Abstract
The first time that phone hacking scandal caught the attention from the general public was in November 2005, when Prince William’s knee injury, which was only known to few cronies, was exposed as news by News of the World. Former NOtW royal editor Clive Goodman was accused of hiring private detective Glenn Mulcaire for phone hacking activities. The major victims were celebrities, politicians, and members of the British Royal family. Later in 2006, both Goodman and Mulcaire were sentenced. The chief editor Andy Coulson then resigned from the newspaper. However, in July 2011, it was revealed that the phone of missing school girl Milly Dowler had also been hacked by a journalist from the News of the World. The messages in the voice mail box had been erased, which gave false hope survival to police and the girl’s family and potentially destroyed valuable evidences about the girl’s abduction and murderer. Within more and more , resulted in a public outcry against the News International. On the 8th of July, after the British Parliament’s urgent debate regarding the affair, British Prime Minister David Cameron announced that a public inquiry would look in to the scandal and that further investigations needed to be conducted. Due to advertisement boycotts and unrelenting public pressure, News of the World ended its 168 years publication on 10th of July. Eight days later, former News of the World reporter Sean Hoare was found dead. He was the first to allege phone hacking at the publication. News of the World (this part is replaced by fiona’s new similarity reduced edition)

The News of the World (NoTW) was at one time one of the biggest-selling English language newspapers in the world. It was first published in 1843 and at the time of the closure in 2011, its circulation was around 8.4m issues per week, which showed that it still had one of the highest circulations among English language newspapers.
The company was initially established as a broadsheet by John Browne Bell in 1843 and was later sold to Henry Lascelles Carr in 1891 and was finally bought by Rupert Murdoch's media firm--News Limited.
Back to the very beginning, when News of the World’s first edition was announced in 1843, the newspaper’s practice was defined as “fearless and persistent to find out the truth… never seek for the financial support from any party and hide neither the achievements nor the mistake of any… dedicate in delivering good service to old England by maintaining her honourable reputation and safety, the prosperity of all classes of the people” (Hinton 2011). This powerful and explicit mission statement was regarded as the company’s founding motto.
NoTW was transformed into a tabloid after it merged into the News International. News International was a subsidiary of News Corporation, thus NoTW became the Sunday sister paper of the Sun. The key focus of the tabloid was celebrity-based scoops and news of populist. Its “extraordinary” scandal news earned the company various names including but not limited to “famous News of the Screws” and “Screws of the World slogan” (UK: BBC. 2011)
The Company was famous for uncovering gentries as druggies, sex scandals, or murders, arranging the journalists to hack into the insider system to get either photographic or video evidence and phone hacking. In order to promote sales in the Britain, Murdoch’s tabloid paid large amounts of money to obtain exclusive scoops. A fraction of this money was paid to private detectives, who would devote their time to: phone hacking, bribe the police officers and illegally purchase private documents over a long period of time. With its paparazzi style and individual newsfeeds, the sales of the paper averaged 2,812,005 copies on weekly basis up until 2010. A culture that initially “advocated for truth” spread like virus, even though it meant the violation of the law.
On July the 4th 2011, phone hacking scandal on the missing teenage Milly Dowler shocked the public and the accusations on NoTW reached to the peak. In order to calm the eavesdropping scandal, Murdoch announced the closure of the newspaper on July the 7th 2011, only 3 days after the disclosure of the scandal. (this part is replaced by fiona’s new similarity reduced edition)
Top Down Culture
To differentiate itself in the British newspaper market, Murdoch introduced a new tabloid style to NoTW. Rupert Murdoch described the newspaper as a campaigning one, which was interested in the gossip on celebrities just as desired by the public. James Murdoch described the brand of NoTW as an Investigation newspaper concerning scandals and uncovering wrongdoing, campaigning and so forth.
One of the important guidelines of Rupert Murdoch is to uncover stories by every means. He believes that obtaining news can be justified by the result, and hence there is ‘no prison’ in the newsroom as it is this results that counts. Most forms of information collecting conduct are delivered from “the top down”, meaning the person in charge of the paper leads the rest of the employees, telling them how to do to get the information need (Bernstein, 2011). People hired respected the authority and obeyed the organizational rules. They were doing what they were expected to do and what they regarded as a norm in the office (Ferrell, 2011). Moreover, to encourage employees, NoTW ran a monthly ‘merit’ scheme, that is, journalist would be awarded of £500 for their good stories.
There is thus the critic that Murdoch’s leadership as pushing the employees to unabashed pursuit of any possible information. The new approach was first known to the public by Christine Keeler’s autobiography of the 1963 Profumo affair. The Keeler article stimulated circulation, although Murdoch was criticized by his peers of reporting old and ugly news. Management Layer
Murdoch was not only blamed for the introduction of a new tabloid style to NoTW, he also made innovations to ways of decision on all of his headings.
The Murdoch family owns 38% of news corporation and three positions out of seven in its board of directors, moreover all of the Murdoch family members are in important positions: Rupert Murdock is the chairman and chief executive officer, his son James Murdoch is the Deputy Chief Operating Officer, News Corporation, Chairman and CEO and Lachlan K. Murdoch who is executive chairman and DMG radio Australia. The Murdock family don’t merely have voting power of the board but also the executive power of manager’s. Murdoch established an Executive Management Team (consisting of the heads of NI’s various divisions, the three editors and the CEO) in the corporate to discuss daily business issues and to draw the CEO’s attention to issues of significance. The team met weekly to make decision on the lawful, professional and ethical of the employee at the title level.
However, such ‘meeting’ could not stop Murdoch’s philosophy of creating a corporate culture that ignored occupation standards in ethical practices and fostered unethical behaviour. The disgraceful manner of senior management executives and some of the company's senior journalists was absorbed by the employees. A corporate culture was formed that required them to be mini-Murdochs, buccaneering campaigners who would take whatever steps necessary to achieve their boss's wishes (or, more pertinently, what they believed to be their boss's wishes)
The investors of news corporation have claimed calls for Rupert Murdoch to separate the power of chairman and CEO to enhance decision making quality and reduce management risk.
The shareholders criticize the culture of nepotism at News Corp, saying: "Murdoch has treated News Corp like a family candy jar, which he raids whenever his appetite strikes” (Preston, A. 2011).
The complaint, filed in a Delaware court, states: "It is inconceivable that Murdoch and his fellow board members would not have been aware of the illicit news-gathering practices."

Hiring Detectives With the phone hacking scandal revealed, News of the World has since also been blamed of hiring private detectives to gain secret and confidential information. Glenn Mulcaire, a private investigator who provided the newspaper with mobile phone details of celebrities, had a year's contract with the Sunday paper for "research and information services" worth £104,988 and also received £12,300 in cash from the paper. According to the Leveson Inquiry, in July 2007 News International settled a claim for unfair dismissal brought by Mr Goodman, making a payment of a further £140,000 in addition to a £90,000 notice payment that had been made in February 2007 when Mr Goodman was dismissed. According to NoTW's financial authorization system, the maximum amount that a desk head could authorize was £2,000 for a single payment, and any payments over £50,000 required approval from the Chief Financial Officer. The cash payment to the third party needed to be authorized by the managing editor and the editor or deputy editor. The person applied for the payment would be asked to provide an invoice or other forms of writing evidence. The request and supporting documents would be recorded by an internal tracking system. The system included an Approved Signatory List, which was used to default the user permission.
In January 2007, Mulcaire was jailed along with the News of the World royal editor Clive Goodman after admitting to hacking voicemail messages of royal aides' phones, including Prince William. In December 2011, Mulcaire was rearrested on suspicion of conspiracy to hack voicemail messages and perverting the course of justice, facing four charges of conspiracy to unlawfully intercept communications. Members in the management layer arrested because of involvement in phone hacking
Sue Akers, deputy assistant commissioner at the Metropolitan Police Service, led the probes into the alleged illegal activities including phone and computer hacking and bribery. In the police chief updates of inquiry on hacking & bribery probes, Akers stated that there appeared to be a culture of illegal payments and systems created to facilitate those payments at the Sun. Besides, News Corp’s internal management and standards committee had proffered significant evidence on management acquiescing phone hacking activities and bribing MPS, that led to “very substantial” arrests
Many employees from management level were charged because of the phone hacking scandal. Former managing editor in the News of the World, Stuart Kuttner, who worked 22 years until his resignation in July 2009, was arrested by both police from two operations probes: Weeting (the investigation into phone hacking) and Elveden (probing allegations of inappropriate payments to police officers), for allegations of phone hacking and of bribing police officers to leak sensitive information. He was charged with three counts of conspiracy to unlawfully intercept communications.
Andy Coulson, News of the World editor between 2003 and 2007, resigned from his position following the convictions of ex-News of the World royal editor Clive Goodman and private investigator Glenn Mulcaire for phone hacking. Coulson was arrested in 2011 in connection with claims of phone-hacking and corruption allegations and in July 2012 was charged on five counts of conspiracy to unlawfully intercept communications.(3) In fact, corrupt Scotland Yard officers received substantial cash bribes from News of the World journalists. It is claimed that officers received more than £100,000 in unlawful payments. The payments – allegedly authorised by Andy Coulson – are said to have been made to officers in key positions in return for confidential information. (4) Another core management member Rebekah Brooks, the former News of the World editor and former News International chief executive, also faced charged. She faced three charges of conspiracy to corruppt the course of justice and a further three charges of conspiracy to unlawfully intercept communications. Brooks admitted using private investigators during her time as editor of the tabloid between 2000 and 2003, also, she admitted the payments to private investigators were the responsibility of the paper's managing editor's office. End of Story? Not Yet!
Even though both internal and external stakeholders were blaming the poor corporate culture of NoTW and unethical decision made by its management, the executives still denied that they would need any amendment. After the leveson Inquiry, Murdoch was questioned if “this is going to lead to chains getting more say over the company now, or how it might affect your management structure.” Murdoch responded: ”No, nothing’s changed and I’m just not throwing innocent people under the bus, that’s all.”
Ethical dilemmas do not just end by the closure of the newspaper. On a visit to London on 17 February 2012, Murdoch announced he was soon to launch a Sunday edition of The Sun, widely seen as a successor to the News of the World. On 19 February 2012 it was announced that the first edition of The Sun on Sunday would be printed on 26 February 2012.(5) It would employ a number of former News of the World journalists.

Appendix
1.

There is a obvious stock price drop after July 2011 when the scandal was exposed, it almost took 1 year and 7 months to recover its loss. It was a huge loss for BskyB’s investors and owners. http://corporate.sky.com/investors/share_price This is a three years share price chart of News Corporation, the share price dropt rapidly after 7/11 then it took about half one year to reach the price level before the expose of the phone hack scandal. http://finance.yahoo.com/q/bc?s=NWS+Basic+Chart 2.

Teaching Note
Case Synopsis
The case was developed to provide students with the chance to analyse the actual circumstance from an ethical perspective. The case study has an in-depth analysis towards the world-shocked UK phone hacking scandal. The case initially has a brief description about the trigger of the scandal: the divulgation of Prince William’s confidential message and the truth behind the murdered schoolgirl Milly Dowler. Then, it brings the main character of the scandal, the Murdoch’s Newspaper Organization, in the spotlight.
In order to find out the motivation why the organization would undertake the unethical behaviour, the author firstly provides a general background of the organization. Afterwards, by reviewing evidence of the senior management’s reaction, the author has a specific focus on the Murdoch’s profit-oriented culture, and intends to explain the relationship between the culture and the emerging unethical decision making consequence. The case study was provided with an assumption that the management’s reaction is shaped and can truly reflect the organization’s top culture.

Learning objectives
• Recapitulate the UK phone hacking scandal, know the trigger and development of the event
• Understand framework for ethical decision making in business and the composed elements in the model
• Undertake stakeholder view of the business and identify the relevant stakeholders
• Understand Schein’s view of culture
• Lead students to understand why changing culture is a tough work, and the toxic culture can be spread in the Murdoch organization

Theories/ Models Applied
• Schein’s Culture Model
• Framework for ethical decision making in business

Case Disscussion Questions
Question 1: What is the main culture concerned in the case study? Apply Schein’s view of culture model to analysis the culture and show the link if possible.
Culture is a series of shared basic assumptions within a group, and shapes the way that the group solves its problems of external adaptation as well as internal integration (Schein 1984, p.3). Schein (1984, p.4) classified the assumptions into three categories, namely external adaption issues, managing internal integration and deeper culture assumptions. Appendix 1 provides details for the assumptions in each level. Besides, empirical studies have shown the positive correlation between the culture and organization’s performance (Calori& Sarnin 1991, p.71; Kotter&Heskett 1992). In this case study, we can see that the Murdoch organization is carrying on a profit-oriented or outcome-oriented culture, and the “top down” culture make the toxic culture easily spread within the group; the profit-oriented culture has bred the unethical phone hacking performance. Going back to Schein’s Culture Model, the goal (under external adaption issues) of the tabloid is to get the eye-catching stories and beat the competitors. The internal integration management level is aligned with the goal; the tabloid will award employees who get the news regardless of the means to achieve it. To explore from the deeper cultural assumption level, the twisted culture is caused from wrongly defining “what is truth” within the organization. Simply because everyone in the organization gives tacit consent to the phone hacking, the unethical method has been popularly used and was accepted as the right thing to do.
Question 2: How does profit driven culture in the NOtW relate to the unethical decision that management made? such as phone hacking and bribing police? (Hint: apply the organizational factor in the ethical decision model in business and link the facts in the case study)
You can consider the organizational factors from two aspects: the organizational culture and the structure of the organization. Firstly, the organization has a profit-oriented or outcome-oriented culture, and the group members will be awarded if they get the breaking news to attract readers regardless of the means they used to get the news. The organization’s own benefit and profit is supreme in the group. Thus, the unethical award criteria have more potential to lead people within organization to act unethical (Ferrell et al. 2006). Secondly, we can summaries from the case that the structure of the organization tends to be centralized, in which the decision making is in the hands of the senior management. Under the centralized management structure, the desire of the senior management level can directly lead the rest people in the organization. To some extent, the decision of the senior management is the decision through the whole organization. Since the high management is promoting the unethical ways to get the news, it is more likely to make the whole organization end with the unethical decisions. Besides, students are also expected to know the link between the subsequent relationships between the unethical decisions. For example, journalists were influenced by the toxic culture and took the phone hacking method to get the news, which is unethical. However, after the secret was disclosed, the senior management decided to cover the fact by bribing the police, and this made the organization walk further away from the ethical decision. Thus, the unethical decisions penetrate different levels the whole organization.