Mart hourly sales

employee earns under $250 per week. Most full-time employees are

working for $7.50 per hour for 28-40 hours a week. As a result of this

pay scale, the majority of Wal-Mart employees are living well below the

poverty line (PBS, 2010). Part of the reason that that Wal-Mart’s

employees receive such low pay is that Wal-Mart is a notoriously anti-

union company. The unionized retail workers in the United States that

do not work at Wal-Mart on average make 25 percent more annually

than those employees that work the same job at Wal-Mart (PBS, 2010).

The benefits of the employees at Wal-Mart have also been

criticized. After several years of trying to silence the critics of its

employee benefits program by improving the plan offered to employees,

Wal-Mart instituted a huge cut back on employee health-care in October

2011. The new employee health-care program states that any employee

that works less than 24 hours per week will lose all health insurance

plans that the company may be providing them. In addition any future

employees that work an average of 24 to 33 hours a week will no longer

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be allowed to include a spouse as a part of their health care plan

(Abelson and Greenhouse, 2011). Wal-Mart will continue to do its best

to put a positive spin on the way that it treats their employees, but these

facts cannot be denied. As a result of Wal-Mart’s tendency to overlook

the importance of taking care of its employees, the company’s image has

been permanently damaged.

The Community Effect

Despite these controversies, Wal-Mart still finds itself in favor with many

of the communities in which it is located. As one of the largest

corporations in the United States, Wal-Mart claims to understand the

importance of giving back in each of the local communities in which it

is established (Wal-Mart Corporate- Community & giving, 2011). In fact,

Wal-Mart’s community relations have extended to over 100,000

charitable organizations and over $2 billion in fighting hunger in the

United States (Wal-Mart Corporate- Community & giving, 2011). For a

majority of consumers, the primary focus is the fact that Wal-Mart

provides them with lower prices than that of any other retail store

At a first glance, it may seem that Wal-Mart provides a plethora

of jobs for citizens of a community. On deeper analysis, however, it

becomes clear that Wal-Mart can run smaller, family run retail stores in

the area out of business. Even if someone is lucky enough to get a job

with Wal-Mart, on average the individual will be are paid 18 percent

less than he or she would be at the family run retail store. Furthermore,

a 2007 study that found that the presence of Wal-Mart in a community

reduced the retail employment rate by 2.7 percent (Neumark, 2007).

As a result, many communities cannot make up for this lost income.

In 2004 Wal-Mart stores and associates cost the state of California

approximately $86 million (Dube and Jacobs, 2004).

Another argument often made against Wal-Mart establishing

itself in a community is the opinion that they do not actually support

issues that are important to the community. Some would go as far as to

say Wal-Mart is not interested in what is best for the community at all.

Jeff Doss is the real estate manager of Wal-Mart, and in 2005 he was

asked about a quote by Sam Walton that stated Wal-Mart would never

build stores in towns where residents did not want them. He responded

with the statement, “if that was the case, we would never build a store

anywhere” (Meekel, 2005). The implication is that Wal-Mart

management is well aware that many communities do not want Wal-

Mart stores locally, but Wal-Mart will build a store in those

communities, regardless.

Wal-Mart has an effect primarily on rural communities of the

United States, but also on some major cities, specifically New York City.

In 2011, the Alliance for a Greater New York (ALIGN) and the Murphy

Institute at the City University of New York projected that if Wal-Mart

were to achieve its goal to open 159 stores in the area, 14,000 retail jobs

and $353 million in total wages would be lost due to the Wal-Mart

openings (Norman, 2011).

Community: The Effect on Taxpayers

This raises another important issue that has been brought about due to

the nation-wide spread of Wal-Mart stores – the effect Wal-Mart has on

local taxpayers. Studies have shown that a large number of number of

Wal-Mart associates qualify for Medicaid and other types of subsidized

public care, at the expense of taxpayers. An example of this is the state

of Ohio where, in 2009, in excess of $44.8 million in taxes was paid out

specifically due to this phenomenon. Not only does Wal-Mart pass these

bills onto the communities in which it locates, but in 2008 and 2009

Wal-Mart managed to fail to make payment on an estimated $3.4 billion

in taxes (Office of the New York City Public Advocate, 2011).

This community versus Wal-Mart fight has actually risen to a

moderately intense level. So much so that one of the well-known

websites against Wal-Mart, www.wakeupwalmart.com, has actually

developed a five-step plan that is meant to keep a community Wal-Mart

free. It consists of a strategy for success, planning tactics, using

legislative tools, location resources and allies, and finding others in the

community. The site also serves as a place for infuriated community

members to blog about their opinions on Wal-Mart. This is just one

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example of how passionate the combat has gotten between Wal-Mart

and the community. Superficially, Wal-Mart can appear to be the ideal

store for a community, but in reality many communities do not want the

stores because of the detrimental effects associated with having a Wal-

Mart store within its borders.

The Reality of the Situation

The injustices that Wal-Mart has been associated with are no secret and

as a result, many people have developed a negative view of Wal-Mart.

Unfortunately, consumer behavior directly contradicts this negative

view. In fact, Wal-Mart has continued to prosper in light of the hundreds

of trials and studies that have given the company negative publicity.

Wal-Mart currently has market capitalization of $191.5 billion and holds

the majority of the retail market share at 13.5 percent (Yahoo Finance,

2011). Wal-Mart’s closest competitor, Target, cannot hold a candle to

these statistics, as their market capitalization is barely one fifth of that of

Wal-Mart’s, at $35.7 billion (Yahoo Finance, 2011).

How has Wal-Mart been able to maintain its success? It is

argued that the company is far from ethical, hurts the United States

economy, and negatively affects communities in which the stores are

located. The truth is that the United States recession of 2008 created the

perfect environment in which Wal-Mart thrives; consumers with tight

budgets look to the retailer with the lowest prices. Ironically, this same

recession has exacerbated two of the most detrimental impacts of Wal-

Mart’s business practices: these practices impact on unemployment and

household income.

The United States Unemployment Rate

Between January 2001 and January 2008 the unemployment rate ranged

between 4.2 percent and 6.3 percent. Since that time, the rate has reached

a high of 10.1 percent in October of 2009, leveling off at around 9percent

since (Bureau of Labor Statistics, 2011). Table 2 illustrates this impact of

the 2008 economic recession on the American unemployment rate.

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The rise in the unemployment rate works to Wal-Mart’s

advantage, contributing to the chain’s continued success during the past

few years. As Wal-Mart has expanded nationwide, it has continued to

take away jobs in the retail sector by driving out small retailers

wherever it goes. However, even as Wal-Mart takes away jobs in an area,

given the current economic situation people are less reluctant to take a

job with Wal-Mart in spite of the controversy surrounding the company.

Prior to the recession, a majority of these workers might have compared

available salaries at other employers and opted against working for Wal-

Mart; now these same individuals find themselves comparing taking a

job with Wal-Mart to not having a job at all.

Table 2: United States Unemployment Rate 2001 throughSeptember 2011

Source: Bureau of Labor Statistics, 2011

Income and the Recession

Much like the unemployment rate, the income of the average United

States household has been negatively affected by the current economic

environment. In fact, the two can be viewed as inversely related in the

sense that as companies continue to decline in this “survival of the

fittest” economy, they are forced to downsize and impose pay cuts on

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2001 4.2 4.2 4.3 4.4 4.3 4.5 4.6 4.9 5.0 5.3 5.5 5.7

2002 5.7 5.7 5.7 5.9 5.8 5.8 5.8 5.7 5.7 5.7 5.9 6.0

2003 5.8 5.9 5.9 6.0 6.1 6.3 6.2 6.1 6.1 6.0 5.8 5.7

2004 5.7 5.6 5.8 5.6 5.6 5.6 5.5 5.4 5.4 5.5 5.4 5.4

2005 5.3 5.4 5.2 5.2 5.1 5.0 5.0 4.9 5.0 5.0 5.0 4.9

2006 4.7 4.8 4.7 4.7 4.6 4.6 4.7 4.7 4.5 4.4 4.5 4.4

2007 4.6 4.5 4.4 4.5 4.4 4.6 4.7 4.6 4.7 4.7 4.7 5.0

2008 5.0 4.8 5.1 4.9 5.4 5.6 5.8 6.1 6.2 6.6 6.8 7.3

2009 7.8 8.2 8.6 8.9 9.4 9.5 9.5 9.7 9.8 10.1 9.9 9.9

2010 9.7 9.7 9.7 9.8 9.6 9.5 9.5 9.6 9.6 9.7 9.8 9.4

2011 9.0 8.9 8.8 9.0 9.1 9.2 9.1 9.1 9.1

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workers simultaneously in an effort to avoid going under. This means

that unemployment will rise as household income declines. The

relationship between unemployment and household income can be seen

in Figure 1 below.

Starting at the left side of the graph, the lower, finer line

represents the unemployment rate from January 2000. The higher,

heavier line represents a household income index, beginning also in

January of 2000. The two lines appear to directly relate to each other up

until January 2008 (the second shaded region on the graph) when

household income drops off and unemployment rises and the two lines

cross. More recently, household income and unemployment are both

dropping and both are at points on their respective scales that are

significantly different from where they started in 2000. The behavior of

the measures during the 2008 recession indicates that both are affected

by the recession itself. This clearly illustrates what has happened to

household income and unemployment during the recession.

Figure 1: Unemployment and Income in the United States

Source: Sentier Research, 2010

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The research from which this data is drawn was conducted

in 2010 and reviewed income by type of household as well. The

conclusions of this study can be summed up in the following six points. 1. Real median annual household income has fallen significantly more

during the economic recovery period from June 2009 to June 2011

than during the recession lasting from December 2007 to June 2009.

2. During the recession, real median annual household income fell by

3.2 percent, from $55,309 in December 2007 to $53,518 in June 2009.

During the economic recovery, real median annual household

income fell by an additional 6.7 percent, from $53,518 in June 2009

to $49,909 in June 2011.

3. For the entire period from December 2007 to June 2011, real median

annual household income has declined by 9.8 percent. A decline of

this magnitude represents a significant reduction in the American

standard of living.

4. Real median annual household income for family households with a

male or female head and no spouse present (many with children in

the household) declined by 7.3 percent (from $39,321 to $36,465)

compared to a decline for married-couple households of 4.5 percent

(from $76,783 to $73,324).

5. Real median annual household income for households with a head

under 25 years old declined by 9.5 percent (from $32,123 to $29,060)

compared to a decline for households with a head 45 to 54 years old

of 5.5 percent (from $65,911 to $62,315).

6. Real median annual household income for households with a head

looking for work or on layoff (unemployed) declined by 18.4 percent

(from $41,037 to $33,487) compared to a decline for households with

a head working full-time of 5.1 percent (from $72,104 to $68,454)

(Sentier Research, 2010).

The common thread in all six of these conclusions is decline.

But in a time when citizens in virtually all socioeconomic statuses

continue to suffer, Wal-Mart continues to thrive. The conditions that so

negatively affect peoples’ lives appear to work to Wal-Mart’s advantage.

Over this recessionary time period, an accurate revision of Wal-Mart’s

mission statement of “saving people money so they can live better,”

might be saving people money, so they can continue to live the lifestyle

they have become accustomed to. (Wal-Mart Stores Inc., 2011). If there

is one thing that Wal-Mart is good at, it is providing millions of products

for consumers to choose from, all at lower prices than other retailers.

The American Consumer and Ethics

Despite its best attempts to cover its tracks, it has become abundantly

clear that Wal-Mart is indeed a questionable business in terms of ethics.

The retail giant continues to hurt its suppliers, communities, employees

and ultimately the United States. However, the unfortunate truth is that

as American citizens have lost an average of three to four thousand

dollars from their annual incomes, they have also become increasingly

indifferent to the effect of Wal-Mart’s unethical practices in an attempt to

maintain their respective living standards.

While individual consumers continue to save money at Wal-

Mart, collectively the American consumer does not appear to fully

understand that money saved personally directly stunts the growth of

communities and the United States economy as a whole. The prevailing

attitude of every man and woman for him- or herself has resulted in the

America people learning how to turn and look the other way while Wal-

Mart continues to operate unethically. This phenomenon has

contributed to Wal-Mart’s continuing success since the economic

recession of 2008. In fact, since the recession began, Wal-Mart has

increased revenue and profit each year, as indicated by their annual

income statements, seen in Table 3.

There are many industries that win consumers by being aware

of stakeholder theory and becoming highly active in corporate social

responsibility. But because the retail market has ultimately become

something very close to a monopoly, Wal-Mart sits atop the proverbial

food chain and seems to be impervious to business ethics; the

corporation is able to continue to maintain the highest market share

and sales, while remaining unethical. It is true that no business can be

successful without their consumers, and American consumers have a

share of the responsibility in allowing this seemingly unstoppable

conglomerate’s behavior. But while consumers deserve a share of the

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blame for Wal-Mart’s success in spite of poor ethics, other parties have

some responsibility as well, including the United States government.

Table 3: Wal-Mart Income Statements, Years Ending 2009through 2011

Period Ending Jan 31, 2011 Jan 31, 2010 Jan 31, 2009Total Revenue 421,849,000 408,085,000 404,254,000 Cost of Revenue 315,287,000 304,444,000 303,941,000

Gross Profit 106,562,000 103,641,000 100,313,000 Operating ExpensesResearch Development — — —Selling General and Administrative 81,020,000 79,639,000 77,546,000 Non Recurring — — —Others — — —

Total Operating Expenses — — —

Operating Income or Loss 25,542,000 24,002,000 22,767,000 Income from Continuing OperationsTotal Other Income/Expenses Net 201,000 181,000 284,000 Earnings Before Interest And Taxes 25,743,000 24,183,000 23,051,000 Interest Expense 2,205,000 2,065,000 2,184,000 Income Before Tax 23,538,000 22,118,000 20,867,000 Income Tax Expense 7,579,000 7,156,000 7,133,000 Minority Interest (604,000) (513,000) (499,000)

Net Income From Continuing Ops 15,959,000 14,962,000 13,734,000

Non-recurring EventsDiscontinued Operations 1,034,000 (79,000) 146,000 Extraordinary Items — — —Effect Of Accounting Changes — — —Other Items — — —

Net Income 16,389,000 14,370,000 13,381,000

Preferred Stock And Other Adjustments — — —

Net Income Applicable To Common Shares 16,389,000 14,370,000 13,381,000

Source: Yahoo Finance, 2011

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The American Government’s Role in Business Ethics

Over the past decades, many governments across the globe have

realized that they have a significant role to play in the adoption and

implementation of business ethics. In a study that examined the role

that European governments played in corporate social responsibility

(CSR), several interesting results become evident. The study focused on

two specific areas in which increased CSR has become evident in the

governments examined, globalization and political initiative (Albareda

et al., 2008).

There has been a change in the center of economic power

where increasingly the state has a dependent role and business a

dominant one (Albareda et al., 2008). The increased globalization that

the power of technology has inspired, has indirectly presented

governments with new political challenges that force big business and

government to cooperate with one another. Several nations have used

the concepts of CSR as a framework for the collaborative efforts of

governments and businesses to follow (Albareda et al., 2008).

For instance, Italy has been able integrate the social and

environmental concerns of their country into the everyday operations of

businesses nation-wide. The government has been able to build the

perception that CSR is a competitive opportunity for companies in Italy

to earn success. On the other hand, the United Kingdom government

found the adaptation of CSR policies justifiable during a time where

Britain was faced with a high unemployment rate, social poverty and

lack of economic development, a situation that the United States

government faces now (Albareda et al., 2008).

The controversy that arises when governments become

involved with CSR is whether or not officials of that government should

take it upon themselves to regulate and enact laws to make CSR actions

mandatory within businesses (Albareda et al., 2008). In Europe, CSR

public policies have taken hold in fifteen of the twenty seven nations of

the European Union. These nations have found that there is indeed a

clear role for government in the development of CSR in business, in

their efforts to address the socioeconomic issues that their countries

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may face (Albareda et al., 2008). In the conclusion of this study, the

relationship between government, civil society, and business was

summed up in the following diagram, seen as Figure 2.

It is important to note that in this diagram, although the process

begins with government instituting CSR within public administration, if

and when CSR is correctly implemented into the three interrelated

realms of government, business and civil society, it becomes a

renewable and beneficial process for the given economy as a whole.

This particular study is interesting because it was conducted by

observing three Europeans countries implementing CSR successfully in

different ways – those countries being Italy, Norway, and the United

Kingdom. Although the governments in these countries mandated CSR

in different ways, there was a common result indicating that CSR is a

strong force for sustainable economic development.

Figure 2: The Relationship between Government, Civil Society,

and Business

Source: Albareda et al., 2008

Government

1

Business

1. CSR in public administration2. CSR in administration-business sector relationships3. CSR in administration-society relationships4. Relational CSR

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Civil society

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Conclusion: Together We Stand, Divided We Fall

One of the downfalls of a capitalist society is the frequency with which

businesses become virtual monopolies, and consequently, make the

given industry ultimately inefficient and dangerous to the country’s

economy. Perhaps there is no better example of this situation than

Wal-Mart’s domination of the retail industry for the past several decades.

Although Wal-Mart may claim that they believe in, and

participate in, a stakeholder welfare view of management, a closer

examination of the statistics has revealed an approach that has achieved

the opposite result. The reality is that Wal-Mart has developed a

proverbial stranglehold over its employees, suppliers and the

communities in which it operates. Furthermore, the lingering effects

of the economic recession of 2008 have left American citizens with

significantly lower household income and in many cases, jobless. The

combined effect of the current economic conditions of the United States,

and the unethical operations of Wal-Mart, has been to present the retail

giant as a hazard to its stakeholders and also to the United States

economy as a whole.

Trapped in a struggle for survival, the American consumer has

been forced to hold the savings they incur at Wal-Mart, more valuable

than the economic condition of their respective communities and

nation. This circumstance makes it seem that a boycott or decline in

Wal-Mart’s sales is far from a realistic expectation to hold for consumers

nationwide. Government intervention, however, could force Wal-Mart to

behave in a more ethical manner. In most cases government

interference in realm of business is unnecessary and a hindrance, but in

this specific case governmental implementation of CSR (corporate social

responsibility) in the form of legislation is necessary. The experiences of

several European nations bear out the conclusion that forcing a

corporation to behave in a responsible manner can benefit all parties.

18

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