Case Study 6 - J&J and Dow Corning

Organizational Theory
« LBA3 »
Mrs. Emna MAALOUL MROUA
Case for analysis :
« Ethical stances at Johnson & Johnson

and Dow Corning »
In 1982, managers at Johnson & Johnson, the well known maker of pharmaceutical and
medical products, experienced a crisis. Seven people in the Chicago area had died after taking
Tylenol capsules that had been laced with cyanide. Johnson & Johnson’s top managers needed
to decide what to do. The FBI advised them to take no action because the likehood that
supplies of Tylenol outside the Chicago area were contaminated was very low.
Moreover, withdrawing the drug from the market would cost the comany millions of dollars.
Johnson & Johnson’s managers were of a diffrent mind, however. They immediately ordered
that supplies of all Tylenol capsules in the U.S. market be withdrawn and sent back to the
company, a move that eventually cost more than $ 150 million.
In 1992, managers at Dow Corning, a large pharmaceutical company that had pioneered the
development of silicon breast implants, receive disturbing news. An increasing number of
reports from doctors throughout the United Stetes indicated that many women who had
1
received Corning Silicon breast implants were experiencing health problems ranging from
fatique to cancer and arthritis due to ruptured implants. Dow Corning’s mangers believed that
the available evidence did not prove that fluid leaking from implants was the cause of these
health problems. Nevertheless, a few months later, Dow Worning’s chairman, Keith
McKennon, announced that the company was discontinuing its breast implant business and
closing the factories that produced them. At first glance, it appears that the gol of managers
at both companies was to protect their customers and that both companies behaved very
responsibly. However, it was not the case. Soon after Dow Corning’s withdrawal from the
implant business, it became known that a Dow Corning engineer had questioned the Safety of
silicon breast implants as early as 1976. In 1977, the engineer had sent top managers a memo
summarizing the results of a study by four doctors who reported that 52 out of 400 implant
procedures had resulted in ruptures.
In response to a court order, the company eventually released this memo, along with
hundreds of other pages of internal documents. Women filed hundreds of lawsuits against
Dow Corning for knowingly selling a product that may have been defective. Lawyers accused
Dow Corning of deliberately misleading the public and of giving women whose implants had
caused medical problems false information to protect the interests of the company.
The behavior of Dow Corning’s managers seemed out of character to many people, for Dow
Corning had widely publicized its well developed ethics system, which monitored the behavior
of its scientists and managers. Every one of Dow Corning’s main divisions was supposed to be
visited by six of its top managers every three years. Top managers were charged with the
responsibility of questionning employees about wrongdoing at any level and of helping to
reveal ethical lapses that could be corrected. The results of this ethics audit were then to be
reported to the company’s board of directors. Obviously, this ethics system had not prevented
Dow Corning’s managers from behaving unethically toward customers with regard to its
breast implant product.
Johnson & Johnson also had an ethics system in place. At its center was a credo describing in
detail Johnson & Johnson’s ethical stance toward customers, employees, and other groups.
Why did Johnson & Johnson credo lead its managers to behave ethically while Dow Corning’s
ethics audit failed ?
One reason appears to be that Johnson & Johnson’s managers had internalized the company’s
ethical position. Thus, to them, the credo crearly represented the company’s values, and they
routinely followed the credo when they needed to make a decision that was likely to affect
customers’ health. At Dow Corning, in contrast, it appears that managers had been just going
through the motions in their efforts to explore ethical issues and had not been taking
appropriate steps to ensure that their own behavior was above reproach. Ethics expert agree
that talking to large groups of employees every three years without an objective approach
(the scientists bosses were in the room listening to their subordinates’s concerns or
objections) was a poor way to uncover ethical lapses.
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Discussion questions :
1- Why did the managers at the two organizations have different ethical stances towards
their customers?
(Hint: Go to J&J’s web site and look at its code of ethics)
J&J’s code of ethics :
• It is our fundamental responsibility to place the wellbeing of the patient first by appropriately
balancing risks and benefits, and to help ensure that the best interests of patients and
physicians who use our products receive utmost consideration
• It is our responsibility to apply credo-based values and judgment regarding the
design, conduct, analysis and interpretation of clinical studies and results
• It is our responsibility to adhere to the principles of good clinical practice
Dow Corning is the opposite case, they did not have an ethical system, no moral principles
was cared for, no clear communication, no objective approaches when managers visit
facilities and talk with employees, it seemed like they were in the market just for the money.
2- Outline a series of steps Dow Corning’s directors and managers should have taken to
prevent this problem
• Have a good system of ethics

• Refund the people that have had a bad experience
• Have objective approaches when talking with employees
• Face mistakes and not choose to instead try to run away from them
• Make sure that the products are 100% safe for use.
• Listen to engineers or whoever is working in the business. Communuication is crucial.
Amanie Ben Othman

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Organizational Theory

Case for analysis :

« Ethical stances at Johnson & Johnson

• Have a good system of ethics

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