Investigation Related to how General Electric Polluted the Hudson River

When Jack Welch became CEO of GE in 1981, he set out to reenergize one of America’s largest companies. Through a revision of GE’s mission and values Welch grew GE to a multimillion-dollar company, ready to face competitors and future challenges. Any company not number one or two in their industry was divested or closed and though sometimes perceived to be a destroyer, he restructured GE into one of the world’s most staid corporations.

Welch transformed General Electric into one of the biggest corporate giants in the history of United States. He established numerous policies within the company, which made General Electric one of the most competitive and profitable companies in its time. Due to his competitive policies some of the jobs were eliminated while other were outsourced to other countries where labor and everything else was cheaper. GE also had it’s share of not doing the right thing. The company polluted the Hudson River and as mentioned before hurt the communities in other ways with layoffs and closing factories to then take overseas. GE was also not able to achieve diversity within its owners or top management which is one of their documented issues.

One of the actions that could have been done different is acted early in the duty to its environment by finding other means of disposing that was not the Hudson River or trying to clean if after the damage was done. After a long time, Jeffrey Immelt chose to cooperate with the Environmental Protection Agency, but it could have been done sooner. Another thing that could have been done differently is the diversity within the workplace.

General Electric during the Welch era is the perfect example of the Friedman’s view that the only social responsibility for corporation is to increase profits while obeying the law.

The competitive nature of Welch was what brought the company to eats peak and was used to transform General Electric into the global industry it’s been known for while also obeying the law. As a result, Welch was famous for being ruthless and without integrity, although he tried to preached integrity, his actions were then made public to the public. The Hudson River pollution is a perfect example.

General Principles of the Corporate Responsibility:

1) Providing economic benefits.

2) Corporations have a duty to follow the law.

3) Corporations have a duty to alleviate adverse effects on society.

4) Social responsibility varies with company characteristics.

5) Managers should try to meet legitimate needs of the stakeholders.

6) Corporate behavior must comply with norms in an underlying social contract.

General Electric during Welch’s tenure was very successful in complying with the general principles of the corporate responsibility. They were extremely successful in generating profit and creating value for its stakeholders. They followed every law and followed every government. Managers had to act ethically, conforming their behavior to ethical principles. Managers had to meet the legitimate needs of the stakeholders and those who failed at their job were removed. GE led the way in the restructuring of American corporations to make them competitive in global markets. Welch helped define the social contract of the 1980s and 1990s.

Welch took over General Electric in 1981, his mission was to transform GE into Americas most competitive and profitable company, which was close to its mark. As a result, he created unthinkable wealth for its shareholders. Shareholders are always ranked first on the classical economic theory where managers are solely responsible to the interest of owners. Marjorie Kelly argues that shareholder centered view of corporations is wrong. In Kelly’s point of view, she argues that employees do all the work that make the company profitable and successful yet being rewarded is considered an expense to the corporation that must be reduced. Stakeholders who have done none of the wok end up getting rewarded more. GE could of kept rewarding the stakeholders as they pleased but should have rewarded their employees more and not seen as liabilities.

Welch exited the company in 2001. The company moved in a more progressive direction. It became more cooperative with rules and regulations, for example, once again the Hudson River cleanup. They established more socially responsible way of doing things like a new sustainability strategy called ‘’ The Ecomagination’’ initiative, which is both a business and a social responsibility strategy. Once Jeffrey Immelt joined the company as the new CEO, diversity was suddenly extremely important to the company. Some may say that Welch had a more profitable company because its responsibility was bringing the company to make more profit while Jeffrey’s era was primarily fulfilling ethical duties to the range of stakeholders beyond shareholders. It depends on how everyone defines which responsibility was more important.

Cite this page