“The idea that a corporation exists solely to make money is actually quite new,” explained Ralph Gomory, a professor of management at New York University. The broader sense of corporate responsibility was starkly apparent during World War II, when many U.S. companies dramatically changed their operations to aid the war effort, Gomory said, but it also extended through the 1950s, 1960s, and 1970s. “Even in the early ’80s, you would be more likely to hear a CEO talking about his responsibilities to the country or to his employees than his duty to the shareholders.” In practice, that broader sense of corporate obligation translated to self-imposed restraints on the way that companies interacted with their communities and with their workers, said William Lazonick, a professor of economics at the University of Massachusetts, Lowell. “For example, up until the 1980s, CEOs were extremely reluctant to shut down factories and lay off a large number of workers,” Lazonick said. “Mass layoffs were actually seen as a serious abnegation of corporate responsibility. It was understood that the company had a responsibility to it workers, and that if it failed, society at large would be on the hook for that failure.”
Posted on: Sun, 23 Jun 2013 04:48:49 +0000
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