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Cases in Business Ethics

Preparing SCU students for the ethical challenges of a career in business and fostering a broad community of ethical support both on campus and in the working world. These cases were written by Santa Clara University seniors Alexis Babb, Saayeli Mukherji, Amanda Nelson, and Noah Rickling as part of their work as Hackworth Fellows in Business Ethics at the Markkula Center for Applied Ethics.

The following postings have been filtered by tag Start-up. clear filter
  •  Startup Fundraising: In the Name of the Greater Good?

    Ian is Founder and CEO of a non-profit organization that helps low-income high school students prepare for higher education. He founded the organization shortly after college, and it is currently on the cusp of a major breakthrough. But like many nonprofits, the funding necessary to fuel that growth is lacking. Ian's organization is applying to a research foundation that could promise millions of dollars in funding. However, before Ian can apply, the foundation requires a formal evaluation of the group's organizational success, which must be conducted by a third party.

    The foundation requires one of the following experiments:

    1) Randomized control experiment: This type of experiment is the most scientifically valid because it allows the greatest reliability of statistical estimates of treatment effects. In the case of Ian's organization, half of a group of eligible students would be randomly selected to do the college prep program while the other half not do the program but would still be tracked. If Ian selects this method, his group would receive significantly more funding because the method is more "scientifically valid.” On the other hand, this poses an ethical dilemma because it would involve actively withholding services from half of the eligible students who would otherwise be selected.

    2) Quasi experiment: This type of experiment is an observation-based study that measures the causal impact of an intervention on a target population.  It does not require random assignment of students into treatment and control groups. All the students at a partner school would be admitted to the program, and the experiment results and statistics would be compared to historical averages of the school district, mitigating the ethical concerns raises in the randomized control experiment. However, if Ian selects this option, there will be less funding available for the program, negatively affecting the number of students that the program can reach in the future.

    What should Ian do?

  •  Cultural Barriers: When Equality Compromises Efficiency

    Ralph was a sales representative of a small but fast-growing mobile and social advertising platform. Working directly with the co-founder, Mike, Ralph was responsible for door-to-door sales, pitching the company's platform that helped clients gain a virtual following of customers.

    The business owners in the area often spoke English as a second language, making clear communication between the two parties a key concern for Ralph.

    On one sales call, Ralph approached a small hair salon and secured a contract along with a $100 signup fee. However, the situation soon turned sour, as the hairdresser was furious after learning that she would have to operate the online platform herself, as opposed to the full service deal she thought she had signed.

    Mike, Ralph's boss, now found himself stuck in tough situation. Ralph claimed that he was blatantly clear what the contract was offering, though mentioned communication was strained due to the language barrier. Under the company's philosophy of putting the customer first, Mike refunded the $100 signup fee and voided the contract.

    This was not the first time Mike had to refund a contract under these conditions, causing Mike to revisit both the contract and Ralph's sales pitch to ensure that the language was a clear as possible. After this incident, it was clear that adjustments have not made an impact, and the company continued to lose money on negated contracts and time wasted not pursuing interested customers. Mike began to consider redrawing their target areas away from those where English is not the predominantly spoken language, but is concerned that would be an injustice to those potential customers.

    Should Mike make the decision to work only with English-speaking customers? Is that an ethical solution? Are there any alternatives?

  •  Startup Management: Friend or Liability?

    Edward is CEO of a nonprofit startup. He hired Charlie, a high school friend, last summer, to stabilize the company while Edward finished his degree. Charlie is from a prominent family, with a powerful network that has raised a large amount of money for Edward's nonprofit. Both Edward and Charlie are committed to the mission of helping low-income students go to college, and with this shared vision they get along well.

    Although Charlie is great at strategy formulation, Edward finds that he is poor at executing plans and taking action. Now that Edward is graduating, he wants to take the nonprofit to the next level, but is concerned about Charlie's lack of execution will hold the company back. On the other hand, Charlie made a major contribution keeping the company afloat the past year, in addition to his family's contributions, not to mention the two have been friends for some time now.

    What should Edward do?

    Posted June 2013