PROFESSIONAL ETHICS: CASE STUDY ANALYSIS

PROFESSIONAL ETHICS: CASE STUDY ANALYSIS
Introduction
Modern life often puts people in front of significant ethical challenges. Unfortunately,
in most cases the simple ethical dilemma of “good and evil” does not work. As multiple case
studies clearly demonstrate (e.g.: Enron, Parmalat or ImClone cases) corporate ethic in
business is always closely interrelated with the issue of profit. Money for jam has made
modern businessmen and even common employees to become the “knights of fortune” who
easily betray ethical fundamentals looking for rapid commercialization.
There are globally known cases which serve the classic illustration to the issue. These
are the cases of Enron, WorldCom, Vivendi and other commercial giants. These cases often
give people a palliative feeling that these challenges are extremely remote and cannot
influence their lives. However, also we do not often recognize it, we face contravenes of
ethical principles quite often in our everyday lives. Joan Callahan (1988) in her “Ethical
Issues in Professional Life” gives a number of examples. Doctors who make surgeries
knowing beforehand that it will give patient more harm than benefits; engineers who scrimp
expensive materials and make our buildings less reliable than it is required; designers who
economize on development of passive and active safety of the car, etc. are all perfect
illustration to the idea.
Whether we like it or not, but we all have recently become the hostages of business
ethics. As a result, citizens’ privacy, financial welfare and even safety may be somehow
endangered. I will provide only few examples to illustrate the ethical risks we face every day.
The cods of citizens’ identification cards do not remain secret, as they are known to
the banks and police officers. Security-codes of credit cards do not belong purely to their 
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holders. Medical information is stored in a database which is not difficult to access. The
planes people fly may fail to pass a required technical evaluation. People’s dwelling may be
built without following necessary standards. Yet, nation’s government may fail to warn
citizens about the inflation or coming defaults, etc (Daly, 1996).
However, regardless the number of examples people often underestimate the grave
importance of ethic in their everyday life. The recent events in which the ethic was involved
demonstrate that we are often excessively trustworthy when confide in our banks, engineers,
doctors, attorneys, etc. The following case study serves a perfect illustration to challenges in
modern business ethics and associated risks for the common people.
Identification of the case
In the present survey I will assess the issue of business ethics in banking and IT
sector. In terms of modern digital society we seem to rely too much on our banks and
software without recognizing that all our welfare and personal information may appear in
danger. Also this is an invented story it seems to accumulate different ethical challenges in
business sector, particularly those described in Callahan’s (1988) book.
A software engineer is given a project to develop software for one of the top national
banks that performs online banking services. The software involves share and exchange of
large amounts of private information (e.g.: security codes, personal data, banking accounts,
etc.) belonging to the vast customer base. Besides, as the bank provides a large number of
services, it shares client’s medical insurance codes, credit cards services, chequeing, deposit’s
codes, etc. Apparently, if this information comes in wrong hands it could lead to lose of
critical financial and ultra-sensitive information.
The engineer realizes the importance of designing extremely reliable software but he
faces a kind of an ethical dilemma. In fact, the engineer is given only six months to develop, 
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finish and launch the project, whereas at least nine months are normally required to produce
this kind of product. Nine months are usually the average timeline necessary to produce
reliable banking software which will maintain highest possible commitment to quality and
security of the clients. Otherwise the software risks to appear underdeveloped and easy to be
accessed by hackers.
Taking into account the sensitivity of information which is at stake, the engineer
informs the managers of the issue. He tries to persuade them that it will be at least unwise to
launch the software in six months, as its efficiency will only be about 80% versus 95% that it
is normally required to ensure the best possible service.
After the lasting deliberations company’s CEO and managers decide to continue with
this online banking product due to the competition from other industry players who as well
design the online banking software for a hypothetic bank. It appears a kind of a tender and the
company which develops the software earlier will “skim the milk” while the others will loose
perspective client.
The software engineer is actually given two choices, i.e.: either to continue with the
project and design it within the denoted time-constrain (though both he and managers realize
beforehand that they will not be able to design the reliable product within this limited period
of time) or to take a discharge (though he realizes perfectly well again that the company will
hire someone else to finish the project). In both cases, as it goes, the project regardless its
reliability will be designed and launched within six months. In other words, the engineer
understands perfectly well that the project will be finished regardless his participation. If he
dismissed the software would be designed by another programmer. Thus, regardless the
ethical challenges the engineer actually has no obvious way out but to keep on his work.
However, as we see the software design company was in completely the same
situation as the engineer. If it rejected from a project the software would still be designed by a 
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third company within the limited period of time. Overall, the project would have been done in
time regardless its designers. Thus, company’s managers decided the same way as later the
engineer did: if the project is to be done in this period of time let it be us who will do it.
After much hesitations and self-recriminations the software engineer decides to keep
on working on the project and finishes it within the outlined six months period. However,
being pressed for time he fails to provide required testing and the software appears to be of a
rather poor quality. Nevertheless, the customer bank purchases this software and installs it on
all the servers throughout the whole country though probably admitting as well the risk that
the software designed in such a limited period of time may cause the leakage of sensitive
information.
One year after in a result of security breach on this online banking service the vast
amount of sensitive personal information including pivotal health and financial data of
millions of customers comes in the wrong hand. As a result financial assets of the customers
as well as bank and designing company’s reputation appeared at stake.
Philosophical analysis of ethical dilemmas in the case study
Until recently philosophers showed little concern of the business, medical, law and
other types of ethics. However, as since late 1970s – early 1980s the issue of ethic became a
central concept in nearly all spheres of human life, philosophy became an important
framework for ethical issues’ analysis. Observing Callahan (1988) philosophy of ethics
implies the principles of managers’ moral and behavior, the rights of the stakeholders and a
wider community as a whole, transparency of the company and equal attitude to its
stakeholders, etc. In other words, this kind of analysis incorporates almost all organization
aspects associated with ethics. 
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Nowadays there are at least several most influential ethical paradigms which are often
put in the core of business ethics’ analysis. The western corporate ethics is often assessed
from perspectives of Classical Greek Philosophy based mainly on the ideas of Plato and
Aristotle. This philosophical framework is based on the principles of good and evil for people
and society as a whole. Another influential framework is the Japanese Kyoshi Philosophy
based on the principles of co-living and co-working to achieve the common good. The other
less spread philosophical models of business ethics analysis are Hindu Dharma which implies
the principle of inherited duty, the Buddhist Santatthi incorporating the value of self restraint,
the Muslim Zakat which focuses on a duty to help the poor. However, the dominant
philosophical principle of business ethic is obviously the western notion of human rights
shared in all Christian countries (Papoutsy, 2005).
Regardless the visible different approaches to philosophy of business ethics they
generally imply at least several major common criteria, i.e.: responsibility of business for
stakeholders and wider community, transparency of decision making, yet, its accountability.
To my mind, the dominant criterion that underlies all philosophical approaches outlined
above is moral, trust and respect. I will hereinafter follow these principles of research analysis
(Callahan, 1988).
Let us try to be clear first about the major moral characteristics of modern business. In
my analysis I will address major four of them, i.e.: social contract of business, collective
responsibility of business, active responsibility of business (precautionary principle) and
juridical state. I will briefly address each of these principles prior to the case study evaluation
(Jeurissen, 2003).
According to Donaldson (1982) social contract of business model relationships
between business and society as a whole are based on the idea of mutual exchange
(Donaldson, 1982, p. 41-45). The business receives a number of privileges from society, such 
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as people’s trust and credits, legal and human environment in which companies’ function, etc.
In exchange, society obtains another set of benefits, such as growing profits, developing
economies and other social benefits. Society agrees with this mutual exchange only because
the advantages exceed social costs (Jeurissen, 2000).
As this is society that actually builds corporations, it always has the right to choice.
Donaldson verbalizes this right in the following way: “we choose to create corporations and
we might choose either not to create them or to create different entities. Corporations are thus
like political states in their need for justification” (Donaldson, p. 37). The same way we
influence governments and authorities we may influence corporations to play in favor of
society as a whole.
Another concern and moral obligation of business is collective responsibility
embodied in businesses’ concern in maintaining stability of civil society. Alternative
definition of institutional responsibility’s principle is “partnership” or “dialogue” (Jeurissen,
2000). According to the principle of partnership business should actively engage in
partnerships with its direct and indirect stakeholders for the joint solution of social problems.
Development of this mutual solution is based on the principle of common good. Ideally,
business-society partnership incorporates the following agents and their interests: businesses,
stakeholders, social partners and local actors.
Active responsibility of business also known as precautionary principle is one of the
most recent philosophical criteria of analysis. It implies that as we lives in an increasingly
hazardous world modern society is first of all a risky and thus vulnerable society. With
concern of this risk precautionary principle of business implies proper analysis of deeds and
decisions taken by corporations. According to Russ (2003, p. 95) when a decision raises even
minimal potential threat to society precautionary measures should be taken even at the cost of
corporate profits. 
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Eventually, the principle of juridical state (which is one of the most important for our
analysis as it implies business to business relationships) assumes that corporations as well as
citizens pursue just legal environment in which they are willing to put themselves. In the other
words, the principle of juridical state implies fair relationships between corporations
(Jeurissen, 2000). These fair relationships imply development of common moral norms and
principles shared by all business in a global scale.
Evaluation of the case study
As conventional wisdom says, when the law does not work it is the place for ethics.
As my case study hardly implies any legal contraventions, it is now a time for its ethical
analysis.
Prior to the analysis I would like to design a research hypothesis. I believe that
assessment of ethical challenges behind the issue would be mutually beneficial for all three
parties, i.e.: software company, bank and clients.
First I will address the contractor party and discuss the ethical collusions associated
with the software design company. Then I will proceed with the party of a bank.
As I have already identified, at first glance both stakeholders within the contractor’s
party obviously had had no reasonable choice: in all the cases the software would have been
designed by a third party. However, was there a way out from this dead-end? I am sure there
were at least several.
The dilemma for contractor and engineer resembles the well-known prisoner’s
dilemma (Poundstone, 1992). This well known model involves the principles of philosophy,
ethics and psychology of cooperation and conflict of interests. Regarding the value of this
framework I will give its brief description.
Two men, prisoner A and prisoner B have been taken into custody and separated. The
district prosecutor is convinced that they are both guilty of a felony but he needs a confession 
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from at least one of them in order to obtain a conviction. Each prisoner can either confess or
not confess strategy of behavior. The same situation is with our case study as each party had a
choice either to participate or reject from the project.
If both rejected they will be both prosecuted for the felony and moderate sentence
would be recommended (in our case the company would have to pay the forfeit to the bank
and bear some financial losses).
In both confessed (in our case, if both parties decided to work upon the project) they
both would have a chance not to be sentenced as there are no visible evidences (in our case
the software may appear to be reliable enough and not endanger the clients and the company
may receive a financial reward).
If one confesses and the other does not, the confessor will have its charges dropped
and the other prisoner will be prosecuted for the felony with a maximal sentence (in our case
if a company agreed to participate in the project and the engineer rejected, he would have to
leave the company and bear maximal possible losses).
The bank in this case performs the role of a prosecutor. In both the company and the
engineer reject from participation the bank will obviously require them to pay the forfeit.
This schema implies a hard decision making based on the principles of philosophy,
ethics, profits and losses, etc. It may be illustrated graphically: 
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Engineer
Agree to participate Reject to participate
Software design company
Reject to participate
The losses would be maximal, as the
company will loose its client and
expected income and reputation.
Engineers agreement without
company’s decision is of little effect
on the deal
The company and the engineer will
both lose their profits and jobs. The
software will be nevertheless
designed, launched and sold by
competitive company. The risk for
both stakeholders is great (the
reputation and money are at stake)
Agree to participate
The losses may be minimal if the
software works well but may be
maximal if it breaks down. In this
case both the company and engineer
will have greatest damages but may
also have greatest profits. It is fiftyfifty deal for the company and
engineer
The losses will be maximal as he
loses his job and income. Besides,
the company can hire another
engineer and the software. The
company looses nothing in this case
as it may hire another person to do
this job. It is a 100% loss for the
engineer
Chart 1. Dilemmas for the issue stakeholders: research framework

Having agreed to design potentially failing software both the engineer and contractor
contravened a key business moral: to sacrifice own profit for the sake of fair business and
reputation. Failing to obey this moral the company lost not only money but also sacrificed its
reputation. Following the philosophical principles of business ethics the company infracted
the principle of businesses’ active responsibility (precautionary principle). Also this party was
aware that the software to be designed would fail it did not do anything to prevent this failure.
First of all, the company literally intimidated its employee who had no way out but to
agree with the terms. In this case the contractor has broken another fundamental principle of
business ethics. i.e.: social contract of business. It was ready to sacrifice the rights of its
employee in order to achieve rapid profits. The principle of social contract was also infringed,
as the designer did not warn its customer (bank) about the probable failure. 
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Another concern of social contract disdain was that the contractor sacrificed personal
information, assets and health of bank’s clients. However, bank’s clients in this case may be
regarded as the major stakeholders as they are the very direct “consumers” (users) of the
software. So, their interests were put at stake and this is obviously the major ethical collision
in the analyzed case.
Additionally, contractor also broke the juridical state, as it was injustice to its
customer. However, commitment to customers whether they are corporate or private entities
is another fundamental business moral.
Now I would like to proceed with possible ways out from the dear-end based on the
principles of business ethics. As I have already defined, collective responsibility is one of the
pivotal ethical concerns of modern business. The value of this principle is its ability to
maintain a partnership and a dialogue between the partners. This principle implies share of
information and development of joint solution of either actual or probable problems. To my
mind, by strict follow of this principle the contractor would have avoided all of the problems
above described.
To my mind, the contractor should have warned its customer (a direct stakeholder)
that not only their company but not a single firm on the market was unable to design this
software in the limited period of time. This solution, to my mind, might have helped both
parties to arrange real terms for the project. Besides, this strategy might have been opted by
the engineer. He as well might have warned the customers of a great probability of failure and
ask for shift of a deadline. In this case, I believe, the company would remain its greatest asset
– its brand and reputation and commitment to ethical principles in business.
Now I will analyze im