On Monday I brought you the case of the Dick’s Sporting
Goods chain, and their efforts to do the right thing in the current debate
about “assault-type” rifles – or at least to conform to public opinion about
guns that look somewhat like ones that have been used for criminal purposes in
recent memory. As I noted in that post, there is no legal obligation for Dick’s
to do this; current Federal gun laws permit ownership of semi-automatic rifles
with magazines of ten rounds or less, and Dick’s has all of the required
permits and authorizations to carry and sell such weapons. A much better
question is whether Dick’s management team has a fiduciary responsibility to
its ownership NOT to do something like this – and where those obligations come
into conflict…
Consider, for a moment, that the job of any management team
is to increase stockholder value, usually by making the company more profitable
through higher sales, greater efficiency or what have you. If they fail to do
so, they are violating the spirit of their agreement with the owners, if not in
fact violating actual laws regarding management of a company. Dick’s is not in
the business of changing the world through better gun control laws and more responsible
gun ownership; they are in the business of selling sporting goods, which
includes hunting and target shooting guns, ammunition and equipment. The desire
to prevent mass shooting incidents, while laudable, is not really part of their
mission…
If the gun control issue is too oblique, we could consider
the tobacco industry as a similar case. No one who isn’t an industry flak (and
not many of those, anymore) is going to deny that smoking is bad for you. But
processing and selling it isn’t illegal, whereas the companies that do this
provide thousands of jobs and billions in tax revenue, as well as income for
the people who own their stock. Declaring that a specific category of product
is bad for you, and that therefore they’re not going to produce or sell it any
longer, would probably be in the public interest – except for the fact that
other companies would be happy to make up the difference in production,
resulting in no net change for the public and business losses for the company
making that declaration…
By the same token, no one has empowered Dick’s Sporting
Goods to determine what guns should or should not be available to the citizens
of any particular city or state, any more than any tobacco company has been
given the right to decide what products their customers should be allowed to
have. No one is likely to dispute that public relations is important, that
being seen as good corporate citizens is critical to a company’s image, or that
taking actions in the public interest will improve a company’s working
conditions in terms of public acceptance. At the same time, people have enough
trouble with the “Nanny State” effects of elected officials trying to control
their lives for their own good; they’re even less likely to appreciate such
efforts from private companies…
All of which leads me to the question: should Dick’s (or any
other private company) attempt to restrict the sales and distribution of
potentially dangerous products, even if those products are completely legal?
Should they attempt to consider the overall welfare of their customers and the
community when deciding what product mix to carry in their stores? If this
results in lower profits, and a corresponding loss of income to their
stockholders, is this still an acceptable choice? What if it results in major
losses for the company, putting employees out of work, and negatively impacting
the firms that supply those (questionable) products to Dick’s in the first
place? If their well-meaning attempts to promote the welfare of the public
cause greater damage (in terms of unemployment, lost assets, hunger,
foreclosures, or what have you) than the original product would have done, can
we still justify such a choice? Or should the company carry whatever products the
appropriate Federal, state and local authorities allow them to carry, and just
let their customers make their own purchase decisions?
It’s worth thinking about…
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