Viewpoint -- Big Business Needs To Return To Small-Town Ethics

Dec. 21, 2004
Globalization makes it easy for companies to look the other way.

As the founder and director of the Business Ethics Center at Grand Valley State University in Allendale, Mich., Barry Castro lives and works in a region of the Midwest where there's an abundance of privately owned family businesses. The ownerships of these businesses have passed from generation to generation and enjoy a high degree of loyalty, honesty, and trust among workers, customers, the community, and the companies themselves. That picture of Midwest business bliss is quite a contrast to the recent revelations that large international companies such as Bridgestone/Firestone Inc., Ford Motor Co., Mitsubishi Motors Corp., and Mitsubishi Electric Corp. knew about product problems long before they let the public or their own employees know. For example, the president of Mitsubishi Motors resigned last month after it was disclosed that the company had covered up auto defects for nearly two decades. In the aftermath of that scandal, Mitsubishi Electric -- even though it had known and not done anything about the problem since 1992 -- decided to recall two models of television sets (marketed only in Japan) because of a potential overheating problem that could trigger a fire. In the U.S., Ford Motor -- despite its aggressive efforts to help consumers replace potentially hazardous Firestone truck tires -- has been chastised by Congress for starting a tire-replacement effort for the same tires in Venezuela a year before it did so in the U.S. In addition, a string of Congressional hearings have brought to the forefront a variety of internal documents that suggest both Ford and Bridgestone were aware of problems with Firestone tires on Ford vehicles long before Bridgestone decided to recall 6.5 million Firestone tires that have been linked to at least 103 deaths (The recall occurred after pressure from the government.) What's happened to business ethics? It's simple, says Castro. Global ownership that has faceless corporations operating local entities and selling products to customers they never see has made it easy -- even if it happens to be unintentional -- for companies to cover up problems, whether they be product defects or plant closings. As Castro explains, companies are "all pretty honest with people that that they deal with face-to-face." But the farther you get away from people, he says, "the easier it is to build a convenient cover-up" even if that wasn't the original intent. "The heart of business ethics is moral imagination," says Castro. "Thus, the bigger you are, the harder it is to imagine the moral consequences of what you do. . . . Firestone clearly let [the truck-tire problem ] go on a long time hoping it would go away. It's uncomfortable for people to think about what they're complicit in." Another case in point: plant closings. When companies acquire companies and merge facilities in the name of efficiency plants close down. "That is the way you work when you are at a distance," says Castro. "You see your obligation to the shareholders, not the community." How do you get large corporations to take into account the impact of their actions on local communities and faceless customers? Castro suggests that more companies treat moral consciousness the way it is done at Motorola Inc. The company has consciousness-raising sessions that address moral principles and encourage people to question when those principles are abrogated. "It starts with top management saying [it has] a will to run a certain kind of company, even if it means taking losses," Castro says. And if a crisis occurs as it did at Firestone, "swallow hard and get to the bottom of it instead of trying to make someone a scapegoat," suggests Stephen J. Cabot, employment law attorney with Harvey, Pennington, Cabot, Griffith & Renneisen Ltd., Philadelphia. "I think the lesson that management ought to learn from this is that if they have information about a serious problem or a potentially serious problem, they ought to stop the assembly line until they correct the problem. You can't have this as a work-in-process or it could throw you into bankruptcy."

Michael A. Verespej is an IW senior editor based in Cleveland.

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