MGMT 5101EL – Ethical Leadership

THE STAKEHOLDERS REPORT FOR THE BOARD OF DIRECTORS

OF MONSANTO

Module 7: Final Report

Submitted to: Dr. Victoria Kannen

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Group J
 Date: 12/03/2023

Table of Content

1. Introduction - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2

2. Problem Statement - - - - - - - - - - - - - - - - - - - - - - - - 2

3. Analysis and Discussion of the Problem - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3

- Environmental issues, health Concerns, and Social responsibility

- Intellectual Property Rights

- Corporate Social Responsibility

4. Analysis of the Management Report - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4

- Ethical Leadership (Management)

- Ethics Program

- Social, Economic, and Environmental Strategy and performance

5. Future areas of collaboration between Management and Stakeholders - - - - - - - 6

- Sustainability

- Research and Development

- Education and Outreach

- Supply chain management

6. Recommendation and Action Plan- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7

7. References - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9

8. Appendix - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9

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 Introduction
Monsanto Company is the world’s largest seed company, with sales of $13.5 billion. It focuses

on biotechnology, which is the genetic modification of living things. In order to achieve specific

goals, like increased agricultural yields or insect resistance, Monsanto scientists have spent the

last few decades changing crops—often by inserting new genes or adapting existing genes within

plant seeds. Monsanto has been at the center of numerous controversies over the years. The

Monsanto controversy raises important ethical and social responsibility issues that concern the

company's key stakeholders. This report aims to provide a detailed analysis of the key

stakeholders in the Monsanto controversy and the issues that concern them. The report considers

the ethical and social responsibility of the corporation towards its stakeholders, and it uses the

chapters and articles assigned to support its recommendations.

The problem
The main issue concerning stakeholders in the Monsanto case study is the potential health and

environmental risks associated with the use of genetically modified organisms (GMOs) and the

company's herbicide product. Many stakeholders, including consumers, environmental groups,

and government agencies, are concerned about the long-term effects of GMOs and human health,

the environment, and biodiversity. Additionally, farmers who use Monsanto's patented GMO

seeds and herbicides are also stakeholders in the case study, as they are concerned about the

impact of these products on their livelihoods and the sustainability of their farms. Other

stakeholders, such as shareholders and employees, are concerned about the company's financial

performance and reputation in the face of growing controversy and negative public perception.

However, this is a very controversial subject because, in many developing nations, food crops

like rice, corn, and soybeans have been able to raise yields to help feed the needy. Demand for

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food is rising quickly in less developed countries (LDCs) due to population growth. Monsanto

will be able to satisfy stakeholders' needs if GM seeds can enhance crop production while

having few unfavorable impacts. Nonetheless, many people are suspicious of Monsanto's

motivations. 

1. Does Monsanto have the desire to serve people, or is it solely interested in making

money for itself?

2. Is it ethical for Monsanto to market and sell products that they know may have

harmful effects on the environment and human health?

Analysis and Discussion of the Problem

Monsanto, now owned by Bayer, has been the subject of a number of controversies and

allegations of organizational misconduct over the years. Some of the most significant include:

1. Environmental issues, health Concerns, and Social responsibility

Environmental groups, activist organizations, and some consumers have raised concerns

regarding the safety and potential long-term impacts of GMOs on the environment and human

health. The usage of GMOs may contaminate non-GMO crops, harm insects, and perhaps result

in health issues.

According to Ferrell, Fraedrich and Ferrell (2019) book on business ethics on of the major issue

is consumer protection, which often occurs in the form of laws passed to protect consumers from

unfair and deceptive business practices. Major areas of concern include environmental hazards

and product safety. Because consumers are less knowledgeable about certain products or

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business practices, it is the responsibility of companies to take precautions to prevent consumers

from being harmed by their products.

2. Intellectual Property Rights

It has been claimed that Monsanto vigorously defends its intellectual property rights, notably its

seed patents. Activist organizations claim that Monsanto's attempts to enforce its patents restrict

farmers' flexibility to save seeds for replanting, resulting in higher costs and less choice in the

market.

3. Corporate Social Responsibility

The company has not done enough corporate social responsibility in crating long-term impact on

farmers. Rather the company engaged on expansion of its business and capital structure.

According to the stakeholder value creation view, CSR activities have a beneficial effect on

shareholders’ wealth because supporting the interests of other stakeholders is often in the best

interests of shareholders (Baron, 2008). For instance, providing generous benefits to the society

and community may facilitate the support of community. Similarly, engaging in CSR may

enhance the reputation of the firm resulting in the attraction and retention of customers and the

mitigation of political and financial risk (Lee & Faff, 2009).

Analysis of the Management Report

1. Ethical Leadership (Management)

The management of Monsanto established a Code of Business Conduct to outline the company's

ethical standards and express its concern for upholding integrity among all of its numerous

stakeholders. To protect the rights of Monsanto employees and those in its supply chain, the

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business adopted a human rights policy in 2006 and an extra code of conduct for its chief

executive and finance officers in 2003. This initiative effectively communicates the company's

knowledge of ethical leadership and its efforts to encourage all leaders to use ethical judgment

and leadership.

According to a study on business ethics and the performance of organizations by (Ezinwa &

Theresa, 2021), the authors looked into the applicability of a code of business ethics for directing

the performance of an industry and assessed how well the industry adhered to the code. Findings

indicate that industry performance depended on a code of ethics and that there was high industry-

wide compliance with the code. As a result, there should be clear mechanisms in place to always

recognize and address ethical leadership difficulties; in addition, it is crucial that organizations

raise the severity of their sanctions for ethical code violations.

2. Ethics Program

Monsanto claims that the project assists the corporation in putting its beliefs into practice and in

establishing its identity and areas of support. The principles that Monsanto pledges to preserve

include honesty, open communication, openness, benefit sharing, and respect, acting as owners

to achieve goals, and creating a great workplace. The business culture and the caliber of the

ethical program are two important factors in determining how to make ethical decisions. The

variables that influence a company's financial performance include its organizational culture, the

effectiveness of its ethical programs, executive management, decision-making methodology, and

ethical attitudes and values (Garcia-Castro et al., 2010).

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 3. Social, Economic and Environmental strategy and performance

Monsanto has donated millions of dollars to initiatives aimed at enhancing communities in

underdeveloped nations. Monsanto was ranked 36 on the 2013 list of the 100 Best Corporate

Citizens by Corporate Responsibility Magazine. This demonstrates how the business is focusing

on corporate social responsibility and building strong stakeholder relationships.

This idea of corporate social responsibility is supported and studied by Barnett on 2007 on his

study on stakeholder influence capacity and the variability of financial returns to Corporate

Social Responsibility. As per his study finding Compliance with CSR principles in relation to

business partners builds an appropriate level of relational capital, which is the basis for the

proper functioning of the enterprise in the environment, credibility, which strengthens

relationships with important stakeholders, thus reducing transaction costs, leading to improved

financial results, and creating value for the company and its stakeholders (Barnett, 2007).

Future collaborative areas between company and stakeholders

Here are some potential areas of collaboration between the company and its stakeholders:

Sustainability: Monsanto could collaborate with environmental groups and farmers to develop

sustainable agriculture practices that reduce the negative impact of farming on the environment.

This could include initiatives to reduce the use of pesticides and fertilizers, increase crop

diversity, and improve soil health.

Research and development: Monsanto could partner with universities, research institutions, and

other companies to develop new agricultural technologies and products. This could include

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genetically modified crops that are more resistant to pests, drought, and disease, as well as new

types of fertilizers and other agricultural inputs.

Education and outreach: Monsanto could work with farmers, consumers, and advocacy groups

to promote understanding of the science behind agriculture and the benefits of modern farming

practices. This could include educational programs for schools and community groups, as well as

outreach to consumer groups and the media (Groves & LaRocca, 2011). Stakeholders,

particularly employees, gain from sustainable investment. Multiple studies have demonstrated

that socially progressive shareholders with long-term aspirations assist their organizations in

enhancing employee welfare. For instance, they may treat staff members better (Kang & Kim,

2020), reduce the likelihood of layoffs (Greenwood, Daz, Li, & Lorente, 2010), and thereby

increase job protection.

Supply chain management: In order to improve the efficiency and sustainability of its supply

chain (Hind et al., 2009), Monsanto could collaborate with suppliers, distributors, and retailers.

This could include initiatives to reduce waste, improve transportation efficiency, and ensure that

products are produced and distributed in an ethical and sustainable manner.

Recommendation and Action Plan

 Governments’ regulatory body like Food and Drug Administration (FDA), European

Union, Environmental Protection Agency (EPA) and other supervisory organs should

work together. Because the issue of stakeholders and consumers cannot be solved with a

disorganized effort.

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 Advocacy groups, activists and scientists should work with the government and

Monsanto Company to find better solution and long-term benefit to other stakeholders’

farmers, consumers, suppliers, employee, distributers, etc.

 Finally, major initiation towards the problem should be made by Monsanto Company.

Because doing business without the participation of internal and external stockholders

have significant consequences. Monsanto should conduct extensive research on the

long-term effects of GMOs and provide transparency to customers and regulators

about the safety of its products. The business should also set up a mechanism for

monitoring and react to any potential adverse effects of its products on the

environment and public health.

 Monsanto should create risk-free substitutes for dangerous chemicals and herbicides like

glyphosate. The business should invest in creating sustainable and environmentally

friendly products and maintain transparency on any potential harm brought on by its

current products.

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 References

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cases. Eleventh edition. Boston, MA, Cengage Learning.

2. Lee, D.D., & Faff, R.W. (2009). Corporate Sustainability performance and idiosyncratic risk: A
global perspective. Financial Review, 44(2), 213-237
3. Baron, D. P. (2008). Managerial contracting and corporate social responsibility. Journal of

Public Economics, 92(1), 268–288. https://doi.org/10.1016/j.jpubeco.2007.05.008

4. Groves, K. S., & LaRocca, M. A. (2011). An Empirical Study of Leader Ethical Values,

Transformational and Transactional Leadership, and Follower Attitudes Toward Corporate

Social Responsibility. Journal of Business Ethics, 103(4), 511–528.

5. Brown, M. E., & Treviño, L. K. (2006). Ethical leadership: A review and future directions. The

Leadership Quarterly, 17(6), 595–616. https://doi.org/10.1016/j.leaqua.2006.10.004

6. Olli-Pekka Viinamäki. (2012). (PDF) Why Leaders Fail in Introducing Values-Based Leadership? An

Elaboration of Feasible Steps, Challenges, and Suggestions for Practitioners.

https://www.researchgate.net/publication/268410207_Why_Leaders_Fail_in_Introducing_Values-

Based_Leadership_An_Elaboration_of_Feasible_Steps_Challenges_and_Suggestions_for_Practitioners

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Investigation of the Experiences of Executive Ethical Leaders. Journal of Business Ethics,

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10. Monsanto. (2022, February). BUSINESS FOR 2030. http://www.businessfor2030.org/monsanto

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GOOD GOVERNANCE.

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Corporate Social Responsibility. The Academy of Management Review, 32(3), 794–816.

http://www.jstor.org/stable/20159336

15. Greenwood, R., Díaz, A. M., Li, S. X., & Lorente, J. C. 2010. The multiplicity of institutional logics and

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Manufacturing Firms In South-East, Nigeria.

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Appendix

Initial Management Report of Monsanto by Group I Ethical Leadership Students member

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