Interpreting Moral Dilemmas in the Business World

By Heide B. Malhotra
Heide B. Malhotra
Heide B. Malhotra
March 11, 2009 Updated: March 11, 2009

Cambodian women workers are working at a garment factory in Phnom Penh.  (Tang Chhin Sothy/AFP/Getty Images)
Cambodian women workers are working at a garment factory in Phnom Penh. (Tang Chhin Sothy/AFP/Getty Images)
Consumers resolve moral dilemmas by practicing “disengagement” when buying products produced in sweatshops or sold by companies that take advantage of loopholes in labor laws.

Desire for products overrides ethical and moral behavior and becomes the norm the longer a consumer practices it, according to researchers in the study titled “Sweatshop Labor is Wrong Unless the Jeans are Cute: Motivated Moral Disengagement,” recently published by Harvard University.

Discounted prices override knowledge that shoes, electronics, toys, jeans, and other products were produced by sweatshop labor, the study found.

“Ethical decisions are biased due to the desire of people to see themselves as moral, competent, and deserving, and thus, not susceptible to conflicts of interest,” researchers suggested in the Harvard University study “The Ethical Mirage: A Temporal Explanation as to Why We Aren’t as Ethical as We Think We Are.”

The “everyone does it” excuse and other morally deceptive reasoning is “setting off a downward spiral of future bad behavior and ever more lenient moral codes … and when bad behavior precedes moral questioning, people bend their moral beliefs to match the preceding action,” researchers claimed in another recent Harvard study.

Wall Street Lacks Morals, Study Says

Accused $50 billion Ponzi scheme swindler Bernard Madoff exits federal court in New York City. Madoff was attending a hearing on his legal representation and is due back in court Thursday.  (Mario Tama/Getty Images)
Accused $50 billion Ponzi scheme swindler Bernard Madoff exits federal court in New York City. Madoff was attending a hearing on his legal representation and is due back in court Thursday. (Mario Tama/Getty Images)
Wall Street brokers, investors, consultants, advisers, and others involved in investing activities “would be willing to break the law if they believed that they could make a lot of money and get away with it,” 71 percent of survey takers said in a February Harris Poll survey of “American Attitudes to Wall Street.”

This is the highest survey result concerning this subject ever tabulated. The next highest survey result of 64 percent was collected in 1996.

In 2009, 26 percent of people surveyed agreed with the statement “in general people on Wall Street are as honest and moral as other people.” This represents a 15 percent drop from 2008. All others surveyed have a negative view of Wall Street operators.

The results are not black-and-white, however. More than 50 percent of Americans think that Wall Street is a necessary evil and more than 60 percent think that banks, financial institutions, and Wall Street are vital for America’s economy to flourish, but take exception to those who manage these institutions.

“They tend to see necessary and valuable institutions managed by dishonest and unethical people,” a survey respondent shared.

Only 29 percent of surveyed people think that the U.S. Security and Exchange Commission (SEC) serves the public’s interest, a 42 percent drop from 2007. Some analysts feel that the SEC failed to detect some of the recently uncovered multimillion-dollar Ponzi schemes.

Repositioning Outward

“Companies are thinking less about losses they may suffer and more about losses they may cause … a shift from preventing employees from harming the company to preventing companies from harming the outside world,” found researchers in a recently published study “2009 Top Compliance Concerns of Global Companies” by Integrity Interactive Corporation, a global consulting firm.

North American firms put greater emphasis on conflicts of interest, such as accepting gifts, eating at expensive restaurants, flying on the corporate jet, and going to exotic places, compared to European ones.

Keeping the firm’s assets, financial integrity, information security, and good name from being discredited has moved to the bottom of a list of 12 attributes.

Harm to stockholders and others affected by the firm's actions is most likely the reason for the move to look outside instead of within the firm, suggests the report.

The governments of the world are far behind the corporate world in changing from selfish to altruistic attributes, suggests the recent Integrity press release.

“The spate of recent bribery and corruption cases involving prominent government officials shows that this same level of rigor is missing in the public sector. Ethics and compliance efforts in government remain weak,” said David Curran, CEO at Integrity, in the press release.

Scathing Report on Sweatshop Activities

Workers produce the Chinese-made handsets 'Spice' at a semi-hightech factory in Shenzhen, southern China's Guangdong province on December 19, 2008.   (AFP/Getty Images)
Workers produce the Chinese-made handsets 'Spice' at a semi-hightech factory in Shenzhen, southern China's Guangdong province on December 19, 2008. (AFP/Getty Images)
A new report revealed that some electronic products for sale in the United States and produced for Lenovo Group Ltd., Hewlett-Packard Co. (HP), International Business Machines Corp., Dell Inc., and Microsoft Corp., are manufactured in sweatshop surroundings by the Taiwanese-owned Mae Tay Plastic Co., Ltd. in Dongguan City, Guangdong Province.

A biting report, titled “High Tech Misery in China,” on sweatshop conditions at the Chinese Mae Tay factory, was published by The National Labor Committee (NLC) in February.

The report says that Mae Tay workers are locked into the factory compound four days a week. They are cheated out of a great portion of their pay for being two minutes late, having fingernails not trimmed exactly as demanded by the factory, stepping on the grass when entering factory grounds, daring not to work on Sunday, not wanting to work a 74-hour workweek, and any other infraction perceived by company management.

Manual keyboard production requires the workers to install 3,250 keys an hour and 35,750 keys during an 11-hour shift.

The U.S. companies named in the report claimed that Mae Tay is an indirect supplier and they therefore have no control or knowledge of operations in these factories.

“Mae Tay [spelled Mei Tai in the letter] is not a direct supplier to Dell, but the company is part of our supply chain,” said Tod Arbogast, a director at Dell, in a letter to the NLC.

“We have found that May Tay is not one of HP’s direct suppliers, but is a supplier to two of our suppliers," a HP letter said.

These companies justified their behavior as aboveboard, moral, and ethical by belonging to the Electronic Industry Citizenship Coalition (EICC), a coalition that produces a code of conduct and requires its members to adhere to this code.

Suppliers must follow such conduct and are periodically reviewed for compliance. The caveat is that only direct, not indirect, suppliers are reviewed.

Heide B. Malhotra
Heide B. Malhotra