Sample Management Paper on Corporate Governance and Business Ethics

Corporate Governance and Business Ethics

The success of social networks has made the industry very competitive. This has often pushed companies to unprecedented lengths such as selling customers’ data to third parties just to earn extra income. While this may seem like a good business idea, the ethical and legal arguments surrounding it paints an ugly picture of a company that is irresponsible and passive to its customers. The recent Beacon scandal illuminated a lot of structural irregularities and lack of appropriate policies in one of these companies, namely Facebook. This paper seeks to unravel the organizational and policy drawbacks that could have resulted in Facebook ‘selling’ users’ personal data.  

Foremost, Facebook’s stakeholders can be categorized into two groups: the external and known and the internal and unknown. The latter comprised the board of directors, customers, employees, suppliers, government, and financiers. These stakeholders have a tangible stake in the company and can influence the company’s decisions to their advantage. They also have a mutual code of conduct and their relationship with Facebook is contractual. The key stakeholders include the board of directors, customers, and the government. The board is responsible for making guidelines that inform the company’s activities. The customers are the market and the reason why the company exists while the government plays an oversight and supervisory role to protect the customers’ welfare. The internal stakeholders comprise of Facebook’s partners and other secretive data clients. These stakeholders often get into agreements with the company that contravene the external stakeholders’ desires. These partners include companies like Netflix, Spotify, and Amazon. Their contracts with Facebook is often hidden from the public eye and involves aspects of surveillance capitalism.

Facebook was initially established on a foundation of integrity and honesty. These tenets influenced the company’s decisions with its key stakeholders prior to the scandal. The company would get into a contractual agreement with its clients that involved non-disclosure of their information to any third party unless expressly agreed upon by the client. As such, clients’ could rely on Facebook to securely store their contact, residence, and even their intimate communications. However, when a window of opportunity materialized giving Facebook the ability to ‘sell’ this information, the company suddenly became opportunistic and manipulative. It secretly allowed access to such information and made good billions from this dubious trade (Silverman, 2018). This act shows that the company didn’t have high regard for its clientele as it had initially portrayed. All the contractual claims seemed to be a way to winning clients’ trust so as to facilitate the eventual act of selling their information.       

The ethical issues related to Facebook’s use of customer data include transparency, trust, and safety. The company must ensure that any activity with third parties that involves customer data is expressly communicated to the customer. Nothing involving a customer’s data should catch him/her by surprise. Secondly, trust should be maintained between Facebook and the customer. A customer expresses his/her trust by agreeing to voluntarily provide Facebook with their information. The company should henceforth ensure that this trust is replicated by safety storing this information. Lastly, Facebook should provide regulations that inform the safety of customer data at all times. The legal issues, on the other hand, include privacy laws, distribution of data, and misleading claims. The company has a legal mandate to ensure the privacy of its customers is maintained (Acquisti, Gritzalis, Lambrinoudakis & Vimercati, 2007). As such any acts of data collection and surveying should be done with consent from the customer and not arbitrarily. Secondly, the distribution of data should also be upon consent otherwise this contravenes the customer’s right to privacy. Lastly, misleading claims especially adverts should be properly vetted before being shown to customers.     

The board of directors should implement policies synonymous with the proposed Consent Act. This Act requires explicit opt-in permission from customers to collect, use, share, and sell any personal data (Brandom, 2018). The Act also includes new security and breach reporting measures. The board should also investigate the scandal and punish all those who were involved since Facebook had initially pledged to guarantee users’ privacy and enact a comprehensive privacy program which it failed to do. Thirdly, and probably the hardest, the board should find a way of taming Mark Zuckerberg’s powers. However, given the fact that Zuckerberg is both the CEO and a major shareholder, the board members may be cowed to back him rather than engage him head on.

The firm should institute the aforementioned ethical policies to avert a similar scandal in the future. These policies are transparency measures, trust, and enhanced safety regulations. The company should ensure that customers are alerted prior to any activity involving their personal data (Shackelford, 2018). This will ensure that only willing customers will have their data distributed to third parties. The company should strive to make the consumer the master of his/her data. The company should also ensure that it follows on its pledges made to legal bodies such as the Federal Trade Commission (FTC). Had Facebook followed on its pledge to the FTC concerning having a comprehensive privacy program and guaranteeing consumer safety then most likely the scandal would have been averted.

In conclusion, Facebook’s key shareholders should strive to maintain a mutual agreement amongst them. Policies governing the collection and storage of data should be well articulated by the company and communicated to the customers. Express permission should also be sought before indulging in any activity involving customers’ data. If companies like Facebook are able to apply and strictly follow the aforementioned guidelines then customers can rest peacefully knowing that their data will not land in the hands of strangers.


Acquisti, A., Gritzalis, S., Lambrinoudakis, C., & di Vimercati, S. (Eds.). (2007). Digital privacy: theory, technologies, and practices. CRC Press.

Brandom, R. (2018, April 10). After Facebook hearing, senators roll out new bill restraining online data use. Retrieved from

Shackelford, S. (2018, September 26). Facebook’s social responsibility should include privacy protection. Retrieved from

Silverman, J. (2018, December 20). The Facebook scandal isn’t really about social media. It’s about capitalism. Retrieved from