From A Business Perspective Essay

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
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.
Quorum Books
Reder, Alan. 1944. In Pursuit of Principle and Profit. New York:
G.P. Putnams Sons Publishing
Sawyer, George. 1979. Business and Society: Managing Corporate Social
Impact. Boston
Houghton Mifflin Publishing
Schuyten, Peter. To Clone A Computer. New York Times
February 4, 1979. Pg. 1
Velazquez, Manuel. 1992. Business Ethics: Concepts and Cases. New Jersey
Prentice Hall Publishing
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.
Quorum Books
Reder, Alan. 1944. In Pursuit of Principle and Profit. New York:
G.P. Putnams Sons Publishing
Sawyer, George. 1979. Business and Society: Managing Corporate Social
Impact. Boston
Houghton Mifflin Publishing
Schuyten, Peter. To Clone A Computer. New York Times
February 4, 1979. Pg. 1
Velazquez, Manuel. 1992. Business Ethics: Concepts and Cases. New Jersey
Prentice Hall Publishing
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