Ethical leadership in breaking planned obsolescence in consumer product design

Ethical leadership is required to stop the 'Planned Obsolescence' principle in Consumer Product Design and Development

This paper attempts to identify and explain the issue of 'Planned Obsolescence' and whether the ethical leadership can help eradicate it from consumer perspective. Ethical decision making model developed by Winter (1992b) and Corporate Social Responsibility model developed by Carroll (1991) will be used as the theoretical foundation for this paper. Survey method will be used to ascertain the response of the subjects and regression was used to assess the gathered data.

Innovation is not always a friend of consumer. The businessmen in the middle have full control over it and do manipulate its introduction and shelving as per their wish. To earn a hefty sixty percent margin and restart the process of innovation and sales and profits through capacity investments (Reinhardt et al., 1997), the manufacturers are forced to continue introducing new products in the market while the previous ones are already new, thus making the previous ones obsolete. The customer who had bought the previous one now needs to buy the latest one as well in order to stay at level with his competitors, resulting in double revenue for the firm. For instance, now that the processor functionality becomes twice of what it was 1.5 years ago and manufacturing product technology completes its turnover cycle in just 3 years, the desktop personal computer market now leads the speed with which the cycle of technological turnover for electronics embedded in many products completes itself. (Goodall, Fandel, Allan, Landler, & Huff, 2002).

The expectations are that the fixed investment needed in an electronic chip fabrication plant will rise to $10 billion by 2015. Add the technological or market failure perils to it (Tewary & Wang, 2005), and the manufacturer will put aside the ethics guide and run to do anything that can save his money. That's when the leadership comes into picture. Normal managers would continue using obsolescence as the easiest tool in the technology industry but a leader, a visionary will not hurt the consumers because of an ill-planned investment. Why will a leader do such a thing? How can ethical problems really solve this dilemma and who would like to actually do it in real life? Let's try to answer these questions.

Though the empirical evidence which relates personality traits to ethical leadership is still not overwhelming, one's cognitive moral development (e.g., Turner et al., 2002) his level of standards (Howell & Avolio, 1992) and conscious use of authority (House & Howell, 1992) and his social responsibility norm (Kanungo, 2001) are supposed to affect the ethical leadership talent. Different personality traits are linked with the ethical leadership acumen. Dependability, fidelity, trustworthiness, faithfulness, audacity and concern for other people, carefulness and endurance, acting upon the decisions of one's conscience, and empathy are seen as vital for ethical leadership (e.g., Bass & Steidlmeier, 1999; Brown et al., 2005; Guillen & Gonzalez, 2001; Khuntia & Suar, 2004).

In recent years, scholars have argued that ethical leadership has become an essential element for today's managerial programs (as cited in Erickson, 2006). Initially, research on ethical decision-making focused on actions that increase profits and maintain honesty in all transactions. However, recent studies have included ideas that construct and maintain lucrative and profitable relationships as well. This transformation has reverted to the pre-industrial age of corporate management, illustrated by direct marketing and sales activities that promote the possibility for an emotional commitment amid buyers and sellers that rise above small economic exchange (as cited in Erickson, 2006).

Ethical leadership is clearly a business practice focused on decision-making efficiency. Designing sustainable and durable products is beneficial to companies as it improves their relationship with customers. However, the implementation of an ethical and moral product engineering and designing system takes a long time and huge investment. Furthermore, employees also have to be taken on board and informed about the long-term benefits it could bring. Common bond across horizontal and vertical boundaries have got to be created by the top management to achieve unity of purpose. The goal of the current leadership ought to be to form a bridge between the human behavior and the business structure in order to establish an exchange that is satisfying for the customers and profitable for the company (Erickson, 2006).

Statement of the Problem:

Results from various studies have shown that we are not honest people about honesty, at least the majority of us. That's why the self-reports employed to find out the traits required for ethical leadership failed completely. The respondent's own fact twisting makes the self-reports biased. (e.g., Viswesvaran & Ones, 1999) The characteristics like integrity, conscientiousness and honesty are most likely to be prone to faking (e.g., McFarland & Ryan, 2000). Therefore, using the results generated by self-reports and integrity tests are a very debatable topic in this arena. (see e.g., Lilienfeld, Alliger, & Mitchell, 1995; Rieke & Guestello, 1995) Hence, how to measure these very desirable characteristics still remains a big question for the empirical evidence researchers.

Scholarly research on planned obsolescence principle has been carried out with limited scope and has produced mixed results. In most research done recently, little work has been done in measuring consumer perception values about ethical leadership corporate social responsibility and what it means to them. This study aims to fill this gap and survey consumer perception about ethical leadership and corporate social responsibility related to planned obsolescence.

3. Research Questions:

1. Are consumers aware of current planned obsolescence practices?

2. Do they view corporate leadership as responsible being responsible for obsolescence practices?

3. What related experiences have they and their significant others had in the past?

4. How important is corporate social responsibility to them?

4. Significance of the Study

The study has both theoretical and practical implications. Firstly, while, a growing body of literature exists dedicated to customer complaint, business process management (BPM) as well as leadership (Wheatley, 2005), nonetheless, there is little empirical research on topics relating to ethical leadership and how innovation and change can be implemented to stop the use of the Planned Obsolescence principle in product design and design.

On a general level, this study will carry significant value for companies around the world since this research will thoroughly cover the concept of corporate social responsibility and ethical decision-making at the management level from a consumer's perspective.

1)

The findings of this study will provide valuable information for the policy makers both in the top management of companies to make effective decisions to support and fund effective product design programs.

2)

This study and its findings will become an addition to and update of the international research on ethical leadership, planned obsolescence and corporate social responsibility.

5. Motivation and Purpose:

In keeping with ethical leadership that integrates innovation and change, which aims to resolve customer complaints, presents businesses numerous rewards and reimbursements. To start with, this kind of relationship can produce a loyal consumer. Research also shows that more than the frequent buyer; the loyal consumer has an affecting connection to the manufacturer (as cited in Schein, 2004). These sentiments can comprise reliance, partiality, and consideration of the corporation's capability to produce durable and effective products (Schein, 2004).

6. Theoretical Framework:

This study uses ethical decision making model developed by Winter (1992b) and Corporate Social Responsibility model developed by Carroll (1991) as the theoretical foundation for this paper. Winter and Barenbaum (1985) were extremely disturbed by the failure of self-reports and integrity tests (specified above) and came up with TAT testing mechanism. In this type of testing, the social responsibility is gauged by pictures relating to moral and legal standards of behavior, internal responsibility, concern for others, care about the results and self-evaluation (Winter, 1992b). They included 5 variables to gauge the inclination towards ethical decision making.

(1) Exhibiting self-control when making right decisions;

(2) Always doing what's fair and unbiased;

(3) Thinking and acking for the greater good of others;

(4) Making decisions that are necessary and good for the company;

(5) Exhibiting role-model qualities

Since this measure uses the coding of running text, the temptation for social desirability is reduced (for an overview of validation studies see Winter, 1991, 1992b). This measure of social conscientiousness zeros in on whether a person shows an inner obligation to do what is right and fair and is always thinking of greater good of people and the company and demonstrates role-model qualities.

Keeping the issue of obsolescence in mind, one should think about how to find such an ethical leader first who would morally consider obsolescence a wrong practice because it harms others, thus displaying a concern for others. The leader should be taking ownership of his actions, holding himself responsible for going against obsolescence on ethical grounds. Similarly, he should possess all the characteristics that are mentioned in the discussion above.

Before going any further on obsolescence and ethical leadership issue, let us first see how ethics' implementation has been a debatable issue in past, which will help us see what roadblocks one may encounter while implementing ethical leadership to eliminate obsolescence. Ethical behavior is all about internally control one's behavior using the five essentials that have been discussed so far. These characteristics form the overall social responsibility stamina in a person and various other forms of responsibility involving the direction of one's behavior internally (Winter, 1992a).

Hence, if we are to describe an ethical leader, it would be like someone who feels responsibility for an agenda, is countable enough to work on it, is internally motivated and satisfied by working ethically on that agenda (instead of thinking only about the profits that project would make ). Responsibility itself has different facets. Responsibility is also referred to as feeling responsible for others (e.g., Blasi, 1983; Hoffman, 1982; Sartre, 1947). In other cases, responsibility could take the form of exhibiting self-control and learning to know what the outcomes of one's actions could be. Taking ownership of one's ideas and actions is another form of responsibility. For this study the researchers have chosen Corporate Social Responsibility Model developed by Carroll (1991) as the second theory.

Carroll proposed four levels (pyramid) of CSR which consists of economic, legal, ethical, and philanthropic responsibilities. Carroll (1991) defined economic responsibility as the expectation on the corporation to maximize the earnings per share. Legal responsibility refers to the obligation of obeying laws and regulations. Ethical responsibility is the responsibility of doing what is expected morally and ethically, while philanthropic responsibility refers to charitable expectations of the society towards corporation. Based on these four components, a socially responsible firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen.

Chapter 2: Literature Review

After having a proper understanding of the dynamics of ethics and framing a corporate leader in our minds, let us come back to the core issue of obsolescence mentioned at the start of this article. Few researchers take buyers perspective on innovation instead of supplier's perspective. Business interests do not leave any entity out of the famine of obsolescence. For instance, over 2000 components pass into obsolescence every month (Prophet, 2002) in case of military. While as far as the military aircrafts are concerned -- in 2003 military aircraft had an age of 22.5 years (U.S. Air Force, 2003) in contrast with 11 years for commercial aircraft (Bureau of Transportation Statistics, 2006). The military is just not an attractive customer for businessmen to keep parts in production (McHale, 2000) because of very low market share of it. (Condra, Anissipour, Mayfield, & Pecht, 1997). Other examples include electronics manufacturing (Carbone, 2006), aviation (Singh & Sandborn, 2006), heating/ventilation/air conditioning engineering (Goggins, 2007), media broadcasting (Blumenfeld, 2007), semiconductor manufacturing (Mutschler, 2008), and publishing (Charlesworth, 2007). One disruption to one of the global sources of supply affects many buyers today (Craighead, Blackhurst, Rungtusanatham, & Handfield, 2007). Moreover, supply risks have increased heavily after the initiation of war on terror. (Wagner & Bode, 2008). All of these factors will only worsen the situation with companies relying more on repairs than new purchases. The latest obsolescence field is marketing-based obsolescence which results due to mere introduction of new and newer products, automatically making the previous ones old (Buyer's perspective).

Like an economic supply and demand-based equilibrium price, the value is also based upon supplier and buyer's powers. The point at which the needs in the market intersect with the offerings in the market determines the portions of values captured by both of the parties (Brandenburger & Stuart, 1996). And just like a price below or above the equilibrium price results in supply or oversupply, so does a low or negative values captured by any party means a breakdown of relationship. An example is that of semiconductors market where the supplier's opportunity cost from lost profits on huge capital investments usually are way higher than buyer's willingness to pay (Brandenburger & Stuart, 1996).

The game played between buyers and suppliers in the semiconductor market is shown in Fig. 1 (at the bottom). According to the author, the result low or negative created during this process for buyers will cause obsolescence, letting the suppliers win. The amount by which the technical characteristics surpass those more attractive markets may lead to delay in obsolescence, but the buyers should be aware of the alternate markets. The supply and demand (supplier and customer) based explanation of obsolescence is considered much more comprehensive than the others in the literature relating to obsolescence as shown below (Brandenburger & Stuart, 1996).

Practices related to Planned Obsolescence:

In manufacturing design, a strategy of purposely scheming, preparing or developing merchandise with a defined utilitarian time so that it outdates after a specific time interval is called Planned obsolescence. To encourage buyers to purchase newer versions of the product is the purpose behind planned obsolescence. By reducing the time span of the item via using the following approaches of obsolescence companies increase the replacement requirement needs in the most efficient way.

To design a product in such a way that it is operational for a specific time span only, this phenomenon is also known as "death dating." A book published in 2006 called Slade stated that in the 1950s and 1960s death dating was used as benchmark for various devices. For example back in the olden day's handy radio sets were engineered to function for the duration of three years only so as to increase replacement requirement needs and earn profit (Slade, 2006).