The Ethics of Speaking Out: A Case Analysis

Michael Shur

MG305 • Managerial Ethics

Saint Mary’s University of Minnesota

Minneapolis, Minnesota

April 9, 2008
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In Case 6.3, Speaking Out about Malt, we are introduced to Whitewater Brewing

Co., a manufacturer of alcoholic beverages whichmarkets to various segments of

consumers. One of its products, Rafter, is a low cost, high alcohol malt liquor which is

targeted to inner-city teenagers.

Rafter is very popular within a community which is already plagued by issues

related to alcoholism; specifically its youth who suffer disproportionately from the effects

of alcohol abuse. Whitewater is not alone in this practice, for it, along with other makers

of potent, high-alcohol drinks, target urban youth with products specifically packaged and

marketed to appeal to them. As a result, malt liquor is a very profitable product for

Whitewater Brewing Co.

To carry out our analysis, we will begin with a quick summary of the case itself.

Next, we will identify the key stakeholders and point out the specific ethical issues that

are raised for each. Finally, using the principles and processes from our study of

managerial ethics, we will attempt to build a framework that helps us to arrive at the

proper course of action, both for the business and the individuals involved. Along the

way, we hope to elucidate the values and assumptions of the stakeholders, the company,

and the community, arriving finally at a point where we are able to determine whether

their ethical decisions made are sound.

Mary Davis is a vice president at Whitewater Brewing Co. Through outside

research for a class she is taking, she has discovered that companies like the one she
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works for welcome the profitability of low-cost, high-alcohol products like Rafter, but are

not particularly proud of the low quality they represent. Characteristically, within the

industry, this class of product is often marketed with no indication of being manufactured

by a respectable firm.

Davis writes a paper for the class discussing these issues in terms of an overall

industry practice, mentioning Whitewater Brewing Co. only in passing. The paper is

well-received, and Mary republishes it as a newspaper article. This article catches the

attention of the Board of Directors of Whitewater, who are not happy with its

ramifications and potential impact on their business.

Ralph Jenkins, CEO of Whitewater, like any chief executive, is under constant

pressure by his board, to maximize profit. Whitewater’s shareholders and its board expect

that the company they own, under the fiduciary leadership of Mr. Jenkins, is doing

everything within its legal power to expand market share and maximize profit. They fear

that the article written by Ms. Davis could bring about further regulations that will impact

the company's profitability.

Jenkins issues Davis a memo instructing her to never again comment publicly

about malt liquor before clearing her comments first with him. Davis feels this directive

is an invasion of her rights as a citizen, and she informs Jenkins that she intends to

exercise her right of free speech at an upcoming speaking engagement. Jenkins remains
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firm in his position, delivering the ultimatum that she will either conform to the memo, or

resign.

The issues we will focus on are whether Jenkins has the moral right to issue the

memo curtailing Davis' free speech, whether Davis actually has a moral right to free

speech in the workplace, and what the most ethical course of action for Davis to

ultimately take would be. Also, we shall explore whether a company has any moral

responsibility to protect the health of the communities it serves, or whether its sole ethical

responsibility is in maximizing profit. None of these questions can be answered

unequivocally; however we will use the tools at our disposal to try to arrive at an ethical

decision, beginning with the nature of capitalism and its relevance in this case.

Whitewater Brewing’s position, as represented by Jenkins' memo, takes its moral

stance within the context of American capitalism, on the foundation of the right of private

enterprise to pursue a profit. Whitetewater's business practices would be condoned by

Adam Smith who argued that when "people are left to pursue their own intersects, they

will, without intending it, produce the greatest good for all" (as cited in Shaw, 2005,

p.122).

Additionally, the company has a solid claim in both common law and legal

precedent to the right to require its employees not to "act or speak disloyally" (Shaw,

2005, p.196). That claim indisputably applies to an employee while on the job; however
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other issues come into play when the employee is engaged in activities in their private

life. We shall now examine those issues more closely.

The dispute between Davis and Jenkins arises from Davis' contention that, as an

American citizen, she possesses a constitutionally protected right to free speech. Her

position is that, as long as she satisfactorily performs the duties of her job when she’s at

work, she has the right to participate in constitutionally protected activities when she is

on her own time. She has the right to her own opinion, and she has the right to voice it.

Davis believes that the target marketing of inexpensive high-alcohol drinks to the

urban community is unethical and immoral, specifically because of the ravages of alcohol

within those communities. As a result of that belief, she feels duty-bound to help those

communities by tempering the availability and attractiveness of potentially harmful

products.

While there is no doubt that Davis possesses these rights as an American citizen,

Whitewater Brewing Co. has a legitimate concern that her written opinions may cause

additional regulation to be imposed upon them. If Davis were merely a private citizen,

unaffiliated with Whitewater Brewing in any way, there would be little that the company

could do; indeed all of us have the right to express our opinions, even if such opinions are

critical of a legitimate business operation. However many businesses try to exert their

influence into employees' private lives, and whether or not this influence is ethical is a

function of the concept of legitimate influence (Shaw, 2005).

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As an employer, Jenkins has the right to expect that Whitewater's employees do

not work against the company’s interests. Companies have the right to discipline and

even terminate employees whom they determine are not acting in accordance with their

wishes. Federal law and legal precedent have firmly established that employment is at-

will, meaning that Mary Davis’ ongoing employment at Whitewater is not contractually

protected. Of course, Whitewater has an interest in retaining its high-performing

employees, but the bottom line is that they have the right to determine who works at the

company. As long as they do not treat her in a manner that could be construed as

discriminatory, they have the right to threaten to terminate her if they believe that her

outside activities are of legitimate concern (Shaw, 2005).

If, on the other hand, Davis were involved in civic activities to help the very same

urban community, but these activities were unrelated to alcohol consumption, then

Whitewater may not have a legitimate interest. However Davis' article not only criticized

the industry at large, but also specifically mentioned Whitewater Brewing Co., so there is

a clear legitimate reason for Jenkins and the board to react as they did.

Additionally, since Whitewater Brewing Co. is by definition in the business of

producing and distributing alcoholic beverages, it would be unrealistic to expect the

executives of the company to condone an employee actively working against the

consumption of alcohol. Though an argument could be made that Whitewater's business

is immoral at its core, capitalism grants them not only the right to sell alcohol—as long as
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they follow the law—but also the right to issue an ultimatum to employees who question

the moral legitimacy of their business practices.

Immanuel Kant would challenge this narrow interpretation by judging the actions

of all the stakeholders against the measure of a categorical imperative: should their

actions be universalized? In other words, one’s actions are right only if one could “will

them to become a universal law of conduct” (as cited in Shaw, 2005, p. 54). Using Kant's

schema for determining right from wrong, we could reasonably infer that Jenkins himself

would not feel good about a predatory company targeting his family with harmful

products that they were not equipped to resist. Against this measure, Kant would deem

the company's business practice immoral.

To continue applying Kant's principles, most people would feel unjustly repressed

if they were threatened with termination for expressing their opinion on their own time.

In this aspect as well, the actions of Jenkins and the board can not be morally right. From

a Kantian perspective, therefore, both the company's overall pursuits, and Jenkins'

individual actions are unethical.

Capitalism is often criticized for its indifference toward the health and well-being

of society, eschewing social welfare in its relentless pursuit of profit and free markets

(Shaw, 2005). This indifference can be found not only in industries that produce

obviously harmful products like alcohol or tobacco, but in industries which on the surface

seem beneficial, such as factory farming, which causes ecological damage (Shaw, 2005).
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As an aside, capitalism, while indifferent to the health and well-being of the communities

it serves, often provides—through the law of supply and demand—a mechanism to

address such damage. A community damaged by the activities of a particular company

might be aided by another company whose product or service is designed to help. This

observation isn’t meant to exonerate the potentially destructive activities of unregulated

business, in fact if anything it illustrates the opposite; that left to Adam Smith's invisible

hand, there is no morality inherent to capitalism other than the pursuit of profit. Any

moral or ethical outcomes that are not the result of individual decisions have probably

been imposed through government regulation (Shaw, 2005).

Looking at the case from John Stuart Mill's point of view, a utilitarian would

attempt to determine right from wrong by trying to calculate the total happiness produced

by the company (Shaw, 2005). This is a difficult task, for on the one hand it could be

argued that the ravages of alcohol abuse produce much misery, therefore Davis' attempt

to thwart the company is well-founded. Yet an equally convincing utilitarian counter-

argument might be that treating the urban community as if it were a child, unable to make

its own choices about whether to drink malt liquor or not, actually produces less

happiness, and is therefore unethical. Davis' guilt might be assuaged by writing the article

critical of companies like her own which prey on those purportedly unable to resist a

force of will greater than their own, but her single unit of happiness is potentially

outweighed by Jenkins', the board's, and the community's collective unhappiness with the

outcome.
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If Davis' activism were successful in dampening the supply, the price would rise.

Further, it is unlikely that a well-intentioned article would do anything to deter an

alcoholic from seeking out and finding another source of cheap alcohol. In fact, if the

price were to increase, and consumers still demanded the product, it follows that they

would have less money to spend on other, perhaps more necessary goods. Most

important, Davis’ efforts would effectively curtail the freedom of choice of the consumer.

Since none of these outcomes would add to the total utility, we must conclude from a

utilitarian point of view that Davis' action is less ethical than that of Jenkins and

Whitewater Brewing Co.

Mary Davis has looked inside herself and concluded that the company she works

for is behaving unethically, and though neither Adam Smith, nor John Stuart Mill would

support her, she can take solace in the fact that she would probably have the weighty

opinion of Kant on her side. The problem is that she continues to draw a paycheck from

Whitewater Brewing Co., and part of that paycheck comes from the very activities she

decries. When challenged by her boss, she feels her rights have been trampled. Her

position is that she has civil rights that guarantee her free speech. Moreover her

extracurricular activities—activities which she chooses to take part in while not at work

—are none of the company's concern.

Common sense may support Mary's position; after all, we live in a country

founded upon free speech. There is a gut feeling that it would be unfair to demand that

she sacrifice her basic constitutional protections in the workplace. Indeed, the subject of
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the absence civil liberties in the workplace is highly controversial, and has been criticized

by many prominent thinkers (Shaw, 2005).

Legally, companies have the right to curtail civil liberties, yet ethics cannot be

determined by law alone. History is full of examples of citizens who took an ethical

stance against a law they felt was immoral. Martin Luther King fought for civil rights and

opposed discriminatory laws, and went to jail more than once, rather than sacrificing his

ethics. In fact, cases such as this illustrate the presence or absence of a superogatory

action; that is one that far and above the call of duty. We rightly admire a man like Martin

Luther King, but we typically do not expect as much from ordinary people (Shaw, 2005,

p. 61).

So far, we have had a difficult time proving that the actions of Jenkins or the

company were truly unethical. In order to prove this, we would have to offer a theoretical

criticism of capitalism itself, challenging its fundamental values. There are many who

would support such an argument, including Karl Marx, George Soros, and even Christian

idealism itself (Shaw, 2005). Though these are worthy philosophical considerations, they

are too broad to be of practical use in a business case analysis such as this.

There is one remaining stakeholder however whose actions are subject to critique,

and that is Mary Davis. She feels unjustly trapped by Jenkins' ultimatum to her, but

perhaps it is she who has allowed this moral dilemma to entrap her. Perhaps the most
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ethical decision she could make in this case is to resign her position, thus refusing to lend

her professional assistance to a company she feels violates a public trust.

If she were to take this course of action, we would rightly commend her as an

exemplar of superogatory action. She would become a rare person, and illustrate moral

leadership with such an act. We could admire her for choosing this route, and yet if she

does not do so, we cannot condemn her, for she is just a normal citizen (Shaw, 2005). If,

however, she decides to remain in her position as vice president of Whitewater Brewing,

she is ethically bound to abide by the terms of Jenkins' memo, and refrain from speaking

out about malt. To do any less would be wrong.

To conclude, the issues brought up in Case 6.3, Speaking out about Malt, get to

the heart of important ethical issues in business management. Our study of ethics

provides us various schools of thought from which to draw our conclusion; ideologies

which may be at odds with one another. At the same time we are challenged not to take

refuge in moral relativism. The path is not always clear.

There is often no single, indisputably correct answer to a true moral dilemma;

otherwise it would not need to be so closely scrutinized. By identifying the stakeholders,

the ethical issues, and the possible guidance provided by ethical founders such as Kant,

Smith, Mill and others, we hope to be able to build a framework that allows us to

withstand pressure, make the best choice, and convincingly articulate and defend our

business decisions.