Business Ethics - Ford Pinto Case Study
This week’s case analysis consists of a big automotive scandal from the 1970s, namely Ford Motor Company’s defectively designed Pinto. The Pinto had a faulty fuel tank, which often caused fires and explosions following even minor accidents. As it later turned out, executives at Ford did know about the problem, but after some analysis, they decided it was more profitable for them to not recall the faulty cars, and instead just settle the eventual lawsuits (regisuniversity.org 2013).
Now, not just in light of the Who-How (WH) framework for business ethics, but in general, Ford’s decision to ignore this issue was completely unacceptable. Nobody should design, manufacture, and sell products that they know can cause harm to the customers. In my opinion, this behaviour should have been punished by law as homicide, and the executives who knew about the defective fuel tank and decided not to recall the Pintos should have gone to prison. In the following paragraphs, I will explain why.
Every organization in order to be trustworthy, loved, respected, transparent, and ultimately successful, has to do business ethically. This means that the decisions they make regarding their business conduct have to be, first of all, compliant with local and federal laws, secondly, advantageous for customers and employees, and third (becoming more important nowadays), environmentally friendly. The most widely used guideline for business ethics is the WH framework, which encompasses three factors: whom does the action affect, what is the purpose of the action, and how the ethical decisions are made (Kubasek 2016).
(Photo: Joe Haupt - Flickr)
In Ford’s case, the W in this framework (whom it affects) was the problematic part. The “whom” here refers to customers and shareholders as well, and the interests of these two groups collided. On the one hand, there was the safety of the customers, on the other, there was the opportunity to lose three times less money. The executives went with losing less money, even if that meant the possible death of multiple people. The H in the framework refers to how to make an ethical decision, and there are multiple ways to guide businesses in this issue. The first one is the Golden Rule, which is basically implying to behave with others in a way we would like others to behave with us. Another guide is the television test, which makes people imagine what the public opinion about an issue would be if it was televised, or widely known. And finally, the universalization test is an exercise of imagining what the world would be like if other businesses started doing what we are about to do. Would it be a better or a worse place (Kubasek 2016)?
Referring to the W, Ford saved $90 million, but around 900 people died in vain (tortmuseum.org 2020). None of the ethical guidelines were followed. It is clear that Ford completely disregarded the WH framework when making the decision to not recall the Pintos. They also broke the law by willingly letting people die in order to make more profit and by failing to warn them of the dangers. Their actions also clashed with basic human rights that are not just federal, but global.
The Ford Pinto scandal was of such great measure that Ford was forced to completely discontinue the Pinto line and was also punished to pay what amounts to around $15 million today (tortmuseum.org 2020). An amount I believe is ridiculously low for what they have done. The bigger punishment to them probably was the disastrous public relations setback.
This example, however, is a great lesson on how important business social responsibility is, especially in this digital age. Now way more people have access to news and information than ever before, so any bad news leaked about a company can mean the end of that organization. Almost 50 years passed since the 1970s, and since then the United States passed several bills that protect customers. Global and federal competition is also greater than ever, so if a company wants to be successful, they need to be the best, not just quality-wise, but ethically as well.
Regis University (2013). Ford Pinto: A Pre Law Case-Study in Product Liability - Regis University College for Professional Studies: Faculty Pre Law Blog. (2013, June). http://www.regisuniversity.org/ford-pinto-a-pre-law-case-study-in-product-liability/
Kubasek, N. (2016). Dynamic business law: The essentials 4th edition. https://www.vitalsource.com/products/dynamic-business-law-the-essentials-nancy-kubasek-v9781260159264
Tort Museum of Law (2020). The Ford Pinto. (2020, April). https://www.tortmuseum.org/ford-pinto/