Homework answers / question archive / Write an APA-formatted paper of at least 3 pages, not including the cover page and references, in which you explain why legal rules may be insufficient for fulfilling ethical responsibilities

Write an APA-formatted paper of at least 3 pages, not including the cover page and references, in which you explain why legal rules may be insufficient for fulfilling ethical responsibilities

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Write an APA-formatted paper of at least 3 pages, not including the cover page and references, in which you explain why legal rules may be insufficient for fulfilling ethical responsibilities. Identify a case/instance in which a business person has done something that is legally permitted, but is ethically wrong, and also identify a case/instance in which a business person has acted in a way that is legally wrong, but ethically right. Describe the ethical issues in each case and the outcome of the person’s decision. You will need to do research on the cases and principles that you write about and incorporate citations to appropriate resources that support/provide evidence for what you write.

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https://fod-infobase-com.jwupvdz.idm.oclc.org/p_ViewVideo.aspx?xtid=31489 https://www.youtube.com/watch?v=vmVu66Fpd9U page i Business Ethics page ii page iii Business Ethics Decision Making for Personal Integrity and Social Responsibility page iv BUSINESS ETHICS: DECISION MAKING FOR PERSONAL INTEGRITY AND SOCIAL RESPONSIBILITY, FIFTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2014, and 2011. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 LCR 24 23 22 21 20 ISBN 978-1-260-26049-6 (bound edition) MHID 1-260-26049-6 (bound edition) ISBN 978-1-260-51293-9 (loose-leaf edition) MHID 1-260-51293-2 (loose-leaf edition) Director: Michael Ablassmeir Associate Portfolio Manager: Laura Hurst Spell Marketing Manager: Lisa Granger Content Project Managers: Melissa M. Leick; Emily Windelborn; Karen Jozefowicz Buyer: Susan K. Culbertson Design: Beth Blech Content Licensing Specialist: Brianna Kirschbaum Cover Image: Arrows: Pixel-Shot/Shutterstock; arrow sign: ©RTimages/Shutterstock; landscape: ©imagedepotpro/E+/Getty Images; compass: ©Design Pics/Kristy-Anne Glubish Compositor: SPi Global All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Control Number: 2019953715 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. mheducation.com/highered page v To Rachel and Emma. —Laura Hartman To Michael and Matthew. —Joseph DesJardins To Georgia. —Chris MacDonald page vi About the Authors Laura P. Hartman The School of Choice/L’Ecole de Choix (Haiti) Laura Pincus Hartman is Executive Director of the School of Choice Education Organization, a U.S.–based nonprofit that she cofounded, which oversees the School of Choice/L’Ecole de Choix, a unique leadership development education program in Haiti that serves children and families living in extreme conditions of poverty. Hartman also is professor emerita at DePaul University. She held a number of roles during her almost three-decade career there, including Associate Vice President for Academic Affairs, Vincent de Paul Professor of Business Ethics at DePaul University’s Driehaus College of Business, and Director of its Institute for Business and Professional Ethics. From 2015– 2017, Hartman also served as the inaugural Director of the Susilo Institute for Ethics in the Global Economy at Boston University and Clinical Professor of Business Ethics in BU’s Department of Organizational Behavior. She has been privileged to serve as an Associated Professor at the Kedge Business School (Marseille, France) and has taught as a visiting professor at INSEAD (France), HEC (France), the Université Paul Cezanne Aix Marseille III, the University of Toulouse, and the Grenoble Graduate School of Business, and served as the Gourley Professor of Ethics at the Melbourne Business School. Hartman is past president of the Society for Business Ethics and established its Professional Mentorship Program. She is the coauthor of Employment Law for Business (McGraw-Hill). Hartman graduated magna cum laude from Tufts University and received her law degree from the University of Chicago Law School. She divides her time between Haiti and Sint Maarten, and has been a mother to two daughters. Joseph DesJardins College of St. Benedict/St. John’s University Joseph DesJardins holds the Ralph Gross Chair in Business and the Liberal Arts and is professor of philosophy at the College of St. Benedict and St. John’s University in Minnesota. His other books include An Introduction to Business Ethics; Environmental Ethics: An Introduction to Environmental Philosophy; Environmental Ethics: Concepts, Policy & Theory; Contemporary Issues in Business Ethics (coeditor with John McCall); and Business, Ethics, and the Environment: Imagining a Sustainable Future. He has served as president and executive director of the Society for Business Ethics and has published and lectured extensively in the areas of business ethics, environmental ethics, and sustainability. He received his BA from Southern Connecticut State University and his MA and PhD from the University of Notre Dame. page vii Chris MacDonald Ryerson University Chris MacDonald is an associate professor and director of the Ted Rogers Leadership Centre at Ryerson University’s Ted Rogers School of Management in Toronto, Canada, and a senior nonresident fellow at Duke University’s Kenan Institute for Ethics. His peer-reviewed publications range across business ethics, professional ethics, bioethics, the ethics of technology, and moral philosophy, and he is coauthor of a best-selling textbook called The Power of Critical Thinking (4th Canadian Edition, 2016). He is cofounder and coeditor of both the Business Ethics Journal Review and the news and commentary aggregator site Business Ethics Highlights. He is perhaps best known for his highly respected blog, The Business Ethics Blog, which is carried by Canadian Business magazine. page viii Preface We began writing the first edition of this textbook in 2006, soon after a wave of major corporate scandals had shaken the financial world. Headlines made the companies involved in these ethical scandals household names: Enron, WorldCom, Arthur Andersen, KPMG, J.P. Morgan, Merrill Lynch, Morgan Stanley, Citigroup, Salomon Smith Barney. At that time, we suggested that, in light of such significant cases of financial fraud, mismanagement, criminality, and deceit, the relevance of business ethics could no longer be questioned. Sadly, as we enter the fifth edition of this book, these same issues are as much alive today as they were a decade ago. While our second edition was preceded by the unprecedented financial meltdown in 2008–2009 and the ethical problems faced by such companies as AIG, Countrywide, Lehman Brothers, Merrill Lynch, and Bear Stearns, this current edition continues to witness financial and ethical malfeasance of historic proportions and the inability of market mechanisms, internal governance structures, or government regulation to prevent it. But the story is not all bad news. While cases of corporate fraud continue to make headlines (think of the recent Volkswagen, Wells Fargo, and Facebook scandals), countless small and large firms provide examples of highly ethical—and profitable—business enterprises. The emergence of benefit corporations (see Chapter 5 for examples) is only one instance of corporations dedicated to the common good. In this edition, we aim to tell the stories of both the good and the bad in business. As we reflect on both the ethical corruption and the ethical success stories of the past decade, the importance of ethics is all too apparent. The questions today are less about whether ethics should be a part of business strategy and, by necessity, the business school curriculum, than about which values and principles should guide business decisions and how ethics should be integrated within business and business education. This textbook provides a comprehensive, yet accessible introduction to the ethical issues arising in business. Students who are unfamiliar with ethics will find that they are as unprepared for careers in business as students who are unfamiliar with accounting and finance. It is fair to say that students will not be fully prepared, even within traditional disciplines such as accounting, finance, human resource management, marketing, and management, unless they are sufficiently knowledgeable about the ethical issues that arise specifically within and across those fields. Whereas other solid introductory textbooks are available, several significant features make this book distinctive. We emphasize a decisionmaking approach to ethics, and we provide strong pedagogical support for both teachers and students throughout the entire book. This decision-making approach balances the goals of helping student reach conclusions without imposing someone else’s answers on them. Our goal is to help students make responsible decisions for themselves. But ethical decision page ix making is no small feat, especially in an area that is necessarily multidisciplinary. Numerous small cases and examples aim to help teachers and students integrate concepts and material from philosophy, law, economics, management, finance, and marketing with the very practical goal of making real-life decisions. We aim to bring students into these discussions by regularly grounding our discussions in issues with which they are already familiar, thus approaching them through subjects that have already generated their interest. page x New to the Fifth Edition While our goal for the fifth edition remains the same as for the first—to provide “a comprehensive yet accessible introduction to the ethical issues arising in business”—readers will notice a few changes. As always, the primary incentive of a new edition is to update the text with new and timely cases and topics. Readers will find new discussions of such companies as Facebook and Wells Fargo, as well as such topics as the #MeToo movement and digital privacy. Perhaps the most noticeable change, however, is the elimination of end-of-chapter readings, and this deserves some explanation. When the first edition was published, our goal was to be as current and timely as possible, not only by including up-to-date examples throughout each chapter, but also through the end-of-chapter readings. Our thinking was that these readings would allow students and teachers to dive more deeply into the subject matter and access perspectives to broaden the scope of the conversation. They also could serve as convenient topics for written assignments or in-class discussions. However, at this point, accessing these perspectives has become so easy through the internet and other means that including them is no longer necessary to achieve our original goals. In fact, our choices instead can limit rather than broaden the range of ideas available. Further, the increasing costs of textbooks are a serious concern for everyone in education. Students should know that while they are most directly affected by rising costs, teachers, authors, and, yes, even publishers are also troubled by this and regularly look for ways to reduce the costs of education. As we (the authors and our publisher, McGraw-Hill) looked for ways to control costs, the end-of-chapter readings stood out. Permission fees for reprinting readings have increased significantly in recent years, especially in this era of electronic and custom publishing, and the additional length added by the readings contributes to increasing production costs. We decided that these added costs were no longer justified by the benefits, especially considering that the readings are often readily available online, typically at no costs to students under the “fair use” copyright guidelines. The readings were always included only as a means to supplement the core text, and we have now concluded that students would be better served by eliminating the readings and focusing this edition more on the core text itself. In several cases, we have been able to integrate the content of the reading within the text as a Reality Check or Decision Point. We have retained the same logical structure and chapter organization of previous editions because we have heard from many colleagues and reviewers that this structure works well for a semester-long course in business ethics. But every chapter has been revised to include new and updated material, cases, topics, and readings. Importantly, we continue to provide increased international perspectives, with particular references to Canadian and UK legislation and institutions. page xi Among the changes to this edition are the following: New or revised Opening Decision Points for every chapter, including new cases or in-depth discussions on: ? ? ? ? ? ? ? Wells Fargo Job security and confidentiality Executive compensation Free expression in the workplace Facebook Digital marketing The business of food New cases, Reality Checks, or Decision Points within the text on such companies and topics as: ? ? ? ? Mylan Epi-Pen Greed #MeToo movement Tesla ? ? ? ? Uber Marijuana in the workplace Digital privacy Gender and sexual identity As always, we reviewed and revised the entire text for accessibility, consistency, and clarity. page xii Acknowledgments A textbook should introduce students to the cutting edge of the scholarly research that is occurring within a field. As in any text that is based in part on the work of others, we are deeply indebted to the work of our colleagues who are doing this research. Our book is a more effective tool for both students and faculty because of their generosity. In particular, thanks to Ryerson students Stefania Venneri, Tanya Walia, and Daniel Marotta for their useful suggestions, and to Katrina Myers at the University of Chicago and to Summer Brown at DePaul University for their exceptional research and editing assistance. In addition, we wish to express our deepest gratitude to the reviewers and others whose efforts served to make this manuscript infinitely more effective: Cheryl Adkins Longwood University Lynda Fuller Wilmington University Daniel F. Nehring Morehead State University Richard Stillman The Graduate Center, CUNY Jeffrey Yoder Fairfield University Our thanks also go out to the team at McGraw-Hill Education who helped this book come into existence: Michael Ablassmeir Director Laura Hurst Spell Associate Portfolio Manager Lisa Granger Marketing Manager Melissa M. Leick Senior Content Project Manager page xiii Brief Contents Preface viii 1 Ethics and Business 2 Ethical Decision Making: Personal and Professional Contexts 31 3 Philosophical Ethics and Business 4 The Corporate Culture—Impact and Implications 91 5 Corporate Social Responsibility 6 Ethical Decision Making: Employer Responsibilities and Employee Rights 1 57 139 171 7 Ethical Decision Making: Technology and Privacy in the Workplace 227 8 Ethics and Marketing 9 Business and Environmental Sustainability 10 285 319 Ethical Decision Making: Corporate Governance, Accounting, and Finance 351 Glossary Index 387 394 page xiv Table of Contents About the Authors Preface vi viii Chapter 1 Ethics and Business 1 Opening Decision Point: Wells Fargo and Consumer Fraud 2 Introduction: Getting Comfortable with the Topic 5 Making the Case for Business Ethics 8 Ethics and the Law 13 Business Ethics as Ethical Decision Making 18 Business Ethics as Personal Integrity and Social Responsibility 20 Chapter 2 Ethical Decision Making: Personal and Professional Contexts 31 Opening Decision Point: Am I About to Lose My Job? What Would You Do? 32 Introduction 33 A Decision-Making Process for Ethics 34 When Ethical Decision Making Fails: Why Do “Good” People Engage in “Bad” Acts? 45 Ethical Decision Making in Managerial Roles 50 Chapter 3 Philosophical Ethics and Business 57 Opening Decision Point: Are CEOs Paid Too Much, Compared to Their Employees? 58 Introduction: Ethical Frameworks—Consequences, Principles, Character 60 Utilitarianism: Making Decisions Based on Ethical Consequences 64 Utilitarianism and Business 66 Challenges to Utilitarian Ethics 70 An Ethics of Principles and Rights Human Rights and Duties 75 Human Rights and Social Justice 77 Human Rights and Legal Rights 79 Challenges to an Ethics of Rights and Duties 71 80 Virtue Ethics: Making Decisions Based on Integrity and Character 81 A Decision-Making Model for Business Ethics Revisited 87 Chapter 4 The Corporate Culture—Impact and Implications 91 Opening Decision Point: Creating an Ethics Program 92 What Is Corporate Culture? 93 Culture and Ethics 101 Compliance and Values-Based Cultures 105 Ethical Leadership and Corporate Culture 107 Effective Leadership and Ethical, Effective Leadership 112 Building a Values-Based Corporate Culture 114 Mission Statements, Credos, Codes of Conduct, and Statements of Values 114 Developing the Mission and Code 116 Culture Integration: Ethics Hotlines, Ombudspersons, and Reporting 117 Assessing and Monitoring the Corporate Culture: Audits 123 Mandating and Enforcing Culture: The Federal Sentencing Guidelines for Organizations 124 Chapter 5 Corporate Social Responsibility 139 Opening Decision Point: Facebook 140 Introduction 143 Ethics and Social Responsibility 144 Economic Model of CSR 150 Stakeholder Model of CSR 153 Integrative Model of CSR 157 The Implications of Sustainability in the Integrative Model of CSR 157 Exploring Enlightened Self-Interest: Does “Good Ethics” Mean “Good Business”? 161 page xv Chapter 6 Ethical Decision Making: Employer Responsibilities and Employee Rights 171 Opening Decision Point: The Choice to Voice 172 Introduction 174 Ethical Issues in the Workplace: The Current Environment 175 Defining the Parameters of the Employment Relationship 177 Due Process and Just Cause 178 Downsizing 185 Health and Safety 188 Health and Safety as “Acceptable Risk” 189 Health and Safety as Market Controlled 191 Health and Safety as Government-Regulated Ethics 193 Global Applications: The Global Workforce and Global Challenges 195 The Case of Child Labor 201 Rights and Responsibilities in Conflict: Discrimination, Diversity, and Affirmative Action 203 Discrimination 203 Diversity 209 Affirmative Action 213 Chapter 7 Ethical Decision Making: Technology and Privacy in the Workplace 227 Opening Decision Point Being Smart about Smartphones 228 Introduction 229 The Right to Privacy 231 Defining Privacy 231 Ethical Sources of a Right to Privacy 232 Legal Sources of a Right to Privacy in the United States Global Applications 238 235 Linking the Value of Privacy to the Ethical Implications of Technology 242 Information and Privacy 243 Managing Employees through Monitoring Why Do Firms Monitor Technology Usage? 251 Monitoring Employees through Drug Testing 252 Other Forms of Monitoring Business Reasons to Limit Monitoring Balancing Interests 259 256 258 Regulation of Off-Work Acts Tobacco Use 261 Weight Differences 262 261 245 Marital and Relationship Status 262 Sexual Orientation and Gender Identity Off-Work Use of Technology 265 263 Privacy Rights since September 11, 2001 267 Chapter 8 Ethics and Marketing 285 Opening Decision Point: Digital Marketing and Ethics 286 Introduction 288 Marketing: An Ethical Framework 290 Responsibility for Products: Safety and Liability 294 Contractual Standards for Product Safety 295 Tort Standards for Product Safety 296 Strict Product Liability 299 Ethical Debates on Product Liability 299 Responsibility for Products: Advertising and Sales Ethical Issues in Advertising 301 Marketing Ethics and Consumer Autonomy 303 Marketing to Vulnerable Populations 308 Supply Chain Responsibility 312 300 Chapter 9 Business and Environmental Sustainability 319 Opening Decision Point: The Business of Food 320 Introduction 322 Business Ethics and Environmental Values 324 Business’s Environmental Responsibility: The Market Approach 328 Business’s Environmental Responsibility: The Regulatory Approach 331 Business’s Environmental Responsibilities: The Sustainability Approach 333 The “Business Case” for a Sustainable Economy 337 page xvi Principles for a Sustainable Business Sustainable Marketing 341 339 Product 341 Price 342 Promotion 343 Placement 345 Chapter 10 Ethical Decision Making: Corporate Governance, Accounting, and Finance 351 Opening Decision Point Volkswagen’s Diesel Fraud 352 Introduction 356 Professional Duties and Conflicts of Interest 357 The Sarbanes-Oxley Act of 2002 365 The Internal Control Environment 367 Going beyond the Law: Being an Ethical Board Member 368 Legal Duties of Board Members Beyond the Law, There Is Ethics 368 369 Conflicts of Interest in Accounting and the Financial Markets 372 Executive Compensation 374 Insider Trading 378 Glossary Index 387 394 page 1 Chapter 1 Ethics and Business It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you’ll do things differently. Warren Buffet Ethics is the new competitive environment. Peter Robinson, CEO, Mountain Equipment Co-op (2000– 2007) No snowflake in an avalanche ever feels responsible. Voltaire, 1694–1778 page 2 Opening Decision Point Wells Fargo and Consumer Fraud1 In December 2013, the Los Angeles Times published the results of an ongoing investigation into Wells Fargo. The Times report described high-pressure sales practices that were aimed at marketing additional financial products to present customers, a practice known as cross-selling. The report told of Wells Fargo employees establishing new accounts in customers’ names without their consent or knowledge. The Times story included interviews with numerous branch managers from across the United States who described unreasonably high sales targets and quotas that encouraged such unethical practices. In response to this story, Wells Fargo claimed that it took all legal or ethical lapses seriously but denied any systemic wrongdoing. A spokesperson cited a new corporate Ethics Program Office that would oversee compliance with corporate ethical standards. Following this report, the City of Los Angeles, the State of California, and the U.S. Consumer Financial Protection Bureau (CFPB) began a series of investigations into Wells Fargo. Exactly how aggressive Wells Fargo had been in cross-selling became clear in September 2016 when the CFPB announced that Wells Fargo employees had fraudulently opened millions of unauthorized credit card and deposit accounts in the name of present customers. Wells Fargo admitted to the wrongdoing and agreed to pay fines of $185 million to state and federal authorities. The investigations uncovered a wide range of fraudulent practices that included ordering credit cards, opening new accounts, establishing new lines of credit, or purchasing insurance and overdraft protection. All of this was done without the consent or knowledge of customers. In some cases, employees forged customers’ signatures or used their own address so information about these accounts would be sent to their homes rather than to the defrauded customers. The process involved was reasonably easy. Employees, often in the type of entry-level positions that recent college graduates might fill, had ready access to the information needed to open new accounts: names, addresses, social security numbers, credit reports, and so forth. Applying for and confirming the sale of a new product for an existing customer could be done with a few clicks of a mouse. Investigations revealed that thousands of employees had taken part in the scheme. Much of the activity described by the Los Angeles Times occurred at local branch offices and included every level of employee from tellers to personal bankers to the branch managers themselves. Of course, such widespread fraud could not have gone unnoticed by managers who had oversight of these branch offices. It soon became clear that mid-level management had actively participated in these activities, including providing instructions on how to do it and how to avoid detection by customers. Branch managers who failed to meet sales targets were publicly berated and threatened by their superiors. Employees who missed targets for cross-selling were required to work nights and weekends and were denied promotions and salary increases. It also appears that employees who were reluctant to participate, or who attempted to blow the whistle, not only lost their jobs but also received negative evaluations that effectively prevented them from finding future employment in the banking industry. Less directly, but perhaps much more effectively, management participated in the practice by creating and enforcing demanding sales quotas and wage and salary structures that rewarded those who met these targets. page 3 Wells Fargo had a reputation as a leader in the business strategy of crossselling, the practice of marketing additional products to existing customers. Traditionally, banks and financial services companies had seen themselves as professionals who provided advisory services to clients in much the same way that an attorney or an accountant provides professional services to his or her clients. In this model, success would be measured in terms of achieving the clients’ interests in managing risks, return on investment, and so forth. This fiduciary model of business aims to align the interests of the firm with the interests of the client so that when the client succeeds, the firm succeeds. But many banks and financial institutions have moved away from this fiduciary model in recent decades to adopt a more transactional, consumerist model in which clients are viewed simply as customers to whom the company sells products. Here, the firm’s success is measured in terms of how many products are sold and how much profit is earned from those sales. Of course, one tradeoff of this shift is that client and business interests may not always align in that the business can profit whether or not the customer does. Wells Fargo was among the first banks to move aggressively in this direction. At the time of the 2016 announcement, Wells Fargo admitted that since 2011 employees had opened more than 1.5 million fraudulent accounts and more than 500,000 unauthorized credit card applications in the names of present customers. Further investigations of activities prior to 2011 discovered that more than half a million additional fraudulent online bill-paying accounts also had been opened and hundreds of thousands of fraudulent insurance policies were sold to unsuspecting customers. By early 2018, Wells Fargo had admitted to selling more than 3.5 million unauthorized financial products to customers. In April 2018, the CFPB and the U.S. Comptroller of the Currency announced additional fines to punish Wells Fargo for deceptively adding unneeded insurance to consumer auto loans and manipulating interest rates on mortgages. As many as 600,000 automobile loans might have been subjected to such unneeded additional insurance. Initially, senior Wells Fargo executives, including CEO and Board Chair John Stumpf, claimed that the fault rested with “dishonest” individuals who had been fired for this behavior. In total, 5,300 employees were fired as a result of these frauds. Testifying to the U.S. Senate Banking Committee, Stumpf claimed: “I do want to make it clear that there was no orchestrated effort, or scheme as some have called it, by the company. We never directed or wanted our employees, whom we refer to as team members, to provide products and services to customers they did not want or need.”2 Stumpf explained the widespread nature of the fraud as likely resulting from employees talking to each other. But closer analysis showed a pattern of decisions, behavior, and tone at the highest executive levels that contributed to a culture in which such widespread fraud flourished. Stumpf himself was known for his mantra, “eight is great,” to promote a target of eight products for each customer in an industry where the average was less than half that. During every quarterly earnings call that took place while the fraud was occurring, Stumpf had boasted to investors of the ever-increasing levels of record cross-selling. Partially as a result, the value of Stumpf’s own stock ownership increased by more than $200 million during the five years that the fraud was prevalent. page 4 There was also evidence that senior executives knew of the fraudulent sales well before the practice became public. After all, the Los Angeles Times article was published three years previously. Further, Wells Fargo’s own training manual contained a reminder not to sell products without the explicit consent of customers—a reminder that the manual highlighted and emphasized in such a way to suggest that the practice was known to occur. Wells Fargo executives also had internal reports showing that the steady increase in cross-selling was directly correlated with a steady increase in accounts that were never used by customers. The entire culture of Wells Fargo seemed designed to encourage cheating and discourage honest sales practices. For example, the incentive system, ranging from sales targets for hourly workers to executive bonuses, made it clear to everyone that aggressive cross-selling was the expectation for all. The senior executive who had direct oversight of the sales division received over $125 million when she retired just before the scandal was revealed. (Wells Fargo eventually recovered half that amount in a claw-back process.) Employees stated that reports to an internal ethics hotline and to the corporate ethics program were ignored. In response to claims that they failed to exercise their oversight function as required by U.S. federal law, board members later claimed they were left in the dark, learning about the scandal from the media. Like many corporations, the Wells Fargo CEO also served as the chair of the board. It is worth noting that various government agencies were involved in this case. City of Los Angeles and California state investigators played a major role is uncovering the fraud. The federal CFPB and the Comptroller of the Currency also worked on the investigations and instituted the large fines against Wells Fargo. The U.S. Senate Banking Committee held several hearings in which members very publicly criticized Wells Fargo executives and its board. The U.S. Federal Reserve Bank, the primary regulator of U.S. banks, imposed strong penalties on the bank and its board. In an unprecedented punishment, the Fed restricted Wells Fargo’s future growth and required the replacement of several board members for failing their oversight duty. But other government actions, including laws that prohibited fraud, protecting whistle-blowers, and laws that required ethical compliance and oversight by the board, proved ineffective in preventing widespread fraud that went on for many years.3 1. A helpful first step in ethical analysis is to look for harms and benefits. What harms were done by this fraud? Can you explain exactly what the ethical wrong was? Other than consumers, who else was harmed? Who benefited? Did the parties who benefited deserve the benefit? Were any benefits unfair or unethical? 2. Where would you place primary responsibility for this scandal: individual employees who forged customers’ accounts, managers who oversaw those employees, senior executives, board members, or the corporation itself? 3. Sometimes when we assign responsibility, we are looking for someone to blame, someone who is at fault. Who do you blame in this case? 4. Sometimes the question of responsibility is asked so that we can identify the cause and, in turn, prevent it from happening again. What recommendations would you make to prevent this from happening again? page 5 5. How do you understand the difference between a fiduciary model and a transactional, consumerist model of the business–customer relationship? What reasons exist for the fiduciary model? Why would a financial or banking firm (or law firm, accounting firm, or hospital) not seek to make as much money as possible from its customers? Is there an ethical difference between the fiduciary and transactional models? Chapter Objectives After reading this chapter, you will be able to: 1. Explain three levels at which ethical decisions get made in business. 2. Explain the nature of business ethics as an academic discipline. 3. Explain why ethics is important in the business environment. 4. Explain why ethical responsibilities go beyond legal compliance. 5. Distinguish the ethics of personal integrity from the ethics of social responsibility. 6. Distinguish ethical norms and values from other business-related norms and values. 7. Describe ethical decision making as a form of practical reasoning. Introduction: Getting Comfortable with the Topic When we began work on the first edition of this book in the early 2000s, the legal, financial, and ethical implications of the Enron scandal were still frontpage news. Almost twenty years later, Enron has faded from public consciousness. One reason for this, of course, is that as a direct consequence of these scandals neither Enron nor its accounting firm Arthur Andersen exists today. In 2000, they were both well-known and highly respected global firms. Some years later, as we prepared another edition, the entire global economy was in the middle of the deepest economic recession since the Great Depression of the 1930s. That recession resulted from the collapse of a housing bubble that was brought about because of ethically questionable subprime mortgage lending practices, widespread trading of fraudulent financial instruments based on these risky mortgage-backed securities, and a failure of oversight on corporate, professional, and governmental levels. As a direct result of these ethical lapses, hundreds of banks failed and dozens of globally active financial institutions, including such major well-known firms as Lehman Brothers, Bear Stearns, Countrywide Financial, and Washington Mutual, ceased to exist, either through bankruptcy or by being acquired by other companies at greatly reduced prices. The list of major business firms involved in significant ethical scandals during just the first two decades of the 21st century is depressingly long. Besides the corporations already mentioned, the list would page 6 include such major global firms as Walmart, Nike, Apple, Merrill Lynch, JP Morgan Chase, KPMG, Credit Suisse, Takata, Halliburton, AIG, WorldCom, Tyco, Global Crossing, Rite Aid, Sunbeam, Waste Management, HealthSouth, Ernst and Young, Citigroup, Salomon Smith Barney, Goldman Sachs, Bank of America, Deep Water Horizon, Exxon, Johnson & Johnson, Pfizer, Firestone, BP Global, Fannie Mae, and even the New York Stock Exchange itself. Sadly, the list of corporate scandals continues to expand. Beside the Wells Fargo case that opens this chapter, in just the past few years, recent and ongoing ethical scandals have involved such major companies as Facebook, Google, Volkswagen, Purdue Pharma, Deutsche Bank, Cambridge Analytica, Nissan, Tesla, Equifax, and Uber. But the news is not all bad. There are also countless examples of exemplary corporations and business practices. A relatively new business phenomena called “Benefit Corporations” (discussed in Chapter 5) allows for-profit businesses to adopt an explicit corporate mission of serving the common good. Such well-known firms as Ben and Jerry’s, King Arthur Flour, Seventh Generation, and Patagonia have adopted the Benefit Corporation model. Further, the growing field of social entrepreneurship seeks to leverage the skills and creativity of entrepreneurs to address social challenges. Corporate philanthropy exists everywhere, from the large scale of corporate foundations that give away millions of dollars annually, to small businesses in every local community that support schools, arts programming, and community organizations such as Boys and Girls Clubs, the United Way, Red Cross, and Habitat for Humanity with hundreds of millions of dollars in charitable giving. No doubt we can find good and bad behavior in contemporary business. We can find some firms that are deeply corrupt, and we can find some that are models of social responsibility. Most often, we can find both good and bad behavior, good and bad people, in every individual firm. Our hope is that this book can help you navigate your way through these challenges and avoid the pitfalls of unethical situations. This opening chapter will introduce business ethics as a process of decision making. Simply put, the harms caused by the scandals associated with all the organizations just mentioned were brought about by ethical failures and unethical decisions. This text provides a decision-making model that we believe can help both analyzing these past ethical failures and avoiding future ones. OBJECTIVE As the Wells Fargo case demonstrates, business decision making occurs at several levels. Every day at Wells Fargo, individual human beings, from tellers and personal bankers at local branch offices to senior executives and board members, had to decide for themselves what they were going to do. Am I going to open this fraudulent account? How am I going to treat the people who work for me? Should I speak up and push back against these demands, or should I just go along and get along? Should I continue to work for a firm that asks me to do these unethical things? As a board member, should I ask questions and challenge the CEO, or should I judge his work solely on the basis of quarterly earnings? page 7 Decisions at Wells Fargo also occurred at an organizational level. Individual decisions were made within the context of organizational policies, practices, expectations, and norms. The organization, through its management, created incentive policies, disciplinary policies, dismissal practices, sales targets, handbooks, ethics programs, executive bonuses, and even specific directions on how to create fraudulent accounts and how to prevent customers from learning about them. The organization had a culture that allowed, if not encouraged, such unethical behavior. But this Wells Fargo case also raises questions that go beyond the decisions made within the organization. Beyond the personal and organizational level, there is a broader social and political level of decision making that is also relevant for business ethics. Given the many corporate scandals we’ve mentioned, and given all the people who have been harmed by them, citizens must ask questions about the role of government, the law, and regulations. For example, what type of laws and regulations should govern business? What expectations do we have for regulatory bodies such as the Consumer Financial Protection Bureau? How much of business decision making should be left to market mechanisms such as competition and consumer demand, and how much should be subject to legal and regulatory standards? The field of business ethics helps us analyze and evaluate decision making at all three of these levels. Business ethics involves decisions at the individual, at the organizational, and at a broader social and governmental level. As individuals, each of us interacts with businesses as customers, as employees, and as citizens of the countries in which they operate. A business ethics class can help us think about what we would do if we were the customers defrauded by Wells Fargo, what we might have done had we been the individual employees who were expected to open fraudulent accounts, and what we should do as individual citizens in a country in which these frauds were possible. But individuals do not exist in a vacuum. Again, as the Wells Fargo case suggests, it can be difficult for good people to live up to their standards within a corrupt organization. Likewise, it can be difficult for bad people to act unethically within an organization that promotes and lives up to high ethical standards. As we will see later in this book, organizational culture and corporate leadership have important roles to play in decision making. Yet, business organizations themselves do not exist in a vacuum. Every business is situated within one or more social, economic, and political structures. Just as individual decisions and behaviors are influenced by the surrounding organization, so too are the decisions of individual businesses and entire industries influenced by social, economic, and political environments. A business operating in Quebec, Canada, will face a different social and cultural environment than one operating in Dallas, Texas. Obviously, the law itself is the major means by which a society imposes standards and expectations upon business. But, as we describe in a later section, obeying the law is not enough to fulfill ethical responsibilities. It is also true that the social, economic, and political environments in which businesses operate are heavily value-laden, and a class on business ethics should help us think through these social, economic, and political values as well as those individual values that each of us use in making decisions. page 8 Given this description, it is clear that business ethics is a multidisciplinary field. First, the field of business ethics is rooted in the more general discipline of philosophical ethics. The role of philosophical ethics is to provide the fundamental language and categories of ethics. For thousands of years philosophers have thought and theorized about such things as rights and duties, virtues and values, social justice, responsibilities, liberty, equality, and the common good. How these various concepts fit together, how they might be justified, what their strengths and weaknesses are, and how and where they apply in life are questions that philosophers have examined for millennia. Learning about philosophical ethics provides a knowledge base for our own study of business ethics so that we won’t have to start from scratch. Business ethics also includes resources from such fields as psychology, business management, organizational behavior, leadership studies, and sociology. How and why people behave as they do, how the organizational environment encourages and discourages behaviors, how organizations and individuals within them can create a culture in which ethical behavior flourishes are questions that arise from this diverse group of social sciences. Finally, broader social disciplines such as law, economics, and political science contribute to business ethics as we think about how business organizations fit into a broader social and political context. OBJECTIVE To summarize, as a field, business ethics investigates ethical questions that arise at the individual, organizational, and social/political level. As ethically responsible people, each of us should consider how we interact with business as individual consumers, individual employees, managers, executives, and citizens. This text is a contribution to the academic field of business ethics. Its aim is to describe, examine, and evaluate ethical issues that arise within business settings and to help each of us become more ethical individuals and help us create more ethical institutions. A business ethics class therefore has many goals, including helping us to: 1. Develop the knowledge base and skills needed to identify ethical issues. 2. Understand how and why people behave unethically. 3. Decide how we should act, what we should do, and the type of person we should be as individuals. 4. Create ethical organizations. 5. Think through the social, economic, and political policies that we should support as citizens. Making the Case for Business Ethics OBJECTIVE For business students, the need to study ethics should be as clear as the need to study the other sub-fields of business education. As discussed earlier, without this background, students simply will be unprepared for a career in contemporary business. Businesses themselves must take ethics into account and integrate ethics into their organizational structure, for both ethical and business reasons. But even for individuals who do not anticipate a page 9 career in business management or business administration, familiarity with business ethics is crucial. Our lives as employees, as consumers, and as citizens are affected by decisions made within business institutions; therefore, everyone has good reasons for being concerned with the ethics of those decision makers. As recently as the mid-1990s, articles in such major publications as The Wall Street Journal and the Harvard Business Review questioned the value of teaching business ethics. Even today, it is not uncommon to encounter skepticism among students about the need and value of a class in business ethics. Part of this skepticism may come from a general skepticism about ethics itself. Many people view ethics as a mixture of sentimentality and personal opinion that would interfere with the efficient operation of business. From this perspective, ethics is a subjective matter of feelings and opinions that can safely and reasonably be ignored. (See the Decision Point “Who Is To Say What Is Right or Wrong?” in Chapter 3) A more influential version of this skepticism involves what some have called the “separation thesis.”4 This perspective holds that ordinary ethical considerations should be kept separate from business decisions because business has its own standards of right and wrong. A version of this was most famously expressed by the Nobel Prize–winning economist Milton Friedman. In a 1970 article that has become a classic in business ethics, “The Social Responsibility of Business Is to Increase Its Profits,” Friedman claimed that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”5 Elsewhere in that essay, Friedman explained that the “rules of the game” included both law and “ethical custom.” separation thesis The separation thesis asserts that ordinary ethical standards should be kept separate from, and not be used to judge, business decisions because business has its own standards of good and bad. It is fair to say that this separation thesis remains common in business circles. According to this view, business practice should be kept separate and independent of ordinary ethical concerns. Business fulfills its social and ethical responsibilities by pursuing profits within the law and within the rules of the economic game. Those economic rules are the conditions necessary to ensure the efficient operation of economic markets. In a marketplace free from fraud and deception, competitive pressures and market demand will direct the self-interested pursuit of profit to ethically appropriate goals. Thus, there is no reason to complicate the matter with outside ethical considerations. Questions about the relationship between ethics and economics are as old as the field of economics itself. Adam Smith, often considered the founder of modern market economics, suggested in The Wealth of Nations that, under the conditions of a competitive market, self-interest alone would lead, “as if by an invisible hand,” to ethically appropriate ends.6 Yet in his other major book, The Theory of Moral Sentiments, Smith argued that sympathy and benevolence were among the most fundamental of all human motivations. The relationship between these two books has long puzzled scholars. How does one reconcile an economic model that seems to treat self-interest as sufficient for securing socially good ends with a moral psychology that treats benevolence and sympathy as fundamental? page 10 The truth of the matter, and what was likely Smith’s own view, is that human beings are capable of a wide diversity of motivations and behaviors, ranging from narrow self-interest to wide empathy and altruism. In this, business is no different from any other aspect of human life. Some motivations like selfishness, greed, and the pursuit of money, power, fame, or prestige can lead people to make decisions that can cause harm, that violate basic principles, and that can corrupt what the American president Abraham Lincoln once called the “better angels of our nature.” Smith’s market conditions were intended as a means to channel self-interested motives to greater social ends, but Smith himself did not think that humans are always and necessarily self-interested. (To consider a view that does consider humans as always self-interested, see the Reality Check “Psychological Egoism: Are Humans Naturally Selfish?”) While questioning the relevance of ethics to business was at one time an open question, today the more pressing question is not whether to, but how to effectively integrate ethics into business practice. After all, even the separation thesis holds that business ought to be governed by some ethics and some values. We should not lose sight of the fact that obedience to the law, avoiding fraud and deception, and engaging in free and open competition are themselves ethical considerations. The separation thesis claims that this narrow range of ethical considerations is enough for business to fulfill its responsibilities. Especially in light of the many cases of corporate scandal and corruption already mentioned, many would disagree with that judgment. Consider the Wells Fargo case. Thousands of people lost their jobs, tens of thousands of consumers faced increased costs and lower credit ratings, some consumers even had their cars repossessed when they were unable to pay fraudulently increased loan costs. Or consider the Enron case, in which thousands of innocent people lost their jobs and investors, including countless pension funds and retirement funds, lost billions of dollars. Most dramatically, consider the harms caused by the global economic collapse of 2008, a collapse largely brought about by ethical failures in the financial and real estate industries. In the United States alone, investigators found that more than 26 million people lost jobs and more than $11 trillion in household wealth was lost as a result of the 2008 economic meltdown. Within the first year of that recession, Canadian unemployment rose from 6.3% to 8.6%, with more than 400,000 Canadians losing their jobs. Within the U.S. and Canada, hundreds of thousands of families lost their homes, hundreds of banks failed, and countless other businesses went bankrupt. This crisis had cascading consequences, as the economic meltdown quickly spread across the globe. The official U.S. government investigation of this recession concluded that the financial crisis was avoidable because it resulted from failures of business management, regulatory oversight, and corporate governance, as well as a “systemic breakdown in accountability and ethics.”7 Within a year of this report, the U.S. government established the Consumer Financial Protection Bureau, the very governmental regulatory body that investigated the Wells Fargo fraud. page 11 Reality Check Psychological Egoism: Are Humans Naturally Selfish? In the background to some skepticism about the relevance of ethics to business, and often part of the reasoning behind the separation thesis, lies a theory called psychological egoism. This theory purports to be an account of human motivation, asserting that humans are fundamentally and unavoidably motivated by self-interest. In other words, everything that we do is one for our own, egoistic, benefit. Because this is thought a “fact” of human nature, so the argument goes, ethical considerations that expect us to act for the interests of others is unrealistic. Thus, it is only realistic to keep business rules separate from ordinary ethics. psychological egoism An alleged theory of human motivation that claims that all human actions are selfish and motivated by self-interest. Psychological egoists conclude that because humans are incapable of acting out of altruistic motivation, our only reasonable option is to arrange institutions in ways that channel individual egoism to the social good. The social contract tradition in political philosophy associated with Thomas Hobbes, for example, acknowledges the reality of self-interested individuals but argues that cooperative social behavior is in the self-interest of individuals. Adam Smith’s theory provides another variation of this approach. Smith argues that rationally self-interested egoists acting within an open and competitive market and constrained by prohibitions against fraud and coercion would, as if led “by an invisible hand,” promote the greater social good. But is psychological egoism an accurate theory of human motivation? Does psychological egoism pose a serious challenge to doing business ethics? The first thing to note is that if this is to be a challenge to ethics, defenders must claim that egoism is something more than merely a tendency of humans. If humans acted selfishly only some of the time but were capable of altruistic behavior at other times (as Adam Smith himself seems to have concluded), then we have no reason to give up on ethics and no reason to adopt the separation thesis. In fact, this may well be the major point of ethics: People tend to act selfishly; therefore, ethics exists to establish constraints upon this selfish behavior. In order for psychological egoism to threaten the relevance of ethics, defenders must claim that humans not only have a general tendency to act selfishly, but must always and only act out of self-interest. But, on the face of it, such a claim is obviously false. Parents and friends are two everyday examples of humans who regularly act for the well-being of others. More generally, if psychological egoism were true, we would either need to radically revise or totally abandon such concepts as friendship, love, charity, volunteering, sacrifice, generosity, loyalty, and countless others acts that assume altruistic motivation. Egoists have two ways to answer these facts. First, they might claim that when people act in such ways, they are still doing what they want and, therefore, are still acting selfishly. But this option is deeply misguided. On one hand, if this is intended as an empirical claim about human behavior, it is obviously false. People do things that they don’t “want” to do all the time (consider going to the dentist and doing philosophy homework as examples!). On the other hand, if this is not intended as an empirical claim—if it is an attempt to define self-interest as doing whatever an individual wants—then the egoist has abandoned the attack on ethics. That is, if the egoist admits that people are capable of two types of self-interested acts—those in which they want to benefit the self and those in which they want to benefit others—then the door is still open for ethics to sometimes require the latter rather than the former. A second response commonly made by egoists is to claim that even in cases of sacrifice and charity, people derive satisfaction out of ethical acts, and this suggests that selfishness underlies even the most beneficent act. So, even the mother who sacrifices for her baby is self-interested because she gets the satisfaction of lovingly caring for her baby from the act. But this response also fails because it confuses the intention or motivation for acting (one of the things with which ethics is concerned) with the feelings or reactions that follow from the act. I am selfish egoist only if the reason (or intent or motivation) that I have for helping my children is in order to feel good about myself. I am selfish if my intent for helping my friends is only to derive some personal benefit from this act. But that is not what motivates parents, or friends, or many of us much of the time. Our reason and motivation are to help others, and feeling good about it after the fact does not diminish the ethical nature of the act. Familiarity with psychological egoism will be helpful for the study of business ethics. Ethics will sometimes require business managers to sacrifice their own self-interest, often in the form of profits, in order to fulfill their page 12 ethical responsibilities. It is not uncommon for people to think that such a requirement is unrealistic and unreasonable. This may be particularly true for those people who have been taught by certain economic theories that humans are naturally selfish. But psychological egoism provides no support for such conclusions. Note: You will see Reality Checks throughout each chapter. Slightly different from Decision Points, these boxes offer practical applications of the concepts discussed during that chapter segment or examples of the ways in which the concepts are implemented in “real” business decision making. By now, the case for business ethics should be clear. Decisions made in business can have a significant impact on the well-being of countless individuals both within and outside of the business itself. Business decisions can no more escape ethical judgment than any other aspect of living a human life. As some of the examples already discussed demonstrate, both the very existence of a firm and the conditions under which it operates require that decision makers move beyond the narrow view of responsibilities that are captured by the separation thesis to consider the impact of those decisions on a wide range of stakeholders. In a general sense, a business stakeholder will be anyone who affects or is affected by decisions made within the firm, for better or worse. Failure to consider these additional stakeholders will have a detrimental impact on those stakeholders, on stockholders and on the firm’s long-term sustainability as a whole. This perspective is articulated effectively by Whole Foods Market’s “Declaration of Interdependence.” Satisfying all of our stakeholders and achieving our standards is our goal. One of the most important responsibilities of Whole Foods Market’s leadership is to make sure the interests, desires and needs of our various stakeholders are kept in balance. We recognize that this is a dynamic process. It requires participation and communication by all of our stakeholders. It requires listening compassionately, thinking carefully and acting with integrity. Any conflicts must be mediated and win-win solutions found. Creating and nurturing this community of stakeholders is critical to the long-term success of our company. [Emphasis added.]8 stakeholder In a general sense, a stakeholder is anyone who can be affected by decisions made within a business. More specifically, stakeholders are considered to be those people who are necessary for the functioning of a business. The Reality Check “How Does the Law Support Ethical Behavior?” describes some legal requirements that have been created in the United States since the Enron scandal. Beyond these specific legal obligations, organizational survival relies upon ethical decisions in a great many ways. Unethical behavior not only creates legal risks for a business, it creates financial and marketing risks as well. Managing these risks requires managers and executives to remain vigilant about their company’s ethics. It is now more clear than ever that a company can lose in the marketplace and go out of business, and its employees go to jail, if no one is paying attention to the ethical standards of the firm. As a final point, we should acknowledge that there are good business and financial reasons for practicing good ethics. First, a good reputation is itself good for business. Major firms such as Patagonia and Ben and Jerry’s explicitly market themselves as pursuing ethically beneficial goals. More generally, look to retail marketing advertisements to see how often firms use such words as “trust,” “honest,” “reliable,” “dependable,” and page 13 “caring” to promote business in the marketplace. Second, as some of the most dramatic corruption cases have demonstrated, unethical behavior can cause serious harm to the firm itself, up to and including bankruptcy. Third, attracting and retaining employees is easier for firms with good ethics than those with bad reputations. Finally, as such firms as Nike, McDonald’s, Facebook, Walmart, Chick-fil-A, Nestlé, and Target have learned, consumer boycotts of unethical business practices can have significant financial costs. Reality Check How Does the Law Support Ethical Behavior? As we will explain in the following section, ethics and the law are not the same. But law and ethics overlap in many ways. Good laws become law precisely because they promote important ethical values. But in some cases, laws are passed to help support ethical behavior in another way, namely by focusing the attention of corporate leaders on the need to work hard to ensure ethical behavior in their organizations. In 2002, for example, the U.S. Congress passed the Sarbanes-Oxley Act to address the wave of corporate and accounting scandals. Section 406 of that law, “Code of Ethics for Senior Financial Officers,” requires that corporations have a code of ethics “applicable to its principal financial officer and comptroller or principal accounting officer, or persons performing similar functions.” The code must include standards that promote: 1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. 2. Full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the issuer. 3. Compliance with applicable governmental rules and regulations. Ethics and the Law OBJECTIVE Before turning to a discussion of ethical decision making, it is worth reflecting on the role played by the law. Any discussion of norms and standards of proper business behavior would be incomplete without considering the law. In fact, some defenders of the separation thesis would argue that the law provides the only social norms and standards needed for business ethics. It is certainly true that deciding what one should do in business does require consideration of what the law requires, expects, or permits. The law does provide an important guide to ethical decision making, and this text will integrate legal considerations throughout. But legal norms and ethical norms are not identical, nor do they always agree. For example, some ethical requirements, such as treating one’s employees with respect, are not legally required, though they are ethically justified. On the other hand, some actions that may be legally permitted, such as firing an employee for no reason, would fail ordinary ethical standards. As reflected in the separation thesis, some people continue to believe, perhaps more commonly prior to the scandals of recent years than after, that a business fulfills its social responsibility simply by obeying the law. From this perspective, an ethically responsible business is merely one that complies with the law; there is no responsibility to do anything further. Individual businesses may choose to go beyond this legal minimum, such page 14 as when a business supports the local arts, but these choices are voluntary. A good deal of management literature on corporate social responsibility centers on this approach. Business ethics requires obedience to the law; anything beyond that is a matter of corporate philanthropy and charity, something praiseworthy and allowed, but not ethically required. Over the last two decades, many corporations have established ethics programs and have hired ethics officers who are responsible for managing corporate ethics programs. Ethics officers do a great deal of good and effective work, but it is fair to say that much of their work focuses on legal compliance issues. Of course, the environment varies considerably from company to company and industry to industry. The Sarbanes-Oxley Act, the U.S. law established after the Enron scandal, created a dramatic and vast new layer of legal compliance issues for companies doing business in the United States. But is compliance with the law all that is required to behave ethically? In order to move forward to our discussion of ethics as a more effective guidepost for decision making, let us briefly explore at this point several persuasive reasons that legal compliance alone is insufficient. 1. Believing that obedience to the law is sufficient to fulfill one’s ethical duties raises questions of whether the law, itself, is ethical. Dramatic examples from history, including Nazi Germany and apartheid in South Africa, demonstrate that one’s ethical responsibility may run counter to the law. On a more practical level, this question can have significant implications in a global economy in which businesses operate in countries with legal systems different from those of their home country. For instance, some countries permit discrimination on the basis of gender and some strictly censure internet content. A firm that does business in such a country must decide whether to obey the local law or remain true to ethical principles. From the perspective of ethics, a business does not avoid its need to consider ethical responsibilities just by obeying the law because sometimes it may have to decide if the law itself deserves to be obeyed. 2. Societies that value individual freedom will be reluctant to legally require more than just an ethical minimum. Such liberal societies will seek legally to prohibit the most serious ethical harms, although they will not legally require acts of charity, common decency, and personal integrity that may otherwise constitute the social fabric of a developed culture. The law can be an efficient mechanism to prevent serious harms, but it is not very effective at promoting “goods.” Even if it were, the cost in human freedom of legally requiring such things as personal integrity would be extremely high. What would a society be like if it legally required parents to love their children, or even had a law that prohibited lying under all circumstances? 3. On a more practical level, a business acting as if its ethical responsibilities end with obedience to the law is just inviting more legal regulation. Consider the difficulty of trying to create laws to cover each and every possible business challenge; the task would require such specificity that the number of regulated areas would become unmanageable. Additionally, it was the failure of personal ethics among such companies as Enron, after all, that led to the creation of the Sarbanes-Oxley Act and the page 15 corruption of subprime mortgage lending that led to the creation of the Consumer Financial Protection Bureau. If business restricts its ethical responsibilities to obedience to the law, it should not be surprised to find a new wave of government regulations and legal restrictions. Public perception of business can play a major role in what laws are created to regulate business. See the two Reality Checks “Are Business Executives Perceived as Corrupt?” and “Ethics in the Corporate World.” Reality Check Are Business Executives Perceived as Corrupt? Transparency International: Perceived Corruption in Business Transparency International asked people worldwide to respond to this statement: “How many business executives in your country do you think are involved in corruption?” Responses saying “most” or “all” from selected countries are displayed below. Country Most All Australia 16% 5% Brazil 25% 10% Chile 31% 25% China 9% 2% Egypt 28% 11% France 14% 3% Ghana 29% 10% Japan 15% 2% Russia 18% 9% United Kingdom 15% 6% United States 25% 10% Source: Data extracted from Transparency International; Putting Corruption out of Business: Business’ Responsibility; www.transparency.org/research/bps2011. 4. The law cannot anticipate every new ethical issue that businesses might face, so often there may not be a regulation for the particular dilemma that confronts a business leader. For example, when workplace email was in its infancy, laws regarding who actually owned the email transmissions (the employee or the employer) were not yet in place. As a result, one had no choice but to rely on the ethical decision-making processes of those in power to respect the appropriate boundaries of employee privacy while also adequately managing the workplace (see Chapter 7 for a more complete discussion of the legal implications of workplace monitoring). When new quandaries arise, one must be able to rely on ethics because the law might not yet—or might never—provide a solution. page 16 Reality Check Ethics in the Corporate World It’s no secret that a substantial portion of the public has trouble trusting corporate CEOs. Every time another corporate scandal makes headlines, chatter increases about the fundamental untrustworthiness of business in general, and of business leaders in particular. But just how little does the public trust CEOs? And how does the public’s trust in CEOs differ from their trust in members of other occupations and professions? In 2014, the Ted Rogers Leadership Centre at Ryerson University (in Toronto, Canada) conducted a national survey to ask Canadians their perceptions of the ethics of political leadership. One question they asked is: “In general, how much do you trust members of the following professions to behave ethically in their roles—that is, to live up to both public and professional standards in fulfilling their duties?” Here are the percentages of respondents who indicated that they trust members of the following professions to behave ethically: Doctors: 78 percent Judges: 65 percent Police officers: 60 percent Public servants: 36 percent Journalists: 33 percent Business CEOs: 22 percent Union leaders: 20 percent Political staff: 16 percent Politicians: 13 percent Lobbyists: 9 percent Of course, there are important questions about just how to interpret such data. It is worth noting that these numbers suggest a correlation between how much we trust various professions and how familiar we are with what they do. Most people know and rely on their family physician, and most people have a pretty good idea of what a judge does. On the other hand, fewer people understand what a CEO does. So what is expressed as a lack of trust may just reflect a lack of understanding. Or it might not! But we should always consider a range of explanations in the face of data such as these. Source: “Public Perceptions of the Ethics of Political Leadership,” Ted Rogers Leadership Centre (November 5, 2014), www.ethicssurvey.ca (accessed June 6, 2016). The survey was conducted among a nationally representative sample of n = 1,039 Canadians between October 17 and 22, 2014, using an online panel. 5. Finally, the perspective that compliance is enough relies on a misleading understanding of law. To say that all a business needs to do is obey the law suggests that laws are clear-cut, unambiguous rules that can be easily applied. This rule model of law is very common, but it is not quite accurate. Some laws—speed limits on highways, for example—are clear and unambiguous. But many other laws, especially in the area of civil law that governs most commercial transactions, are not. Of course, if the law was clear and unambiguous, there would not be much of a role for lawyers and courts. These considerations demonstrate that business cannot avoid making ethical judgments, even if it is fully committed to obeying the law. Consider, for example, what would be required of a business committed to obeying the legal requirements established by a law such as the Americans with Disabilities Act (ADA). Like similar laws in many countries, this law requires American employers to make reasonable accommodations for employees with disabilities. (In the United Kingdom, the comparable law is called the Equality Act, 2010. In Canada, where employment law is a provincial matter, there are laws such as the Ontarians with Disabilities Act, 2002, and the Accessibility for Manitobans Act, 2013.) All of these laws use such ambiguous terms as “reasonable” or “barriers” or even the page 17 word “disability” itself. But what counts as a disability and what would be considered a “reasonable” accommodation? What creates a barrier to employment? Over the years, claims have been made that relevant disabilities include obesity, depression, dyslexia, arthritis, hearing loss, high blood pressure, facial scars, and the fear of heights. Whether such conditions are covered under the law depends on a number of factors, including the severity of the illness and the effect it has on the employee’s ability to work, among others. Imagine that you are a corporate human resource manager and an employee asks you to reasonably accommodate his allergy. How would you decide whether allergies constitute a disability under the ADA? In general, most of the laws that concern business are based on the common law of past cases that establish legal precedents. Each precedent applies general rules to the specific circumstances of an individual case. The law provides general guidance to make “reasonable accommodations” for a “disability.” But courts decide, on a case-by-case basis, whether some action was or was not reasonable or whether this condition is or is not a disability. In most business situations, asking, “Is this legal?” is really asking, “Are these circumstances similar enough to past cases that the conclusions reached in those cases will also apply here?” Because there will always be some differences among cases, the question will always remain somewhat open. Thus, there is no unambiguous answer for the conscientious business manager who wishes only to obey the law. There are few situations where a decision maker can simply find the applicable rule, apply it to the situation, and deduce an answer from it. The decision maker cannot avoid responsibility for her own judgment of what should be done. Without aiming to criticize the legal profession (especially because one of the authors of this text has a legal background!) but merely to demonstrate the preceding ambiguity, it is worth remembering that many of the people involved in the wave of recent corporate scandals were themselves lawyers. In the Enron case, for example, corporate attorneys and accountants were famously encouraged to “push the envelope” of what was legal. Especially in civil law (as opposed to criminal law), where much of the law is established by past precedent, as described earlier, there is always room for ambiguity in applying the law. Further, in civil law there is a real sense that one has not done anything illegal unless and until a court decides that one has violated a law. This means that if no one files a lawsuit to challenge an action, it is perceived as legal. As some theories of corporate social responsibility suggest, if a corporate manager is told that she has a responsibility to maximize profits within the law, a competent manager will go to her corporate attorneys and tax accountants and ask what the law allows. Or ask those professionals to “push the envelope” to see what they can legally get away with, and that typically means what they would be willing to defend in court. A responsible attorney or accountant will advise how far the manager can reasonably go before it would obviously be illegal. In this situation, the question is whether a manager has a responsibility to “push the envelope” of legality in pursuit of profits. Most of the cases of corporate scandal mentioned at the start of this chapter involved attorneys and accountants who advised their clients or bosses that what they were doing could be defended in court. The off-book partnerships that were at the heart of the collapse of Enron and page 18 Arthur Andersen were designed with the advice of attorneys who thought that, if challenged, they had at least a reasonable chance of winning in court. In the business environment, this strategy falls within the domain of organizational risk assessment, defined as “a process . . . to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.”9 Accordingly, the decision to “push the envelope” becomes a balance of risk assessment, cost–benefit analysis, and ethics—what is the corporation willing to do, willing to risk? Using this model, decision makers might include in their assessment before taking action: The likelihood of being challenged in court. The likelihood of losing the case. The likelihood of settling for financial damages. A comparison of those costs. The financial benefits of taking the action. The ethical implication of the options available. risk assessment A process to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives. It is important to recognize that risk assessment is not simply a valueneutral process of professional judgment. While determining the likelihood of one particular outcome versus another can be a professional judgment for attorneys and accountants, deciding whether the risk is worth taking is not. That, ultimately, is a value judgment, and when the risks involve potential harms and benefits to a variety of stakeholders, it is a judgment that involves ethics as well. Because the law is often ambiguous—because in many cases it simply is not clear what the law requires—there is seldom certainty with regard to these decisions. Therefore, business managers will often face decisions that will require their ethical judgments. To suggest otherwise simply presents a false picture of corporate reality. Thus, even those businesspeople who are committed to strictly obeying the law will be confronted on a regular basis by the fundamental ethical questions: What should I do? How should I live? As suggested earlier, whether we step back and explicitly ask these questions, each of us implicitly answers them every time we make a decision about how to act. Responsible decision making requires that we do step back and reflect on them, and then consciously choose the values by which we make decisions. No doubt this is a daunting task, even for experienced, seasoned leaders. Fortunately, we are not alone in meeting this challenge. There can be better and worse ways to think about ethical issues and make decisions on how to act. Business Ethics as Ethical Decision Making As the title of this book suggests, our approach to business ethics will emphasize ethical decision making. No book can magically create ethically responsible people or change behavior in any direct way, and that’s certainly not our goal here. But students can learn and practice responsible and accountable ways of thinking and deliberating. We believe that decisions that follow from a process of thoughtful and conscientious reasoning page 19 will be more responsible and ethical. In other words, responsible decision making and deliberation will result in more responsible behavior. So what, exactly, is the goal of a business ethics course? On one hand, ethics refers to an academic discipline with a centuries-old history; we might expect knowledge about this history to be among the primary goals of a class in ethics. Thus, in an ethics course, students might be expected to learn about the great ethicists of history such as Aristotle, John Stuart Mill, and Immanuel Kant. As in many other courses on other subjects, this approach to ethics would focus on the informational content of the class. Yet, ethical theories and the history of ethics can seem beside the point. Many observers, including some businesses looking to hire college graduates, business schools, and business students, expect an ethics class to address, if not produce, ethical behavior, not just information and knowledge about ethics. After all, what good is an ethics class if it does not help prevent future scandals such as Wells Fargo or Enron? Knowledge about ethics is one thing, but ethical behavior is another, and many believe that it is the behavior not the knowledge that should be the goal of a business ethics class. For our purposes, ethics refers not only to an academic discipline, but also to that arena of human life studied by this academic discipline, namely, how human beings should properly live their lives. We believe that business ethics should aim for both knowledge about ethics and more responsible behavior. And we believe the tools provided in this book will better equip students to think clearly about such questions. At very least, after taking a course based on this book, you should be better equipped than the average person to think clearly about ethical issues in business, and to offer a reasoned point of view about those issues. ethics Derived from the Greek word ethos, which refers to those values, norms, beliefs, and expectations that determine how people within a culture live and act. Ethics steps back from such standards for how people do act, and reflects on the standards by which people should live and act. At its most basic level, ethics is concerned with how we act and how we live our lives. Ethics involves what is perhaps the most monumental question any human being can ask: How should we live? Following from this original Greek usage, ethics can refer to both the standards by which an individual chooses to live her or his own personal life and the standards by which individuals live in community with others (see also morality). As a branch of philosophy, ethics is the discipline that systematically studies questions of how we ought to live our lives. A caution about influencing behavior within a classroom is appropriate here. Part of the hesitation about teaching ethics involves the potential for abuse; should teachers be promoting particular ethical views in the classroom? Many believe that teachers should remain value-neutral in the classroom and not try to impose their own views on students. Part of this concern is that the line between motivating students and manipulating students is a narrow one. There are many ways to influence someone’s behavior, including threats, guilt, pressure, bullying, and intimidation. Some of the executives involved in the worst of the recent corporate scandals were very good at using some of these methods to motivate the people who worked for them. Presumably, none of these approaches belong in a university classroom, and certainly not in an ethical classroom. But the alternative is not to abandon any hopes of contributing to a more ethical business climate. Not all forms of influencing behavior raise concerns about manipulating or coercing behavior. There is a big difference between manipulating someone and persuading someone, between threatening (unethical) and reasoning (more likely ethical). This textbook resolves the tension between influencing behavior and manipulation by emphasizing ethical judgment and ethical decision making. We agree with those who believe that an ethics class should attempt to produce more ethical behavior among the students who enroll. But we believe that the only academically and ethically legitimate way to achieve this objective is through page 20 careful and reasoned decision making. Our fundamental assumption is that a process of rational decision making, a process that involves careful thought and deliberation, can and will result in behavior that is more reasonable, accountable, and ethical. Perhaps this is not surprising after all. Consider any course within a business school curriculum. Most people would agree that a management course aims to create better managers. And any finance or accounting course that denied a connection between the course material and financial or accounting practice would likely be counted as a failure. Every course in a business school assumes a connection between what is taught in the classroom and appropriate business behavior. Classes in management, accounting, finance, and marketing all aim to influence students’ behavior. We assume that the knowledge and reasoning skills learned in the classroom will lead to better decision making and, therefore, better behavior within a business context. A business ethics class follows this same approach. While few teachers think that it is our role to tell students the right answers and to proclaim what students ought to think and how they ought to live, still fewer think that there should be no connection between knowledge and behavior. Our role should not be to preach our own ethical beliefs to a passive audience, but instead to treat students as active learners and to engage them in an active process of thinking, questioning, and deliberating. Taking Socrates as our model, philosophical ethics rejects the view that passive obedience to authority or the simple acceptance of customary norms is an adequate ethical perspective. Teaching ethics must, in this view, challenge students to think for themselves. Business Ethics as Personal Integrity and Social Responsibility At its most basic level, ethics is concerned with deciding how we act and how we live our lives. Ethics involves what is perhaps the most monumental question any human being can ask: How should we live? Ethics is, in this sense, practical, having to do with how we act, choose, behave, and do things. Philosophers often emphasize that ethics is normative, which means that it deals with our reasoning about how we should act. Social sciences, such as psychology and sociology, also examine human decision making and actions; but these sciences are descriptive rather than normative. When we say that they are descriptive, we refer to the fact that they provide an account of how and why people do act the way they do—they describe; as a normative discipline, ethics seeks an account of how and why people should act a certain way, rather than how they do act. (For an exploration of some of the relevant factors in such a decision, see the Decision Point “Management and Ethics.”) normative ethics As a normative discipline, ethics deals with norms and standards of appropriate and proper (normal) behavior. Norms establish the guidelines or standards for determining what we should do, how we should act, what type of person we should be. Contrast with descriptive ethics. descriptive ethics As practiced by many social scientists, provides a descriptive and empirical account of those standards that actually guide behavior, as opposed to those standards that should guide behavior. Contrast with normative ethics. OBJECTIVE How should we live? This fundamental question of ethics can be interpreted in two ways. “We” can mean each one of us individually, or it might mean all of us collectively. In the first sense, this is a question about how I should live my life, how I should act, what I should do, and what kind of person I should be. This meaning of ethics is based on our value structures, defined by our moral systems; and, therefore, it is sometimes page 21 referred to as morality. It is the aspect of ethics that we refer to by the phrase “personal integrity.” There will be many times within a business setting where an individual will need to step back and ask: What should I do? How should I act? Imagine that you were a personal banker working at Wells Fargo and your supervisor directed you to open up a new account for an existing customer without that customer’s knowledge. What would you do? If morals refer to the underlying values on which our decisions are based, ethics refers to the applications of those morals to the decisions themselves. So, an individual could have a moral value of honesty, which, when applied to her or his decisions, results in a refusal to process a fraudulent account. morality Sometimes used to denote the phenomena studied by the field of ethics. This text uses morality to refer to those aspects of ethics involving personal, individual decision making. “How should I live my life?” or “What type of person ought I be?” are taken to be the basic questions of morality. Morality can be distinguished from questions of social justice, which address issues of how communities and social organizations ought to be structured. personal integrity The term integrity connotes completeness of a being or thing. Personal integrity, therefore, refers to individuals’ completeness within themselves, often derived from the consistency or alignment of actions with deeply held beliefs. Decision Point Management and Ethics Imagine that you are examining this chapter’s Opening Decision Point in one of your classes on marketing or organizational behavior. What conclusions would you reach about who or what is responsible? What advice would you offer to Wells Fargo or government regulators to prevent a repetition of what happened? After offering your analysis and recommendations, reflect on your own thinking and describe what values underlie those recommendations. 1. 2. 3. 4. What facts would help you make your decision? What aspects of this case raise values that are particular to managers? What stakeholders should be involved in your advice? What values do you rely on in offering your advice? In the second sense, “How should we live?” refers to how we live together in a community. This is a question about how a society and social institutions, such as corporations, ought to be structured and about how we ought to live together. This area is sometimes referred to as social ethics, and it raises questions of justice, public policy, law, civic virtues, organizational structure, and political philosophy. In this sense, business ethics is concerned with how business institutions ought to be structured, about whether they have a responsibility to the greater society (corporate social responsibility, or CSR), and about making decisions that will have an impact on many people other than the individual decision maker. This aspect of business ethics asks us to examine business institutions from a social rather than from an individual perspective. Thus, we might conclude that Wells Fargo’s cross-selling practices were unethical. We refer to this broader social aspect of ethics as decision making for social responsibility. social ethics The area of ethics that is concerned with how we should live together with others and how social organizations ought to be structured. Social ethics involves questions of political, economic, civic, and cultural norms aimed at promoting human well-being. In essence, managerial decision making will always involve both of these aspects of ethics. Each decision that a business manager makes involves not only a personal decision but also a decision on behalf of, and in the name of, an organization that exists within a particular social, legal, and political environment. Thus, our book’s title makes reference to both aspects of business ethics. Within a business setting, individuals will constantly be asked to make decisions affecting both their own personal integrity and their social responsibilities. page 22 Expressed in terms of how we should live, the major reason to study ethics becomes clear. Whether we explicitly examine these questions, each and every one of us answers them every day through our behaviors in the course of living our lives. Whatever decisions business managers make, they will have taken a stand on ethical issues, at least implicitly. The actions each one of us takes and the lives we lead give very practical and unavoidable answers to fundamental ethical questions. We therefore make a very real choice as to whether we answer them deliberately or unconsciously. Philosophical ethics merely asks us to step back from these implicit everyday decisions to examine and evaluate them. More than 2,000 years ago Socrates gave the philosophical answer to why you should study ethics: “The unexamined life is not worth living.” To distinguish ethics from other practical decisions faced within business, consider two approaches to the Enbridge oil spill scenario in the Decision Point “Ethics after an Oil Spill.” This case could just as well be examined in a management, human resource, business law, or organizational behavior class as in an ethics class. The more social-scientific approach common in management or business administration classes would examine the situation and the decision by exploring the factors that led to one decision rather than another or by asking why the manager acted in the way that he did. A second approach to the Enbridge case, from the perspective of ethics, steps back from the facts of the situation to ask what should the manager do? What rights and responsibilities are involved? What good will come from this situation? Is Enbridge being fair, just, virtuous, kind, loyal, trustworthy? This normative approach to business is at the center of business ethics. Ethical decision making involves the basic categories, concepts, and language of ethics: shoulds, oughts, rights and responsibilities, goodness, fairness, justice, virtue, kindness, loyalty, trustworthiness, and honesty. OBJECTIVE To say that ethics is a normative discipline is to say that it deals with norms: those standards of appropriate and proper (or “normal”) behavior. Norms establish the guidelines or standards for determining what we should do, how we should act, and what type of person we should be. Another way of expressing this point is to say that norms appeal to certain values that would be promoted or attained by acting in a certain way. Normative disciplines presuppose some underlying values. norms Those standards or guidelines that establish appropriate and proper behavior. Norms can be established by such diverse perspectives as economics, etiquette, or ethics. But to say that ethics is a normative discipline is not to say that all normative disciplines involve the study or discipline of ethics. After all, business management and business administration are also normative, are they not? Are there not norms for business managers that presuppose a set of business values? One could add accounting and auditing to this list, as well as economics, finance, politics, and the law. Each of these disciplines appeals to a set of values to establish the norms of appropriate behavior within each field. These examples suggest that there are many different types of norms and values. Returning to our distinction between values and ethics, we can think of values as the underlying beliefs that cause us to act or to decide one way rather than another. Thus, the value that I place on an education leads me to make the decision to study this evening, rather than to play video games. I believe that education is more worthy, or valuable, than playing games. I make the decision to spend my money on groceries rather than on a vacation because I value food more than relaxation. A company’s core values, for example, are those beliefs that provide the ultimate guide to its decision making. values Those beliefs that incline us to act or to choose in one way rather than another. We can recognize many different types of values: financial, religious, legal, historical, nutritional, political, scientific, and aesthetic. Ethical values serve the ends of human well-being in impartial, rather than personal or selfish, ways. page 23 Decision Point Ethics after an Oil Spill10 In August 2011, it was reported that an oil pipeline, owned by the energy company Enbridge, had sprung a leak near the tiny, remote town of Wrigley in Canada’s Northwest Territories. Not surprisingly, residents were unhappy about the spill, confronting Enbridge with the twin dilemmas of how to clean it up and what to do about the people of Wrigley. More generally, managers at Enbridge had to figure out, in the wake of the leak, what their obligations would be and to whom those obligations were owed. Wrigley—slightly farther north than Anchorage, Alaska, but much farther inland—in 2011 had a population of about 165. Most community residents are members of the Canadian aboriginal group known as the Dené. Citizens of the town of Wrigley have very low levels of education—most of the population has received no formal education whatsoever. More than half of the community is unemployed. Poverty and access to the basic amenities of modern life are a serious challenge. At present, there isn’t even a year-round road into the town. They maintain a traditional lifestyle based on hunting, fishing, and trapping, one that leaves them almost entirely dependent on the health of local forests and waterways. Environmental protection isn’t just a question of principle for the people of Wrigley; it’s a matter of survival. After the spill was discovered, it was estimated that 1,500 barrels of oil had leaked, but company officials said luckily none of the oil had reached the nearby Willowlake River. Locals were skeptical, with some claiming that the water now tasted odd. Immediately after the spill was discovered, the company devised a detailed cleanup plan—a document more than 600 pages long. But locals were not impressed and said the complex technical document was too difficult to understand. When the company offered $5,000 so that the community could hire its own experts to evaluate the plan, locals were offended. How could a rich oil company insult them that way, first polluting their land and then offering such a tiny payment? For Enbridge, the spill was a significant blow to its ongoing effort to maintain a positive image. Just a year earlier, in the summer of 2010, the company had made headlines when one of its pipelines ruptured in Michigan, spilling more than 20,000 barrels of oil into local rivers. At the time, Enbridge was in the midst of trying to win approval for its proposed Northern Gateway Pipeline project and faced serious opposition from environmental groups and aboriginal communities. The company faced a number of difficult issues in the wake of the Wrigley spill. The first concern, clearly, would be to clean up the spilled oil. Then there was the issue of remediation—the process of attempting to restore the polluted land back to something like its original state. Further, there was the question of whether and how to compensate the local community for the pollution and loss of use of some of their traditional hunting grounds. All of this was set against a backdrop of controversy surrounding the impact that oil pipelines have on the lands and communities through which they run. 1. What do you think motivated the company’s decision to offer the community $5,000 to hire its own expert? Why do you think the community was insulted? If you were the company’s local manager, what would you have done? 2. What facts would be helpful to you, as an outsider, in evaluating the company’s behavior after the spill? page 24 3. What values are involved in this situation? How would Enbridge answer that question internally? How would the people of Wrigley answer that question, if asked? 4. Did Enbridge have obligations that went beyond cleaning up the area d