TOMS Shoes and Corporate Social Responsibility: A Case Analysis

This case study evaluates the corporate social responsibility initiatives of TOMS Shoes, a social enterprise employing the one-for-one business model. The study examines the effectiveness and impact of TOMS' donations on recipient countries, particularly focusing on the balance between the company's marketing benefits and the actual aid provided. Findings suggest that while TOMS' efforts improve social welfare, they can also negatively affect local economies by disrupting local shoe industries. The report recommends that TOMS and similar enterprises implement more precautionary measures to avoid economic harm, such as subsidizing local production instead of direct donations. By shifting focus from immediate social problems to long-term economic empowerment, these enterprises can foster sustainable development in recipient countries. The analysis also considers the evolution of TOMS' approach, including decentralizing production to recipient countries to create jobs and expanding into other socially responsible products. The study concludes by highlighting the potential for collective impact when multiple social enterprises adopt similar models, provided they address the inherent economic challenges.

Running Head: CORPORATE SOCIAL ENTERPRISES 1
Evaluating Corporate Social Enterprises
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CORPORATE SOCIAL ENTERPRISES 2
Evaluating Corporate Social Enterprises
The Executive Summary
Background Information
This project involves a case study on the corporate social responsibility of companies using the
one-for-one business model structure. Corporate social enterprises such as TOMS Shoes have
successfully been able to market their brand through cause-marketing. However, the impacts of
their corporate social responsibility on the recipient countries have received sharp criticism and
appraisal in equal measures. This study seeks to establish:
 The effectiveness and level of impacts of the corporate social responsibility activities
undertaken by companies such as TOMS.
 If the benefits received from the donations by the recipient countries match the benefits
attained by the company as a result of the cause-marketing.
Procedure
This study was undertaken by a group of university students by sampling opinions and literature
by previous researchers and directly examining documented data regarding the corporate social
responsibility aspect of companies employing the one-for-one business model structure. TOM
Shoes Company was used in this case study.
Findings
 The corporate social responsibility activities of companies such as TOMS were found to
be hurting the economies of the recipient countries by killing local Shoe industries.
 The profits made by the company out of the cause-marketing were not coherent with the
figurative cost of the donations.

CORPORATE SOCIAL ENTERPRISES 3
 The company has tried to mend the economic injuries inflicted to the local industries by
moving their operations base to the donations recipient countries. This creates
employment opportunities to the people who might have lost jobs due to the collapse of
the local industries.
Recommendations
 More precautionary measures need to be put in place to prevent cases where activities
geared towards improving the social welfare of a developing country ends up stagnating
the economic base of the country.
 Instead of TOMS Shoes Company donating shoes to the developing countries, they
should set aside funds for the corporate social responsibility function. These funds should
in return be channeled to the recipient country and used to subsidize the cost of
production in the shoe-making industry.
 Rather than focusing on the social problems affecting the children in the donations
recipient countries, TOMS should focus on coming up with economic solutions to the
economic problems derailing the social development of the respective countries. If the
recipient countries can be empowered economically, they will be able to handle the social
welfare of their citizens on their own.
Introduction
TOMS Shoe is a social corporate enterprise that through a one-for-one business model
structure seeks to address the rampant social problems in developing countries. The company
donates a pair of shoe to a needy child for every single sale of a pair of shoe made while as well
using the cause to market its brand. However, previous research has raised questions on the

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sustainability and tenability of the course. Adoption of this business model by more and more
companies endangers the long-term viability of the corporate social responsibility aspect of the
business (Marquis & Park, 2014).
The ability of the companies to attain their stipulated corporate social responsibility goals
while also ensuring that local market industries are not hurt by their activities has also attracted
divergent opinions. Methods used by the companies such as TOMS to keep its competitors at bay
have also been criticized in equal measure (Boulouta & Pitelis, 2014). The undertaking of this
case study was motivated by the numerous loopholes poked on the efficiency and effectiveness
of corporate social responsibility function in companies using the one-for-one business model to
address the social problems in imperfect economies.
In this study, we will analyze the positive and negative impacts of all the activities
undertaken by corporate social enterprises such as TOMS Shoes. We will seek to establish
whether the cause-marketing strategies settled for by TOMS Shoes meets its objectives without
obstructing the economic progress of the countries they seek to help. The benefits accrued due to
cause-marketing in the buy-one-give-one model will be contrasted with the benefits transferred
to the donations recipient countries. From a rational and unbiased perspective, does TOMS
Shoes one-for-one business model structure contribute towards attainment of their corporate
social responsibility? Do the benefits accrued due too the cause marketing match the level of
help and benefits to donation recipient countries?
The type of shoes given for donations by TOMS varies in quality compared to those
supplied for sale in their market industry. The company has greatly tried to impact the social
standards of recipient countries by ensuring that the children targeted by this initiative remain
healthy and are able to pursue their studies with fewer distractions to worry about. However,

CORPORATE SOCIAL ENTERPRISES 5
local industries in the shoemaking business have been drawn out of business with some forced to
fold up (Bartter, 2012). The number of a single pair of shoes sold by TOMS cannot match the
number of shoes given for donation. The cost of producing a single pair of shoes for donation
and the costs of donating the shoes have to be taken care of by the profit made from the overall
sale.
Analysis of the Business Model
TOMS shoe business employs the for-profit structure in the one-for-one social
entrepreneurship model. Through the-one-for-one model, TOMS is able to identify a state of
need in a country and come up with ways to address the need. The aforementioned need may
vary from market failures to market needs. The type of need directs the company on what form
of action to take. TOMS for-profit model seeks to address the market need in the recipient
country (Talpalaru, 2014).
The consumer products industries have in the recent past witnessed a revolutionized
success after adopting the buy-one-give-one model approach in their businesses structure. The
customer’s choice of a company seems to be made with the expectation that their transaction can
make an impact on a social cause (Mason et al, 2015). More success has been witnessed in the
apparel industries as compared to other sectors. This can be accounted by the fact that clothes,
jewelry, and shoes provide a free marketing tool for the company after the consumers put on the
product. The choice of products a company deals in greatly influences the level of success of the
one-for-one social entrepreneurship model. Products that are worn are easily able to market the
company as well as trigger story telling. This in return creates publicity for the company
(Marquis & Park, 2014).

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However, the model might be a bit challenging to companies dealing with consumable
products such as foods. It proves difficult for free marketing witnessed in the companies dealing
with apparel to be achieved with companies handling consumable goods. Financial institutions
have also picked on this model approach. For instance, CommonBond a for-profit social
enterprise funding loans for students commit to funding the education program for a needy
student for every domestic student loan transacted (Anderson, 2016).
The costs of donations relatively increase as the prices for commodities being sold by the
company increases. This can be well explained by the fact that the items for donation have to be
factored from the profit margins of the sales made. Critiques have always faulted the price of
TOMS shoes compared to the quality of the product. If the critiques were to be true then this
would mean that the company is charging high prices for their products to increase their profit
margins. Companies such as Smile Squared sell their products at a premium price to reduce the
costs involved in donations (Marquis & Park, 2014). Five years after the formation of TOMS
shoes, one million shoes had been distributed in form of donations, two years later, the number
of shoes distributed had doubled to two million(TOMS, 2013).
The increase in the number of shoes donated implies an increase in levels of profits
taking into consideration that donations are drawn from profits made. However, in the TOMS
for-profit business structure, the number of donations might not reflect the profit margins on the
sales made. The quality of shoes placed for sale is not the same as the shoes made for donation
purposes. The company has brought the products closer to the recipients by decentralizing their
operations base and also relies on its partnering organizations to deliver the donated shoes to the
recipients. This has the effect of eliminating the costs of donating the shoes. The partnering
organizations must also identify recipients of the donated shoes. Assessing the level of need of

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the recipients should be done by the partnering organization to ensure that only the intended
recipients’ benefits and to reduce the impacts of this process on the local industries (TOMS,
2013).
Relation to CSR
TOMS Shoes corporate social responsibility idea was conceived after the founder visited
Argentina and observed that most children were not in shoes. From its inception in 2006, TOMS
main mission has been to see to it that with every single sale of a pair of shoe, a child in need
gets a pair for free (Brown, 2013). The founder, Blake Mycoskie has always affirmed the
company’s commitment to eradicating poverty in the recipient countries each time he appears on
media. By donating shoes to the needy school going kids, the founder argues that the health of
the kids while at school is taken care of due to improved hygiene standards. From Blake
Mycoskie perspective, this has a positive achievement given that it reduces rates of dropouts
associated with health issues. The kids are therefore able to attain good grades at school
(Lebowitz, 2016).
The one-for-one business model approach is meant to build sustainability by
reciprocating each sale made with an act of kindness. Human capital compliments manufactured
capital in imperfect economies. The human capital is measured in terms of the health conditions,
knowledge and skills of citizens in an economy. TOMS Company under the corporate social
responsibility program seeks to strengthen the human capital of developing countries economies
(Pearce, Barbier & Markandya).
However, the intention has not always matched the impact when it comes to corporate
social responsibility objective of TOMS shoes. Previous research indicates that local industries
in the countries where the donations of shoes are made have suffered major blows to the extent

CORPORATE SOCIAL ENTERPRISES 8
of some local shoemaking companies being thrown out of business. This in return inflates the
levels of unemployment in that country and slows the economic growth of the country due to
reduced levels of manufactured capital. Shoe donation to the recipient country only meets the
short-term needs of the nation while inflicting long-term injuries to the economy of that country.
A kind gesture meant to lift a country from the jaws of poverty ends up drawing the country into
tough economic times and thus entrenching the poverty levels even further (Jain, 2011).
In a bid to mitigate the economic sabotage brought about by local shoe-making industries
by being driven out of the market, TOMS shoes have decentralized its shoemaking operations
and supply chain. By moving the shoemaking plant to countries such as Ethiopia, Haiti,
Argentina, and India, not only are job opportunities created for the locals but also savings in
costs used to ship goods (TOMS, 2011). TOMS has also ventured into other social
entrepreneurial practices by merchandising products such as coffee and sunglasses. It could also
be argued that by TOMS leading the pace in the one-for-one business model and the emulation
witnessed by other social entrepreneurs such as Bombas dealing with socks, Out Of Print that
deals with books and Figs that produces clothes for healthcare workers, a concerted effort in
fighting poverty in third world countries can end up bearing measurable results (Fritz, 2018).

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References
Anderson, T. (2016, February 23). Social Promise: The Making of a Social Entrepreneur.
Retrieved May 25, 2018, from CommonBond Social Promise:
https://commonbond.co/post/the-making-of-a-social-entrepreneur
Bartter, J. (2012). A New Model of Corporate Social Responsibility: A Case Study of Toms
Shop. emyliacahya999.
Boulouta, I., & Pitelis, C. (2014). Who Needs CSR? The Impact of Corporate Social
Responsibility on National Competitiveness. Journal of Business Ethics: Springer Link,
349-364.
Brown, S. (2013, April 9). Momentum Telecom. Retrieved May 25, 2018, from Corporate Social
Responsibility Model: TOMS Shoes: https://momentumtelecom.com/corporate-social-
responsibility-model-toms-shoes/
Business Government & Society III . (2012, April 16). TOMS Shoes: Doing More Harm than
Good? Retrieved May 27, 2018, from Business Government & Society III :
https://bizgovsociii.wordpress.com/2012/04/16/toms-shoes-doing-more-harm-than-good/
Fritz, J. (2018, April 22). Lessons in Corporate Social Responsibility from TOMS (Shoes).
Retrieved May 25, 2018, from the balance smb: https://www.thebalancesmb.com/lessons-
from-toms-shoes-2502511
Inc. (Director). (2014). How TOMS Founder Blake Mycoskie Crafted an International Brand
[Motion Picture].
Jain, N. (2011, April 27). Shoes for Business: The unintended consequences of doing good.
Retrieved May 25, 2018, from The Harvard Crimson:
https://www.thecrimson.com/article/2011/4/27/shoes-local-toms-pair/

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Lebowitz, S. (2016, June 15). On the 10th anniversary of TOMS, its founder talks stepping
down, bringing in private equity, and why giving away shoes provides a competitive
advantage. Retrieved May 25, 2018, from Business Insider:
http://www.businessinsider.com/toms-blake-mycoskie-talks-growing-a-business-while-
balancing-profit-with-purpose-2016-6?IR=T
Marquis, C., & Park, A. (2014). Inside the Buy-One-Give-One Model. Stanford Social
Innovation Review , 30-31.
Mason, H., David, M., Dumitrescu, D., & Luthy, M. (2015). Trend-Driven Innovation: Beat
Accelerating Customer Expectations. New Jersey: John Wiley & Sons, 2015.
Mycoskie, B. (2016, June 15). On the 10th anniversary of TOMS, its founder talks stepping
down, bringing in private equity, and why giving away shoes provides a competitive
advantage. (S. Lebowitz, Interviewer)
PBS Interview with Blake Mycoskie. Travis Smiley. September 9, 2011,
http://www.pbs.org/wnet/tavissmiley/interviews/toms-shoes-founder-blakemycoskie/
Pearce, D., Barbier, E., & Markandya, A. (2013). Economics and Environment in the Third
World. In D. Pearce, E. Barbier, & A. Markandya, Sustainable Development (pp. 2-17).
London: Routledge.
Stefano Ponte & Lisa Ann Richey (2014) Buying into development? Brand Aid forms of cause-
related marketing, Third World Quarterly, 35:1, 65-87, DOI:
10.1080/01436597.2014.868985
Talpalaru, M. (2014). Blake Mycoskie, TOMS, and Life Narratives of Conspicuous Giving.
Project Muse, 168-190.
TOMS. (2013). TOMS One for One Giving Report. TOMS.

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TOMS. (2011). Toms Giving Report. TOMS.

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Appendix
The following image diagram illustrates the one-for-one business model structure. It
demonstrates how TOMS shoes are able to link their customers and the cause to support needy
cases.
(TOMS, 2011)
The pair of shoes sold by TOMS in consecutive years since its inception has been on an upward
rise trend as demonstrated in the graph below obtained from their 2013 giving report:
(TOMS, 2013)

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For every single product purchased, TOMS reciprocates the product in donations.
(TOMS, 2013)
Find below the link to a YouTube video clip where TOMS founder narrates of how TOMS Shoes
was formed and the progress in an interview with Inc. Magazine. How TOMS Founder Blake
Mycoskie Crafted an Intentional Brand | Inc. Magazine (Inc., 2014)
https://youtu.be/C3eCo-El_RY
TOMS Shoes donates shoes to over forty countries worldwide as captioned in the image below:
(TOMS, 2013). In doing so,
they seek to achieve their social mission of ensuring a better tomorrow. TOMS shoe brand name
originates from their mission of ensuring that action taken today will have an impact on the
tomorrow of the children they help.
TOMS’ 2008-2012 Income Statements
Income Statement 2011 2010 2009 2008
Revenue $20,100,000 $16,500,000 $13,000,000 $9,600,000

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TOMS’ Growth Rate
1 YR Revenue Growth Rate 21.8%
3 YR Revenue Growth Rate (CAGR) 27.9%
(Business Government & Society III, 2012)
TOMS enjoys comparatively unrivaled economic benefits such as free marketing. Their
cause-marketing campaign attracts a lot of publicity and attention from the media. The media has
always been attracted to stories with an act of kindness. Other unconventional marketing tactics
include blogging and creating viral content videos from their giving activities. The publicity and
attention created attract lots of people who are later converted to customers. It can be argued that
a majority of the people attracted to the TOM shoes could be due to the social cause as opposed
to the functionality appeal. This can be backed up by the fact that in the market industry, there
are other companies offering the same or even more superior quality products and at a relatively
lower price but this doesn’t stop potential and repeated customers from buying from TOMS
shoes. The ability of TOMS to market their cause yields the same or even exceeds the results of a
commercial marketing strategy (Stefano & Lisa, 2014).
TOMS argues that using shoes as their tool for charity gives their recipients value beyond
the healthcare benefits. Most schools in the countries they donate shoes to demand their pupils to
be in a specific color of shoes before admission. By donating shoes to these kids whose families
have to prioritize whether to buy shoes and go without meals or go for meals and stay without
shoes, the class attendance is improved. This in return improves the education standards in the
recipient countries. The shoes are also able to reduce cases of absenteeism at school brought

CORPORATE SOCIAL ENTERPRISES 16
about by health complications of students. The shoes are able to prevent diseases associated with
lack of shoes such as soil-borne diseases and hookworms.