CORPORATE RESPONSIBILITY AND ETHICS The Wharton School, University of Pennsylvania Legal Studies 210, Spring 2005

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1 CORPORATE RESPONSIBILITY AND ETHICS The Wharton School, University of Pennsylvania Legal Studies 210, Spring 2005 Prof. William S. Laufer Department of Legal Studies 670 Huntsman Hall Dr. Djordjija Petkoski Lead Enterprise Structuring Specialist Head of Private Sector Development Team Word Bank Institute Washington, D.C. COURSE MATERIAL Kenneth E. Goodpaster & Laura L. Nash (1997) Policies and Persons: A Casebook in Business Ethics. New York: McGraw-Hill (3 rd Edition) World Bank Institute Course on Corporate Social Responsibility and Sustainable Competitiveness Additional course material will be added regularly to WebCafé. DESCRIPTION This course explores corporate responsibility and ethics from a multidisciplinary perspective. It reviews theories of business ethics and corporate criminal liability, and illustrates how they apply to a number of case studies. COURSE REQUIREMENTS Class Participation: All students will be expected to actively participate in class. Early in the semester the class will be divided into eight teams (5-8 students). Each team will participate in case role playing throughout the course. In addition, teams will participate in a debate and prepare a paper (not to exceed 10 pages) describing its position and arguments. Supportive documentation and references are required. A copy of this paper should be provided to the opposing team at least one day prior to the debate. Each team will make a 30 minute argument, and a 10 minute rebuttal of the opposing team s position. The debates will be graded on the basis of persuasiveness, creativity, accuracy, and responsiveness to the other team s argument.

2 COURSE REQUIREMENTS (CONTINUED) Examination: There will be a final examination (open book and open notes) during the regularly scheduled examination period at the end of the semester. World Bank Video Conferences: There will be six required video conference sessions organized by the World Bank Institute (WBI) in Washington, D.C and the Zicklin Center for Business Ethics Research at Wharton. These VCs will connect staff from the World Bank, World Bank field offices, and business school students from three of the following World Bank target countries: Turkey, Bosnia, Russia, Romania, Ethiopia, Mexico, Brazil, Costa Rica and Chile. The VCs are scheduled for Friday mornings at 10am. Specific dates and locations to be announced. GRADING Final grades, consisting of class and video conference participation (25%), class debates and assignments (25%), and the final examination (50%), may be adjusted to conform to an acceptable distribution. PART I: INTRODUCTION AND OVERVIEW COURSE OUTLINE Personal Values: Victor Roberts and Project Grand Slam Corporate Values (Looking Inward): Santa Clara Cruise Lines Corporate Values (Looking Outward): Nike v. Kasky Corporate Values (International Business): Curem Pharamceuticals; Sea Star PART II: TOOLS T. Dunfee, et. al., Business and Ethics, Chapter 8, Modern Business Law and the Regulatory Environment, 3d edition, McGraw-Hill, 1997 W. S. Laufer, excerpts from Corporate Bodies and Guilty Minds

3 PART III: PERSONAL VALUES Peter Green s First Day: A young man s boss expects him to give an unwarranted discount to an important sales account. Martha McCaskey: When does consulting become industrial espionage-- stealing the intellectual property of competitors? What can a middle-level manager do if she has doubts about her own behavior and her company s integrity? International Drilling Corporation: When and how to "blow the whistle" on the head of the company. Viking Air Compressor, Inc.: Conflicting views on what constitutes socially responsible corporate behavior and the means of achieving it. PART IV : CORPORATE VALUES: LOOKING INWARD American Cyanamid Company: When employees are exposed to potentially harmful chemicals, special measures for physical protection may seem in order but also pose the possibility of sexual discrimination in company practices. H.J. Heinz Company: The Administration of Policy (A): The ethics of executive behavior in the context of incentive compensation, goal setting, and other corporate mechanisms; instances of questionable activity have begun to emerge. H.J. Heinz Company: The Administration of Policy (B): The company now has firmer information; what action should be taken? Three Short Cases on Sexual Harassment: In each of three cases, based on the experiences of Harvard Business School students, issues of personal judgment and corporate policy are intimately linked. Lex Service Group, Ltd.: Development of the Guidelines (A): Whether, why, and for whom a corporation should develop guidelines for behavior. Lex Service Group, Ltd.: Closing Portsmouth Depot (B) Lex Service Group, Ltd.: Work Conditions at Inglesby Shipyard (C) Lex Service Group, Ltd: The Reading Pallets Theft (D): As executives begin to apply these guidelines to actual situations at the company, ethical courses of action become problematic. Reell Precision Manufacturing, Inc. (A): When a company has been successful for years partly because of its strong Judeo-Christian culture, how should it respond to those who claim that this is discriminatory?

4 PART V: CORPORATE VALUES: LOOKING OUTWARD Tennessee Coal and Iron: Company-community relationships; should a business firm take action regarding issues of race relations that face a community? The Poletown Dilemma: Should General Motors keep its plant in Detroit or move it to another location? At what cost to shareholders? Should Detroit accommodate General Motors to keep the company from moving? At what cost to the citizens of Poletown? The Bush Foundation: A Case Study in Giving Money Away (A): When a nonprofit foundation takes great pains to give money away with social responsibility, does it also have a duty to invest its principal according to social criteria? Alco Beverage Company and Moderation Advertising: Can a company realistically encourage moderation in the consumption of its product? What is responsible marketing behavior when over consumption is socially hazardous? Note on Product Safety: A background note for the product safety cases. Managing Product Safety: The Ford Pinto Managing Product Safety: The Firestone 500 Managing Product Safety: The Proctor and Gamble Rely Tampon: Three classic cases on problems of product safety, government regulation and customer reactions. Super Soaker: What does a company do when people are seriously injured from the misuse of one of its products? Does the company bear any social and moral responsibility in this situation? Collaborative Research, Inc., plus Note on the Biotechnology Industry: What responsibility does a company in a new technology have for anticipating possible abuses with its products? Environmental Pressures: The Pollution Problem: What has often been referred to as the "classic pollution case," wherein a previously authorized mining and processing operation on Lake Superior s shores is now charged with violating a variety of environmental regulations. DuPont Freon Products Division: A case that describes the ozone layer depletion problem and asks how a large company with a big stake in fluorocarbons comes to terms with the ethics of it all.

5 Ashland Oil, Inc.: Trouble at Floreffe: How candid should a chief executive be when the company appears to have been negligent regarding an oil spill? What if the lawyers have a lot to say about potential litigation? Exxon Valdez: Corporate Recklessness on Trial: In the highest-profile civil damage case in corporate legal history, the jury had to determine what was fair to all the parties--both as to compensation and as to punishment. PART VI: CORPORATE VALUES: INTERNATIONAL BUSINESS The Foreign Corrupt Practices Act: A Reconsideration: The text of the 1977 act, a discussion of its impact, and proposed changes in it. Changmai Corporation: The new general manager of a Malaysian paperproducing subsidiary of an international corporation is asked by the local environmental ministry for a bribe, and weights the consequences. Safety First? An American manager in Jakarta is troubled over differing standards of workplace safety between America and Indonesia. When do differences deserve criticism? The Evaluation: A Swiss multinational manager faces a dilemma as he tries to apply to a senior Thai employee a corporate performance appraisal system that seemed to pit principle against respect for cultural differences. The IBM-Fujitsu Dispute: Examination of a controversy over intellectual property ownership, its resolution, and implications for future International trade relations. Smoking and Health: United States Tobacco Companies--National and International Operations: An industry case that raises issues of smoking and health both in the United States and other countries. Note on the Export of Pesticides from the United States to Developing Countries: Ethical issues regarding the sales of pesticides to less developed countries when those pesticides cannot be sold or can be sold only for restricted use in the United States. Velsicol Chemical Corporation: A case that gives life to the Note on Pesticides by showing how one company took on the challenge of trying to make an ethical difference in its third world marketing practices.

6 Dow Corning Corporation: Business Conduct and Global Values (A): How to develop a comprehensive ethics policy for a global enterprise, even when local ethical norms may differ. Dow Corning Corporation: The Breast Implant Controversy (B): Ten years after the Dow Corning case on the global business conduct policy, the company is driven into Chapter 11 by a controversy over the safety of its silicone breast implants.

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