Should We Go Beyond the Law: A Case Analysis

Problem Statement
In the ethical dilemma “Should We Go Beyond the Law?”, Nathan Rosillo, a key product
developer at Chem-Tech Corporation, developed a new lubricant product with his team (Daft,
2014). Chem-Tech Corporation’s top executives believe that this new product can improve the
dismal financial performance of the company. In addition, this can be produced at significant
cost savings because of the loosening of environmental regulation requirements. This means
that the company may directly dispose of their waste into the Dutch Valley River which Mr.
Rosillo has a sentimental attachment to. He expressed his opposition to the waste dumping to
the plant manager and his direct supervisor but he was dismissed. He was told that the company
will technically not be breaking any laws and that they should only concern themselves on
ensuring the company’s financial survival. Mr. Rosillo is contemplating whether he should
approach the visiting manufacturing vice president and present his concerns in hopes that she
would agree with him.
The main question that this case aims to answer is: How should Mr. Rosillo respond
further to his company’s decision to directly dispose of their waste into the river?

Key Objectives
Our key objective is to come up with an ethical decision that will improve Chem-Tech
Corporation’s financial performance. Mr. Rosillo’s decision on whether to take action against the
company’s method of waste disposal has financial implications for the company. This is because
they would either have to spend more on the proper treatment of their wastes versus just
directly dumping them into the river.

Analysis of the Case

In analyzing this case, I will be using the moral rights approach as a framework and the
principle of Corporate Social Responsibility as a guide in evaluating potential decisions (Daft,
2014).

Moral Rights Approach

The moral rights approach asserts that every person has fundamental rights and the
most ethical decisions are those that ensure those rights are kept protected. Following this
approach, Chem-Tech Corporation should choose a method of waste disposal that meets their
right to pursue economic gains as a business without interfering with society’s right to a clean
environment and clean source of water.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is the “obligation of organizational managers to
make choices and take actions that will enhance the welfare and interests of society” (Daft,
2014). This responsibility is directed towards any person or group, within and outside the
organization, who will be affected by the organization’s actions and performance. In this case, it
will be anyone who will be affected by Chem-Tech Corporation’s economic performance and
action of directly throwing waste into the river. The primary stakeholders include Mr. Rosillo
and his fellow employees, the company’s top executives, and the customers. The community
living near the river is also a stakeholder because the company’s actions will affect how they live.

Evaluation of Corporate Social Responsibility. In evaluating its CSR, Chem-Tech

Corporation will have to base their decisions in four criteria. The first is economic responsibility
which is a company’s responsibility to maximize profits for the owners and shareholders out of
the goods and services that they offer to society. In this particular case, this refers to their new
lubricant product. However, economic gain is only one of the responsibilities highlighted in the
principle of CSR. As they try to reach their economic goals, companies also have a duty to fulfill
their legal responsibility by operating within the legal requirements imposed by authorities. In

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this case, it is the loosened environmental regulation requirements. The next criteria is ethical
responsibility which means that even when pressured to engage in a more convenient unethical
behavior, the decisions made by the organization must not harm the society, such as those who
live near the river in the given scenario. The highest criterion of CSR is discretionary
responsibility which Chem-Tech Corporation may fulfill if they voluntarily contribute to the
betterment of society without being mandated by economics, law, or ethics, which goes beyond
what is expected of them.

Development and Selection of Alternatives

Given the analysis of how to respond to the situation of Chem-Tech Corporation, Mr.
Rosillo can be guided in contemplating which course of action would be most appropriate in
reaching the objective of making an ethical decision that can improve the company’s dismal
financial performance.

First Option: Keep Silent and Proceed with Waste Disposal into the River
Mr. Rosillo’s first option is to be a passive bystander and allow Chem-Tech Corporation to
proceed with its plan to directly dispose of their wastes into the river. This will fulfill the
company’s economic responsibility because it can increase the company’s profit by reducing
their operational expenses on proper waste treatment and disposal. Because of higher profit, the
economic situation of the company may be improved and no lay-offs have to happen to ensure
the company’s survival. Legal responsibility is also fulfilled because dumping of waste in the
river has been allowed by regulatory agencies. By keeping silent and turning a blind eye on the
potential negative consequences of this option to the environment, Mr. Rosillo will also avoid
any further tension between him and his supervisors.
However, dumping of wastes into the river will mean that Chem-Tech Corporation will be
violating its ethical responsibility of safeguarding the welfare of society, particularly the
community living near the river. Improper waste disposal into the river may result in water
pollution that will harm the health of people living nearby, disrupt the ecosystem or food chain
that exist in the river, and negatively affect the quality of river water which may be used for the
community’s daily needs. Hence, Chem-Tech Corporation will also be violating the moral rights
principle because it will interfere with the community’s freedom to safely enjoy the clean river,
right to clean water, clean environment, and good health. Hazardous wastes that will be dumped
by the company may contaminate the water and subsequently, harm the people and animals
who will consume or be exposed to it. This may result in illness or even death which will also
result in a negative public image. This may deter customers from buying the new product,
resulting in decreased profits. The company may be pressured to clean up the river later on or
pay for the medical expenses of anyone who gets sick due to the contaminated water. Therefore,
the economic gains will only be short-term and will result in worse economic losses for the
company in the long run.

Second Option: Get an Environmental Group to Stage a Protest

Mr. Rosillo’s second option is to get the local environmental advocacy group to stage a
protest against the company’s decision to dump waste into the river. The advantage of this is it
will save Mr. Rosillo from the potential tension that may arise if he expresses his opposition to
the top executives’ decision to his other supervisors or his colleagues. It will also allow the
community to exercise its right to voice out their concerns. However, even if the protest will
somehow change the decision of the top management, it will result in a bad publicity for
Chem-Tech Corporation. News of irresponsible waste management may even result in the
customers’ boycott of the new product which was supposed to help the company survive
financially. This may also result in lay-offs if the protest worsens their economic situation.
Although this option still fulfills the legal responsibility of the company to operate within
environmental regulations, it will violate their economic and ethical responsibility of
maximizing profit while ensuring that the company and its employees will remain unharmed.

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Third Option: Approach the Manufacturing Vice President
The third option that Mr. Rosillo may consider is to approach the visiting manufacturing
vice president. He can emphasize to her that as an industry leader, there is a great need for
Chem-Tech Corporation to serve as a good example in sustainable waste management. If his
recommendation is heard and implemented, this may be an effective marketing strategy and
result in a good public image. Customers may be motivated to buy the new product as a show of
support for the company’s regard for environmental sustainability in its operations. The
resulting higher profit may save the company’s financial situation and may mean that the jobs of
its employees will be retained. They will also avoid protests from environmentalists or the
people living near the river which may negatively affect their sales. Future costs of cleaning up
the river or paying for the community’s medical expenses as a result of societal pressure may
also be avoided. This option fulfills the ethical responsibility of the company to protect the
welfare of all stakeholders which includes the community near the river and the ecosystem
thriving in it. This can be accomplished while still operating within the legal requirements of
environmental regulations. Mr. Rosillo may even recommend that Chem-Tech Corporation can go
a step further and fulfill its discretionary responsibility by creating initiatives that will safeguard
the cleanliness and safety of the river, just because it is the right thing to do. For example, he may
suggest initiatives that will reduce waste in the workplace or programs that will encourage
recycling.
However, this option will result in greater operational expenses for the company in order
to properly treat and dispose of waste. This places the company’s financial survival and
retainment of employees at risk. Mr. Rosillo also faces the risk of being dismissed by the
manufacturing vice president. This may result in tensions between him, his supervisors, and
probably even his colleagues because he will be branded as the employee who opposed the
company’s top executives.

Recommendation and Conclusion

Given that there are more advantages to the third option, the recommended course of
action is for Mr. Rosillo to approach the manufacturing vice president with his concerns about
the company’s waste management method. He should present his argument on the importance
of carrying out the company’s CSR in a polite and professional manner with all the possible
advantages and disadvantages. He may reassure the manufacturing vice president that despite
the additional operational costs of proper waste treatment and disposal, it will benefit the
company in the long run because it positions the company as the environmentally-friendly
choice, eventually leading to economic gains. He may also volunteer to be part of the team who
will come up with an action plan on how to implement responsible waste management. This will
show the manufacturing vice president his determination and confidence in his argument and
his readiness to accept responsibility. If Mr. Rosillo’s recommendation will be implemented, he
will accomplish his goal to ethically improve Chem-Tech Corporation’s financial performance
while taking into account the interests of all stakeholders.
In this case analysis, the idea that economic gain should be the sole objective of a
company was challenged. Managers should not regard legality, cost, and convenience as the sole
determinants of the most ethical course of action. The welfare of society should also be
considered because projects that harm other people may also indirectly impact the organization.

Reference
Daft, R. L. (2014). Chapter 5: Managing ethics and social responsibility. In Management (12th ed.,
pp. 150-181). Boston, MA: Cengage Learning.