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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

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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.

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


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