The Role of Corporate Social Responsibility: A Study of Wells Fargo

This essay analyzes Wells Fargo's corporate social responsibility (CSR) practices in light of recent scandals involving the creation of unauthorized accounts. It contrasts the company's actions with the principles of CSR, which emphasize ethical decision-making that goes beyond mere economic, technical, or legal compliance. The essay highlights the conflict between agency theory, which prioritizes shareholder value, and stakeholder theory, which considers the interests of all stakeholders, including customers and the broader community. Drawing on research by Aguinis & Glavas (2012) and Bauman & Skitka (2012), the essay argues that Wells Fargo's behavior reflects a failure to embrace CSR principles, particularly the idea that profit should not be the sole purpose of business. To prevent future ethical lapses, the essay suggests that Wells Fargo should adopt a model based on transparency, freedom, culpability, responsibility, fairness, and social responsibility, as proposed by Van Tonder (2006). The essay concludes by acknowledging the ongoing debate about the relative importance of shareholder versus stakeholder needs and calls for a model that reconciles these conflicting expectations.

Running Head: CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility
Student’s Name
Institution
Date

CORPORATE SOCIAL RESPONSIBILITY 2
Recently, Wells Fargo was condemned for creating accounts without the knowledge of its
client. Such scandal suggest that the company does not adhere to key concepts of corporate
social responsibility as suggested by Aguinis & Glavas (2012), who postulated that CSR is based
on the idea that business people make decisions that go beyond the strictly economic, technical
or legal and must review their strategies accordingly.
CSR, according to Aguinis & Glavas (2012), is defined as a business approach that goes
beyond strictly economic goals to include social and environmental goals. Wells Fargo is
exercising the elements presented in agency theory whereby the company is expected to focus
only on the shareholder value. This is evidenced by the fact that the company created accounts
without client’s knowledge. Such act violates the social responsibility (Aguinis & Glavas 2012).
Currently, companies are expected to adjust to modern changes in their corporate responsibilities
and stop justifying immoral behavior by strict compliance with the law or internal procedures, by
the geographical or technical limits of certain legislative texts or by a moral decorum that would
only be a smokescreen. Perhaps Wells Fargo should adopt the stakeholder theory and understand
all the key elements of corporate social responsibility
Wells Fargo does not comply will all concepts of corporate social responsibility. For
example, Bauman & Skitka (2012) revealed that making a profit at any price is not - and cannot -
be the sole purpose of businesses. Wells Fargo ought to focus on other concepts of social
responsibility related to the environment and social sphere.
To avoid such scandals in future, Wells Fargo should apply the model proposed by Van
Tonder (2006), which advises the companies and organizations to adhere to principles such as
transparency, freedom, culpability, responsibility, fairness and social responsibility. Despite the
fact that Wells Fargo’s acts are unacceptable, there is still a debate on whether the companies

CORPORATE SOCIAL RESPONSIBILITY 3
should focus on shareholders needs or stakeholders needs. Perhaps there is a need for a model
that unify the two conflicting expectations.

CORPORATE SOCIAL RESPONSIBILITY 4
References
Aguinis, H., & Glavas, A. (2012). What we know and don’t know about corporate social
responsibility: A review and research agenda. Journal of Management, 38: 932-968.
Bauman, C. W., & Skitka, L. J. (2012). Corporate social responsibility as a source of employee
satisfaction. Research in Organizational Behavior, 32: 63-86.
Van Tonder C.L. (2006). Towards A Minimum Conceptualisation Of Ethical Organisational
Change: The Platform Provided By The “King Ii” Report. SA Journal of Human
Resource Management, 2006, 4 (3), 12-21