Research on the Evolution of Organizations in the Twentieth Century

Research on the evolution of organizations in the twentieth century demonstrates a considerable focus on the overall benefits or value and that an organization should engender to society. Scholars contend that organizations should have a high level of social responsibility with respect to the products and services they provide to the community as well as their overall impact on society and the environment. The social responsibility of the organization has become such a pervasive issue that researchers have identified a broad framework of tangible and in tangible benefits that must be examined in order to assess the overall level of social responsibility exhibited by the organization. Social responsibility can come in the form of providing jobs to an economically blighted area to developing community programs that support the development of the infrastructure of the community (Grossmanx, 2004).

Despite the fact that organizations are expected to engage in positive social responsibility programs the reality is that many organizations do not altruistically fulfill its obligation. Rather, most organizations exist in a context that creates a give-and-take between the organization and its external environment. The end result of this give-and-take is often the establishment of a neutral organization that engenders both positive and negative impacts on the local community. Although this overall neutrality can be a boon for society, there are clearly industries that have more of a positive or negative effect on both society and the communities in which they operate. Thus, these organizations need to be evaluated in order to understand their overall impact on society and community development.

Utilizing this argument as a basis for investigation, this research considers a cost-benefit analysis of both chemical companies and tobacco companies. A review of the current data that has been produced with respect to the overall impact of these organizations on society will demonstrate that while the chemical companies have the potential to have the a substantially negative impact on both individuals and the ecosystem as a whole, these organizations have consistently exhibited consistent corporate social responsibility when compared to the tobacco companies. Although the processing of tobacco and manufacturing of cigarettes does not produce considerable environmental threats, the products that are created by tobacco companies pose a much more significant risk to overall health than the products created a manufactured by chemical companies. Through cost-benefit data collected in its investigation, it will be possible to demonstrate that tobacco companies pose a much more pertinent risk to society than chemical companies

Methodology-Hypothesis

In an effort to demonstrate the severity of the negative impact that tobacco companies are having on society, this investigation employs a cost-benefit analysis to compare the benefits and repercussions of companies operating in the tobacco industry and the chemical industry. Adler (1998) defines a cost-benefit analysis as one aggregates the total financial costs and expected benefits that can be produced to get an enterprise. The costs are subtracted from the benefits in an effort to determine the overall impact that the organization will have on society. For the purposes of this investigation, an attempt will be made to assess the overall costs and benefits of both the tobacco industry and the chemical industry.

Based on a rudimentary understanding of the operations that occur in both the tobacco and chemical industry the following hypothesis has been formulated:

• H1: Applying a cost-benefit model to both the tobacco and chemical industry it will be possible to demonstrate that the negative impact of the tobacco industry on society is significantly greater than that of the chemical industry.

In order to prove this hypothesis, a critical review of the costs and benefits of both industries on the larger context of society will be researched and assessed. By assigning quantitative cost-benefit assessments for each industry, it will be possible to demonstrate the negative impact that tobacco companies have on the overall development of society.

Literature Review

In order to accurately develop particular cost-benefit data for both the tobacco and chemical industries it is first necessary to consider what has been written about the overall impact of these industries on society. For this reason, this investigation will consider the tobacco and chemical industries as separate entities. By independently examine the data from both of these industries and specific cost-benefit analysis for each industry will be developed. From this data able to be possible to make a comparative analysis of these industries.

The Tobacco Industry

critically examining the specific issues that must be taken into consideration when assessing the overall cost benefit of the tobacco industry, it becomes evident that there are a host of a variables that need to be included in this analysis. In particular, the following variables need to be considered in the context of this analysis: the medical cost associated with treatment for diseases caused by tobacco products-i.e. cancer of the lungs, throat and larynx-the human cost of deaths caused by tobacco products-i.e. in terms of the lost productivity associated with death-the benefits that can be garnered from economic development produced by tobacco companies-in terms of employment and community development programs undertaken by tobacco companies-and the extent of tax revenues that are used by states to finance other social development programs.

Not surprisingly, the overall medical costs related to mortality and morbidity of a cigarette smoking and tobacco use has been well examined by researchers. The National Institute on Drug Abuse (2005) reports the following: "tobacco use remains the leading preventable cause of death in the United States, causing approximately 440,000 premature deaths each year and resulting in an annual cost of more than $75 billion in direct medical costs" (InfoFacts...). While the direct medical costs of tobacco use have been widely examined by researchers, the indirect costs of tobacco use must also be considered. A recent study by the Society for Neuroscience (2005) estimates that the indirect costs associated with tobacco use amount to approximately $138 billion per year. This figure includes costs to care for premature babies that are born to mothers that used tobacco products during pregnancy. When placed together the total direct and indirect medical costs of the tobacco companies is approximately $231 billion per year.

With the direct and indirect medical costs associated tobacco use elucidated it is now possible to consider the overall impact of that the tobacco industry has on the development of the economy. In particular specific issues such as employment benefits, tax revenues and social programs developed instituted by tobacco companies must be considered in order to understand the benefit that these organizations have or society. A recent policy report conducted Gale, Foreman and Capehart (2000) provides an overview of the impact that the tobacco industry has all the overall economy. According to these authors, "Tobacco is a major US industry. In 1998 consumer spent an estimated $59.3 billion in tobacco products, chiefly on cigarettes..." (p. 2). Of this money spent a total of $13.5 billion was returned to individual states in the form of tax revenues.

In addition to assessing the overall impact of the tobacco industry on the economy Gale, Foreman and Capehart also provide some analysis of the impact of employment that is garnered through the tobacco industry. The organization argues that at the present time, the number of direct and indirect employees working in the tobacco industry is approximately 4.1 million. What is effectively suggests is that the tobacco industry provides considerable opportunities for employment and microeconomic development for individuals. Although a the significant number of individuals employed either the tobacco industry should be taken into consideration when addressing the overall impact of the tobacco industry on society Gale, Foreman and Capehart report that economic studies of changes that employment in a large industries suggest that if tobacco companies were removed from providing employment the overall impact on society would be quite negligible overall:

...Money that would have been spent on tobacco will not disappear from the economy. It will be spent on other goods and services, taxed, or saved. If tobacco expenditures are shifted to other goods and services, there will be a concomitant increase in demand for those products, subsequently increasing the demand for workers, capital, and other factors of production needed to produce them (p. 6).

In this context, Gale, Foreman and Capehart argue that the employment value the tobacco industry for society has the direct implications for social benefit.

Assessing and the overall community programs that are supported by tobacco companies that infuse value into these organizations, a review of information available on these programs seems to suggest that these programs have little value would compare to the overall extent of medical costs associated with tobacco use. For instance, R.J. Reynolds Tobacco (2001) which is one of the country's largest tobacco companies reports that it currently spends $1 million dollars per year funding social development and education programs. If this amount is hypothetically expanded to include the top five at tobacco companies in the United States the total amount of monies spent on social development would only total $5 million. This amount is insignificant when compared to direct and indirect medical costs and tax revenues. Thus, for the purposes of this investigation is about is excluded from the final analysis.

Chemical Industry

While the chemical industry is notably different and the tobacco industry, the specific variables that can be utilized to analyze the overall impact of this industry off society are similar to those utilized for analysis of the tobacco industry. However, there is one notable difference. While direct and indirect medical costs, employment benefits tax revenues and community program benefits only to be taken into consideration so to do the environmental costs that can arise from operating in industry. Specifically, some assessment of the overall financial costs that the chemical industry has on the development of the environment must be taken into account to accurately assess the overall cost-benefit of the chemical industry.

Research on the overall benefits of the chemical industry from the Department of Energy (2000) demonstrates that the chemical industry is one of the largest contributors to the macroeconomy: "The chemical industry provides over 2% of the total U.S. GDP and nearly 12% of the manufacturing GDP. On a value-added basis, chemicals is the largest U.S. manufacturing sector. The industry employed more than a million people in 1997, including nearly 90,000 scientists, engineers, and technicians engaged in R&D" (Economic profile and trends). At the present time the average salary for employees working in this field is $34,525. Aggregated over 1 million workers, this produces economic gains for workers in the amount of $34.5 million per year. As such, the chemicals industry provides a considerable contribution to the economy overall.

Although the direct costs of the chemical industry on healthcare expenditures is difficult to assess overall, research on the impact of pollution, emitted by many of the products developed by chemical companies, provides some insight into the overall costs that are being thrust onto society as a result of the development of this industry. A recent report released by the Washington Toxics Coalition (2003) reports that total healthcare costs from pollution related illnesses amount to approximately $54 billion annually. What this suggests is that the products produced by chemical companies have a negative impact on the evolution of healthcare costs overall.

In addition to the healthcare costs associated with the chemical industry, the overall environmental costs that are incurred by society must be addressed. While this issue is one that appears to be of notable concern overall, environmental economists examining this issue have noted that current tax policies and structures have been put in place to mitigate the overall costs that chemical companies and other toxin producers have on the environment overall. According to researchers at Conservation Economy (2000) most chemical companies pay green taxes to ensure that they pay for any damage that is caused to the environment by their operations. For this reason, the overall environmental costs of the chemical industry on society is negligible because of the fact that these organizations effectively make reparations for environmental damage before it occurs.

Included in this cost-benefit of the chemical industry must be some consideration of the overall benefits that can be garnered from the development of organizations working in this industry. Unlike the tobacco industry, the chemical industry consistently re-invests its profits into the process of research and development. This research and development focuses on the design of new products to improve everyday life. In addition, this research focuses on the development of new technologies to reduce pollution and provide a higher degree of protection from the ill-effects of chemicals in the environment. In total the chemical industry spent $23.4 billion on R&D in 2004 (Chemical industry..., 2005). This research has far reaching benefits that are too difficult to calculate overall.

Data Analysis

In order to provide a clear picture of the overall benefits and costs that are incurred by both the tobacco and chemical industry, a review of the data presented in this investigation is warranted. Looking first at the tobacco industry, the data collected in this investigation shows the following:

Costs for Tobacco Industry

Direct Medical Costs = $75 billion

Indirect Medical Costs = $231 billion

Total Costs = $231 billion

Benefits of Tobacco Industry

Tax Revenues = $13.5 billion

Employment = Negligible

Total Benefits = $13.5 billion

Benefits Minus Costs = -$217.5 billion

The same analysis can now be applied to the chemical industry. When this done, the following is acquired:

Costs for Chemical Industry

Healthcare Costs = $54 billion

Total Costs = $54 billion

Benefits for Chemical Industry

Employment = $34.5 million

Research and Development = $23.4 billion

Total Benefits = $23.7 billion

Benefits Minus Costs = -$30.3 billion

What this data clearly demonstrates overall is that both industries have a overall negative impact on society. What is perhaps most interesting about this situation however, is that even though chemical companies produce toxic materials that are, in many cases, much more potent than tobacco, the tobacco companies have a greater negative impact on society overall. When the data is tabulated, the overall impact of the tobacco companies on society is extraordinary when compared to the impact of the chemical industry. This data effectively demonstrates the pervasive threat that tobacco companies pose to the larger context of society.

Conclusions

The central goal of this research was to demonstrate that the tobacco industry has a far more detrimental impact on society than the chemical industry through the application of a broad cost-benefit analysis framework. Even though the chemical industry has promulgated considerable health and environmental harm, the data clearly demonstrates that tobacco companies do much more damage to society than chemical companies. Despite this realization however, it is interesting to note that little has been done to impede the development of the tobacco companies in the US. At the present time, the threat of exposure from chemicals is so substantial that the organizations operating in the chemical industry must spend billions of dollars each year in order to comply with federal guidelines to ensure overall health and safety of the public. Even though the tobacco industry poses a more significant threat to the public, it operates virtually free of government regulation.

Through conducting this research another important issue was elucidated. While the tobacco companies may spend some of their profits on technology development, organizations operating in the chemical industry spend a considerable amount of their profits on research and development. Although it is evident that this research and development is not undertaken in an altruistic manner, the reality is that the chemical companies appear to have developed a greater sense of social responsibility when it comes to their industry. Organizations operating in this industry have come to realize that research is consistently needed to improve the social and financial value that can be garnered through the use of chemicals. Organizations operating in this industry also realize the intangible benefits that can be garnered from research and the development of new products. In addition to giving something back, organizations operating in the chemical industry also face considerable financial burdens to ensure that they protect the environment and the health of all citizens. Green taxes and federal regulations make it difficult for organizations operating in this industry to shuck responsibility for negligence.

Given that the tobacco companies produce far greater problems for society, the central question that remains is: "Why?" Why are tobacco companies allowed to operate with no consideration for the overall safety of society? While capitalists would argue that the system of capitalism enables the tobacco companies to effectively dominate the market without worry of retribution, it would seem that society as a whole would be more incensed about the atrocities being committed by these organizations. This public outrage should result in boycotts of tobacco companies. This in turn should result in the overall decline of these organizations. Unfortunately, this has not occurred. Given the notable damage that the tobacco companies due to society, these organizations should be effectively regulated. Clearly, change is needed to improve outcomes in this case.

References

Chemical industry research and development. (2005). American Chemistry Council. Accessed May 1, 2006 at: http://reporting.responsiblecare-us.com/reports/rd_ia_rpt.aspx.

Economic profile and trends. (2000) US Department of Energy. Accessed May 1, 2006 at: http://www.eia.doe.gov/emeu/mecs/iab/chemicals/page1.html.

Gale, H.F., Foreman, L., & Capehart, T. (2000). Tobacco and the economy: Farms, jobs and communities. Economic Research Service. Accessed May 1, 2006: http://www.ers.usda.gov/publications/aer789/aer789a.pdf.

Grossmanx, L. (2004). Rating corporate social responsibility. Businessdate, 12(4), 5-7.

InfoFacts: Cigarettes and other nicotine products. (2005). National Institute on Drug Abuse. Accessed May 1, 2006 at: http://www.drugabuse.gov/Infofacts/Tobacco.html.

Nicotine addiction. (2005). Society for Neuroscience. Accessed May 1, 2006 at: http://web.sfn.org/skins/main/pdf/brss/BRSS_nicotineaddiction.pdf.

Pollution. (2003). Washington Toxics Coalition. Accessed May 1, 2006 at: http://www.watoxics.org/content/pdf/PBTprogram.pdf.

Press releases. (2005) R.J. Reynolds Tobacco. Accessed May 1, 2006 at: http://www.brownandwilliamson.com/newsroom/resourcesRJRTview.asp?.

True cost pricing. (2000). Conservation Economy. Accessed May 1, 2006 at: http://www.conservationeconomy.net/content.cfm?PatternID=56.