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J Bus Ethics (2012) 106:283293 DOI 10.1007/s10551-011-0995-6
The Nestl Infant Formula Controversy anda Strange Web of Subsequent Business Scandals
Colin Boyd
Received: 25 April 2011 / Accepted: 7 August 2011 / Published online: 21 August 2011 Springer Science+Business Media B.V. 2011
Abstract The marketing of infant formula in third-world countries in the 1970s by Nestl S.A. gave rise to a consumer boycott that came to be a widely taught case study in the eld of Business Ethics. This article extends that case study by identifying three specic individuals who were associated with managing Nestls response to that boycott. It reveals their subsequent direct involvement in a number of additional classic 1980s business scandals (some of which ended with major criminal trials and the imprisonment of eminent business gures)and describes tangential linkages to other business scandals of the time. The article discloses a behind-the-scenes pattern of business villainy, adding both depth and breadth to previous accounts of these scandals. The article offers a conceptual framework that goes beyond personal greed as an explanatory factor for such unethical behavior in the business world, suggesting the presence of personal and organizational networks of intrigue and opportunity. The linkages between the scandals suggest an epidemiological process with the plotters acting as virus carriers contaminating various corporate cultures.
Keywords Beech-Nut Drexel Burnham
Ernest Saunders Guinness Infant formula
Insider trading Nestl
Introduction
The eld of Business Ethics relies on a relatively small core of well-known cases of corporate behavior to illustrate the themes of the subject. Near the top of this list of familiar names (e.g., the Ford Pinto, Tylenol, and Bhopal) is Nestl S.A., the Swiss food conglomerate. Of all the business histories examined by students of ethics, Nestls saga of controversy is perhaps one of most intriguing.
In the late 1960s, Nestl was criticized by social activists for its marketing of powdered milk formula for infants in less developed countries. The case became a cause clbre as Nestl became the victim of a well-organized boycott campaign.
The conict has become a popular case study in the business school curriculum because it demonstrates the need that companies have to constantly preserve and enhance their legitimacy in the public eye. The discussion of legitimacy leads quite naturally into a discussion of...