Tuesday, April 26
Monday, April 25
TO: Dr. Scott Abbott, Dr. Elaine Englehardt, Dr. Timothy Fisher and Dr. Mark Jeffreys
FROM: Tess Seymour
DATE: April 25, 2011
SUBJECT: Proposal of Capstone thesis project researching the methodology and cultural norms surrounding the concept of business ethics.
Statement of Thesis and Project Summary
Business Ethics: What is your life worth?
The purpose of this paper is to identify and raise awareness to what has today become the unacceptable cultural norm of business ethics. Fortune 500 companies are getting away with ludicrous actions and are in fact making a grand profit off of their unethical behaviors. They have little to no regard for who or that which they harm. It is my goal to bring the attention to the disgustingly low standard of business ethics in hopes that many, if not few, will raise their voices and no longer stand by and allow the American public to be ruled and stepped on by the strong and elite of many Fortune 500 companies that seem to have no limits.
Because these are economically challenging times, we as a society tend to more easily accept an attitude of ‘do what you can to survive’. This holds especially true among many Fortune 500 companies who appear to be getting away with exceedingly unethical behaviors for the sake of making a greater profit. Although society has the tools and the knowledge to address these issues, the greater population of the American public seems to turn an ignorant cheek. I believe that over several decades we have seen, addressed, allowed and finally accepted and now expect a lower standard of ethical business practices.
Through careful examination and analysis of three public incidents involving three of the most exemplary Fortune 500 companies we see a disturbingly low level of ethical behavior. The three incidents to be examined are as follows: 1978-Ford in the Ford Pinto scandal, 1993-McDonalds in the McDonalds vs. Stella Liebeck case and 2010-BP in the Gulf of Mexico oil spill.
In each of these three very publically scrutinized incidents we see examples of how successful companies have thrived while taking advantage of and sometimes even harming the average American. Unfortunately, it is my argument that the national acceptance of a disgustingly low standard of ethics has made these incidents not only tolerable, but somewhat forgivable. These three companies have not only survived what should have been the public’s wrath but have continued to grow and become increasingly successful. Two striking problems lie within this statement: 1) the cultural norm for American businesses allows for absurd business ethics and 2) it is the American public who allows for this kind of behavior. We have done nothing to stop it but have actually hindered those who have tried to put an end to it.
Legendary philosophers such as John Stuart Mill and Immanuel Kant address the issue of business ethics and attempt to make sense on a universal level of understanding. Kant defines ethics as, “the end is only just if the means are as well”. Therefore, Kant argues that an ethical business can only be ethical if they are consistent with the practices and beliefs. If a business or company is ethical in all of its doings than it will be ethical in its overall business and reputation, according to Kant. Mill supports this argument but presents a different definition. His argument of utilitarianism supports the belief that all things should act in accordance to providing the greatest good for the greatest amount of people. He states, “The creed which accepts as the foundation of morals, Utility, or the Greatest Happiness Principle, holds that actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness. By happiness is intended pleasure, and the absence of pain; by unhappiness, pain, and the privation of pleasure” (Mill, 43). It is through these two philosophers and a few others like them with supporting and contradicting beliefs that I plan to realize the meaning of proper ethics and hope to thereafter analyze the level of ethics at which we as a culture are practicing and accepting.
Review of Literature
The following is an edited and shortened version of the completed research that has been focused primarily on the businesses Ford and BP. Continued research on these companies along with the third company being McDonalds and the philosophical approach to the entire project along with its counterarguments will surely follow as this project continues on its schedule of completion.
On August 10,
Dowie first addresses the issue of safety that Ford failed to consider while producing the Pinto. The typical accident case involving the Pinto shows that any Pinto that is rear-ended by any vehicle going roughly
Due to stiff competition in the subcompact automobile market, Ford decided to rush production from the normal time expectancy of 43 months to a mere 25 months, practically cutting production time in half. In the process, many crucial steps were jumbled, such as the position and placement of the gas tank. Despite the common knowledge of the faulty production, the dangerous Pinto was released to the public in August of 1970; Ford would fight its revision for years to come.
For over eight years, Ford successfully deterred regulators from changing the safety laws that would force them to adapt their Pinto. Federal Motor Vehicle Safety Standard 301 was developed in 1968 yet not implemented until 1977, thanks to Ford Motor Company. This new law called for stricter rear-end provisions; demanding that all cars be able to withstand a fixed barrier impact of
Ford is most notorious for their cost/benefit analysis that leaked to the public. Cost-Benefit analysis was used to show that if the cost was greater than the benefit was, therefore the project would not be worth it– no matter what the benefit was. This analysis method was rarely used until President Kennedy appointed Ford Motor Company President Robert McNamara to be Secretary of Defense. In this particular document Ford literally chose profit over the consumer’s life; pricing a human life at a mere $200,000 vs. the $11 per car that it would take to fix the Pinto. The total value for a human life was determined by totaling factors such as: future productivity losses ($173,300), medical costs ($1,025), insurance administration ($4,700), legal and court ($3,000) and property damage ($1,500) etc. They gave $10,000 for a victim’s pain and suffering although no one in NHTSA or Ford was able to explain to Dowie how that figure was calculated (Newton, Englehardt, and Pritchard 273). The following is an excerpt detailing the breakdown of the cost/benefit analysis:
Similarly to the Ford Pinto scandal, BP found themselves in a horrible mess with the entire world’s eyes pinned on them. On April 20, 2010 an oil-well owned by BP America known as the Deepwater Horizon rig exploded, leaking millions of gallons of oil into the ocean water in the Gulf of Mexico. The cement casing was cracked and completely dysfunctional and the blowout preventer, which is supposed to be last effort to prevent any sort complications, failed miserably to prevent the disaster from happening. The explosion killed 11 rig workers and injured 17 others. According to the government’s most recent estimate, after leaking for 87 days at a rate of an estimated 1 million gallons of oil per day, the spill produced an estimated total of 185 million gallons of crude oil, making this the world’s largest accidental oil spill in all of history (Shapley 2-3). “Hundreds of miles of shoreline are oiled; tens of thousands of square miles of Gulf waters remain closed to fishing; thousands of birds, fish, turtles and marine mammals have died, millions of gallons of chemical dispersant were used deep underwater, and the ecosystem could remain contaminated in unpredictable ways for years or decades to come” (Shapley 2-3).
Weeks after the explosion, senate hearings tried three of the companies involved, BP, Halliburton and Transocean and concluded with the three executives from the principal companies working on the well, all blaming each other. Soon after the hearings, headlines began to read, “BP knew of problems hours before blast” and then read “BP knew of problems weeks before blast” and finally “BP knew 11 months before blast”. In an article featured in the New York Times, titled Documents Show Early Worries about Rig, the author provides BP’s internal documents which point the blame directly at BP. Similarly to Ford’s case, inside documentation leaked out to the public compromising their own company. These documents revealed there was initial concern with the well-casing and the blowout preventer as far back as eleven months ago (Urbina 1-3).
Internal documents show that BP had an option of which casing to use on the well. The following table approved on November 14, 2008 shows that BP chose the riskier casing partly due to financial reasons:
Table 1-2 (Wild)
As previously stated, internal documents released to investigators have shown that BP clearly knew of problems well before the explosion occurred. Yet, further investigation reveals an even more astonishing fact; this has happened before with BP. BP’s internal documents combined with a collection of witnesses at separate trials and hearings testify of the company’s willingness to cut corners right before the explosion occurred (Urbina 2-4).
Six years ago, in March of 2005, BP’s Texas City Refinery caught fire. In this explosion 15 workers died, 170 employees and nearby residents were injured and buildings within a
The document concludes asking “Which type of house should the piggy build?” Yet it answers its own question with the note “optimal” hand-written next to the option that provides adequate shelter but not blast-resistant, again BP chooses the more risky and again it doesn’t pay off. The BP document was compiled in October 2002 and titled Cost benefit analysis of three little pigs (Outzen 1-3). The document can be seen here:
The third company I will be examining is McDonalds, specifically in the Liebeck v. McDonald’s Restaurants case. The actual case has been closed for several years now. Yet, despite explicit publicity during the time of its trial, the facts of this case are still very much unknown to the American public today.
Stella Liebeck, a 79-year-old woman, was riding in the passenger seat of her nephew’s car when he pulled into a McDonald’s drive-thru-window. He ordered coffee for Liebeck and handed it to her while he paid the cashier. Immediately following, Liebeck’s nephew pulled into a parking stall so that Liebeck could pour cream and sugar into her coffee. When removing the lid from the cup, the hot coffee spilled into her lap causing severe third degree burns on her upper thighs, groin and buttocks.
Liebeck spent eight days in the hospital and underwent multiple skin-grafting procedures and debridement treatments. She was disabled for another two years after the incident. Liebeck originally asked McDonald’s to compensate her medical bills and suffering at a total of $11,000. When they declined she hired a lawyer who then asked for $90,000, to which McDonald’s offered to pay $800. She dismissed their offer and soon thereafter filed for suit. Horrific photographs of Liebeck’s injuries helped jurors understand how serious the problem actually was.
At the time of the case, most of America sided with McDonald’s. The nation was outraged by the jury’s decision to award Lieback 2.7 million dollars, which was later reduced to $640,000. The media portrayed Stella Liebeck to be ignorant and greedy as she received her award for ‘faulty’ coffee when she herself was so obviously at blame for spilling the coffee in the first place. In the eyes of the nation, the case became a prime example of a frivolous lawsuit. An active petition against frivolous lawsuits arose and a serious consideration for tort reform began. The case became the source of many jokes around the country, despite the lack of full and accurate knowledge about the case.
Sometime during the seven-day-long trial, McDonald’s revealed paperwork which indicated they were aware of at least 700 other burn injuries due to McDonald’s hot coffee. From 1982 to 1992 McDonald’s had already paid roughly $500,000 to burn victims and no known efforts to make any changes in their coffee-preparation procedure. Their quality assurance manager testified of a strictly enforced policy that requires coffee to be served at 185 degrees. They do this because market research has shown that sales decrease as the temperature of coffee decreases. Customers want their coffee hot because when coffee is prepared at near-boiling temperatures it reaches its optimal taste.
The number of burn victims compared to the billion cups of coffee sold every day was inadequate. Controversy stemmed over whether or not it was McDonald’s ethical duty to warn unsuspecting customers or change their coffee temperatures and risk a major decrease in sales. During the trial, McDonald’s expert presented the argument that any liquid substance served at 130 degrees is capable of producing third degree burns, therefore reducing the serving heat from 185 to 165 would make little to no difference in regards to consumer’s safety. Although the jury and trial came to a final conclusion, the Liebeck v. McDonald’s Restaurants is still talked about today. It has become an issue questioning business ethics, consumer rights, and frivolous lawsuits to which many would argue Liebeck justly received her claim, while others would say the opposite.
II. Philosophical Definition of Business Ethics
A. John Stuart Mill
a. Business Ethics
B. 2nd Philosopher’s definition of business ethics
III. The Ford Pinto Case-1978
A. Lack of Safety-Ford
B. Denying Responsibility-Ford
C. Internal Documents-Ford
a. Table 1-1
D. Final Verdict- Ford
IV. Stella Liebeck vs. McDonald’s- 1993
A. Lack of Safety- McDonald’s
B. Denying Responsibility- McDonald’s
C. Internal Documents- McDonald’s
D. Final Verdict- McDonald’s
V. BP Oil Spill- 2010
A. Denying Responsibility- BP
B. Lack of Safety- BP
a. Table 1-2
C. Internal Documents- BP
a. Table 1-3
D. Final Verdict- BP
VI. Results from Utah Valley small business surveys
A. Comparison with national statistics
B. Analysis of nationally conducted survey done by Scott J. Vitell
VII. Analysis and Review
Schedule of Completion:
· April 25th- May 9th: Complete reading all relevant Business Ethics Journal articles and work with Elaine for a more guided and focused philosophical approach
· May 9th– May 18th: Complete first draft of business literature review
· May 18th- May 27th: Complete first draft of philosophical literature review
· May 27th- June 2nd: Integrate the two drafts to form the majority of the project
· June 2nd – June 5th: Complete the survey and then conduct randomized Utah Valley small businesses’ surveys
· June 5th-June 8th: Analyze survey results, sort into applicable information
· June 9th- June 15th: Complete first draft and submit to writing center/advisors/scholarly peers for feedback, editing and revisions
· June 16th– June 21st- Revise, work with writing center/advisors/ scholarly peers for editing
· June 21st- Complete final version
· June 21st-June 24th: Defend thesis
Aasland, Dag G. "On the Ethics behind "Business Ethics"." Journal of Business Ethics. 53.1 (2004): 3-8. Print.
· This article defines the ethics that support business ethics. Lead by the views of Emmanuel Levinas, it establishes that business ethics are built upon responsibility and go much further than that. The article shows a view that ethics is not rational nor logical, but personal.
Ahmed, Mohamed, Kung Young Chung, and John W. Eichenseher. "Business Student's Perception of Ethics and Moral Judgment: A Cross-Cultural Study." Journal of Business Ethics. 43.2 (2003): 89-102. Print.
· This article will be extremely useful in the portion that analyzes what business ethics is and in the study detailing business ethics in the nation as well as Utah Valley; it discusses whether or not business ethics is teachable. It also shows how a more global business world has modified and confused the standards of ‘business ethics’.
Asgary, Nader, and Mark C. Mitschow. "Toward a Model for International Business Ethics." Journal of Business Ethics. 36.3 (2002): 239-246. Print.
· This paper shows how the integration of many multinational companies has altered business ethics. Until recently, there were few companies that were truly labeled as multinational. Therefore there has been a huge lack of focus on what constitutes as ethical business practices. This paper offers a suggested code of ethics for multinational companies.
"BP Returns to Profit in Third Quarter with Strong Operating Performance ." BP. BP, 02 Nov. 2010. Web. 5 Dec 2010.
· Information stemming from this website will go towards the background information of BP’s current standing and progress since the spill.
Cherry, Christopher. "Health Care, Human Worth and the Limits of the Particular." Journal of Medical Ethics 23.5 (1997): 310-314. Web. 15 Feb 2011.
· This article pertains specifically to the question of how much a human life is worth and will be extremely useful will comparing how much Ford valued a human life at.
Chismar, Douglas. "Vice and Virtue in Everyday Business Life." Journal of Business Ethics. 29.2 (2001): 169-176. Print.
· This article is ideal for when I will be preparing the survey; it has given me ideas on what to question people about. Many businesses may not and should not have had experiences similar to McDonald’s, Ford’s and BP’s but they have had basic business meetings, phone calls and decisions to make. Chismar argues that business ethics can be applied in everything a business does, and that is what makes it an ethical business.
Davenport, Coral. "Panel Staff: BP Didn’t Put Profits Over Safety." National Journal (2010): 1-5. Web. 7 Dec 2010.
· This article shows the debate between BP and the disagreeing view that BP chose profits over safety. The conclusion shows that BP did not chose profits over safety. This article will help create a more complete view to my argument as I show the opposing view to help backup my information.
Fisher, Josie. "Social Responsibility and Ethics: Clarifying the Concepts." Journal of Business Ethics. 52.4 (2004): 391-400. Print.
· This article was written by a Business Ethics professor who wanted to clarify the difference between social responsibility and ethics. Her results show there are many inconsistencies in much of the literature that defines the two. This will be important in my first section as I try to create an absolute definition of business ethics.
Gaumnitz, Bruce R., and John C. Lere. "Contents of Codes of Ethics of Professional Business Organizations in the United States ." Journal of Business Ethics. 35.1 (2002): 35-49. Print.
· This article reports the findings of a survey that was conducted for 15 professional business organizations in the United States. It addresses the main issues faced in business ethics and tries to find a common ground among these organizations. I will organizing my study and survey after the model of this one as I examine how businesses react to confidentiality, responsibilities to employers/clients, obligations to the profession, independence and objectivity, and business-specific legal and technical compliance issues.
Hargreaves, Steve. "BP Knew of Problems Hours Before Blast." CNN May 14 2010: 1-4. Print.
· This is a news article that supports my view that BP knew about the dangers and problems their rig had long before the blast went off.
Kline, William. "Business Ethics from the Internal Point of View." Journal of Business Ethics. 64.1 (2006): 57-67. Print.
· This article is important to defend businesses that have been deemed unethical. It attempts to explain and show the internal perspective from the companies and businesses. It argues that the purpose of a business is to provide a good or a service, and therefore they are bound to the business laws but as long as the laws do not hinder their overall purpose.
Kulshreshtha, Praveen. "Business Ethics versus Economic Incentives: "Contemporary Issues and Dilemmas"." Journal of Business Ethics. 60.4 (2005): 393-410. Print.
· This article explores the natural ability of man. It argues that many of us act soletly on our self interest and individual incentives but the difference of ethical motivation is that we let our concern for public interest and others overrule our concern for ourselves.
Maguire, Stephen. "Business Ethics: A Compromise between Politics and Virtue." Journal of Business Ethics. 16.12 (1997): 1411-1418. Print.
· This article combines two theories of business ethics 1- that ethics ought to be tested by theories of distributive justice and 2- we ought to examine the character of individual employees and the responsibilities associated with the roles which these individuals play within organizations in order to reach a more teachable ethics principle.
McQuaid, John. "The Gulf of Mexico Oil Spill: An Accident Waiting to Happen." Yale Environment 360 (2010): 1-7. Web. 5 Dec 2010. http://e360.yale.edu/content/feature.msp?id=2272.
Mill, John Stuart. Utilitarianism. 2nd. Indianapolis: Hackett Publishing Company, 2001. 56. Print.
· This work is really fundamental for my philosophical analysis and will help guide the entire project as I try to compare today’s business ethics to what business ethics “should” be.
Morris, Donald. "Defining a Moral Problem in Business Ethics." Journal of Business Ethics. 49.4 (2004): 347-357. Print.
· This article is important in setting clear definition and limitations to what is a moral dilemma and what is not. It helps set the guidelines not for what is ethical but for what needs ethics.
Newton, Lisa H., Elaine E. Englehardt, and Michael Pritchard. Taking Sides. 11. New York, NY: McGraw Hill, 2010. 263-291. Print.
· It was after reading this book co-written by Professor Elaine Englehardt that I was inspired to focus my thesis project on business ethics. It has stood as a key element in my research and continues to provide me with good insights.
Outzen, Rick. "BP & The Three Little Pigs." Independent News June 3 2010, 29: 1-3. Print.
· This article is the news source that provided me with some of the internal documentation for the argument against BP.
Ritter, Barbara. "Can Business Ethics Be Trained? A Study of the Ethical Decision-Making Process in Business Students." Journal of Business Ethics. 68.2 (2006): 153-164. Print.
· This is a study to measure how well ethics and morals can be taught and how much they are inherent, it is relevant to my study because when I am making suggestions on how to increase ethics in business I will be able to incorporate or exclude suggestions based on their findings.
Sauser, William I. "Ethics in Business: Answering the Call." Journal of Business Ethics. 58.4 (2005): 345-357. Print.
· This article addresses many important topics for discussion on business ethics which include: (a) ethics in business, (b) ethical standards in business settings, (c) the role of law, (d) levels of corporate responsibility, (e) the role of religion in business ethics, (f) the idea of business as a calling in a religious sense, (g) the elements of modern corporate culture, (h) creating an ethical corporate culture, (i) demonstrating corporate social responsibility, and (j) providing servant leadership. The purpose of using this paper with my research is to see the different opinions on these issues. I am specifically looking for an opinion that will contradict with mine so I can use their opinion to create a better argument against theirs.
Schwab, Bernhard. "A Note on Ethics and Strategy: Do Good Ethics Always Make for Good Business?" Strategic Management Journal. 17.6 (1996): 499-500. Print.
· This article argues that there need to be laws that enforce key business ethics, it is not simply enough to enjoy the reputation and the self-interest that comes with practicing good business ethics. This article shows a model of how we would change our world’s business ethics, which is essentially what I am aiming to do.
Shapley, Dan. "So How Big Was the BP Oil Spill?." Daily Green 21 Sep. 2010: 2-3. Print.
Urbina, Ian. "Documents Show Early Worries about Rig." New York Times May 26 2010: 1-3. Print.
Villa, Vittorio. "Legal Theory and Value Judgments." Law and Philosophy. 16.4 (1997): 447-477. Print.
Vitell, Scott J., and Troy Festervand. "Business Ethics: Conflicts, Practices and Beliefs of Industrial Executives." Journal of Business Ethics. 6.2 (1987): 111-122. Print.
· This paper shows how to set up the business survey. I will be doing a smaller version of this exact survey except with a few individual additions, special to the location. This paper shows the results of a mail survey responded to by 118 executives. They identified their business ethical beliefs and said how they would respond in different ethical situations.
Vitell, Scott J., Erin Baca Dickerson, and Troy A. Festervand. "Ethical Problems, Conflicts and Beliefs of Small Business Professionals." Journal of Business Ethics. 28.1 (2000): 15-24. Print.
· This paper greatly relates to how I will be focusing on small businesses in Utah. This paper presents the results of a national study of the beliefs and perceptions of small business professionals concerning ethics within their company and business in general. The results support my argument as they found that most business professionals studied believe that business ethics are much lower than they were 10 to 20 years ago.
Wild, Matthew. "Peak oil means deepwater drilling is business as usual." Peak Generation. Peak Generation Oil Co., June 04 2010. Web. 5 Dec 2010.
Zeitvogel, Karin. “BP did not put profit before safety on Gulf well: probe.” Physorg (2010): 1-4 Web. 6 Dec 2010. http://www.physorg.com/news/2010-11-bp-profit-safety-gulf-probe.html.
Friday, March 11
But anyways, I have decided to focus my project around the Ford Pinto Scandal, The McDonald's vs Stella Liebeck Case and the BP Oil Spill from last year. I have been fortunate to already find copies of or articles on the internal documents for all three companies. These documents all incriminate these companies as being 'aware yet inactive' in preventing any of the tragedies that have come to be because of their active decision to not make the NEEDED change. For example: Studying this article in my business ethics course last semester first got me interested in this topic. Ford knew about their faulty gas tanks yet chose to continue selling them even though they knew that the possibility for fatality due to crash induced fires was extremely high. BP purchased the less expensive and much riskier casing for the oil rig-- which as we all know resulted in malfunction and explosion. And finally, I was inspired to add McDonalds to my list of companies to take down after seeing this film at the Sundance Film Festival and realizing that the lady who spilled hot coffee on herself actually withstood horrific burns and was only one of a documented 700 customers who been severely burned by their coffee. So basically, this is the angle I will be taking on this project, that companies across this nation continually chose profit over safety, human life and well being. Here are pictures of the Ford Pinto after a crash, the Deep Horizon oil rig explosion and Stella Liebeck's burnsThat covers it for my business aspect but I plan on incorporating a philosophical perspective on how myself and actual philosophers think business ethics should be handled. I met with one of philosophy professors yesterday about getting suggestions on which philosophers would be most relevant to my study. He suggested Plato, in particular, The Republic, which I have read but it's been a couple years so I will obviously need to reread it with a new purpose. I have also contacted another professor who agreed to help me last semester and am hopeful that I will visit with her next week before the break and rack her brain for suggestions and a little more guidance.
Lastly, I am excited about this project but I feel a little bit stuck because it seems like everyone else is doing a project that seems to be more active than writing a research paper. I've said this before, but I don't want this project just to be a research paper. I want to make a difference with it, but I am not quite sure how. After I research the current laws and policies about required business ethics I might be able to propose a new needed law, but I'm pretty sure as an undergraduate I don't have the qualifications to write a new law for the state of Utah...? Scott? Mark? Who knows? :) I've also considered leading a rally against companies such as Ford or McDonalds but I don't want this project to end with me behind bars. I've seriously considering conducting a survey of 50-100 local businesses on their ethical policies but once I have that information I am unsure of where to go from there. I know we are past the suggestions for our project stage but I am still working a lot of kinks out.
I am headed to the library now to see if I can scan in my internal documents and find some actual material that focuses not only on business ethics but the concept of how much a human life is worth and whether or not we can place a value on it.