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Topical Discussion Unit 1. Moral Decision
Making
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Walmart to End Sales of E-Cigarettes as Vaping Concerns Mount
By David Yaffe-Bellany Links to an external site., Michael Corkery Links to an external
site. and Sheila KaplanLinks to an external site.
Sept. 20, 2019

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The New York Times reported that as vaping-related lung illnesses continue to rise, federal and
state health departments are investigating the risks. In September 2019, Walmart announced that
it would stop selling e-cigarettes at its stores in the United States. This announcement is a blow
to the vaping industry, as concerns mount over the health risks of the products and their soaring
popularity among teenagers.
“Given the growing federal, state and local regulatory complexity and uncertainty regarding ecigarettes, we plan to discontinue the sale of electronic nicotine delivery products,” Walmart
announced in a statement.
Incorporating what you learned in Unit 1, regarding the steps in moral decision-making and how
it is different from everyday decision-making, describe what in your opinion, Walmart should
have done, if anything, in response to the increase societal concern about vaping-related lung
illnesses, particularly in light of the popularity of vaping among teenagers.
Please respond substantively to least two of your classmates, weighing in regarding your
thoughts about what they have expressed.
“ntroduction Back in 1993, when we sat down to write the first edition of this book,
people wondered if business ethics was just a fad. At that point, companies were
just beginning to introduce ethics into new?hire orientations and management
training programs. In academia, business ethics was just beginning to gain traction
as a subject for serious academic study, and some business schools were going so
far as to require a business ethics course to graduate. Back then there was still the
feeling among many experts that business ethics—like time management, quality
circles, and other management buzzwords of the day—would soon become a
footnote in texts that described business fads of the late twentieth century. Despite
multiple waves of scandal over the years, these have often been portrayed as
temporary blips. For example, one prominent business writer for Fortune Magazine
wrote an article in 2007 titled “Business is Back!” Here’s a choice excerpt: “It must
be said: The shaming is over. The 5½ year humiliation of American business
following the tech bubble’s burst and the Lay?Skilling?Fastow?Ebbers?Kozlowski?
Scrushy perp walks that will forever define an era has run its course. After the
pounding and the ridicule, penance has finally been done. No longer despised by
the public, increasingly speaking up and taking stands, beloved again by investors,
chastened and much changed—business is back.”1 Could he have been more
wrong? Business managed to outdo itself on the shame index yet again just about a
year later with the collapse of the financial markets. We’ve seen these ethical
debacles occur regularly for the past 30 years. As a result, we’re convinced that
business ethics is far from a fad. It’s an ongoing phenomenon that must be better
understood and managed and for which business professionals must be better
prepared. We tell our students that serious ethical scandals often result from
multiple parties contributing in their own small or large ways to the creation of a
catastrophe. As you’ll read later on in this book, the opioid crisis that is ravaging the
United States is a perfect storm of greed, unethical behavior, and/or inaction by
pharmaceutical companies, pharmaceutical distributors, pharmaceutical chains,
and individual drug stores, physicians, government agencies, and more. We’ve seen
this scenario play out repeatedly over the decades—with individual companies such
as Enron in 2001 and with entire industries such as the financial industry before its
implosion in 2008. The “bones” of the crisis illustrate a pattern of failure with many
players contributing to the ultimate collapse. Like the financial crisis more than a
decade ago, the opioid crisis is unparalleled in its scope and has fueled public
outrage. People are angry, and this type of widespread malfeasance fuels a deep
mistrust of companies, governments, regulators, and the people associated with
them. These are textbook?perfect examples of how numerous people’s actions (and
inactions) can conspire to spawn almost unimaginable calamities that serve to drive
public mistrust of all institutions.”
“Recent business history has proven beyond any doubt that divorcing business from ethics and values
runs huge risks. Rushworth Kidder,2 the highly regarded ethics writer and thinker who died in 2012,
wrote about the financial debacle and the resulting public anger. He eloquently described how free
marketers cite Adam Smith’s Wealth of Nations to justify a breed of capitalism that abhors regulation
and focuses on short?term profits over long?term stewardship. Kidder wisely noted that 17 years before
his more famous book, Smith wrote another one titled The Theory of Moral Sentiments. Smith’s first
book deserves more attention because he always presumed that the messages from these two books
would go hand in hand. Smith’s “moral sentiments” work rests on the assumption that human beings
are empathetic; they care about others, and they derive the most joy from human love and friendship.
His book opened with the following statement: “How selfish soever man might be supposed, there are
evidently some principles in his nature, which interest him in the fortune of others. . . .”3 Smith believed
that a good life derives from the expression of “beneficence,” not from material wealth. He proposed
that self?love (which he also acknowledged) can spur the individual to better his own condition by
besting competitors. But he argued that this must be done in a just manner and in the spirit of fair play
as judged by an informed, ethical, and impartial spectator. We care what others think of us because we
are first and foremost social beings. But we also are moral beings who want to do the right thing
because it is the right thing to do (not just to win the praise of others). According to Smith, virtuous
persons balance prudence (mature self?love), strict justice, and benevolence, and ideal societies are
comprised of such persons. Finally, a flourishing and happy society is built upon a foundation of justice
and rules of conduct that create social order. Smith was confident that humankind would progress
toward this positive ethical state; he called on leaders to avoid the arrogance of power and, instead, to
be virtuous statesmen. Kidder’s point was that capitalism will succeed only when firmly tethered to a
moral base, and he reminds us that Adam Smith—that hero of free marketers—knew this better than
anyone.”
“We completely agree. We began this book more than 25 years ago with the firm belief that business
isn’t just “better” when companies and businesspeople are ethical, but rather that good ethics is
absolutely essential for effective business practice. This is not just empty rhetoric. Work is essential to
life, and most people work for a business of some kind. How we work and the standards we uphold
while we are working affect much more than just commerce. Our business behavior also affects our
personal and company reputations, politics, society at large, and even our national reputation. For
example, the 2008 financial crisis, while global in scope, had its roots in the United States, and the
nation’s reputation has suffered because of the behavior of individuals and companies. Similarly, China’s
reputation has suffered because of contaminants found in Chinese exports such as infant formula,
drywall (used in construction), and children’s toys. So corporate misbehavior does not happen in a
vacuum, and it’s not just corporate reputations that suffer as a result. These scandals cast long shadows,
and they often affect entire industries and countries. For example, many experts believe that the
financial crisis fueled the rise of populist political candidates and that affected the outcomes of
numerous elections around the world including those in the United Kingdom, the United States, Brazil,
Italy, and Germany. In this complex and increasingly transparent world, where reputation influences
everything from who wants to hire you or trade with you to who buys your products to who finances
your debt—and much more—unethical behavior in business is a very big deal indeed.
Let’s delve into the cynicism that these scandals have spawned and then try to move beyond it so that
you can do things differently in the future.
Moving beyond Cynicism
After multiple waves of business scandals, some cynicism (a general distrust) about business and its role
in society is probably healthy. However, cynicism about business has truly become an epidemic in the
United States. To be fair, we should note that although the financial industry screwed up royally in the
years leading up to the financial crisis of 2008 (read more about this in Chapter 10), at the same time
most other mainstream American companies were “running their companies with strong balance sheets
and sensible business models.”4 Most companies were responsible, profitable, and prudent. Because
they had serious cash reserves, many of them have actually managed to weather recent crises
reasonably well. But the attention in recent years has not been on these responsible companies.
Instead, much of the focus has been on the pharmaceutical and financial sectors and their
irresponsibility.
Even more recently, attention has been riveted on the COVID?19 crisis, which has killed over a million
people worldwide as this book goes to press, raising trust concerns regarding government and corporate
responsibility. People are asking if countries could have done more to slow the spread of the virus and
reduce the death count? What effect has globalization and the desire for inexpensive goods had on the
availability of medical equipment—especially personal protective equipment for medical personnel,
who are on the front lines fighting this virus and who have died in large numbers trying to help others?
Do countries and companies have a responsibility to produce such equipment locally or regionally where
it would be more available in case of an emergency? What role does planning play in a country’s ability
to effectively respond to such a pandemic? Does climate change increase the likelihood of such
pandemics and is that one more reason for companies and countries to employ long?term, ethical
thinking? According to the Edelman 2020 Trust Barometer, only 43 percent of people worldwide trust
government leaders.5 How do you think that impacts how people respond to government guidelines
during an emergency—whether that’s a tropical storm, a terrorist threat, or a pandemic? What does
cynicism and a lack of trust cost society?
How bad is the cynicism? According to the 2016 Edelman Trust Barometer6—a survey of almost 30,000
college?educated people around the world—it’s bad almost everywhere around the globe. (Edelman is
the world’s largest independent public relations firm with 53 offices around the world. Its business is
helping companies build and maintain reputations.) Edelman’s study shows that only 49 percent of
consumers trust institutions in general. As for business, globally about half of the general public and
about 60 percent of the informed public trust companies.
The Edelman study also highlights the importance of consumer trust—the degree to which consumers
trust organizations has a direct impact on their buying patterns and much more. Over a one?year period,
91 percent of consumers stated that they purchased a product of service from a company they trust,
and 77 percent of consumers refused to purchase a product or service from a company that they
mistrusted. These figures suggest that corporate reputations affect consumer buying patterns, and
companies risk harming their bottom line when they do not act to protect their good name.
The most recent Edelman survey (2019) shows an even more disturbing trend7: people around the
world don’t know what to believe. There has been such an assault on truth—with politicians routinely
lying, Facebook containing fake profiles stirring up unrest with fake news, predictions of fake videos of
real people doing and saying things they have not done or said, and more—that 73 percent of survey
respondents expressed concern about fake news being weaponized. The latest survey also shows a huge
trust gap between the “informed” pubic and the “uninformed” public, with informed people trusting
institutions significantly more than their uninformed neighbors. Of course, that gap is what underpins
many election results around the world. If people don’t know what or whom to believe, how can they
trust anything or anyone? How can they lose their cynicism?
However, consistent with our idea that business ethics is not a fad, neither is public cynicism about
business ethics new. We have written about it in every edition of our book (since 1995). Surely, the
factor that has contributed the most to cynicism in recent years is the highly visible behavior of some of
the nation’s leading corporations and executives, whose activities have garnered so much space in the
business press and on the evening news. How do you watch hour after hour of such reporting and not
walk away jaded? In the last few years, all you had to do was read about or watch the news to feel
cynical, and business school students are no exception. We also note that business is not alone in its
scandalous behavior. In recent years, we’ve learned about politicians who brazenly lie repeatedly,
legislators on the state and national level who propose laws and regulations that have been written by
the lobbyists who give them campaign donations, academics who falsified their research results,
ministers who stole from their congregations, priests who abused children, and athletes who took bribes
or used performance?enhancing drugs. It seems that no societal sector is immune.
Many of our readers are business school students, the current or future managers of business
enterprises. Surveys suggest that many business students are themselves surprisingly cynical about
business (given that they’ve chosen it as their future profession). They might believe that they’ll be
expected to check their ethics at the corporate door or that they will be pressured to compromise their
own ethical standards in order to succeed. One symptom: cheating is pervasive in many high schools
and colleges.8
At the same time, we know that students at many colleges and universities, including business schools,
are encouraging their own faculty and administrators to establish newly invigorated academic integrity
policies and honor codes. In an honor code community, students take responsibility for implementing
the academic integrity policy and for holding each other accountable to it. They manage study?run
judiciaries that mete out serious discipline to their fellow students who tarnish the community by
cheating. These efforts, which are gaining real traction at many schools, suggest that at least some
students have had enough and are willing to turn from cynicism toward a proactive approach to change
things.
A 2008 Aspen Institute study of nearly 2,000 MBA students from 15 leading international business
schools provides some insight into MBA students’ attitudes, which may be moving in a less cynical
direction. Similar to the findings they obtained in a 2002 survey, the results of Aspen’s 2008 survey of
MBA students indicate that the students anticipate facing difficult conflicts regarding values in their
jobs, and they suggest some cynicism about ethics in the workplace. However, about 40 percent of
these students believe that their business education is preparing them to manage values conflicts “a
lot,” and another 50 percent believe that they’re being prepared “somewhat.” Also, more than a quarter
of the respondents said they are interested in finding a job that gives them the opportunity to
contribute to society (compared to only 15 percent in 2002). More than half believe that safe, high?
quality products and responsible governance and transparent business practices are very important in a
potential employer. In addition, more than half said they would advocate alternative values or
approaches in response to values conflicts at work (many more than in 2002).9
The media might be largely responsible for students’ cynical attitudes. Think about the depiction of
business and its leaders in movies and on television. The Media Research Center conducted a survey of
863 network TV sitcoms, dramas, and movies in the mid?1990s. Nearly 30 percent of the criminal
characters in these programs were business owners or corporate executives. Entrepreneurs were
represented as drug dealers, kidnappers, or sellers of defective gear to the military.10Fortune magazine
called this “the rise of corporate villainy in prime time.”11 Movies have abounded with negative
messages about corporate America. Think Dark Waters, The Founder, Margin Call, The Big Short, There
Will Be Blood, The Wolf of Wall Street, Arbitrage, Avatar, Inside Job, Up in the Air, The Constant
Gardner, Gasland, Wall Street, Boiler Room, Civil Action, Glengarry Glen Ross, The Insider, Erin
Brockovich, Supersize Me, The Corporation, Enron: The Smartest Guys in the Room, Michael Clayton,
The International, Quiz Show, and Bowling for Columbine. And there are more such movies every year;
we’re sure you can add to the list. A much tougher exercise is to generate a list of movies and television
shows that actually create a positive ethical impression of business. Can you think of any? The consistent
negative representation of business in the media has its effects. Academic research suggests that
cynicism toward American business increased after study participants viewed the film Roger & Me,
which depicted ruthless plant closings and layoffs at General Motors.12 Imagine the cumulative,
daunting effect of viewing countless movies and television programs that portray business as corrupt
and business leaders as ruthless and unethical.
To counter that media?fueled cynicism at least somewhat, we encourage you to think about your own
life and the hundreds of reliable products and services you trust and depend on every day as well as the
people and businesses that produce them. These good folks are businesspeople too, but it isn’t nearly as
exciting or sexy for the media to portray businesspeople who do the right thing every day. We also
encourage you to talk with businesspeople you know, perhaps people in your own family who work for
businesses. Do they feel pressured to compromise their ethical standards, or do they see their employer
in a more positive light?
Interestingly, the Ethics & Compliance Initiative’s 2013 National Business Ethics Survey (see ethics.org)
found that only 9 percent of employees of for?profit enterprises report feeling pressured to compromise
their ethical standards. That means that more than 91 percent said that they were not feeling such
pressure. Also, two?thirds of these employees said that their own company has a strong or strong?
leaning ethical culture. What do these numbers mean? To us, it means that most Americans who work
in business think that their own company and coworkers are pretty ethical. Still, they read the same
media accounts and see the same movies and TV programs as everyone else, and these offerings
influence cynicism about American business in general.13
Finally, we won’t leave a discussion of cynicism without talking about the events of September 11, 2001.
While the business scandals of 2001–2002 left many cynical, the events of September 11, 2001, showed
us some of the best in many individuals and businesses. While this crisis occurred almost 20 years ago,
there are few examples that illustrate the corporate response to disaster (even among competitors) as
well as the 9/11 attacks do. We have read about the care, compassion, and assistance that countless
American firms gave to those who were harmed by the terrorist attacks. Few firms were hit as hard as
Sandler O’Neill & Partners, a small but profitable Wall Street investment bank that lost 66 of its 171
employees—including two of the firm’s leading partners—on September 11. The firm’s offices were on
the 104th floor of the World Trade Center. Despite its dire financial straits, the firm sent every deceased
employee’s family a check in the amount of the employee’s salary through the end of the year and
extended health?care benefits for five years. Bank of America quickly donated office space for the firm
to use. Competitors sent commissions their way and freely gave the company essential information that
was lost with the traders who had died. Larger Wall Street firms took it upon themselves to include
Sandler in their deals. The goal was simply to help Sandler earn some money and get back on its feet.14
This is only one of the many stories that point to the good that exists in the heart of American business.
In this book, we offer a number of positive stories to counterbalance the mostly negative stories
portrayed in the media.
The bottom line is this. We’re as frustrated as you are about the media portrayal of business and the
very real, unethical behavior that regularly occurs in the business community. But we also know that the
business landscape is a varied one that is actually dominated by good, solid businesses and people who
are even heroic and extraordinarily giving at times. So, for our cynical readers, we want to help by doing
two things in this book: (1) empowering managers with the tools they need to address ethical problems
and manage for ethical behavior, and (2) providing positive examples of people and organizations who
are “doing things right” to offset some of the media?fueled negativity.
In May 2009, something notable and quite positive happened. A group of 20 second?year students at
Harvard Business School created The MBA Oath in an attempt to articulate the values they felt their
MBA degree ought to stand for:
THE MBA OATH
As a business leader I recognize my role in society.
My purpose is to lead people and manage resources to create value that no single individual can create
alone.
My decisions affect the well?being of individuals inside and outside my enterprise, today and tomorrow.
Therefore I promise:
I will manage my enterprise with loyalty and care, and will not advance my personal interests at the
expense of my enterprise or society.
I will understand and uphold, in letter and spirit, the laws and contracts governing my conduct and that
of my enterprise.
I will refrain from corruption, unfair competition, or business practices harmful to society.
I will protect the human rights and dignity of all people affected by my enterprise, and I will oppose
discrimination and exploitation.
I will protect the right of future generations to advance their standard of living and enjoy a healthy
planet.
I will report the performance and risks of my enterprise accurately and honestly.
I will invest in developing myself and others, helping the management profession continue to advance
and create sustainable and inclusive prosperity.
In exercising my professional duties according to these principles, I recognize that my behavior must set
an example of integrity, eliciting trust and esteem from those I serve. I will remain accountable to my
peers and to society for my actions and for upholding these standards.
This oath I make freely, and upon my honor.
This focus on positive values among business students and business in general received significant
publicity and turned into something of a movement. More than 400 graduates of Harvard Business
School initially signed the oath, and they have been joined by almost 11,000 business students from 300
other colleges and universities globally. For more information, go to www.mbaoath.org.
Can Business Ethics Be Taught?
Given all that has happened, you might be wondering whether business ethics can be taught. Perhaps all
of the bad behavior we outlined earlier results from a relatively few “bad apples” who never learned
ethics from their families, clergy, previous schools, or employers.15 If this were so, ethics education
would be a waste of time and money, and resources should be devoted to identifying and discarding bad
apples, not trying to educate them. We strongly disagree, and the evidence is on our side.
Aren’t Bad Apples the Cause of Ethical Problems in Organizations?
According to the bad apple theory, people are good or bad and organizations are powerless to change
these folks. This bad apple idea16 is appealing in part because unethical behavior can then be blamed
on a few individuals with poor character. Although it’s unpleasant to fire people, it’s relatively easier for
organizations to search for and discard a few bad apples than to search for some organizational problem
that caused the apple to rot.
Despite the appeal of the bad apple idea, “character” is a poorly defined concept, and when people talk
about it, they rarely define what they mean. They’re probably referring to a complex combination of
traits that are thought to guide individual behavior in ethical dilemmas. If character guides ethical
conduct, training shouldn’t make much difference because character is thought to be relatively stable:
it’s difficult to change, persists over time, and guides behavior across different contexts. Character
develops slowly as a result of upbringing and the accumulation of values that are transmitted by schools,
families, friends, and religious organizations. Therefore, people come to educational institutions or work
organizations with an already defined good or poor character. Good apples will be good and bad apples
will be bad.
In fact, people do have predispositions to behave ethically or unethically (we talk about this in Chapter
3). And sociopaths can certainly slip into organizations with the sole intent of helping themselves to the
organization’s resources, cheating customers, and feathering their own nests at the expense of others.
Famous scoundrels like Bernie Madoff who defrauded investors definitely come to mind. Such
individuals have little interest in “doing the right thing,” and when this type of individual shows up in
your organization, the best thing to do is discard the bad apple and make an example of the incident to
those who remain.
But discarding bad apples generally won’t solve an organization’s problem with unethical behavior. The
organization must scrutinize itself to determine whether something rotten inside the organization is
spoiling the apples. For example, Enron encouraged a kind of devil?may?care, unethical culture that is
captured in the film Enron: The Smartest Guys in the Room. Arthur Andersen’s culture morphed from a
focus on the integrity of audits to a consulting culture that focused almost exclusively on feeding the
bottom line (you’ll read more about that in Chapter 5). In this book you’ll learn that most people are not
guided by a strict internal moral compass. Rather, they look outside themselves—to their
environment—for cues about how to think and behave. This was certainly true in the financial crisis
when the mantra became “everyone is doing it” (and making a lot of money besides). At work,
managers and the organizational culture transmit many cues about how employees should think and
act. For example, reward systems play a huge role by rewarding short?term thinking and profits, as they
did in the recent financial crisis. In this book, you’ll learn about the importance of these organizational
influences and how to harness them to support ethical behavior and avoid unethical behavior.
So apples often turn bad because they’re spoiled by “bad barrels”—bad work environments that not
only condone but might even expect unethical behavior. Most employees are not bad to begin with, but
their behavior can easily turn bad if they believe that their boss or their organization expects them to
behave unethically or if everyone else appears to be engaging in a particular practice. In this view, an
organization that’s serious about supporting ethical behavior and preventing misconduct must delve
deeply into its own management systems and cultural norms and practices to search for systemic causes
of unethical behavior. Management must take responsibility for the messages it sends or fails to send
about what’s expected. If ethics problems are rooted in the organization’s culture, discarding a few bad
apples without changing that culture isn’t going to solve the problem. An effective and lasting solution
will rely on management’s systematic attention to all aspects of the organization’s cultur

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