Question:
Ethical Culture Analysis This paper should be an in-depth investigation and analysis of the ethical culture and performance of a large organization based on course concepts. The organization should, if possible, be a prospective employer: a firm you might like to work for in the future. You will gather data through press reports, company Web sites and materials, personal observation, interviews, and other possible sources. Your analysis should be structured as follows:
Introduction
A description of the organization and its operations.
An explanation of your interest in this group.
Body: Cover the following elements and include both description and evaluation of each element:
- How the organization prevents and responds to problematic and antisocial behaviors
- Components of ethical culture, including the core beliefs these components are drawn from Pertinent ethical concepts or theories, including details of each concept or theory
- Cultural change efforts (ethical drivers), including the complexities of the ethical issues involved and cross-relationships among issues
- Organizational citizenship/social performance
- Ethical global citizenship and ethical diversity
Conclusion
Determine whether this is an ethically decoupled or an ethically transformed organization, and defend your choice against possible disagreements or objections.
Offer suggestions that could be provided to management for the improvement of the organization.
Indicate whether you would like to work for this organization based on your analysis and your own core beliefs or would recommend that others do so.
Evaluation will be based on:
The quality of your research (evaluated for thoroughness and evidence of critical use of sources)
The adequacy of your description, including background (evaluated for thoroughness, clarity)
Evidence that you have comprehended and applied course concepts (evaluated for accuracy, completeness)
The depth of your analysis and observation and evidence that you recognize issues and their complexity (evaluated for evidence of critical thinking)
The adequacy of your conclusion (evaluated for evidence of support and quality of suggestions)
The quality of your writing (evaluated for correct grammar, punctuation, spelling and clear wording).
Answer:
Title: Ethical Culture Analysis of Apple Inc.
Introduction
Apple Inc. is a US computer and consumer electronics company based in Cupertino, California. The first product of the company was a computer called Apple I. At the time of manufacture of this computer, the company’s share price was $3.30. This price rose dramatically to reflect the company’s growing fortunes, reaching $339.87. Apple I was very different from the products that Apple produces today.
Since Apple I was unveiled in 1976, the company has achieved many successes as well as challenges. Today, the company is the most admired corporate entities according to the Fortune Magazine. The company has millions of customers across the world, and it is mainly admired for its innovative, high-quality, and prestigious brands. This global stature has contributed greatly to the company’s growth both in terms of competitiveness and value.
The humble beginnings of the company were triggered by the efforts of Steve Wozniak and Steve Jobs to construct a hand-made computer. This computer lacked most of the characteristics of the modern computer, such as a keyboard, a display, and a graphic user interface. Steve Jobs convinced co-founder Steve Wozniak that it was possible to sell the computer as a commercial product.
With continued innovation, the co-founders created more computers, and Apple Computer Inc. started growing. The mid-1980s, though, were characterized by difficult times for the company, with Steve Jobs being ousted as the company’s chief executive. This was followed by lack of success for newly manufactured products such as Newton and Mac I. However, since the return to the company he co-founded in 1997, the company has been back on the road to progress.
This path of progress has been characterized by a radical change of corporate culture. A key element of this culture is a ‘closed door’ policy, whereby the company’s technology is vigilantly protected. Steve Jobs was also famous for dismantling the company’s organizational structure, whereby he normally chose to address his employees directly. However, one of the most conspicuous changes has been the introduction of new product lines in the area of electronics. In this case, the main products include the iPod, iPhone, iTunes Store, and iPad.
With the expansion into the consumer electronics industry, Apple Computer Inc. was renamed Apple Inc. in 2007. In a way, this move is seen as a shift away from computers. However, it may also be seen as a way of reinventing computers. This is particularly the case with the introduction of iPad, a tablet computer. The iPad has affected competition in the computer market, since buyers sometimes have to choose between buying an iPad, a laptop, a desktop, and a netbook. In fact, after the introduction of the iPad, sales of the other types of computers have dropped significantly. The demand for tablet computers is expected to continue growing rapidly.
It has been rather difficult for corporate analysts and rival company leaders to figure out reasons for the uniqueness of Apple Inc’s business model. Of the many factors cited, the most recurring one is the exemplary leadership skills of Steve Jobs, the company’s co-founder and chief executive. Other factors include innovation, a culture of enthusiasm, and use of cutting-edge technology to produce high-end products.
My interest in this company was triggered by the impressive story of management excellence in the hands of its co-founder Steve Jobs. I am interested in understanding the uniqueness of the company’s ethical culture. Jobs’ success made me want to join the company to work as a management trainee and then rise through its ranks to become a senior executive. This interest has continued to grow, particularly upon observing the astounding success that Apple Inc has achieved not just in the US but across the world.
How Apple Inc. prevents and responds to problematic and antisocial behaviors
Apple Inc. has all along been endeavoring to ensure that all its employees conduct themselves in the right manner while working for the company. The company’s code of ethics emphasizes on success in being creative in the manufacture of high-quality products. In the course of all business interactions, the employees are expected to demonstrate integrity. For Apple, the main pillars of integrity include respect, honesty, compliance, and confidentiality.
To guide the company in the task of preventing and responding to problematic and antisocial behaviors, Apple has put in place a code of conduct that is applicable to all business operations, both at home and abroad. This code of conduct is available on the company’s website. It specifies the policies to be followed in matters of conflict of interest, questionable conduct, and corporate governance. Moreover, Apple Inc. has put in place an Audit and Finance Committee for handling incidences of misconduct and antisocial behavior. There is a Business Conduct Helpline that the company’s employees can use to report any incidences of misconduct to this Committee.
Most of the product components of Apple Inc. are manufactured abroad, particularly in countries where labor costs are low. In such countries, there is a high potential for misconduct because of variations in labor standards. To ensure compliance in the face of differences in oversight policies, Apple compels each of its suppliers to enter into a compliance commitment by signing its elaborate ‘Supplier Code of Conduct’. The company also carries out factory audits in efforts to ensure that the supplier code of conduct is complied with all the time. When violations are identified, Apple may refuse to do any more business with the supplier.
The company also goes a step further to emphasize its commitment towards supplier compliance by releasing an annual Apple Supplier Responsibility Report. This report gives details regarding supplier expectations as well as the findings arrived at in the factory audit. The report also provides details regarding the corrective measures that the company is going to take against factories that violate the Supplier Code of Conduct.
Components of ethical culture: Core beliefs, pertinent ethical concepts, and theories
Traditionally, Apple’s ethical culture dwells largely on issues relating to product quality, privacy, sustainability, intellectual property, and patents. When Steve Jobs returned to the company to try and save it in 1997, a new era started unfolding for the struggling company. Jobs was keen to transform the company’s corporate culture, and this led to the launch of the ‘closed door’ policy. This policy was aimed at ensuring compliance to the issues of product quality, privacy, sustainability, intellectual property, and patents. Today, the company maintains vigilance in the protection of its technology and all employees are expected to share in this goal.
Many scholars tend to pose the question on whether it is possible to identify companies on the basis of how ethical they appear to be (Key, 2008). The notion of organizational culture implies that business organizations tend to have cultures of which ethics form an integral part. Culture entails beliefs that are shared by members of an organization. Ethical culture, therefore, is a reflection of the beliefs that members of the organization share regarding its ethics. In this regard, ethics of various companies can be said to exist on a continuum, with unethical companies being on one end and highly ethical ones being on the other end.
It would be interesting to ascertain the position that Apple would take in this continuum. Considering the reputation that the company has built over the years, it is proper to assert that its ethical culture is among the best in the corporate world. Indeed, a core component of the company’s organizational culture entails a well-written statement on ethical culture. In this statement, the company’s top executives acknowledge that Apple’s reputation can easily be damaged if serious allegations of misconduct were made against any of its employees.
On the issue of product quality, the ethical culture at Apple puts emphasis on consistent oversight. Even the slightest of mistakes tend to bring about serious ethical dilemmas. These dilemmas can be costly considering that in the electronics industry, technology changes at an alarming rate. An excellent example of costly mistakes is that of iPhone 4. Immediately after this product was launched, consumers started complaining that it had reception problems. These problems had to do with antennae interference. Customers had to hold the phone in a specific manner to avoid this problem.
Many public relations practitioners criticized the company for trying to downplay the iPhone problem instead of taking all the necessary measures to correct it. Although this problem did not prevent millions of customers from purchasing the product, it reiterated the need for an elaborate ethical culture statement on how to address problems relating to product quality. For many enthusiasts of the company’s products, Apple is synonymous with product quality. Therefore, it becomes imperative for the company to put mechanisms in place for ensuring that no employees engage in quality-related sabotage.
Most theories of ethical culture tend to emphasize the way various corporate stakeholders come together to reinforce certain aspects of corporate culture. In this analysis, focus is normally on the values, beliefs, and practices that come into play in the management of stakeholder relationships. In the case of Apple, these relationships are seen to be at play with regard to key stakeholders such as suppliers and customers. For suppliers, compliance with the ethical code of Apple Inc. is necessary. In the case of customers, there is always an expectation of service with integrity by all Apple employees and representatives.
Each of the stakeholders involved in Apple’s line of business has certain characteristics. Jones (2007) identifies five key stakeholder cultures: moralist, corporate egoist, agency, and altruist. According to Jones, these cultures exist in a continuum, with the agency culture, which is individually self-interested, being on one end of the continuum. On the other continuum there is the altruist culture, which gives full consideration to the needs of others.
An analysis of Apple’s ethical culture shows that an integral part of the work of top executives entails balancing the conflicting ethical dispositions of different stakeholders. It appears worthwhile to elaborate on the moralist and altruist cultures. These cultures are sometimes grouped together and referred to as broadly moral cultures. In these cultures, one is expected to have an ‘other-regarding’ approach when dealing with making decisions. Such decisions are supposed to be helpful to not just shareholders but also to all stakeholders.
However, in altruist and moralist cultures, there are some differences with regard to the compromises that have to be considered in worst-case scenario. Nevertheless, both attempt to put into consideration the interests of stakeholders. Sometimes, the choices made may not be in their self-interest, in both short- and long-term. Emphasis is on honoring commitments, treating all stakeholders with integrity and respect, and adhering to all contractual obligations.
Following the problems that arose with the iPhone, two customers, one from Massachusetts and another from New Jersey, took Apple Inc. to court for failing to honor its part of the bargain after insisting that iPhone buyers would need to buy protective covers (the so-called ‘bumpers’) for $29. The company recommended the use of these protective covers to deal with the poor signal reception problem. The two customers complained that the company was indulging in unfair business practices and misleading advertising. In the lawsuit, the customers alleged that Apple Inc. and AT&T were engaging in negligent marketing of the iPhone by providing blatantly false information in adverts. These claims, if proven to be true, indicate a move by Apple to put the needs of shareholders ahead of those of customers.
The magnitude of this problem was phenomenal, considering that during the first three days following the iPhone launch, some 1.7 million new iPhones were sold globally. Apple decided to sell protective cases for $29 each, yet these cases were meant to remedy a problem of the company’s own making. One of the customers complained that Apple was supposed to either ship the bumper to customers for free or be order to pay for the bumpers that some customers had already bought.
By selling bumpers to customers to solve a problem of the company’s own creation, Apple Inc appeared to be clinging onto an instrumentalist culture and not a broadly moral one. In an instrumentalist culture, companies ensure that moral considerations are weighed against economic benefits. The so-called ‘taboo trade-offs’ relate closely to an instrumentalist culture. A classic example of ‘taboo trade-offs’ is the tendency to put a dollar value on the human being’s life. In the same way, Apple Inc. appeared to weigh ethical considerations of correcting the iPhone problem against the economic benefits to be realized in the process.
Cultural change efforts (ethical drivers): Complexities of the ethical issues involved and cross-relationships among issues
In any organization, the main ethical drivers are normally cultural change efforts. These cultural change efforts, however, tend to be shroud in complexities. This is largely due to the ethical issues involved and cross-relationships among these issues. At Apple, the most significant cultural change efforts were launched in 1997, when Steve Jobs came back to the organization he had co-founded. This return marked the end of a 12-year absence after ouster after persistent boardroom wars.
It is imperative to reflect on the ethical values that Apple was founded on at the time of growing financial strength in the early 1980s. In September 1981, the company’s culture was codified in a memo issued by an employee task force. This taskforce identified the customer, qualities, standards, and principles that would be regarded as desirable for a smooth running of the company. This memo formed the basis of all the activities being undertaken by employees of the company.
One of the core values enshrined in the 1981 was on the notion of one computer for every person. The other core values were about setting out aggressive goals and pursuing them, togetherness in the technological adventure ahead, and the quest for a positive impact in society as well as making a profit. As per those ethical values, each person was viewed as important, and each had an opportunity as well as an obligation to impact positively on both the company and society. Moreover, cooperation among employees was proclaimed, with an underlying pursuit being that of enthusiastic pursuit of creativity and innovation. Employees were also expected to care a lot about what they are engaging in to help the company realize its goals. In that case, it was necessary to stress the need for the right environment to be created for the desirable values of Apple to flourish.
When Steve Jobs took over again as Chairman and CEO of Apple Inc. he made some drastic, even shocking changes in the company’s board of directors. Of all the board members, only two remained. Initially, Jobs had refused to take up these positions, claiming that he had a different life and he was already playing a satisfactory role of a part-time adviser. However, senior executives of the company were convinced that it would be difficult for any new CEO to undertake his functions properly with Steve Jobs being a board member, and it seemed they were right. Soon after his appointment to head Apple, Jobs sacked all but two directors of the company’s board.
Considering that some of those who were axed had played a critical role, behind-the-shadows, in Jobs’ ouster 12 years earlier, one may consider Jobs’ decision to suck opponents unethical. Moreover, Jobs replaced these opponents with friendly faces. Although the new board decided not to appoint a new chairman until the selection of the new CEO, it was clearly evident that Steve Jobs was now firmly controlling the firm. As a corporate leader, Jobs had a lot of influence on the changes that were taking place in the company with regard to ethical culture. His approach to board-membership overhaul is a reflection of the use of an instrumentalist culture, whereby moral considerations are weighed against economic benefits.
The organizational politics of rivalry towards competitors was at play when Jobs returned at Apple. The issues under contention centered on patents and copyright and they were triggered by Jobs’ decision to enter into a new partnership with Microsoft. Only a few years back, Apple had been embroiled in a legal tussle with Microsoft over patent and copyright issues. Traditionally, Apple loyalists and shareholders held the belief that for Apple to win, Microsoft must lose. Jobs had to convince them that it was not a must that this should be the case. The new cooperative arrangement entailed Microsoft continuing to make the Mac versions of its products for the next five years. Apple would in return bundle the Microsoft’s Internet Explorer with its Mac Operating System, making Internet Explorer the default browser of the OS. To reinforce the cordial relations, Microsoft entered into a settlement on the patent infringement claims by paying an undisclosed fee.
The dealings with a competitor, the wrath of culturally ‘fixated’ stakeholders, and the internal politics of company ownership and management, all reflect the complex nature of the ethical culture of a company of Apple’s magnitude. To survive at the helm of the company, Apple had to sometimes resort to seemingly unethical measures. It should be borne in mind that two years before his return to Apple, Jobs and his close corporate friend Ellison were considering a hostile takeover of the company. If this were to be the case, they would have had to spend billions. Instead, Jobs got to the helm of the company and the company was also paying him hundreds of millions in the sale of the NeXT software (Linzmaye, 2004).
The decisions that Steve Jobs has been making at Apple in many ways exemplify the secrecy with which the launch of new products are held, only for the news to be revealed in a manner resembling publicity stunts. The long awaited public announcements normally attract a lot of hype. The attention that the company attracted in the wake of a new product announcement made many people develop interest in the product. Although no ethical issues arise because of a long-awaited product announcement, questions no doubt emerge regarding the extent to which Apple’s managers are willing to go to maintain this ultra-high level of confidentiality. Sometimes, employees may feel constrained in terms of lack of freedom of expression. Over time, however, this has come to be accepted as Apple Inc.’s ethical culture.
On a positive note, though, Apple has never been involved in any major ethical scandal. This is an indication of the excellence in the way the company’s ethical culture is stipulated and nurtured. Some other major companies have not been as unfortunate, particularly in the 21st century, because they have been at the center of major ethical scandals. These scandals have ended up affecting millions of investors and employees. For Apple, the ability to avoid such major scandals is a major achievement, particularly considering that by their very nature, ethical decisions are complex (Salaman, 2010).
Organizational citizenship and social performance
Currently, there is a lot of literature on organizational citizenship and social performance. However, this very abundance of literature has not helped resolve conceptual confusion regarding the meaning of these terms. This has made it difficult for readers to keep track of developments on this subject (Podsakoff, 2000). There are many forms of organizational citizenship behavior constructs that researchers tend to explore. It would be interesting to find out how the mainstream categories of citizenship behavior constructs are applicable with regard to the ethical culture of Apple Inc.
Organizational citizenship behavior (OCB) is the extent to which an individual’s behavioral attributes and voluntary support contributes to the success of an organization. The task of improving organizational citizenship behavior is an imperative one, and it involves the setting up of both formal and informal systems so that the right organizational environment is established.
At Apple, both formal and informal systems of nurturing the appropriate organizational citizenship are present. Formally, email communication is a highly preferred mode of communication with employees. The former CEO of the company, Steve Jobs, was famous for sending emails direct to employees. He used to send emails to motivate them, to make important communications, and to deal with disciplinary issues.
The example of the process of searching for a new CEO at Apple in 1997 clearly demonstrates how deeply the culture of email communication was entrenched at the company. At this time, Steve Jobs and Larry Ellison jokingly sent an email to a former Pixar employee, Michael Murdock, who had been campaigning for the position of Apple CEO, informing him that he ‘could have the job’ (Perreault, 2004). Murdock did not understand the joke and went ahead to specify the day when he would commence the new job. It was then that Jobs got serious and told him that his services were not needed at all at Apple Inc. (Perreault, 2004). It should be borne in mind that Jobs sent the email at a time when he was quickly consolidating his power at the company. For many, Jobs was the de facto CEO of the company. He had already filled the board of directors with friendly people. The ethical basis of his email to Murdock may be put into question, but it appears the company’s ethical culture allowed such excesses by the bosses.
Indeed, the ethical culture that is nurtured by actions of top company executives tends to have a bearing on the sort of corporate citizenship behavior that is nurtured. For Apple, the business ethics are of one of the highest levels in the corporate world. The fundamental principle is the ‘use of good judgment’. Apple’s employees are particularly aware of the responsibility that they have towards customers, shareholders, and communities in conformity with all legal boundaries and applicable laws. Moreover, all the employees are expected to be fully aware of the ethical responsibility that comes with their job positions.
The extent to which these responsibilities are adhered to determines the level of social performance achieved. Being a technology company, the issues of social performance that are of greatest relevance include honesty, high standards of corporate conduct, respect for confidentiality of information, avoiding conflict of interest, and provision of various benefits to communities through the activities of the company. At Apple, there is always a high expectation that all employees, subsidiary owners, and business partners will comply with each of these standards of corporate citizenship behavior and social performance.
For Apple’s top executives, the responsibilities are clearly outlined. They entail encouraging creativity, cultural diversity, and supportive working environment. This implies absence of any form of harassment, discrimination, and other threats. All along, these values have been nurtured to create the right environment for the production of technologically innovative, on which the company’s survival is dependent.
The issue of social performance has also been addressed through rules that clearly spell out how communication to financial analysts and the press should be made by employees. Even where such personal undertakings are permitted, there are restrictions on circumstances in which Apple-owned equipment can be used for personal use. To avoid conflicts of interest of that nature, the company has clearly outlined the situations where they can occur and designed appropriate avoidance strategies.
Ethical global citizenship and ethical diversity
The unique history of Apple made it to be considered an excellent example of the ‘American Dream’ becoming a reality. Over the years, the company has transformed itself into a multinational enterprise (Brunner, 2009). As a multinational, most of its raw materials are resourced globally, and similarly, its products are sold to global markets. In this scenario, the issues of ethical global citizenship and ethical diversity become pertinent.
The core aspects of the company’s global strategy are influenced by the leadership philosophy of the company’s founder Steve Jobs. Jobs’ visions for Apple have influenced the global ethical strategy that has been adopted in recent years. However, the other senior executives of the organization have also been giving their professional contributions regarding ways of increasing ethical diversity on a global scale. A key aspect of this strategy entails maintaining confidentiality, such that no information regarding the company’s future strategies should be divulged to the world. This strategy requires all employees, whether working in domestic offices or abroad, to demonstrate a strong sense of loyalty to the company’s visions.
Conclusion
In conclusion, Apple Inc. is undoubtedly an ethically transformed organization. Those who object to this observation should look at the Apple Computer Inc. of 1996 and Apple Inc. of today. Upon returning to Apple in 1997, Steve Jobs helped to transform the organization not only in terms of the products being manufactured but also ethically. One component of this transformation took the form of a ‘closed door’ policy, characterized by strict compliance to laws, policies, and regulations on product quality, privacy, sustainability, intellectual property, and patents. The other component entailed dismantling the company’s organizational structures, whereby he normally chose to address his employees directly.
However, with the resignation and subsequent death of Steve Jobs, Apple Inc.’s management has a herculean task of taking the visions of the company’s founder to new heights. Moreover, as a multinational company, Apple Inc. needs to have a more elaborate ethical global citizenship strategy. Such a strategy would be of use both for the company and for prospective employees who are not US citizens. Based on this analysis and on my core beliefs, I would like to work for Apple Inc. For these same reasons, I would also recommend that other professionals do so.
References
Brunner, R. (2009) Intellectual Property Rights in Computer Education: Legal, Societal, and Ethical Issues, Computer Science Education, 1(4), 355-367.
Jones, T. (2007) Ethical Theory and Stakeholder-Related Decisions: The Role of Stakeholder Culture, The Academy of Management Review, 32(1), 137-155.
Key, S. (2008) Organizational Ethical Culture: Real or Imagined? Journal of Business Ethics, 20(3), 217-225.
Linzmaye, O. (2004) Apple confidential 2.0: the definitive history of the world’s most colorful company, New York: William Pollock.
Perreault, G. (2004) Ethical Followers: A Link to Ethical Leadership, Journal of Leadership & Organizational Studies, 4(1), 78-89.
Podsakoff, P. (2000) Organizational Citizenship Behaviors: A Critical Review of the Theoretical and Empirical Literature and Suggestions for Future Research, Journal of Management, 26(3), 513-563.
Salaman, G. (2010) Strategic human resource management: theory and practice, Princeton: Princeton University Press.
