In 2014, Takata Corporation, a major supplier of automobile air bags, admitted a defect with their product and recalled more than 34 million vehicles—about one in every seven cars on the road—making the automotive recall the largest in U.S. history. The recalls were spawned by a series of deaths and injuries from automobile accidents in which the airbag propellant deployed with such force that it ruptured its container, shooting metal parts at the driver or front seat passenger. Eleven automakers—including Toyota, Mazda, Honda, BMW, Nissan, General Motors, and Chrysler—mandated recalls. Later it was revealed that Takata knew about the defects. The company had secretly conducted tests in 2004 after normal work hours and on weekends and holidays, and executives had ordered its engineers to delete the test results from their computers.
On January 7, 2013, a lithium-ion battery, made by the Boeing Company, exploded on a Japan Airlines Boeing Dreamliner 787 jet parked at Boston’s Logan Airport, setting off an intense fire. Earlier that month, All Nippon Airlines reported unexpectedly low charges on its main battery and the pilot smelled smoke in the cockpit, causing another Boeing plane to make an emergency landing in Japan. These two incidents led to the global grounding of all Boeing 787 planes until safety investigations were conducted. Boeing knew that the batteries tended to overheat but said that this would not threaten the planes and their passengers. Nearly four months later Boeing 787s returned to the skies, only to have an internal on-board fire ignite on an Ethiopian Airlines 787 parked at Heathrow Airport in July 2013.
Questions
Around the world, dozens and dozens of other companies were charged with accounting fraud, mishandling investors’ funds, market improprieties, jeopardizing the safety of consumers, and many other illegal activities.
1. Why are business executives, managers, and employees repeatedly being caught conducting illegal and unethical activities?
2. What can firms do to minimize or prevent the unethical activities perpetrated by their executives and employees?
3. Do you think companies that set in place systems or programs to monitor workplace activities to detect illegal or unethical behavior would significantly change outcomes? Explain.