GSOE9510 STRATEGIC LEADERSHIP AND ETHICS
STRATEGIC LEADERSHIP AND ETHICS
GSOE9510 STRATEGIC
LEADERSHIP AND ETHICS
Topics:
• Global Issues: Multinational Companies
• International Perspectives
• Australian Context
Ethics lecture slides based on slides of Prof. Prof.
K.M. Passino , Ohio State University
School of Electrical Engineering & Telecommunications
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• Global issues:
– World-wide impacts (the world is shrinking)
– Long time periods (we are learning about this)
– Cross-cultural, multi-national (real impacts; is
doing engineering the same here as
everywhere else?)
• Relevance to engineering?
– Broad thinking in engineering design
process is essential!
– Engineering is naturally cross-cultural
– Globalization is happening!
– Impact on engineering profession is unfolding
What are “global issues”?
School of Electrical Engineering & Telecommunications
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• Technology transfer: “moving technology
to a new location and implementing it
there” (hardware or software)
• Engineers need to be “cross-cultural social
experimenters”
• Appropriate technology: “identification,
transfer, and implementation of the most
suitable technology” (social, cultural, value
factors play a key role)
Multinational corporations
School of Electrical Engineering & Telecommunications
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• Scale (too big, start small...)
• Technical/managerial skills (e.g., for
safety).
• Bhopal disaster
• Materials and energy (availability, cost)
• Physical environment (temperature,
humidity, salinity, water)
• Human values (acceptability to end users)
• Sustainable development
• Impact on local jobs and economy
Appropriate technology
School of Electrical Engineering & Telecommunications
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• Week 1 – (slide 58)
• Union Carbide, based in US, operated in 37 host
countries
• Dec. 3, 1984, a leak and overheating in a storage
tank methyl isocyanate (MIC) used in agricultural
pesticide, in Bhopal, India (pop: 900,000)
• Plant was operated UCIL – 50.9% owned by UC
• MIC burns any moist part of the body, scalding
throats, nasal passages, blinding eyes and
destroying lungs
• Within an hour the leak exploded in a gush that
sent 40 tons of MIC into the atmosphere
• One of he worst industrial accident in history!
Revisiting Bhopal Disaster
School of Electrical Engineering & Telecommunications
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Laying the Groundwork for a
Disaster
• Consequence of the financial ill health of the Bhopal
plant was that operating staff was cut to a minimum,
training programs were reduced, and equipment was
allowed to deteriorate
• Instrumentation at Bhopal was so unreliable that it was
common for gas leaks of various types to be detected by
workers reporting tearing and burning sensations in their eyes
• Report by UCC inspectors in 1982 indicated many
serious problems, but there was no follow-up inspection
to verify that these had been cleared up.
• reliance was placed on paper assurances that the observed
defects had been remedied
• system of pipes and valves at the plant was very complex, and
the valves were poorly marked
• Valve maintenance was minimal and failures common
Safety - Watchdogs
• Where were the government officials whose
responsibility it was to safeguard worker and public
safety?
• Both national and state governments repeatedly overlooked
serious deficiencies at the facility
• People were permitted to live in the neighbourhood despite
the obvious potential for disaster
• Inspectors did not inspect, regulators failed to regulate
• Most of the engineers were mechanical engineers, not
knowledgeable about chemical processes.
• While the crisis was in full swing, the local government
did a poor job in assisting people to escape from the
afflicted area and in organizing medical treatment for
the victims
500,000 persons exposed
• The toll
– 2500-3000 deaths within a few days
– 10,000 personally disabled
– 100,000-200,000 injured (exact figures disputed)
• Statics ten years later
– 12,000 death claims
– 870,000 personal injury claims
• 2001 victims/families received
compensation from Union Carbide of $600
each
Observations (1)
• Greater sensitivity to social factors was needed in
transferring chemical technology
• Extent of disaster would have been lessened if Union
Carbide had used smaller tanks to store MIC (as required
in France)
• Govt of India required Bhopal to be operated entirely by
Indian workers
– Union Carbide in the beginning spent much training Indian
workers
– Union Carbide initially had U.S. engineers make site visits for
safety inspections
– BUT, in 1982, financial pressures led Union Carbide to relinquish
its supervision of safety at Bhopal
Observations (2)
• In the following two years safety practices eroded
• High turnover of employees
• Failure to properly train new employees
• Low technical preparedness of the local labour pool
• Plant moved from US safety standards to lower Indian
standards
• By 1984, several extreme hazards, and many smaller
ones, were present
• Possible Lesson:
• Be very careful in dealing with transfer of dangerous
technologies to other countries.
• It requires years of diligence and financial commitment.
Some Additional Facts
• Issue of the handling of MIC.
• The questions of how much MIC should be kept on hand
and how it should be stored ?
• Since it was a key factor in the production of Sevin,
manufacturing it in quantity and keeping large stocks on
hand was economically advantageous.
• However, due to its instability and toxicity, this was a
dangerous course of action, particularly where the
competence of the organization was questionable.
• This point is underscored in a post-accident affidavit filed
by Edward Munoz, an American who had previously been a
managing director of UCIL. He stated that UCIL had
opposed storing large quantities of MIC but had been
overruled by UCC.
Questions (Legal)
• How should the victims of the catastrophe be
compensated?
• How should the blame be assigned?
• Legal
• The first issue that had to be resolved in the Bhopal case
was one of jurisdiction. The disaster occurred in India, but
the corporation involved, UCIL, is controlled by an
American company.
• Should the case be tried in India under Indian law or should
it be tried in the United States under American law?
• What is the engineer's role?
• When we leave home and cross national
boundaries, moral clarity often blurs
• No shared attitudes, familiar laws and judicial procedures
that define standards of ethical conduct
• What are the principles that can help them work
through the maze of cultural differences and
establish codes of conduct for globally ethical
business practice? (Ethical leadership)
• How can companies answer the toughest question
in global business ethics
• What happens when a host country’s ethical standards
seem lower than the home country’s?
Mangers/Engineers moral
responsibilities at a global scale?
What is Ethical Absolutism
• Ethical absolutism
• One detailed world-wide set of rules
• Concept that ethical rules are the same everywhere.
• Consider that the United Nations unanimously passed the
Universal Declaration of Human Rights, from which some
of those rights are:
• Everyone has the right to life, liberty, and security of person
• No one shall be held in slavery or servitude.
• No one shall be subjected to arbitrary arrest, detention, or exile.
• No one shall be arbitrarily deprived of his property.
Trusted Networks
What is Ethical Absolutism
• Any system of ethical thought that focuses
strongly on one’s rights and duties is likely founded
upon the concept of ethical absolutism
• Many religions promulgate a set of “thou shalt not”
rules that do not allow for varying interpretations
under any circumstances - these rules are all based
on ethical absolutism
• Different cultural traditions must be respected
• People must express moral truth using only one
set of concepts
• Belief in a global standard of ethical behaviour
Trusted Networks
Balancing the Extremes
• Companies must help managers distinguish
between practices that are merely different and
those that are wrong.
• Relativists:
• Nothing is sacred, and nothing is wrong.
• Absolutists:
• Many things that are different are wrong.
• Neither extreme illuminates the real world of
business decision making.
• The answer lies somewhere in between.