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Running Head: Ethical Workplace Culture 1

Ethical Workplace Culture

Sarah Christl

Arizona State University

June 26, 2017


Ethical Workplace Culture 2

Introduction

In this paper I plan to present a study on culture in the workplace and it how it can
effect ethics in business. This study paper will support my studies in Organizational Leadership.
I will present six case studies that examine culture in the workplace. For each case study I will
provide an analysis and discuss how each studies pertains to culture and business ethics. Next,
I will discuss the methodology that I used to interview two people that are in the same field as I
am. I will then discuss their answers and how they pertain to culture and business ethics.

Case Studies

Case Study 1: Wells Fargo Banking Scandal: Why Culture Matters

Markkula Center Staff

https://www.scu.edu/ethics/focus-areas/business-ethics/resources/wells-fargo-banking-
scandal/

Wells Fargo was the darling of the banking industry, with some of the highest returns on
equity in the sector and a soaring stock price. Top management touted the company’s lead in
“cross-selling”: the sale of additional products to existing customers. “Eight is great,” as in eight
Wells Fargo products for every customer, was CEO John Stumpf’s mantra. 

In September 2016, Wells Fargo announced that it was paying $185 million in fines for
the creation of over 2 million unauthorized customer accounts.  It soon came to light that the
pressure on employees to hit sales quotas was immense: hourly tracking, pressure from
supervisors to engage in unethical behavior, and a compensation system based heavily on
bonuses. 

Wells Fargo also confirmed that it had fired over 5,300 employees over the past few
years related to shady sales practices. CEO John Stumpf claimed that the scandal was the result
of a few bad apples who did not honor the company’s values and that there were no incentives
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to commit unethical behavior. The board initially stood behind the CEO but soon after received
his resignation and “clawed back” millions of dollars in his compensation. 

Further reporting found more troubling information. Many employees had quit under
the immense pressure to engage in unethical sales practices, and some were even fired for
reporting misconduct through the company’s ethics hotline. Senior leadership was aware of
these aggressive sales practices as far back as 2004, with incidents as far back as 2002
identified. 

The Board of Directors commissioned an independent investigation that identified


cultural, structural, and leadership issues as root causes of the improper sales practices. The
report cites: the wayward sales culture and performance management system; the
decentralized corporate structure that gave too much autonomy to the division’s leaders; and
the unwillingness of leadership to evaluate the sales model, given its longtime success for the
company. 

Commentary

I currently am a store manager for a Starbucks store. Employee culture is a huge priority
for the company and for me in my store. It is important for me that the employees are always
comfortable in their work environment and always feel free to talk to me about any concerns
they have. This case study was particularly interesting to me because it shows how important
the culture of company can be even when the culture is a negative one. It was part of the Wells
Fargo culture to push the employees into unethical behavior and to punish some of the
employees that tried to be ethical. Because of Wells Fargo unethical behavior, they were
forced to pay very high fines and the CEO lost his job. It also created a sense of mistrust
between the employees and the company.

Case Study 2: Is the Customer Always Right?

Clare Bartlett

https://www.scu.edu/ethics/focus-areas/more/engineering-ethics/engineering-ethics-cases/is-
the-customer-always-right/
Ethical Workplace Culture 4

Brad is a production engineer at a bicycle company. Part of his job includes inspecting
broken bikes and drafting the design plans for their repair.

One day, Brad receives instructions from his supervisor to repair a bike whose brake
cables had snapped. When Brad inspects the bike, he notices the cables had snapped because
they were made from a low-quality material. He suspects that this bike had been custom
designed, and that the customer simply did not know what materials would be best suited for
the brake cables. Therefore, when Brad drafts his design plans for the repair of the bike, he
incorporates a more durable material for the cables.

When Brad goes to repair the bike, he finds out the customer had specifically requested
that the bike be repaired, but no aesthetic changes should be made to the bike. Brad’s design
for the bike will change the look of the bike, but it will also make the bike more durable. When
Brad goes to his manager and asks him what to do, his manager tells him that “the customer is
always right” and he should repair the bike as the customer requested.

Brad knows he could repair the bike according to the customer’s wishes, but if he does,
the bike will break down again in a few months, perhaps dangerously. However, if he
implements his design improvements, he risks going against his manager and the wishes of the
customer.

Commentary

The idea that the customer is always right has been an idea that has been in retail for a
very long time. It is something that I have seen many employees struggle with over the years.
Working in a setting where we often get customers who are unsure of what they want we often
challenged to make sure that the customer leaves with want even if it’s not what they ordered.
How this is approached is something that is very important and can make the difference
between a happy customer and a customer that is offended and still doesn’t like the product
they have. This starts with the culture in our store and making sure that each barista is focused
on having satisfied customers. This case study does not make it sound like the bike company is
focused on the customers ultimate satisfaction but rather is focused more on their immediate
satisfaction. Knowing that the material could potentially fail again soon and at a time that
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could be potentially dangerous raises ethical concerns beyond just fully satisfying the
customers. It could lead to injury or worse.

Case Study 3: The Case of the Performance Appraisal

Thomas Shanks, S.J.

https://www.scu.edu/ethics/focus-areas/business-ethics/resources/the-case-of-the-
performance-appraisal/

Frank became chief financial officer and a member of the Executive Committee of a medium-
sized and moderately successful family-owned contracting business six months ago. The first
nonfamily member to hold such a position and to be included in the Executive Committee, he
took the job despite a lunch-time remark by the company's CEO that some members of the
family were concerned about Frank's "fit with the company culture." But the CEO (who is
married to the daughter of the founder of the company) said he was willing to "take a chance"
on Frank.

Soon after Frank started, the company decided for the first time to "right-size" (a
euphemism for downsize) to respond to rapid changes in its business. Frank, who had been
through this before when he was a senior manager in his previous company, agreed this was
good for the long-term health of the 20-year-old company. He decided not to worry that family
members seemed more concerned about their own short-term financial interests.

Besides, the CEO was relying on Frank to help him determine how to downsize in an
ethical manner; the CEO said he trusted Frank more on this than he did the head of his
personnel department, who had "been around a little too long."

On Frank's recommendation, the company decided to make its lay-off decisions based
on the annual performance appraisal scores of the employees. Each department manager
would submit a list of employees ranked by the average score of their last three appraisals.

If the employee had been with the company less than three years, if the score for two
employees was identical, or if there was some extraordinary circumstance, the manager would
Ethical Workplace Culture 6

note it and make a decision about where to rank the person. At some point, Frank and the
Executive Committee would draw a line, and those below the line would be laid off.

As Frank was reviewing the evaluations, he was puzzled to find three departments in
which the employee at the bottom of the list had "N/A" where the evaluation score should have
been written. When he asked the managers to explain, they told him these employees had
been with the company almost since the beginning. When performance appraisals had been
instituted six years earlier, the CEO agreed to the longtime employees' request that they keep
receiving informal evaluations "as they always had."

The managers told Frank they'd questioned this decision, and the CEO had told them it
wasn't their problem.

When Frank raised this issue with the CEO, he responded, "Oh, I know. I haven't really
evaluated them in a long time, but it's time for them to retire anyway. They just aren't
performing the way they used to. The company's been very good to them. They've got plenty of
retirement stored away, not to mention the severance you've convinced me to offer. They're
making pretty good money, so cutting them should let us lower the line a little and save jobs for
some of the younger people--you know, young kids with families just starting out. And don't
worry about a lawsuit. No way they'd do that."

"Do they know they're not performing well?" Frank asked.

"I don't know," the CEO responded. "They should. Everybody else in the company does."

As they walked to the door, the CEO put his arm around Frank's shoulder. "By the way,"
he said, "you should know that you've won over the Executive Committee. They think you are a
terrific fit with this company. I'm glad you talked with me today about these three employees.
You got it right: This is a company that cares for its employees--as long as it can and as long as
they're producing. Always has, always will."

Frank left the CEO's office with the vague feeling that he had some moral choices to
make.
Ethical Workplace Culture 7

Commentary

When I first read this case study I didn’t see how it would fit into a discussion about
culture. After rereading it I thought about the different standards that the company had for the
workers. I don’t feel that it is ethical to hold different workers to different standards. By not
doing the same performance review process for each employee that is exactly what this
company is doing. This becomes particularly evident when trying to determine which
employees to keep. Some of the comments made by the CEO could even be construed as age
discrimination. As a leader it is important to hold every employee to the same standard. If you
do this you can avoid a situation like this where people may not know that they are not
performing up to the standard that is expected. I also don’t feel that it is ethical to let someone
go for not performing up to standard if they don’t know that they are performing up to
standard.

Case Study 4: A Sinking Situation

Clare Bartlett

https://www.scu.edu/ethics/focus-areas/more/engineering-ethics/engineering-ethics-cases/a-
sinking-situation/

Roscoe is the head of engineering at a systems engineering company. His company has
been contracted by a company, U-sub, to make firing assemblies for torpedoes. This contract
calls for additional safety testing to ensure that the systems work properly.

The contract stipulated that it was the responsibility of Roscoe’s company to pay for this
expensive additional testing. However, the CEO reminds Roscoe that their company is in
financial trouble and asks Roscoe to skip the extra testing and falsify the paperwork by saying
that the testing had occurred and that the systems passed. He then goes on to tell Roscoe that
if he doesn’t sign off on the testing, he will be fired.

Roscoe decides he cannot give in to his boss’s demands and quits. However he suspects
that his former boss will promote someone else who will be willing to sign off on the testing.
Ethical Workplace Culture 8

Commentary

The ethical culture of a company starts from the top down. If the top management of a
company doesn’t hold itself to high ethical standard the employees won’t. In this case it is not
just a question of ethics but it is also a question of safety. If the additional testing is not
performed it could potentially cause injury or death. I believe that it is likely that the CEO has
asked someone before Roscoe to falsify or somehow cheat on standards. This can lead to a
sense of distrust and an overall negative culture in a company. In my experience employees
want to look up to their leaders and want them to be ethical people.

Case Study 5: Breaking the Bro Code

Alexis Babb, Hackworth Business Ethics Fellow

https://www.scu.edu/ethics/focus-areas/business-ethics/resources/silicon-valley-business-
ethics-cases/breaking-the-bro-code.html

Arnold is the Chief Operating Officer of a multibillion-dollar public company in Silicon


Valley. The staff is predominantly male, and holds quarterly upper management meetings
offsite. Arnold attends one of the meetings, along with the company's CEO, CFO, and numerous
VPs. The opening speaker is the Vice President of Operations, Jordan Tompkins, who was
brought into the organization by the CEO, having been close friends in college.

Jordan, who has college-age daughters, starts his presentation by sharing that he was
out late the night before "partying," and that he “threw together” his slides. His first slide is a
photo of a cheerleader from a local team—in a hot tub. He jokes that he is a big fan of this
particular team. He goes on to cover some highlights of the company's recent performance. His
last slide, however, is formatted to resemble a motivational poster. Entitled “Opportunity,” it is
a photo of an apparently intoxicated college girl lying on the floor wearing only her underwear.

Despite the widespread laughter, the consensus was that Jordan had pushed the
envelope too far, but no harm, no foul. The CEO covered for Jordan, stating “That's just Jordan
being Jordan.” Arnold was the exception, finding Jordan's behavior to be completely out-of-line
Ethical Workplace Culture 9

and deserving of immediate termination. Arnold, being the COO, technically has the power to
fire Jordan at any time, but it is clear that he is under the protection of the CEO.

Commentary

I believe for a company’s culture to be successful everyone needs to be happy and


comfortable in that culture. In this case study, it is hard to believe that Arnold would be the
only one offended by Jordan’s actions. The fact that no one else is willing to speak up about it
only shows that the culture in the company is in a negative place. Also, the fact that it is a well-
known fact that Jordan is protected by the CEO and has a different set of expectations also
points to the negative culture in the company. I also feel that it is unethical for a manager to
treat any employee differently than another. If this type of behavior is protected than what
else will the CEO allow him to do? Allowing this behavior may also lead to other employees
thinking that they can get away with unacceptable and unethical behavior.

Case Study 6: Time-Sharing Space

Jocelyn Tan

https://www.scu.edu/ethics/focus-areas/more/engineering-ethics/engineering-ethics-
cases/time-sharing-space/

Ramona is an intern at an up-and-coming power electronics startup. On her first day of


work, she was shown around a laboratory where she would complete most of her projects.
During this time, she was also introduced to nine male interns who would be sharing the same
lab space. Since the lab could only accommodate five interns at a time, a vote was held to
determine who would work in the lab during the day (e.g. 8am to 4pm) and who would work at
night (e.g. 4pm to 12am) during certain days of the week. The morning shift was a popular
option for a majority of the interns; Ramona was fortunate to be selected for four (out of five)
morning shifts.

Weeks passed. Ramona had been enjoying her work and almost completed one of her
projects. However, one day, a fellow intern asked how she was doing. Ramona commented that
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she was “good but tired.” The intern replied that Ramona had “no reason to be tired because
[she was] working mostly day shifts.” Ramona was offended, but chose to ignore his comment.

The next day, she ran into several interns, one of whom was the one she encountered
the previous day. At some point in group’s conversation, the same intern made a remark about
how Ramona “always got her way [in the workplace] because she was a girl.” Ramona was
upset; however, because she did not want to cause a scene, chose again to ignore his remark.

During the following weeks, Ramona tried to avoid the intern who made the
inappropriate comments. However, certain settings forced her to interact with him and, in
those times, he made a point to make Ramona feel guilty and trivial. Because she did not
observe him behave condescendingly towards the other interns, Ramona speculated that her
colleague held a prejudice towards female engineers.

Commentary

It does appear that the other intern has a problem with Ramona. However, I don’t think
that we have enough information to completely determine that his problem with her is because
she is female. To make the determination I think that it would be helpful to know if all of the
other inters were male or female. Also, I would want to know if he treats any of the other
interns the same way that he treats Ramona. I can still address the issue of the culture of the
workplace without knowing those facts. I feel that any workplace where one employee is
treated differently needs to address the treatment. Regardless of what his reasons for treating
Ramona differently are, it is not appropriate. Ramona should report the treatment to her
superiors. It is up to them to deal with it ethically and address her concerns.

Method

I interviewed two people that are employed by Starbucks as well. The first interviewee
was Erin. Erin is an Assistant Manager who was recently promoted to Store Manager. She has
been employed with Starbucks for eleven years. She was hired as a barista and has worked her
way up. The other Starbucks employee that I interviewed is named Tammy. She was hired
Ethical Workplace Culture 11

externally to be a Store Manager. She has worked for the company for almost four years. Here
is a list of the questions that I started the interview with.

1. How do you define culture in the workplace?


2. What has more of an impact on a store a positive or a negative culture?
3. How do you change the culture in your workplace?
4. Do you think that culture in the workplace is important?
5. Why?
6. Have you experienced any unethical behaviors in the workplace because of the culture?
7. What do you think an ethical leader looks like?
8. If you could create the perfect ethical workplace culture what would it look like?

Results

Interview 1: Erin

1. How do you define culture in the workplace?

Culture to me is the general attitude of the store. Are the employees friendly to each
other? Do they get along and support each other? The culture can also be apparent in
the way that the employees interact with the customers. The more positive the
customer interactions typically the better the culture in the store is.

2. What has more of an impact on a store a positive or a negative culture?

I believe that a negative culture has a greater impact on a store. If the store is in a
negative place than it shows in many different ways. The employees typically do not
work well together in a negative culture. They don’t support each other in helping with
tasks and there is usually a lot of blame placed rather than taking responsibility for
things and helping each other out.

a. I asked her to provide an example of this.


The example that she used was there is a critical task that needs to get done
every night such as taking the temperature of the food that arrived. In a store
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with a positive culture everyone works together to make sure that the task gets
done. In a store with a negative culture typically there is little support around
this task, it may get forgotten often and everyone blames the others for it not
getting done.
3. How do you change the culture in your workplace?
Changing the culture of a workplace is one of the most difficult things that I’ve had to
do. At times it has taken the extreme move of changing employees to change the
culture. Erin stated that she has also had success in changing the culture by using
education. She educated her employees on better ways to interact with each other and
different ways to communicate.
4. Do you think that culture in the workplace is important?
Erin believes that culture is moderately important.
5. Why?
She feels that as long as her employees show up and for the most part have a positive
attitude the culture takes care of itself and doesn’t affect the customer experience. As a
Starbucks Store Manager she feels that the customer experience is the most important
factor she needs to worry about. She also feels that the culture becomes important
when it starts to negatively impact the customer experience.
6. Have you experienced any unethical behaviors in the workplace because of the culture?
In the past Erin had a Shift Supervisor that behaved negatively towards other
employees. This Supervisor would treat some employees differently such as not talking
to them while working with them. The Supervisor would also say negative things about
the other employees while they were not around. This behavior caused conflicts behind
the scenes and caused the employees to not work well together and to discuss the
conflict in front of customers.
7. What do you think an ethical leader looks like?

Erin stated that this was not a question that she had considered before. I asked her to
take some time and then also to answer whether she thought she was an ethical leader.
After some consideration, she said she felt she was an ethical leader. She then stated
Ethical Workplace Culture 13

that she felt an ethical leader was one that led by example. She explained that she
always wanted her Shift Supervisors to treat all the employees the same so she tried to
treat each of them the same. She also stated that for her an ethical leader would always
behave the same in given situations. An example that she used for this was that she
wouldn’t bend a rule for a customer if she wouldn’t do it for every customer.

8. If you could create the perfect ethical workplace culture what would it look like?
This question also made Erin think and after a while she answered that it would look and
feel like equality and consistency. She explained that even though there was a hierarchy
in the store of responsibility there wouldn’t be the feeling that some employees were
better or higher up than others. She said she really would want there to be a sense of
teamwork amongst the employees.

Interview 2: Tammy

1. How do you define culture in the workplace?


Tammy defines culture as the feeling of the store. What you feel when you walk in as a
customer and as an employee. Culture is also how the employees treat each other and
the joy that they in coming to work. If they don’t have joy than that is also part of the
culture.
2. What has more of an impact on a store a positive or a negative culture?
Tammy believes that a positive culture has more of an impact. She believes that a store
with a negative culture can still function adequately. However, a store with a positive
culture can change lives both of the employees and the customers. A positive culture
can allow the employees to do things above and beyond what the basic expectations of
their jobs are. Tammy is very passionate about the culture in her store and how it
effects all aspects of the store.
3. How do you change the culture in your workplace?
Tammy talked about what the culture was like in her store when she took over. The
culture was very blah as she put it. The employees were not very enthusiastic about the
store or the customers. They typically did the bare minimum or slightly above it in their
Ethical Workplace Culture 14

daily routine. To change this Tammy talked about inspiring her employees. She tried to
find in each of them what they were passionate about at work and what they really felt
they were good at. Then she helped them share that passion with the other employees.
The other thing that she did was really get to know some of the regular customers and
in turn introduce the employees to them.
4. Do you think that culture in the workplace is important?
Tammy is very passionate that the culture in the workplace is on of the most import
factors in the success of the workplace.
5. Why?

Tammy said before that the culture of the store is a feeling. That feeling determines if
people want to stay or not, both customers and employees. If the culture is a positive
one than people want to stay and be a part of it. They want to share it with others but
other employees and the customers.

6. Have you experienced any unethical behaviors in the workplace because of the culture?
Tammy didn’t feel that she had experienced any unethical behaviors in her current role
but she had in her past career. She declined to go into much detail but stated that it
had to do with the treatment of a fellow employee but their supervisor and the negative
effect that it had on the whole team.
7. What do you think an ethical leader looks like?
Tammy talked how an ethical leader was also an inspiring leader. That an ethical leader
strove to do the right thing for the people before the business. Tammy also talked
about how an ethical leader would inspire those around them.
8. If you could create the perfect ethical workplace culture what would it look like?
Tammy talked about the team culture that she was currently building in her store. In
this culture everyone had an equal say on almost every decision. She noted that there
were certain policy decisions that were not up for discussion but stated that she wanted
most decisions to be a collaborative effort. So a barista, a shift supervisor and the store
manager would all have the same say in a decision for the store. Tammy felt that this
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would increase fairness to every employee and increase the buy in that each employee
had.

Discussion

As a Starbucks Store Manager I have witnessed the emphasis that a company places on
culture. Until this course I hadn’t put much thought into the ethics of workplace culture. As a
company in the last six months we have placed a renewed focus on the culture for our
employees and our customers. As a company we also pride ourselves on consistently being one
of the most ethical companies in the world (Starbucks, 2017). My concern as I started to write
this paper is how could I tie together the ideas of culture and ethics and make them live in my
store? My goal by the end of this paper is to be able state how I will have an ethical workplace
culture in my store.

Culture can mean many different things to different people. For this paper I will use one
of the definitions provided by Merriam Webster dictionary. Culture can be defined as “the set
of shared attitudes, values, goals, and practices that characterizes an institution or
organization” (Culture, n.d). I want the attitudes and goals in my store to be ethical ones. I feel
that I have a duty to the company that I work for and that people that work for me to strive to
achieve that goal. A rule utilitarian “must weigh the consequences of adopting a general rule
exemplified by that action” (Donaldson, p. 5). So my rule will be that every action must have an
ethical reason behind it. How will I achieve this goal?

One thing that I realized after talking to Erin and Tammy was that education is
important to changing the culture in any store. People want to know the reasons why they are
being asked to do something. They do not want to just blindly follow directions. I do not
believe that most of my employees would buy in to Kant’s belief in the categorical imperative.
His belief that “’ethics then is an ethics of duty rather than an ethics of consequences
(Donaldson, p. 57). I don’t believe that my employees would be ethical just because it is their
duty. While this is a nice idea I think that they are going to want more information. I can give
them this information by educating them.
Ethical Workplace Culture 16

To educate my employees I will have to use the intelligence that they come to me with.
John Dewey was an American philosopher who proposed the pragmatic approach to business
ethics (Donaldson, p. 89). “For Dewey intelligence is not a natural gift or a particular aptitude.
Intelligence is a way of living that maintains the organism in harmony with its environment over
the long run” (Donaldson, pg. 92). What this means to me is that I should use the skills that
each employee comes to me with and hone them into the ethical behaviors that I want to see
modeled in my store and create the workplace culture that I am looking for. In educating our
employees we often use role playing to help the employees feel comfortable with new
behaviors. I believe this to be similar to Deweys dramatic rehearsal.

In Dramatic Rehearsal “we use our imagination to discover the options that might be
available to us” (Donaldson, p. 94). I would use specific scenarios that might arise in an
employee’s day to day activities to allow them to work through them ahead of time. This would
give them an elevated level of comfort so that they could make the most ethical decision in the
moment. The scenarios could be both customer and employee based. They could also
potentially allow the employees to see what would happen if they were to engage in unethical
behavior. This alone will not be enough.

One of the biggest take aways I had from talking to Erin and Tammy was the equality
that is lacking in my store. There is a hierarchy of decision making that I don’t believe is
benefical to the store. I believe that by not allowing the baristas to fully participate in decision
making I am not holding them to the ethical standard that I want for my store. Going forward I
plan to include baristas and shift supervisors in any decision making that I can.

I believe that by striving to make the workplace culture more ethical in my store it will
be beneficial to both my employees and customers. The customers will have a better and more
consistent experience when they come in the store. The employees will have the same
experience and will have the confidence to know what decision to make in any situation.
Ethical Workplace Culture 17

References

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Culture | Definition of Culture by Merriam-Webster. (n.d.). Retrieved from


https://www.merriam-webster.com/dictionary/culture

Donaldson, T. & Werhane, P. (2008). Ethical Issues In Business. Upper Salad River, NJ. Pearson
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Is the Customer Always Right? - Engineering Ethics Cases - Engineering Ethics - More - Focus
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The Case of the Performance Appraisal - Business Ethics Resources - Business Ethics - Focus
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Starbucks Named One of the World’s Most Ethical Companies | Starbucks Newsroom. (2017).

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Markkula Center for Applied Ethics - Santa Clara University. (2015). Retrieved from
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https://www.scu.edu/ethics/focus-areas/more/engineering-ethics/engineering-ethics-
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Wells Fargo Banking Scandal - Business Ethics Resources - Business Ethics - Focus Areas -
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