1 making decisions in business ethics conventional morality & ethical relativism & moral...

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Making Decisions in Business EthicsMaking Decisions in Business Ethics

Conventional Morality & Ethical RelativismConventional Morality & Ethical Relativism& &

Moral Moral Development and Development and what influences the Moral Decisionwhat influences the Moral Decision

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Overview• Examine the question of why ethical and unethical

decisions get made in the workplace.• Determine what is an ethical decision. • Examine prominent ethical decision-making models.• Discuss the importance of differences between

individuals in shaping ethical decision-making.• Critically evaluate importance of situational influences

on ethical decision-making (issues & context based).

I am there

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Heinz and the DrugA woman was near death from cancer. There was one drug doctors thought might save her. The drug was expensive to make, but the druggist charged ten times what it cost. He paid $200 for the raw materials and charged $2,000. The sick woman’s husband, Heinz, went to everyone he knew to borrow the money but could only come up with $1,000: half the cost. He approached the druggist and told him that his wife was dying, and asked him to sell it to him for less or let him pay half now / half later. But the druggist said, “No, I discovered the drug and I intend to make a profit from it.” So Heinz got desperate and began to think about breaking into the man’s store to steel the drug for his wife.

Should Heinz steal the drug? (check one)

___ He should steal it ___ I can’t decide ___ He should not steal it.

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Heinz and the Drug 1. Whether a community’s laws are going to be upheld. 2. Isn’t it natural for a loving spouse to care so much for his wife that he’d steal? 3. Is Heinz willing to risk getting shot as a burglar or going to jail for the chance that

stealing the drug might help? 4. Whether Heinz is a pro. wrestler, or has lots of influence with pro. wrestlers. 5. Whether Heinz is stealing the drug for himself or doing this for someone else. 6. Whether the researcher’s rights to his invention have to be respected. 7. Whether the essence of living is more encompassing than the termination of dying,

socially and individually. 8. What values will be the basis for governing how people act towards each other. 9. Whether the researcher is going to be allowed to hide behind a worthless law which

only protects the rich anyhow. 10. Whether the law here gets in the way of the most basic claim of a member of society.11. Whether the researcher deserves to be robbed for being so greedy and cruel. 12. Would stealing in such a case bring about more total good for all of society or not?

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Conventional Morality and Conventional Morality and Ethical Relativism Ethical Relativism

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Characteristics of Subjective and Characteristics of Subjective and Objective MoralityObjective Morality

• Moral judgments are universally applicable. If a particular action is right or wrong for one person, it is also right or wrong for all similarly situated people.

• Moral judgments are important. Thus, moral judgments must override all other considerations.

• Moral praise must accompany morally right actions & moral blame must accompany immoral behavior (i.e. there are rewards and punishments).

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Descriptive Transcultural RelativismDescriptive Transcultural Relativism

• Describes the differences between cultures & differences in the way particular languages define moral terms.

• Recognize that terms such as “right” and “wrong” are not universally defined in all cultures or languages.

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Moral AbsolutismMoral Absolutism

• There are eternal moral values & principles that are always applicable in all situations.

• This is an alternative to ethical relativism.

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Moral PluralismMoral Pluralism

• Radical Moral Pluralism: people hold mutually irreconcilable views about morality, including what is “right” or “wrong”.

• Pluralism of moral principles: diversity of moral principles, but not irreconcilable.

• Pluralism of moral practices: basic agreement on moral principles, but diversity of opinion regarding specific actions.

• Pluralism of self-realization: members of society must adhere to basic moral norms, but are other-wise free to pursue differing values and lifestyles.

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Moral Pluralism and the LawMoral Pluralism and the Law

• The law is a tool for responding to moral pluralism.• It’s dangerous to equate the legal with the ethical.

– While many laws prohibit immoral or unethical behaviors, those behaviors were immoral before they were illegal.

• The law is primarily reactive, which results in a lag between behavior being identified as socially harmful and legislation being passed to make it illegal.

• Not all laws are morally defensible.• Not all immoral behavior can be made illegal.• Behaviors that are not, in themselves, unethical can

become unethical because of laws that are passed.

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Business and Religious EthicsBusiness and Religious Ethics• Religion is an important guide for many individuals in

their business lives, but religion cannot provide a universal moral code for business.

• Different religions have different ethical codes. • An eye for an eye & a tooth for a tooth is the basis for

individual & equitable justice (the guilty individual must be found and proportional justice must be meted out).

• ”If we practice an eye for an eye and a tooth for a tooth, soon the whole world will be blind and toothless.” Gandhi

• On a global level, there are many religions with varied moral principles. This is also true on a national level, unless a single religion is enforced by the state.

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Normative Ethical RelativismNormative Ethical Relativism

• Claims that when any two people or cultures hold different moral views of an action, both can be right.

• An action may be right for one person or society, and the same action, taken in the same way, may be wrong for another person or society — and both are equally correct.

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Ethical TheoryEthical Theory

• There’s no single ethical theory upon which all people or philosophers agree, but two basic approaches to moral reasoning have prevailed over time.

• The teleological approach argues on the basis of ends. For example, a particular action is right or wrong based upon the consequences of the action.

• The deontological (rules based) approach argues that actions are morally right or wrong independent of consequences.

• Ethical monists follow a single moral theory and ethical pluralists are willing to join components of different ethical theories.

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Making Decisions in Business EthicsMaking Decisions in Business Ethics

Moral Development and Moral Development and what influences the Moral Decision what influences the Moral Decision

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Relationship with normative theoryRelationship with normative theory

• The role of normative theory in the stages of ethical decision-making is primarily in relation to moral judgement– Moral judgements can be made according to

considerations of rights, duty, consequences, etc.

• Commercial managers tend to rely on consequentialist thinking.

• Yet, the issue of whether and how normative theory is used by an individual decision-maker depends on a range of different factors that influence the decision-making process.

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Can we teach ethics?Can we teach ethics?

As a developmental attribute Kohlberg

would argue we could.

By exposure to the topic we can enhance the ability of business students to recognize ethical issues.

Rick Gautschi

Enhancing the Ability of Business Students to Recognize Ethical Issues…, Journal of Business

Ethics, 1998, 17(2): 205-216.

& Tom Jones,

Should we teach ethics?Should we teach ethics?

• Is not there a special ethics for business?

• Is ethics ‘practical’ in the ruthless world of business?

• What’s the cost of being unethical in business?

Is not there an inherent tension Is not there an inherent tension between business & ethics?between business & ethics?

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Influences on ethical decision-makingInfluences on ethical decision-making• Individual factors - unique characteristics of

the individual making the relevant decision (Trevino, 1986).

• Situational factors - particular features of the context that influence whether the individual will make an ethical or unethical decision.

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Individual Influences on ethical Individual Influences on ethical decision-making decision-making 1/51/5

Individual factors include:• Age and gender• National & cultural characteristics• Education and employment• Psychological factors:

– Cognitive moral development– Locus of control

• Personal Values• Personal integrity• Moral imagination

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• Age– Results contradictory.– However experiences

may have impact.

• Gender– Individual characteristic

most often researched.– Results contradictory.

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National and cultural characteristics•People from different cultural backgrounds are likely to have different values / beliefs about right & wrong.

– This will inevitably lead to variations in ethical decision-making across nations, religions & cultures.

•Our ‘mental programming’ is influential in shaping our understanding of differences - Hofstede (1980; 1994)

– Individualism / collectivism– Power distance– Uncertainty avoidance– Masculinity / femininity

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Basic Questions Society must Address (Kluckholm)a.What is the innate nature of people

(evil, neutral, good)(evil, neutral, good).

b.What are People’s Relation to Nature (subjugation, harmony, mastery)(subjugation, harmony, mastery).

c. People’s Time Orientation (past, present, future)(past, present, future).

d.Nature of Human Activity (being, becoming, doing)(being, becoming, doing).

e.Peoples Relationship with one Another (lineal, collateral, individual)(lineal, collateral, individual).

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Education and employment•Type and quality of education may be influential.

•E.g. business students rank lower in moral development than others and more likely to cheat.

– ‘Amoral’ business ed. reinforces myth of amoral business.

– And Lawyers rank high?

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Psychological factorsPsychological factors

• Cognitive moral development (CMD) refers to different levels of reasoning that individuals can apply to ethical issues and problems– Criticisms of CMD

• Gender bias• Implicit value judgements• Invariance of stages

• An individual’s locus of control determines the extent to which they believe that they have control over the events in their life

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Psychological factorsPsychological factorsStages of cognitive moral development1/3

Level Stage Explanation Illustration 1

Obedience and punishment

Individuals define right and wrong according to expected rewards and punishments from authority figures

Whilst this type of moral reasoning is usually associated with small kids, we can also see that business people frequently make unethical decisions because they think their company would either reward it or let it go unpunished (Gellerman '86).

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Instrumental purpose and exchange

Individuals are concerned with their own immediate interests and define right according to whether there is fairness in exchanges or deals they make to achieve those interests.

An employee might cover for the absence of a co-worker so that their own absences might subsequently be covered for in return – a “you scratch my back, I’ll scratch yours” reciprocity (Treviño & Nelson 1999).

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Level Stage Explanation Illustration

3 Interpersonal accord, conformity and mutual expectations

Individuals live up to what is expected of them by their immediate peers and those close to them

An employee might decide that using company resources such as the phone, the internet and email for personal use whilst at work is acceptable because everyone else in their office does it.

II

Conv

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Conv

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Social accord and system maintenance

Individuals’ consideration of the expectations of others broadens to social accord more generally, rather than just the specific people around them.

A factory manager may decide to provide employee benefits and salaries above the industry minimum in order to ensure that employees receive wages and conditions deemed acceptable by consumers, pressure groups and other social groups.

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Wk. 7-27

Psychological factorsPsychological factors

Make the Moral

Judgment Kohlberg (1969)

Taking a moral act depends on more than just

your stage of Moral development

Recognize the

Recognize the

Moral IssueMoral Issue

• RestRest: Components of Moral Action: Components of Moral Action

Establish the Establish the Moral Moral IntentIntent

Execute & Execute & implement the

implement the moralmoral actionaction planplan

Lawrence Kohlberg, Jim Rest, 1982 at the Moral Ed. Conference in Fribourg, Switzerland

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Psychological factorsPsychological factorsPersonal values, integrity & moral imagination•Personal values

– ‘an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state’ (Rokeach 1973:5)

•Personal integrity– Defined as an adherence to moral principles/values

•Moral imagination– Concerned with whether one has “a sense of the variety of

possibilities and moral consequences of their decisions, the ability to imagine a wide range of possible issues, consequences, and solutions” (Werhane, 1998:76)

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Situational influences on ethical Situational influences on ethical decision-makingdecision-making

Issue Related SituationsIssue Related Situations 1/2 1/2

• Jones: Moral Intensity:– Magnitude of Consequences

– Temporal Immediacy

– Social Consensus

– Probability of Effect

– Concentration of Effect

– Proximity

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Issue Related SituationsIssue Related Situations 2/2 2/2

Moral framing:•The same problem/dilemma can be perceived very differently according to the way the issue is framed

– Language is an important aspect of moral framing

Moral muteness (Bird & Walters 1989) because of:

• Harmony• Efficiency•Image of power & effectiveness

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Rewards Strong evidence of relationship between rewards, punishments & ethical behaviour.

Authority Great influence from immediate superiors & top management on ethical decision-making.

Bureaucracy Significant influence on ethical decision-making is well documented.

Work roles Some learning differences evident (quant. vs. non).

Organizational Culture

Strong influence implies relationship between culture & ethical decision-making contested.

Context Related Situations Context Related Situations 1/41/4

Strong evidence of relationship between rewards, punishments & ethical behaviour.

Great influence from immediate superiors & top management on ethical decision-making.

Significant influence on ethical decision-making is well documented.

Some learning differences evident (quant. vs. non).

Strong influence implies relationship between culture & ethical decision-making contested.

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•Systems of reward•Adherence to ethical principles & standards stands less chance of being repeated & spread throughout a company when it goes unnoticed & unrewarded

– “What is right in the corp. is not what is right in a man’s home or in his church. What is right in the corp. is what the guy above you wants from you. That’s what morality is in the corporation” (Jackall, 1988:6)

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Authority • People do what

they are told to do – or what they think they’re being told to do (Milgram).

Bureaucracy• Jackall (1988), Bauman (1989,

1993) & ten Bos (1997) argue bureaucracy has a number of negative effects on ethical decision-making.– Suppression of moral autonomy– Instrumental morality– Distancing– Denial of moral status



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Work roles• Work roles can capture

a whole set of expectations about what to value, how to relate to others, and how to behave.

• Can be either functional or hierarchical.

•Group norms delineate acceptable standards of behaviour within the work community.

•E.g. ways of talking, acting, dressing or thinking etc.

Organisational culture and norms



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How ethical decisions are justified: Rationalization tactics 1/2

Strategy Description Examples Denial of responsibility

Actors engaged in corrupt acts perceive they have no other choice than to participate in such activities.

“What can I do? My arm’s being twisted.” / “It is none of my business if the corp. uses bribery overseas.”

Denial of injury

Actors are convinced that no one is harmed by their actions; hence the actions are not really corrupt.

“No one was really harmed” “It could have been worse.”

Denial of victim

Actors counter any blame for their actions by arguing that the violated party deserved whatever happened.

“They deserved it.” “They chose to participate.”

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How ethical decisions are justified: Rationalization tactics 2/2

Strategy Description Examples Social weighting

Actors moderate the salience of act: 1. Condemn the condemner, 2. Selective social comparison.

“You have no right to criticise us.” “Others are worse than we are.”

Appeal to higher loyalties

The actors argue that their violation of norms is due to their attempt to realize a higher-order value.

“We answered to a more important cause.” / “I would not report it because of my loyalty to my boss.”

Metaphor of the ledger

Actors argue that they’re entitled to indulge in deviant behaviours due to time and effort in their jobs.

“It’s all right for me to use the internet for personal reasons at work. After all, I do work overtime.”

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SummarySummary• In this lecture we have:

– Discussed various stages of and influences on ethical decision-making in business.

– Presented basic model of ethical decision-making.– Outlined individual and situational influences on

ethical decision-making.– Suggested that some individual factors – such as

cognitive moral development, nationality & personal integrity – are clearly influential.

– Suggested that in terms of recognising ethical problems & actually doing something in response to them, it is situational factors are influential. end

1 making decisions in business ethics conventional morality & ethical relativism & moral...

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ethical relativism slide

moral decision slide

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heinz willing

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right actions moral

importance of differences