Who's Responsible for Product Misuse?


I work as a mid-level executive for an American company that sells sensitive electronics parts internationally. By U.S. law, we are required to work out agreements with our customers, and then audit these agreements regarding their use of the product they purchase.

Recently the data made it clear that one of our international customers was not properly accounting for a large portion of recent shipments from us. It was even a joke around our company as to what they might be doing with these parts. I was concerned enough to go to my management, and got the response, “That is not our job.”

This is one of our largest customers, so our leaders want to make sure we retain this customer. Yet I don’t feel right about what might be going on. Any suggestions on what I should do?

A manager caught in the middle


Thanks for an interesting dilemma. The “not our job” response from your management clearly violates the legal standard of auditing your agreements. Obeying the law is usually seen as the first level of ethics in business. The possible uses of the parts in question present another potential ethical problem. Recently, there have been a host of American companies that have received negative attention for the roles they played in aiding the enemy in World War II, most notably IBM for selling technology to the Nazis. While the use of your company’s parts may not be so extreme, the charge of contributing to an immoral regime should provide ample reason for your company’s senior management to reconsider its practices.

If the competitors are U.S. based, then they are bound by the same laws. Your knowledge of your customer’s “secret” may give you some leverage in preventing them from switching suppliers. If the competitor is an international supplier not bound by the same rules, you may have to choose between legal compliance and losing the customer. Sometimes following the right course of action has a large financial implication (and other ensuing consequences, such as layoffs, etc.)

You should speak to senior management again using arguments to establish the fact that it is in the best interests of the company to comply with the law: legal jeopardy, violation of ethical standards, poor example set to employees, and the possibility of a public relations disaster. Exhaust internal channels first. Then, if the response from senior management is negative, this may be a case for blowing the whistle to external channels.

Kenman Wong
Professor of Ethics, School of Business and Economics
Seattle Pacific University

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