Business Ethics

An Ethical Decision-Making Approach

Mark S. Schwartz
Summaries

Chapter 1 : What Determines Ethical Behavior?

Best explains why different individuals act differently in terms of their ethical behavior when
faced with the same set of circumstances, is the person’s moral character. Interrelated but
distinct dimensions to our moral character: - Capability: The ability to properly determine
morally right from wrong. Dimensions to capability has three elements: Moral maturity,
Moral value system, Moral competence. - Commitment: the motivation to consistently do
what we know or determine to be morally right. Dimensions to commitment has three
elements: Moral identity, Moral will power, Moral courage.
Situational context for ethical decision making. -ETHICAL ISSUE is a situation requiring
a freely made choice to be made among alternatives that can positively or negatively impact
others (include: Issue importance, Issue intensity, Issue complexity). -ORGANIZATION’S
ETHICAL CULTURE is the organizational formal and informal elements that contribute to
an organization’s ethical effectiveness. This includes formal and informal communication,
surveillance, and sanctioning systems. - PERSONAL CONTEXT is the individual’s current
situation which can lead to “ethical vulnerability” due to “personal need for gain” or
time/financial constraints.
Chapter 2 : The Ethical Decision-Making Process
Integrated Ethical Decision Making. Two major components to the Integrated-EDM model:
The ethical decision-making process and the factors (or variables) that influence the ethical
decision-making process. The ethical decision-making process is composed of four basic
stages: awareness; judgment; intention; action/behavior. In terms of the process of the
Integrated-EDM model, the initial starting point is the norms.
Chapter 3 : Impediments to Proper Ethical Decision Making
The barriers include: improper framing, moral rationalizations, cognitive biases and
psychological tendencies, self-interest. Improper framing takes place when we ignore the
ethical implications of the situation, and instead only recognize the economic and/or legal
implications of the situation. Unless we frame the dilemma we are facing a set ehical in
nature, we can remain in a state of lacking moral awareness, which can increase our chances
of engaging in unethical behavior. The three frames include economic, legal, ethical frame.
Significant biases and psychological tendencies that can impede moral reasoning:
Obedience to authority, Conformity bias, Incrementalism, Moral equilibrium. There may also
Business Ethics
An Ethical Decision-Making Approach
Mark S. Schwartz
be other cognitive biases or tendencies that affect how information is processed and help
explain the often unethical decisions that managers and executives make: Loss Aversion,
Tangible versus the abstract, Time delay traps, Overoptimism, Confirmation bias. Moral
rationalization means the cognitive process that is used by individuals to convince
themselves that their behavior does not violate their moral standards. Self-interest, which is
often ignored in ethical decision-making research despite its acknowledged importance in
influencing behavior, should be considered to play an important role as an impediment to
ethical behavior.
Chapter 4 : Distinguishing Right from Wrong
1.Becoming aware of an ethical dilemma. The first step in ethical decision making is
realizing that you are facing an ethical dilemma involving more than one alternative course of
action. 2. Moral reasoning. When facing an ethical dilemma, a proper moral reflection or
reasoning process should take place that includes a reflection of the moral standards
discussed above. Can be distinguished into two general categories: those moral standards that
tend to support ethical behavior (universal core ethical values; utilitarianism
(consequences); Kantianism (duties); moral rights; justice/fairness) and those moral standards
that tend to be improperly used to support or rationalize unethical behavior (relativism
(group norms) and egoism (greed)). 3. Apply the The Public-Parent-Pillow (3P) Filter.
Asking yourself if you would be willing to have your decision publicized, tell your child to
act the same way, and still be able to sleep at night, are the final considerations.
Chapter 5 : The Decision To Report Misconduct
Whistleblowing is an attempt by a member or former member of an organization to disclose
wrongdoing in or by the organization. Internal Whistleblowing: Reporting misconduct to a
party within the organization including a manager, senior executive, the CEO, legal counsel,
human resources manager, security, internal auditor, ombudsperson, compliance officer,
ethics officer, or the board of directors. External Whistleblowing: Reporting misconduct to a
party outside the firm such as a government regulator, police, media, or a special interest
group. Application of the criteria: Dennis Gioia and the Ford Pinto Case; Sherron Watkins
and Enron; Dr Jeffrey Wigand and Brown & Williamson.