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E7: Corporate Mismanagement: Bad Apples, Barrels, and Orchards


How can we reprimand corporate misbehavior? Unfortunately, it’s not as simple as putting them in timeout. Business ethicist Kirk Hanson gives an inside look at the world of corporate misdeeds as well as how to deal with the aftermath. He explains in his book on the matter, Rotten: Why Corporate Misconduct Continues and What to Do About It, that more often it takes more than a single actor to cause a scandal. Though the stories that compose the book have been told before, Hanson goes beyond explaining what happened. He provides solutions.

Kirk Hanson: ”The purpose was really to answer for ourselves, what causes corporate misconduct, and why it doesn't seem to be affected by all of the efforts that have been made to try to restrain it. Mark and I started out, to be honest in 1970. Each of us working with companies on issues of corporate responsibility and business ethics, and then we had academic careers where each of us taught for 40 years at Harvard and Stanford and Santa Clara and UCLA each of us have taught at a number of major business schools, but misconduct continues. You know we could have a litany of many major incidents, whether it's BP and the Deepwater Horizon blow up in the Gulf of Mexico or whether it's Wells Fargo, and the fake accounts that were created by employees, there's just been a spate of continuing incidents. So we decided that we would try to write a book, where we would explain for ourselves and for the readers.”

Kirk Hanson: "We explain the frequency of corporate misconduct, which is with three possible explanations , bad apple, bad barrel and bad orchard. And the first two have been part of the discussion within the field of business ethics. The first is that there are simply some bad people in the world. Every company as well as every university and nonprofit, as some small percentage of bad people, and they're going to do bad things, almost no matter what you do.'

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