Questions for Discussion and Review 1. What is your opinion of the verdict delivered in Dodge v, Ford Motor Company? Was the judge correct to rule the way he did? If the case came before the court today, would the outcome be any different? 2. What are the arguments for having corporate governance issues regulated at the federal rather than state level? Do you support these arguments? Develop an argument against the Code for Corporate Responsibility—is it persuasive? » Which of these two positions from the Business Week/Harris Poll do you agree with: That “corporations should have only one purpose—to make the most profit for their shareholders” or that corporations should “have more than one purpose. They also owe something to their workers and the communities in which they operate, and they should sometimes sacrifice some profit for the sake of making things better for their workers and communities”? Why? 5. What are the advantages and disadvantages of a firm incorporating as a Benefit Corporation? If you were starting a firm, would you consider becoming a b-corp? MEDIA CSR Connection: This issue analyzes the role of the media in an increasingly wired world that allows NGOs and nonprofit organizations to expose corporate actions they feel to be socially irresponsible. What is the role of the media in terms of CSR?!75 To what extent do the media have a responsibility to hold firms accountable for their actions? Stakeholders: Media/Journalists, NGOs. Issue The expansion of global media conglomerates and the spread of TV into every corner of the world are radically changing the way we consume news and 566information. In other words, the media “simply is—everywhere and all the time” Before the second world war, radio reached a mere 10% of the population, the print media no more than 20%. Now papers and TV both reach 90% of adults, and radio around 98%. The power of the media has effected a sea change in the development of public attitudes. As the raw material of politics, public opinion has become a mere reflection of the messages put out by the system, the producers of which insist unconvincingly that they follow what, in fact, they are creating . . . Without noticing it, we are abandoning representative democracy and marching towards opinion-led democracy.!75 The Internet magnifies this trend, threatening traditional media (newspapers, in particular, but also TV)!”° and decreasing the time it takes for information to reach us: We watch 60-second television commercials that have been sped up to fit into 30-second spots, even as we multitask our way through e-mails, text messages and tweets. . . . Changes that used to take generations . . . now unfurl ina span of years. Since 2000, we have experienced three economic bubbles (dot-com, real estate, and credit), three market crashes, a devastating terrorist attack, two wars and a global influenza pandemic. !77 Life is lived today at a hectic pace. And, when a newsworthy event occurs, we know about it almost instantly. When a US Airways plane crash-landed in the Hudson River in New York on January 15, 2009, for example, a passenger on the ferry that went to the rescue of the plane’s passengers took a photo of the plane with his cellphone (http://twitpic.com/135xa) and uploaded it instantly with the following message to Twitter, “There’s a plane in the Hudson. I’m on the ferry going to pick up the people. Crazy.”!”* This trend is important for news stations because the channel that breaks the story tends to hold the viewers. And for the media today, bad news is good news is entertainment: This obsession with speed creates problems—we report rumors, with caveats, but mistakes are made . . . It’s a complicated world. The media have a lot to say and not much time to say it, They also have to win audiences, so they sensationalize and simplify. Stalin said that every death is a tragedy; the death of a million, a mere statistic. That’s how the media, albeit with different motives, work as well.!” 567Not only is news spreading more quickly, but how it is interpreted depends on the context, Activities around the world are viewed and judged by the standards where the news is absorbed, not where it occurred. When Al-Jazeera reports on US. actions in the Middle East, for example, it does so for an Arab audience. In spite of President Obama giving his first interview with a foreign media outlet as president to Al-Jazeera’s English channel,'®? the U.S. has little control over the way the country and its foreign policy is portrayed and interpreted in the streets and cafes of Baghdad or Lebanon. As an ad for Al Jazeera in The New York Times states: Bold and fearless journalism that doesn’t shy away from the truth. We put the human being at the center of our news agenda and take you to the heart of the story. Exploring events that are often years, decades and even centuries in the making. Located at the center of the most complicated region in the world—get the real picture, every angle, every side. Al Jazeera.'*! The speed at which news travels today and how it is ultimately interpreted should also be a point of both interest and concern for global corporations, who are already portrayed in a negative light in the media.'*? Firms can no longer trust they can control the flow of information (see Figure 4.5). No actions can be hidden and, if anything goes wrong, the whole world knows about it very quickly. When two employees from Domino's Pizza decided to film a prank video in the kitchen where they worked and upload it to YouTube, for example, the consequences were swift, both for the employees and for Domino’s:'*° Ina few days, thanks to the power of social media, [the two employees] ended up with felony charges, more than a million disgusted viewers, and a major company facing a public relations crisis. . . . By Wednesday afternoon, the video had been viewed more than a million times on YouTube. References to it were in five of the 12 results on the first page of Google search for “Dominos,” and discussions about Domino’s had spread throughout Twitter. Today, a firm needs to strive to maintain positive ties with a broad array of stakeholders, both internal and external. The internet and global media conglomerates make it relatively casy for individuals or NGOs to mobilize and spread their message to multiple audiences before firms even know a problem exists, The growth in importance of global brands, twinned with the rise of media conglomerates, leaves companies exposed to any consumer backlash against activities perceived to be unacceptable or running counter to the image a company’s brand portrays. 568Case Study: CNBC “Four hostile newspapers are more to be feared than 10,000 bayonets.” —Napoleon Bonaparte!*5 The media is an essential part of the democratic society in which we live. Its role is to inform the public and hold those in power accountable to those they are supposed to serve. In an age of information overload and advertising revenue driven by viewer numbers, however, what information to present and how to present it is central to the integrity of the industry. The temptation to condense in order to capture people’s attention soon leads to the need to entertain to keep them watching. Today, the news of the world is conveyed in 30-minute segments, squeezed between the weather, sports, and personal finance programs. CNN Headline News, without blushing, manages to fit the day's major news from around the world into a segment that used to be called “The Global Minute”! The news media often simplify the message and repeat news handed to them by PR departments. As Nick Davies writes in his book, Flat Earth News: In the end, the researchers found that only 12 percent of stories [in the five national UK newspapers—The Times, the Guardian, The Independent, the Daily Telegraph, and the Daily Mail] were based on material generated entirely by the papers’ own reporters. '®° The twenty-four-hour news cycle today is a CNN world of voyeurism and reality TY, where a firm’s difficulties or ethical transgressions are everyone else’s fascinating tidbits: Fear of embarrassment at the hands of NGOs and the media has given business ethics an even bigger push. Companies have learnt the hard way that they live in a CNN world, in which bad behavior in one country can be seized on by local campaigners and beamed on the evening television news to customers back home.!*7 CNN, launched in June 1980, came to prominence in the living rooms of the world and North America, in particular, during the first Gulf War. The station’s willingness to push the envelope in what is expected of a 24 hour cable news channel’s frontline reporters enabled them to carry on presenting after the competition had evacuated to safety: (CNN had been a failing venture until the 1991 Gulf War, when it provided the 569only television coverage from inside Baghdad. That exclusive was possible only because every other network had pulled its correspondents to protect theit lives. Tom Johnson, CNN’s president at the time, wanted to do the same, but [Ted] Turner told him: “I will take on myself the responsibility for anybody who is killed. I'll take it off of you if it’s on your conscience.” No one was killed, but Mr. Turner’s roll of the dice with other men’s lives is no less jarring. * The role CNN plays in conveying information to the public is now a legitimate consideration for the U.S. government when selecting military bombing targets during a war. This is particularly so when the targets are located in civilian or urban areas. As in all aspects of society today, rapidly developing technology allows more things to be done in a much shorter time frame. In a war, the information field commanders receive has multiplied exponentially, as has the speed in which they must decide what to do. When the wrong decision or a mistake is made, CNN is there to tell the world about it: When missiles do go awry, as happened when the United States accidentally struck the Chinese Embassy in Belgrade in May 1999. . . there is alarm worldwide." The CNN Test is the assessment military commanders make when choosing potential targets for bombing during warfare today. This issue was the focus of a number of news items in the lead up to the second Iraq war (2003-2011):!° Military commanders have long had legal advisers. But more than ever, attorneys are in the teams that choose the strategies, the targets and even the weapons to be used. . . . And legal issues aren’t the only factors . . . Commanders must also worry about “the CNN test.” Is the target worth all the loss of innocent life—and the inevitable outery?!?! Public opinion greatly influences a country’s foreign policy (which, after all, is determined by politicians who need to be re-elected). And the media today plays a central role in shaping that public opinion. People react much more strongly to pictures that they see than to words that they read. With words, they have to use their own imagination, which requires effort; pictures are spoon-fed to the public via TV and, increasingly, the Internet. And, when the pictures are riveting, they're played over and over again until they become ingrained in the public conse knownas the “CNN effect.”!°? From Vietnam to the fall of the Berlin Wall, from the World Trade Center towers in New York to the Fukushima tsunami to the Arab 570Spring, TV footage personalizes the story, introduces emotions, and removes the larger context within which foreign policy decisions must be made. As such, the story that the news media convey is not always complete or accurate, but can be thought of more as entertainment that is “packaged for ease of dissemination and consumption.” Nevertheless, CNN’s successes have caused their competitors to respond in order to make their product more competitive. From BBC World to Al-Jazeera to Fox News,! cable news channels have re-shaped the way we watch TV and receive our knowledge about the world. It is perhaps not surprising, therefore, that, in the same way that the first Iraq war enabled CNN to establish itself in the ultra~ competitive media market, the Financial Crisis enabled another cable network, CNBC, to find its identity:!95 Partisanship aside, this is CNBC’s equivalent of a war. Just as the first cable news channel, CNN, rose to prominence during the gulf war in 1991, and another one, the Fox News Channel, became a ratings leader in the period before the Iraq war in 2002 and 2003, CNBC is on a war footing. . . . the network’s home audience started to surge in August 2007 as the upheaval began in the credit markets. They peaked in March 2008 when Bear Stearns was sold to JP Morgan Chase .. . After hitting a plateau that spring, the ratings soared [in fall 2008] when other investment banks collapsed, setting records for the network.'° The increased viewers the channel attracted in the aftermath of the Financial Crisis also helped its parent company, NBC, dominate the network news ratings in the U.S. at the time,!"” while securing “its fourth year of double-digit growth in operating profits”!%* in 2010. CNBC was successful because it was relevant—“It was news being made, all the time, in real time.”! The role played by the station in reporting the crisis (both before and after it occurred), however, was not without its critics: A showdown between a comedian who has become one of America’s most challenging news commentators and a news commentator known for his comedic antics has shone the brightest spotlight on the media market's coverage since the financial crisis began.2” For those who missed Jon Stewart’s lambasting of CNBC on The Daily Show in March 2009, his three part interview of Jim Cramer (host of Mad Money) S71is compelling TV: http://www.thedailyshow.com/wateh/thu-march-12-2009/jim-cramer--pt-l As usual, Stewart employs comedy to great effect. In addition, however, he conftonts Cramer with an honesty and directness that you rarely see on current affairs TV in the U.S. Stewart articulates succinctly the behavior of Wall Strect that led directly to the Financial Crisis, but also skewers Cramer (and CNBC) for becoming part of the problem, rather than being the journalists they purport to be. As a result, the interview is both entertaining and uncomfortable to watch because Stewart so completely undermines what it is that must get Cramer out of bed every morning to do his show. Stewart's analysis was all the more compelling because it challenged what it means to be a modern journalist in a democratic society. Beyond merely castigating CNBC (and, by implication, the business media as an industry) for failing to perform their role of oversight more effectively, Stewart accuses CNBC of complicity—knowing what was going on, but being overly concerned with their status as insiders, rather than maintaining their journalistic integrity. To what extent is journalism part of the establishment and to what extent do journalists have a civic responsibility to hold the great social institutions (e.g, politics and businesses) accountable for their actions? It is hard to do both: The problem here is not individuals but attitudes, including a media culture that causes some people, particularly in the entertainment-driven medium of television, to blur the line between entertainment, good journalism and sound analysis. . . . As long as everyone was making money, nobody wanted to hear the bad news.2°! Jon Stewart advocates for impartiality and criticizes the partisan journalists who he believes fail to hold politicians to account: ‘The problem with the media today is they are too wrapped up in the strategy of the Beltway. .. . They are worried about their connections within that world when what they need to be worrying about is their connection to us outside of that world. . .. We are the ones that they need to protect from this cynical game of right and left that is being perpetrated.7 As indicated by other commentators, the media, with all its flaws, is only 572capable of writing “a flawed first draft of history” as it unfolds.2" It is debatable, however, whether creating an historical account is even given lip-service by today’s media, which others have argued “doesn’t exist to deliver programs to viewers; it exists solely to deliver audiences to adyertisers.”?* This service is packaged in an increasingly partisan message that leaves channels like CNN, who at least claim to be objective, without a strong base of core viewers: Fox News assures conservative viewers that Democrats’ gaffes [represent bad intentions], and Republicans’ [represent a misunderstanding]. MSNBC, vice versa. CNN tries to be fair. Viewers hate that. Its ratings in America are sliding, while Fox and MSNBC are doing well.”°5 This shift towards partisan ideology and ratings maximization is precisely why the media continues to value attention-secking anchors such as Jim Cramer, who demand the limelight with elaborate (and often misleading) bold pronouncements: There is only one Jim Cramer, host of CNBC’s popular finance show Mad Money. His latest notable outburst came [in April, 2009]: “Right now, right here, on this show—I am announcing the depression [is] over!” He is going too far again 20° As the line between news and entertainment blurs, so the way that we understand world events and consume the news has also changed: Today’s satirists are a substantial part of one of the great powers in free societies—the media—and, since the latter part of the 20th century, have substituted themselves for news. . . . In the US, programmes such as The Daily Show with Jon Stewart and The Colbert Report have displaced news and documentary as the main way in which young viewers learn about current events.207 This discussion does not diminish the concern firms should have about their loss of control over the free flow of information. If anything, it should heighten it because, today, the truth and facts are increasingly subjective points of disagreement that are spun to fit a specific agenda, rather than reflect reality. As we become increasingly interconnected and words and images are shared more freely, the ability to assert control is lost and it is not coming back. The Internet is anarchic at heart. As a result, firms need to do all they can to ensure relations with their myriad of stakeholders are as positive as possible, to ensure they do not become the next victim of this communication medium. 573CEO Perspective Rupert Murdoch (News Corporation) The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.7°° Online Resources 10 x 10, http://tenbyten.org/10x10.html ‘Accuracy in Media, http://www.aim.org/ BBC World News, http://www.bbeworldnews.comy Business & Media Institute, http://www. businessandmedia.org/ CNBC, hitp://www.cnbe.com/ CNN, http://www.cnn.com/ Independent Media Center, http://www.indymedia.org/ Mad Money, http://www.cnbe.com/id/ 15838459 mediachannel.org, http://www.mediachannel.org/ Media CSR Forum, http://www.mediacsrforum.org/ The Daily Show with Jon Stewart, http://www.thedailyshow.com/ eee eee eee oe Pro/Con Debate Pro/Con Debate: The media today plays a valuable role holding the important institutions of our society (businesses, government, ete.) to account, Questions for Discussion and Review e watch news , should be? it necessarily 1. Do the media today report the news or distort the news? Do w or entertainment? What do you think CNN’s role, or the BBC What about Al-Jazeera? Is news reporting today objective or is culturally biased? Nv Should the armed services have to answer to CNN or any other news organization? Isn’t that the responsibility of the civilian planners and politicians that shape the strategies that the armed services implement? Should 574the media’s powers be restricted during wartime? Have embedded journalists helped the reporting of war or just upped the entertainment level closer to Hollywood special-effects levels? 3. What is the correct role of a media channel in a democratic society? Are they there to police society’s institutions and hold them accountable based on their own biases and political agendas? Or, are they there to report the news objectively without taking sides? From what you know of CNBC, did they perform well or badly in terms of reporting before, during, and after the Financial Crisis? s Watch the three parts of Jon Stewart's interview of Jim Cramer from CNBC's Mad Money (http://www.thedailyshow.com/watch/thi-march-12-2009/jim- cramer--pt-1). Do you think Stewart’s questions are fair? What do you think about Cramer’s answers? As a result of the interview, do you trust Cramer’s stock advice more or less? Why? 5. What is your response to the following quote? In reality, news is entertainment. And, despite the public’s acceptance of journalistic ideologies, most of the public watch or read news not to be informed or to learn the ‘truth,’ but precisely to be entertained.?°° RELIGION CSR Connection: This issue places religion in a CSR context. To what extent is religion a unifying concept? How can firms incorporate religion into their operating and strategic outlook? What does it mean to be socially responsible with respect to religion? Stakeholders: Society, Customers, Employees. Issue What does it mean to be socially responsible with respect to religion? Beyond tolerance, how can firms respond to stakeholders’ religious needs and interests without shifting the firm’s position from issue-to-issue or seeming to favor one constituency over another? Where people disagree, how can firms respect that S75