Corporate Social Responsibility

Corporate Social Responsibility

Introduction

New Balance was founded in Boston in 1906, when a 33-year-old waiter named William J. Riley began building arch supports to alleviate pain for people who spent all day on their feet. In 1925, Riley designed his first running shoe for a Boston running club, known as the Boston Brown Bag Harriers. The shoe was so successful that in the 1940s, New Balance began making custom shoes for running, baseball, basketball, tennis and boxing. In 1960, it began manufacturing running shoes in multiple widths and significantly expanded production. Sports shoes remained the focus of New Balance business operations, and the company experienced tremendous growth over the next 37 years.

This growth was especially significant in the late 1990s, when the company began a series of acquisitions involving various brands, such as Dunham, Warrior and Brine, among others. In 2009, New Balance was a global company with 4,100 employees worldwide (2,634 of them in the United States) and sales of $1.61 billion in 2008 (Gray, 2010). In addition to footwear, New Balance had a small but growing apparel and accessories business (less than five per cent of sales in 2008). The apparel and accessories were manufactured through suppliers and licensees from 27 countries around the world, including the United States, China and Taiwan.

Strengths and Weaknesses

Overall Governance

While the RL platform covered many key aspects of CSR, it left out critical areas, such as transparency and accountability, employee support and domestic manufacturing; therefore, it did not provide sufficient guidance for managers on how to identify potential business risks and opportunities. New Balance's commitment to retain a portion of its manufacturing base in the United States and avoid layoffs in the economic recession of 2007-2009, for example, were clear demonstrations of social responsibility that were not captured in the RL framework. In response to this finding, New Balance focused on strategy and initiatives in the domestic manufacturing aspect of its RL platform, an area that clearly differentiated the company from competitors.

Products and Services

More research was also needed on new materials and their performance. Sometimes environmentally preferred materials used in footwear and apparel did not provide good performance and durability: in the past coconut shells were found to be cost effective, but consumers did not like the material because it was too hard. With the increasing amount of waste and shrinking landfill capacity, there was a growing trend toward product stewardship or implementing policies that would require manufacturers to take back their products at the end of their useful life;26 for example, Germany instituted a landfill fee on footwear in 2008. While competitors such as Nike had been taking back and recycling old products for some time, this was an expensive undertaking.

Developing industry collaboration was one possible approach, although historically New Balance had been unsuccessful in developing such a partnership with other footwear manufacturers. Other possible approaches included partnering with NGOs or regulators to find a cost-effective solution. From product design to marketing and delivery, this domain should include strategic innovation ...