Ethical Issues in the Case of the Ford Pinto

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Introduction

Ethics in a business environment is, without a doubt, essential for the company’s success and the well-being of its workers and customers. Business ethics tend to be described as a set of values that would correspond with deep-rooted cultural practices, and it should be essential to business management (Bishop, 2013). Ethics should help the company members manage their behavior; however, not every company has a clear code of ethics, causing company executives to manipulate the organizational values. In the 1960s, Ford introduced the Pinto car into the American market. One of Pinto’s main benefits was its low price and compact design. However, in reality, the car cost their owners much more as the Pinto did not meet the safety benchmarks proposed by the National Highway Traffic Safety Administration (NHTSA) (Friedman, 2020). The case of Ford’s Pinto car is an example of mismanagement that sparked the ethical debates regarding the importance of human life over profits. The subject of the Ford Pinto raised various ethical issues, which led to public outcry and could have been prevented if the people involved acted differently.

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The ethical issues raised by the case

Before Ford decided to present the Pinto to American customers, all of the necessary safety tests were conducted. However, the crash test results identified that minor changes to the car’s design would have significantly improved the Pinto’s safety. In the Ford Pinto Memo, the researchers proposed two possible solutions; to modify the vehicle just enough to make it more reliable or to start selling the Pinto unchanged (Friedman, 2020). The review that Ford researchers performed is called Cost-benefit analysis, which implies that a company has to choose a profit-maximizing strategy for their business by choosing between several different strategy options. Thus, the Cost-benefit report included dilemmas connected to human health that required decision-makers to put a price tag on safety, well-being, and even the lives of human beings. Subsequently, this infamous memo is what later sparked an ethical dilemma whether the costs of injuries and deaths should have been more critical to the company than the money that would be spent on improving the car’s conditions.

Besides measuring the costs connected to human losses, the company considers the effect of a crash on their brand name, possible fines, and future sales of other cars. Although the main priority of a business is to make a profit, it does not imply that all the companies are ruthless in their strategies. However, in Pinto’s case, the cost of human lives was less than the price of Ford fixing unsafe cars. Thus, when the overall legal system claims lives as less prominent, they will be less critical to a business that lacks ethical conduct. The lower the price of a single life is, the less likely the industry will attempt to save it, and the more likely the company will peruse benefits from selling a flawed product. Moreover, the ethics of individuals managing the company is also fundamental. Since executives of large companies are rarely legally charged with misconduct, the decision-makers tend to feel invincible and therefore remain unethical (Friedman, 2020). Thus, the other aspect of the dishonest conduct by Ford is due to the institutions within the society that did not put value into people’s well-being and the legal system that rarely persecutes the CEO.

Public’s perception of this case and the resulting outcome

A few years after the car was launched, the Center for Auto Safety demanded the NHTSA to suspend the Pinta from the market; however, this did not happen immediately. Three years later, in 1997, Mother Jones released a detailed article about the car, using the information provided by an anonymous Ford employee (Scharding, 2018). The report led to enormous publicity and sparked the attention of American citizens to the unethical decision-making of Ford. This case was also significant because it was the first time when many American consumers realized how human lives were treated as a cost for many businesses (Friedman, 2020). The public was inevitably concerned with the way Ford’s leadership handled the situation, which led to further in-depth research on the subject. NHTSA did not react to the case timely; however, in 1978, Ford voluntarily recalled the car from the market.

Within seven years of the Pinto’s commercial release, some deaths were associated with its design flaws. The resulting trial damages were significantly more severe than Ford’s analysts assumed initially, based on the NHTSA data being $200.000 per death (Friedman, 2020). Thus, during Grimshaw’s case against Ford, “the California Court of Appeal upheld compensatory damages of $2.5 million and punitive damages of $3.5 million” (Friedman, 2020, p. 77) doubling the anticipated fee. After the article, Ford had to pay substantial legal damages; the case became a popular topic for discussion connected to business ethics, and the company’s brand suffered significantly. Lastly, Ford’s president McNamara was fired, which is a rather unprecedented event for a large corporation.

The alternative course of action

Various parties played a crucial role in the trajectory of affairs in this case, such as the NHTSA, Ford’s management, and CEO. First of all, the unsafe car was able to get into the market partly due to the weak contribution of the NHTSA in the car business’s quality assurance. Such negligence took place because Ford and other major car companies in the USA lobbied the NHTSA (Friedman, 2020). As a result, the car companies that prioritized profit over safety were supporting the organization that was supposed to be in control of their possible misconduct. This oversight is especially unethical because the appropriate regulations that were supposed to enforce crash standards were adopted only six years later when the Pinto was already recalled from the market (Friedman, 2020). Therefore, it would have been better for NHTSA to act more independently without biases for car companies, which would subsequently lead to the imposture of the safety regulations much sooner.

Moreover, the leadership of Ford should have acted less cynically, especially because human lives were involved. The management should have ensured that ethical standards “play a role alongside financial and legal restraints” (Friedman, 2020, p.83). Despite this issue touching upon problems in other layers of society, the final decision to sell the flawed cars was taken by president McNamara (Scharding, 2018). The company leader should have used his executive powers to prevent vehicles from being sold, mainly because he knew about the cost-benefit analysis results. Even though other organizations in society enabled Ford’s leadership’s decision, the company’s president can always choose what choices are the best to make for the company and the consumers’ well-being.

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Conclusion

As a result, the Ford Pinto case is a fantastic example of how an unethical corporation is putting a price tag on a human being’s life because of the possible profits. Another part of the ethical dilemma was caused by the legal system that evaluates human life incredibly low, which leads to the questionable decisions of for-profit corporations. The same legal system is rarely taking the CEOs accountable for wrong choices, which fuels their behavior even more. Furthermore, the news article was able to draw the public’s attention to the case, which eventually led to Ford recalling the Pinto from the American market. Lastly, the NHTSA, the management, and the executive decisions could have been changed to make Pinto drivers safer on the road and for Ford to save their public face.

References

Bishop, W. H. (2013). The role of ethics in 21st-century organizations. Journal of Business Ethics, 118(3), 635–637.

Friedman, H. S. (2020). Ultimate price: the value we place on life. Oakland, CA: University of California Press.

Scharding, T. (2018). This is business ethics, an introduction. Hoboken, NJ: Wiley Blackwell.

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BusinessEssay. 2022. "Ethical Issues in the Case of the Ford Pinto." May 12, 2022. https://business-essay.com/ethical-issues-in-the-case-of-the-ford-pinto/.

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