Jim Willis is the VP (Marketing and Sales) for ISI, a US-based aerospace corporation. Jim is facing an ethical dilemma. According to Cox and Shawana (2008), Fred Ballard, Jim’s boss at ISI, has asked him not to disclose information on the changes in the launch dates of ISI’s satellite following an issue with the camera. Fred expects that the disclosure could have a huge negative impact on ISI’s current and future contract negotiations. The most important contract in question is an ongoing negotiation between HTC and ISI. The ultimate effect would be severe financial losses, especially with the documented strict investor behavior. Also, Fred asserts that it has been standard procedure within the industry for competitors to withhold undesirable information. On the other hand, Jim believes that it is unethical to withhold such vital information from interested parties (Cox & Shawana, 2008). This case seeks to find an ultimate solution to Jim’s dilemma.
There are several issues in play at ISI as follows. First, Fred has given Jim clear instruction against the disclosure of the new launch dates. Second, based on current company policy, Jim cannot disclose any information without approval from the senior executive. Third, the company’s financial well-being would be in trouble because of any eventual uncontrolled disclosure. Fourth, it is industry practice for competitors to publicize completion dates, most of which are unachievable. Fifth, the investors, have strict profitability expectations that may fail to work for the provision of realistic information (Cox & Shawana, 2008).
ISI should disclose the negative information on the launch dates to HTC and other relevant stakeholders.
ISI should stick to the tentative dates and instead report to the investors about a possible delay in the product launch.
FINDING A SOLUTION THROUGH CSR
Hatten (2008) describes Corporate Social Responsibility as a company’s obligation to individuals that have an interest in its operations. These individuals, otherwise known as stakeholders, include employees, suppliers, competitors, investors, the community, and customers. We could solve this case using two major arguments concerning CSR as fronted by Milton Friedman and Archie Carroll (Hatten, 2008).
Friedman took a shareholder’s stance to CSR. According to Bowie (2012), this stance perceives shareholders as the uttermost important part of an organization. Thus, they are the only group to which the company must remain socially responsive. Friedman further looked at the firm as geared towards profit maximization and sharing these profits with shareholders as compensation for their risky investment. This notion shows that he advocated for the shareholders’ voice when it comes to taking part in the social initiative. As such, the chief executive played a rather secondary role when it comes to making CSR related decisions (Bowie, 2012).
Contrarily, Archie Carroll identified four areas of concern that comprise of CSR. Hatten (2008) enumerates these areas as economics, the law, ethics, and discretionary responsibilities. The legal component directs that companies must bank on the legality of their business practices. Their taking of a legal stance means that companies protect consumers and investors from fraudulent practices. In turn, the consumers expect that any business will remain truthful about its essential products and operations (Hatten, 2008).
The economic element directs that a company should remain profitable in a way that produces an adequate ROI to both owners and shareholders. According to Hatten (2008), economically sound companies should also have the ability to create jobs as well as contribute essential products to societies. The last bit of being economically responsible would mean streamlining processes in ways that respect economic efficiency and innovativeness (Hatten, 2008).
Third, an organization’s ethical obligation will involve waste management, consumption, and recycling. Bowie (2012) suggested that such processes revealed the extent to which companies could go without relying on authorities to clean up its negative externalities. Other instances of ethical obligations include adopting ways that are rightful when it comes to employee treatment and customer service. Companies have an obligation to develop a healthy relationship with their customers. Also, they can offer excellent compensation and safe work environments for their employees to enhance satisfaction (Bowie, 2012).
Finally, discretionary responsibilities mean that corporations should aim at the promotion of social welfare and general well-being. They could, for instance, match their employee’s contribution to a charity of their choice. Also, they could consider committing a portion of their profits to a local or global program that helps solve social problems. Internally, a company can make a difference by offering day-care centers for its employees (Hatten, 2008).
Basically, according to Friedman, Jim and ISI should have a limited or no CSR to the society. The reason is that Jim’s main concern is to increase productivity for the sole benefit of the organization and shareholders. It follows that the shareholders at ISI have the sole private right to its social responsibility. Thus, companies that concern themselves too much with the outside word, as opposed to profits, tend to displease their stakeholders (Cox & Shawana, 2008).
According to Archie, however, legally, ISI’s clients and consumers expect that the company remains truthful about its essential products and business operations. Such a move would improve not only ISI's reputation but also prove the authenticity of information from the Executive. Second, an economically sound ISI would look into streamlining its operations in such a way that adheres to innovativeness and economic efficiency (Cox & Shawana, 2008).
Third, it is ISI’s ethical obligation to act in ways that are rightful to all its stakeholders. This action will also include developing a healthy relationship with HTC as a sole client. It implies that ISI will be unethical hiding essential information about the launch dates from the government and HTC. Finally, ISI should, though not so much, ISI should apply a discretionary responsibility to act in ways that voluntarily promotes social welfare and general well-being (Cox & Shawana, 2008).
Now, every industry has its potential issues in the production lines. According to Fox (2012), delays in production, maintenance, and delivery are commonplace for any industry. Most of these problems are solvable at the organizational level without much effect on the customer and client. Thus, it is not beneficial or reasonable to publicize such problems to stakeholders. Fred’s follow Friedman’s suggestion of CSR. According to Fred, ISI has no business reporting actual launch dates to the government, members of the public, competitors and HTC. It follows that it would only be vital for Jim to tell the investors about the current mishaps that have caused the delay. It would also explain the impending potential contract from HTC as a solution to the delay (Fox, 2012).
Nonetheless, Archie’s exhaustive evaluation of CSR shows that limited disclosure of vital information could have detrimental impacts on customers. Therefore, it is the company’s responsibility to disclose vital information. There exist numerous illustrations as why a move not to disclose the launch dates could have negative effects on ISI. For instance, the failure of BP to disclose vital information in the events following the 2009 BP Oil spill had huge financial and reputational effects on the company and its leadership (Corkindale, 2010). Given ISI’s case, the failure to disclose such vital information could cost ISI a chance to work with an organization that can help solve its satellite issues. As a client that values integrity, HTC would appreciate the fact that ISI is truthful about a possible delay in launch dates. Therefore, in this case, it is increasingly beneficial for ISI to disclose the information to all potential stakeholders and explain their possible solutions to meeting the new set deadlines.
Bowie, N. (2012). Corporate Social Responsibility in Business. Minneapolis: Center for Integrative Leadership.
Corkindale, G. (2010, June). Crisis Management: Five Leadership Lessons from the BP Oil Spill. Retrieved April 13, 2016, from The Harvard Business Review: https://hbr.org/2010/06/five-lessons-in-leadership-fro
Cox, S., & Shawana, J. (2008). Everybody Does it: Misleading satellite data contract. Ethics in Science and Engineering National ClearingHouse .
Fox, J. (2012, April 18). The Social Responsibility of Business Is to Increase What Exactly? Retrieved from The Harvard Business Review : https://hbr.org/2012/04/you-might-disagree-with-milton
Hatten, T. (2008). Small Business Management: Entrepreneurship and Beyond. Cengage Learning : Boston, MA.