166 An Ethics Role-Playing Case: Stockholders versus Stakeholder Case Discussion
because prioritizing conflicting needs of stakeholders strikes at the core of the
problem with a stakeholder goal. Be prepared to spend some time discussing this
point with students.
The instructor may wish to highlight utilitarian versus Kantian thought
may be only short-term profit problems with the parent. If students do not
recognize this point, the instructor should solicit it.
A statistical appendix is available from the author that contains more detailed
analysis of student responses and the number of responses that can be classified
into different schools of ethical thinking, such as utilitarian, principle-based, and
Some students may state or imply that the attempt to cut costs is the more
moral decision rather than acceding to the shareholder goal. It may appear to be
more moral to defend the rights of a well-defined group of people immediately
and strongly affected by the decision than the rights of the more distant and ill-
defined group of shareholders and their profits. Students may also believe it is
Journal of Business Ethics Education 7 167
based on short-term events. This should be a major discussion point, and it may
lead into why short-term profit concerns appear to matter so much to top
management and why this is a concern.
Decision 2
Students now receive a handout that outlines Decision 2. The handouts vary
based on their choice in Decision 1. If their Decision 1 choice was to “Continue
operations and try to cut costs within six months”, then they receive Version 1 of
Handout III. It informs students that their efforts to cut costs to the extent
required by the parent are not working. A potential buyer (Sahib) offers to buy
investigation of the buyer.
Firm value can be estimated in various ways, and one way is to calculate the
present value of expected future residual cash flows using the firm’s cost of
equity as the discount rate. Alternatively, the difference between the estimated
market value of the firm’s assets less liabilities provides an estimate of value.
Nevertheless, any estimate of value requires judgment and assumptions, and so a
range of different value estimates are possible. Many students express concern
about recommending the deal at a discounted price, although some that are
concerned will still choose to sell. A few students indicated they feared what
might happen if they recommended the sale to Sahib, citing the material in the
introduction about the common usage of child labor. The most common reason
168 An Ethics Role-Playing Case: Stockholders versus Stakeholder Case Discussion
Suggested questions to encourage discussion after they make their decision
include:
1. Synopsis:
(a) Ask for a synopsis from those whose Decision 1 choice was
3. Are you concerned about the buyer? What more would you like to
know?
4. What are the conflicts and loyalties that are involved in this decision?
Class discussions following this decision still deal with the shareholder
versus stakeholder paradigm, but to a lesser extent than in Decision 1. The
primary motivation for not selling will be concerns about Sahib, although some
students may be concerned about the inability to conduct a due diligence
investigation of the buyer (although most students do not use the term due
Decision 3
Students now receive Handout IV, which outlines the final decision, Decision 3.
The version they receive varies based on their choice in Decision 2. If their
Decision 2 choice was “Recommend the company sell”, they receive Version 1.
It describes a scenario in which the sale of the firm has been consummated and
the student is learning international finance. The students are no longer involved
in the day-to-day operations of the firm. If their Decision 2 choice was “Don’t
sell, keep going as planned cutting costs”, the students receive Version 2, and if
Journal of Business Ethics Education 7 169
Sahib is engaging in activities that are likely to be objectionable to most
students. The students are now given a very structured choice. They must choose
to quit and seek government help in removing Sahib or changing his employment
practices, or continue to work to protect their families. At this point, the case has
moved somewhat away from the shareholder-stakeholder conflict. This decision
Suggested questions to encourage discussion after they make their decision
include:
1. Synopsis:
(a) What is your job now?
(b) What is Sahib doing?
2. Does this decision involve ethical issues or is it just a business
decision?
Class discussions typically focus on the efficacy of seeking government
assistance to oust Sahib or force a change in employment practices, as well as the
personal effect of the consequences for the students and their families. What
happens to their families is of primary concern in this decision. Discussions
170 An Ethics Role-Playing Case: Stockholders versus Stakeholder Case Discussion
You can expect the majority of students to quit and go to the government.
Many will not like either alternative, and many will object to going to the
government. Sahib has government ties, and students cannot tell from the case
information whether the government will listen to them or protect them. This is
typical in a whistleblower situation where an individual must decide whether to
quit or to pursue action against a firm.8 Surprisingly, not all students will believe
that this decision involves ethics, especially those that choose to not quit. In class
discussions many students indicated that they felt they were not responsible for
what was happening, and so their choice was simply a business decision. This
provides a “teachable moment” where the instructor can point out the student’s
responsibility to fight injustice. Students must decide how far they are willing to
Final Results
At the end of the class (or earlier if time permits), students are given the
appropriate final result based on their decisions. Figure 2 contains a brief
summary of the final results that the students receive upon completion of the case.
The complete final results contain more detail and are provided with the case. The
Journal of Business Ethics Education 7 171
The decisions in the case are followed by one set of possible outcomes, but
other outcomes are possible. For example, the decision to cut costs could have
been successful if accompanied by favorable shifts in exchange rates and strong
external demand for the firm’s products. It was risky to sell to Sahib without
proper “due diligence”. However, the sale to Sahib could have led to a positive
outcome for the locals if he had been a trustworthy individual. In particular,
because he paid a “discounted” price, he may have been able to restore wage
levels and employment to acceptable levels. Users of the case should feel free to
develop their own outcomes and final results or to discuss other possible
outcomes with the students, as time permits.
Figure 2: Brief Summary of Final Results (Detailed Final Results are available with the case.)
Decision 1 – (a) Continue and try to cut costs, or (b) Shut down.
Decision 2 – (d1) or (d2) Don’t sell to Sahib.
Decision 3 – (f) Protect your family and continue to work.
Go to jail, Landon helps get you out early, take a minor position with the firm in the
U.S.
Decision 1 – (a) Continue and try to cut costs, or (b) Shut down.
Decision 2 – (c) Sell to Sahib.
Decision 3 – (e) Quit and go to the government.
Career is basically over, get divorced and leave Sri Lanka
172 An Ethics Role-Playing Case: Stockholders versus Stakeholder Case Discussion
Student Feedback
Table 1 contains a brief summary of typical student comments solicited via a
feedback form administered after completion of the case and after the final results
were distributed. The form is included with the case. Due to time constraints, it
may be best to allow students to take the form home and fill it out on their own
time, or fill it out in a subsequent class period. Student responses concerning the
primary point they learned from the case vary, but generally indicate that they
Journal of Business Ethics Education 7 173
Table 1: Typical Student Feedback
Items students do not like about the case include the structured nature of the
decision path, the lack of additional information, particularly about Sahib, and the
inability to work in groups. Many also comment that they do not like their final
Primary point the students learned from the case
• There are gray areas in many business decisions and there are often no easy solutions
• Many decisions lead to unforeseeable outcomes
• Need to balance ethics with business decisions and that may be difficult to do
What they liked about the case
• Different decision routes based on your choices
• Hearing other peoples perspectives
• Very interesting and thought provoking, fun
What they did not like about the case
• My outcome
• Worst case scenario
Suggested case improvements
• Work in groups: better insight, easier to speak up in a small group, allow more role playing
• More time for class discussions
• Need more time to make decisions
174 An Ethics Role-Playing Case: Stockholders versus Stakeholder Case Discussion
Conclusions
The role playing exercise provides a unique and engaging experiential method to
illustrate the tension involved in managing for shareholders versus stakeholders
when the two interests conflict. The case has been successfully used many times,
and a high level of class interaction and discussion has resulted each time.
Students enjoy playing the role of manager and particularly enjoy seeing the
results of their choices and learning how others arrived at a decision. Learning
from the group’s discussion is a high point of the students’ experience.
The instructor may wish to provide a “debriefing” session in the subsequent
class period to discuss further the need for ethics in business training and perhaps
expand on the shareholder stakeholder conflict. This is also a good point to
Journal of Business Ethics Education 7 175
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