Duty-Based Ethics Applied to Mattel's Supply Chain Crisis

Introduction to Duty-Based Ethics

Duty-based, or deontological ethics, is a moral framework concerned with what individuals do rather than the outcomes of their actions. This paper defines the core principles of deontological ethics and applies them to the ethical challenges faced by Mattel Incorporated, the world's largest toy company, with particular attention to its voluntary conduct code, supply chain management failures, and the major product recalls of 2006–2007.

Core Principles of Deontological Ethics

Deontological ethics holds that certain actions are inherently right or wrong based on the nature of the action itself, not its consequences. Its key tenets are:

Under deontological ethics, one cannot simply validate one's actions by proving that the end result was good. For this reason, the approach is occasionally described as "non-consequentialist." The word "deontological" is derived from deon, the Greek term for "duty." Society commonly refers to this ethical approach as "the principle of the thing." It teaches that specific actions are right or wrong because of the type of actions they are, and that individuals are duty-bound to act in accordance with this knowledge, regardless of whether the outcomes are good or bad.

An individual who follows deontological ethics must do what is right even if that action produces less good — or more harm — than the alternative. In other words, individuals are duty-bound to act rightly even when the probable end result is negative. A deontologist determines which action is morally "right" first and then proceeds from there. Deontological ethics focuses on every person's individual value and addresses goals and purposes. An individual acts rightly only when he or she does what is ethically correct, independent of consequences.

Mattel's Global Manufacturing Principles and Conduct Code

Over the past two decades, multinational corporations have faced accusations of unethical business practices and market power abuse, particularly in the management of their supply chains and overseas operations. These allegations include, but are not limited to, personnel exploitation in the form of unduly low wages, unsafe working conditions, and excessive working hours; contamination and pollution of groundwater, land, and air; and the erosion of national governments' ability to protect their citizens' welfare. Multinational companies have responded to such accusations by developing voluntary codes of conduct requiring all organizational members to commit to certain standards (Sethi et al., 2010). These codes are formulated at both company and industry levels; however, they have not succeeded in garnering sufficient public trust or credibility, since compliance claims cannot be independently verified. Furthermore, the codes are not always fully disclosed to the public and often lack transparency.

This paper examines Mattel Incorporated's voluntary conduct code. Mattel is the largest toy company in the world. Its code, named the "Global Manufacturing Principles" (GMP), addresses broad criticisms of voluntary conduct codes through: (a) the creation of comprehensive compliance standards; (b) the public disclosure of complete, uncensored audit reports and organizational remedial actions; and (c) independent external supervision of the organization's adherence to the code.

Greater code adherence and higher levels of transparency afforded field managers a sense of professional gratification, and their achievements gained public recognition. However, an equally steep decline in GMP compliance was also witnessed (Sethi et al., 2010). After all readily achievable targets at Mattel-operated plants had been met, a new series of challenges emerged in addressing vendor plant compliance, which demanded considerable management commitment and stretched company resources. It appeared that ethics- and values-oriented considerations — doing what is right, and for the right reasons — were no longer the primary driver for Mattel Inc. The company perceived no economic benefit from adopting a proactive stance, while competitors appeared to face no negative consequences for failing to do likewise. The ultimate factor contributing to Mattel's departure from the code was a series of widely publicized product recalls that drew the attention of senior management.

The 2006–2007 Toy Recalls and Ethical Failures

During a nineteen-month period spanning 2006–2007, Mattel recalled roughly fourteen million of its manufactured toys. The company faced regulatory actions and several lawsuits, and its reputation suffered a serious blow. Two chief problems emerged: the presence of tiny detachable, potentially swallowable magnets in certain toys, and excessive lead content in the surface paints of several toys. An analysis of the facts revealed two separate ethical contexts: (1) the production practices of the company's subcontractors and contractors in China, and (2) product design failures (Gilbert & Wisner, 2010). Mattel's ethical responsibilities in these two contexts were quite different and reflect the difficulties multinational corporations face in global supply chain management.

The recall of nearly one million Mattel-manufactured toys in August 2007 came as a significant shock, given the company's established ethical reputation. The recalled toys contained dangerously high levels of lead in their surface paints, posing a serious health risk to children. The source was Lee Der Industrial, a China-based Mattel partner of more than fifteen years. Separate safety inspections of Chinese manufacturers conducted by the parent company proved ineffective in preventing the recall. Retailers in Europe first detected the problem in July 2007 (Mattel: Playing with Ethics — Doing Well by Doing Good). Mattel halted production and launched an investigation upon being notified.

Manufacturers in China continued to use lead-containing paints because of their easy availability, low cost, and ease of handling. Lee Der possessed the equipment necessary to test lead levels in paint, but managers apparently either deliberately ignored the equipment's readings or placed confidence in fraudulent quality-check certificates. Matters worsened as additional suppliers' merchandise was found to contain excessive lead levels, triggering further recalls. The total number of toys Mattel was ultimately forced to recall reached nineteen million.

A number of recalls were attributable to design flaws, specifically the inclusion of dangerous magnets that posed a serious choking hazard. In these cases, overseas suppliers bore no responsibility — the fault lay with the parent company itself. Duty-based ethics has clear application here: Mattel had an obligation, independent of economic consequences, to ensure the safety of its products for children.

Conclusion

Duty-based ethics places the obligation to act rightly above the pursuit of favorable outcomes, and Mattel's case illustrates how difficult that standard is to maintain under competitive and economic pressure. From the lead paint crisis driven by supplier misconduct to design flaws that were Mattel's own responsibility, and from declining GMP compliance to a reluctance to commit to living wages, the company's conduct reveals a recurring gap between ethical duty and corporate practice. Deontological ethics demands more than compliance with legal minimums or the appearance of responsibility — it requires that organizations act rightly because it is the right thing to do, regardless of whether competitors follow suit or whether economic benefits result.

References

BBC. (n.d.). Duty-based ethics. BBC Ethics — Introduction to Ethics. Retrieved July 19, 2016, from http://www.bbc.co.uk/ethics/introduction/duty_1.shtml

Corporate Watch. (n.d.). Mattel & Hasbro. Ethical Consumer. Retrieved July 19, 2016, from http://www.ethicalconsumer.org/commentanalysis/corporatewatch/mattelhasbro

Gilbert, J., & Wisner, J. (2010). Mattel, lead paint, and magnets: Ethics and supply chain management. Ethics and Behavior, 20(1).

Mattel: Playing with Ethics — Doing Well by Doing Good. (2015). Retrieved July 19, 2016, from http://stakeholder13.wordpress.com/2015/03/31/mattel-playing-with-ethics/

Sethi, S. P., Veral, E., Shapiro, H. J., & Emelianova, O. (2010). Mattel, Inc.: Global Manufacturing Principles (GMP) — A life-cycle analysis of a company-based code of conduct in the toy industry. Journal of Business Ethics, 99(4), 483–517.