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Takata Airbag Scandal:

A Case of an Ethical
Dilemma
PRESENTED BY: ANKIT KUMAR
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Takata Airbag Scandal

Analysis of Takata’s Ethical Dilemmas

• Stakeholders
• Escalation of Commitment
• Slippery Slope
• Moral Disengagement
Agenda • Whistleblowers
• 10-10-10

Consequences

Consumer Perspective of Airbag Scandal

Recommendations for Takata

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An automotive parts company manufacturing safety

systems like seatbelts and airbags

Founded in 1933

Based in Japan
Overview of
Case 35,000 employees worldwide

Began making airbags in 1988

Currently hold 20% of the airbag market

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Airbag Recall

 17 million vehicles affected

 Over 10 different automakers impacted
 Frontal air bags on both driver’s &
passenger’s side
 Installed in cars from model year 2002
through 2008
 Deploy explosively injuring or even
killing car occupants
Airbag Scandal Timeline 5
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Did Takata and/or the car manufacturers know about the

defects and potential danger prior to recalling the airbags?

Ethical Were the recalls intentionally delayed to avoid negative impact to the
company?
Dilemmas
What party holds more responsibility - Takata or the car manufacturers?
What were their responsibilities?

If Takata and/or the car manufacturers are found guilty of ignoring evidence
of defects in airbags, are the company’s executives liable for murder and/or
manslaughter charges?
Stakeholders 7
 Key Stakeholder Analysis
Key
Goals
Stakeholders
Save lives, prevent
injuries and reduce Safety, providing
economic costs due to
NHTSA road traffic crashes,
through education,
research, safety standards
and enforcement
activity.
Sell cars, make a profit,
Car
maintain a reputable
Manufacturers
brand name
Make a profit, develop
Takata quality products,
keep consumers safe
Buy a safe, reputable and
Consumers Cost, safety, brand with no accidents, injuries or
reliable car
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Outcomes/
Values Influence
Consequences
NHTSA holds a significant
Wants all cars and car parts amount of power over
excellent to be manufactured to meet car and part
service to all safety needs so they manufactures. They can
consumers, ultimately keep consumers implement fines,
integrity, and safe mandatory investigations,
leadership etc.
Wants to maintain profits Hold a large amount of
Profit, safety,
and sales while ensuring influence over when and
reputation,
customers are safe and their what recalls are issued
consumers
brand name is not tainted for their cars
Benefits from making low Influence over
Profit, safety,
cost, fast products for investigation of defects,
quality,
distribution and benefits timeliness of recalls
brand
from covering up the defects and hiding of defects
reputation
Wants to drive a safe car No large amount of
influence – only influence
quality and deaths. Disadvantaged due to comes from purchasing
reputation the defective Takata airbags. power
Can be injured of even killed
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 Escalation of Commitment: we often take
our past actions into account to define our
next steps, even those these past actions are
already completed
 Takata and Honda’s denial of
responsibility continued to grow and
Escalation of escalate throughout the airbag scandal

Commitment
 The denial continued through the
fatalities in 2004 and 2008

 How far did the Escalation go?

 We may never know exactly how far
Takata and Car Manufactures went to
cover up the defective airbags
 Takata’s Slippery Slope 10

IGNORED Mark Lillie’s expertise on the

chemical subject matter of the 1999 decision
to switch the chemical propellant in the
detonator to a less stable chemical form
which he insisted has the potential to result
in uncontrolled detonation.
Takata and Honda called airbag fatality an
“anomaly”. They did not notify the NHTSA and no
further investigation was made public but internal
experiments conducted at Takata after business
hours on salvaged airbags supported Lillie’s but
Takata covered up this evidence.

In 2008, Honda and Takata denied fault in

another fatality related to the uncontrolled
detonation of an airbag and settled the
out of court for an undisclosed amount.

In 2008, 4k Honda vehicles recalled

In 2009, 510K Honda vehicles recalled
In 2010, 437K Honda vehicles recalled
In 2011, 896K Honda vehicles recalled
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Takata’s Mission Statement

“Develop innovative products and provide superlative quality and services to

achieve total customer satisfaction. There is no end to thinking about safety in
today´s automotive society. As a company that makes seat belts, airbags, child
seats and other products that protect life, we are aware of our responsibilities to
society and want to contribute to attaining the goal of creating a world that is
safe. To do this, we will continue to work to create and further evolve safety
products and systems that people can rely on. However, Takata cannot create a
safe world by itself. Takata’s hope is that its products will never have to be
used. We would be delighted developing our safety products in a world where
they never had to be used, where traffic accidents have been totally eliminated.
Please drive carefully. Takata products are positioned between automobiles and
people. Without doubt, there are some Takata products near you. At Takata, we
dream of "a society with zero fatalities from traffic accidents."
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Did they lose sight over their

mission while dealing with this
scandal?
 Moral Disengagement 13

Moral Disengagement: Convincing ourselves that moral

standards do not apply to us for a variety of reasons
 Displacement of responsibility

 Placing the blame on Takata authority figures only

 Diffusion of responsibility

 Placing the blame on the whole company rather than

specific individuals responsible for the defects and cover up
 Attribution of blame

 User error – sitting too close to the airbags, etc.

 Distortion of consequences

 Distancing themselves from the victims, not connecting

with the victim’s families or friends
 Euphemistic labeling

 Takata labeled the defective airbag an “anomaly”

 Financial Impact of Recalls 14

 Takata had a large negative financial impact after recalls

were
announced
 Did this contribute to their escalation of commitment and moral
disengagement in covering up the defects?
Whistleblowers - Conformity to 15
Group Pressure
 Whistleblowers such as Mark Lillie and the 2004 engineers that
tested the airbags afterhours did not immediately disclose their
experienced publically until the 2015 court proceeding.
 What pressures were they facing to keep quiet?
 Social pressures?

 Pressure from management?

 Internal pressures? (fear of losing their job, supporting family,

etc.)
What techniques could they have used to help them speak up?
 Develop your reasons and rationalizations
 Practice your argument with peers
 Gain peer feedback and coaching
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10 Days:
Decision  Since 1999, the actions of the Takata management
to use a cheaper and unstable propellant in airbags

Impacts: 10 did not have immediate effects in the first 10 days

10 Weeks:

Days? 10  Since 1999, the actions of the Takata management

to use a cheaper and unstable propellant in airbags
did not have immediate effects in the first 10

Weeks?10 10
weeks either
Years:

Years?  However, within the course of over 10 years, 4 fatal

accidents were confirmed in which metal shrapnel
was the root cause of the fatality. The decision to save
money and cover up the scandal led to these
devastating 10 year consequences
 Consequences for Takata – How far 17
does the blame go?
 What should be the consequence for Takata
executives who covered up and ignored evidence
of defective airbags?
 Murder?
 Manslaughter?
 Financially Responsible?
 Not Guilty? No Blame?

 Should Honda or other car manufactures

share the blame and face criminal charges as
well?
 Consumer’s Perspective of 18

Airbag Scandal
 Communicating with consumers about the issues with the airbags
and/or recalls.
 Are the involved parties doing their due diligence and notifying consumers?
 Are the notifications in a timely manner to prevent further harm?
 What Consumers need?
 Information regarding vehicles involved in recalls
 Vehicle brand

 Model

 Type of risk

 What to do if owns particular model

 Clear explanation of the risks to consumers
 To know that the car company cares about their well-being
 Consumer Perspective - Survey Results 19

Who should be responsible for the safety equipment

in your vehicle?
Frequency Valid Percent
Manufacturer 6 12.8
Suppliers 1 2.1
Both 40 85.1
Total 47 100.0

Responsibility of vehicle safety equipment lies solely with the

suppliers of safety equipment to car manufacturers
Strongly Neither Agree Strongly
Disagree Agree
Disagree nor Disagree Agree
Strongly Disagree 1 1 0 0 0
Responsibility of vehicle
Disagree 0 13 0 3 0
safety equipment lies
Neither Agree nor Disagree 0 0 7 0 0
solely with the car
Agree 0 0 1 12 4
manufacturer
Strongly Agree 0 1 0 3 2
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Current:

• Hold an independent investigation to determine

where the problem started within Takata
• Coordinate with manufacturers to issue international
recalls

Recommenda Future:
tions for • Veil of Ignorance
• Quality Manager
Takata • Statistical control charts
• Part Testing Process Audits
• Behavior affecting values → Values affecting
behavior
• Create an accountable company culture
• Company Culture
• Focusing and condensing the mission statement
Thank You. 21