Brief Historical Summary
Dennis Kozlowski, is the former Chief Executive Officer (CEO) of Tyco International Ltd. During his tenure, Kozlowski engaged in activities that were considered unethical. In 2005 Kozlowski was convicted of misappropriation of corporate funds. Kozlowski had been involved in illegal and unethical behavior during most of his tenure. The findings that lead to the conviction of the former CEO were due to the persistent questioning and interrogating tactics of the shareholders and stakeholders because Kozlowski held within his authority to make decisions that could change the course of the company. Business ethics, auditing practices, and government regulations will forever be affected by the $500 million loss endured by the company. Needless to say this scandal had an major impact on the economy and the business world.
Kozlowski’s long line of bad decision making is used by businesses as well as academics as an examples of unethical behavior and why internal controls are important to corporate governance. As the primary indicator of performance, corporate governance reports often display the strength and weaknesses of the company but are only as reliable as the set of values and ethics of the person’s implementing the rules.
Unethical behavior/event examined
Was it unethical practices, poor governmental regulations, or bad organizational behavior that lead Kozlowski to make the decisions that lead to the 2005 conviction? Vasile (2004) defined business ethics as “learning what is right and what is wrong and simply doing what is right” (p. 2). However, the actions attached to the decisions are not always as easily derived. In most instances, leaders are faced with making the decision as to what is better for the company versus what is best for the public. Joosten, Dijke, Hiel, and De Cremer (2014) argued “that the constant pressure that organizational leaders face can limit the willpower that is required to act ethically” (p. 1). However, Joosten et al. also point out the possibility that a leader’s ego may also direct the decision to act unethically. To this effect, the conditions by which the decisions to act unethically may stem from the lack of values or the how the framework for the values are designed. This could mean that the leader does not necessarily lack values but instead the values by which the individual stands are not in conjunction with those of the company and possibly society at large.
In the case of Kozlowski, the decisions made were in the best interest of neither the general public nor the stakeholders and investors. The fact the Kozlowski used company funds to make extravagant purchases for personal gratification, only proved that the decisions made were not in line with any definition of ethical behavior. In short, Nelson and Quick contend that “doing the right thing can have a positive effect on an organization…thus, organizations depend on individuals to act ethically” (p. 64).