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Ethical Issues

Read case study and answer all the question in a report format as described below

Michael Vasquez was proud of his job as a new product manager for a technology start-up, and he loved the challenges, risks and tough decisions that went along with the job. But as he sat in his office after a long day, he was troubled, struggling over what had happened earlier that day and the information he now knows.

Just before lunch, Michael's boss had handed him a pile of private strategic documents from their closest competitor. It was a competitive intelligence gold mine product plans, pricing strategies, partnership agreements and other documents, most clearly marked private and confidential. When Michael asked where the documents came from, his boss told him with a touch of pride that he had taken them right off the competing firm's server. I got into a private section of their intranet and downloaded everything that looked interesting, he said. Later, realising Michael was suspicious, the boss would say only that he had obtained electronic access via a colleague and had not personally broken any passwords. Maybe not, Michael thought to himself, but this situation wouldn't pass the 60 Minutes test. If word of this acquisition of a competitor's confidential data ever got out to the press, the company's reputation would be ruined.

Michael didn't feel good about using these materials. He spent the afternoon searching for answers to his dilemma, but found no clear company policies or regulations that offered any guidance. His sense of fair play told him that to use the information was unethical, if not downright illegal. What bothered him even more was the knowledge that this kind of thing might happen again. Using this confidential information would certainly give him and his company a competitive advantage, but Michael wasn't sure he wanted to work for a firm that would stoop to such tactics.

Sources: Adapted from Weber, Kent (January February 2001). Gold Mine or Fool's Gold? Business Ethics, 18.

What is the ethical issue in this scenario?


What should Michael do? Justify your answer using at least two ethical theories.


Do you perceive Michael's boss to be ethical or unethical? Explain your answer in detail


Should Michael blow the whistle? Define whistleblowing. Explain what motivates whistle-blowers and under what circumstances whistleblowing is justified?


Based on the case study, provide four reasons why ethics is relevant to business?

Ethical Issues

On daily basis, people have to face a number of ethical issues, where a choice has to be made between two alternatives, where the right decision has to be made instead of the wrong one, even when the wrong decision is an easier and more profitable decision. Ethics are the codes which govern the behavior and the decisions which are taken by the individuals, on the basis of the values and the level of moral which they follow. The ethical decision is made on the basis of trust and integrity and includes complex issues like compliance, diversity and governance.

In the sphere of business, several times such ethical decisions are raised, which has to be resolved, keeping in mind the ethical integrity. In the following parts, the given case study has been evaluated on the basis of business ethics.

The major ethical issue in this case relates to the improper mode in which the data of a competitive company was attained, along with the motives for attaining the same. Competitive intelligence spying is considered as an unethical way of attaining the material information of another company so as to attain the benefit for own company (Garfunkel, 2014). The reason why the competitive intelligence spying is considered as unethical relates to the fact that the information which is attained of the competitive company is the private and the confidential information of a company, which if misused, can wreak havoc over the competitive company, and can result in huge profits for the company which misuses such data. The other reason why such behavior is considered as unethical stems from the fact that the information is attained in a manner which is unlawful, and even when the same is lawful, it is unethical, as it only follows the letter of the law, instead of its spirit (Ferrell, Fraedrich and Ferrell, 2016).

In the given case study, Michael’s boss attained the competitive intelligence by hacking the private intranet of the competitive company, which was unlawful. Also, the later statement by the boss in this regard highlights the unethical manner in which the information was obtained. This information was attained for the personal benefit of the company. Due to these reasons, an ethical issue was raised in this case with regards to competitive intelligence spying (Daft and Samson, 2014).

In this case, Michael should follow the steps as are governed through theories of virtue ethics and utilitarianism. As per the virtue ethics, the virtue of an individual, i.e., the mind and character of an individual should dictate the decisions undertaken by the individuals. In this theory, the nature, along with the definitions of the virtues is discussed.  This theory presents that when an individual shows courage, justice, temperance and honesty, the good character of a person is expressed (Winter, 2011). In the given case study, Michael should act on the basis of virtue ethics. In other words, he should uphold the virtues like honesty, fairness, justness, and courage in the steps which he undertakes. So, instead of using the information which his boss has given him, he should use this information and blow the whistle on his boss. He should honestly show to the world that the information was obtained in an unethical manner and that the sense of justice needs to prevail.

Steps to be taken by Michael

The utilitarianism theory also acts as a guide in this case. As per this theory, the best alternative is such which maximizes the utility or which helps in attaining the benefit of the majority (Bykvist, 2010). Through the adoption of this doctrine, such actions are considered as correct which not only promotes happiness, but spreads the same in the greatest numbers. Under this theory, happiness and pleasure have been given the essential values. So, a true utilitarian would undertake such actions which keep the happiness of everyone as their key aim, instead of striving for the happiness of a particular group of a particular person (Santa Carla University, 2014). In the given case study, Michael needs to be a true utilitarian and keep the happiness of everyone supreme in comparison to the happiness of the company in which he works or that of his boss. And as a result of this theory, he is obligated to stop his boss from misusing the confidential information of the other company as the same focuses on the benefits of his company, instead of the world.

It is very clear from the acts which have been undertaken by Michael’s boss that he was indulged in unethical conduct. This is evidenced from the fact that he took the sensitive information of his competing company and gave it to Michael to be used for the benefit of his own company. Not only he stole the information of his competitors, he also wanted it to be used for the company’s benefit and was quite proud of his actions. On the basis of the two ethical theories discussed above, his actions were not based on the happiness of others, but just his personal happiness; and his actions were also not based on virtues or honesty and fairness. Hence, it is clear that the boss of Michael had undertaken unethical conduct, by indulging in corporate espionage.

Whistleblower is a term used to denote such individuals who express the unethical or illegal conduct which is being undertaken by a particular organization by exposing certain information which proves or highlights the unethical conduct undertaken by the organization, in front of the whole world. A number of laws have been formed for the protection of whistleblowers so that the individual blowing the whistle can be safeguarded from any kind of harassment or discrimination. So, a whistleblower cannot be kicked out of the job, nor another company can deny them job due to the reasons that they have been whistleblower in the past (Brown, 2008).

Michael’s Boss: Unethical

The moral reasons are behind the motivation of the whistleblowers more than the monetary reasons (Waytz, 2016). The government officials often bring out reward programs so that the unlawful activities can be brought to the notice of the government. Though, the studies suggest that the whistleblowers are motivated by the physical wellbeing of the public, instead of the financial gains (Alejandro, 2016). Whistleblowers are the individuals who keep the ethical theories supreme and give them more weight age than the financial incentives given by the government. The ethical people are the ones who blow the whistle over the corrupt or unlawful activities undertaken by the organizations of which they are a part (Alfred, 2016).

Whistle blowing is justified only when certain specific conditions are fulfilled. Before an accusation is made, it is crucial that the whistleblower ensures that his claims are indeed legitimate. There also has to be a right motive behind blowing the whistle. So, in case the whistle is being blown just because the employee had a grudge with his employer, the whistle blowing in such case would not be justified. The objective of whistle blowing has to be bringing such actions to an end which harms the others; and not to harm the employer just because the employee is unhappy (Shaw, 2013).

Whistle blowing is no playful matter; it is a crucial and serious matter and has significant repercussions. Hence, whistle blowing has to be undertaken only after all of the other alternatives have been exhausted by the whistle blower. So, initially, the whistleblower should make an attempt to settle the matter within the company, by talking to his superiors or the department of human resource. Only when no results are attained from these sources, should the whistleblower opt for blowing the whistle. Even though a range of safeguards have been presented for the whistleblowers, they have to face the adversities. And hence, the individual should blow the whistle only when they are ready to make personal sacrifices (Vaughn, 2012).  

There are a number of reasons for the relevancy of ethics in any business. When an organization is known as being ethical, instead of being indulged in ethical practices, it is able to attract more customers, investors, and employees. So, by being ethical a company is able to attract the consumers towards its products, which helps the businesses in boosting their profits and sales. More employees want to continue to be associated with such a business which is ethical, which helps in reducing the labor turnover, which again translates into the productivity being increased. Not only the company is able to retain its staff, it also attracts more employees who want to be associated with the company, which results in the costs of recruitment being reduced and helps the company in getting the most talented employees (ACCA, 2014).

Michael as a Whistleblower

Apart from this, an ethical company is able to attract more and more investors which helps in the share prices of the company being high, which can act as a protection for the business from being taken over. When a company is famous for being ethical, the regulatory bodies and the government do not keep a stern eye on their activities, as is done for such companies which are regularly indulged in unethical conduct. So the company is less likely to be fined for poor behavior and instead could act as a market leader in undertaking ethical practices. This in turn results in the reputation and goodwill of the company being boasted, which a crucial asset for any business. Once the reputation of the business is charred, it becomes difficult for it to be managed. So, ethics are crucial for any business and this is not for a single but numerous reasons. An ethical company not only has goodwill in the industry, but also can increase its sales and walk on the path of constant growth (Minus, 2013).

Conclusion

On the basis of the discussion carried above, it is quite clear that Michael faces an ethical dilemma in this case. The actions of his boss are such that they breach the basis of every ethical conduct. His boss had been indulged in corporate espionage and the information obtained from this espionage has been given to Michael to be used for the benefit for the company for which he works. But, the ethical theories of utilitarianism and virtue put an obligation over Michael to refrain the use of such information. Further, he is also required to blow the whistle on his boss, so that his unethical conduct could be properly dealt with. However, before Michael blows the whistle he has to ensure that this is the justified thing to do in this matter and that he has exhausted all of the possible available alternatives, before taking such a big step. The rationale of blowing the whistle on the company and his boss stems from the advantages which an ethical business has, as have been highlighted above.

References

ACCA. (2014) Why is ethics important to business?. [Online] ACCA. Available from: https://blogs.accaglobal.com/2014/11/25/why-is-ethics-important-to-business/ [Accessed on: 01/06/17]

Alejandro, H. (2016) What Motivates a Whistleblower?. [Online] Lexology. Available from: https://www.lexology.com/library/detail.aspx?g=3708e644-10d0-488a-b00a-f8a21f5b2414 [Accessed on: 01/06/17]

Alfred, C.F. (2016) Whistleblowers: Broken Lives and Organizational Power. New York: Cornell University.

Brown, A.J. (2008) Whistleblowing in the Australian Public Sector: Enhancing the Theory and Practice of Internal Witness Management in Public Sector Organisations. Canberra: The Australian National University.

Bykvist, K. (2010) Utilitarianism: A Guide for the Perplexed. London: Bloomsbury Academic.

Daft, R.L. and Samson, D. (2014) Fundamentals of Management: Asia Pacific Edition PDF. 5th ed. South Melbourne: Cengage Learning Australia.

Ferrell, O.C., Fraedrich, J., and Ferrell, L. (2016) Business Ethics: Ethical Decision Making & Cases. 11th ed. Boston, MA: Cengage Learning.

Garfunkel, T. (2014) Is Competitive Intelligence Ethical?. [Online] Digitalist. Available from: https://www.digitalistmag.com/technologies/analytics/2014/11/20/competitive-intelligence-ethical-01792890 [Accessed on: 01/06/17]

Minus, P.M. (2013) The Ethics of Business in a Global Economy. New York: Springer.

Santa Carla University. (2014) Calculating Consequences: The Utilitarian Approach to Ethics. [Online] Santa Carla University. Available from: https://www.scu.edu/ethics/ethics-resources/ethical-decision-making/calculating-consequences-the-utilitarian-approach/ [Accessed on: 01/06/17]

Shaw, W.H. (2013) Business Ethics: A Textbook with Cases. 8th ed. Boston, MA: Cengage Learning.

Vaughn, R.G. (2012) The Successes and Failures of Whistleblower Laws. Northampton, MA: Edward Elgar.

Waytz, A. (2016) Whistleblowers are Motivated by Moral Reasons Above Monetary Ones. [Online] Pro Market. Available from: https://promarket.org/whistleblowers-motivated-moral-reasons-monetary-ones/ [Accessed on: 01/06/17]

Winter, M. (2011) Rethinking Virtue Ethics. New York: Springer.

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