Evaluate Ethical Behavior

Beyond the Manager’s Moral Dilemma:

Rethinking the ‘Ideal-Type’ Business

Ethics Case Todd Bridgman

ABSTRACT. Case teaching occupies a central place in

the history of business education and in recognition of its

significance, the Journal of Business Ethics recently created a

new section for cases. Typically, business ethics cases are

used to teach moral reasoning by exposing students to

real-life situations which puts them in the position of a

decision-maker faced with a moral dilemma. Drawing on

a critical management studies’ (CMS) critique of main-

stream business ethics, this article argues that this ‘ideal-

type’ decision-focused case underplays the social, political

and economic factors which shape managerial decisions.

An alternative ‘dark side’ case approach is presented,

which highlights the structural features of capitalism and

the role of government in regulating the market. The

‘dark side’ approach is illustrated with the case of a New

Zealand woman, dependent on an oxygen machine, who

died when her power was disconnected by her State-

owned electricity supplier because of an unpaid bill. The

case considers the actions of both the company and the

industry regulator within the context of a ‘light-handed’

approach to government regulation. The article con-

cludes with a discussion of how this approach to the case

method, which moves beyond managers and their moral

dilemmas, can provide students with a deeper under-

standing of the complexity of business ethics.

KEY WORDS: business ethics, case teaching, critical

management studies, management education, profes-

sionalisation

Introduction: ethics teaching in the spotlight

The crisis which swept financial markets in 2008

has prompted another round of questioning over

the role played by business schools. Following the

post-Enron introspection over the state of busi-

ness education (Ghoshal, 2005), this latest bout of

soul-searching has intensified concerns about the

moral shortcoming of today’s business school grad-

uates. Labelled the ‘academies of the apocalypse’

(James, 2009), business schools are blamed for pro-

ducing ‘wannabe Gordon Geckos’ 1

(Chibber, 2009)

who believe that is greed is a virtue which holds the

key to economic prosperity (Walker, 2009).

The global financial crisis (GFC) has re-ignited

interest in the idea of management as a profession.

The professionalisation project was prominent in the

founding of business schools in the United States

(Khurana, 2007), but it gave way in the 1960s to an

emphasis on technical expertise following criticisms

of poor quality research and low quality students

(Gordon and Howell, 1959; Pierson, 1959) and was

further undermined in the 1980s when economic

theories, such as agency theory, came to dominate the

curriculum, framing the task of management as the

narrow pursuit of shareholder interests (Ghoshal,

2005). The idea of the corporate statesperson was in

danger of becoming ‘increasingly obsolete and

embarrassingly irrelevant’ (Danley, 1998, p. 21) – the

lofty view of management as a profession with ‘higher

aims’ abandoned in favour of a view which sees

managers as ‘hired hands’ serving shareholder interests

(Khurana, 2007). The GFC has led to attempts to

resuscitate the figure of the management professional.

Khurana and Nohria (2008) outline a Hippocratic

Oath for Managers, based on that undertaken by

medical professionals, in which managers pledge to

serve the public’s interest. At their own institution,

Harvard Business School, half of the graduating class

of 2009 pledged to honour the values of the man-

agement profession (Economist, 2009). 2

At the heart of professionalisation is the issue of

trust. The legitimation of management as a profession

Journal of Business Ethics (2010) 94:311–322 � Springer 2011 DOI 10.1007/s10551-011-0759-3

rests on an ethos of service where managers serve

society’s interests, rather than the narrower interest of

the corporation. Professionalisation offers the promise

of a self-disciplinary mechanism, with its shared

knowledge, standards and norms of conduct allowing

a form of self-regulation to compensate for the

imperfections of more formalised regulatory processes

(Khurana, 2007). If organisations are run by moral

managers, then the implication is that they can be

trusted to govern themselves, rather than being sub-

jected to heavy oversight from state-based regulatory

mechanisms. The stakes are high, with accreditation

agency Association to Advance Collegiate Schools of

Business (AACSB, 2004, p. 7) warning that ‘at issue is

no less than the future of the free market system,

which depends on honest and open enterprise to

survive and flourish’. As the response of governments

to the GFC demonstrates, if managers cannot be

trusted to act in the interests of society, then the

freedoms extended to business will be curtailed.

Where does this leave the teaching of business

ethics? It is widely accepted that more ethics teaching

is needed, but how should we teach ethics? A recent

meta-analysis of business ethics programmes con-

cluded pessimistically that such programmes have

little impact on students’ perceptions, behaviour or

awareness, although it did note that ‘the instructional

approach that is most fruitful for ethics is a case-

based approach’ (Waples et al., 2009, p. 147). The

case-based approach has nearly 100 years of history

within business schools and has been an integral part

of ethics education by endeavouring to assist the

development of students’ moral reasoning. This

article identifies an ‘ideal-type’ business ethics case,

based on analysis of submission requirements to

leading case journals, where students encounter

managers who are faced with moral dilemmas and

must balance the needs of multiple stakeholders

in making ethical decisions. Underpinning this

approach is an assumption that the moral deficiencies

of managers are the solution to the problem of

repugnant corporate conduct. This article explores

that assumption by drawing on a critique of main-

stream business ethics by critical management studies

(CMS), which encourages us to attend to systemic

influences. From this perspective, unethical behav-

iour by corporate managers might alternatively be

viewed as the rational pursuit of profit within a

capitalist system. In considering ways to improve

corporate behaviour, this critique prompts us to look

beyond the narrow concern with the ethical char-

acter of managers to consider the rules of the system

and those who create and administer those rules –

government and its agencies.

Instead of suggesting that we abandon the case

method, this article proposes an alternative ‘dark

side’ approach to case writing and teaching, which

encourages students to attend to structural con-

straints on managerial decision-making. In order to

illustrate this alternative approach, a case is presented

which tells the story of a New Zealand woman,

dependent on an oxygen machine, who died when

her power was disconnected by her State-owned

electricity supplier because of an unpaid bill. Rather

than place students in the position of a manager who

is faced with an ethical dilemma, students are

encouraged to analyse the interaction between a

profit-seeking organisation and an industry regulator

within a capitalist system. This is not an ‘ideal-type’

business ethics case, but it is argued that the teaching

of business ethics would benefit from its expanded

definition of business ethics.

The contribution of CMS to a critique

of business ethics’

The CMS questions the authority of mainstream

management thinking. It is a pluralistic movement

informed by a diversity of theoretical perspectives,

but common to each is a view of management as a

pervasive institution within capitalism (Alvesson

et al., 2009). Critical management scholars have

been active in the field of business ethics, con-

fronting ‘taboos’ (Kallio, 2007) avoided by main-

stream theorists. Whilst a unitary CMS critique of

mainstream business ethics does not exist, a recurrent

theme is the mainstream’s construction of ‘business

ethics’ as the solution to the problem of undesirable

corporate behaviour. This illusion is maintained by

a focus on the individual as the unit of analysis,

underpinned by a view of the manager as an

autonomous agent, and by an exclusion of politics

which turns attention away from the role of gov-

ernment and the inter-organisational dynamics of

the regulatory environment.

Critical management scholars have highlighted

the separation of ‘ethics’ from ‘politics’ within the

312 Todd Bridgman

mainstream of business ethics (Jones et al., 2005;

Parker, 2003; Parker and Pearson, 2005). This has

allowed academics within business schools to create a

distinct area of inquiry with boundaries which

include moral philosophy and exclude politics and

ideology. The effect is ‘a rather tidy affinity between

a narrow use of the word ‘‘ethics’’ and a market

managerial ideology that considers questions about

persons to be legitimate but questions about political

economy to be largely settled’ (Parker, 2003,

p. 189). In this way, the construction of ‘business

ethics’ as a field of study or a subject for the cur-

riculum is revealed as a political commitment to

particular ideologies (the individual, managerialism)

which serves to legitimate the discipline and those

academics who identify with it.

Mainstream business ethics has a preference for

individualistic explanations, which downplay or avoid

completely the social context (Jones et al., 2005). The

response that corporate scandals are the result of ‘a few

bad apples’ deflects attention from the systemic

influences on such behaviour, bringing managerialism

to the fore and relegating theories of political econ-

omy to the background (Jones, 1996). Danley (1998)

identifies three components of managerialism: the

separation of ownership and control which hands

power to managers; the associated discretionary

powers to pursue goals other than short-term profit

maximisation; and professionalism. Taken together,

the key assumption is that managers have the discre-

tionary power to do good, but they either don’t have

the will or the knowledge to do good. Hence, the

solution is to provide the knowledge through courses

in management and ethics. (Danley, 1998, p. 25)

Whilst not wanting to ‘obliterate the micro’

(p. 28), for Danley, the problem is not with immoral

managers, but with the structural, enduring features

of capitalism. Danley concludes that assumptions of

managerial discretion are probably false and that by

applying a political lens ‘we may come to understand

that management has little choice’ (p. 28). Corporate

downsizing and outsourcing might be caused by ‘evil

managers’ (p. 29), but are more likely responses to

structural features of the external environment, he

argues. If managers’ moral reasoning is not the

problem, then teaching them about moral philoso-

phy is not the solution (Danley, 1998).

Critical approaches to business ethics, therefore,

highlight how the construction of business ethics as a

field of study within the institution of the business

school functions ideologically to legitimate the

workings of a free market system by promoting a

trust in self-regulation by corporations and an asso-

ciated distrust of government-imposed regulation. As

a result, questions about the ethics of business within

a capitalist system are silenced (Wray-Bliss, 2009).

Later in the article, an approach to the case method is

presented which places the ethics of business in the

foreground. First however, let me briefly review the

literature on the case method of teaching.

Teaching business ethics using cases

‘What decision would you make?’ It seems to me that

this is the entire burden and thrust behind using cases

in an ethics course. That is, what would the individual

students do if they found themselves in such and such a

situation? In effect the instructor wants to force or lead

the student into the habit of ethical thinking and

ethical decision making. (Gini, 1985, p. 352)

The case method has a long history within man-

agement education, associated in particular with

Harvard Business School, dating back to the

founding of the school in 1908 when the first Dean,

Edwin F. Gray, advocated the ‘laboratory method’

of instruction (Corey, 1998). At that time, there was

little management theory, with teachers either

writing cases about their own experiences as man-

agers, or working with managers to prepare cases

about the problems they encountered at work

(Corey, 1998; Lundberg and Winn, 2005).

Lynn (1999, p. 2) defines a teaching case as ‘a

story, describing or based on actual events and cir-

cumstances, that is told with a definite teaching

purpose in mind and that rewards careful study and

analysis’. Lynn identifies five types of cases: decision-

forcing, policy-making, problem-defining, concept-

application and illustrative. Decision-forcing (or

decision-focused) cases are the most popular because

of ‘the conviction among teachers in the professions

that the essence of professional skill is the ability to

make decisions under trying circumstances’ (p. 107).

Characteristics of high-quality teaching cases are

presented in Table I and highlight the dominance of

313Beyond the Manager’s Moral Dilemma

the decision-focused type. According to these cri-

teria, high-quality cases are those which identify an

actor or actors who must make decisions and solve

problems – irrespective of the type of case deployed.

An analysis of the submission guidelines of leading

business case journals supports the observation that

the decision-focused case represents an ‘ideal type’. 3

Case Research Journal only publishes decision-focused

cases and gives priority to those which are based on

field-research, rather than secondary sources. The

Business Case Journal has historically focused on

decision-focused cases, though it now also accepts

‘descriptive cases’ which enable students to analyse

how a situation was managed and encourage them to

determine if it could have been handled better. The

Case Journal is the most open of the three, with the

submission guidelines explicit that cases do not have

to have a decision focus. They also welcome illus-

trative, descriptive and analytical cases.

Within the field of business ethics, a similar pref-

erence for the ‘ideal-type’ decision-focused case is

evident, with Gini’s (1985, p. 185) classification in

Table I an exemplar. The Journal of Business Ethics has

recently created a new section for cases on business

ethics, in response to the growing presence of ethics

in the business school curriculum. In their intro-

duction to the new case section, Falkenberg and

Woiceshyn (2008) note that the need for teaching

materials is growing, yet available cases are com-

monly either too short, too long, out of date or push

students towards a ‘right’ answer and are typically

written from the perspective of senior management,

thereby neglecting ethical dilemmas faced by middle

management and professionals. The title of Falken-

berg and Woiceshyn’s article makes clear its focus –

‘Enhancing business ethics: Using cases to teach

moral reasoning’ (p. 213). The authors argue that a

‘consensus has started to emerge’ (p. 213) that the

goals of case teaching should be to increase students’

awareness of ethics and to improve their reasoning

and judgement skills by getting them to identify and

apply their own values. For Falkenberg and Woice-

shyn, the primary use of cases is to teach moral rea-

soning by exposing students to real-life situations.

Whilst acknowledging that issues such as business–

government relationships, the organisation of the

economic system and the conflicts of stakeholders are

important, the emphasis on teaching moral reasoning

implies that ‘good’ cases explore these issues through

the nodal point of the manager as decision-maker.

Whilst I applaud Journal of Business Ethics’ recog-

nition of the importance of case teaching, by taking a

narrow view of the uses of ethics cases (to teach

moral reasoning), other uses are neglected. For Fal-

kenberg and Woiceshyn, good cases identify prob-

lems and encourage students to make decisions to

solve them. However, there is a danger that, in the

rush for ‘solutions’, we may be missing important

contributing factors to the ‘problems’. Within CMS,

there exists a small but growing body of case writers

who seek to challenge this case writing orthodoxy.

The Dark Side Case Competition, organised by the

TABLE I

Characteristics of high-quality teaching cases

Gini (1985) Lynn (1999) Lundberg et al. (2001)

Identifies the problem or what is at

stake

Poses a problem that has no obvious answer Describes a real situation

Requires the reader to identify the

non-normative or factual issues involved

Identifies actor(s) who must solve the

problem, make decisions

Is reasonably complex

Requires the reader to identify the

normative or ethical issues involved

Requires the reader to use the information in

the case to address the problem

Is decision focused

Requires the reader to consider the

available alternatives

Requires the reader to think critically and

analytically to evaluate the problem and

potential solutions

Requires the reader to make a decision Has enough information for a good analysis

Source: Gini (1985), Lynn (1999) and Lundberg et al. (2001).

314 Todd Bridgman

CMS Division of the Academy of Management,

began in 2001 following an observation by the US

critical scholar Paul Adler that cases libraries were

dominated by ‘best practice’ cases or by cases which

involved managers facing difficult decisions. Adler

wanted the Dark Side Case Competition to focus

not on ‘individual bastards, but on cases that tell us

something about the broader system and how it

permits, encourages, even forces firms to do terrible

things’ (Adler, cited in Raufflet and Mills, 2009, p.

5). ‘Dark side’ case writers, therefore, are united in

the belief that restricting cases to focus on the moral

reasoning of decision-makers tends to downplay the

structural features of the capitalist system. This raises

the possibility that what is identified as a consciously

moral (or immoral) decision by a manager might

alternatively be viewed as a rational business decision

by profit-seeking organisations within a system based

on capital accumulation (Raufflet and Mills, 2009).

The next section provides an illustration of this

alternative approach to case writing. 4

After intro-

ducing the case, the analysis focuses on how this

approach departs from the ‘ideal-type’ and how this

might get students thinking differently about busi-

ness ethics.

The dark side of ‘light-handed’ regulation:

the death of Folole Muliaga 5

Folole Muliaga, a 45-year-old Samoan woman, and

her son Ietitaia were in their Auckland home on 29

May 2007. 6

Mrs Muliaga was in the dining room

and Ietitaia was seated at the computer in the living

room. At 10.25 a.m., Ietitaia answered a knock

on the door. ‘Good morning, I’m from Mercury

Energy and Mercury Energy is disconnecting your

power for arrears’, said the man, an employee of

VirCom Energy Management Services (hereafter

‘the contractor’) which was contracted to perform

Mercury Energy’s disconnections. 7

He handed

Ietitaia a disconnection notice which he took to his

mother, who told him to invite the man into speak

with her. By this time the contractor had cut the

power supply to the house. Ietitaia asked him to

come inside, and the man followed him to the

dining room, stepping over a tube running from a

machine in Mrs Muliaga’s bedroom to the prongs

attached to her nose.

Mrs Muliaga was not a healthy woman. Since

migrating to New Zealand in 2000 with her hus-

band, Lopaavea and four children in search of a

better life, her health had deteriorated. She first

received hospital treatment on 5 April 2007 for

breathing difficulties associated with her weight,

which had risen to 212 kg. She was diagnosed with

obesity hyperventilation syndrome, an illness which

prevented her from breathing adequately to remove

carbon dioxide from her body. Mrs Muliaga was

treated with drugs and a ventilator and by the time of

her discharge from hospital on 11 May 2007, her

weight had fallen to 184 kg. She was given two

machines to continue oxygen treatment at home.

The contractor explained to Mrs Muliaga that he

had disconnected the power on instruction from

Mercury Energy, as the account was NZ $168.40 (US

$120) in arrears. Mrs Muliaga asked ‘So how do I get

my power on?’ to which the contractor replied, ‘You

either pay or ring Mercury Energy’. Ietitaia did not

hear all of the conversation, but heard his mother say

‘Please give us a chance’ to which the contractor

replied ‘I’m just doing my job’. The contractor could

see the plastic tubes coming from Mrs Muliaga’s nose,

but he did not know what they were for and did not

feel it was his business to ask about them. He did not

see any oxygen machines, or any tubes on the floor.

He also did not hear the alarm which was triggered

when power supply to the oxygen machine was cut.

Once the contractor left the house, Mrs Muliaga’s

health deteriorated rapidly. She took some pills, but

Ietitaia and his brother Ruatesi, who had arrived

home, were concerned. She asked Ietitaia to play a

song on the guitar but halfway through the song she

was struggling to breathe. Ietitaia went to the dining

room to call an ambulance but their phone was

disconnected. He returned to find his mother

unconscious and Ruatesi attempting resuscitation.

Ietitaia went to the neighbours’ house and an

ambulance was called. Two ambulance staff arrived

and continued attempts to resuscitate her but it was

too late. Folole Muliaga was dead.

The blame game begins

Mercury Energy was the third largest energy retailer

in New Zealand, providing electricity and gas ser-

vices to 315,000 residential business customers

315Beyond the Manager’s Moral Dilemma

throughout New Zealand. It was a profitable busi-

ness – between 2003 and 2007 its earnings nearly

doubled, though its return on shareholders’ equity

had fallen by more than half during this time to less

than 6%. Mercury Energy had a strong presence in

Auckland, with more than 50 years of history sup-

plying customers in the region. Mercury Energy was

active in community initiatives to support the

company’s goal of ‘bringing together the Company

and surrounding communities so that the needs of

each are mutually understood’ (Mighty River

Power, 2007, p. 28). In 2007, Mercury Energy

insulated, free of charge, the homes of 50 patients of

Auckland’s children’s hospital, who were suffering

from respiratory illnesses, to make their houses

warmer and drier.

The day following Mrs Muliaga’s death news

reports began to surface in New Zealand. These

were soon picked up by international news outlets,

including the BBC and CNN, their attention having

been drawn by the apparent death of a woman over

an unpaid electricity bill. Mercury Energy initially

insisted it had done nothing wrong, but it softened

its stance as further details of the case were revealed.

Senior management visited the family’s home,

dressed in traditional Samoan lava-lavas wrapped

around their suits, to offer their condolences and

money to cover funeral expenses. Politicians from

New Zealand’s government and opposition parties

were quick to start pointing the finger of blame.

Prime Minister Helen Clark accused Mercury

Energy of a ‘hard-nosed commercial attitude’ and

said it was unbelievable that the contractor had gone

ahead with the disconnection even though he saw a

tube coming out of Mrs Muliaga’s nose (Eaton,

2007). Richard Prebble, former State Owned

Enterprises Minister, said it was ironic that Prime

Minister Clark was attacking Mercury Energy, given

that her government owned it (Prebble, 2007).

Two weeks after Folole Muliaga’s death, Police

announced there was no evidence to justify any

charge against either Mercury Energy or their con-

tractors. Following an inquest, Coroner Gordon

Matenga concluded that Mrs Muliaga died of an

arrhythmia caused by morbid obesity and that ‘the

cessation of oxygen therapy and stress arising

from the fact of the disconnection (as opposed to the

way in which the power was disconnected) have

contributed to her death’ (Matenga, 2008, p. 33).

The VirCom contractor escaped blame, with the

Coroner accepting that he knew nothing of Mrs

Muliaga’s medical condition, the oxygen machine

or the need for power to keep it operating. The

Coroner accepted that had the contractor been

aware of the situation, he would have followed the

standard procedure and telephoned Mercury Energy

to advise them that the power should not be cut off.

The contractor had given two examples when he

had done this in the past, one case involving children

with intellectual disabilities and the other a newborn

child.

New Zealand’s electricity industry reforms since 1984

While the focus of the media’s attention was the

actions of the contractor and of Mercury Energy,

Mrs Muliaga’s death can also be examined in the

broader context of a radical transformation of New

Zealand’s electricity sector which had begun

25 years earlier. Prior to 1984, electricity generation

and transmission had been the responsibility of the

Ministry of Energy, a government department,

which was also responsible for policy advice and

regulatory functions. The Ministry of Energy oper-

ated New Zealand’s hydro-electricity network and

its gas and coal-fired stations, as well as maintaining

the transmission system that distributed electricity to

local power board and councils, which sold it to

consumers. In 1984, the newly elected Labour

government faced a foreign exchange crisis which

provided the catalyst for a series of wide ranging

neo-liberal economic reforms which transformed

New Zealand from one of the most regulated

economies in the OECD to arguably the least reg-

ulated (Chapman and Duncan, 2007). Treasury, the

department which advised the government on eco-

nomic policy, argued the Ministry of Energy was

over-staffed and inefficient and suggested a number

of market reforms for the sector.

In 1987, the Electricity Corporation of New

Zealand (ECNZ) was set up as a company under the

State Owned Enterprises Act to own and operate

New Zealand’s generating stations and the trans-

mission system. Policy and regulatory activities were

separated out and largely retained within the Min-

istry of Energy. Section 4 of the State Owned

Enterprises Act 1986 stated that

316 Todd Bridgman

[1] The principal objective of every State

Enterprise shall be to operate as a successful

business and, to this end, to be:

[a] as profitable and efficient as comparable busi-

nesses that are not owned by the Crown;

[b] a good employer; and

[c] an organisation that exhibits the sense of

social responsibility by having regard to the

interests of the community in which it oper-

ates and by endeavouring to accommodate

or encourage these when able to do so

(State Owned Enterprises Act, 1986).

In 1989, an Electricity Task Force recommended

the development of a ‘light-handed’ regulatory

regime, which involved the use of the existing com-

petition policy regime to deal with anti-competitive

behaviour, together with extensive information dis-

closure and the threat of further regulation if dominant

market players abused their natural monopoly posi-

tion. ‘Light-handed’ regulation was seen as preferable

to ‘heavy-handed’ regulation, such as price controls,

which were considered complex, costly to administer

and not always capable of producing the preferred

result. By maintaining a ‘light-handed’ approach,

regulations could be kept to a minimum, with addi-

tional measures introduced to overcome any weak-

nesses in the regulatory framework that arose over

time (Ministry of Economic Development, 2006).

In 1999, the newly elected Labour government

inherited an electricity industry that was largely self-

regulating, with market participants subject to few

legislative and government restrictions. Whilst it

was Labour that had begun the neo-liberal reforms

in 1984, its electoral success in 1999 was based on a

pledge to curb the excesses of the free market,

especially in the provision of essential services, such

as electricity. The government stated that it favoured

industry solutions where possible, but signalled its

intention to regulate if the industry failed to self-

regulate responsibly. In 2000, it announced a new

governance structure for the industry, including a

self-governance board. However, by 2003, industry

participants had failed to reach agreement on self-

governance arrangements, prompting government

to establish an Electricity Commission (EC) to take

over governance of the industry.

The EC and its guidelines for low-income customers

The EC, funded by a levy on electricity companies,

was responsible for overseeing the governance and

operations of New Zealand’s electricity market.

Consistent with New Zealand’s ‘light-handed’

regulatory approach, the EC had extensive powers

to regulate but was expected to meet its objectives

through persuasion rather than regulation. In 2005,

the EC announced it was considering implementing

a set of guidelines to assist low-income domestic

consumers to ensure that minimal disconnections

occurred, and to establish standards for these dis-

connections. It was hoped that by introducing

guidelines all parties would benefit – retailers’ bad

debts would be reduced as well as the costs that

resulted from enforcing them, social agencies would

reduce the money they were advancing to cus-

tomers struggling to pay their bills and consumers

would benefit from a continuous supply of elec-

tricity. The EC noted that some retailers made

more strenuous efforts than others before making

disconnecting low-income customers. Following

the hearing of submissions from power companies,

community groups and other interested parties, the

EC released a final set of guidelines which were

‘advisory, in line with its objective to encourage

rather than regulate’ (Electricity Commission, 2005,

p. 5).

Critical to the Coroner’s investigation into Mrs

Muliaga’s death was Mercury Energy’s actions

leading up to the disconnection being ordered, in

relation to the EC’s guidelines. The guidelines

involved a two-step process: first, the electricity

retailer would inform its customers on how to

identify themselves as a vulnerable customer who

would face hardship if the electricity was discon-

nected. The obligation was then on those customers

to follow those instructions. At the time of Mrs

Muliaga’s death, Mercury Energy did have a ‘Do

Not Disconnect List’ which included 59 customers

with medical conditions, but Mrs Muliaga was not

on the list. Following her death, Mercury Energy

accepted they had not fully complied with the EC

guidelines. Whilst they did assist vulnerable customers

who identified themselves, they did not provide

information on the process of self-identifying as a

vulnerable customer. The Coroner concluded that:

317Beyond the Manager’s Moral Dilemma

It is perhaps no surprise that the Muliaga family did not

advise Mercury Energy of Mrs Muliaga’s medical

condition. There is no evidence before me that the

Muliaga family was aware that help was available to

them. (Matenga, 2008, p. 16)

Why did Mercury Energy not implement the

EC guidelines? There is no definitive answer to this

question, but, in 2005, a submission was made by

Mercury Energy’s parent company, Mighty River

Power, to the EC on the proposed guidelines. In

its submission, Mighty River Power supported the

objectives of the guidelines but said that retailers

already had processes around disconnection and the

EC had failed to demonstrate there was a problem

with them. Mighty River Power (2005) said that

while disconnection was considered a ‘last resort’

(p. 14), the ability to disconnect was needed to

ensure bad debts did not grow too big and to

provide an incentive for bad debtors to pay their

bills. Any actions which delayed disconnection

would

distort the current prioritisation process by sending a

very clear signal to low income and vulnerable indi-

viduals that electricity should be the last obligation that

they should be concerned about. (Mighty River

Power, 2005, p. 5)

While the tragedy of Mrs Muliaga’s death has

many contributing factors, it is not unreasonable to

suggest that her death might have been avoided if

Mercury Energy had chosen to implement the

EC’s voluntary guidelines. We need also to con-

sider the actions of the industry regulator itself. The

EC could have chosen to regulate the way in

which electricity suppliers disconnect low-income

customers, rather than preferring voluntary guide-

lines consistent with a ‘light-handed’ regulatory

approach. Grey Power, a lobby group for those

aged over 50, warned in its submission on the

draft guidelines that electricity retailers might

ignore guidelines they found difficult or costly to

implement. The only way for the EC to ensure

low-income consumers would be protected, they

argued, was to regulate (Grey Power, 2005).

In June 2007, as a direct result of the death of Mrs

Muliaga, the EC put out a revised set of guidelines for

assisting low-income consumers. Whereas the 2005

guidelines were ‘advisory’ (Electricity Commission,

2005, p. 5), the 2007 guidelines stated that ‘retailers

must report annually on their level of compliance

with the guidelines, and where the guidelines have

been deviated from, provide reasons for each type of

deviation’ (Electricity Commission, 2007, p. 3). This

compliance information would be publicly available

on the EC’s website. Despite this tougher stance, the

EC stopped short of imposing regulations, preferring

once again to threaten regulation if the response from

retailers was unsatisfactory.

Beyond the manager’s moral dilemma

Based on the criteria of high-quality cases presented

in Table I, the case presented above is not an ‘ideal-

type’ business ethics case, in two respects. First,

while it does retrospectively describe decision-

making at multiple levels (the decision by Mercury

Energy not to implement the voluntary guidelines,

and the decision by the EC to create guidelines

rather the regulations), it does not ask students to

‘step figuratively into the position of a particular

decision maker’ (Leenders et al., 2001, p. 3). Rather,

students are encouraged to analyse the interplay of

political and economic factors and organisational

relationships and to suggest how this tragedy might

have been prevented.

Second, it does not fit the ‘ideal-type’ ethics case

because there is no apparent ethical dilemma. There

is no evidence that any of the decision-makers in

the case were conscious that the choices they made

involved moral choices. Mercury Energy’s decision

not to implement the guidelines could be inter-

preted, retrospectively, as a moral dilemma, but it is

unlikely to have presented itself as such at the time,

since Mercury Energy appeared to believe its’ pro-

cesses were sufficient. In addition, their concerns

about providing a disincentive for people to pay

their electricity bills can be interpreted as a rational

pursuit of the primary objective of their governing

legislation, the State Owned Enterprises Act, which

requires such entities to be as profitable as their

private-sector competitors.

It was noted earlier how, from the perspective of

CMS, mainstream approaches to business ethics

foreclose the ethical with their preoccupation with

ethical dilemmas, which has the effect of counting

318 Todd Bridgman

out of a consideration of ‘ethics’ anything that does

not engage the moral character of individuals (Jones

et al., 2005). In analysing the case, students are

encouraged to consider the government’s preference

for light-handed regulation, the EC’s preference for

voluntary guidelines regarding the treatment of low-

income customers by electricity suppliers and the

choice by Mercury Energy not to implement those

guidelines, as politico-ethical choices which fall

within an expanded definition of ethics. These are

choices by powerful institutions either entrusted

with social responsibility obligations or which claim

social responsibility as a guiding value. These are

ethical choices about the rules of capitalism and the

role of the State within the capitalist system, but are

not ethical dilemmas faced by managers.

It is noteworthy that media coverage of

Mrs Muliaga’s death was dominated by the search for

a villain. Early coverage focused on the actions of the

contractor in continuing the disconnection despite

apparently obvious signs that Mrs Muliaga was in

poor health. When it emerged that Mercury

Energy’s processes had been deficient, attention

shifted to the company’s CEO and chairperson. The

Coroner concluded that no individual was to blame

for Mrs Muliaga’s death. Instead, he told a relatively

mundane but no less important story about the

creation of voluntary guidelines by the industry

regulator for the protection of vulnerable customers

which an electricity supplier chose not to imple-

ment. In contrast to the comprehensive media

coverage of Mrs Muliaga’s death, the release of the

Coroner’s findings generated relatively little report-

age.

It is also noteworthy that the Coroner concluded

his investigation by congratulating Mercury Energy

for acknowledging that their previous practices were

not compliant with the 2005 guidelines and for

voluntarily making changes to their disconnection

practices following Mrs Muliaga’s death. The

changes include treating all customers as vulnerable

to ensure no one was missed and producing infor-

mation brochures in six different languages (includ-

ing Samoan). In addition, it was now routine that

customers calling Mercury Energy were asked

whether anyone in the household was either

vulnerable or medically dependent on electricity.

The faith in self-regulation appears unshaken by this

tragedy.

Conclusion: business ethics

and the management professional

A frequent response to corporate scandals has been

for greater coverage of ethics in the business school

curriculum, a response underpinned by continued

faith in the possibility of moral managers who serve

not just their organisation’s shareholders but some

wider civic purpose. Implicit in this call is the belief

that the key to securing improved standards of cor-

porate conduct is to raise the moral character of

individual managers.

The financial and economic turmoil of recent

times has breathed new life into efforts to make

management a profession. As recently as 2007,

Khurana, one the professionalism’s strongest advo-

cates, accepted it was a dead project within the

contemporary business school. Khurana lamented

the fact that the theories which dominate today’s

curriculum question the relevance of ethics itself,

giving reassurances from business school deans that

ethics will be taken more seriously a hollow tone.

Now, just 3 years later, the professionalisation of

management is firmly back on the agenda. It can be

expected that a renewed interest in teaching business

ethics will follow this revival of the management

professional.

While the use of teaching cases in management

education has a rich history, the case method has

been criticised for reducing management to the tasks

of collecting information and making decisions

(Stonham, 1995), and for providing students with a

false confidence by increasing their tolerance for

ambiguity and encouraging risk-taking (Shugan,

2006). This article argues that it not the case method

per se that is the problem, but the ‘ideal-type’ deci-

sion-focused case which dominates the teaching of

business ethics, in which students are presented with

a manager needing to make decisions in the face

of an ethical dilemma. An alternative ‘dark side’

approach to case writing has been presented, which

reveals the mainstream’s blind spot concerning the

legitimate role of government in regulating eco-

nomic activity. The blind spot exists because of the

ideological commitments of mainstream business

ethics to the free market, whereby considerations of

how to conduct business within the rules of free

market capitalism are legitimate, but discussions

about the merits of changing the rules are considered

319Beyond the Manager’s Moral Dilemma

illegitimate. The former is business; the latter is

politics.

An anticipated criticism of the increased attention

given to the structural features of capitalism

encouraged by this and other ‘dark side’ cases is that

they present a deterministic view of the world which

leaves no place for individual morality. By down-

playing the importance of developing moral char-

acter within future managers, does this not mean that

so long as managers pursue their economic respon-

sibilities within the law, then that is all that can, and

should, be expected of them? Within some CMS

writing on business ethics traces of determinism

are evident. For example, Banerjee (2008), in his

critique of mainstream CSR, concludes that ‘in the

political economy we live in today, corporate strat-

egies will always be made in the interests of

enhancing shareholder value and return on capital,

not social justice or morality’ (p. 74). Whilst it might

be idealistic and naı̈ve to assume that corporate

executives will act in the interest of social justice and

morality, the GFC shows us that they sometimes

pursue strategies which enhance their own financial

interests at the expense of shareholder value. The

political economy thesis therefore goes too far in

denying managerial agency and as Parker (2003)

notes, there is little to be gained from replacing a

single-minded concern with agents with that of

structures. It is possible however, to acknowledge

the influence that structures have on action, through

creating conditions of possibility, without falling

into a determinist position.

This article has not been an argument against the

possibility of the moral manager. Whatever inten-

tions lie behind the student pledge undertaken by

graduate MBAs at Harvard Business School, at the

very least it encourages students to consider the

difficulties of undertaking to act ethically and

responsibly whilst working within the structural

constraints of capitalism. However, it is to be hoped

that rather than relying naively on this mechanism of

self-regulation, serious consideration can also be gi-

ven to the role of government in delivering desirable

societal outcomes from business activity. We should

include this examination of the ethics of business in

our construction of the field of ‘business ethics’.

The ‘ideal-type’ business ethics case, with its focus

on the management professional as a decision-maker

faced with a moral dilemma, works against this.

Khurana (2007) states that, in teaching business

ethics, we should examine the pull of three institu-

tional forces – the market, government regulations

and the self-regulation of managers on some agreed-

upon set of values. The decision-focused case,

grounded upon the ideological assumptions of

managerialism and self-regulation, does not deliver

this. By looking to managers and their morality, it

takes as given the virtues of the market and excludes

from its possible range of ‘solutions’ that of greater

government intervention. The GFC provides us

with recent evidence that while abhorrent conduct

by corporations can be conveniently blamed on ‘a

few bad apples’, a deeper appreciation emerges when

we consider the systemic influences of the make-up

of the financial markets and of the role played by

States in regulating (or choosing not to regulate)

those markets. This article has argued that a ‘dark

side’ approach to case-writing gives greater promi-

nence to these economic and political factors, pro-

viding students with a more complex understanding

of business ethics and the constraints on managerial

decision making.

Notes

1 Gordon Gecko was the character played by Michael

Douglas in Oliver Stone’s 1987 film Wall Street, whose

catchphrase ‘greed is good’ typified the recklessness of

Wall Street in the 1980s. The 2010 sequel, Wall Street:

Money Never Sleeps is based on Gordon Gecko’s release

from prison just before the onset of the GFC. 2

A group of graduates of Harvard’s Class of 2009

went on to form MBA Oath, a coalition representing

more than 250 business schools worldwide. The Oath

contains a pledge to ‘create value responsibly and ethi-

cally’ (www.MBAOath.org). Opponents argue the Oath

violates the fiduciary responsibility of managers to maxi-

mise wealth for shareholders. 3

While case journals lack status in today’s higher edu-

cation environment which privileges research over

teaching, they provide case writers with an opportunity

to gain a published output for their work. 4

It is acknowledged that there is no singular ‘dark

side’ approach – the case presented here is intended to

be illustrative rather than definitive. 5

This article presents a shortened version of the full

case, entitled ‘The Dark Side of Light Handed Regulation:

Mercury Energy and the Death of Folole Muliaga’, which

320 Todd Bridgman

won the 2009 Dark Side Case Competition. The case

was written entirely from secondary sources, including

the finding of the Coroner’s Inquest and submissions to

the EC on the introduction of guidelines on arrange-

ments to assist low-income consumers in 2005, before

Mrs Muliaga’s death, and a revision of the guidelines in

2007 following her death. 6

The events described in this section are based on the

findings of Coroner Gordon Matenga released in Sep-

tember 2008 on the inquest into the death of Folole

Muliaga (Matenga, 2008). 7

The name of the contractor was permanently sup-

pressed by the Coroner because of possible threats to

his own safety and that of his family.

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Victoria Management School,

Victoria University of Wellington,

PO Box 600, Wellington 6140, New Zealand

E-mail: [email protected]

322 Todd Bridgman

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