Business Ethics Essay, Research Paper

Business Ethics

>From a business perspective, working under government contracts can be a

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

revenue increases and the company grows in the aggregate. The obvious downfalls

to working in this manner is both higher quality expected as well as the

extensive research and documentation required for government

contracts. If a part fails to perform correctly it can cause minor glitches

as well as problems that can carry serious repercussions, such as in the

National Semiconductor case. When both the culpable component and company are

found, the question arises of how extensive these

repercussions should be. Is the company as an entity liable or do you look

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

would have to look at the mitigating factors of both the employees and their

superiors along with the role of others in the failure of these components. Next

you would have to analyze the final ruling from a corporate perspective and then

we must examine the macro issue of corporate responsibility in order to attempt

to find a resolution for cases like these.

The first mitigating factor involved in the National Semiconductor case is

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

assigned. It is plausible that during the testing procedure, an employee couldn?t

distinguish which parts they were to test under government standards and

commercial standards. In some cases they might have even been misinformed on the

final consumers of the products 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 employees

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

at on an individual basis.

The second mitigating factor is the duress or threats that an employee might

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

testing was completed in the National Semiconductor labs, the documentation

department also had to falsify documents stating that

the parts had surpassed the governmental 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 a superior. This was also the case when

the plant in Singapore refused to falsify the documents

and were later falsified by the employees at the have California plant before

being submitted to the approval committees (Velazquez, 53). 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 employment would go into

jeopardy. Although working under these conditions does not fully excuse an

employees from moral fault, it does start the divulging process for determining

the order of the chain of command of superiors and it helps to 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 National Semiconductor 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 a direct duty 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 incompetence on the part of

the testing department. For example, the electrical engineer that

designed the defective computer chip could act in good faith that it would be

tested to ensure that it did indeed meet the required government endurance

tests. Also, for the employees that handled the part after the testing process,

they were dealing with what they believed to be a component that met every

governmental standard. If it was not tested properly, and did eventually fail,

isnt the testing department more morally responsible than the designer or the

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

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

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

like this can serve the dual purpose of finding irresponsible employees as well

as those that are morally excused.

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

seriousness of the fault or error caused by this product. Since National

Semiconductor was repeatedly being reinstated to the listed of approved

government contractors, one can safely assume that the level of seriousness, in

the opinion of For the contractor approval committees, is not of monumental

importance. Yet one has to wonder how this case would have been different if the

lack of testing did cause the loss of life in either a domestic or foreign

military setting. Perhaps the repercussions would have come faster much more

stringent. The fact that National Semiconductor did not cause a death does not

make them a safe company. They are still to be held responsible for any errors

that their products cause, no matter the magnitude.

As for the opposition to the delegating of moral responsibility, mitigating

factors and excusing factors, they would argue that the entity of 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

into a public forum. 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, the 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 National

Semiconductor case was along these lines. The government permanently removed

National from its approved contractors list and then National set out to

untangle the web of culpability within its own confines. This allowed a

relatively quick resolution as well as the ideal scenario for National

Semiconductor. In response, one could argue that the entity of a corporation has

no morals or even a concept of the word, it is only as moral and ethical as the

employees that work in that entity. All of the employees, including top ranking

executives are working towards advancing the entity known as their corporation (Capitman,

117). All employees, including the sub-contractors and assembly line workers,

are in some part morally responsible because they should have been clear on

their employment duties and they all should have been aware of which parts were

intended for government use. Ambiguity is not an excusing factor of moral

responsibility for 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 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 National Semiconductor were banned from future work in any

government office (Velazquez, 54). Looking at the case from the standpoint of

National Semiconductor,

the outcome was favorable considering the alternate steps that the government

could taken. As explained before, it is ideal for a company to be able to

conduct its own investigation as well as its own punishments. After all, it

would be best for a company to determine what specific

departments are responsible rather than having a court of law impose a burden

on every employee in its corporation. Yet, since there are ethical issues of

dishonesty and secrecy involved, National Semiconductor should have conducted a

thorough analysis of their employees as well as their own practices. It is

through efforts like these that a corporation can raise

the ethical standard of everyone in their 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 affect society in

way or another. In fact, with the plethora of corporations, society is being

affected on various fronts; everything from water contamination to air bag

safety is a concern. The biggest problem that all of us must contend with is

that every decision that a business makes is gauged by the financial

responsibility to their corporation instead of their social responsibility to

the local community, and in some cases, the international community. This was

pointed out on

various occasions as the main reason why National Semiconductor falsified

their reports. The cost that the full tests would incur did not outweigh their

profit margins. Their business sense lead them to do what all companies want . .

. maximum profit. 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. (Capitman, 118). 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 National Semiconductor case, one can notice many

failures in moral responsibility. National Semiconductor would have to review

its employees, particularly the

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

was the widespread falsification of the testing documentation that caused the

downfall of National Semiconductor, not the integrity of their components. In

the synopsis 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. In order to accomplish this, the

company executives would have to encourage their employees to voice their

concerns in regards to the advancement of the company. 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 from the government 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 society.

To conclude, I must say that 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 in that entity. 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 equates to moral perfection. 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. There needs

to be a shift to the thinking of total utility for the social community in order

to weigh business decisions. Opponents would argue that this is a long term plan

that require too many radical changes in the face of business. Also, there is no

way that an industry wide standard can be set since there are too many types of

corporations. Plus, companies have different needs and every moral rule is

subjective according to the type of business that everyone conducts.

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

are feasible, it is possible for every company to examine their practices as

well as the attitude of their employees. There will be companies that find that

they are doing fine with employees that 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 start implementing changes.

Once a few companies start to see the benefits of changes, it can help to

encourage other companies to follow suit. After

all, as seen in the case of National Semiconductor, mistakes in one

department can cause the deterioration of an entire corporation. When the costs

that are possible are taken into account, the changes required to rectify this

are small in comparison.

Capitman, William. 1973. Panic In the Boardroom. New York:

Anchor Press-DoubleDay Publishing

Harris, Kathryn, Chips Maker Feels Attack on Four Sides Los Angeles Times

April 4, 1982. Pg. B1

Pava, Moses. 1995. Corporate Responsibility and Financial Performance.

London Quorum Books

Reder, Alan. 1944. In Pursuit of Principle and Profit. New York:

G.P. Putnams Sons Publishing

The words "ethical," "moral," and "legal" are

often misunderstood and misused. The terms are similar in that each refers to a

human behavioral code. Human behavior is complex and thus no one term is

sufficient to describe it. Ethical, moral, and legal issues also intertwine to

create our entire understanding of behavior as it relates to our sense of right

and wrong.

To further complicate matters, each civilization and culture (past and

present) has its own of what is ethical, moral, or legal. Therefore, one cannot

arrive at a simple, clear definition of what each term means. The

"meaning" of the terms is often dependent upon who is defining them.

Ethics

Many people who write about ethics use the term when referring to the most

general codes by which humankind lives; that is, those codes of behavior that,

for the most part, transcend time, culture, and geography. In simple terms,

ethics is the study of people’s concept of right and wrong.

Therefore, we use the word "ethical" when we are speaking of that

general code of right and wrong recognize by enlightened civilizations from the

beginning of time. When we ask the question "Was that act or decision

ethical?" we are asking if it meets the test of what is accepted as

universally right. Writers suggest that we consider such basic concepts as

honestly, fairness, and compassion as universal ethical values.

Morals

The term "moral" speaks to issues that concern a community of

people rather than humankind in general. The study of morals also concerns

itself with right and wrong but more directly in terms of specific groups of

people. One may consider morals as specific rules of right and wrong based on

universal ethical truths.

Thus, we use this word "moral" when we refer to behavior that may

be acceptable for one society but not for another. Some people consider as moral

issues such things treatment for children, the aged, animals, and the

environment along with questions about marriage and other human relationships.

(Purple, 1989, 66)

Legal

Just as moral can be seen as more specific than ethical, legal is seen as the

most specific of the three terms. Laws are codified behaviors for members of

society enacted by a specific lawful authority. (Gifts, 1991) The law may have

as its foundation moral rules and ethical truths, but it is closely allied with

politics. As a result, it suffers from greater subjectively than do ethics and

morals. Laws differ not only from society to society but also from town to town.

What is legal in Los Angeles, for example, may be punishable in Portland. Laws

are more temporary than morals of ethics, often changed by simple majority vote

or by decree.

We use the word "legal" when judging an act by the most specific

set of local laws that have been codified by local authority. Issues as

universal as theft and as specific as jaywalking are subject to local law.

(Elliott, 1992, 28-35)

The terms "ethical," "moral," and "legal" are

similar in the sense that each refers to the interpretation of right and wrong.

Their differences depend upon how explicit and specific a description we use to

interpret a set of behaviors.

Business Ethics

>From a business perspective, working under government contracts can be a

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

revenue increases and the company grows in the aggregate. The obvious downfalls

to working in this manner is both higher quality expected as well as the

extensive research and documentation required for government contracts. If a

part fails to perform correctly it can cause minor glitches as well as problems

that can carry serious repercussions, such as in the National Semiconductor

case. When both the culpable component and company are found, the question

arises of how extensive these repercussions should be. Is the company as an

entity liable or do you look into individual employees within that company? From

an ethical perspective one would have to look at the mitigating factors of both

the employees and their superiors along with the role of others in the failure

of these components. Next you would have to analyze the final ruling from a

corporate perspective and then we must examine the macro issue of corporate

responsibility in order to attempt to find a resolution for cases like these.

The first mitigating factor involved in the National Semiconductor case is

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

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

distinguish which parts they were to test under government standards and

commercial standards. In some cases they might have even been misinformed on the

final consumers of the products 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 employees

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

at on an individual basis.

The second mitigating factor is the duress or threats that an employee might

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

testing was completed in the National Semiconductor labs, the documentation

department also had to falsify documents stating that the parts had surpassed

the governmental 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 a superior. This was also the case when the plant in

Singapore refused to falsify the documents and were later falsified by the

employees at the have California plant before being submitted to the approval

committees (Velazquez, 53). 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 arent 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 employment would go into

jeopardy. Although working under these conditions does not fully excuse an

employees from moral fault, it does start the divulging process for determining

the order of the chain of command of superiors and it helps to 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 National Semiconductor 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 a direct duty 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 incompetence on the part of the testing department. For example, the

electrical engineer that designed the defective computer chip could act in good

faith that it would be tested to ensure that it did indeed meet the required

government endurance tests. Also, for the employees that handled the part after

the testing process, they were dealing with what they believed to be a component

that met every governmental standard. If it was not tested properly, and did

eventually fail, isnt the testing department more morally responsible than the

designer or the assembly line worker that was in charge of installing the chip?

Plus, in large corporations there may be several testing departments and is some

cases one may be held more responsible than another depending on their

involvement. A process like this can serve the dual purpose of finding

irresponsible employees as well as those that are morally excused.

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

seriousness of the fault or error caused by this product. Since National

Semiconductor was repeatedly being reinstated to the listed of approved

government contractors, one can safely assume that the level of seriousness, in

the opinion of For the contractor approval committees, is not of monumental

importance. Yet one has to wonder how this case would have been different if the

lack of testing did cause the loss of life in either a domestic or foreign

military setting. Perhaps the repercussions would have come faster much more

stringent. The fact that National Semiconductor did not cause a death does not

make them a safe company. They are still to be held responsible for any errors

that their products cause, no matter the magnitude.

As for the opposition to the delegating of moral responsibility, mitigating

factors and excusing factors, they would argue that the entity of 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

into a public forum. 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, the 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 National

Semiconductor case was along these lines. The government permanently removed

National from its approved contractors list and then National set out to

untangle the web of culpability within its own confines. This allowed a

relatively quick resolution as well as the ideal scenario for National

Semiconductor.

In response, one could argue that the entity of a corporation has no morals

or even a concept of the word, it is only as moral and ethical as the employees

that work in that entity. All of the employees, including top ranking executives

are working towards advancing the entity known as their corporation (Capitman,

117). All employees, including the sub-contractors and assembly line workers,

are in some part morally responsible because they should have been clear on

their employment duties and they all should have been aware of which parts were

intended for government use. Ambiguity is not an excusing factor of moral

responsibility for 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 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 National Semiconductor were banned from future work in any

government office (Velazquez, 54).

Looking at the case from the standpoint of National Semiconductor, the

outcome was favorable considering the alternate steps that the government could

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

own investigation as well as its own punishments. After all, it would be best

for a company to determine what specific departments are responsible rather than

having a court of law impose a burden on every employee in its corporation. Yet,

since there are ethical issues of dishonesty and secrecy involved, National

Semiconductor should have conducted a thorough analysis of their employees as

well as their own practices. It is through efforts like these that a corporation

can raise the ethical standard of everyone in their 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 affect society in

way or another. In fact, with the plethora of corporations, society is being

affected on various fronts; everything from water contamination to air bag

safety is a concern. The biggest problem that all of us must contend with is

that every decision that a business makes is gauged by the financial

responsibility to their corporation instead of their social responsibility to

the local community, and in some cases, the international community. This was

pointed out on various occasions as the main reason why National Semiconductor

falsified their reports. The cost that the full tests would incur did not

outweigh their profit margins. Their business sense lead them to do what all

companies want . . . maximum profit. 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. (Capitman, 118).

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 National Semiconductor case, one can notice many failures in

moral responsibility. National Semiconductor would have to review its employees,

particularly the supervisors, for basic ethical values such as honesty. example,

ultimately it was the widespread falsification of the testing documentation that

caused the downfall of National Semiconductor, not the integrity of their

components. In the synopsis 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. In order to accomplish this, the company

executives would have to encourage their employees to voice their concerns in

regards to the advancement of the company. 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

from the government 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 society.

To conclude, I must say that 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 in that entity. 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 equates to moral perfection.

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. There needs to be a shift to the thinking of total utility for

the social community in order to weigh business decisions.

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

radical changes in the face of business. Also, there is no way that an industry

wide standard can be set since there are too many types of corporations. Plus,

companies have different needs and every moral rule is subjective according to

the type of business that everyone conducts.

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

are feasible, it is possible for every company to examine their practices as

well as the attitude of their employees. There will be companies that find that

they are doing fine with employees that 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 start implementing changes. Once a few companies start to

see the benefits of changes, it can help to encourage other companies to follow

suit. After all, as seen in the case of National Semiconductor, mistakes in one

department can cause the deterioration of an entire corporation. When the costs

that are possible are taken into account, the changes required to rectify this

are small in comparison.