The Lack of Social Responsibility
Surrounding the Demise of Asian Rattan, Inc.
Jennifer Linnabary
October 4, 2002
BIS 402
Professor David Wells
In order to maintain an economically strong presentation of social responsibility, a
business owner must adhere to the moral values of others. Of course, a company must
have strong, core values when faced with the moral beliefs of these associations of
people, or stakeholders. Aided with government support and guided by clear stakeholder
concerns, the employees of Asian Rattan, Inc. unionized in retaliation of living conditions
and moral conflict, which caused Jun-Jun Hernandez to lose his business. Lacking
proper communication and proactive interest, Jun-Jun confronted a problematic issue
after the damage had already occurred. His employees had decided to strike for a higher
wage, and Jun-Jun complied with their requests only after serious debate. Due to
minimal social responsibility, Jun-Jun may have prevented the collapse of Asian Rattan,
Inc. if he would have adopted stakeholder management principles, established sincere
corporate values, and implemented a marketplace of morality.
Because Jun-Jun Hernandez abstained from effectively practicing stakeholder
management, he lost his company, Asian Rattan, Inc. In a slight attempt at considering
the interests of others, Jun-Jun provided housing, church services, and medical care for
his employees. However, despite the services rendered, Jun-Jun’s lack of communication
among business associates and employees became his ultimate downfall. In “The
Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications,”
Donaldson and Preston informatively reveal that “Through the social reporting process,
the corporation will gain and understanding of its stakeholders, and the stakeholders will
gain an understanding of the corporation as well as its relationship with the other
stakeholders” (319). In the Asian Rattan case, Jun-Jun is described as using
“intermediaries” when communicating with the employees, in order to avoid any open
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conflict (56). Because he chose to relay messages through others, he transmitted and
received inaccurate information pertaining to employee morals and corporate values. In
short, Jun-Jun neglected his social responsibilities to his employees by abstaining from
effective interaction, which caused the downfall of Asian Rattan, Inc. Although, he
supposedly could not afford to raise the wage, he could have communicated this dilemma
to the employees prior to the resulting problematic conflict. Through effective
communication and dialogue, Jun-Jun and Asian Rattan, Inc. would have been most
successful by using stakeholder management principles.
In contrast to stakeholder management, Jun-Jun was conducting business with an
economic set of values rather than personal morality. Because he displayed corporate
values, Jun-Jun showed a focus on shareholder-wealth-maximization. In “Defending the
Stockholder Model: A Comment on Hasnas, and on Dunfee’s MOM,” John Dobson
describes the stockholder model as an avenue “through which the actions of managers are
disciplined by both the expectations and beliefs of stakeholders,” and of society at large
(21). Asian Rattan, Inc., had little stockholder association, yet Jun-Jun followed the
model because he focused on maximizing his personal wealth while justifying his actions
as morally disciplined. In essence, the less money awarded to workers, meant more
money for Jun-Jun and Asian Rattan, Inc. In short, he displayed a personal interest with
success and wealth, rather than considering the destitute conditions of his employees.
Due to his lack of stakeholder consideration and wealth-maximization intentions,
Jun-Jun Hernandez exercised a minimal degree of corporate social responsibility. As
mentioned earlier, Jun-Jun focused more on the profitability of his company rather than
making the employees his primary responsibility. However, he did share some
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compassion for the employees, and may have considered his personal actions as being
“socially responsible.” For instance, he may have hired people with fewer skills and
knowledge rather than more qualified employees, in order to reduce poverty. In “The
Social Responsibility of Business is the Increase Its Profits,” Milton Friedman remarks,
“It may well be in the long-run interest of a corporation that is a major employer in a
small community to devote resources to providing amenities to that community” (18).
However, despite their destitute living conditions, the employees voluntarily chose to
work at Asian Rattan, Inc. with the option to leave at any time. Therefore, Jun-Jun
assumed some responsibility for his employees, but made profit maximization his
ultimate priority, which minimized social responsibility.
Aside from the various approaches toward social responsibility, a marketplace of
morality (MOM) slightly evolved within the walls of Asian Rattan, Inc. Jun-Jun
responded to the moral issues and concerns of his stakeholders with economic values or
judgments. Therefore, a MOM did exist, although Jun-Jun did not express a proper
reaction to the warning signs. He failed to align the corporate values with the moral
beliefs and preference of potential stakeholders (Bowie and Dunfee 27). In order to
survive, Asian Rattan, Inc. needed a set of core moral values in order to establish a strong
corporate culture. When confronted with moral pressures, Jun-Jun failed to “incorporate
the interests of relevant stakeholders into decision making” (Linowes 29). He proactively
responded to moral concerns after he had lost the battle. Due to the lack of
communication, Jun-Jun was not informed or prepared to evaluate the moral expressions
of his employees. The eventual emergence of problematic morality could have been
prevented, and loss may have substantially been recovered at Asian Rattan, Inc. Hence, a
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marketplace of morality would have maintained the company, but Jun-Jun and Asian
Rattan lacked essential core values to address the morals of stakeholders.
Because Jun-Jun dishonestly responded to legal pressures from the union and
government, he abstained from establishing social responsibility even further. In
“Corporate Social Responsibility,” the case states, “As a member of society, a firm must
abide by the laws and regulations governing society” (17). Jun-Jun knew his workers
were being paid less than the minimum government requirement, and he still maintained
his standards. Aside from his lack of compliance with the government, he refused to
open his “books” during negotiations with the union (Linowes 58). By withholding the
necessary documentation to support his financial claim, Jun-Jun projected a dishonest
image. Without a clear presentation of corporate social responsibility, Jun-Jun lost a
battle he inevitably created through self-serving actions.
While Jun-Jun failed to follow stakeholder management principles, the
stockholder model, and neglected to adequately follow the “social responsibility”
guidelines, he did manage to address a few of the article contents in some way. The
Stakeholder Management Approach would have been the most preferred management
choice for Jun-Jun, because he would have acquired a mutual respect and constructive
communication between the company employees. By thoroughly exploring and
responding to the interests of stakeholders, Jun-Jun would probably still be managing
Asian Rattan, Inc. successfully today. Essentially, business managers should consider all
company stakeholders and their interests, in order to maintain success.
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Bibliography
“Corporate Social Responsibility.” McGraw-Hill Primis, 1999: 1-22.
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12(2), 2002: 257-264.
Bowie, Norman E. and Thomas W, Dunfee. “Confronting Morality in Markets.”
Journal of Business Ethics 38, 2002: 381-393.
Dobson, John. “Defending the Stockholder Model: A Comment on Hasnas, and
on Dunfee’s MOM.” Business Ethics Quarterly v. 9, n. 2, 1970: 337-345.
Donaldson, Thomas and Lee Preston. “The Stakeholder Theory of the
Corporation: Concepts, Evidence and Implications.” Academy of Management
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Friedman, Milton. “The Social Responsibility is to increase its profits.” New York
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