Ethics in America II

Classroom Resources > Ethics in America II > 6. Risk, Reward, Responsibility: Ethics in Business

Risk, Reward, Responsibility: Ethics in Business

Should the executives at Casablanca Cruise Lines have asbestos removed from their ships by a company based in the former Soviet republic of Novostan? The cost would be $80 million less than if an American company were used, but Novostani standards of worker safety are far less rigorous. What should executives at MaxiCorp disclose about accidents in cars using their device, which doubles the mileage of cars in which it is installed, when they have no idea whether their device is contributing to the accidents? And what should executives at Wowie Info do when the authoritarian government of Jaigunda demands the name of a Jaigundan customer who has been using Wowie's Internet services to criticize the government? In each case, panelists struggle to make sound business decisions while observing ethical imperatives in the changing global economy.

The numbers are in, and executives at Casablanca Cruise Lines (CCL) discover that the company can save as much as 80 million dollars if asbestos is removed from their ships by a company based in the former Soviet republic of Novastan, rather than by a U.S. company. But the Novastani standards of worker safety are far less rigorous. Does CCL help, or hurt, the Novastani people by bringing them this business—and is that question the company’s concern? Panelists struggle to balance the value of bringing badly needed jobs and money to the workers against the price that these workers may pay in health and safety. Does outsourcing such work to developing countries create a “race to the bottom”? Or are lower, but reasonable, standards and pay a key competitive advantage for people trying to lift themselves out of poverty? As Casablanca executives struggle to reach a decision, it becomes clear exactly how difficult this question is.

While executives at CCL struggle with their old ships, the engineers at MaxiCorp have made a huge and exciting technological breakthrough: a device that can double a car’s mileage. However, despite their best intentions, this company runs up against some uncomfortable risks with its new product, including several accidents involving cars using the device. The family of a person who was killed in one of these accidents now threatens to sue. Eventually a story is written about the accidents and the company’s top people need to make some decisions about how to deal with it. How does the company grapple with the risk its clients may be confronting, especially when the company itself is unsure of the degree of risk? How do we as a society decide what is an acceptable rate of failure with new technologies that bring tremendous benefits?

Lastly, we are in the boardroom of a top Internet company, Wowie Info, where the two founders are deciding on where to bring their information portal next. The company already dominates North America and Europe. They decide to look at the Asian country of Jaigunda. But what happens to the values of a company dedicated to the free flow of information, when it comes to a country with a government hostile to the unfettered exchange of ideas? On the one hand, Wowie Info provides a service that could help this nation close its technological gap, encourage innovation, boost economic growth, and perhaps loosen the authoritarian grip of the government; on the other hand, by refusing to do business with a country that embraces censorship, the company could take a moral stand on freedom of speech. Wowie Info decides to move into Jaigunda, and eventually faces demands by the government to hand over their clients’ names and information. They first demand the name of someone who is selling child pornography. Next, they demand the name of a blogger who is writing about police brutality. Both are crimes in this totalitarian country. What are Wowie’s obligations to its shareholders, employees, customers, suppliers, and the community, and do they change when the nature of the alleged crime changes?

Credits

EXECUTIVE PRODUCER
Richard Kilberg

PRODUCER
Pamela Mason Wagner

WRITER
Carol Shookhoff

SENIOR EDITORIAL DIRECTOR
Ruth Friendly

EXECUTIVE DIRECTOR
Barbara Margolis

BROADCAST PRODUCER/DIRECTOR
Mark Ganguzza

EDITOR
Kerry Soloway

ASSOCIATE PRODUCERS
Joey David
Jason Steneck

PRODUCTION COORDINATOR
Ann Yoo

SCENIC DESIGN
H. Peet Foster

LIGHTING DESIGN
Dan McKenrick

SENIOR AUDIO ENGINEER
Bob Aldridge

ETHICS CONTENT ADVISOR
Lisa H. Newton, Ph.D.

AUDIENCE COORDINATOR
Rachel Ward

SPECIAL THANKS
David Beim
Ronald Berenbeim
Bruce Buchanan
Michael Connor
John Goff
R. Scott Greathead
David Montone
Laura Nash
Lynn Sharp Paine
Sandra Panem
Sandra Pinnavaia
Jane Polin
Peter Ruof
Jeffrey Seglin
S. Prakash Sethi
Allan Sloan
Teresa Tritch

Meet the Participants

Jake Tapper (Moderator)
John Abele
Betsy Atkins
Joanne B. Ciulla
William Donaldson
Ben W. Heineman Jr.
Lewis Kaden

Paul Krugman
Leslie Lowe
William McDonough
Nell Minow
Joe Queenan
Senator Paul Sarbanes
Fred Smith Jr.

Jake Tapper
Senior National Correspondent ABC News

Jake Tapper is an ABC News correspondent based in the network’s Washington, D.C., bureau. He contributes regularly to Good Morning America, Nightline, World News Tonight, and This Week with George Stephanopoulos, as well as ABC News’s digital properties, including ABC News Now and ABCNews.com. Since joining ABC News in July 2003, Tapper has reported on a wide range of stories, including the aftermath of Hurricane Katrina, the investigation into the disclosure of CIA agent Valerie Plame’s identity, and the debate over Terri Schiavo. During the 2004 presidential election, Tapper reported on charges by the Swift Boat Veterans for Truth against Senator John Kerry and also manned the fact-check desk during ABC News’s debate and election coverage. He also reported on the California gubernatorial recall and the election of Governor Arnold Schwarzenegger. Tapper frequently reports on politics, faith in America, and the culture wars.

John Abele
Founding Chairman
Boston Scientific Corporation

John Abele is the founding chairman of Boston Scientific Corporation and a pioneer and leader in the field of less-invasive medicine. John holds numerous patents and has published and lectured extensively on the technology of various medical devices and on the technical, social, economic, ethical, and political trends and issues affecting health care. His major interests are science literacy for children, education, and the process by which new technology is invented, developed, and introduced to society. Current activities include chair of the FIRST Foundation, which works with high-school kids to make being science-literate cool and fun, and development of the Kingbridge Centre (www.kingbridgecentre.com) and Institute, a conferencing institution whose mission is to research, develop, and teach improved methods for interactive conferencing: problem solving, conflict resolution, strategic planning, and new methods for learning.

Betsy Atkins
CEO
Baja Corporation

Betsy Atkins is a highly acclaimed public-company board director and author. Betsy has served on some of the world’s most visible global public-company boards. For 25 years, she has worked behind the scenes at companies like Lucent, HealthSouth, Wilmington Trust, and Paychex. Betsy started her business career as an entrepreneur, cofounding several successful high-tech companies, including blockbuster Ascend Communications, a NASDAQ company that achieved $5.4 billion in revenue in nine short years. Betsy has been a CEO three times, dramatically scaling, building, and repositioning businesses, resulting in acquisitions and public offerings. She has a strong international and operational perspective encompassing the full range of experience from explosive growth to restructuring. Betsy’s venture capital firm, Baja Corporation, is known for its technology-investing acumen, investing in companies such as Yahoo and eBay before they were household names.

Joanne B. Ciulla
Professor of Leadership and Ethics
University of Richmond

One of the founding faculty members of the Jepson School of Leadership Studies at the University of Richmond, Joanne Ciulla teaches courses on ethics, critical thinking, conflict resolution, and leadership in international contexts. She was honored in 2003 with the Outstanding Faculty Award from the State Council of Higher Education for Virginia. Professor Ciulla has held the UNESCO Chair in Leadership Studies at the United Nations International Leadership Academy in Jordan and academic appointments at La Salle University, the Harvard Business School, the Wharton School, and Oxford University. Professor Ciulla’s research interests are leadership ethics, business ethics, international leadership, and the philosophy of work. Her books include Ethics, The Heart of Leadership; The Working Life: The Promise and Betrayal of Modern Work; and The Ethics of Leadership. Her most recent book is entitled Honest Work: A Business Ethics Reader (Oxford University Press, 2006).

William Donaldson
Former Chairman
Securities and Exchange Commission

William H. Donaldson became the 27th chairman of the U.S. Securities and Exchange Commission on February 18, 2003. Mr. Donaldson arrived at the commission with more than 45 years of experience working at the highest levels of business, government, and academia. He served as chairman and CEO of the investment banking firm Donaldson, Lufkin & Jenrette, which he cofounded; chairman and CEO of the New York Stock Exchange; chairman, president and CEO of Aetna; and chairman and CEO of Donaldson Enterprises. Mr. Donaldson cofounded the Yale University School of Management, serving as the graduate school’s first dean and professor of management studies. His government service spans five presidential administrations and includes serving as under secretary of state to then secretary of state Henry Kissinger, and counsel and special adviser to Vice President Nelson Rockefeller.

Ben W. Heineman Jr.
Former Senior Vice President for Law and Public Affairs
General ElectricSenior Fellow
Harvard Law School

Ben W. Heineman Jr. is the first distinguished senior fellow at Harvard Law School’s Program on the Legal Profession, a senior fellow at the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government and senior counsel to the law firm of Wilmer Hale. He served as GE’s senior vice president–general counsel from 1987 to 2003 and as senior vice president for law and public affairs from 2004 until his retirement at the end of 2005. At Harvard, he is focusing on a wide variety of public and private-sector issues, including the global anticorruption movement, corporate citizenship and social responsibility, the changing role of the corporate general counsel and the inside legal department, corporate governance, and corporations and public policy. Mr. Heineman began his legal career as a public-interest lawyer protecting the rights of the mentally handicapped, served as HEW assistant secretary for planning and evaluation in the Carter administration and, prior to GE, was a partner in two Washington, D.C., law firms, focusing on test case and Supreme Court litigation. A Rhodes Scholar, editor in chief of the Yale Law Journaland law clerk to Supreme Court Justice Potter Stewart, Mr. Heineman is the author of books on British race relations and the American presidency.

Lewis Kaden
Vice Chairman
CitigroupChief Administrative Officer
Citigroup

Lewis B. Kaden is vice chairman and chief administrative officer of Citigroup. Before joining Citigroup, Kaden was at Davis Polk & Wardwell, where he was a partner whose practice included corporate governance, mergers and acquisitions, and advocacy before appellate courts including the United States Supreme Court. During his more than twenty years at the firm, he regularly advised directors and senior management of major corporations on significant issues. Before joining Davis Polk in 1984, Kaden served for four years as director of Columbia’s Center for Law and Economic Studies, was a professor of law at Columbia University from 1976 to 1984, and has been an adjunct professor since 1984.

Paul Krugman
Columnist
The New York TimesProfessor of Economics and International Affairs
Princeton University

Paul Krugman joined the New York Times in 1999 as a columnist on the op-ed page and continues as professor of economics and international affairs at Princeton University. He is also the Centenary Professor at the London School of Economics. Krugman is the author or editor of twenty books and more than two hundred papers in professional journals and edited volumes. His professional reputation rests largely on work in international trade and finance and he is one of the founders of the “new trade theory,” a major rethinking of the theory of international trade. He won the 2004 Asturias Award given by the King of Spain, often called the European Pulitzer.

Leslie Lowe
Program Director
Interfaith Center on Corporate Responsibility

Leslie Lowe is the director of Interfaith Center for Corporate Responsibility’s program on Energy and the Environment. Ms. Lowe has been an attorney in New York State for over twenty years. Until March of 2002, she was the executive director of the New York City Environmental Justice Alliance (NYCEJA), a citywide network of 16 community-based organizations in low-income communities of color. She serves on the boards of directors of the Jessie Smith Noyes Foundation, Environmental Advocates of New York, the Center for Economic and Environmental Partnership, Housing Works, and is a trustee of the Weeksville Society. A graduate of Harvard Law School and of Columbia University’s Graduate School of Journalism, she received her bachelor of arts degree from Bennington College and did postgraduate research in economic and social history at the University of Paris.

William McDonough
Vice Chairman
Merrill Lynch

William J. McDonough is vice chairman and special advisor to the chairman of Merrill Lynch. He is responsible for assisting senior management in the company’s business development efforts with governments and financial institutions. Previously, from 2003 to 2005, he was chairman of the Public Company Accounting Oversight Board, a private-sector, not-for-profit corporation created by the Sarbanes-Oxley Act of 2002 to oversee auditors of public companies. From 1993 to 2003, Mr. McDonough served as president and chief executive officer of the Federal Reserve Bank of New York.

Nell Minow
Editor and Founder
Board Analyst

Nell Minow is the editor in chief of the Corporate Library. Prior to cofounding the Corporate Library and Board Analyst, Ms. Minow was a principal of Lens, a $100 million investment firm that took positions in underperforming companies and used shareholder activism to increase their value. Her other professional experience includes serving as president of Institutional Shareholder Services, and as an attorney at the U.S. Environmental Protection Agency, the Office of Management and Budget, and the Department of Justice. She has authored over two hundred articles and coauthored three books on corporate governance. Ms. Minow is a graduate of Sarah Lawrence College and the University of Chicago Law School.

Joe Queenan
Former Editor
Forbes MagazineColumnist
Smart Money; Chief Executive

Joe Queenan, formerly a senior editor at Forbes, writes about business matters and American culture for the New York Times, Smart Money, Barron’s, and Chief Executive. He has published stories in the New Republic, Time, Rolling Stone, Esquire, and Newsweek. His books include Red Lobster, White Trash, and the Blue Lagoon, an account of his descent into the hell of American popular culture, and The Unkindest Cut, an account of his attempt to make the world’s least expensive film. Queenan is a columnist at Smart Money and Chief Executive, a contributing writer at Men’s Healthand Hollywood Life, and has written innumerable articles for GQ, TV Guide, Spy, Movieline, the Guardian, the Wall Street Journal, and the Washington Post.

Senator Paul Sarbanes
U.S. Senator (D-MD)

Senator Sarbanes is a democratic senator from Maryland and the longest serving senator in that state. In 1970 he was elected to the United States House of Representatives, the first of three terms. It was during his service in the House, in August 1974, that Sarbanes was selected by his Democratic colleagues on the House Judiciary Committee to introduce the first Article of Impeachment, for obstruction of justice, against President Richard Nixon. On November 2, 1976, Sarbanes was elected to the United States Senate. In response to the failure of Enron Corporation in 2001, which, at the time was the seventh largest corporation in the United States, Sarbanes, in his capacity as chairman of the Senate Banking, Housing, and Urban Affairs Committee, held a series of comprehensive hearings resulting in the passage of a bipartisan bill designed to reform the accounting industry and restore the investor confidence that had been eroded following the collapse of Enron.

Fred Smith Jr.
President and Founder
Competitive Enterprise Institute

Fred L. Smith Jr. is president and founder of the Competitive Enterprise Institute, a free-market public-policy group established in 1984. Mr. Smith combines intellectual and strategic analysis of complex policy issues, ranging from the environment to corporate governance. Mr. Smith is also a frequent guest on national television and radio programs to discuss and debate regulatory initiatives and topical policy issues. Mr. Smith’s writing has been published in leading newspapers and magazines such as the Wall Street Journal, National Review, Economic Affairs, and the Washington Times. Before founding CEI, Mr. Smith served as director of government relations for the Council for a Competitive Economy, as a senior economist for the Association of American Railroads, and for five years as a senior policy analyst at the Environmental Protection Agency.

View Program and Text Highlights

The video highlight shows our panelists in action. The Discussion Guide frames their debates in contemporary terms, while the Ethics Reader grounds the discussion in the philosophy of the past.

How much risk is too much?

Maxicorp, a private corporation, invents the MaxiMile, a device that doubles automobile mileage. It’s a huge technological breakthrough and a great business opportunity. All’s well for two years as a car manufactured with the MaxiMile, the I-Care Car, sells 950,000 units. The corporation’s enormous investment is on the way to paying off, the investors are optimistic, and the environmentalists are planning the next three projects.

Then an I-Care Car stalls on the highway while doing 85 miles per hour. It is rear-ended, the driver is killed, and the family threatens to sue I-Care Car and Maxicorp. Nine similar accidents occur, but there’s still no proof that malfunctioning MaxiMiles caused the cars to stall.

Maxicorp executives have to decide how to conduct a credible investigation and what to disclose about the accident to the public and business partners. And parents have to decide whether they should stop driving their kids in an I-Care Car based on anecdotal evidence of risk.

Read Text Highlights

Framing This Discussion (from the Discussion Guide)

The MaxiMile scenario illustrates the conundrums and trade-offs typical in debates about product safety. What constitutes statistically acceptable risk? Should we accept more short-term risk to advance a technology that in the long run could help alleviate global environmental problems? How much information about product safety should a corporation disclose to consumers and its business partners? Can a corporation be trusted to conduct fair investigations and tests or should a third party be brought in? How should a corporation manage its public relations? Whom can the public trust?

For a deeper examination of the analysis abridged here, see the Discussion Guide.

Philosophical Grounding of This Discussion (from the Ethics Reader)

Judging by the following passage from Wealth of Nations, economist and moral philosopher Adam Smith would argue that Maxicorp should behave like a person and follow its own self-interest. For Smith, a business’s interest in profit motivates it to meet a consumer’s interests in the value of the product, and it is this tension that inadvertently drives a robust economy.

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. . . . “[B]y directing that industry in such a manner as its produce may be of the greatest value, he [an individual] intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

To read selections from philosophical texts relevant to this program, see Ethics Reader.

Read Related Articles

My 16 Days on the HealthSouth Board
Betsy Atkins

A director gives a firsthand account of her brief stint on the board of an embattled company, and explains why she decided to resign after learning that the company’s directors’ and officers’ insurance had been cancelled.

Overcoming the “fear of ethics”
Joanne B. Ciulla, Ph. D.

Why do people think ethics cannot be considered in a business context, and what can be done to correct this misconception?

Series Directory

Ethics in America II

Credits

Produced by Fred Friendly Seminars. 2007.

Closed Captioning
ISBN: 1-57680-860-2

Programs

Program 1 Three Farewells: Medicine & the End of Life

This program looks at the difficult choices a loving family makes as they confront the end of life. When a perfect pregnancy ends in unforeseen complications, and the newborn suffers very severe brain injury, how should the parents decide what is best for their baby? When, a few years later, the baby's grandmother descends into dementia from Alzheimer's, should her earlier wish to forego all medical treatment be honored, even though she may no longer understand — or agree — with the statements she made when she was competent? Still later, another family member receives a diagnosis of pancreatic cancer. If she is terminally ill, should she be able to avail herself of medications to aid her in dying?

Program 2 War Stories: National Security & the News

Program 3 My Brother’s Keeper

In a neighborhood perhaps like your own, in a family perhaps not too different from yours, individuals struggle with their college applications, with promotions at work, with the actions of their neighbors, and try to determine what to do when important values about questions of fairness, loyalty, secrets, and trust conflict.

Program 4 Choosing Justice: Elections and Judicial Independence

John Fairfield, a former prosecutor and respected state trial judge, is thinking of pursuing a life-long dream: a seat on the state Supreme Court. In Fairfield's state, Centralia, all the judges are chosen in nonpartisan elections, with no limits on what can be spent — or said — in the process of campaigning. Fairfield wonders what will be required of him — especially regarding fundraising and political advertising in what will be a fiercely contested statewide campaign — and what the implications might be for the ethical integrity of the judiciary.

Program 5 A Better Brain: The Ethics of Neuro-Enhancement

Maria and her daughter Camilla are meeting with several challenges in this difficult time in their lives, from the exhaustion of working two jobs, to the pressure and loneliness of being an average, unpopular kid at school. Yet it appears that some new pharmaceuticals may help each of them — if they choose to use them. New drugs have also found a place in the university setting where students find that Hype Pharmaceuticals' Alzheimer's drug, Rememberall, helps them study better, work faster and remember much more. By enhancing their performance this way, are they cheating? Are they possibly endangering themselves?

Program 6 Risk, Reward, Responsibility: Ethics in Business

Should the executives at Casablanca Cruise Lines have asbestos removed from their ships by a company based in the former Soviet republic of Novostan? The cost would be $80 million less than if an American company were used, but Novostani standards of worker safety are far less rigorous. What should executives at MaxiCorp disclose about accidents in cars using their device, which doubles the mileage of cars in which it is installed, when they have no idea whether their device is contributing to the accidents? And what should executives at Wowie Info do when the authoritarian government of Jaigunda demands the name of a Jaigundan customer who has been using Wowie's Internet services to criticize the government? In each case, panelists struggle to make sound business decisions while observing ethical imperatives in the changing global economy.

Reader Reader: Ethics in America II

Selections from the writings of the great ethicists of the Western tradition

Discussion Guide Discussion Guide: Ethics in America II

Discussion Guide: Ethics in America II

Ethics in America II

Risk, Reward, Responsibility: Ethics in Business

Credits

Meet the Participants

View Program and Text Highlights

Read Related Articles

Series Directory

Credits

Programs

Program 1 Three Farewells: Medicine & the End of Life

Program 2 War Stories: National Security & the News

Program 3 My Brother’s Keeper

Program 4 Choosing Justice: Elections and Judicial Independence

Program 5 A Better Brain: The Ethics of Neuro-Enhancement

Program 6 Risk, Reward, Responsibility: Ethics in Business

Reader Reader: Ethics in America II

Discussion Guide Discussion Guide: Ethics in America II

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