CULTURAL NORM ETHICAL

Cultural-Norm Ethical Dilemma Analysis

Diversity Cultural-Norm Case Scenario

1. Case of the Million Dollar Decision

Hackworth and Shanks (1998) Pegasus International Inc. is a leading manufacturer of integrated

circuits (chips) and related software for such specialty markets as communications and mass

storage, as well as PC-based audio, video, and multimedia. With a focus on innovation, Pegasus

is committed to "technology leadership in the new millennium." Its long-standing strategy has

been to anticipate changes in existing and emerging growth markets and to have hardware and

software solutions ready before the market needs them. The company has also made significant

strides in wireless communications. The systems and products of Pegasus' wireless business

have been selling well in its already existing markets in the United States, Japan, and Europe.

But, like any company, Pegasus is eager to grow the business.

At a strategy session with the Wireless Division, Pegasus CEO Tom Oswald and division

managers decide to explore the potential of expanding their business to China. Initial research

indicates that China is likely to develop into a huge market for wireless because its people do not

currently have this capability and the government has made spending on wireless a priority.

Wireless is really the only choice for China because of the high cost of burying the

communications cables necessary in wired systems; further, in underdeveloped countries, copper

wires are often stolen and sold on the black market.

Subsequent research does raise one concern for Pegasus wireless managers. They tell Oswald,

"We have this problem. China allocates frequencies and makes franchise decisions city by city,

district by district. A 'payoff' is usually required to get licenses." The CEO says, "A lot of

companies are doing business with China right now. How do they get around the problem?"

His managers have done their homework: "We believe most other companies contract with

agents to represent them in the country to get the licenses. What these contractors do is their own

business, but apparently it works pretty well because the CEOs of all those companies are able to

sign the disclosure statement required by law saying that they know of no instance where they

bribed for their business."

"I wonder if paying someone else to do the crime is the same as our doing the crime," Oswald

says. "I'm just not very comfortable with the whole question of payoffs. So, let me ask you, if we

don't expand into China, how much business will we lose, potentially?" His Wireless Division

manager responds, "It will be huge not to do business in all the countries expecting payoffs.

China alone represents easily $100 million of business per year. It's not life and death, but it is

a sizable incremental opportunity for us, not to mention potential Japanese partners who will

make significant capital investments. All we have to do is add our already-existing technology.

When you consider all that, we have a lot to gain. What will we really lose if our local

contractors are forced to make payoffs every now and then?"

Oswald wants his company to succeed, he wants to maximize shareholder value, he wants to

keep his job, and he wants to model ethical leadership. He has made an effort to build a corporate

culture characterized not only by aggressive R&D and growth but also by integrity, honesty,

teamwork, and respect for the individual. As a result, the company enjoys an excellent reputation

among its customers and suppliers, employee morale is high, and ethics is a priority at the

company. (Case of the Million Dollar Decision section, paragraph 2)

References

Hackworth M.L., Shanks S. J. (1998). Case of the million dollar decision. Retrieved from

http://www.scu.edu/ethics/dialogue/candc/cases/million.html#pegasus