The rise of the corporate apology
Bridgestone/Firestone's crisis reveals quickening cycle of accountability in era of Web and instant communication.
Perhaps love means never having to say you're sorry. But in business, it's becoming de rigueur. In the past month alone, the heads of four major multinational corporations have publicly apologized for company misdeeds.Skip to next paragraph
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That's good public relations. But several observers believe something deeper is at work. Corporations are edging toward a higher standard of accountability - forced in part by a wider availability of information in the age of the Internet.
Indeed, the revolution in communications and the globalization of business investing are slowly pushing the movement forward. A buzzword - "transparency" - has even been coined to describe the new mood of accountability in government and, increasingly, in business.
"There's a general trend toward transparency," says Aron Cramer of Business for Social Responsibility, a business membership group based in San Francisco. "Many companies are recognizing it's not only good for consumers and the general public, but also for themselves."
Analysts point to the proliferation of corporate environmental reports, moves by Nike and others to improve third-world working conditions, and oil-company acknowledgments that their products affect the environment.
"There's a marketlike mechanism for morality, and that's a good thing for society," says Ira Jackson at Harvard University's Center for Business and Government. "It's a good common-sense development where the guy or the gal at the top says: 'The buck starts and stops here.' "
Observers disagree whether the latest round of mea culpas falls into that category. Consider:
*Katsuhiko Kawasoe, president of Mitsubishi Motor Corp., last month apologized for 20 years of his company's coverup of safety complaints.
*James Goodwin, chairman of UAL Corp., has taken out TV ads to say he's sorry for the canceling of thousands of United Airlines flights this summer.
*Tire-related accidents of the Ford Explorer have forced Ford president Jacques Nasser to pledge on TV to resolve the mess.
*A packed US Senate panel last week heard Masatoshi Ono, chairman of Bridgestone/Firestone, take "full and personal" responsibility for the same tire-related accidents, now linked to 88 fatalities. At a follow-up hearing Sept. 12, company vice president John Lampe acknowledged the firm's credibility has been shaken and pledged "to develop open and transparent processes so that our customers, Congress, and the public can have confidence that we have done the right thing."
Limits to apologies
Of course, apologies go only so far. Take United Airlines. Labor disputes with its mechanics and pilots, air-traffic control problems, and weather forced the airline to cancel some 100 flights a day late last month.
Mr. Goodwin's subsequent on-air apology "will buy them one more chance," says Dennis Logue, management professor at Dartmouth College in Hanover, N.H. "If they don't deliver after that, then they're in some serious difficulty."
Some analysts take a harsher view of Bridgestone/Firestone and Ford. "I'm not sure there's as much transparency as the corporate heads are claiming," says economist Ray Canterbery at Florida State in Tallahassee. "Rhetoric works well until something like this happens."
Johnson & Johnson set the standard for openness almost 18 years ago, after news broke that some of its Tylenol capsules had been laced with cyanide. The company quickly pulled all capsules from the market - a move that cost a cool $125 million - and alerted the public to the danger. Three months later, the firm had developed a sealed, tamper-resistant container, and by the following year Tylenol had regained its top spot in its category.
Falling short of the standard?
Against that standard, Firestone/Bridgestone and Ford don't measure up well. "The mounting evidence is making it increasingly difficult to credibly believe that neither of these companies knew anything of this problem before this summer," said Sen. John McCain (R) of Arizona, Commerce Committee chairman, at the Sept. 12 hearing.
Firestone/Bridgestone, in particular, has been slow to apologize, which looks especially bad in the information-accelerated age of the Internet.
"What's new about transparency is that not only can you not hide, you can't hide for a minute," says Professor Jackson.
Even Ford's reputation as a well-run, values-driven company looks tarnished. Critics say that no matter what corporations claim about their accountability, such incidents will occur until executives become criminally liable for faulty products.
"Things don't change with fines and recalls," says Russell Mokhiber, editor of Corporate Crime Reporter, a legal weekly based in Washington. "The reality is they're not going to change their ways till people go to jail."
Last week, Sen. Arlen Specter (R) of Pennsylvania introduced a bill that would jail executives for up to 15 years if they knowingly sold defective products that put consumers at serious risk.
Other observers suggest that more pressure could come from consumers if they had more access to information about the social and environmental impacts of products.
"It's very difficult to get information on that," says L. Jean Camp of the Institute of Electrical and Electronics Engineers. Some groups, such as the Council on Economic Priorities, rate companies according to various social and environmental criteria. But consumers can't compare how the manufacture of, say, various athletic shoes affects the environment or third-world labor.
"That's exactly what information technology has the potential for," she adds.
(c) Copyright 2000. The Christian Science Publishing Society