Odwalla Case
...It turns out that Odwalla wasn't the paragon of social responsibility that everyone had thought. Indeed, it was found to be criminally negligent in causing the death of a young girl-and permanent injury of several other children-from E. coli poisoning. This brings up serious questions about what social responsibility really is, whether we are looking for it in the right places, and what we can do to encourage corporations to act in the public interest.
The fall from grace was breathtaking. At its peak of prosperity in 1996, Odwalla, the juice company based in Half Moon Bay, California, was touted as much for its ethical consciousness as for its growth prospects. In the autumn of that year, however, one child died and at least seventy others were injured after drinking Odwalla apple juice tainted by poisonous bacteria. Two years later, after pleading guilty to criminal charges of violating Federal food safety laws and paying $1.5 million, the largest fine ever assessed in a food case by the Food and Drug Administration,1 Odwalla is desperately searching for a suitor to save the company from extinction.
Before all this happened, investors captivated by Odwalla's "socially responsible" reputation had bid up its stock to a triple digit price-to-earnings multiple; today it is deep in red ink. Rather than a brand-marketing success story, it faces the dubious distinction that it "will forever be known as the careless producer of poisoned fruit juice."2
How did things go so wrong? Does the Odwalla case provide insight into how well-meaning executives can better align their socially responsible rhetoric with day-to-day operational challenges?
The Trap of "Good Intentions"
Odwalla produces great tasting juices-premium, and until recently, unpasteurized and fresh. It was run by executives who were not shy about noting their commitment to a more just society. Founder...
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