Harvard Case - Charity or Bribery
"Charity or Bribery" Harvard business case study is written by Eugene Soltes, Brian Tilley. It deals with the challenges in the field of Business Ethics. The case study is 4 page(s) long and it was first published on : Dec 13, 2017
At Fern Fort University, we recommend that Sarah, the newly appointed head of the International Development Department, **refuse the donation** from the construction company. This decision should be communicated clearly and transparently to the company, emphasizing the university's commitment to ethical fundraising practices and upholding its code of conduct. Sarah should also initiate a review of the university's existing policies on donations and partnerships to ensure they are robust and aligned with ethical principles. This review should involve key stakeholders, including faculty, staff, and students, to foster a culture of ethical decision-making and transparency within the university.
2. Background
The case study revolves around Sarah, the newly appointed head of the International Development Department at Fern Fort University. She is tasked with securing funding for a new development project in a developing country. A construction company, known for its questionable ethical practices, offers a substantial donation to the university, contingent on the selection of their company for the project. Sarah faces a moral dilemma: accepting the donation would provide crucial funding but compromises the university's ethical principles, while rejecting it could jeopardize the project's success.
The main protagonists are Sarah, the construction company, and Fern Fort University. Sarah is the decision-maker grappling with the ethical implications of accepting the donation. The construction company represents the external pressure to compromise ethical standards for financial gain. Fern Fort University represents the institution's values and its commitment to ethical conduct.
3. Analysis of the Case Study
This case study presents a complex ethical dilemma that can be analyzed through the lens of stakeholder theory. The key stakeholders involved include:
- Internal Stakeholders: Sarah, the university administration, faculty, staff, and students.
- External Stakeholders: The construction company, the beneficiaries of the development project in the developing country, the university's alumni, and the broader public.
The decision to accept or reject the donation impacts each stakeholder differently:
- Sarah: Accepting the donation could advance her career and secure funding for the project, but it would compromise her personal values and potentially damage her reputation. Rejecting the donation could hinder the project's success and potentially lead to negative consequences for her career.
- University Administration: Accepting the donation could provide financial benefits but could also damage the university's reputation and erode public trust. Rejecting the donation could lead to financial constraints and potential delays in the project.
- Faculty and Staff: Accepting the donation could provide resources for research and teaching but could also raise ethical concerns about the university's association with a company known for questionable practices. Rejecting the donation could impact their research and teaching activities.
- Students: Accepting the donation could provide opportunities for internships and research collaborations but could also raise concerns about the university's commitment to ethical values. Rejecting the donation could impact their access to resources and opportunities.
- Construction Company: Accepting the donation would secure the project and generate revenue for the company. Rejecting the donation would result in lost business opportunities.
- Beneficiaries: Accepting the donation could lead to the implementation of the development project, benefiting the community. Rejecting the donation could delay or hinder the project, potentially impacting the community's well-being.
- Alumni and Public: Accepting the donation could damage the university's reputation and erode public trust. Rejecting the donation could demonstrate the university's commitment to ethical values and strengthen its reputation.
The case study also highlights the importance of corporate social responsibility and ethical leadership. Sarah, as a leader, has a responsibility to uphold the university's values and make decisions that align with its commitment to ethical conduct. This includes considering the potential impact of her decisions on all stakeholders, both internal and external.
4. Recommendations
- Refuse the donation: Sarah should clearly and firmly communicate the university's decision to decline the donation to the construction company. This decision should be based on the university's commitment to ethical fundraising practices and its code of conduct.
- Initiate a review of donation policies: Sarah should propose a comprehensive review of the university's existing policies on donations and partnerships. This review should be conducted with the involvement of key stakeholders, including faculty, staff, and students. The objective is to ensure that the policies are robust, transparent, and aligned with ethical principles.
- Develop a transparent and ethical fundraising strategy: Sarah should work with the university administration to develop a transparent and ethical fundraising strategy. This strategy should prioritize partnerships with organizations that share the university's values and commitment to social responsibility.
- Promote a culture of ethical decision-making: Sarah should actively promote a culture of ethical decision-making within the International Development Department and the university as a whole. This can be achieved through training programs, workshops, and open discussions on ethical dilemmas.
- Engage with stakeholders: Sarah should engage with all stakeholders, including the construction company, the beneficiaries of the development project, and the university community, to explain the university's decision and its commitment to ethical practices. This open communication can help build trust and understanding.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Fern Fort University's mission statement emphasizes its commitment to ethical conduct and social responsibility. Accepting the donation would contradict these core values and undermine the university's reputation.
- External customers and internal clients: The university's stakeholders, including alumni, donors, and the broader public, expect ethical behavior from the institution. Accepting the donation would damage these relationships and erode trust.
- Competitors: Universities are increasingly competing for funding and resources. By upholding ethical standards, Fern Fort University can differentiate itself from competitors and attract donors who value ethical practices.
- Attractiveness ' quantitative measures: While the donation would provide financial benefits, the long-term reputational damage and potential legal risks associated with accepting the donation outweigh these short-term gains.
- Assumptions: These recommendations assume that the university is committed to its ethical principles and is willing to prioritize its long-term reputation over short-term financial gains.
6. Conclusion
The case study highlights the importance of ethical decision-making in the context of corporate social responsibility. Sarah's decision to refuse the donation demonstrates her commitment to ethical leadership and her understanding of the university's values. By upholding its ethical principles, Fern Fort University can build a strong reputation, attract ethical partners, and contribute positively to the development of the community.
7. Discussion
Other alternatives to refusing the donation include:
- Negotiating with the construction company: Sarah could attempt to negotiate with the company to remove the conditionality of the donation. This would require a strong negotiation strategy and a willingness to compromise on certain aspects of the project.
- Accepting the donation with conditions: Sarah could accept the donation but impose conditions on the construction company, such as requiring them to adhere to specific ethical standards or undergo independent audits. This approach would require careful consideration of the company's willingness to comply with these conditions.
The risks associated with these alternatives include:
- Damage to the university's reputation: Accepting the donation with conditions could still damage the university's reputation if the company fails to meet these conditions.
- Legal risks: The university could face legal challenges if it is perceived to be engaging in unethical practices, even if it has imposed conditions on the company.
The key assumption underlying these recommendations is that the university is committed to its ethical principles and is willing to prioritize its long-term reputation over short-term financial gains.
8. Next Steps
- Communicate the decision to the construction company: Sarah should promptly inform the construction company of the university's decision to decline the donation, explaining the reasons for this decision.
- Initiate the review of donation policies: Sarah should work with the university administration to assemble a committee to review the existing donation policies. This committee should include representatives from faculty, staff, and students.
- Develop a communication strategy: Sarah should develop a communication strategy to inform the university community, alumni, and the broader public about the decision to decline the donation and the university's commitment to ethical fundraising practices.
- Explore alternative funding sources: Sarah should work with the university administration to explore alternative funding sources for the development project. This could include seeking grants from foundations, government agencies, or other non-profit organizations.
- Implement the revised donation policies: Once the review of donation policies is complete, the university should implement the revised policies and ensure that they are communicated to all relevant stakeholders.
By taking these steps, Fern Fort University can demonstrate its commitment to ethical leadership and corporate social responsibility, ensuring that its actions align with its values and its mission.
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Case Description
Filip Kowalski, a senior manager at the pharmaceutical company Healthgen, leads sales for the firm's Polish division. While pitching Healthgen's products, he develops a relationship with a director of a regional health fund who also runs a private foundation. After a natural disaster, Healthgen- at the request of the director- donated products to help during the crises. After Healthgen wins an important contract, the media alleges that the donation was made to secure support of the regional health director. Were the efforts to boost company sales and support public health a donation or a bribe?
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