Takata airbag scandal - A Case of Ethical Dilemma

Takata Airbag Scandal: Exploration of an Ethical Dilemma

Presented by: Cynthia Barclay, Adam Bell, Nate Snodgrass & Gervan Williams

Takata Airbag Scandal Analysis of Takata’s Ethical Dilemmas

Stakeholders Escalation of Commitment Slippery Slope Moral Disengagement Whistleblowers 10-10-10 Consequences

Consumer Perspective of Airbag Scandal Recommendations for Takata

Agenda

Takata Overview

Quick Facts An automotive parts company

manufacturing safety systems like seatbelts and airbags

Founded in 1933 Based in Japan 35,000 employees worldwide Began making airbags in 1988

Currently hold 20% of the airbag market

Gervan Williams

Can we use this slide instead of slide 4?

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

Video

Airbag Scandal Timeline




Agenda

Ethical Dilemmas

Did Takata and/or the car manufacturers know about the defects and potential danger prior to recalling the airbags?

Were the recalls intentionally delayed to avoid negative impact to the company?

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

Key Stakeholder Analysis

Key Stakeholde

rsGoals Values

Outcomes/Consequences

Influence

NHTSA

Save lives, prevent injuries and reduce

economic costs due to road traffic crashes, through education,

research, safety standards and

enforcement activity.

Safety, providing excellent service

to consumers, integrity, and

leadership

Wants all cars and car parts to be manufactured to meet all safety needs so they ultimately keep

consumers safe

NHTSA holds a significant amount of power over car and part manufactures.

They can implement fines, mandatory

investigations, etc.

Car Manufacturers

Sell cars, make a profit, maintain a reputable

brand name

Profit, safety, reputation, consumers

Wants to maintain profits and sales while ensuring customers are safe and their brand name is not

tainted

Hold a large amount of influence over when and what recalls are issued for their cars

TakataMake a profit, develop quality products, keep

consumers safe

Profit, safety, quality, brand

reputation

Benefits from making low cost, fast products for

distribution and benefits from covering up the

defects

Influence over investigation of

defects, timeliness of recalls and hiding of

defects

ConsumersBuy a safe, reputable

and reliable car

Cost, safety, brand quality

and reputation

Wants to drive a safe car with no accidents, injuries or deaths. Disadvantaged

due to the defective Takata airbags. Can be injured of even killed

No large amount of influence – only

influence comes from purchasing power

Escalation of Commitment

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 escalate throughout the airbag scandal

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

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



Small innocuous acts….

…that lead to moral transgression

Takata’s Slippery Slope

Takata’s Mission Statement - Did they lose sight over their mission while dealing with this scandal?

“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."

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”

Moral Disengagement

Financial Impact of Recalls

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 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

Decision Impacts: 10 Days? 10 Weeks? 10 Years?

10 Days: 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 days

10 Weeks: 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 either

10 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 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?

Consequences for Takata – How far does the blame go?

We surveyed 48 people and asked where the responsibility/blame lies

Responsibility of vehicle safety equipment lies solely with the car

manufacturer

Frequency Valid Percent

Strongly Disagree 2 4.2

Disagree 16 33.3

Neither Agree nor

Disagree7 14.6

Agree 17 35.4

Strongly Agree 6 12.5

Total 48 100.0

Responsibility of vehicle safety equipment lies solely with the suppliers

of safety equipment


Strongly Disagree 1 2.1

Disagree 15 31.3

Neither Agree nor

Disagree8 16.7

Agree 18 37.5

Strongly Agree 6 12.5

Total 48 100.0




Agenda

Consumer’s Perspective of 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

Who should be responsible for the safety equipment in your vehicle?


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 Disagree

DisagreeNeither

Agree nor Disagree

AgreeStrongly Agree

Responsibility of

vehicle safety equipment lies solely

with the car

manufacturer

Strongly Disagree 1 1 0 0 0

Disagree 0 13 0 3 0

Neither Agree nor

Disagree0 0 7 0 0

Agree 0 0 1 12 4

Strongly Agree 0 1 0 3 2


Stakeholders Slippery Slope Escalation of Commitment Moral Disengagement Whistleblowers 10-10-10 Consequences


Agenda

Recommendations for Takata

Current: Hold an independent investigation to determine where the

problem started within Takata Coordinate with manufacturers to issue international recalls

Future: Veil of Ignorance

Quality Manager 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

Leadership & Management

Takata airbag scandal - A Case of Ethical Dilemma