Tesla Corporate Social Responsibility Essay Sample

Tesla Social Responsibility
Name
Institutional Affiliation
Tesla Social Responsibility
The Corporate Social Responsibility (CSR) concept goes way back to the early 20th century although its prominence has grown significantly in recent times. First and foremost, CSR attenuates to an organization’s actions that have a direct impact on the environment and social well-being. A company has to assess its actions and see to it they contribute towards fulfilling related responsibilities. CSR coerces firms to incorporate social and environmental issues into their primary strategy if not daily operations. Lyon et al. (2018) state that four-fifths of the Fortune 500 perceive CSR as an important part of their sustainability to the extent that they have opted to issue annual sustainability reports demonstrating their efforts in environment-friendly activities.
CSR is a multifaceted concept, idea or philosophy depending on an individual’s angle. To this end, various scholars have made stipulated the primary theories and approaches that endear to support the prevailing claims. Consequently, the CSR theory, stakeholder approach, three domain model, and triple bottom approaches will be quite spread in the text as they offer support to Tesla’s real-life circumstances. Tesla is a modern automotive that specializes in the production of EV as well as other products in the renewable energy niche. Its immense growth over a relatively short period has led to growing popularity globally. Tesla’s primary activities are a straightforward indication of their CSR actions regardless of the scorn from various quarters and the company will be used to dissect various aspects apparent in CSR.
Evolution of CSR
The CSR concept emerged in the 1920s. However, the succeeding occurrence of the Great Depression as well as the Second World War suppressed the extent to which it was discussed among business leaders. It was not until in the 1950s when the situation changed for the better. In 1951 specifically, chairman of the board for Standard Oil of New Jersey, Frank Abrams brought CSR into the limelight. Abrams was offering his analysis of the concept in an article in the Harvard Business Review. He argued that he perceived as his firm’s duty “to conduct the affairs of the enterprise to maintain an equitable and workable balance among the claims of the various directly interested groups, a harmonious balance among stakeholders, employees, customers, and the public at large” (Lawania & Kapoor, 2018, p. 46). 2 years late Howard Bowen offered a definition of CSR and the greatest insight from his proposition is his insistence for the articulation of business policies encapsulating decisions and objectives that are desirable to society. The two perceptions from Abrams and Howard are equally important because one offers the essence of relationships with every stakeholder while the other includes the relevance of appropriate activities that offer value to society.
During this period there were no accepted theoretical models that would enhance the comprehension of this concept. This position presents Archie Carroll who in 1979, created the CSR model where the elements of corporate social responsiveness, social issues, and CSR were considered as the foundation blocks for a philosophy that was to guide corporations in the future. Nevertheless, CSR philosophies were rarely integrated into the business with the ensuing inabilities to provide curated measurements and tests to the model. Nevertheless, his input placed faith in academics and businesses to explore the philosophy deeper. A specific case of interest is that of Peter Drucker whose significant portion of his research was conducted in the ‘90s. Further, he was an academic quite keen on expanding the available knowledge. Drucker was eager to establish why some organizations had better performances than others (Lee, 2008). His results project the role of stakeholder analysis. In essence, this major result led to the development of the stakeholder model, which “solved the problem of measurement and testing by more narrowly identifying the actors and defining their positions and function in relation to another” (p. 61).
It was an interesting observation considering that his assertion contradicted those of Milton Friedman; a Nobel laureate. In his book, Capitalism, and Freedom, Friedman writes that:
“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Fox, 2012).
Milton was right because, in extremities, the goal of the business is to attain a financial edge that guarantees its survival and at the very least, ensures that it thrives in the foreseeable future. In this case, the case for societal obligations is a secondary event. Societal obligations have gained more prominence in the 21st Century where there has been an unprecedented rise in superior companies and superstar firms. Superstar firms are “the top 10 percent of companies capturing 80 percent of positive economic profit” (Ramaswamy et al., 2019). Companies are making significant profits to the extent that people are convinced of their ability to make contributions towards social amenities. On the other hand, corporations that have indulged in such activities perceive it as a form of publicity giving them much-needed leads. Retrospectively, customers reward them by making purchases of their products. Many are convinced that the market is creating a new dynamic. To this accord, Myers (2016) states that the market expects businesses to balance profits and social responsibility. Businesses must showcase their efforts because modern socio-conformations illustrate that perception is reality.
Various CSR Theories and Approaches
Various CSR theories and approaches underpin the best comprehension of this concept. CSR theory banks significantly on the CSR Pyramid, which some circles are convinced “is probably the most well-known model of CSR” (Caroll, 2016, p. 2). The pyramid consists of four different components and in unity, they offer a formidable framework upon which an enterprise can engage in its policies, practices, actions, and business decisions concurrently. Further, the pyramid provides clarity over the components through demarcations and related functions, which make the CSR approach solid. Carroll formulated a very important conceptual framework, which outlines the sequential order of events beginning with economic, legal, ethical, and finally, discretionary responsibility (Carroll, 2016). Even then, there are contentious issues with it considering that in “developing countries, economic responsibility is still a paramount function of all followed by philanthropic responsibility” (Lawania & Kapoor, 2018, p. 9). On the other hand, a company such as Tata Group begun its economic and philanthropic activities simultaneously.
The stakeholder theory asserts for the identification of the firms’ stakeholders leading to a better comprehension of the most appropriate strategic priorities. In this case, the stakeholder is any individual or group whose activities influence the attainment of the organization’s goals or the firm’s objectives influence them. Therefore, the underlying principle in this theory is predicated upon who and what matters. The existing relationship between the two parties (the firm and stakeholders) highlights the level of corporate citizenship. Ultimately, this position indicates’ capabilities the firm has concerning integrating stakeholders’ strategic needs and the firms. The combination determines the effectiveness of the delivery of societal and environmental commitments. A keen observer will recognize that contemporary organizations are quite engaged in implementing their business model as well as navigating their stakeholders’ concerns. The management outlines precise criteria to identify their specific stakeholders for CSR programs and strategic implementation. External stakeholders are very crucial to the process because they contribute to sustainable business practices. They would include the media, regulatory bodies, local communities, suppliers, customers, and farmers. Consulting them in various business dealings is crucial in enhancing their sense of belonging.
The three-domain model is almost similar to the pyramidal approach where it takes into account three primary areas which are the legal, economic, and ethical aspects. These are articulated as major concerns for a firm’s social responsibility. However, one may question why the philanthropic area is disregarded as an exclusive area. In response, academicians who are in sync with this model argue that philanthropic activities exist in all of these domains. Corporate philanthropy in this model is treated as strategic philanthropy that is subsumed under economic and ethical responsibilities or “charity expected by society” (Geva, 2008). In essence, the three elements are defined as the cogwheels of CSR. They are interconnected although the economic aspect elicits the major force. Besides, the firm must make a profit amidst the external competition. Finally, operations from the legal and compliance areas of the model have to thrive under the prevailing political environment.
The final theory is the triple bottom approach. International experts developed this model giving much prevalence to the legal, economic, and ethical areas of social responsibility whereby they recognize these as very important for sustainable development. The triple bottom approach extends its reach to corporate reporting, labor, economic development, technology, and government policies. There is a minimal difference, if any, between the triple bottom approach and the three-domain model. In essence, all of these theories endear to substantiate the valuable role of doing activities that have societal value and above all, create important relationships with every party that is central to the firm’s progress.
Tesla Inc.
The term ‘disruption’ has grown exponentially over the turn of the 21st Century. In this period, the technology sector has witnessed a game-changing component in the quest to have efficient and effective production in various sectors. Its application has extended beyond the manufacturing sector, to other industries such as health, food and beverages, agriculture, retail, finance, and entertainment. However, of greater concern in this discussion is the automobile industry and the major disruptor in the sector, which is Tesla Inc.
In the emerging tech world order, Silicon Valley in San Francisco has remained the leader even though other ruthless regions across the globe are challenging this prospect. Silicon Valley is the source of the major global companies in the tech industry as it took major steps before the rest of the world realized how lucrative the sector was and implemented related solutions. The entire region (San Jose, Oakland, and Mountain View), which is popularly known as the Bay Area, owns the majority of the tech patents in comparison to any other American city thereby justifying claims of its phenomenal status. Holmes (2017) indicates that the city’s patent ownership has risen from only 4% in 1976 to approximately 16% in 2008. It has been recognized as the global leader in disruptive innovation taking the rise of major organizations including but not limited to Google, Intuit, Netflix, eBay, Cisco Systems, and Tesla.
In 2003, Tesla incorporated as an organization although back then very few people knew about the firm situated in Silicon Valley. A group of engineers had decided to establish a company whose primary dedication was to produce EV with zero carbon emissions. The engineers were keen on accelerating the onset of sustainable transport (Bilbeisi & Kesse, 2017). It was a massive feat to even think this when most of the vehicles in the market were internal combustion engines (ICE). Besides, the conventional automakers such as Ford, General Motors, and Toyota and whose market capitalization was in the billions of dollars had not sanctioned the production of such vehicles. In the contemporary market, Tesla cuts across a technological company that endears to re-invent the automobile sector with energy innovations.
Tesla’s growing popularity and confidence among consumers is advanced by the presence of its longest-serving chief executive officer (CEO) in the industry as well as the majority owner, Elon Musk. In defining the company’s growth, Elon Musk is an individual whose contribution cannot be disregarded whatever the cost. He embodies what analysts, academics, academicians, and scholars refer to as strategic leadership. Musk is a brilliant individual in the tech space taking into account his previous achievements in creating Zip2 in 1995 and X.com, which later became PayPal in 2001. His engineering prowess has established stability in the company with Tesla as progressive as its brother companies SolarCity and SpaceX. Another angle to perceive his importance is the fact that in such a disruptive environment, leaders have to possess the sight to foresee changes as well as dynamism. The technology elicits this level of dexterity compelling the leaders to have a bird’s eye view and guide their team where necessary. Gayathri and Kumari (2019; p. 1522) expound on this point when they acknowledge that “It is not only the industry that has changed, but also the workforce, its diversity, technology, pace of change, and knowledge updation methods.”
Musk was the first individual to take an automotive company for initial public offerings since Ford in 1956. This move is an extraordinary feat considering the massive outlay of initial capital that is needed to enter this space. The IPO raised $226.1 million (Squatriglia, 2010) and even the company has taken other financial leverages since then, the amount was sufficient to give the company the boost it needed to enter the market. Musk has been at the forefront of dealing with the challenges the company has faced over its existence. His companies almost went bankrupt during the 2007 global crisis, but he was able to find a solution to circumvent the financial predicaments it was facing through debts. Also, it has been reported that Musk has slept in the Tesla gigafactory to provide corrections to malfunctioning robots as he geared to meet production deadlines (Zetlin, 2019). There is much that can be said about the strategic mechanisms that are in place at Tesla Inc. that are beyond the scope of this paper. However, a significant part of the following discussion will offer the audience the company’s strategic position when it comes to CSR.
Tesla’s CSR
Tesla’s Core Products and the Environment
The company’s core products sell the idea that the company is committed to a better society and thus, a major play when it comes to CSR. Tesla has specialized in the production of energy generation and storage systems and more importantly, fully EV. Further, it sells solar electricity to its customers. A major example is Tesla’s construction of a mega-battery solar system in Australia that is powering about 30,000 homes (Jorgensen, 2020). The state of South Australia had become accustomed to the weather-caused blackout issues; the situation becomes dire siphoning into political debates and conflicts. Musk, who is popular for his ferocious and entertaining tweets, claimed that if Tesla was o...