The big idea: How does a multinational company respond when it discovers that one of its products is being used for unintended purposes?

The scenario: His elation over a good fiscal-year performance turned to alarm when the president and chief executive of GE Healthcare India, V. Raja, learned that the company’s ultrasound machines had been implicated in many cases of prenatal sex determination in India. Even in the 21st century, social forces in India favored males, and as a result, some in India continued to see females as a burden on their families. Studies had shown that fewer and fewer girls were being born, with potentially catastrophic consequences for future Indian society. The reason: Women were relying on ultrasound machines to determine the gender of their fetuses and, if they were girls, having abortions. Abortion, it turned out, was replacing infanticide as a method for families to select sons, not daughters. An article in the well-respected publication The Lancet, claimed that about 500,000 female fetuses, or one in 25, were selectively aborted each year throughout India.

GE had first entered India in the early 1990s, and the country had proved to be a key growth market for the company. Sales of diagnostic equipment in India grew from   $30 million in 1995 to $250 million by 2006, and further growth was expected. Raja knew that the ultrasound machines provided much-needed medical care for Indians, particularly those in rural communities. With the machines’ increasing portability, they could be brought to remote areas where medical care had been nonexistent. Ultrasound technology has a vast array of critical applications, from diagnosing heart disease, fetal defects or birth complications, gallbladder obstructions, kidney stones, and congenital or hereditary abnormalities. Raja also knew that the company was following all the rules and regulations to prevent abuse in the use of the machines. Nonetheless, unscrupulous practitioners in India, despite the banning of the practice, continued to use the machines to determine the gender of a fetus.

The Indian government had attempted to fight fetal gender predetermination through its Prenatal Diagnostic Techniques Act of 1994, and its subsequent 2003 amendment, which banned the use of technology such as ultrasound and sonogram for the purpose of gender determination. But some clinics continued to illicitly offer this diagnostic.

GE Healthcare attempted to get the clinics to comply with the law. But how should the company deal with the mounting criticism? Should it step back from its aggressive sales strategy in India? How responsible is GE for the use of its machines? What efforts should the company make to stop the illicit prenatal gender determination and resulting abortions, in order to both engage the issue and protect the image of GE as a responsible corporation going forward?

The resolution: GE Healthcare chose to proactively engage the larger social issue at stake. The company continued to sell its ultrasound machines but attempted to address the issue, in working directly with both the Indian government and various NGOs. The firm increased mandatory training for ultrasound practitioners and stepped up its vigilance and warnings to practitioners. The company also funded a publicity campaign within India, “Rights of the Girl Child,” and started funding educational programs for India’s girls.

The lesson: Business organizations do not operate in a vacuum. Unanticipated issues that arise from the larger social and cultural environment can become highly salient. Organizations must define their responsibilities, values and obligations in such situations, while identifying key stakeholders and their needs and rights. Proactively engaging the broader societal context in a responsible way represents both good ethics and good strategy.

— Jared Harris

Harris is an assistant professor of business administration at the University of Virginia’s Darden School of Business.

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