Of the billions of tons of carbon let loose into the world’s atmosphere each year, China is responsible for 21 percent, mostly due to its growth in manufacturing. And due to the billions of tons of wastewater and sewage released into rivers and lakes by Chinese chemical firms every year, 300 million of its citizens do not have clean drinking water. Clearly, these ethical breaches represent the failure not of one individual but of scores of teams: to be exact, top management teams in organizations throughout the country. Does that mean the leaders of China’s companies are all unethical? Surely not.
To increase corporate social responsibility (CSR), we need to understand the team dynamics that lead to unethical decision making. First, we examine the context. As a major emerging country, China witnessed unprecedented growth in industry that has brought opportunities for corporate profits, better salaries, and better access to services for its citizens. Millions have been able to pull themselves and their families out of poverty. Few would argue that providing jobs and services isn’t a highly ethical pursuit. However, top management teams now face pressure to sustain growth at any cost. The top management team of Rongping Chemical Company made the tragic decision to cut costs and increase profits by dumping untreated chlorine into rivers, raising the level of chromium-6—a tasteless, odorless compound that causes ulcers and cancers—to over 20 times national standards. Other organizations, like Luliang Chemical Company, have done the same, endangering the health of the same citizens it helps with jobs and opportunities.
Some observers have been shocked that top management teams in a country with collectivist values, which stress a group-oriented outlook, would make decisions that don’t consider everyone affected by them. One recent study indicated that the problem is competing ethical principles: duty to others v. duty to society. As management teams faced financial dissatisfaction about their firm’s performance, environmental ethics and CSR actions decreased, suggesting the teams were feeling pressure from their organization’s stakeholders and becoming less concerned about the environment. They may also have rationalized that providing jobs was for the greater societal good and believed that violating stakeholder expectations would cost them their own place on the management team. However, the study found that on an individual level, when a person’s sense of collectivist values increased, environmental ethics also increased, suggesting that the top managers did favor CSR initiatives, but other concerns predominated in the team settings. We may conclude that these teams are likely hindering the progress of environmental awareness. When teams feel pressured to meet certain (sometimes narrow) metrics, there may be more unethical team decisions than individual members would make on their own.
• Do you think you could be convinced to let your organization dump chemicals such as chromium-6 into the water supply? Why or why not?
• Why might top management teams be more likely to make unethical decisions than their individual members would make?
• The cases of Rongping and Luliang are far from isolated incidents. You may remember the case of Pacific Gas & Electric (PG&E), which dumped chromium-6 into the water supply in Hinckley, California, as recounted in the movie Erin Brockovich. That case resulted in a $333 million award, the largest settlement ever in a direct-action lawsuit, to help the town’s 2,000 residents. In contrast, when 1,721 villagers brought suit against Rongping (more plaintiffs than ever in China, to date), the court ordered the company to pay a total compensation of $105,000 for damage to the land. And the Chinese environmental group Friends of Nature filed the country’s first-ever public-interest lawsuit, which shut down Rongping’s plant in a village, but did not offer monetary restitution for the villagers. How might these outcomes affect the ethical decisions of top management teams in the future?