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| MODULE NAME | SUCCESS THROUGH BUSINESS SCHOOL | |
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Business Ethics and the Reckitt Benckiser Humidifier Disinfectant Scandal
A critical evaluation of moral philosophy ethical decision making and leadership response
Table of Contents
Company, unethical practices. 4
1 Analysis 1 Moral philosophical bases. 5
1.1 Philosophical Base 1- Utilitarianism.. 5
1.2 Philosophical Base 2- Deontological Ethics. 6
1.3 Philosophical Base 3- Virtue Ethics. 7
3 Analysis 2 Ethical decision making. 8
4 Analysis 3 Leadership and organisational response. 9
Introduction
Nature of business ethics.
Business ethics is a significant subject that will be inclined to consider what organisations ought to do when corporate decisions are made on how people, rights and social wellbeing are affected. It is therefore something, which the law cannot enforce: the actions may be within the legal framework but quite immoral. Ethical analysis has a connection between personal judgement and organisational incentive, governance and accountability (Crane et al., 2019). This report argues here that the disinfection of humidifiers next run in South Korea by Reckitt Benckiser could not be perceived as the defective-product incident. It was a manifestation of bad taste, untrue faith and a tardiness, outward-driven, afterthought recalcitrance in accepting responsibility.
Company, unethical practices.
Reckitt Benckiser (changed to Reckitt) is a manufacturer of UK based health, hygiene and nutrition products. It has a Korean subsidiary named Oxy which marketed Oxy Ssak, a humidifier disinfectant with polyhexamethylene guanidine (PHMG). In 2001, Reckitt acquired Oxy and the item went on sale till the Korean government implicated the humidifier disinfectants in severe lung injuries in 2011. The prosecutors then alleged that the required inhalation-toxicity testing was evaded and they alleged the safety claims were not true (Reuters, 2016). The 2016 announcement of the company confessed its product liability, such as death, and compensation (Reckitt, 2016). However, a period of five years between the discovery of the public health and the response weakened the ethical position of the response. National studies were then able to show similar patterns of product-sales and patterns of diagnosed lung-injury (Yoon et al., 2021), and a systematic review implicated exposure and respiratory and other harms (Song et al., 2022).
| Year | Event | Ethical significance |
| 2001 | Reckitt acquired Oxy; PHMG product continued in the market. | Acquisition due diligence and product-stewardship duties became material. |
| 2011 | Korean public-health investigation linked humidifier disinfectants with lung injury; sales ceased. | The risk became explicit and demanded prompt disclosure, remedy and investigation. |
| 2016 | Prosecutions, boycott pressure, corporate apology and compensation programme. | Accountability followed external pressure and came years after causal concern emerged. |
| 2020 onward | Broader health evidence and a revised Korean remedy framework developed. | Long-latency and non-respiratory harm made narrow eligibility ethically inadequate. |
| 2016 | Prosecutions, boycott pressure, corporate apology and compensation programme. | Accountability followed external pressure and came years after causal concern emerged. |
| 2020 onward | Broader health evidence and a revised Korean remedy framework developed. | Long-latency and non-respiratory harm made narrow eligibility ethically inadequate. |
Table 1 Case timeline and ethical significance
1 Analysis 1 Moral philosophical bases
1.1 Philosophical Base 1- Utilitarianism
Utilitarianism is the moral judgment of a business decision in terms of whether the consequences of the action can create the most overall good and the least frequently avoidable harm to all the affected individuals (Crane et al., 2019). In this view, the decision to carry on the advertisement of Oxy Ssak by Oxy Reckitt Benckiser produced few positive effects, such as the ease of use to the consumers, income and job creation. Nevertheless, one should consider these advantages against the very serious impact the consumers and their families, as well as the entire South Korean healthcare system suffer. Polyethylene guanidine was present in the product and when put into humidifier became aerosolised and was thus inhaled at home. This exposure was related to severe lung injuries and deaths.
Ju et al. (2021) discovered that 54.4% of the deaths in humidifier-disinfectant claimants who had died were due to respiratory diseases. Among survivors, other effects were psychological distress, the break of family relations and the inability to fit in to normal routine (Lee et al., 2022). New evidence has also related exposure to potential non-respiratory damage, such as toxic hepatitis (Kim et al., 2023). Consequently, negative utility was not limited to physical disease: it encompassed bereavement, looking after, expense of medicine and a decline in popular trust to household health items.
The biggest foreseeable risk failure on the part of Reckitt was related to foreseeable risk management. Despite the fact that managers might have lacked definitive causal evidence in the first place, a product that was created to dispense chemicals into the air in the household built a predictable risk of inhalation injuries. In cases where the consequences may be irreversible disease or even death, doubt intensifies the ethical rationale behind precautionary testing as opposed to further commercialisation. Ha et al. (2023) suggest that an integrated weight-of-evidence approach should be used to evaluate the humidifier-disinfectant causation, rather than a single study is needed. Thus, the lack of the decisive evidence could not be ethically an appropriate reason to miscarry the investigation.
The recall of the product in 2011 did not lead to any additional exposure hence it was a utilitarian enhancement. Benefits were also created to some of the victims by the apology and compensation programme offered by Reckitt in the later years. However, complete popular acceptance and a mass of remediation arose only in 2016, following prosecution, pressure of boycotts, and criticism by the general population (Reckitt, 2016; Reuters, 2016).
1.2 Philosophical Base 2- Deontological Ethics
Deontological ethics is based on the action of an action based on duties and moral foundations other than the ultimate result of the actions. Kantian deontology specifically places individuals obliging the decision-maker to value people as ends in themselves and perform actions based on principles that might be used across the board (Crane et al., 2019). These principles impose the responsibilities in a consumer-goods company to be of reasonable care, to test goods properly, to communicate in good faith and in a manner which upholds the consumers in making informed decisions.
According to Oxy Ssak case, these were not met. Prosecutors claimed that there was a lack of proper inhalation-toxicity testing and that product-safety guarantees were false (Reuters, 2016). The categorization of a household product repeatedly inhaled as safe based on inadequate route-specific evidence did not allow consumers to know the danger that they and their families were exposed to. Park et al. (2020) show the need to research the unique conditions and pathways under which consumers were at risk of exposure to humidifier-disinfectant chemicals. In another context, safety may not necessarily be achieved due to the aerosolization and inhaling of a substance.
One weakness of deontology is that responsibilities are occasionally conflicting: in cases where scientific proof is undecided, managers might have conflicting responsibilities to customers, staff, company owners and governmental bodies. However, life and dignity and informed consent protection must be of top priority over commercial convenience. The insufficient testing, safety-related communication, and reaction and acceptance of responsibility used by Reckitt could therefore not fit into the deontological ethical frameworks.
1.3 Philosophical Base 3- Virtue Ethics
Virtue ethics evaluates morality based on the character, values and pragmatism exhibited by decision-makers. Rather than posing the question of whether or not an action was followed by a rule or with a positive outcome, it contemplates whether an organisation lives by virtues of honesty, integrity, prudence, courage, justice and compassion (Crane et al., 2019). These virtues ought to be incorporated in organisational culture, product development processes and behaviour of leadership in a corporate setting.
Reckitt finally complying with the apology, responsibility and compensation programme, can be taken as one of the indicators of building responsibility and compassion. The nature of the response is, however, unclear with regard to the timing. Corrective action driven by prosecution and reputational pressure is not as much evidence of stable virtue as that undertaken because a consumer protection is considered as an intrinsic right. Liu et al. (2024) warn that the positive reputation of corporate-social-responsibility may not always lead to more ethical choices to recollect the products.
| Framework | Test | Assessment of Reckitt and Oxy | Required ethical response |
| Utilitarianism | Net welfare and avoidable harm | Severe, persistent health and family harm outweighed convenience and profit. | Precautionary withdrawal, surveillance and broad remediation. |
| Kantian duty | Universal duty and respect for persons | Inadequate testing and assurance impaired informed choice and used consumers instrumentally. | Truthful labelling, exposure-specific testing and prompt disclosure. |
| Rights and justice | Rights, fair burdens and fair process | Benefits and risks were unequally distributed; claimants faced information and proof barriers. | Independent assessment, victim voice, appeal and proportionate compensation. |
Table 2 Moral philosophy judgement matrix
3 Analysis 2 Ethical decision making
In his four-component model, Rest isolates moral awareness, judgement, intention and behaviour. It also comes in handy here since it is not possible to explain the case by just a number of unethical people. Through awareness, the managers should have realised that aerosolization of a chemical in the presence of families was an ethical issue. Technical classification and subsidiary distance might have positioned the product as a common domestic hygiene, though.
In the course of judgement, managers had to make a choice of further testing, warning, repeat sale and recall. To continue commercial logic would exclude injury or causation and, in this instance, no single study was able to prove causation. This is not ethically competent because product stewards possess greater information, and have a chance to reduce uncertainty. Ferres and Marcet (2021) analysis of CSR, and misconduct proves the idea that it is needed to investigate the behaviour and not to conclude about the ethics based on the CSR reputation. The will of priorities and incentives are dominant to either primacy of sound judgment inherent to sales and reputation.
A last manifestation of behaviour was withdrawal, investigation, apology and compensation. Such measures were considerable, yet the basis of the 2011 discovery in the sphere of public-health underlining them. Delay means a delay between the action and recognition. Reckitt (2016) taking full responsibility enhanced candour and larger studies (still ongoing) show damage can extend past the initial characterization of the case. The corporate decision systems must thus pool the complaints, toxicology and epidemiology and in turn step up on a weight-of-evidence basis. Outside regulation is particularly important in a situation where participants in the economic market have the incentives to minimize signals. A weakness of this model is that it appears to be conscious of linearity, judgement and intention are being engaged in interaction and organisational culture can interpose the use of moral language before a formal decision is made. However, it is most faulty between the developing knowledge and protection behaviour at the opportune moment.
Figure 2 Humidifier disinfectant sales and diagnosed lung-injury cases in South Korea.
Source: Yoon et al. (2021)
4 Analysis 3 Leadership and organisational response.
More transactional and autocratic control than ethical leadership is appropriate in the pre-crisis pattern: the continuation of the products and commercial performance have respectively been assigned better organisational emphasis and stakeholder voice respectively. To say which individuals were what kind of leaders would be purely conjecture on my part depending upon what I can discover in the books. The greater conclusion is about systems. Ethical leaders ensure that safety issues are talkable, uphold the challenge and treat the affected persons respectfully. At the location, the ineffectiveness of the upward escalation and parental control is denoted by the protracted time needed in the case and the reliance on the outside investigation. This is in line with the reasoning of the toxifying triangle of the module; when combined with concentrated power, cynical followers and a favorable regulatory environment, without showing how all parties were acting in the intent to harm other people (Northouse, 2019).
The reaction during the year 2016 transformed to visible accountability. Korean CEO Ata Safdar expressed his apology, and even group CEO Rakesh Kapoor appeared in front of the whole world and said that it was the role of its product and developed compensation agreements (Reckitt, 2016; Reuters, 2016). That response joined transformational sentences of modified safety culture that were transactional curbs and redress. Nguyen et al. (2021) offer the relationship between ethical leadership and CSR, reputation and performance, but the sequence of this relationship is essential: only the set of values coupled with the action received credibility. In addition, the paper suggests that the verbal and non-verbal CEO-apology behavior affects the social rejection of CEO-apology cues (Li et al., 2023). Symbolism can be used to have a conversation but not rather than evidence, compensation or independent audit.
Response had remained reactive with purposeful acceptance had come after years of mobilisation of victims, pressure of boycott and investigation. Research on crisis has suggested that one of the recovery response policies is product-harm (Zheng et al., 2023) that impacts financial-market response, yet reputation-oriented logic continues to enact instrumentalization of victims. The in-person analysis of the scandal in South Korea identifies economic value concerning CSR, still, ethical leadership has to be redeemed despite a case that the value can be recovered at any moment.
5 Recommendations
| Recommendation | Concrete implementation | Measure and ethical basis |
| 1 Product safety gate | Independent inhalation-toxicology review for all aerosolised or vaporised formulations; board safety-committee approval for launches and material changes. | All qualifying products reviewed; no launch waivers. Reduces utilitarian harm and fulfils duty of care. |
| 2 Early warning and recall rule | Combine complaints, poison-centre, toxicology and regional data. Withdraw temporarily when a credible severe-harm threshold is met. | Escalate in 48 hours; decide in 10 working days; annual simulation. Protects rights under uncertainty. |
| 3 Victim-centred remedy | Independent medical, legal and victim panel. Cover physical, psychological and caregiving harm; publish decisions and allow appeal. | Claim time, reversal rate, satisfaction and open cases. Advances procedural and distributive justice. |
| 4 Leadership accountability | Tie reward and succession to safety indicators, speak-up protection and corrective-action closure; assure performance externally. | Quarterly board review; no substantiated retaliation; disclose overdue actions. Converts intent into behaviour. |
These controls are also identified to deal with the diagnosed causes of the report as opposed to the general CSR. The safety gate counteracts the first failure in the test; the rule of recall counteracts the perceived low immediacy and commercial rationalisation; the remedy model responds to rights and justice; executive accountability reduces the gap between subsidiary information on the part of the parent. Independent assurance provider- The design of the controls and a sample of the closed cases should be evaluated. Failure and exception must be made known by Reckitt, as flawless adherence arguments present moral licensing. Board should also meet with the representatives of the victims at least once in a year and disclose how the evidence is changing policy. This provides stakeholders that are affected with voice and does not diminish the ownership of decisions.
6. Conclusion
The actions of Reckitt and Oxy contradict the principle of consequentialism, duty and justice test. The degree and time of loss were greater than the gain to the product; lack of testing and guaranteed reproduced autonomy; and only the individual customers were being exposed to harm with no ready recourse to remedy. The Rest model ranks organisational weakness in between conscious, action and fuelled by range, motivation and feeble strengthening. In the case of the 2016 apologies and compensation, this was a move towards the right direction but there was no other option given the level of pressure and time that hindered the level of ethics. To accomplish the plausible reform, precautionary product regulation, well-timed withdrawal that is based on evidence, easily accessible victim redress, board-level accountability via clear outcomes is included.
References
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Ferrés, D. and Marcet, F. (2021) ‘Corporate social responsibility and corporate misconduct’, Journal of Banking & Finance, 127, 106079. https://www.sciencedirect.com/science/article/abs/pii/S0378426621000376?via%3Dihub
Ha, M., Park, T., Lee, J.-H., Kim, Y., Lim, J., Baek, Y.-W., Yu, S., Chung, H.-M., Kyu Hyuck Chung and Cheong, H.-K. (2023). Evidence integration on health damage for humidifier disinfectant exposure and legal presumption of causation. Epidemiology and health, [online] 45, pp.e2023095-e2023095. doi:10.4178/epih.e2023095.
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