CHAPTER 4: MAKING DECISIONS IN BUSINESS ETHICS

ESTUDIAR CON EL LIBRO

Descriptive ethical theories provide an important addition to the normative theories covered in the
previous chapter: rather than telling us what business people should do (normative theory), descriptive
theories seek to tell us what business people actually do – and more importantly, why they do it.

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.

Main factors in deciding the moral status of a situation:

• Decision likely to have significant effects on others.

• Decision likely to be characterised by choice, in that alternative courses of action are open.

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

Models of ethical decision-making

Schwartz (2016) distinguishes between two types of ethical decision making.

Rationalist perspective – very common approach that assumes a logical reasoning approach, akin to a
calculation being done, prior to arriving at an ethical judgement

Intuitionist/sentimentalist perspective – considers role of cognitive processes and intuition, emotion or

sentiment, particularly important is the role of quick moral intuitions

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.

• However, 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

1
Two broad categories: individual and situational (Schwartz, 2016)

• 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

STEPS TO FOLLOW IN THE EXAM TO ANALYZE A CASE

• 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

International perspectives on ethical decision-making:

Research on individual factors influencing ethical decision-making has a strong US and Asian bias

– Consistent with choice within constraints

Research on situational factors originated by European authors

– Consistent with concern for constraints themselves

2
Individual influences on ethical decision making:

1. Age and gender

Age: Results contradictory, however experiences may have impact

Gender: Individual characteristic most often researched, results contradictory

• These categories too simplistic

2. 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

– Indulgence

Individualism/collectivism

Someone from a individualist culture, such as are found in northern Europe or USA, might be more likely
to reflect on ethical problems alone in order to make their own independent decision.

Someone from a collectivist culture, such as are found in southern Europe and Latin America, might be
more likely to consult with the wider group.

3
Power distance

A high power distance culture, like Japan or China, might be less willing to question the orders given by
their superior, even if they felt they were being asked to do something ethically questionable.

Continuar leyendo libro 171/633

3. 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.

The separability assumption. One thing is business and ethics is another.

4. Psychological factors

- Psychological factors are concerned with cognitive processes; in other words, how people actually
think.

- From an ethical decision-making point of view knowing about the differences in the cognitive
processes of individuals can clearly help us to improve our understanding of how people decide what is
the morally right or wrong course of action.

We shall look at two of the most prominent psychological factors:

- Cognitive Moral Development

Cognitive moral development (CMD) refers to the different levels of reasoning that an individual can
apply to ethical issues and problems, depending on their cognitive capacity.

Level one. The individual exhibits a concern with self-interest and external rewards and punishments.

Level two. The individual does what is expected of them by others.

Level three. The individual is developing more autonomous decision-making based on principles of
rights and justice rather than external influences.

VER DIAPOSITIVAS 30-31 Continuar leyendo libro 173/633

Criticisms of CMD Theory:

Gender bias – biased due to emphasis on abstract principles

Implicit value judgements – privileges rights and justice over other bases of morality

Invariance of stages – situational influences can shape more development level which is engaged

- Locus of Control

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

4
 - Someone with a high internal locus of control believes that the events in their life can be
shaped by their own efforts.

- Someone with high external locus of control believes that events tend to be the result of the
actions of others, or luck, or fate.

To what extent individual’s locus of control could influence ethical decision making?

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

Treviño and Nelson (2014) suggest…

- Those with a strong internal locus of control might be expected to be more likely to consider
the consequences of their actions for others.

5. 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 values Individual beliefs about desirable behaviours and goals that are stable over time and
which influence decision-making. Personal values sometimes can change.

6. Personal integrity

Defined as an adherence to moral principles or values. Personal integrity: you are coherent with your
beliefs.

Whistleblowing. Intentional acts by employees to expose, either internally or externally, perceived

ethical or legal violations by their organization. It is an important means by which ethical issues are
reported and policed. However, such exercises of integrity can require protection, e.g. the Sarbanes-
Oxley act requires US listed companies to provide channels for anonymous reporting of violations.
Likewise, specific whistle-blower protection laws exist, such as in Norway, Romania and the UK

1. Recognize moral issue. Be aware that something is not ethically correct

2. Make moral judgement. Reflect on the situation and decide to act or not
3. Establish moral intent. Decide to act according to personal values
4. Engage in moral behavior. Denounce the behavior

7. 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”

It is the creativity with which an individual is able to reflect about an ethical dilemma.

Godwin (2015) found that individuals who exercised moral imagination were more likely to generate
mutually beneficial outcomes for business and society than those who did not.

Moral imaginatin could be vital, if we are to understand the relative influence of our two sets of factors,
individual and situational.

5
Situational influences on decision-making

Issue-related factors
Have been shown to influence both whether an individual actually recognizes the moral nature of a
problem in the first place (i.e. the moral recognition stage) and also the way that people actually think
about and act upon the problem (the subsequent stages in the ethical decision-making process).

- Moral intensity. Jones (1991:374-8) proposes that the intensity of an issue will vary according
to six factors:

1. Magnitude of consequences

• The expected sum of the harms (or benefits for those impacted by the
problem or action.

2. Social consensus

• The degree to which people are in agreement over the ethics of the problem
or action.

3. Probability of effect

• The likelihood that the harms (or benefits) are actually going to happen.

4. Temporal immediacy

• The speed with which the consequences are likely to occur.

5. Proximity

• The feeling of nearness (social, cultural, psychological, or hysical) the

decision-maker has for those impacted by their decision.

6. Concentration of effect

6
 • The extent to which the consequences of the action are concentrated heavily
on a few or lightly on many.

- Moral framing. The use of language to expose or mask the ethical nature of certain behaviours
or decisions. It is mostly used to make an unethical action look more acceptable to oneself
and/or third parties.

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 muteness (Bird & Walters 1989). People in business are reluctant to ascribe moral terms
to their work, even if acting for moral reason or if their actions have obvious moral
consequences because of concerns regarding perceived threats to:

– Harmony. Managers believe that moral talk disturbs organizational harmony by

provoking confrontation, recrimination and finger-pointing.

– Efficiency. Managers feel that moral talk clouds issues, making decision-making more
difficult, time consuming and inflexible.

– Image of power and effectiveness. Managers believe that their own image will suffer
since being associated with ethics is typically seen as idealistic and utopian, and lacking
sufficient robustness for effective management.

Moral framing can also occur after a decision has been made or an act carried out. It is important
therefore to look not just at what people decide, but how they then justify their decisions to themselves
and others.

– Anand et al (2004:39) call these justification “rationalization tactics” …

– Mental strategies that allow employees (and others around them) to view their corrupt
acts as justified.

See 48/64

Context-related factors
By context we mean the organizational context in which an employee will be working, especially the
expectations and demands placed on them within the work environment that are likely to influence
their perceptions of what is the morally right course of action.

1. System of rewards

Adherence to ethical principles and standards stands less chance of being repeated and spread
throughout a company when it goes unnoticed and unrewarded. There is considerable evidence to
suggest that employees´ ethical decision-making is indeed influenced by the systems of reward they see
operating in the workplace.

2. Authority

The exercise of hierarchical power to compel a subordinate to act in a certain way. It is a key factor in
shaping ethical decisions because employees tend to follow the explicit and implicit preferences, orders,
and rules of their superior.

7
 3. Bureaucracy

A type of formal organization based on rational principles and characterized by detailed rules and
procedures, impersonal hierarchical relations, and a fixed division of tasks. It tends to prevent personal
moral reflection in favour of prescribed organizational policies.

• 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. Individual morality tends to be subjugated to the functionally

specific rules and roles of the bureaucratic organization. Thus, effective bureaucracy essentially
“free” the individual from moral reflection and decision-making since they need only to follow
the prescribed rules and procedures laid down to achieve organizational goals. This can cause
employees to act as “moral robots”, simply following the rules rather than thinking about why
they are there or questioning their purpose.

Instrumental morality. The bureaucratic dimension focuses organizations members´ attentions

on the efficient achievement of organizational goals. Hence, morality will be make meaningful
only in terms of conformity to established rules for achieving those firms´goals-i.e.
instrumentalized- rather than focusing attention on the moral substance of the goals
themselves.

Distancing. Bureaucracy serves to further suppress our own morality by distancing us from the
consequences of our actions. Bureaucracy serves to further suppress our own morality by
distancing us from the consequences of our actions-for example, a supermarket purchasing
manager in London is rarely going to be faced with the effects of their supply negotiations on
the farm workers producing the supermarket´s coffee beans in Colombia.

Denial of moral status. Bureaucracy has been argued to render moral objects, such as people
or animals, as things, variables or a collection of traits. Thus, employees become human
“resoruces”, that are means to some organizatinal end; consumers are reduced to a collection
of preferences on a marketing database, animals become units of production or output that
can be processed in a factory. The point is that by dividing tasks and focusin on efficiency, the
totality of individuals as moral beings is lost and they are ultimatly denied true moral status.

4. 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

5. Organizational culture

The meanings, beliefs, and common-sense knowledge that are shared among members of an
organization, and which are represented in taken-for-granted assumptions, norms and values.

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

– E.g. ways of talking, acting, dressing or thinking

6. National context

Instead of looking at the nationality of the individual making the decision; now we are considering the
nation in which the decision is actually taking place, regardless of the decision-maker’s nationality

8
Different cultures still to some extent maintain different views of what is right and wrong