TOMS SHOES: ETHICALLY GLOBAL?

The focus of most of the chapters in this text has been on companies seeking (or in many cases
failing) to operate according to clearly established ethical principles that guide how they treat
their stakeholders. The concept of doing the right thing has been presented as a natural
alignment to their central business purpose, whether thats making cars, computers, or providing
nancial or consulting services. But what about a company that was started speci cally to do
the right thing? Not a consulting company to advise other companies on ethical business
practices, but a company whose core purpose is conscious capitalismdelivering a product as
a means to another end. In 2006 Blake Mycoskie was inspired by a visit to Argentina to bring the
traditional Argentine alpargata slip-on shoe to the U.S. market. Not an unusual decision for a
serial entrepreneur like Mycoskie, but what made this idea unique was his purpose for this
business. While doing community service work in Argentina, Mycoskie was struck by the
countrys health and poverty problemsand in particular the large numbers of children without
shoes. His idea was to work with Argentinean shoemakers and vendors to produce shoes with
vibrant colors and prints for the U.S. market and to offer those genuine alpargata shoes at a price
point that would allow his company to give away one pair free for every pair sold. Mycoskie
originally intended to give 200 pairs of shoes to the children of Los Piletones in Argentina, but
the buy-one-give-one-away model proved so successful that the rst shoe drop, as the
donation visits have become known, delivered 10,000 pairs of shoes to match 10,000 pairs
purchased by customers at such retailers as Bloomingdales, Nordstroms, and Urban Out tters.
In the four years since Mycoskies company TOMS was founded, over 600,000 pairs of shoes
have been donated in Argentina, Haiti, and Ethiopia. The Ethiopian shoe drops are especially
signi cant because of a local disease called podoconiosis, a form of elephantiasis. Contracted
through the soil, the disease causes dis gurement and ulcers in the lower legs, and sufferers are
ultimately banished from their villages like lepers. The good news is that the disease is 100
percent preventable by wearing shoes, and the last Ethiopian shoe drop delivered 37,000 pairs.
An important point to remember when learning about TOMS is that this is a for-pro t company.
Mycoskie was inspired by the Newmans Own company started by actor Paul Newman and
writer A. E. Hotchner in 1982, which has donated over $300 million to community and healthrelated bene t programs in the last three decades. Newmans Own is also for pro t. The pursuit
of a favorable tax status as a nonpro t company was never the point; it was the ability to give
away the pro ts to worthy causesthats why the companies were created in the rst place.
1. Does TOMS buy-one-give-one-away model make it a more ethical company than a
traditional shoe manufacturer donating money to a charity? Why?
2. Why would customers pay such a high price for a simple linen shoe?
3. Mycoskie designed TOMS model from the ground up. Could an established company
improve its ethical standards by launching a model like TOMS? How?
4. Select two other industries that could copy the buy-one-give-one-away model, and
explain how it could be adopted.