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Business And Ethics Essay, Research Paper

Business and Ethics



ECBU 346


FEBURARY 12, 1997


From a business perspective, working under government contracts can be

very lucrative. In general, a steady stream of orders keep coming in, revenue

increases and the company continues to grow. There are a few obvious downfalls

to working with government contracts; a higher quality is to be expected as well

as extensive research accompanied by accurate and complete documentation are

usually required. If one part of the process fails to perform correctly it can

cause minor flaws as well a problems that can carry some serious repercussions;

For example the case of the failed computer chip at Company X. When both the

employee and company are found at fault, the question arises of how extensive

should the repercussions be? Is the company as a whole liable or do you look

into individual employees within that company? From an ethical perspective one

would have to look at the available information of both the employees and their

superiors along with the role of others in the situation. Next you would have

to analyze the final outcome from a corporate perspective and then examine the

corporate responsibility as a whole in order to find a resolution for cases such

as this.

The first mitigating factor involved in the Company X case is the

uncertainty, on the part of the employees, on their duties that they were

assigned. It is possible that during the testing procedure, an employee

couldn’t distinguish between the parts they were to test under government

standards and commercial standards. In some cases they might have even been

misinformed on the final product that they tested. In fact, ignorance on the

part of the employees would fully excuse them from any moral responsibility for

any damage that may result from their work. Whether it is decided that an

employee is fully excused, or is given some moral responsibility, would have to

be looked at on an individual basis.

The second mitigating factor is one of threats that an employee might

suffer if they do not follow through with their assignment. After the bogus

testing was completed in the Company X labs, the documentation department also

had to falsify documents stating that the parts had more than met the

governments testing standards. From a legal and ethical standpoint, both the

testers and the writers of the reports were merely acting as agents on direct

orders from upper management. The writers of the reports were well aware of the

situation yet they acted in this manner on the instruction of a supervisor.

Acting in an ethical manner becomes a secondary priority in this type of

environment. As stated by Alan Reder, ?if they [the employees] feel they will

suffer retribution, if they report a problem, they aren’t too likely to open

their mouths.? (113). The workers knew that if the reports were not falsified

they would come under questioning and perhaps their job would be in jeopardy.

Although working under these conditions does not fully excuse an employee from

moral fault, it does give a starting point to help narrow down the person or

department that issued the original request for the unethical acts.

The third mitigating factor is one that perhaps encompasses the majority

of the employees in the Company X case. We have to balance the direct

involvement that each employee had with the defective parts. Thus, it has to be

made clear that many of the employees did not have direct involvement with the

testing departments or with the parts that eventually failed. Even employees,

or sub-contractors that were directly involved with the production were not

aware of the ignorance on the part of the testing department. For example, the

electrical engineer that designed the defective computer chip could have stated

that it was tested and it did indeed meet the required government tests. Also,

for the employees that handled the part after the testing process, they were

dealing with what they believed to be a piece of equipment that met government

standards. If the part was not tested properly, and did eventually fail, isn’t

the testing department more morally responsible than the designer or the

assembly line worker that was in charge of installing the chip? In large

corporations there may be several testing departments and in some cases one may

be held more responsible than another depending on their involvement. A process

like this can serve as a dual purpose for finding irresponsible employees as

well as those that are morally excused.

The fourth mitigating factor in cases of this nature is the measure of

the seriousness of the fault or error caused by the product. Since Company X

was repeatedly being added to the list of approved government contractors, one

can safely assume that the level of seriousness, in the opinion of the

contractor approval committees, is not of monumental importance. Yet a person

has to wonder how this case would have been different if it caused the loss of

life in a military setting. Perhaps the repercussions would have taken effect

much faster and been more stringent. The fact that Company X did not cause a

death does not make them a safe company. They are still to be held responsible

for any errors for which their products cause, no matter the extent.

As for the opposition to the delegating of moral responsibility,

mitigating factors and excusing factors, most would argue that the corporation

as a whole should be held responsible. The executives within a corporation

should not be forced to bring out all of the employees responsible. A company

should be reprimanded and be left alone to carry out its own internal

investigation and repercussions. From a business law perspective this is the

ideal case since a corporation is defined as being a separate legal entity.

Furthermore, opposition would argue that this resolution would benefit both the

company and the government since it would not inconvenience either party. The

original resolution in the Company X case was along these lines. The government

permanently removed Company X from its approved contractors list and then

Company X set out to untangle the web of wrongdoing from within. This allowed

for a relatively quick resolution as well as an ideal scenario for Company X.

In response, one could argue that the whole corporation has no morals or

even a concept of the word. A corporation is only as moral and ethical as the

employees that work for it. All employees, including top ranking executives are

working towards the advancement of the company as a whole. All employees,

including the sub-contractors and assembly line workers, are in some part

morally responsible. Every employee should have been clear on their employment

duties and aware of which parts were intended for government use. Uncertainty

is not an excuse for moral responsibility in the case of the workers. Also, the

fact that some employees failed to act in an ethical manner gives even more

moral responsibility to that employee. While some are definitely more morally

responsible than others, every employee has to carry some burden of weight in

this case. In fact, when the government reached a final resolution, they

decided to further impose repercussions and certain employees of Company X were

banned from future work in any government office (Velazquez, 54).

Looking at the case from the standpoint of Company X, the outcome was

favorable considering alternate steps in which the government could have taken.

As explained before, it is ideal for a company to be able to conduct its own

investigation as well as it’s own punishment. After all, it would be best for a

company to determine what specific departments are responsible rather than

having a court of law trying to decide which employee is to be blamed. Yet,

since there were ethical issues of dishonesty and secrecy involved, Company X

should have conducted a thorough analysis of their employees as well as their

own practices. It is through such efforts that a corporation can raise the

ethical standard of everyone in the organization.

This case brings into light the whole issue of corporate responsibility.

The two sides that must ultimately be balanced are the self interests of the

company, with main goal of maximum profit, and the impacts that a corporation

can cause on society (Sawyer, 78). To further strengthen this need, one could

argue that there are very few business decisions that do not have an affect on

society in one way or another. In fact, with the vast number of growing

corporations, society is being affected on various fronts; everything from water

contamination to air bag safety is becoming a major concern. Every decision

that a business makes is gauged by the financial responsibility to their

corporation instead of their social responsibility to the local community. This

was pointed out on various occasions as the main reason why Company X falsified

their reports. The cost of reingineering of the defective part did not outweigh

the loss of business. In the opinion of the executives, they were acting in a

sensible manner. After all, no executive wants to think of themselves as

morally irresponsible.

The question that naturally arises, in debating corporate responsibility,

is what types of checks and balances can be employed within a company to ensure

that a corporation and all of its agents act in an ethical manner. Taking the

example of the Company X case, one can notice many failures in moral

responsibility. Company X would have to review its employees, particularly the

supervisors, for basic ethical values such as honesty. For example, ultimately

it was the widespread falsification of the testing documentation that caused the

downfall of Company X, not the integrity of it’s imployees. In the outline of

the case it is never mentioned that the employees initiated this idea, it would

seem that it was the supervisors that gave the order to falsify the documents.

Through open communication, a company can resolve a variety of its ethical

dilemmas. As for the financial aspects of the corporation, it has to decide

whether the long term effects that a reprimand can have outweighs their bottom

line. In other words, corporations have to start moving away from the thought

of instant profit and start realizing both the long term effects and benefits.

These long term benefits can include a stronger sense of ethics in the work

force as well as a better overall example to society.

In conclusion, I agree with the use of mitigating factors in determining

moral responsibility. A company, as defined by law, is only a name on a piece

of paper. The company acts and conducts itself according to the employees that

work for it. I use the word employee because in ethical thinking there should

be no distinction of rank within a company. There are times when executives can

be held directly responsible and at the same time, there are cases where

employees are acting unethically without the executives knowing. Neither title

of executive or employee are always morally perfect. Therefore, when a company

has acted irresponsibly, its employees must be held liable in a proportionate

amount. As for the future of ethics in business I would speculate that if

employees started to think more in long term benefits and profits, many of the

ethical dilemmas that we face today would be greatly reduced. As mentioned

before, businesses today uses the measuring stick of profitability. We need to

stress the importance of placing ethical weight on all major business decisions.

Opponents would argue that this is a long term plan that require too

many radical changes. Also, there is no way that an industry wide standard can

be set due to the vast differences in corporations.

In response, I would argue that although there are no industry standards

that are feasible, but it is possible for every company to examine their

practices as well as the attitudes of their employees. There will be a number

of companies that will defend that are doing all they can to make sure their

employees are aware of their moral values. Yet other companies will find that

they do have areas that need improvement. It is steps like these that spark

change in an organization. Once a few companies start to see the benefits, it

can help to encourage other companies to follow suit. After all, as seen in the

case of Company X, mistakes in one department can cause the deterioration of an

entire corporation. When a corporation realizes the costs involved with

decisions such as this, the changes required to rectify are small in comparison.

Works Cited

Pava, Moses. ?Corporate Responsibility and Financial Performance.?

Quorum Books, March 1995.

Reder, Alan. ?In Pursuit of Principle and Profit.?

G.P. Putnams Sons Publishing, 1995.

Sawyer, George. ?Business and Society: Managing Corporate Social Impact.?

Houghton Mifflin Publishing, Feburary 1993.

Velazquez, Manuel. ?Business Ethics: Concepts and Cases.?

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