Problem: Part Four-Social Responsibility Cases Case One: Guns

Does the gun industry bear any portion of the blame and responsibility for Adam Lanza's decision to murder 20 children and 6 adult staff members at Sandy Hook Elementary School in Newtown, Connecticut, on December 14, 2012? Lanza, who also killed his mother and himself, carried into the school a Bushmaster XM15 assault rifle along with two handguns. Efforts to pass new federal gun control legislation have, at this writing, been unsuccessful, but many scholars and journalists have suggested that the firearms industry should police itself as a means of reducing gun violence. They argue that the industry has been negligent in failing to take measures that would reduce the distribution of guns to criminals. Cornell University business ethics lecturer Dana Radcliffe commented on the industry's position: The U.S. rate of homicide by firearms is over thirty times that of Britain and Australia. Gun violence is a national plague. . . . However, this problem. . . is of no concern to the companies that make the weapons used in gun-related crimes. With regard to taking measures to keep their products out of the hands of criminals, their only responsibility is minimal compliance with the law. Beyond that, they have no obligation to try to prevent their dealers and distributors from engaging in illegal or suspicious sales.120

When many guns used in crimes come from a particular source, law enforcement officials suspect possible gun trafficking. Police, lawmakers, and others have pressed the firearms industry to enforce policies voluntarily in their distribution chain that would reduce the number of guns diverted into criminal use. Radcliffe argues that the gun industry must do so: If the gun industry could act to reduce significantly the availability of their weapons to criminals, then it is reasonable to think it should do so. The commonsense assumption that gun makers have a special responsibility to help combat gun violence was expressed in an affidavit by Robert Hass, a former Smith & Wesson executive. As he put it, "[T]he nature of the product demands that its distribution be handled in such a way as to minimize illegal and unintended use."121 Indeed, Smith & Wesson agreed in 2000 to take gun safety steps including forbidding its distributors from selling at gun shows unless background checks were conducted for all sales.122 Smith & Wesson products were boycotted immediately, the safety plan was never enforced, and in 2012 Smith & Wesson was inducted into the National Rifle Association's "Golden Ring of Freedom," a group of donors who have given $1 million or more to the NRA.123 Congress and President George W. Bush substantially shielded the gun industry from liability in 2005 through the Protection of Lawful Commerce in Arms Act, which immunizes gun manufacturers and sellers from most civil claims (such as negligence and public nuisance) arising from the unlawful misuse of firearms. The gun industry argues that obeying the law, which does not impose a duty to police distributors and dealers, satisfies corporate responsibilities. Furthermore, they remind us that guns are not intrinsically evil, and those who fire guns must bear primary responsibility for the results. Expressing its frustration with new state gun-control legislation, gun manufacturer PTR Industries announced in 2013 that it was leaving Connecticut for the more gun-friendly climate of South Carolina. John McNamara, PTR's vice president of sales said, "One hundred percent of our product line is illegal in Connecticut. They just want to collect our tax dollars on a product that they don't think is safe to own."124

Case One Questions

1. a. What did Robert Hass mean when he said "The nature of the product demands that its distribution be handled in such a way as to minimize illegal and unintended use"?

b. Do you agree with Hass? Explain.

c. Do gun manufacturers have a social responsibility for their products beyond the demands of the market and the law? Explain.

2. Following the Newtown murders, Cerberus Capital Management, a very large investment firm, decided to seek a buyer for one of its companies, Freedom Group, which makes the Bushmaster rifle that was used in the school shootings. Apparently, the California State Teachers' Retirement System, which has $750 million invested with Cerberus, encouraged the sale. Cerberus said the sale was designed to meet its obligations to investors. Following Newtown, Dick's Sporting Goods suspended sales of what it called modern sporting rifles, and Walmart reportedly removed ads from its website for guns similar to the one used in Newtown.

a. Do those decisions appear to represent a shareholder or stakeholder approach to management? Explain.

b. As you develop your own financial portfolio, should you decline to hold investments in gun companies? Explain.

3. Law professors Lucinda M. Finley and John G. Culhane, writing in The New York Times, recently advocated imposing a new tax on gun manufacturers and importers.125 The tax would be applied to each gun sold, and the proceeds would be used to create a compensation fund for innocent gun violence victims. What do you think of that idea? Explain.