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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
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
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
As for the opposition to the delegating of moral
responsibility, mitigating factors and excusing factors,
they would argue that the entity of the corporation as a
whole should be held responsible. The executives within a
corporation should not be forced to bring out all of the
employees responsible into a public forum. A company should
be reprimanded and be left alone to carry out its own
internal investigation and repercussions. From a business
law perspective this is the ideal case since a corporation
is defined as being a separate legal entity. Furthermore,
the opposition would argue that this resolution would
benefit both the company and the government since it would
not inconvenience either party. The original resolution in
the National Semiconductor case was along these lines. The
government permanently removed National from its approved
contractors list and then National set out to untangle the
web of culpability within its own confines. This allowed a
relatively quick resolution as well as the ideal scenario
for National Semiconductor.
In response, one could argue that the entity of a
corporation has no morals or even a concept of the word, it
is only as moral and ethical as the employees that work in
that entity. All of the employees, including top ranking
executives are working towards advancing the entity known
as their corporation (Capitman, 117). All employees,
including the sub-contractors and assembly line workers,
are in some part morally responsible because they should
have been clear on their employment duties and they all
should have been aware of which parts were intended for
government use. Ambiguity is not an excusing factor of
moral responsibility for the workers. Also, the fact that
some employees failed to act in an ethical manner gives
even more moral responsibility to that employee. While some
are definitely more morally responsible than others, every
employee has some burden of weight in this case. In fact,
when the government reached a final resolution, they
decided to further impose repercussions and certain
employees of National Semiconductor were banned from future
work in any government office (Velazquez, 54).
Looking at the case from the standpoint of National
Semiconductor, the outcome was favorable considering the
alternate steps that the government could taken. As
explained before, it is ideal for a company to be able to
conduct its own investigation as well as its own
punishments. After all, it would be best for a company to
determine what specific departments are responsible rather
than having a court of law impose a burden on every
employee in its corporation. Yet, since there are ethical
issues of dishonesty and secrecy involved, National
Semiconductor should have conducted a thorough analysis of
their employees as well as their own practices. It is
through efforts like these that a corporation can raise the
ethical standard of everyone in their organization.
This case brings into light the whole issue of corporate
responsibility. The two sides that must ultimately be
balanced are the self interests of the company, with main
goal of maximum profit, and the impacts that a corporation
can cause on society (Sawyer, 78). To further strengthen
this need, one could argue that there are very few business
decisions that do not affect society in way or another. In
fact, with the plethora of corporations, society is being
affected on various fronts; everything from water
contamination to air bag safety is a concern. The biggest
problem that all of us must contend with is that every
decision that a business makes is gauged by the financial
responsibility to their corporation instead of their social
responsibility to the local community, and in some cases,
the international community. This was pointed out on
various occasions as the main reason why National
Semiconductor falsified their reports. The cost that the
full tests would incur did not outweigh their profit
margins. Their business sense lead them to do what all
companies want . . . maximum profit. In the opinion of the
executives, they were acting in a sensible manner. After
all, no executive wants to think of themselves as morally
irresponsible. (Capitman, 118).
The question that naturally arises, in debating corporate
responsibility, is what types of checks and balances can be
employed within a company to ensure that a corporation and
all of its agents act in an ethical manner. Taking the
example of the National Semiconductor case, one can notice
many failures in moral responsibility. National
Semiconductor would have to review its employees,
particularly the supervisors, for basic ethical values such
as honesty. example, ultimately it was the widespread
falsification of the testing documentation that caused the
downfall of National Semiconductor, not the integrity of
their components. In the synopsis of the case it is never
mentioned that the employees initiated this idea, it would
seem that it was the supervisors that gave the order to
falsify the documents. In order to accomplish this, the
company executives would have to encourage their employees
to voice their concerns in regards to the advancement of
the company. Through open communication, a company can
resolve a variety of its ethical dilemmas. As for the
financial aspects of the corporation, it has to decide
whether the long term effects that a reprimand from the
government can have outweighs their bottom line. In other
words, corporations have to start moving away from the
thought of instant profit and start realizing both the long
term effects and benefits. These long term benefits can
include a stronger sense of ethics in the work force as
well as a better overall society.
To conclude, I must say that I agree with the use of
mitigating factors in determining moral responsibility. A
company, as defined by law, is only a name on a piece of
paper. The company acts and conducts itself according to
the employees that work in that entity. I use the word
employee because in ethical thinking there should be no
distinction of rank within a company. There are times when
executives can be held directly responsible and at the same
time, there are cases where employees are acting
unethically without the executives knowing. Neither title
of executive or employee equates to moral perfection.
Therefore, when a company has acted irresponsibly, its
employees must be held liable in a proportionate amount. As
for the future of ethics in business I would speculate that
if employees started to think more in long term benefits
and profits, many of the ethical dilemmas that we face
today would be greatly reduced. As mentioned before,
businesses today uses the measuring stick of profitability.
There needs to be a shift to the thinking of total utility
for the social community in order to weigh business
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
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
Quorum Books
Reder, Alan. 1944. In Pursuit of Principle and Profit. New
G.P. Putnams Sons Publishing
Sawyer, George. 1979. Business and Society: Managing
Corporate Social
Impact. Boston
Houghton Mifflin Publishing
Schuyten, Peter. To Clone A Computer. New York Times
February 4, 1979. Pg. 1
Velazquez, Manuel. 1992. Business Ethics: Concepts and
Cases. New Jersey
Prentice Hall Publishing


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