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 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 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.
  
 
 
 Bibliography
 
 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. 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
 
 Please send feedback on this paper to: dsalguer@gwis2.circ.gwu.edu
 
 
 