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    B E - Topic 1 Compulsory Readings PDF

    Uploaded by

    Shreyas shekar

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    © All Rights Reserved
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    ibd, Sows (9-009) | Pradante Ete eo" Senths telean » Congacye perry Readrigt Gor tepret Is Business Ethics, the Changing Environment, and Stakeholder Management OPENING Case Blogger: “Hi, | download music and movies, limewire and torrent. is it illegal for me to download or is itjust ‘egal for the person uploading it. does anyone know someone who was caught and got into trouble for it, what happened them. Personally | dont see a difference between downloading a song or taping it on acas- sette from a racio!!”! ‘The Recording Industry Association of America (RIAA), on behalf ofits member companies, has sued ‘more than 20,000 people for unlawful downloading. RIAA detectives easly learn ofthe illegal downloating activity by logging on to peer-to-peer networks such as Kazaa, where users' sharefolders are visible to all ‘The majority of these cases have been settled out of court for one to three thousand dollars. Stil the RIAA continues to protect the rights of copyright owners, deterring illegal ile sharing by issuing lawsuits against individuals and universities. Students often use university networks to illegally distribute copyrighted sound recordings on unauthorized peer-to-peer services. The RIAA issues subpoenas to universities nationwide. Most conferm and give the identity of students only after assisting those accused by providing an opportunity to stop the subpoena with their own funds. The university networks used for ths illegal activity include schools in Connecticut, Georgia, Kansas, Michigan, Minnesota, New Jersey, Pennsylvania, Rhode Island, Texas, Virginia, and Washington. As in earlier rounds of lawsuits, the RIAA is utilizing the “John Doe” litigation process, which is used to sue defendants whose names are not known. Citing the ongoing effort to reach out to the university community on proactive solutions to the problem of illegal filesharing on college campuses, Cary Sherman, the RIAA's president, said: Itremainsasimportantas ever that we continue to work withthe university community inaway thatisrespectal ‘ofthe lawas wellas university values. That is one of our top priorities, and we believe our constructive outreachhas ‘been enormously productive so far. Along with offering students legitimate musi services, campus-wide edica~ tional and technological intativesareplayinga criticalrole. Butthere isalsoa complementary need for enforcement by copyright owners against the serious offenders—to remind people that this activity is illegal. Sherman stated: legally dovrloading music from the Internet costs everyone—the musicians not geting compensated for their craft, the owners and employees ofthe thousands of record stores that have been forced to close, lgitinare: cline music services building their businesses, and consumers who play by the rules and purchase their misic legaly. In 2007, a ruling was handed down to Christopher David Brennan of Waterford, Conn., by plaints ‘Atantic Recording, Electra Entertainment Group, Interscope Records, Sony BMG Music Entertainment, nc ‘Sachands: Resolved question, Meal downloding? What's illga?, Yahoo! Answers, UK. & Ireland, htp/ /ukanswersyaboo.ce / question index? qfd=20080229 06732AA:COpt, aceesed March 2, 2008. 16 Business Ethics: Concepts and Cases [BMG Music. These record companies claimed that Brennan violated their copyrights by storing 2,071 songs on his PC, “including Hootie and the Blowfish’s ‘Drowning’ and Billy Joel's ‘Don’t Ask Me Why’." Court records show that Brennan's mother was served a notice that he needed to appear in court, but he never showed up. So the record labels asked for a default judgment, which would have meant Brennan would have to pay the labels for each infringing file, among other remedies. The companies alleged that Brennan “used an ‘online media distribution system’ to ‘make available’ copyrighted recordings.” (On February 13, 2008, U.S. District Judge Janet Bond Arterton denied granting a default judgment, writing that "the record labels failed to show Brennan was actualy distributing copies of songs, which he said is what is ‘against the law,” and that the companies’ “allegations of infringement lack any factual grounding whatsoever.” Pamela Jones, writing on the Groklaw blog, noted that, “Arterton essentially rejected that having songs present ‘on a PC constitutes a violation of copyright .. That seems to be a very significant blow to the RIAA's template litigation strategy,” she wrote. Recording companies now hire computer forensics companies to locate and ‘track file-sharing networks to file sharers. The IP address for a computer connected to a file-sharing network is found and given to the recording companies, who then try to force ISPs to identify the subscriber connected with the address. Privacy activists argue, in tur, that a person's IP address (which identifies the subscriber but not necessarily ‘the person) is private, protected information that can be shown during criminal but not civil investigations. Fred ‘yon Lohmann, senior staff attorney with the Electronic Frontier Foundation, stated on his organization's blog that Arterton's recent ruling “suggests that courts are not prepared to simply award default judgments worth tens of ‘thousands of della against individuals based on a piece of paper backed by no evidence. 1.1 BUSINESS ETHICS AND THE CHANGING ENVIRONMENT Businesses and governments operate in changing technological, legal, economic, social, and political environments with competing stakeholders and power claims. As the opening story shows, there is more than one side to every complex issue and debate involving businesses, consumers, families, other institutions, and professionals. When stakeholders and companies cannot agree or negotiate competing claims among themselves, the issues generally go to the courts. The RIAA, in the opening case, does not wish to alienate too many college students because they are also the music industry’s best customers. At the same time, the association believes it must protect those groups it represents. Also, not all stakeholders in this contro- versy agrec on goals and strategies. For example, not all music artists oppose students downloading or even sharing some of their copyrighted songs. Offering free access to some songs is a good advertising tactic. On the other hand, shouldn’t those songwriters and recording companies who spend their time and money creating, marketing, distributing, and selling their intellectual property protect that property? Is file sharing, without limits or boundaries, stealing other people's property? If not, what is this practice to be called? On. the other hand, if file sharing continues in some type of form, and ifit does help sell large numbers of labels, for many artists, wil this “practice” become legitimate? While the debate continues, individuals (15 years old and younger in many cases) who illegally share files also have rights as private citizens under the law, and recording companies have rights of property protection. Who is right and who is wrong, especially when ‘wo rights collide? Who stands to lose and gain from this case? Who gets hurt by these transactions? Which group's ethical positions are most defensible? Ge, Jeremy. (2006), U.S. judge pokes hole filesharing lawsuit. Court euling could force the musi industry to provide more evi dence against people accused of illegal fle sharing, legl expers say, IDG News Service InfoWorld, htp/ /www:infoworld.com/ tice /08/02/26/US-juge-pakes-holedin-Slesharinglwsut_L nul, acesved February 26,2008; Recording Indutry Association of ‘America. (Api 28, 2008) New wave of egal le sharing lawsuits brought by RIAA. ClleyateFresswze, hp /w.cpwite.com/ achive 2001/4/28/1538.5p. Business Fthcs, the Changing Environment, and Stakeholder Management 17 Stakeholders are individuals, companies, groups, and even nations that cause and respond to external issues, opportunities, and threats. Corporate scandals, globalization, deregulation, mergers, technology, and slobal terrorism have accelerated the rate of change and the uncertainty in which stakeholders must make business and moral decisions. Issues concerning questionable ethical and illegal business practices confront everyone, as the following examples illustrate: + ‘The subprime lending crisis is one ofthe latest business scandals. Consumers, banks, mortgage companies, real estate firms, home owners, and a hos of other stakeholders were involved. Many of those who were sold mortgages were lied to about low-risk, high-return products. “On January 17th, Merrill Lynch announced its largest loss ever—$9.8 billion for the fourth quarter of 2007. Tis came as a result ofa write dowm of the value of certain assets held by the company—a $16.7 billion loss in book value. The assets had been purchased as part of the subprime mortgage bonanza of afew years ago.” This crisis is contributing to the entire US. cconomy’stiking to the brink of recession.’ Another corporate scandal-—this time i’s worse! + The corporate scandals at Enron, Adelphia, Halliburton, MCI WorldCom, Tyco, Arthur Andersen, Global Crossing, Dynergy, Quest, Merrill Lynch, and other firms jarred shareholder and public confidence in Wall Street and corporate governance. “Only 18% of Americans express a great deal or quite a lot of confidence in big business, compared to 59% who express confidence in small business. Confidence in big business has never been high, reaching its maximum of 34% in 1974. Even in the haleyon days ofthe dot. com boom in the late 1990s, only 30% of Americans expressed a great deal or quite 2 lot of confidence in big business. The current 18% confidence rating in big business is the same as last year, and remains the Jowest in Gallup history." + ‘The debate continues aver excessive pay to those chief executive officers (CEOs) who posted poor corpo- rate performance. “Shareholders want CEOs to be paid for their long-term performance,” said AFSCME (American Federation of State, County and Municipal Employees) President Gerald W. McEntee. AFSC- ‘ME’s 1.4 million members participate in public pension funds with combined assets worth more than $1 trillion. “We are in the middle ofa sub-prime mortgage crisis where some failing CEOs are walking away with hundreds of millions of dollars. That makes no sense, and we think giving shareholders a vote on CEO pay will help to stop it.” In early 2008 investors fled shareholder resolutions at more than 90 com- panies “where pay has been excessive or where there has been a perceived misalignment between pay and performance over the past three to five years, inchuding Abbott Laboratories, Bear Stearns, Blockbuster, Capital One, Citigroup, Coca-Cola, Countrywide Financial, Lexmark, Merrill Lynch, Morgan Stanley, Motorola, Northrop Grumman, and Wells Fargo.”® + Are companies becoming overregulated since the scandals? The Safbanes-Onley Act of 2002 is one re- sponse to the corporate scandals. This act states that corporate officers will serve prison time and pay large fines if they are found guilty of fraudulent financial reporting and of deceiving shareholders. Implement- ing this legislation requires companies to create accounting oversight boards, establish ethies codes, and show financial reports in greater detail to investors. Implementing these provisions is costly for compora- tions. Some claim their profits and global competitiveness are negatively affected and the regulations are “unenforceable.” + US. firms are outsourcing work to India and other countries to cut costs and improve profits. Estimates ‘of US. jobs outsourced range from 104,000 in 2000 to 400,000 in 2004, and to a projected 3.3 million by ‘Gaus Roandiable January 28, 2008) hp: /causoundtable blogspot.com 2008/01 /another-corprate scandal this-ime-tsuml ‘Newport, Frank June 21, 2007), Americans’ conidenc in Congress at all

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