COMMERCE 7016OL Social Responsibility | Fargo Scandal CSR report
Answer:
Recently, Wells Fargo was condemned for creating accounts without the knowledge of its client. Such scandal suggest that the company does not adhere to key concepts of corporate social responsibility as suggested by Aguinis & Glavas (2012), who postulated that CSR is based
on the idea that business people make decisions that go beyond the strictly economic, technical or legal and must review their strategies accordingly.
CSR, according to Aguinis & Glavas (2012), is defined as a business approach that goes beyond strictly economic goals to include social and environmental goals. Wells Fargo is exercising the elements presented in agency theory whereby the company is expected to focus only on the shareholder value. This is evidenced by the fact that the company created accounts without client’s knowledge. Such act violates the social responsibility (Aguinis & Glavas 2012). Currently, companies are expected to adjust to modern changes in their corporate responsibilities and stop justifying immoral behavior by strict compliance with the law or internal procedures, by the geographical or technical limits of certain legislative texts or by a moral decorum that would only be a smokescreen. Perhaps Wells Fargo should adopt the stakeholder theory and understand all the key elements of corporate social responsibility
Wells Fargo does not comply will all concepts of corporate social responsibility. For example, Bauman & Skitka (2012) revealed that making a profit at any price is not - and cannot - be the sole purpose of businesses. Wells Fargo ought to focus on other concepts of social responsibility related to the environment and social sphere.
To avoid such scandals in future, Wells Fargo should apply the model proposed by Van Tonder (2006), which advises the companies and organizations to adhere to principles such as transparency, freedom, culpability, responsibility, fairness and social responsibility. Despite the fact that Wells Fargo’s acts are unacceptable, there is still a debate on whether the companies should focus on shareholders needs or stakeholders needs. Perhaps there is a need for a model that unify the two conflicting expectations.
References
Aguinis, H., & Glavas, A. (2012). What we know and don’t know about corporate social responsibility: A review and research agenda. Journal of Management, 38: 932-968.
Bauman, C. W., & Skitka, L. J. (2012). Corporate social responsibility as a source of employee satisfaction. Research in Organizational Behavior, 32: 63-86.
Van Tonder C.L. (2006). Towards A Minimum Conceptualisation Of Ethical Organisational Change: The Platform Provided By The “King Ii” Report. SA Journal of Human Resource Management, 2006, 4 (3), 12-21
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