Donald Trump and the dilemma of corporations
The corporate sector is at odds over how to place political morality above the prime task of running an efficient business in light of Donald Trump's immigration ban policy
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Draconian and monstrous as US president Donald Trump’s diktat on banning refugees and migrants from seven Muslim countries seems, what is more fascinating is American society’s response to it.
So far at least most sections of the US public have shown a willingness to oppose what they believe is wrong. The corporate sector, of course, is caught in a quandary. Do you place political morality above the prime task of running an efficient business?
Already Google chief executive officer (CEO) Sundar Pichai and Facebook founder Mark Zuckerberg have expressed their reservations about Trump’s move.
Starbucks CEO Howard Schultz went one better, announcing that his company planned to hire 10,000 refugees over five years in 75 countries, while Airbnb said it would provide free housing to refugees and anyone not allowed into the US.
But their response may well be driven by business interests. Multiculturalism has been one of the basic tenets of multinational businesses, particularly in newer industries. In fact, ride-sharing pioneer Uber, after facing flak for appearing to profit from a stoppage by taxi drivers, announced it would create a $3 million defence fund to help cover the legal expenses associated with the executive order.
So far at least we haven’t see business leaders in other countries, including India, coming out strongly against the selective bans. While new-age companies like Google and Facebook were unanimous in their criticism of the Trump order, there were other, more traditional companies in industries like airlines, banks, automobiles and pharma that have so far saved their fire. Bloomberg reported how General Electric chief executive officer Jeff Immelt’s internal mail on the issue avoided direct criticism of Trump’s policy even as it reiterated the company’s multi-cultural character.
It isn’t an easy call, no matter how amoral the refusal to stand up to a tyrannical order may appear. German companies like IG Farben (which split after World War II into four companies including Bayer and Sanofi) used slave labour in its factories during the Third Reich, evidence of which came much later in the form of class action lawsuits brought by former forced and slave labourers against German companies that exploited them during World War II. In 2011, the dynasty behind the BMW luxury car maker admitted to having used slave labour in its plants during the war. Other companies, including German banks, took over flourishing Jewish businesses for a pittance.
Repugnant as their actions are, consider for a moment what might have been had these companies decided not to toe the Nazi government line. Some of the most renowned German companies of today, household names like Siemens, Volkswagen, Krupp, DaimlerChrysler, may well have ceased to exist in their unequal battle with the Nazi machinery. For all the cinematic appeal of Oskar Schindler, the good German businessman made famous by Steven Spielberg, it was an almost impossible task for a company, let alone an executive, to resist the might of a malevolent state.
It’s a bit like expecting Indian companies to have stopped production or issued harsh reprimands of the government during the dark days of the Emergency between 1975 and 1977. Few did.
Not unexpectedly, the public in general expects companies to wear their conscience on their sleeve. According to an annual survey by public affairs agency Global Strategy Group, 84% of Americans believe that businesses have a responsibility to bring social change on important issues, just behind the President (89%) and Congress (92%). The study also found that 81% of Americans believe corporations should take action to address important issues facing society.
US businesses, led by more aware and independent leaders, have in the recent past shown a definite willingness to take on these actions. When the US Supreme Court legalized gay marriage across the US, blue-chip companies like Procter & Gamble and Goldman Sachs were at the forefront of the movement. Having built their own companies on the principle of equality and diversity, they argued forcefully for the right of all human beings to marry.
In 2010, when Arizona pushed through Senate Bill 1070, a controversial anti-immigration measure which gave law enforcement officers the right to demand proof of immigration status on the grounds of suspicion, race, colour or national origin, it was the business community which led the fight to drop some of the more reprehensible parts of the law.
The Trump ban is another moment of truth for companies and executives not just in the US but everywhere including in India. Expediency, and the wait-and-watch attitude, may protect their bottom lines.
But there are some lines that transcend numbers.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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