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More ethics in business

Ethics in Business

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

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

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

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

extensive research and documentation required for government contracts. If a

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

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

When both the culpable component and company are found, the question arises of

how extensive these repercussions should be. Is the company as an entity liable

or do you look into individual employees within that company? From an ethical

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

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

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

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

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

The first mitigating factor involved in the National Semiconductor case

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

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

distinguish which parts they were to test under government standards and

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

final consumers of the products that they tested. In fact, ignorance on the part

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

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

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

at on an individual basis.

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

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

bogus testing was completed in the National Semiconductor labs, the

documentation department also had to falsify documents stating that the parts

had surpassed the governmental testing standards. From a legal and ethical

standpoint, both the testers and the writers of the reports were merely acting

as agents on direct orders from a superior. This was also the case when the

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

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

approval committees (Velazquez, 53). The writers of the reports were well aware

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

supervisor. Acting in an ethical manner becomes a secondary priority in this

type of environment. As stated by Alan Reder, . . . if they [the employees]

feel they will suffer retribution, if they report a problem, they arent too

likely to open their mouths. (113). The workers knew that if the reports were

not falsified they would come under questioning and perhaps their employment

would go into jeopardy. Although working under these conditions does not fully

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

determining the order of the chain of command of superiors and it helps to

narrow down the person or department that issued the original request for the

unethical acts.

The third mitigating factor is one that perhaps encompasses the majority

of the employees in the National Semiconductor case. We have to balance the

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

to be made clear that many of the employees did not have a direct duty with the

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

sub-contractors, that were directly involved with the production were not aware

of the incompetence on the part of the testing department. For example, the

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

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

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

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

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

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

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

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

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

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

irresponsible employees as well as those that are morally excused.

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

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

Semiconductor was repeatedly being reinstated to the listed of approved

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

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

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

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

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

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

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

that their products cause, no matter the magnitude.

As for the opposition to the delegating of moral responsibility,

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

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

corporation should not be forced to bring out all of the employees responsible

into a public forum. A company should be reprimanded and be left alone to carry

out its own internal investigation and repercussions. From a business law

perspective this is the ideal case since a corporation is defined as being a

separate legal entity. Furthermore, the opposition would argue that this

resolution would benefit both the company and the government since it would not

inconvenience either party. The original resolution in the National

Semiconductor case was along these lines. The government permanently removed

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

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

relatively quick resolution as well as the ideal scenario for National


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

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

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

executives are working towards advancing the entity known as their corporation

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

workers, are in some part morally responsible because they should have been

clear on their employment duties and they all should have been aware of which

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

moral responsibility for the workers. Also, the fact that some employees failed

to act in an ethical manner gives even more moral responsibility to that

employee. While some are definitely more morally responsible than others, every

employee has some burden of weight in this case. In fact, when the government

reached a final resolution, they decided to further impose repercussions and

certain employees of National Semiconductor were banned from future work in any

government office (Velazquez, 54).

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

outcome was favorable considering the alternate steps that the government could

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

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

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

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

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

Semiconductor should have conducted a thorough analysis of their employees as

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

can raise the ethical standard of everyone in their organization.

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

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

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

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

argue that there are very few business decisions that do not affect society in

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

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

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

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

responsibility to their corporation instead of their social responsibility to

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

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

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

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

companies want . . . maximum profit. In the opinion of the executives, they were

acting in a sensible manner. After all, no executive wants to think of

themselves as morally irresponsible. (Capitman, 118).

The question that naturally arises, in debating corporate responsibility,

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

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

example of the National Semiconductor case, one can notice many failures in

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

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

ultimately it was the widespread falsification of the testing documentation that

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

components. In the synopsis of the case it is never mentioned that the employees

initiated this idea, it would seem that it was the supervisors that gave the

order to falsify the documents. In order to accomplish this, the company

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

regards to the advancement of the company. Through open communication, a company

can resolve a variety of its ethical dilemmas. As for the financial aspects of

the corporation, it has to decide whether the long term effects that a reprimand

from the government can have outweighs their bottom line. In other words,

corporations have to start moving away from the thought of instant profit and

start realizing both the long term effects and benefits. These long term

benefits can include a stronger sense of ethics in the work force as well as a

better overall society.

To conclude, I must say that I agree with the use of mitigating factors

in determining moral responsibility. A company, as defined by law, is only a

name on a piece of paper. The company acts and conducts itself according to the

employees that work in that entity. I use the word employee because in ethical

thinking there should be no distinction of rank within a company. There are

times when executives can be held directly responsible and at the same time,

there are cases where employees are acting unethically without the executives

knowing. Neither title of executive or employee equates to moral perfection.

Therefore, when a company has acted irresponsibly, its employees must be held

liable in a proportionate amount. As for the future of ethics in business I

would speculate that if employees started to think more in long term benefits

and profits, many of the ethical dilemmas that we face today would be greatly

reduced. As mentioned before, businesses today uses the measuring stick of

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

the social community in order to weigh business decisions.

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

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

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

Plus, companies have different needs and every moral rule is subjective

according to the type of business that everyone conducts.

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

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

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

that they are doing fine with employees that are aware of their moral values.

Yet other companies will find that they do have areas that need improvement. It

is steps like these that start implementing changes. Once a few companies start

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

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

in one department can cause the deterioration of an entire corporation. When the

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

this are small in comparison.


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

Anchor Press-DoubleDay Publishing

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

April 4, 1982. Pg. B1

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

Quorum Books

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

G.P. Putnams Sons Publishing

Sawyer, George. 1979. Business and Society: Managing Corporate Social Impact.


Houghton Mifflin Publishing

Schuyten, Peter. To Clone A Computer. New York Times

February 4, 1979. Pg. 1

Velazquez, Manuel. 1992. Business Ethics: Concepts and Cases. New Jersey

Prentice Hall Publishing

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