TOMs Shoes: A Virtuous Company?


Introduction

Exhibit 1

Exhibit 1: Kalpana

“For 13-year-old Kalpana, the walk to school has always been a difficult one. Kalpana lives in an economically and socially marginalized community where her father works as a laborer, not generating much income for the family. Because of their economic hardships, Kalpana has never owned a pair of shoes suitable for her walk to school” (TOMs Shoes, 2014). This is the beginning of a story on TOMs website. By detailing stories similar to Kalpana’s, TOMs advertises its donation efforts to children and families in need through their One for One giving strategy, a form of cause-related marketing. Cause–related marketing can be defined as “…the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenue-providing exchanges that satisfy organizational and individual objectives” (Varadarajan and Menon, 1988, 60). One for One works exactly how it sounds: for every product purchased, a product or service will be donated to someone in need. By linking consumer purchases and donations, TOMs attempts to create a relationship between the consumer and the disadvantaged individual.

In this paper, a virtue ethics perspective will be used to analyze TOMs as a company. Bert van de Ven provides a model by Balmer and Greyser to determine whether or not a company is virtuous. They define five separate identities that corporations have: actual, communicated, conceived, ideal, and desired. A company’s actual identity is seen through different attributes of the corporation, such as leadership style, business activities, etc. Communicated identity is what about the company is conveyed through advertising, public relations, and the media. Conceived identity is the view that relevant stakeholders have of the company as a result of their image or company branding. Ideal identity is what the optimal positioning of a company would be in their market, and desired identity comes from the corporations’ leaders’ vision for the organization. Misalignments of these identities can cause many problems for organizations (van de Ven, 2008, 343-344). In Balmer and Greyser’s opinions, the virtuousness of a firm should be based upon its actual identity, even though many people rely on the media’s impression of the firms. They also believe that a firm’s conceived identity should not conflict with its’ actual identity (van de Ven, 2008, 343-345).

To determine if TOMs actual identity portrays the company as a virtuous firm, it must be defined what virtue they are trying to live up to as an organization. As a firm that relies heavily on cause-related marketing and is organized as a for-profit corporation, a virtue that TOMs should try to live up to is authenticity. The relationship that TOMs is attempting to create between the consumer and underprivileged communities is crucial to their business strategy. The company must be genuine and authentic in their marketing and donation efforts to try and create these relationships; otherwise, they would be abusing their cause-related marketing strategy and could not be considered virtuous. This paper will work to explore this question: is TOMs authentic in their actions? Can they be considered a virtuous company?

Background of TOMs and Mycoskie

TOMs Shoes was founded by Blake Mycoskie in 2006 after he traveled to Argentina and saw the quality of life that children without shoes had. Without shoes, children’s feet are likely to be cut by walking barefoot, making them susceptible to many different infections and diseases. Some schools may even require shoes to attend, so children whose families cannot afford shoes are further marginalized by being denied education. Mycoskie had the idea to create a self-sufficient, for-profit business with the goal of helping these children. He organized TOMs as a for-profit company because he thought a sustainable business would have a more lasting impact than a one-time donation (Daniels Fund Ethics Initiative, 2011, 3). TOMs was created with the goal of selling and donating shoes, and later expanded to sell eyewear and coffee. Prior to founding TOMs, Mycoskie created five other businesses, as well as competed on the Amazing Race with his sister (they came in second). In 2011, Mycoskie was named to Fortune Magazine’s “40 under 40” list, being recognized as “one of the top young businessmen in the world” (TOMs Shoes, 2014).

TOMs Products and Giving

TOMs sells three different products: shoes, glasses, and coffee. All three products follow their One for One model, but in slightly different ways. In regards to the “Gift of Shoes,” for every pair of shoes a consumer buys, a pair gets sent to a child in need (process detailed in Exhibit 2). TOMs works with 75 different shoe Giving Partners who distribute their shoes. After a consumer has purchased a pair of shoes, an order for Giving Shoes is customized by TOMs to determine the sizes, quantity, and types of shoes necessary. TOMs then delivers the shoes, covering all related transportation and distribution costs, which are then distributed by the Giving Partners. TOMs reviews their process by monitoring the impact that their donations have on local communities. They conduct visits to these communities to study the process so that it can be updated to become more effective. TOMs also provides replacement shoes as necessary. They currently distribute shoes in over 60 countries (shown in Exhibit 3), including China, Ghana, Haiti, and the Philippines, just to name a few (TOMs Shoes, 2014).

Exhibit 2: Shoe Giving process

Exhibit 2: The Gift of Shoes

Exhibit 3: Where Shoes are Given

Exhibit 3: Where Shoes are Given and Made

The “Gift of Sight” works slightly differently than TOMs’ shoe donation efforts. For every pair of TOMs glasses that are purchased, TOMs will restore sight for one person through whatever means necessary, be it prescription glasses, eye surgery or medical treatment (process detailed in Exhibit 4). TOMs has Giving Partners for this effort as well, with their main partner being the Seva Foundation. TOMs not only gives funding for an individuals’ sight to be restored, but they also help clinics and hospitals within the community train local residents to work. This way, they are not only supporting individuals lacking quality eyesight, but also local economies. TOMs currently gives the gift of sight in 12 different countries, including Cambodia, Guatemala, and Nepal, as well as in the United States (TOMs Shoes, 2014).

Exhibit 4: The Gift of Sight

Exhibit 4: The Gift of Sight

TOMs most recent venture, selling coffee (the “Gift of Water”), was launched in January 2014. For every bag of coffee sold, TOMs donates enough clean water for one person to last them a week. TOMs also “…supports local business development and government investments to create sustainable water sources and solutions for widespread, long-term impact” (TOMs Shoes, 2014) (detailed in Exhibit 5). The ultimate goal of their efforts is to not just supply clean drinking water for an individual, but rather to ensure long-lasting clean water for an entire community (TOMs Shoes, 2014).

Screen Shot 2014-04-16 at 6.56.40 PM

Exhibit 5: The Gift of Water

Criticisms of TOMs

TOMs has been criticized many times since it was created. Cheryl Davenport heavily criticizes TOMs in her article “The Broken ‘Buy-One, Give-One’ Model: 3 Ways to Save Toms Shoes” (2012). She argues that there are three main flaws in TOMs business model: they are not solving a social problem, the “feel good value proposition” that TOMs relies on is unstable, and the donated shoes wearing out leaves these children in the same situation that they were in before. Her first criticism draws information from Time, stating “…an increasing number of foreign aid practitioners and agencies are recognizing that charitable gifts from abroad can distort developing markets and undermine local businesses by creating an entirely unsustainable aid-based economy” (Davenport, 2012). She also argues that on his trip to Argentina, Mycoskie did not go around to the different villages and ask them what they needed. Instead, he came to the idea of donating shoes on his own. In reality, the villagers may benefit more from a gift of something other than shoes, but Mycoskie simply did not ask for their opinion. Her second criticism attacks what TOMs rely on to sell shoes: the “feel good value proposition.” TOMs shoes are sold at a high price for the simple shoes that they are, but consumers are willing to pay the high price for them because they are also donating to a good cause. Davenport (2012) argues that TOMs is not unique in relying on this feel good value for consumers and that they are not differentiating themselves from other products that offer the same good feeling. Davenport (2012) believes that this lack of uniqueness is not a sustainable business model for TOMs because they will eventually lose demand for their product. Her third criticism is that the shoes given to children will inevitably wear out, leaving these children in the same position that they were in before (Davenport, 2012).

John Favini offers similar criticisms in his piece “Some Bad News About TOMs Shoes” (2013). He claims that while donating shoes to protect children’s feet from disease is one solution to this health problem, it is not the only, or best, one. One infection that children sometimes get from not wearing shoes is ringworm, and many times this occurs by walking on the ground in areas that people use to go to the bathroom. Favini (2013) argues that a more lasting solution to this problem would be building cement latrine facilities for communities that would last for decades. His second criticism is that while TOMs’ business model (One for One) does provide some aid to the communities, it is not the lasting solution that they need. He compares this to donating fish to a community as opposed to teaching them how to fish. Many communities that TOMs operates in would benefit from the economic boost that new jobs would bring, and having locally made shoes would fill this need. Simply donating the shoes, “…targets the symptom, not disease” (Favini, 2013).

Virtue Ethics: Is TOMs Acting as a Virtuous Company?

Rosalind Hursthouse (1999) defines a virtue as a character trait that is concerned with many different actions. The example she gives is a person that would be considered honest (because honesty is a virtue). Someone is not honest simply because they tell the truth; a truly honest person has strong feelings against lying. A fully virtuous person would never have to debate what is the right or wrong way to act because they have no inclination to act in a way that is not considered right (Hursthouse, 1999). The virtue that TOMs as a company should try to live up to is authenticity because they are a for-profit company donating products and services. If they are not authentic and do not follow through with their actions, the relationship that they are claiming to create between consumers and disadvantaged communities is not present. In order to determine if TOMs is being authentic in their actions, I shall look at their actual identity using Balmer and Greyser’s model.

Exhibit 6: Mycoskie

Exhibit 6: Mycoskie

TOMs’ actual identity is comprised of several factors. A large part of TOMs actual identity are their business practices. Their business activities focus on their One for One model of selling and donating products. Cause-related marketing practices have the potential to be abused by companies wanting to appear more socially conscious than they actually are. For example, many mining companies will display their corporate social responsibility initiatives in their advertisements to appeal to consumers and attract investors. In reality, they are making little effort to actually restore the environment to its’ pre-mining condition and just want to appear to be doing so for good publicity (this practice is also known as “greenwashing”). To examine the authenticity of TOMs’ marketing practices, we must assess the practices themselves and what TOMs’ intent in using them is. Until recently, TOMs did not pay for their advertising efforts. Instead, they partnered with different designers, as well as relied on word-of-mouth and social media to accomplish their marketing (Daniels 3). They used cause-related marketing tactics and their One for One model in these efforts. Many of their advertising efforts detail the story of children or communities that have been positively impacted by the donations (such as Kalpana’s story featured in the introduction). Some pictures even include Mycoskie posing with these children in their new shoes, as seen in Exhibits 6 and 7. In November of 2013, TOMs launched its first paid media campaign by creating the “Marketplace,” a group that combines 30 different companies with goals similar to TOMs. The slogan of the Marketplace is: “This is Bigger Than Us” (McClellan). The goal of this campaign is to encourage consumers to buy products from socially conscious companies. TOMs has also worked to expand their range of products offered in order to help a wider group of people in a variety of ways.

Exhibit 7: Mycoskie

Exhibit 7: Mycoskie

Another crucial part of TOMs’ actual identity is leadership style. Mycoskie as a CEO appears to have strong values regarding helping others, as can be seen by his choice to create TOMs shoes as a for-profit company that makes regular donations to people in need. I would assume that many of TOMs’ employees feel similar to Mycoskie in the desire to help other people. Corporate ownership is another part of a firm’s actual identity. TOMs is a privately owned corporation, meaning that does not have to be concerned with sacrificing company goals to please shareholders. Overall, TOMs appears to be a well-intentioned company due to their actions and how the company operates. They are in no way required to donate a pair of shoes for every pair purchased; this is just a standard that the company created for itself. But, are they acting as a virtuous company?

Seeming authentic in their actions has proven difficult for TOMs, as seen through the criticism that their donations are not what disadvantaged communities need most. Their conceived identity, how relevant stakeholders see them, seems to conflict with their actual identity, which Balmer and Greyser argue should not be the case (van de Ven, 2008, 344). Even though their past efforts have been criticized, I would argue that TOMs is a virtuous firm, which can be seen through their actual identity, use of cause-related marketing, and efforts to improve. TOMs does not simply use cause-related marketing as a means of attracting customers; their donations and philanthropic efforts are central to the company’s business practices (Daniels Fund Ethics Initiative, 2011, 1). Bert van de Ven would agree because the company is admitting that “…both the cause and company win as a result of the corporate social responsibility,” (347) they are not trying to cover up their own self-interest by using cause related marketing. Instead, they are simply communicating their business ideals and efforts to consumers, making this communication well intentioned and authentic. They are trying to reinforce the idea of a relationship being created between the consumer and underprivileged person receiving the donation. If TOMs was not being authentic, there might be problems with the actual delivery of shoes or push back against critics, but I found no arguments suggesting that this is the case. I believe that TOMs is acting as a virtuous and authentic company.

Over time, TOMs has not only shown that it deals with criticism well, but they have tried to improve as a company based on the feedback they have received. After hearing many accusations that the company is not benefiting local communities that much by only giving donations, Mycoskie announced several efforts the company is taking to combat this criticism. First, TOMs is building a shoe factory in Haiti to manufacture the shoes that it donates to citizens of the country, and they plan on employing 100 Haitians to build the shoe industry. Second, Mycoskie pledged that by the end of 2015, a third of all shoes donated by the company would be manufactured in the country in which they are being distributed. As of April 11, 2014, TOMs manufactures its Giving Shoes in six countries: Argentina, China, Ethiopia, Haiti, India and Kenya, and they are looking to keep expanding (TOMs Shoes, 2014).

According to a virtue ethics perspective, these efforts by TOMs to manufacture shoes in the region in which they are donated are virtuous. They have the choice to manufacture their shoes anywhere around the world, but by doing so in a developing nation where the donations are being received, they are helping both the local communities and the children in the region. The relationship that TOMs creates between consumers and people receiving the donations, therefore, is taken to another level by adding a third party to the relationship: the local people employed by the factories. This adds to the authenticity of the relationship because more parties are benefiting from the same transaction. If TOMs continues to make improvements in their business practices and stay true to their corporate ideals, I believe that they will have great success as an authentic and virtuous company.

References

Davenport, C. (2012, Apr 10). The broken “Buy-one, give-one” model: 3 ways to save toms shoes. Fast Company, http://www.fastcoexist.com/1679628/the-broken-buy-one-give-one-model-three-ways-to-save-toms-shoes

Favini, J. (2013). Some bad news about TOMs shoes. [http://www.whydev.org/some-bad-news-about-toms-shoes/] Whydev.Org, , 4/16/2014.

Hursthouse, R. (1999). On virtue ethics. Oxford University Press.

TOMs Shoes. (2014). TOMs: One for one. Retrieved 4/16, 2014, from http://www.toms.com

TOMs: One for one movement. (2011). Daniels Fund Ethics Initiative, 1. http://danielsethics.mgt.unm.edu/pdf/TOMS%20Case.pdf

Van de Ven, B. (2008). “An ethical framework for the marketing of corporate social responsibility.” Journal of business ethics, 82(2), 339-352.

Varadarajan, P. R., & Menon, A. (1988). “Cause-related marketing: A coalignment of marketing strategy and corporate philanthropy.” The Journal of Marketing, 58-74.

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One thought on “TOMs Shoes: A Virtuous Company?

  1. Fascinating and apt analysis of TOMs shoes.

    I learned about the different kinds of identity and I think this is a useful way to think about the moral life of businesses as well as the dynamics of firm reputation and stakeholders.

    Of all the criticisms the one made that “shoes wear out” strikes me as a bit silly, honestly.

    The others are more powerful. However, I think that there is still short-term and long-term approaches. TOMs may be more short term and that is fine. One-for-One marketing may never be as good at solving root problems. But it is hard to get to root causes if daily needs are so undermet.

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