The ethics of outsourcing at Mattel

Problems and Perspectives in Management, Volume 8, Issue 4, 2010

SECTION 3. General issues in management
Sarah D. Stanwick (USA), Peter A. Stanwick (USA)

The ethics of outsourcing at Mattel
Abstract
This study addresses the ethical issues related to Mattel Corporation. This study presents a chronological dateline highlighting the illegal and unethical activities that took place by suppliers for Mattel as well as Mattel’s reaction to the crisis. In addition, this article will address how corporate culture played a role in the decision to outsource the manufacturing process to facilities, which were not following legal standards.
Keywords: Mattel, corporate culture, ethics, Fraud, product safety.
JEL Classificastion: M14.

Introduction”
Corporate culture is defined as the shared values and beliefs of individuals within an organization (Stanwick and Stanwick, 2009). Corporate culture is an important concept to examine when researchers attempt to explain unethical behavior within an organization. Previous research in the area has primarily focused on the positive aspects culture that is related to firm performance (Deal and Kennedy, 1982; Peters and Waterman,
1982; Denison, 1990). It is also important to consider that the corporate culture can have negative impact on a firm’s operations if the culture supports unethical and illegal activities. This study examines how one company, Mattel, developed a culture which allowed the unethical and illegal actions of its suppliers to negatively affect its operations.

fixated only on the low price of production of the Chinese suppliers. By allowing the quality standards to drop to potentially dangerous levels, Mattel managers focused only on their own self-interests since their performance was directly linked to the financial performance of Mattel. Therefore, Mattel managers ignored potential safety issues with the production of the toys in China since lower levels of production or higher costs per unit would have a direct

References: Barboza, D. (2007). Why Lead in Paint? It’s Cheaper, The New York Times, September 11. Barboza, D., and Story, L. (2007). Toymaking in China, Mattel’s Way, The New York Times, July 26. Barboza, D., and Story, L. (2007). Mattel Issues New Recall of Toys Made in China, The New York Times, August 14. Bass, B., and Steidlmeier, P. (1999). Ethics, Character, and Authentic Transformational Leadership Behavior. Bogoslaw, D. (2007). Mattel Takes a Hit on Toy Recall, Business Week, August 8. Casey, N. (2007). Mattel Issues Third Major Recall, The Wall Street Journal, September 5. Casey, N., and Pasztor, A. (2007). Safety Agency, Mattel Clash Over Disclosures, The Wall Street Journal, September 4. Casey, N., Zamiska, N., and Pasztor, A. (2007). Mattel Seeks to Placate China With Apology, The Wall Street Journal, September 22. Cody, E., and Jie, Z. (2007). Chinese Toy Executive Found Hanged After Export Ban, The Washington Post, August 14. Deal, T., and Kennedy, A. (1982). Corporate Culture, Reading: Addison-Wesley. Denison, D. (1990). Corporate Culture and Organizational Effectiveness, New York: Wiley. Eckert, B. (2007). In Defense of Mattel, The Wall Street Journal, September 11. Granitz, N. (2003). Individual, Social and Organizational Sources of Sharing and Variation in the Ethical Reasoning of Managers, Journal of Business Ethics, 42, pp. 101-124. Hegarty, W. and Sims, H. (1979). Organizational Philosophy, Policies and Objectives Related to Unethical Decision Behavior: A Laboratory Experiment, Journal of Applied Psychology, 64, pp. 331-338. MacLeod, C. (2006). China Toy Industry Feels Growing Pains, USA Today, December 21. Mattel (2007). Press Release, August 2. Miller, D., and Thomas, S. (2005). The Impact of Relative Position and Relational Closeness on the Reporting of Unethical Acts, Journal of Business Ethics, 61, pp O’Donnell, J. (2007). Lead in Mattel Toys was 180 Times the Limit: CEO plain to testify in Capital Hill Hearing Today, USA Today, September 19. Olesen, A. (2007). Mattel Apologizes to China Over Recalls. USA Today. September 21. Peters, T. and Waterman, R. (1982). In Search of Excellence: New York: Collins Business. Problems and Perspectives in Management, Volume 8, Issue 4, 2010 22 23. Stanwick, P., Stanwick, S. (2009). Understanding Business Ethics, Upper Saddle River, NJ: Prentice Hall. 24. Story, L. (2007). Putting Playthings to the Test, The New York Times, August 29. 25. Story, L. (2007a). Lead Paint Prompts Mattel to Recall 967,000 Toys, The New York Times, August 2. 26. Story, L. (2007b). Mattel Official Delivers an Apology in China, The New York Times, September 22. 27. Story, L., and Barboza, D. (2007). Mattel Recalls 19 Million Toys Sent From China, The New York Times, August. 15. 28. Taub, S. (2007). Bad Play: Mattel Sued for Keeping Mum on Toy Defects, CFO.com, October 10. 29. Trevino, L., Hartman, L. and Brown, M. (2000). Moral Person and Moral Manager: how Executives Develop a Reputation for Ethical Leadership 30. Zamiska, N. and Casey, N. (2007). Supplier of Toys to Mattel is Investigated in China, The Wall Street Journal, August 9.