Who Is Responsible?

Duane Windsor, the Lynette S. Autrey Professor of Management in Rice’s Jesse H. Jones Graduate School of Management, is not so quick agree, for ethical and practical reasons.

In an article in a special issue of the Journal of Corporate Citizenship, “Stakeholder Responsibilities: Lessons for Managers,” Windsor says it is “a dilution of stakeholder theory to start spreading responsibility around versus keeping it with management.” He makes a practical argument: Customers’ actions often occur at a distance from the decisions made by management.

Take the case of Unocal Corporation, an energy giant currently embroiled in a lawsuit stemming from its passive investment in a pipeline partly owned by the government of Burma. The military regime in Burma is often labeled by the U.S. government and others as a repressive dictatorship that allegedly has used rape, murder, and slave labor to secure its interests and investments—including the pipeline at the center of the lawsuit. Do consumers who purchase a product that is transported through this pipeline bear some responsibility for the methods allegedly employed by the Burmese government to operate the pipeline?

Windsor points out that most customers would have no way of knowing exactly how their gas was transported. In addition, almost any action a consumer would take, beyond simply not buying the product themselves, could be subject to criticism and legal challenges by others. “We would be moving into a world in which everyone has unlimited moral responsibility and has to consult everyone before taking action,” Windsor says.

On the other hand, the board of directors and executive team at Unocal should have known that the Burmese government would use such methods to protect its investment. If they felt insulated because they wouldn’t actually be carrying out any brutality, that would be a morally wrong rationalization, says Windsor.

To be sure, putting the onus in the executive suite doesn’t relieve consumers of all responsibility for making careful purchases. For instance, a person who purchases a CD with the knowledge that it is stolen is acting immorally, and probably illegally as well, Windsor says. The consumer’s ethical responsibility is to those harmed: the firm or individual who holds the copyright to the songs on the CD.

Ultimately, business owners, managers, and board members have to hold themselves to a higher moral standard than do consumers, says Windsor. “The board has a crucial role to play in determining the fundamental values of a company,” he says. “Based on those values, management is charged with formulating and implementing strategy and directing the operations of the company.”

Approaching business decisions from a moral framework may even cost a firm, adds Windsor. Ken Moser, Rice M.B.A. ’04, a former student of Windsor, headed a business unit that manufactured parts for combustion turbines. In one case, Moser and his colleagues were working on a part that they manufactured in Europe, where the patent had expired, meaning that anyone was free to use the design. Moser’s team developed and launched their own product, at which point the company that had created the original design obtained a patent in the United States—despite the fact that the product had been commercially available for more than 17 years. “Our first reaction was that this was ridiculous,” says Moser. “We had manufactured a whole bunch of stuff legally that they suddenly said we couldn’t sell.” However, it became clear that the patent was valid, and Moser and his colleagues disposed of all the parts that weren’t already in use. “It was a tough decision, and it felt unjust,” he says.

This incident, along with others in which he was forced to consider ethics as well as the bottom line, prompted Moser to seek an M.B.A. program that included course work in business ethics. He found that at the Jones School. “I feel comfortable regarding my own decisions from an ethical perspective; however, given the recent meltdown of companies in the energy trading business, in part due to apparent lapses in ethical behavior, I felt ethics training would be important going forward,” says Moser. “It’s relevant to everything we do.”

—Karen M. Kroll