The Consequences of Breaking Unwritten Moral Rules
Abstract
This article examines the critical role of individual and situational factors in fostering unethical corporate behaviour within the highly regulated healthcare sector. Utilising two landmark cases—the Theranos technological fraud and the Purdue Pharma opioid crisis—the study analyses how leadership character traits, cognitive biases, and systemic governance failures converge to produce catastrophic social harm. The analysis is grounded in Schwartz’s Integrated Ethical Decision-Making Model (I-EDM), focusing on ‘moral capacity’ as a decisive individual moderator. The analysis indicates that the leadership styles of both Elizabeth Holmes and the Sackler family aligned with distinctive behavioural archetypes—characterised by self-centredness, strategic manipulation, and a lack of interpersonal empathy—which served to foster institutionalised moral disengagement and ‘ethical blindness’. These behavioural tendencies were compounded by pervasive cognitive biases, specifically overconfidence and confirmation bias, which created a psychological framework for leaders to rationalise deceptive commercial practices as necessary instruments for achieving broader visionary or altruistic objectives. Situational analysis highlights how these companies exploited regulatory loopholes, such as ‘trade secret’ protections and flaws in FDA oversight, to shield technological failures and deceptive marketing from public scrutiny. Furthermore, both organisations suffered from insular governance…
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