I recently ran across an old post by Dale Oesterle on the form of corporate social responsibility waged by GM:
There is a sizable group of academics that favor empowering boards of directors to favor constituencies other than shareholders (employees, suppliers, local citizens) in corporate decision making. GM overpaid labor, buying peace for managers, at the expense of shareholder profit (and share price) for years. Now GM's survivability is at stake; employees themselves would be better off it the GM board had been more careful of shareholder profits. Railroads situation is similar to GM (they have special legislation that protects their unions). Compare GM's (or the railroad's) situation to that of Caterpillar's. Caterpillar went through some tough strikes to hold the line on labor costs; Caterpillar is now doing very well and is an international success story. The theory of shareholder primacy, rejected by many academics, is that in 9 cases out of 10, sustained shareholder profits are a surrogate for long-term gains for other constituencies -- when shareholders make money over-time, employees have good, stable jobs. If we hold boards accountable for profits, all constituencies, over-time, also benefit.
Still timely today. And it makes you wonder about the merits of giving the UAW 55% of Chrysler.
