Download This paper utilises lines of ethical argumentation to

This paper utilises lines of ethical argumentation to analyse the ethical dilemma
facing an operations director regarding manufacturing arrangements in an
international supply chain (Crane & Matten, 2004). While specific in nature, the case
study highlights the ethical dilemmas faced by businesses in an increasingly
globalised world and how best to overcome those challenges. Modes of ethical
reasoning are analysed to determine what the operations director should do but the
complexities of ethics in business limits the validity of choosing one best solution.
The paper asserts that a solution can be found, but it is dependent on the individual’s
personal development and organisational and situational variables.
Introduction
Business ethics may be defined as: ‘the study of business situations, activities and
decisions where issues of right and wrong are addressed’ (Crane & Matten, 2004:8),
with these issues of right and wrong addressed in the moral sense. Ethics is a
profoundly human concept with its basis in reasoning and agency, the capacity for
human beings to make choices. The globalised nature of business creates much
uncertainty and this in turn leads to ethical issues. This uncertainty is accentuated by
the constant desire to create products at a cheaper rate and make them available to
a wider market (Steiner & Steiner, 2005). In today’s globalised world, managerial
decisions have consequences for many members of society. People’s lives and
welfare may be radically changed by a decision made by a manager, based on their
moral agency. Therefore, business ethics is a very important subject. When one
considers the recent wikileaks scandal or the older Enron and Arthur Andersen
cases it further strengthens the importance of and the need for business ethics.
In moving forward with this question, I will firstly address the ethical dilemma that
was presented in class and upon which this question focuses. I will then look at
different ethical theories and critically explore how they may help the manager
resolve his dilemma. Finally I will conduct an analysis into ethics at the individual,
situational and organisational level and how they shape decisions in light of ethical
issues.
The Ethical Dilemma
The case in question is an intriguing one which represents the nature of ethical
concerns faced by managers in this increasingly globalised world we live in. An
operations manager of a chocolate company that sells accompanying toys has
discovered a cheaper source of supply in the form of a Thai supplier. The deal is
favourable for the manager as this deal is a third of the cost of his current
Portuguese supplier but the quality is consistent. This desire to find cheaper sources
of supply is undoubtedly one of his main job characteristics. He travels to Thailand
and doesn’t see the standard workshop that he has come to expect from experience.
Instead, there was a line of 30 men who took away large boxes of small toy parts to
their homes. The manager visited one of the houses and it was there that he
encountered an entire family working together to assemble the toys. The family of
eight, two parents and six children between the ages of 5 and 14 all looked content
in his opinion. A day’s work would finish around 8pm and the toys that were
completed would be boxed and prepared to be dispatched to the factory. While this
experience was different to the product manager’s previous encounters with a supply
chain, his Thai counterpart assures him that this way of arrangement is quite
common in Thailand and with that knowledge he leaves the workshop happy to put
through the deal and quietly confident in making personal gain from the transaction.
It is only when he is buying souvenirs for his nieces on the way home that the gravity
of the situation hits him. He wonders what if the roles were reversed and it was his
own young family members who were subjected to work long hours and be deprived
an education. This leads him to question the ethics of this decision (Crane & Matten,
2004).
When one considers the situation it is difficult to pick the most ethical outcome
instantly as both aspects come with their merits and criticisms. The fact that the
method of supply is common to Thai culture and the children seemed happy would
suggest the product manager should use the Thai supplier. However, when one
imposes Western norms upon them, the entrapment of children into work is most
definitely unethical. This one small example shows how difficult some situations are
to deal with for managers as there is no right or wrong answer and no set of rules
that can be universally followed.
Virtue Ethics
The first ethical theory I will look at is virtue ethics. This is a principle based
perspective which is not affected by outside influences. Virtues may be described as
‘means’ which are attributes that help the individual to lead a good life (Fisher &
Lovell, 2009). It is believed that those with virtuous character can take morally
correct actions. Aristotle is considered to be the founding father of virtue ethics. He
was a philosopher who lived in Greece between 384 and 322 BC (Fisher & Lovell,
2009). The individual is at the focus of Aristotle’s theory but importantly, the
individual within the societal context. In Ancient Greece, the view of one’s self
perceived by peers was critical to happiness and explains why such virtuous
characteristics were desired by the people of that time.
Virtue ethics is not a rule based theory but a theory based on possessing certain
characteristics that would enable a person to carry out moral and correct
judgements. Wisdom, courage, self-control and justice were the virtuous
characteristics according to Plato. Aristotle reinforced those virtues with truthfulness,
patience, amiability, liberality and magnanimity, which means one who possesses
self-control and pride (Fisher & Lovell, 2009). It is worth noting that Thomas Aquinas
believed justice to be a global virtue needed to harmonise the insatiable commercial
side and the social side of the world (Dierksmeir & Celano, 2012). Justice and
temperance were central to Aristotle’s ethical thinking also (Audi, 2012).
Virtue ethics is based upon one possessing virtuous traits and is subjective so it is
hard to analyse the ethical dilemma in question accurately. Added to this, virtue
ethics does not automatically classify child labour as unethical as a virtue would
need to exist that explicitly referenced the rights of the child to make the correct and
virtuous decision (Fisher & Lovell, 2009).
‘What would a virtuous person do in this situation?’ is a good question to ask in any
given situation. A virtuous manager may look favourably upon choosing the Thai
family as it would provide them with employment and remuneration. He may also
consider that in many ways, the children’s lives may be better and happier in the
safe and secure environment the familial home represents. Conversely, the manager
may contend that the children should be entitled to their right to education and
choose a different supplier as a result. Virtue ethics have a role to play in business;
however there is no right or wrong answer as the manager’s dilemma shows.
Instead, the decision maker must make an ethical judgement based on knowledge
and experience acquired over time (Crane & Matten, 2004).
Consequentialist Ethics
Egoism is a philosophical idea that dates back to the time of Plato and focuses on
what outcomes behold the decision maker in ethical dilemmas. With egoism, an act
may be deemed morally right if man is freely able to pursue desires and self-interest.
This is grounded in the belief that for an individual to lead a good life they should
follow their self-interest. Adam Smith’s ‘Invisible Hand’ is an example of egoism
which leads to a morally right outcome in the marketplace. Beauchamp and Bowie
have described Smith’s theory as ‘egoist practice for utilitarian results’ (Crane &
Matten, 2004) meaning that decision makers pursuing their own interest can lead to
greater social welfare, according to Smith. An enlightened egoist approach is a
deviation from the standard egoist theory in that it discerns a person’s self-interest
and desires should be measured against an objective value (Crane & Matten, 2004).
Two people may follow their own self-interest but one could be considered better or
more morally correct.
When we apply this enlightened egoist approach to this dilemma we consider that
the manager, the Thai supplier and even the parents of the children are able to
pursue the deal to be arranged to fulfil their own self interests. The children in the
example could perceive their reality as being normal and happy and in this sense it is
morally right. Where it becomes immoral however, is when one considers that the
cost of using the children as part of the supply chain is the rejection of the child’s
right to pursue their own self-interest and attain an education.
Egoist ethics is a weak theory as it works on the basis that one’s pursuit of their own
interests does not impact negatively on another’s (Crane & Matten, 2004). As many
examples from the business world would prove, this is nigh on impossible.
Utilitarianism dates its origin back to 19th Century social theorists Jeremy Bentham
and J.S Mill. It contends that an action may be deemed morally right if it results in the
greatest amount of happiness, or utility for the greatest amount of people (Crane &
Matten, 2004). Bentham considers utility to be the greatest goal for an individual in
life. Utility is an important tool as it is also used when referring to economics.
Utilitarianism is different to egoist ethics as it not only focuses on the individual but
also the notion of collective welfare. It is due to this that it is known as a
consequential principle as it focuses on the outcomes and consequences of one’s
actions. It is a desirable theory as it entices the decision-maker to reflect upon the
potential outcomes of each agent in the situation and not to become motivated by
self-interest. In the theory, man is seen as a hedonist- one who maximises pleasure
and minimises pain. A happiness and unhappiness view of utility is known as a
eudemonistic view (Crane & Matten, 2004).
Utilitarian view of ethics comes close to establishing a cost-benefit analysis as it is
necessary to assign utility to each individual and consequence involved in a certain
situation to ascertain which decision is morally correct. Crane and Matten (2004)
apply this theory to the manager’s dilemma with the use of a ‘balance sheet’, a list of
the potential incidences of pleasure and pain. Through this analysis, the correct
decision is for the manager to choose the Thai supplier as the aggregate pleasure
derived from the relationship is higher than the aggregate pain. Not doing the deal
also resulted in a high level of pain based on Crane and Matten’s analysis. This
theory has its flaws which are quite obvious. It is subjective as different people may
have varying opinions on what the consequences of an action may be. It is difficult to
quantify as not all costs can be easily assigned. In this example, the pleasure or pain
experienced by the children is very difficult to quantify whereas the product
manager’s own pleasure or pain could be quantifiable in monetary terms. Another
flaw lies in the principle of the theory, that the greatest good should be achieved for
the greatest amount of people. Under these guidelines, minority groups would suffer
greatly at the hands of wealthy decision makers as the distribution of utility would be
uneven (Crane & Matten, 2004).
The theory has been differentiated to cope with these limitations however. The
analysis of the manager’s dilemma above is an example of act utilitarianism. This is
the estimation of pleasure and pain derived from a single act which is morally
judged. Rule utilitarianism questions whether the principles of an action will induce
pleasure or pain in the long run. Interestingly, while Crane and Matten (2004)
postulate that the dilemma is morally correct under act utilitarianism; a rule
utilitarianism approach would deem it unethical as the underlying notion of child
labour would be detrimental to society in the long run. Rule utilitarianism is especially
beneficial as if a decision was to be made that all incidences of child labour are to be
deemed unethical, it would reduce the number of similar ethical dilemmas that
managers are faced with (Crane & Matten, 2004).
Non-Consequentialist Ethics
Non-consequentialist theories are theories that believe the moral decision should not
be determined by the consequences of an action. Two types of these theories that
have been applied to business ethics is ethics of duties and the ethics of rights and
justice.
The main subscriber of the ethics of duties was the German philosopher, Immanuel
Kant. Kant believed that there were ‘certain eternal, abstract, and unchangeable
principles that humans should apply to all ethical problems’ (Crane & Matten,
2004:86). Kant believed individuals to be rational beings and he cultivated a
framework that could be applied to moral issues regardless of all outside actors or
subjects. He called this the ‘categorical imperative’ and it was made up of three
maxims (Fisher & Lovell, 2009). In short, the maxims focus on the ideas of
consistency, human dignity and universality. These ideas become clearer when they
are applied to the product manager’s ethical dilemma. Under maxim one, the
manager must consider whether his decision could be applied to every incident of
child labour. As he is ill at ease with the situation, he would not want it to become a
universal law so it would be unethical. According to maxim two, a person should be
regarded as an end and not a means only. In this example, it is safe to assume that
the children have not chosen to work and are being used as child labour to satisfy
the ends of another. This would indicate a denial of basic human dignity, and thus
would deem this to be unethical. Finally maxim three is perhaps the most conclusive
of all regarding the manager’s decision. It contends that it is highly unlikely that every
rational being would deem child labour to be ethical; this lack of universality would
surmise that the deal is unethical (Crane & Matten, 2004).
This is quite a complex theory which is difficult to apply to every situation. Kant’s
view that man acts according to self-imposed duties is a bit optimistic and not a true
reflection of the world we live in today (Fisher & Lovell, 2009).
Natural rights may be defined as ‘certain basic, important, inalienable entitlements
that should be respected and protected in every single action’ (Crane and Matten,
2004:89). Rights result in a duty that must be adhered to by others and is an
approach that is similar to Kant’s but does not reply on the use of the ‘categorical
imperative’. The rights approach is seen in the American Constitution and The
United Nations Declaration of Human Rights. Human rights are especially important
as multi-national corporations are judged on the way they respect and acknowledge
rights. This indicates that this form of ethics is very important in our globalised world.
Using human rights the answer to the product manager’s dilemma is obvious. A child
has the right to education and freedom of consent and both of these rights are
eliminated in the manager’s decision. The uneven distribution of wealth that would
arise from the deal would also be a rights issue.
Justice may be described as the fair treatment of all individuals in any given situation
to ensure everyone gets what they deserve (Crane & Matten, 2004). Aquinas argues
that this fair treatment ought to be a habit and delivered with prudence to overcome
ethical parochialism (Dierksmeier & Celano, 2012). John Rawls states that for justice
to occur, the least-well off in society should benefit the most from socio-economic
situations, justice must be fair in other words. In the manager’s ethical dilemma the
question is asked whether each individual involved has some liberty. The major
issue is that the children are missing out an education and thus this deal would not
benefit the least well-off in the situation.
Discourse Ethics
Finally, discourse ethics when applied to the manager’s dilemma would suggest
rational dialogue between all those involved in the situation should take place to
create norms through which future decisions could be made. Dialogue between all
concerned would perhaps be the best and fairest way to settle the decision in the
interest of all parties. This is a view supported by Jurgen Habermas on the basis that
no pressure is applied to any party (Fisher & Lovell, 2009).
Organisational, situational and Individual Variables
Ethics at an organisational level is of great importance. Organisations should look
past their economic role and recognise their role as ‘agents of change’ (Svensson &
Wood, 2008). The Enron case shows how an organisation can become infiltrated by
unethical practices at a senior level which reverberates through the organisation.
Linde’s (1993) statement that individuals use socially-extant cognitive systems to
structure their meaning is enhanced by Crane and Matten (2012) who state that a
person’s decision making is affected by their cognitive moral development stage.
They go on to state that a person’s cognitive thinking is affected by individual and
situational factors that shape a person’s decision when faced with an ethical
dilemma. Situational variables may be organisational culture which impacts on an
individual’s response to an ethical dilemma as I alluded to earlier. Factors such as
organisation structure, referent others, obedience to authority, responsibility for
consequences and the existence of codes of ethical conduct would have a grand
effect on an individual’s ethical conduct in the workplace. At an individual level, field
dependence, locus of control and ego strength are the variables which influence
ethical decision making, according to Crane and Matten (2012). A manager who is
field independent may display more consistency between what they believe to be
moral and the action they actually take. The idea of ego strength is that the manager
who possesses high ego strength is more likely to follow their own values and not be
overly influenced by outside variables. Locus of control refers to how much influence
a person believes they have over outcomes. A manager who takes no responsibility
for unethical behaviour is one who’s locus of control is external. Conversely, an
internal locus of control is possessed by a manager who believed that outcomes are
a result of their own actions. Lawrence Kohlberg came up with a theoretical
framework which helps to discern how individuals think about ethical decisions.
There are six development stages and Kohlberg places most adults at stage three or
four (Crane & Matten, 2012). When we relate this to the operations director in the
dilemma, we can only theorise about his moral development stage and his
susceptibility to outside influences. The fact that he has some reservations implies
that he has a moral compass and is aware of the issues with child labour. However,
we remain unaware as to his individual characteristics and to the culture of the
organisation for which he works.
Conclusion
As my analysis shows, ethics has been of concern for thousands of years. Great
thinkers such as Plato and Aristotle placed great emphasis on the importance of
one’s ethical conduct. This importance of ethics persists to contemporary times with
many scandals brought about by ethical misconduct casting a shadow over the
credibility of certain organisations. The case in question highlights the multi-cultural
nature of today’s world. This creates more ethical problems as local traditions, such
as children working from home in Thailand, contradict with Western norms and
create dilemmas that managers are faced with. As my analysis has shown, there are
many individual and situational factors involved in coming to a decision and through
the use of ethical theories it is clear that it is hard to define a right or wrong answer.
One could argue that the ‘Golden Rule’ would be the most ethical route to take in
any given situation, however, such is the complexity of ethical situations one solution
cannot be applied to the masses. While the theories help to breakdown the thought
processes of the manager, we remain unaware of the so-called ethically correct
action. It is this abstraction within ethics that leads to such dilemmas for managers
within the workplace and why there is never an easy answer.
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