retirement through some kind of equity ownership. Three out of four working Australians invest in superannuation, and over five million Australians use financial advisers. This growth in market size and coverage inevitably means that many investors are participating for the first time in financial markets, which they may not entirely or adequately understand. During the late 1990s, many inexperienced financial services consumers bought a complicated range of products and services and were caught out, losing their life savings.
IN PRACTICE Johnson & Johnson and others Crisis may strike a company unexpectedly. A huge amount of blame can be placed on a company if it fails to respond properly to a crisis. In 1982, Tylenol commanded 35 per cent of America’s over-the-counter analgesic market, contributing about 15 per cent of Johnson & Johnson’s profits. Unfortunately, an individual succeeded in lacing the drug with cyanide and seven people died as a result. After that incident, there was panic about Tylenol and the market value fell by $1 billion. When the same situation occurred in 1986, the company acted quickly. It recalled all Tylenol products from every outlet, not just the outlets where the products had been tampered with. The company also decided the product should not be re-established until something had been done to provide better product protection. As a result, tamper-proof packaging was developed. The cost was high and the lost production and destroyed goods of the recall were considerable. However, the company won praise for its quick and appropriate action, and achieved the status of consumer champion. Within five months of the disaster, the company regained 70 per cent of its market share for the drug. The company had succeeded in preserving the long-term value of the brand and its loyalty. Contrast that with the case of Bridgestone/Firestone in 2001. In Washington, it paid US$41.5 million in settlement to fend off lawsuits by states over defective tyres the company recalled in late 2000. The United States investigators had documented 271 deaths from thousands of accidents involving the tyres and the Attorneys-general raised doubts as to whether Bridgestone/Firestone and Ford were aware of the problems with the tyres long before the recall was announced. Can you think of any other real-life cases similar to these?
The market, including owners and investors, public stakeholders and the general public, has certain ethical expectations. The market’s support for an entity depends upon the credibility of the entity’s corporate commitments and reputation, and the strength of its competitive advantage. Credibility depends on the trust that stakeholders place in the entity’s activities, and trust, in turn, depends upon the values underlying such corporate activities. Stakeholders increasingly expect an entity’s activities to show respect for their values and interests. This respect for stakeholder values and interests determines the ethical standing and success of a corporation. The Johnson & Johnson example shows the importance of respect for stakeholder values and interests. With an increasing amount of interest in corporate activities and accountability, the public expectations of businesses and the professions have become far more concerned with stakeholder interests and ethical matters than has been the case in the past. Directors, executives and business managers, who serve the often conflicting interests of CHAPTER 3 | INFORMATION SYSTEMS ETHICS
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