Corporate social responsibility is defined in Chapter 5 as the corporate duty to create wealth by using means that avoid harm to, protect, or enhance societal assets. Did GE in the Welch era fulfill this duty? Could it have been done better? What should it have done?
Jack Welch did make GE the most valuable company in the world. He was described as “the most important and influential business leaders of the 20th Century” by some Wall Street analyst. Nevertheless, Jack Welch as the CEO did not fulfill the duty of social responsibility. He did not avoid harm or protect societal assets.
Under Welch’s leadership the GE Company contributed to environmental damages in areas of the country which manufactured GE products. One instants is GE heavily polluted the Hudson River with PCBs, one of the most toxic and persistent man-made substances that can cause cancer in people. From 1947-1977 GE dumped as many as 1.3 million pounds of PCBs into the Hudson River. It has turned 197-mile stretch of the river into the nation’s superfund site. Since then there has been a struggle for GE to clean up the mess. In 1980 Congress passed the Superfund law which has created a tax on the chemical and petroleum industries and provided broad Federal authority to respond directly to releases or threatened releases of hazardous substances that may endanger public health or the environment. GE has failed to comply with this law. They are fighting the development of clean-up plan with every tool it can buy by lobbying congress, attacking the Superfund law in court, and launching a media bitz to spread disinformation about the usefulness of cleanup, claiming that dredging the river would actually stir up PCBs which was false claimed by EPA and outside experts. If they do not clean up the mess it could cost tax payer $350 to 400 million dollars. This is showing that GE is not protecting society and is actually harming people. When Welch was CEO he could have just cleaned up the mess and it would have reduces the health risk it cased to people. Instead he choose to fight the clean up process which cost him millions while he could have just spent to money and cleaned it up to avoid harm, and protect society.
Another way he harmed, and did not enhance society is the number of people he laid off in the company. With is five years of him taking over 1 and 4 people would leave GE payroll. The book states, union leaders estimate that in his last 15 years GE eliminated 150,000 jobs in the United States through layoffs, subcontracting, and out sourcing to foreign countries. With the extensive about of layoffs and outsourcing jobs it hurts the United States economy by increasing the unemployment rate and the American debit ratio. Welch has added the economy of outsourcing which is leaving American’s with out jobs here and unable to find jobs. This is not enhancing are society when the unemployment rate is increasing due to layoff employees and outsourcing jobs over seas.
The only way Jack Welch fulfills its primary economic responsibility in paying taxes. They paid 5.7 billion dollars in taxes in 2000. Taxes do help in society in many ways though. The taxes paid to state and local jurisdictions help pay for police and fire protection. Federal income taxes help pay for defense for the country. They also pay for capital facilities such as highways and other transportation services and for help for those who are poor or ill. Jack Welch believed that he fulfilled his social responsibility by paying taxes because how that helps society. He said, “I think a company’s social responsibility is first and foremost to winning because winning companies are the only companies that can give back. Winning companies pay taxes.” However, GE pressured cities, countries, and states to lower taxes by threatening to move operations elsewhere. This impacted schools and the infrastructure by lowering the budgets. He believes in paying taxes is his social responsibility but...
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