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What is the Final Grade?
This case uses the experience of a professor at a prominent business school who is involved in a grade dispute with a number of students as an opportunity to introduce core business ethics concepts. After receiving low grades in a course, a number of students appeal their grades. Unbeknownst to the professor, the students' appeals are processed and their grades are adjusted without the professor being given an opportunity to defend her rationale for the original grades. Unhappy with the result, she unsuccessfully raises this issue internally both within her business school as well as with her parent university. Eventually, the professor even considers pursuing a legal remedy. Through the case, core ethical principles related to fairness, justice, and process can be explored by looking at the scenario from the students', instructor's, and the university's perspective. Additionally, there is an opportunity to reflect on what the professor should do next. Should she continue to speak-up and act based on her principles? This is an ideal case to use at the beginning of a semester because the university context will be familiar to all participants. Through the case, foundational ethical concepts can be introduced that will set the stage for the remainder of any course that contains an ethics component. -
Dakota Industrial Co. Ltd: Sustainable Garment Manufacturing in a Fast-Fashion World
This case explains how Dakota, a medium-sized garment maker headquartered in Hong Kong, built its sustainability program while serving a US$3 trillion industry that is the world's second-largest polluter after oil. It explores the main drivers behind Dakota's sustainability program - the relationship with its major customer, H&M; Dakota's organic development of sustainability principles as it moved production from China to Cambodia and Myanmar, two rapidly developing but poor countries in Southeast Asia; and the evolving discourse over business ethics and the "triple bottom line" (TBL) challenging companies to meet performance metrics that include impact on social and environmental wellbeing as well as corporate growth. -
Who Cares About Organizational Purpose and Corporate Social Responsibility, and How Can Organizations Adapt? A Hypermodern Perspective
Organizations are becoming increasingly mindful of their purpose, clarifying their raison d'etre and fulfilling their economic, social, governance, ethical, and environmental responsibilities. One of the drivers for this behavior is stakeholders' interest in purpose-driven organizations committed to creating positive value in society. However, less is known about these stakeholders: who they are, why they care, and how organizations can adapt in response. In this article, we use the theoretical framework of hypermodernity to propose that a specific type of stakeholders, identified as hypermodern individuals, may care about purpose-led, responsible organizations. This article highlights five characteristics of these individuals that may explain why they care, including their desire to contribute to a humane and caring world and their love for experiential consumption. Furthermore, we offer recommendations for managers on how to create actionable strategies to implement and communicate purpose and corporate social responsibility to this stakeholder group. -
Richardson Eye Care and Surgery Center
A consultant experienced in developing predictive models for his clients to improve business operations, Everett Blake, was working with the Richardson Eye Care and Surgery Center (RECSC), which wanted to explore ways to improve its no-show rate, classifying a "no-show" as an appointment not kept without 24-hours' notice. After running variables through an XGBoost model, Blake's company had identified predictive variables, which included age and gender. However, Blake was uncomfortable with these two variables, fearing that, if they were used to identify potential no-shows (and consequently not get follow-up calls about their appointments in the future), this could be considered discriminatory and might lead to a different quality of care for different groups of patients. With this in mind, Blake had to decide what his recommendation to RECSC should be. -
Xibei's Business Model: Creating Shared Value for Stakeholders
By creating shared value (CSV) for stakeholders, Xibei, a 31-year-old catering company, managed to hold on to the number one spot in the Chinese food and beverage market in 2019. Founder and Chairman Jia Guolong said that the company's creation of shared value for stakeholders was not a noble gesture, but a bid to generate higher business returns and rival other restaurant giants around the world. Over the past 31 years, this business model created a virtuous circle for Xibei, helping to continuously boost competitiveness. As of June 2019, Xibei ran 350 stores in 56 cities across China and had plans to expand into other markets. However, Jia recognized that it would be challenging to implement the CSV business model in the global market, which would test his and Xibei's ability to capture and deliver value. If Xibei shared value but did not reap the returns, then the model would not work. So, how would Jia adapt the CSV model for the international market? -
Natural Factory: The Role of CSR in Starting a Business
This case describes the development of Natural Factory's social e-commerce model, the role of CSR in the founding of that model, as well as its successes and limitations. In 2018, Natural Factory boasted a turnover of more than ¥600 million, and by January 2019, it had accumulated nearly 6 million purchasing users and over 27 million followers. Despite the impressive growth, Natural Factory was struggling to acquire new users. Marketing products directly to end-consumers would allow the company to break through this bottleneck quickly but at the expense of the small-scale merchants to whom the company owed its success. Founding CEO Su Lujiang faced a serious dilemma: how could the company continue to acquire new users without alienating the old ones? -
The AAK Kolo Nafaso Programme: Securing an Alternative Shea Supply Chain
The Kolo Nafaso programme was started in 2009 in Burkina Faso by AAK, a 140-year-old Swedish supplier of vegetable fats and oils. AAK created a direct link with the producers - women in West Africa who traditionally harvested shea nuts - and cut out the middlemen. The aim was to improve productivity and pay a fair price. As a cocoa butter equivalent, the oil from the nuts was a major ingredient for chocolate manufacturers, who could then claim that their products were made from traceable ingredients and a sustainable supply - a growing concern for consumers and investors. As the programme expanded from Burkina Faso to Ghana, AAK met several obstacles: maintaining the loyalty of the shea producers when local competitors offered higher prices, operational challenges associated with expansion, ensuring a stable supply despite political unrest in Burkina Faso, rising costs, and realising the potential brand value of Kolo Nafaso. -
What Went Wrong with Boeing's 737 Max?
This case describes the development of the Boeing 737 Max airplane model and the events leading up to two tragic plane crashes, in which a total of 346 people died: the crash of Lion Air flight 610 on October 29, 2018, in Indonesia, and the crash of Ethiopian Airlines flight 302 on March 9, 2019, in Ethiopia. The evolution of Boeing's organization and management is described, focusing on the span from Boeing's 1997 merger with rival McDonnell Douglas through the development of the 737 Max and the crashes. The case examines the antecedents and possible causes of the crashes, both through the lens of industry and competitive dynamics and through the lens of corporate culture and development processes at Boeing. The development of the 737 Max is described in detail, including the factors and decisions that led to the development of the Maneuvering Characteristics Augmentation System (MCAS), the system that ultimately led to the crashes. Information about Boeing's response and actions during the period between the two crashes is also included in the case. -
Assessing Corporate Impact: Danby's Response to Syrian Immigration
In April 2018, more than one year after the chief executive officer (CEO) of Danby Appliances Inc. launched a private sponsorship program to support Syrian refugees in their integration into Canada, the CEO and others were starting to raise some questions. Although the program seemed to have had an overall positive impact on Syrian refugees, Danby's board of directors wondered about the impact of the program on the appliance business. The settlement program continued to take up a considerable amount of the CEO's time and may have even been a drain on other Danby resources, such as staff time. With competition intensifying in the appliance manufacturing industry, the board asked the CEO to assess the impact of the settlement program on Danby, the refugees, and the community, and to recommend whether the program should continue. The CEO knew it would be difficult to collect precise numbers and wondered how he should start to quantify the true impact of the settlement program. -
Thursday Night Dilemmas
This case focuses on how to think about personal and business ethical dilemmas. The case presents three ethical dilemmas: two hypothetical scenarios presented to Kiara in her ethics class, and one real situation in her personal life. While dilemmas one and two may be unethical but legal, dilemma three involves an actual crime. Kiara has been working as a cosmetologist at her aunt's salon for three years, and she has just discovered illegal business activity there. -
How Bad is Your Company? Measuring Corporate Wrongdoing Beyond the Magic of ESG Metrics
Most attempts to measure corporate wrongdoing rely on data and indices sold by environmental, social, and governance (ESG) data providers. Developed for investors and market players, ESG data have been widely used in academic interests, but so far little research has been conducted to assess and overcome the limitations of ESG. In this article, we take the first step in this direction and propose using an M-quantile regression approach to develop an index of corporate wrongdoing, specifically firms' involvement in controversies over universal human rights. We apply our proposed methodology to a novel and unique hand-collected dataset of 380 large publicly-listed firms from both advanced and emerging economies, covering the period 2003-2012. We discuss the importance of these indices for managers and practitioners. -
Anti-Money Laundering: The Banking Industry in Hong Kong
The Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) became effective in Hong Kong in April 2012. Since then, between July 2015 and December 2018, the Hong Kong Monetary Authority has taken disciplinary actions against four banks, namely State Bank of India, Coutts & Co AG, Shanghai Commercial Bank, and JPMorgan Chase Bank, for their violations of the ordinance, resulting in a total pecuniary penalty of HKD32m. This case summarizes (i) the bank regulator's findings on the deficiencies by the four banks in their AML compliance programs and their violations of the AMLO; and (ii) the disciplinary actions taken by the banking regulator against the four banks. The case also presents the challenges encountered by the financial institutions between compliance costs and avoidance strategy in the form of "de-risking". The instructor can use the case to explore AML concepts as well as issues faced by banks in compliance practices as a result of the AMLO, as illustrated by experiences of the four banks. In addition, the instructor can analyse the impacts the AMLO has on the banking industry and the society, including the social cost of compliance to the AMLO and the efficient and effective provision of banking services to the community, as well as potential regulatory arbitrage among countries as well as the potential shifting of money laundering activities to other non-bank financial services providers, e.g., shadow banks. -
What Hank Did Next
Hank Carlson, once a successful businessman and a well-respected member of his community, spent nearly two years in prison for check fraud. When he was caught, the community turned on him instantly, and his family suffered financially and socially as a result of his deeds. Carlson did his time grudgingly, believing himself to have been the scapegoat of a Justice Department that was overcompensating for the Enron debacle by punishing any businessperson who set a toe even slightly outside the law...even if, as Carlson imagines is true of him, they hadn't really hurt anybody. Now, Carlson is out of prison and working to repair the broken trust and relationships within his family. He has an okay job and new connections with people who don't know about his past. But when an investment banker offers Carlson a finance job, Carlson fears that accepting it would reveal what he'd done all over again, exposing himself and his family to more damage. And then a local teacher at the center of a scandal reaches out to Carlson for help and advice. What should Carlson do? -
Friedman at 50: Is It Still the Social Responsibility of Business to Increase Profits?
Fifty years ago Milton Friedman famously argued that the social responsibility of business is to increase its profits, which today are at record highs. And, as public institutions falter, business is now offering to step into the void. We must resist this (further) intrusion of business into the public sphere, as it will further depreciate civic institutions. The business of business is business, and so it should be. Business' track record in public politics has been to engineer the rules of the game to its own advantage. -
CSR at Torrent Group
Corporate Social Responsibility (CSR) has emerged as an important area of corporate attention in an informationally integrated world. Corporates are realizing that how they are perceived by the larger society, has a bearing on their capacity to function effectively and create shareholder value. The task of developing and implementing the CSR strategy for Torrent Group was entrusted to Markand Bhatt, a veteran executive in the group. Documenting the challenges faced by Bhatt and the decisions he was required to make the case details the context for an in-depth discussion on the process of design and execution of CSR strategy. -
Virtue as a Framework for the Design and Use of Artificial Intelligence
Practitioners are seeking information and ethical guidance related to the design and utilization of artificial intelligence (AI) across a variety of applications. Developments at Google illustrate the potential good of AI as well as potential concerns. In this article, we use Google to create a context that demonstrates the relevance of virtue for the ethical design and use of AI. We describe a set of ethical challenges encountered by Google and introduce virtue as a framework for ethical decision making that can be applied broadly to numerous organizations. We also examine support for virtue in ethical decision making as well as its power in attracting and retaining the employees who develop AI and the customers who use it. To conclude, we apply the virtue framework to Google's AI challenges and offer suggestions for its use in other organizations. -
Culture at Google
Beginning in 2017, technology (tech) company Google faced a series of employee-relations issues that threatened its unique culture of innovation and open communication. Issues included protests surrounding Google's contracts with the U.S. government, restrictions of employee speech, mistreatment of contract and temporary workers, allegations of sexual misconduct and gender inequality, and claims of retaliation against labor organizing. While Google employees felt an obligation to dissent against morally questionable practices, embodying the company's informal motto "don't be evil," the company struggled to respond to employees' concerns while preserving its unique culture. -
Software Sense: Making the Case for the Long-Term View
Beth Collins, CFO of Software Sense, an American multinational computer hardware and software developer, contemplated various ways that her publicly traded company could embrace a more long-term orientation in its quarterly reports and throughout its reporting ecosystem. Like other publicly traded companies, Software Sense faced constant pressure from investors and analysts to increase short-term financial-performance metrics, particularly in its quarterly earnings calls. Many in business were concerned about the deleterious effects of short-termism, which referred to the practice of focusing on short-term rather than long-term performance and results; these effects included less attention paid to long-term value creation and innovation, strategy, and fundamentals; less R&D investment; and the implementation of high-risk strategies that could threaten the company's health. Recently, Collins had read about and heard presentations by Chief Executives for Corporate Purpose (CECP), an initiative encouraging business leaders to reframe investor calls away from short-term reporting and toward a more long-term strategic approach and orientation. As she researched CECP's recommendations and strategies, Collins could see the benefits of this approach-but also the potential problems. -
Theranos: Who Has Blood on Their Hands? (B)
This supplemental case tracks the results of the Colman and Taubman-Dye class action suit against Theranos as well as Theranos' other legal challenges, and chronicles the final demise of the company in 2019. -
Fossil Fuel Divestment
The President of Harvard University is facing growing pressure from students, alumni, and other climate change activists that are urging the university to divest its multi-billion dollar endowment from fossil fuel companies. The case summarizes the arguments for and against Harvard divesting, examining past examples of Harvard's investment decisions and the financial implications of divestment.