Ford Pinto Case

In 1968 aiming to increase its profits the Ford Motor Company began to produce the Pinto vehicles. At the beginning this project justified the hopes displaying good sale rates. Nevertheless, four years later the Pinto became a reason of serious issues that significantly affected Ford’s reputation. To be precise, during the summer of 1978 6 Pinto’s customers were burned alive into their cars. The situation was unusual because the fire emerged in a result of a low speed crash, what should not have happened. It is believed that the unethical situation occurred because the Pinto’s production was limited with strict time, weight and budget frames. Consider the case, the vehicle was supposed to weigh about 2000 pounds, and the expenses should not exceed 2000$. The former employee of the Ford Motor Company, who was responsible for taking test drives, reveals that “even with these restrictions, the Pinto met federal safety standards” (Weiss, 91). Nevertheless, company’s collaborator admits that the need to adhere to set restrictions encouraged the engineers “to compromise the safety” (Weiss, 91). Among those 6 victims there were three teenage females that died in car accident when they were trapped in the burning car. The police investigation concluded that the lapses in design made “the Pinto more vulnerable to a rear-end collision” (Leggett, n. pag.). In particular, in order provide more trunk space, the engineers decided to place the vehicle’s fuel tank behind the rear axle, whereas, it should have been installed above. What makes the things even worse, the crash tests displayed this potentially lethal short-coming of the Pinto; however, Ford’s associates decided that the probability of an accident was relatively low. Consequently, the company did not consider as appropriated to recall the cars and improve their design. It is not surprising that the main inhibiting factor that disengaged the leaders from an ethically correct approach was their reluctance to lose the profits. Notably is that the calculations revealed that the cost of the Pinto would have been increased for only 11 percents if the needed design corrections have been done. The company’s unwillingness to spend money on the essential improvements, which would have saved people’s lives, seems to be rather reprehensible. Without doubts, there are several alternative approaches that are based on the principles of business ethics. For instance, it is relevant to reduce the costs of vehicle’s interior, but make all necessary design improvements, which correspond with the safety of the Pinto. In addition, the manufacturing costs may be incorporated into the value of the Pinto cars. In this case, the company should strive to succeed in advertising their product by implementing certain marketing strategies. For example, the vehicle can be equipped with different appliances and devices. Even if this approach costs the company 0.5 percent more, it would help to increase the sales of the Pinto creating the brand image of a semi-all-inclusive car for affordable price. Less ethical, but permissible in the conditions of the extreme necessity, is the approach to reduce the manufacturing costs. It may include the reduction of salaries and/or economical allocation of the resources on the factories. Undoubtedly, this alternative does not fully coincide with the principles of corporate social responsibility because it violates the ethical attitude towards company’s collaborators as one of the main stakeholders. Nonetheless, as was stated above, in the urgent case, this approach can be taken into consideration as a temporal relevant measure to save the company’s reputation and prosperity. Unfortunately, the Ford Motor Company did not adhere to ethical solutions. The case got publicity and only under the pressure of society the company decided to recall their dangerous vehicles, even though their reputation has already been tainted. As it was identified later, “the fact that Ford had chosen earlier not to upgrade the fuel system design became an issue of public debate” (Leggett, n. pag.). Nevertheless, when National Highway Traffic Safety Administration encouraged the company to conduct a risk/benefit analysis, the results identified that, in spite of the Pinto’s shortcomings, a level of risk was permissible. Consider the case, the results of a risk-benefit analysis identified that “it is acceptable for 180 people to die and 180 people to burn if it costs $11 per vehicle to prevent such casualty rates” (Leggett, n. pag.). This very incident launched the lawsuit; the Ford Motor Company was accused by prosecutor of Elkart County, Indiana “for reckless homicide and criminal recklessness” (Leggett, n. pag.). Meanwhile, the victims’ families got considerable financial compensation; the company’s decisions and its performance have not been recognized as illegal.

Taking into account the strict limits in expected weight and costs of the Pinto cars, one may deduce that the mid level leaders of the company were under a considerable pressure created by their corporation. To make the things even worse, setting the time frames for the production of new vehicles, the company engaged its employees to accelerate manufacturing processes. Most probably, Ford’s collaborators understood that such circumstanced would compromise the safety of their project; however, the hardest ethical dilemmas were laid on the managers of different levels. For instance, the leaders may be overwhelmed with the duty to protect the needs customers (in particular, they must guarantee the safety of products). Simultaneously, the chief is supposed to protect financial needs of shareholders and employees. Besides, the companies have certain liabilities to the communities; specifically, they should maintain business without causing any hazardous conditions. Nevertheless, there are the situations whereas it is hardly possible to fulfill all the obligations to all groups of stakeholders. At this point an ethical dilemma occurs. The leader must meticulously evaluate the situation and choose whose interests and to what extent may be violated. Given that despite design issues, generally, the Pinto was recognized to meet the federal requirements of safety, the company’s leaders decided to trample the interests of their clients. This peculiarity allows observing another dilemma, which originated in the same situation. This dilemma implies to the fact that, as a rule, legal and financial responsibilities are considered to be more important than the ethical and philanthropic ones. Of a great part it happens because the society divides these corporate responsibilities into two groups: one has tangible results, meanwhile, another group is characterized with the intangible outcomes. The first group comprises legal and financial responsibilities; whereas, the second contains ethical and philanthropic liabilities. Consequently, the adherence to the first group is mandatory, while the obligations suggested by the second are optional. What makes the things even worse is that, at the first sight, this definition itself is intangible because modern business ethics addresses the given components in the integrity endowing them equal importance. Nonetheless, this classification does not fully coincide with the current realities (neither it resonates with the 70s of the 20th century). Consider the case, the neglect of legislative responsibility is punished by means of fines, imprisonment, deprivation of properties and other tangible ways. Similarly, once the financial interests of stakeholders are trampled, the entire businesses (no matter how big and powerful it was) would collapse. The high level of competition would not allow the business to survive if its owner (s) does not consider the financial interests of all participants as a major priority. These rules are imposed by the community. In a case when the above-stated dilemma emerges, the society, as a stakeholder, encourages the leaders to fulfill their ‘tangible duties’ in the first place. The course of actions chosen by the chiefs of the Ford Motor Company is a vivid sample of the legal/financial versus ethical/philanthropic dilemma. Furthermore, it proves the immense impact of the community even if it seems to be implicit and unexpressed.

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To a great extend today’s society compels business owners and managers of all levels to make the similar decisions as Ford’s leaders did more than forty years ago. Nevertheless, fortunately for the contemporaries, there can be noticed a strong positive tendency towards the development of ethical and philanthropic approaches while operating businesses. Specifically, many communities become significantly reproachful towards unethical ways to conduct businesses. For example, corporate social responsibility gains meaning as an important business strategy that is employed by numerous organizations in order to remain competitive. Assessing the importance to stay in the ethical frames while operating businesses, it is appropriate to deduce that all kinds of ethical responsibilities towards all groups of stakeholders are equally significant.

That is why, at a given time in 2014, to solve the dilemmas created by the workflow, one should apply to the ethical approaches.

Today’s business ethics distinguishes five main ethical approaches that should be considered by every manager, who is motivated to adhere to the principles of corporate social responsibility. The concepts of Utilitarianism, Kant’s Categorical Imperative, Rawl’s justice as fairness, Confucianism and altruism can help to find ethically correct decisions even in the ambiguous situation when leaders are being attacked with various dilemmas and concerns. The concept of Utilitarianism presumes that every action has consequences. Therefore, making a decision, one should anticipate its plausible outcomes. Furthermore, the final solution is supposed to be based on the comprehension that it is the best measure possible, which can be implemented endeavoring to provide the highest good the largest group of people. Undoubtedly, this characteristic of Utilitarianism suggests three-step process of decision-making. Firstly, it is recommended to foresee all possible consequences. Secondly, the leader must assess “the direct as well as the indirect costs and benefits for each option” (Johnson, 20). Thirdly, Utilitarianism engages “to select the alternative that produces the greatest amount of good based on the cost-benefit ratios generated in step two” (Johnson, 20). Applying this approach in the Ford Pinto case, it becomes clearly visible that a mid level manager should report the nature of problem to the chief with the relevant outline directed on the elimination of potential negative outcomes. If this requirement is neglected, the manager is supposed to attract the attention of the community to this design issue. As an important stakeholder, communities are known to have significant influence on CEO’s decisions. Even though such actions may be greatly reproved by the superiors, in terms of Utilitarianism, it is the right approach, which would assure the highest good to the biggest number of individuals.

Certainly, this claim can be disputed by the presumption that such actions would affect the reputation of the entire company in a negative way. As a result, financial interests of investors and collaborators would be violated. Nevertheless, being accused in the production of dangerous vehicles can rightfully be considered as far worse condemnation that can affect the reputation and profitability of the company even more severely.

Another ethical approach is known as Kant’s Categorical Imperative. It presumes that “moral duties should be obeyed without exceptions” (Johnson, 24). This ethical philosophy accentuates that the mid level manages of the Ford Motor Company (as well as other leaders) are always supposed to act in accordance with the moral and ethical norms. Constructing the chain of reasoning, one may rightfully conclude that the adherence to this concept eliminates the occurrence of ethical dilemmas because it does not imply to the notions like more ethical deeds or less ethical actions. Consequently, it suggests that there is no need to anticipate and evaluate the outcomes striving to find the most ethical decision. Instead, Kant’s Categorical Imperative emphasizes that there is the only one correct solution. In the Pinto’s case, it would be to recall the deficient vehicles with the aim to improve their design.

The next ethical approach is called Rawls’s justice as fairness. The 20th century philosopher, John Rawls, proposes that before making any decisions the individuals should be armed with the principles of equity. This notion presumes equal opportunities for every person as well as equal rights and freedoms to every citizen. The practical implementation of Rawls’s justice in the contemporary business ethics refers to the veil of ignorance (Johnson, 28). The veil of ignorance is the approach to assess the situation whereas an individual’s decision is not affected with the prior knowledge. In other words, implementing Rawls’s veil of ignorance the mid level manager of Ford would neglect the pressure of his/her community. Besides, the importance of financial loses will be significantly reduced since the problem will be solved basing exclusively on its components. Simply put, utilizing the veil of ignorance the ethical dilemma would be reduced to its grounds: there is an issue, thus, it must be solved.

The next ethical principle, Confucianism, suggests that the relations should be built on the basis of trust and mutual benefits (Johnson, 30). Given the fact, constructing business relations on the basis of Confucianism, the leader should develop the policy that communicates with company’s trustworthiness and dependability. It is not surprising that these two characteristics of the brand image are crucial for the reputation. As a result, the notion of trustworthiness can make a significant impact on the flourishing and profitability of the corporation. It is exactly what happened with Ford. Consider the case, the relations between this company and its stakeholders were not mutually beneficial since Ford produced the vehicles that were potentially dangerous. This very peculiarity undermined the clients’ trust. Consequently, the company was doomed to endure public reproach and lawsuit; it lost its money and reputation. Therefore, one may deduce that the issue would not have emerged if the managers of all levels have adhered to the ethical principle of Confucianism while constructing both their business and their image.

The last, but not the least, ethical approach is the concept of altruism, which educates that “we should help others regardless of whether or not we profit from doing so” (Johnson, 32). Being altruistic presumes that one expresses genuine concerns about the other people. Assessing the Pinto case from this perspective, it is appropriate to state that the leaders of the Ford Motor Company were lack of altruistic approach while conducting business. Instead, the company expressed concerns more about own needs attempting to eliminate plausible negative outcomes in respect with their impact on the company’s assets in the first place. The lives of 6 people could have been saved and the scandal would not have emerged if Ford’s leaders have constructed company’s performance in accordance with the altruistic approach.

It goes without saying that successful implementation of the above-stated ethical approaches becomes possible only if the leader’s personality is sufficiently evolved to comprehend the true meaning and value of those principles. It is important to understand that “one’s personal identity becomes heavily influenced by the corporate identity” (Weiss, 96). Consequently, “in their jobs, people are sometimes expected to play different roles that may make competing demands on them, causing internal con???????ict and stress that may be resolved via unethical behavior such as lying” (Trevino, & Nelson, 275). Undoubtedly, under these circumstances the leader is at risk of becoming “an unwitting victim of his or her cognitive structuring” (Weiss, 96). To avoid such highly undesirable prospect, the future leader should strive for improvements of his/her cognitive characteristics. In other words, it is necessary to develop “ethical decision-making style” (Nelson &Trevino, 76). This style presumes ethical behavior that, according to James Rest, consists of four components: moral sensitivity, moral judgment, moral motivation and moral character. Moral sensitivity is a personal quality that is characterized with a well-developed ability to distinguish moral actions from the amoral ones. Simply put, this capacity helps to identify an ethical issue. Relating this mental feature to the Pinto case, one can assume that the mid level leaders could have moral sensitivity. After all, the ability to detect an ethical problem does not guarantee its successful elimination; it is only the first step in the direction of the problem-solving. The second component, moral judgment, contains three stages of person’s advancement, and these are: preconventional, conventional and postconventional levels (Nelson &Trevino, 79). The first phase is characterizes with “obedience to authority for its own sake” (Nelson &Trevino, 79). The second one is more advanced and presumes that the correct and socially accepted behavioral patterns are adopted as the proper stereotypes. Finally, the third level of moral judgment suggests that an individual developed the ability to “follow ethical principles of justice and rights” (Nelson &Trevino, 79). Being on a postconventional stage of moral judgment a leader should demonstrate clearly distinguishable adherence towards ethical decision making in spite of external and internal influences, which tend to create ethical dilemmas. Obviously, the managers of Ford Corporation did not demonstrate the postconventional stage of ethical cognition. Instead, the company’s actions resemble with the first, preconventional, phase of moral judgment while certain ethical actions are performed by people whose motive is the necessity to avoid or reduce the probability of punishment. Moral motivation envisages strong internal locus of control. An individual with a well-developed internal locus of control is known to take responsibilities in his/her actions (Nelson &Trevino, 84). This approach is a rather efficient way to avoid moral disengagement that can be presented in a form of moral justification, advantageous comparison, displacement or diffusion of responsibility, distortion of consensus, dehumanization and attribution of blame (Nelson &Trevino, 87). Unfortunately, estimating the performance of the mid level managers and their role in the Pinto case, one can rightfully conclude that they applied to moral disengagement. It underlines the limited internal locus of control and, consequently, refers to poor moral motivation. Meanwhile, the opposite behavior would point to the presence of moral character of Ford’s employees. Specifically, moral character assumes the ability to resist to external influences, which is a critical capacity that is highly welcomed in the contemporary business world.

Summing up the above-mentioned, it is appropriate to accentuate that the Pinto’s ethical dilemma emerged because the work performance of the managing staff was not organized in accordance with the ethical principles. The neglect of five main ethical approaches (Utilitarianism, Confucianism, Rawls’s justice as fairness, altruism and Kant’s Categorical Imperative) led to the death of 6 Ford’s clients. Besides, the company was publicly reproached. The Ford Motor Company was obliged to pay considerable money to victims and their families. Similarly, even greater financial losses were caused by the necessity to recall the Pinto vehicles in order to make design improvements. The refusal to adhere to ethical approaches is considered to be the reason of the underdeveloped ethical behavior of the leading staff. Specifically, the levels of moral sensitivity, moral judgments, moral motivation and moral character of the Ford’s managers were not advanced enough to comprehend the necessity of operating in ethical frames.

Assessing the Ford Pinto case it is highly recommended to develop ethical behavior, which resonates with the ethical decision-making style and is manifested through the implementation of basic ethical approaches. Moreover, it is critically important to align the notion of corporate social responsibility with the actual social attitudes by means of decreasing the gaps between theoretical knowledge and mismatched practical conditions. In other words, acknowledging the flowing and codependent relations between the components of business ethics, the communities should be engaged to address all corporate responsibilities equally.