Making Decisions in Business EthicsDescriptive Ethical Theories

Overview

• Examine the question of why ethical and unethical decisions get made in the workplace

• Determine what an ethical decision is• Review prominent ethical decision-making models• Discuss the importance of differences between

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

influences on ethical decision-making (issues and context based)

• Identify points of leverage for managing and improving ethical decision-making in business

Descriptive Ethical Theories

Descriptive business ethics theories seek to describe how ethics decisions are actually made in business, and what influences the process and outcomes of those decisions.

What is an ethical decision?

Main factors in deciding the moral status of a situation

• Decision likely to have significant effects on others

• There is a choice, and alternatives are possible

• The Decision is perceived as ethically relevant by one or more parties

Models of ethical decision-making

Stages in ethical decision-making

Recognise moral issue

Make moral

judgement

Establish moral intent

Engage in moral

behaviour

Ethical decision-making process

Source: Derived from Rest (1986), as cited in Jones (1991).

Distinct stages. You don't necessarily go through all of this in a single process.

Influences on ethical decision-making

Two broad categories: individual and situational (Ford and Richardson 1994)

• Individual factors - unique characteristics of the individual making the relevant decision– Given at birth – Acquired by experience and socialisation

• Situational factors - particular features of the context that influence whether the individual will make an ethical or unethical decision– Work context– The issue itself including

• Intensity• ethical framing

Influences on ethical decision-making

Two broad categories: individual and situational (Ford and Richardson 1994)

• Individual factors • Situational factors

What could these things involve? Discuss

Framework for understanding ethical decision-making

Recognise moral issue

Make moral judgement

Establish moral intent

Engage in moral

behaviour

Situational factors

Individual factors

Limitations of ethical decision-making models

• Models useful for structuring discussion and seeing the different elements that come into play

• Limitations– Not straightforward or sensible to break model

down into discrete units– Various stages related or interdependent– National or cultural bias

• Model is intended not as a definitive representation of ethical decision-making, but as a relatively simple way to present a complex process

Individual influences on ethical decision-making

Individual influences:what, how and how much?

Individual influences on ethical decision-making

Age and gender

• Age– Results contradictory– However experiences may have impact

• Gender– Individual characteristic most often researched– Results contradictory

• These categories too simplistic

National and cultural characteristics

• People from different cultural backgrounds likely to have different beliefs about right and wrong, different values, etc. and this will inevitably lead to variations in ethical decision-making across nations, religions and cultures

• Hofstede (1980; 1994) influential in shaping our understanding of these differences – our ‘mental programming’:– Individualism/collectivism– Power distance– Uncertainty avoidance– Masculinity/femininity– Long-term/short-term orientation

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 education reinforces myth of business as amoral

Psychological factors

Cognitive moral development (CMD) refers to the different levels of reasoning that an individual can apply to ethical issues and problems

• 3 levels (details over the next two slides)• 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

Stages of cognitive moral development (I)

Source: Adapted from Ferrell et al. (2002); Kohlberg (1969); Trevino and Nelson (1999)

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 children, we can also see that businesspeople frequently make unethical decisions because they think their company would either reward it or let it go unpunished (see Gellerman 1986).

I Preconventional 2

Instrumental purpose and exchange

Individuals are concerned with their own immediate interests and define right according to whether there is fairness in the 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 and Nelson 1999).

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 telephone, the internet and email for personal use whilst at work is acceptable because everyone else in their office does it.

II

Conventional

4

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.

Level Stage Explanation Illustration

III Postconventional

5 Social contract and individual rights

Individuals go beyond identifying with others’ expectations, and assesses right and wrong according to the upholding of basic rights, values and contracts of society.

The public affairs manager of a food manufacturer may decide to reveal which of the firm’s products contain genetically modified ingredients out of respect for consumers’ rights to know, even though they are not obliged to by law, and have not been pressurised into by consumers or anyone else.

6 Universal ethical principles

Individuals will make decisions autonomously based on self-chosen universal ethical principles, such as justice, equality, and rights, which they believe everyone should follow.

A purchasing manager may decide that it would be wrong to continue to buy products or ingredients that were tested on animals because he believes this doesn’t respect animal rights to be free from suffering.

Stages of cognitive moral development (II)

Personal 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 or valuesMoral 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)

Situational influences on decision-making

Situational influences : what, how and how much?

Type of factor

Factor Influence on ethical decision-making

Moral intensity

Reasonably new factor, but evidence suggests significant effect on ethical decision-making.

Issue-related Moral framing

Fairly limited evidence, but existing studies show strong influence on some aspects of the ethical decision-making process, most notably moral awareness.

Rewards

Strong evidence of relationship between rewards/punishments and ethical behaviour, although other stages in ethical decision-making have been less investigated.

Authority Good general support for a significant influence from immediate superiors and top management on ethical decision-making of subordinates.

Bureaucracy

Significant influence on ethical decision-making well documented, but actually exposed to only limited empirical research. Hence, specific consequences for ethical decision-making remain contested.

Work roles

Some influence likely, but lack of empirical evidence to date.

Organizational culture

Strong overall influence, although implications of relationship between culture and ethical decision-making remain contested.

Context-related

National Context Limited empirical investigation, but some shifts in influence likely.

Situational influences on ethical decision-making

Type of factor

Factor Influence on ethical decision-making

Moral intensity

Reasonably new factor, but evidence suggests significant effect on ethical decision-making.

Issue-related Moral framing

Fairly limited evidence, but existing studies show strong influence on some aspects of the ethical decision-making process, most notably moral awareness.

Rewards

Strong evidence of relationship between rewards/punishments and ethical behaviour, although other stages in ethical decision-making have been less investigated.

Authority Good general support for a significant influence from immediate superiors and top management on ethical decision-making of subordinates.

Bureaucracy

Significant influence on ethical decision-making well documented, but actually exposed to only limited empirical research. Hence, specific consequences for ethical decision-making remain contested.

Work roles

Some influence likely, but lack of empirical evidence to date.

Organizational culture

Strong overall influence, although implications of relationship between culture and ethical decision-making remain contested.

Context-related

National Context Limited empirical investigation, but some shifts in influence likely.

Moral Intensity

• Jones (1991:374-8) proposes that the intensity of an issue will vary according to six factors:– Magnitude of consequences– Social consensus– Probability of effect– Temporal immediacy– Proximity– Concentration of effect

• The same problem or dilemma can be perceived very differently according to the way that the issue is framed– Language important aspect of moral framing (using

moral language likely to trigger moral thinking)

Moral framing

How ethical decisions are justified: rationalization tactics

Systems of reward

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

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

Authority • People do what they are told

to do – or what they think they’re being told to do

• Recent survey of government employees (Ethics Resource Center, 2008: 9):– 20% think top leadership is

not held accountable– 25% believe top leadership

tolerates retaliation against those reporting ethical misconduct

– 30% don’t believe their leaders keep promises

Bureaucracy• Jackall (1988), Bauman

(1989, 1993) and 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

– HOW? And how could this be improved?

Authority and Bureaucracy

Work roles and organizational norms and culture

Work roles• Work roles can

encapsulate 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

Organizational norms and culture

application

Elastic REAL case study

Edmodo: Business schools case study