In US, according to the business ethics framework, the management and the employees of an organization are under statutory obligation to safeguard the assets and other resources of the company from loss and misuse. The management of an organization is responsible for detecting, remedying the issue that may arise within the organization. It must ensure that the company is carrying out its corporate social responsibilities effectively and attaining business objectives (Hartman et al. 2014). An organization must comply with the legislations, regulations and other relevant company policies.
Although vast majority of manager are responsible to run an organization, yet corporate corruption exists in the organization, partly because most of the employees break or twist the ethical rules as their superiors deliberately ignore unethical behaviors and sometimes unknowingly encourage the employees to avoid the same.
In the case of Ford Pinto case, it was revealed that under intense competition from Volkswagen and other small-car manufacturers, Ford rushed into manufacturing the Pinto into production. The Engineers had discovered the potential danger of the crack in the fuel tanks during the pre-production crash tests but the company leaders decided to proceed, as the assembly line was ready. The company decided to pay for the lawsuits, as its expenses are less than the expenses of the repairs.
The company did not consider safety as an important condition instead it laid more emphasis on the cost benefit analysis of the company (Rubin, 2014). According to the ‘who-how’ framework of business ethics, corporate social responsibility is fundamental for any organization to function smoothly. The management of any organization must maintain health and safety in the workplace and the corporate social responsibility of any organization to ensure that the business operation of any organization ensures healthy and a safe environment as well. CSR of an organization requires its managers to prevent and remedy any problem detected by them that might have an adverse effect not only on the employees and the company but also on the environment (Ferrell & Fraedrich, 2015).
The ethical business framework requires that an organization must be a responsible corporate citizen and it is expected from the organization to carry out its responsibilities towards the community effectively (Crane & Matten, 2016). The organization must be committed to safeguard the environment in which it operates its business by reducing the impact of their activities on air, water and land. Further, an organization must perform its operations in accordance with the legal and ethical framework irrespective of any fierce competition.
In the Ford Pinto’s case, the decision to forego the repairing of the defective design was unethical, as the company has considered the stiff competition from Volkswagen and the profit margin of the company. The company failed to comply with the CSR as well which mandates that any organization must ensure that its business operation must not affect the environment and the community within which it is operating its business. Further, despite being aware of the defect in the fuel tank of the car, it did not redesign it. The company should have at least redesigned the car after it caused death and injuries to numerous consumers; however, it decided to pay for the lawsuits, as it was cheaper than the repairing costs. Thus, it failed to act according to the business ethical framework.
Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.
Hartman, L. P., DesJardins, J. R., MacDonald, C., & Hartman, L. P. (2014). Business ethics: Decision making for personal integrity and social responsibility. New York: McGraw-Hill.
Rubin, G. D. (2014). Does the Fact the Financial Sector is Heavily Regulated Leave Any Place for Ethics?. Institute of Business Ethics.