TOMS Shoes Integrated CSR Strategy

TOMS Shoes A Case Study examining a company at the forefront of social entrepreneurship and CSR

Aurora Mendez, David Gomez Gurrola, Sumra Khan and Abigail Hunter Corporate Social Responsibility Professor Raphael International University in Geneva, Summer 2011  

TOMS  Shoes  is  a  company  that  intrinsically  integrates  elements  of  corporate  social   responsibility  (CSR)  into  all  facets  of  its  operation  and  strategy.  CSR  is  not  an   additional  element  to  TOMS’  corporate  mission,  it  is  the  foundation  from  which  the   business  is  built  upon.    The  core  concept  is  a  “One  for  One”  business  model  where   every  product  that  is  purchased,  provides  a  similar  donated  product.         While  TOMS  corporate  strategy  may  begin  from  a  campaign  structured  for   philanthropy,  with  CSR  at  the  helm  of  its  corporate  vision  and  strategy,  social   responsibility  takes  on  various  platforms  within  TOMS  company  structure.  Besides   the  outward  structure  of  “One  for  One”  giving,  TOMS  operational  structure  weaves   CSR  onto  a  variety  of  platforms.  These  platforms  include  poverty  reduction,  fair   trade,  and  employee  rights.     Through  its  policies,  TOMS  shoes  maintains  positive  relationships  within  a  vast   multiplicity  of  stakeholders  in  all  of  the  societies  in  which  it  operates.  The  strategy  it   has  undertaken  shows  it  stands  to  create  affluence  and  benefits  for  both  internal   and  external  stakeholders  as  it  generated  wealth  for  itself.  TOMS  goes  beyond   corporate  giving,  it  has  institutionalized  socially  responsible  instruments  for  doing   business;  moreover,  it  shows  that  social  responsibility  is  profitable.     Founding  a  company  today  with  a  vision  for  TOM-­morrow   Created  in  2006,  the  idea  of  TOMS  evolved  when  founder,  Blake  Mycoskie,  was   visiting  Argentina.    As  his  travels  extended  beyond  the  tourist  trail,  Mycoskie,  a   budding  entrepreneur,  was  shocked  and  humbled  by  the  poverty  that  surrounded   him.  He  could  not  help  but  recognize  a  substantial  number  of  children  without   footwear  and  this  led  him  to  an  epiphany.         While  a  donation  would  provide  footwear  once,  Mycoskie  was  not  interested  in   making  a  simple  donation.    Instead,  Mycoskie’s  concocted  an  idea  for  a  sustainable   company  that  could  give  continuously.  Thus,  developing  a  business  model  to  enable   a  sustainable  income  to  be  generated,  from  which  to  provide  children  with  an   ongoing  supply  of  shoes.    Upon  returning    to  his  home  in  Los  Angeles  (LA),  his  first   250  shoes  were  already  made  and  TOMS,  the  brand  after  a  better  “TOM-­‐orrow”,     was  born  (Shambora,  J).       Through  hard  work  and  determination,  within  the  first  eight  months  TOMS  had  sold   10,000  pairs  of  shoes,  spurring  the  move  from  his  home  ‘office’  into  business   premises.    During  this  inaugural  year,  TOMS  held  true  to  its  mission  and  completed   a  shoe  drop  in  Argentina  for  10,000  shoes.         By  the  second  year  Friends  of  TOMS  headed  to  South  Africa  where  50,000  shoes   were  hand  delivered.    This  event  has  continued  annually,  reaching  Rwanda,   Ethiopia,  Haiti  and  even  on  home  soil,  in  New  Orleans  (TOMS,  2011b).    All  shoe   drops  are  captured  on  camera  and  made  available  through  TOMS  website  or   youtube.com.  This  enables  consumers  to  share  the  experience  with  all  parties   involved.   2

  With  an  increasing  level  of  media  attention  TOMS  sales  have  increased  rapidly  and   to  date,  has  shown  no  signs  of  abating  (Pohlman,  N).    Seventy-­‐two  dedicated   members  of  staff  and  their  slogan  of  “One  for  One”  resulted  in  the  donation  of  over   one  million  shoes,  operating  in  23  countries  and  generating  over  US$4.6  million  in   accumulated  profits  since  its  inception  until  2009  (TOMS  Official  Website  &  Giving   Report).  As  the  central  theme  for  its  business  model,  TOMS  CSR  policies  penetrate   all  levels  of  the  enterprise;  CSR  practices  appear  throughout  operations  whilst   reverberating  in  strategies.     While  TOMS  began  with  shoes,  its  success  has  led  to  a  recent  expansion.  As  of  1  June   2011,  TOMS  provides  glasses  and  eye  tests  in  exchange  for  each  pair  of  sunglasses   purchased.    Both  products  were  carefully  considered,  ensuring  positive  profit   margins  through  an  increased  cost  to  the  consumer,  estimated  at  fifty  percent   (Oloffson,  K).    In  addition,  compelling  arguments  are  given  for  each  product  and   their  ability  to  aid  beneficiaries.         Growth  of  international  recognition  for  the  movement   TOMS  provocative  corporate  governance  structure  has  not  gone  unnoticed.  To  date,   the  company  has  received  awards  such  as  the  People’s  Design  Award  from  Cooper-­‐ Hewitt  National  Design  Museum,  Smithsonian  Institution  in  2007.  In  2009,  TOMS   also  received  the  ACE  award  from  Secretary  of  State  Hillary  Clinton  honoring  TOMS   commitment  to  CSR,  innovation,  exemplary  practices  and  democratic  values   worldwide.     Mycoskie  himself  has  been  recognized  for  his  vision  and  leadership  of  the  company.   In  2007,  he  was  awarded  a  People  Magazine  “Heros  Among  Us”  award  and  has  been   a  featured  speaker  on  social  entrepreneurship  at  esteemed  events  such  as  the   Purdue  Series  on  Corporate  Citizenship  (Purdue  University  News  Service).  Bill   Clinton  has  dubbed  Mycoskie,  “one  of  the  most  interesting  entrepreneurs  [I’ve]  ever   met,”  and  Bill  Gates  has  used  his  vision  for  TOMS  as  an  example  of  “creative   capitalism”  (TIME).  Mycoskie  was  also  heralded  by  Businessweek  as  one  of   America’s  Most  Promising  Social  Entrepreneurs  in  2009  (Businessweek).     Social  responsibility  profitable  and  recession  proof?   Originally  set  up  out  of  the  home  office  in  LA,  TOMS  has  now  expanded  to   production  plants  in  Argentina,  Ethiopia  and  China.  Each  set  up  in  regions  where   “One  to  One”  beneficiaries  are  located.  While  critics  claim  that  production  in   developing  nations  is  a  means  by  which  TOMS  is  able  to  use  underpaid  labor  to   produce  cheaply  and  reap  profits  (Timmerman),  the  production  facilities  are  subject   to  internal  audits  every  quarter  and  annual  external  audits  by  the  reputable  auditing   agency  Intertek.       In  these  facilities,  workers  are  guaranteed  a  fair  living  wage  –  above  minimum   standards  in  Argentina  and  Ethiopia,  undisclosed  for  China  –  and  employment   contracts  that  secure  continued  employment  (Intertek  Report).  Furthermore,  the   3

factories  undergo  evaluation  for  their  safety  standards,  cleanliness  and  age  of   workers  (TOMS).  The  company  requires  every  manufacturer  to  sign  a  code  of   conduct  and  comply  with  International  Labor  Standards  set  by  the  International   Labor  Organisation  (ILO).     TOMS  is  one  of  the  few  businesses  to  have  sustained  its  growth  throughout  the   recession.    Mycoskie’s  explanation  is  the  appeal  of  the  concept,  the  low  overheads   and  the  fact  that  ‘giving’  was  incorporated  as  a  fixed  cost  per  shoe  into  their   business  model  from  the  outset  (Zimmerman,  M).         Global  stakeholders   There are a variety of stakeholders, both internally and externally, who can effect and are affected by the decisions of TOMS as a corporate entity. Shareholders to the company are only Mycoskie as the founder, and Argentine partner who invested in the business upon its expansion into production capacities in Argentina, Alejo Nitti. Internal stakeholders include Mycoskie as the Chief Shoe Giver (CSG), employees and manufacturers. In contrast, external Stakeholders include local shoe manufacturers, humanitarian organizations and NGOs, other international brands, consumers, shareholders, and the beneficiaries at the receiving end. The  extent  of  involvement  from  several  of  the  stakeholder  groups  is  unusual  in   comparison  to  alternative  for-­‐profit  organizations  and  can  be  accounted  for  by  CSRs   fundamental  role  in  the  organizational  culture.  TOMS prioritizes the interests of stakeholders, especially beneficiaries, synonymously with more traditionally favoured shareholders.       Employees  at  headquarters  in  Los  Angeles  are  extremely  satisfied  stakeholders  due   to  TOMS  CSR  policies  in  relation  to  labour  standards.  The  employees  are  proud  of   their  work,  they  believe  that  their  involvement  contributes  to  the  alleviation  of   sufferance  experienced  by  the  beneficiaries.    As  a  result  ,  motivation  and  job   satisfaction  is  high.  When  interviewed  Mycoskie  attributes  employee  satisfaction   success  to  the  fact  that  the  socially  responsible  business  model  attracts  superb   employees.  “I’ve  been  lucky  enough  to  attract  passionate,  dedicated  people  who  will   do  anything  to  make  an  impact  on  the  world,”  he  says.  “They  are  all  seeking   something  more  than  a  9-­‐to-­‐5  job”  (Zimmerman).       Furthermore,  TOMS  encourages  workers  be  involved  on  a  ground  level  as  well.   TOMS  currently  donates  to  over  twenty  countries  through  a  non-­‐profit  subsidiary   named  ‘Friends  of  TOMS’  which  carries  out  the  role  of  organising  the  global  shoe   drops  for  employees  and  volunteers.    During  shoe  drop  events  each  pair  of  shoes  is   placed  on  a  child’s  foot  by  one  of  the  team,  providing  a  unique  opportunity  to   experience  the  act  of  giving  in  person.       These  volunteers  are  also  critical  stakeholders  for  TOMS  because  they  are  usually   consumers  or  activists  who  can  see  the  social  benefits  of  their  purchase.       One  of  the  largest  criticisms  of  TOMS  shoes  and  donating  to  charity  in  general  is  that   it  harms  local  industries.  However  TOMS  claims  that  is  does  everything  possible  to   4

avoid  this  by  working  alongside  ‘Giving  Partners’.    Giving  Partners  are  humanitarian   organizations  that  carry  out  their  own  aid  and  development  projects  within   communities.    They  provide  TOMS  with  an  in  depth  understanding  and  presence  in   the  communities  they  serve.         Working  in  collaboration  enables  identification  of  the  most  suitable  beneficiaries   and  the  correct  product  specifications.    In  addition,  once  a  community  has  been   identified,  Giving  Partners  act  as  a  distribution  point  for  donations.    Giving  Partners   provide  a  substantial  cost  saving  for  TOMS  by  eliminating  the  need  for  costly   research  into  beneficiaries  and  sourcing  distribution  points  (TOMS,  2011a).   An  example  of  one  such  organization  is  World  Vision,  which  has  freely  distributed   the  shoes  in  12  of  the  23  countries  the  company  has  a  presence  in  (Business  Wire).   More  recently  it  partnered  with  the  Seva  foundation  that  has  helped  to  give  eye  care   and  treatment  to  more  than  three  million  people  around  the  world  (Moore).  Such   partnerships  do  not  only  facilitate  the  activities  and  the  challenges  that  TOMS  faces,   but  they  provide  a  service  which  makes  their  “one  for  one”  possible,  while  at  the   same  time  they  save  on  overhead  costs.     Free  marketing  opportunities  have  been  provided  while  working  in  collaboration   with  various  companies.    An  example  of  which  is  AT&T  who  in  2009,  sent  a  camera   crew  with  the  task  of  following  Blake  Mycoskie  for  several  weeks  around  two   continents  to  show  the  reliability  and  importance  of  their  communication  services   to  TOMS  (Palmer).    In  addition,  TOMS  has  enjoyed  free  promotion  and  endorsement   from  Hollywood  stars  such  as  Scarlett  Johansson,  Liv  Tyler,  Julia  Roberts  and  Ben   Affleck  to  name  a  few  (Admin,  2011).     The  services  and  attention  received  by  TOMS  provides  a  substantial  advantage  over   its  competitors.  Combining  an  international,  high  fashion  shoe  brand  with  a  strong   sense  of  corporate  social  responsibility  provides  an  additional  advantage,  other   brands  that  follow  their  example  are  unlikely  to  draw  as  much  attention,  and  are   likely  to  be  criticized  for  imitating  TOMS.1✵  In  this  way,  TOMS  engagement  with  civil   society  stakeholders  and  activists  is  rewarding  for  the  company.     Much  like  the  satisfaction  the  employees  gain  for  working  for  TOMS,  is  the   satisfaction  consumers  get  when  they  purchase  TOMS,  because  they  feel  they  are   directly  contributing  to  a  good  cause.  Much  of  TOMS  success  has  been  accredited  to   ✵

This  is  in  summary,  of  exactly  what  happened  with  Sketchers  when  they  released  Bobs  shoes.   Other  brands  that  are  also  socially  responsible  include,  Soles4Souls,  Flipflops  for  Families  and1  as   well  as  Oliberte  foot  wear.1  Soles  for  Soles  relies  on  donations,  Flipflops  for  families  as  the  name   implies,  concentrates  on  a  different  type  of  footwear  than  TOMS  does.  Oliberte  is  all  about   manufacturing  it  shoes  in  Africa  aiming  to  boost  the  African  shoe  industry.  These  organizations   operate  differently  than  TOMS  does  therefore  they  are  not  a  threat  or  are  threatened  by  TOMS  shoes.  

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social  networks,  their  clever  use  of  these  allow  the  creation  of  a  strong  relationship   between  the  company  and  consumers  (Bolin).   Shareholders  gains  are  reduced  to  directly  increase  the  amount  of  benefit  received   by  those  in  need.  Usually  this  would  cause  tensions  between  stakeholders  and   shareholders  because  they  are  fighting  to  get  a  larger  slice  of  the  proverbial  pie.   However,  the  only  two  shareholders  are  Mycoskie  and  his  Argentine  partner  and   they  established  the  business  with  the  viewpoint  that  they  were  willing  to  reap   lesser  profits  in  order  to  do  greater  good.  TOMS  therefore  means  shareholder  and   stakeholder  benefits  run  parallel  and  increase  the  company  pie  as  a  whole  meaning   greater  profit  and  greater  good  resulting  from  corporate  growth.   Because  the  shareholders  are  not  short  run  profit  maximizers  and  stakeholders  all   enjoy  the  opportunities  TOMS  affords  them  the  company  has  been  able  to  run  an   extremely  successful  business  in  a  socially  responsible  manner.  They  are  also  able  to   receive  great  benefits  such  as  free  distribution,  free  advertisement  and  celebrity   endorsement,  but  most  importantly  customer  loyalty.     Corporate  vision,  mission  and  strategy  for  implementation   For  many  companies,  CSR  represents  the  creation  of  new  ideas  for  their  public   relations  campaigns,  rather  than  a  real  and  sustainable  change  with  society  and  the   environment.  In  other  cases,  companies  take  more  serious  approaches  to  donate  to   meaningful  causes.  An  example  of  this  type  of  companies  is  TOMS  Shoes.  Blake   Mycoskie,  the  entrepreneur  behind  this  start  up,  realized  that  it  was  crucial  to  work   in  harmony  with  their  customers,  government,  environment  and  public  to  create  a   positive  impact  in  the  lives  of  disadvantaged  children  and  to  be  successful.  He   recognised  that  consumers,  investors  and  employees  are  more  loyal  to  good   corporate  citizens  and,  therefore,  will  help  the  company  to  contribute  to  the  society   in  a  sustainable  way.     TOMS  Shoes`  corporate  vision  is  summed  up  in  their  simple  coined  phrase:  “One  for   One”.  This  means  that  for  every  pair  purchased,  TOMS  will  give  away  a  pair  of  new   shoes  to  needy  children  in  poor  communities.  As  stated  in  the  book,  Strategic   Corporate  Social  Responsibility,  the  vision  is  the  one  that  “answers  why  the   organization  exists  and  identifies  the  needs  the  firm  aspires  to  solve  for  others”   (Werther  &  Chandler,  2010).  In  this  case,  the  one  for  one  movement  represents  the   involvement  of  various  stakeholders  -­‐shareholders,  customers,  employees,  NGOs,   etc  -­‐  making  choices  to  improve  the  lives  of  children  in  different  parts  of  the  world.     With  this  vision  as  his  guide,  Mycoskie  decided  to  start  a  company  and  not  an  NGO   in  order  to  have  a  sustainable  project.  The  young  social  entrepreneur  claimed  that  it   would  have  been  easier  to  purchase  shoes  and  distribute  them  in  poor  communities;   however,  had  he  taken  this  approach  it  would  have  resulted  in  only  a  single   donation.  ,    

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The  strategy  adopted  by  this  company  follows  the  premises  of  the  Stakeholder   Perspective  where  the  ideal  vehicle  for  the  implementation  of  their  vision,  mission   and  CSR  policies  is  the  integration  of  multiple  stakeholders  to  the  cause.    Mycoskie   considers  that  every  stakeholder  becomes  a  philanthropist  and  a  donor  at  the  same   time.  Therefore,  the  company  promotes  their  shoes  under  the  motto:  “help  us   change  the  world”.     TOMS`  strategy  to  fulfill  its  vision  stresses  out  the  establishment  of  shoe-­‐giving   partnerships  with  international  humanitarian  organizations  that  contribute  with   their  expertise  and  extensive  experience  in  communities  that  are  in  need  of  help.   These  partnerships  are  very  important  since  the  company  can  be  sure  that  its   donations  are  having  the  biggest  impact  possible.     TOMS`  strategic  partnerships  allow  the  company  to:    Identify  communities  that  need  shoes:    determine  disadvantaged   communities  where  TOMS  shoes  will  serve  economic,  health  and  education   needs.      Get  the  proper  shoes  to  children:  be  sure  that  their  shoes  will  satisfy  the   children`s  needs.    Help  their  shoes  have  a  bigger  impact:  TOMS  shoes  are  part  of  extensive   health  and  education  programs  run  by  their  Giving  Partners.    Give  children  shoes  as  they  grow:    once  a  community  is  identified,  TOMS   will  continuously  supply  shoes  to  help  the  local  children  stay  healthy  and   have  access  to  education  as  they  grow  up.    Provide  feedback:  the  company  relies  on  feedback  about  its  shoes  and   giving  process  in  order  to  have  a  continuous  improvement  of  their  programs.     TOMS`  strategy  embodies  5  components.  First,  the  company  emphasizes  the   importance  of  riding  a  trend.  TOMS  identified  the  rise  in  consumers  who  have   become  more  conscious  about  the  goods  their  purchase  as  well  as  of  its  impact  in   the  society  and  the  environment.  More  and  more  consumers  are  willing  to  purchase   a  pair  of  shoes  and  know  that  at  the  same  time  they  are  doing  some  good  in  the   world.       Secondly,  the  company  was  created  under  the  premise  that  sales  equal  the  good   done.  Mycoskie  said,  "...we  know  every  day  that  we're  going  to  give  away  one  pair  of   shoes  for  every  one  we  sell,  and  that's  that.  If  we  can't  make  the  business  work  that   way,  then  the  business  just  doesn't  work"  (Fritz).  Third,  the  company`s  model  is  a   self-­‐feeding  loop.  Sustainability  has  been  the  main  concern  since  the  company  was   created.       Fourth,  TOMS`  strategy  depends  on  the  constant  motivation  and  participation  of   their  employees.  The  successful  entrepreneur  states  that  the  employee  morale  is   always  high  because  everyone  is  happy  knowing  they  are  doing  something  to   improve  a  child`s  life.  This  also  allows  the  company  to  attract  a  better-­‐caliber  talent   that  seeks  to  improve  the  company`s  business  model.     7

  Finally,  the  company  decided  that  its  shoes  will  receive  more  attention  if  they  attach   a  story  to  them.  If  you  explain  the  consumers  the  company`s  vision  and  its   philanthropic  activities,  consumers  will  feel  good  about  their  purchase  and  will   encourage  more  people  to  contribute  to  the  cause.     TOMS  CSR  policies  implementation  follows  medium  to  long  term  patterns  due  to  its   variety  of  stakeholders  involved.  Blake  Mycoskie  understood  that  the  primary  CSR   responsibility  of  a  CEO  is  to  actively  support  the  integration  of  CSR  policies  into  the   culture  of  the  firm.    TOMS  is  characterized  by  a  strong  focus  in  philanthropic   activities  as  well  as  by  having  a  profitable  business  model.  Activism  and  good   intentions  do  not  preserve  an  operation  if  basic  economical,  legal  and  other  business   fundamentals  are  not  taken  into  account.  Therefore,  the  disadvantaged  children  and   the  company`s  decision  to  donate  shoes  in  this  way  together  are  the  reason  behind   TOMS`  successful  business  model.  Instead  of  making  CSR  an  important  part  of  its   business  model,  TOMS  shoes  is  making  CSR  the  business  model  itself.     Working  the  offense   The  CSR  central  to  the  structure  of  TOMS  Shoes  is  an  offensive  CSR  approach  to   doing  business.  Structurally,  it  is  a  company  operating  as  a  for-­‐profit  industry  yet  it   still  contains  elements  of  altruism.  While  the  company  is  undoubtedly  seeking  to   maintain  their  sustainable  competitive  advantage,  it  does  so  in  terms  of  contributing   to  the  global  society  in  which  in  operates.     Through  examination  of  stakeholders,  it  becomes  apparent  that  TOMS  is  not  simply   enacting  specific  programs  nor  constructing  an  outlying  branch  to  incorporate   socially  responsible  actions.  It  is,  instead,  maximizing  its  production  capabilities   while  also  increasing  its  abilities  in  social  cultural  engagement.  In  the  process  it  is   benefiting  both.     An  example  of  a  TOMS  policy  that  reflects  this  is  its  production  in  Argentina.     Production-­‐wise,  it  is  less  expensive  to  set  up  a  factory  and  employ  workers  in   Argentina  than  in  would  be  in  the  US,  where  TOMS  headquarters  is.  Furthermore,   TOMS  original  style  shoe,  is  modelled  after  an  Argentine  slip-­‐on,  the  alpargata,  thus   Argentina  was  the  optimal  location  because  workers  were  knowledgeable  as  to  the   style  and  quality  of  the  product.  Therefore,  TOMS  was  acting  to  maximize  its   production  capability.     However,  there  is  a  socio-­‐cultural  aspect  to  setting  up  production  in  the  country  as   well.  Instead  of  simply  donating  shoes  to  children  in  desperate  situations,  TOMS  was   able  to  also  provide  good  employment  opportunities  for  adults  to  provide  for  their   children.  In  this  manner,  TOMS  contributed  to  poverty  alleviate  on  both  a  surface   and  an  institutionalised  level.  What  was  in  the  best  interest  of  the  company  and   made  them  money  was  also  in  the  best  interest  of  the  society  in  which  it  set  up   operations  for  both  production  and  as  a  beneficiary  of  “One  to  One.”     8

Furthermore,  these  socially  responsible  activities  recruit  talented  employees  to   work  for  TOMS.  Mycoskie’s  first  employee,  Candice  Wolfswinkel,  now  chief  giving   officer,  worked  for  free  for  a  year  before  receiving  any  pay.  Chief  financial  officer   Caroline  Zouloumian  left  her  career  in  finance  after  paying  off  her  loans  from   earning  a  Harvard  MBA  to  go  work  for  TOMS  (LA  Times).  In  2009,  the  company   received  over  1,000  applications  for  15  summer  internship  positions.  One  of  the   main  reasons  is  because  employees  are  able  to  connect  what  they  do  in  the  office  to   the  good  on  the  ground  as  part  of  the  Giving  Campaign  that  sends  employees  on   Shoe  Drops  (TOMS  Website).     As  a  result  of  activities  in  Ethiopia,  where  TOMS  shoes  are  pledged  to  try  to  treat   podoconiosis  –  a  foot  disease  that  causes  elephantatitis  of  the  foot  sparked  in   childhood  from  walking  barefoot  on  red  soil  (WHO)  –  government  interest  has  even   begun  to  spark.  In  an  interview  with  TOMS,  Dr  Gail  Davey  at  the  School  of  Public   Health  in  Addis  Ababa  Public  University,  Ethiopia  praises  TOMS  for  “helping   communities  understand  the  importance  of  shoe  wearing,  and  actually  delivering   shoes  to  them”  (TOMS).     The  centrality  of  CSR  in  TOMS  business  model  has  also  led  to  positive  relationships   with  activist  communities,  particularly  the  most  active  one:  college  students.  TOMS   works  to  engage  these  student  activists  within  their  business  model.  Mycoskie   himself  travels  to  colleges  to  speak,  and  he  runs  his  marketing  as  a  “vagabond”   campaign  to  raise  awareness.    Activism  is  so  intrinsically  tied  into  the  structure  of   the  company  that  where  “marketing”  or  “customer  service”  appears  for  most   companies,  TOMS  has  branded  themselves  as  a  “movement”  (TOMS  website).  TOMS   does  not  just  conform  to  the  standards  of  activists,  it  encourages  their  involvement   in  the  company.     Part  of  this  movement  has  been  the  2008  initiative  TOMS’  began  named,  ‘One  Day   Without  Shoes’.    While  it  essentially  was  an  innovative  public  relations  exercise,   TOMS  was  able  to  motivate  college  students  across  the  nation  to  participate.  Those   involved  should  spend  anything  from  a  few  minutes  to  a  whole  day  without  shoes.     Its  aim  was  to  enable  participants  to  experience  life  without  shoes  and  raise   awareness  of  the  company  and  its  social  mission.    While  it  was  initially  promoted   through  university  campuses,  as  the  company  has  gained  global  recognition,  so  has   the  event.    By  2010,  over  a  quarter  of  a  million  people  went  barefoot  at  over  1600   events  taking  place  worldwide  (One  Day  Without  Shoes).           Because  CSR  is  the  nature  of  TOMS  business,  TOMS  has  an  offensive  CSR  approach.   Evidence  of  this  is  in  the  positive  outcomes  TOMS  has  seen  as  a  result.  It  has  a   strong,  fruitful  relationship  with  its  internal  and  external  stakeholders,  and  creates   monetary  benefits  and  social  benefits  for  itself  and  societies  it  exists  within.  As  a   result,  it  automatically  recruits  talented  employees,  attracts  positive  attention  from   governments  and  prominent  figures,  and  sells  within  activist  movements.  (  I  would   delete  this  paragraph)     9

Ethical  foundations  of  structure  and  giving    The  structure  of  TOMS,  erected  around  CSR,  intrinsically  ties  together  a  mix  of   complimentary  ethical  issues  in  its  corporate  structure  and  decision  making   process.  At  TOMS,  CSR  is  not  applied  as  a  tool  but  is  instead  a  lens  through  which  all   corporate  decisions  and  policies  are  viewed.  Overall  TOMS’  CSR  policies  fall  closer   towards  altruism  than  ethical  egoism  because  the  company  essentially  attempts  to   embody  CSR  instead  of  practice  CSR.  The  blending  of  ethical  principles  is  most   evident  within  their  push  towards  accountability  and  transparency.     TOMS’  corporate  structure  and  decision  making  illustrates  elements  of  virtue,   deontology,  consequentialism,  justice  and  rights  as  well  as  cultural  relativism.  Virtue   guides  the  actions  of  TOMS  in  its  quest  to  provide  shoes  to  children  in  impoverished   circumstances.  The  company  is  not  compelled  to  hold  a  “One  to  One”  giving  ratio,   but  was  guided  in  its  mission  to  do  so  by  virtue;  arguably  the  virtue  of  Mycoskie.  In   this  way  it  also  encompasses  deontological  ethics  since  TOMS  set  rules  for  itself   upon  its  formation  and  is  motivated  to  uphold  its  self-­‐imposed  duties.     Consequential  ethics  also  play  a  role  in  TOMS’  decision  making  considering  the   nature  of  the  giving  scheme.  The  actions  of  the  consumer  will  have  an  outcome  on   children  half  the  world  away.  TOMS  also  views  things  as  such  with  the   establishment  of  its  factories;  putting  a  factory  in  Ethiopia  will  lower  costs  plus   serve  as  a  form  of  poverty  alleviation  in  the  disparaged  community.  Justice  and   rights  are  also  practiced  ethics  of  the  company  as  it  applies  codes  of  conduct  and   international  labour  standards  to  all  of  its  employees  and  manufacturers.  In  some   cases,  such  as  Argentina,  TOMS  goes  above  and  beyond  national  and  international   standards  to  uphold  human  rights  and  social  justice  (Intertek).     Cultural  relativism  is  another  form  of  ethics  that  is  applied  in  TOMS  decision   making.  The  entire  context  for  entering  into  Ethiopia  to  do  shoe  drops  was  based   upon  the  desire  to  help  combat  preventable  disease  within  the  country.  TOMS   considered  the  culture  of  the  country  and  saw  an  opportunity  to  help  within  the   context  of  the  society.     While  not  all  forms  of  ethical  behaviour  are  executed  across  the  wide  spectrum  of   decision  making  TOMS  must  do,  elements  of  each  are  evident  in  specific  situations   because  a  combination  of  them  are  ingrained  in  the  corporate  structure.  They  are   ingrained  in  the  form  of  accountability  and  transparency  that  are  major  pillars  of   TOMS  corporate  structure  (TOMS  website).  Accountability  is  integrated  by  TOMS   adoption  of  various  codes  of  conduct  such  as  ILO  workers  rights  standards,  fair   trade  standards.  Furthermore,  with  their  annual  “Giving  Report,”  TOMS  openly   measures  its  performance  in  relation  to  the  goals  it  had  set  for  itself  and  rates  itself   accordingly.       In  terms  of  transparency,  the  constant  internal  and  external  auditing  programs  it   has  set  up  provide  a  window  into  the  quality  of  their  performance  across   manufacturing  platforms.  Ethically,  accountability  and  transparency  built  within   10

TOMS’  corporate  structure  is  evidence  that  the  company  really  is  attempting  to  take   a  virtuous  path,  and  make  good  decisions  that  have  positive  consequences  on   multiple  stakeholders  within  their  cultural  setting.         Maintaining  a  critical  eye   While  TOMS  may  fall  closer  to  altruism  on  the  spectrum,  it  is  still  not  void  from   necessity  to  pursue  and  create  profit;  it  is  a  corporation  after  all.  Since  its  creation,   TOMS  has  made  millions  of  dollars  charging  consumers  in  the  developed  world  to   provide  over-­‐valued  shoes  to  the  developing-­‐world  poor.  Mycoskie  has  been  the   greatest  single  profiteer  from  the  endeavour,  now  living  on  a  giant  sailboat  in  LA   and  driving  an  Aston  Martin  (Good  Intentions).     Consumers  are  told  that  half  the  price  of  their  shoe  -­‐  US$25  –  buys  a  second  shoe  for   a  child  in  a  world  where  shoes  only  cost  US$2  to  US$3  on  average  (Nemana).  Critics   contend  that  this  scheme  is  remarkably  profitable  for  TOMS  because  it  effectively   means  that  the  company  is  not  paying  for  the  shoes  themselves  but  are  having  the   Western  consumer  pay  for  both.  Furthermore,  they  say,  it  outcompetes  all  footwear   sellers  in  the  region  of  the  developing  country  when  TOMS  gives  its  shoes  away  for   free  (Mason).     “Consumer  capitalism,”  where  you  combine  acts  of  goodwill  with  acts  of   consumption,  is  not  a  means  of  development,  say  critics.  “TOMS  is  a  good  marketing   tool,  but  it’s  not  good  aid,”  says  Good  Intentions  Are  Not  Enough,  a  blog  committed   to  CSR  accountability.     However,  in  the  context  of  corporate  culture,  it  is  undeniable  that  Mycoskie  and   TOMS  are  at  least  attempting  to  be  at  the  forefront  of  reforming  the  social   responsibilities  of  business  because  it  integrates  corporate  social  responsibility   (CSR)  into  all  facets  of  its  operation  and  strategy.    TOMS  is  able  to  maintain  positive   relationships  within  a  vast  multiplicity  of  stakeholders  in  all  of  the  societies  in  which   it  operates  because  of  its  policies.  Its  strategy  creates  affluence  and  benefits  for  both   internal  and  external  stakeholders  and  generates  wealth  for  itself.  TOMS  goes   beyond  corporate  giving,  it  institutionalizes  socially  responsible  instruments  for   doing  business;  moreover,  it  shows  that  social  responsibility  is  profitable.                           11

Bibliography Brown, Tanya (28 December 2009). “Founder and ‘chief shoe giver’ of TOMS shoes to speak at Purdue,” PURDUE UNIVERSITY NEWS SERVICE. http://www.lafayette-online.com/business/2009/10/toms-shoes-founderpurdue Bloomberg Businessweek (2009). “America’s Most Promising Social Entrepreneurs,” http://images.businessweek.com/ss/09/04/0403_social_entrepreneurs/26 Davey, Gail (5 December 2009). “Q&A with: Dr Gail Davey on Podoconiosis,” TOMS Blog. http://www.toms.com/blog/content/qa-dr-gail-davey-podoconiosis Gates, Bill (31 July 2008). “Making Capitalism More Creative,” TIME MAGAZINE. http://www.time.com/time/business/article/0,8599,1828069,00.html Good Intentions Are Not Enough (25 October 2010). “TOMS Shoes: Good marketingBad Aid,” http://goodintents.org/in-kind-donations/toms-shoes Intertek Official Website. “Auditing Services for Consumer Goods: Footwear” http://www.intertek.com/footwear/audits/ Mason, Zac, (4 October 2010). “Do You Cause More Harm than Good by Giving TOMS Shoes to the Poor?,” ZACSTRAVAGANZA. http://zacstravaganza.blogspot.com/2010/10/does-toms-cause-moreharm-than-good-by.html Moore, Booth (19 April 2009). “Toms Shoes’ model is sell a pair, give a pair away,” LOS ANGLES TIMES. http://www.latimes.com/features/image/la-iggreentoms19-2009apr19,0,3694310.story Nemana, Vivek (12 November 2010). “A tryst with TOMS,” AID WATCHERS. http://aidwatchers.com/2010/11/a-tryst-with-toms/ Timmerman, Kelsey (6 April 2011). “The problem with TOMS shoes & its critics,” MADE IN AMERICA BLOG. http://whereamiwearing.com/2011/04/06/toms-shoes/ TOMS Shoes Official website: http://www.toms.com World Health Organisation, official website on Podoconiosis. http://www.who.int/neglected_diseases/diseases/podoconiosis/en/index  

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