This paper is about corporate values. It is based on a case involving a video game manufacturer that is launching a new, violent video game where its previous output had been non-violent. The paper discusses the balance between ethics and profits and the role that a statement of values can play in guiding internal and external stakeholders.
Business Management
Each company must face the decision on their own as to what sort of ethical guidelines they want to follow. While Friedman (1970) made the case that a business only has social responsibility to earn profits, this theory is not airtight. It is based on agency theory, that management is working as agents of the shareholders. The shareholders are rational investors whose only desire is to make more money. This discounts the fact that investors have access to a wide range of information about a company -- for example they can review the Sustainability Report if the company has one, or its statements about ethics and social responsibility. With this information publicly available, shareholders can easily understand prior to purchase what the company stands for and how it will behave. If CanGo has made any sort of indication that it will only market games that are fully responsible, then shareholders have to understand that is part of the company's mandate, meaning that managers are obligated to work within that mandate, not just to pursue profits. If the company does not have an ethical charter that would forbid violent video games, it can pursue that line of business. Goodness knows there's a lot of money in such games. They are rated, so that games inappropriate for children are marketed as such, with warnings for parents.
So while the perception that responsibility and profits don't mix is false, CanGo needs to work within its own ethical guidelines. The company's stakeholders need to understand what those guidelines are. CanGo needs to simply work within its previously defined frameworks, or make sure to clarify and communicate if this new game represents a change in policy.
2.
If the company had a mission and values statement, well at least the values part would provide guidance with respect to marketing violent video games. As I noted above, the company should act in accordance with what it has already stated are its values. Having a values statement provides such definitions for all stakeholders, and as long as the company upholds its own internal values, it can market whatever products fit within that framework.
3.
If CanGo has otherwise established itself as a marketer of non-violent video games and now it is changing that policy, many stakeholders might disagree with that decision. Employees and retail channel partners in particular might have bought into a particular ethical stance of the company based on its lack of violent games in its portfolio. If that is the case, then some might feel betrayed by what they feel is a new turn of policy for the company. However, this might not be the case. The new game might not bother other stakeholders at all, especially if it has always been understood that the company has not particular ethical guidelines with respect to violent games. In lieu of a solid values or ethics statement, past performance is going to dictate how other stakeholders feel about this game, and if the game is an apparent change of policy for the company it can expect from stakeholders to feel betrayed.
4.
I agree that some people will make purchase decisions based on ethics. I have seen this myself. I do not feel, however, that this represents a significant portion of the market. People tend to behave as rational actors -- not all the time but most of the time. Someone is not going to eschew a popular G-rated game from CanGo just because the company now has R-rated games. In fact, this exact scenario played itself out with Disney several years ago when it started branching out through subsidiaries to other entertainment forms for different audiences. There has not actually been a significant impact on its children's entertainment business just because one of its studios make more adult movies. So while some people might take an ethical stand in their purchasing, not that many people will do so for any length of time -- manufactured outrage has no real staying power in the market.
5.
I agree with the first statement -- the company would have been better off with a values statement from the outset. This statement would have been able to serve as a guidepost for behavior at the company, giving management as well as external stakeholders a sense of what to expect from the company. It is possible that some customers held unrealistic expectations of what the company was going to do, because there was no statement that could guide them.
You’re 81% through this paper. Sign up to read the full paper.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.