Case 3 – The Skeleton in the Corporate Closet
To help students understand how the ethical orientation of the leader is a key
factor in promoting ethical behavior among employees.
To highlight the difference between integrity-based and compliance-based
approaches to organizational ethics.
To help students understand the role of corporate governance mechanisms in
aligning the interests of managers, owners, employees and other stakeholders.
To encourage discussion of the importance of stakeholder management and the
implications of a firm’s vision, mission and goals for coherence in values and
direction of organizational strategy.
To point out the challenge of protecting intellectual property, developing dynamic
See the table below to determine where to use this case:
11: Strategic Leadership
Ethical orientation; integrity-based vs compliance-based
9: Strategic Control &
Corporate governance mechanisms; stakeholder
1: Strategy Concept
Role of organizational leadership; stakeholder management;
vision, mission and goals
4: Intellectual Assets
Intellectual property; dynamic capabilities
Hudson Parker founded General Parkelite Company (GPC Incorporated) in 1927. The
company owed its success to Parkelite, the miracle plastic patented by Parker in 1920. On
the occasion of the firm’s 75
anniversary a document was accidentally uncovered that
indicated this plastic, this synthetic polymer material, had been invented by someone else –
Hudson’s friend Karl Gintz, a fellow chemist. It looked like Parker had stolen the formula.
Hap Parker, Hudson’s grandson, now CEO of the company, must decide whether to disclose
this fact and discredit his grandfather, “contain the discovery” by putting a gag order on the
few employees who now knew the truth, or rationalize the incident by putting on a public
relations spin. The facts were ambiguous. The document had not been used to file the patent.
It’s possible that the innovation was essentially Hudson’s but that Karl had taken notes on it
to perhaps improve it. Both Hudson and Karl were dead, Karl having died during World
War I, but Karl’s father had brought a lawsuit against Hudson in 1938 claiming Karl was the
sole inventor. The suit was denied, by a jury trial, and Hudson went on to found the
company. 75 years later, GPC had grown into a successful enterprise with a strong culture,
largely due to the efforts of Hudson Parker. Hudson had infused the whole organization with
the importance and excitement of constant innovation, and had won the respect of business
leaders, customers, and employees for being fair-dealing and compassionate, a