Making Decisions in Business Ethics

Descriptive Ethical Theories

 Factors in deciding for ethical decision
• 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

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Stages in ethical decision-making

Ethical decision-making process

Recognise Make Establish Engage in

moral moral moral moral
issue judgement intent behaviour

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

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Relationship 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
• Decision-maker depends on a range of different factors that
influence the decision-making process

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 Influences on ethical decision-making
Two broad categories: individual and
situational (Ford and Richardson 1994)
• Individual factors -
– Given at birth (age, gender)
– Acquired by experience and socialisation (education, personality,
attitude)
• Situational factors -
– Work context (reward system, job roles, organizational culture)
– The issue itself including
• Strength
• ethical framing

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 Framework for understanding
ethical decision-making
Individual factors

Recognise Make moral Establish Engage in

moral issue judgement moral intent moral
behaviour

Situational factors

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Individual influences on ethical
decision-making

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 Age and gender
• Age
– Results contradictory
– However experiences may have impact
• Gender
– Individual characteristic most often researched
– Results contradictory
• These categories too simplistic

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 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 (autonomous and driven for the benefit of one’s)
– Power distance (unequal power is accepted and respected)
– Uncertainty avoidance (preference for certainty, rules and truth)
– Masculinity/femininity [valuing money and things (masculinity)
versus valuing people and relationship (femininity)]
– Long-term/short-term orientation

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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 academic cheat
• ‘Amoral’ business education reinforces myth of business as
unethical

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 Psychological factors
Cognitive moral development (CMD) refers to the different
levels of reasoning that an individual can apply to ethical
issues
• 3 levels (self-interest and reward, expected by others, autonomous
decision-making)
• Criticisms of CMD
– Gender bias
– Implied value judgements (how people actually think)
– 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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 Stages of cognitive moral
Level
development (I)
Stage Explanation Illustration
Individuals define right and Whilst this type of moral reasoning is usually
1 Obedience wrong according to expected associated with small children, we can also
and rewards and punishments from see that businesspeople frequently make
punishment authority figures unethical decisions because they think their
company would either reward it or let it go
unpunished (see Gellerman 1986).
I Preconventional
Instrumental Individuals are concerned with An employee might cover for the absence of
2 purpose and their own immediate interests and a co-worker so that their own absences might
exchange define right according to whether subsequently be covered for in return – a
there is fairness in the exchanges “you scratch my back, I’ll scratch yours”
or deals they make to achieve reciprocity (Treviño and Nelson 1999).
those interests.
Interpersonal Individuals live up to what is An employee might decide that using
3 accord, expected of them by their company resources such as the telephone, the
conformity immediate peers and those close internet and email for personal use whilst at
II Conventional and mutual to them work is acceptable because everyone else in
expectations their office does it.
Individuals’ consideration of the A factory manager may decide to provide
4 Social accord expectations of others broadens to employee benefits and salaries above the
and system social accord more generally, industry minimum in order to ensure that
maintenance rather than just the specific employees receive wages and conditions
people around them. deemed acceptable by consumers, pressure
groups and other social groups.

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

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 Stages of cognitive moral
development (II)
Level Stage Explanation Illustration

5 Social Individuals go beyond identifying The public affairs manager of a food

contract with others’ expectations, and manufacturer may decide to reveal which of
and assesses right and wrong the firm’s products contain genetically
individual according to the upholding of modified ingredients out of respect for
rights basic rights, values and contracts consumers’ rights to know, even though they
of society. are not obliged to by law, and have not been
III Postconventional pressurised into by consumers or anyone else.

6 Universal Individuals will make decisions
ethical autonomously based on self-
principles 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.

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 Personal values, integrity & moral
imagination
Personal values
• Continue over time
• Influence behaviour
• Concerned with individual and collective well-being (Rokeach
1973:5)
Personal integrity
• Defined as an adherence to moral principles or values
Moral imagination
• “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 decision-making
Type of Factor Influence on ethical decision-making
factor
Moral intensity Reasonably new factor, but evidence suggests significant effect on ethical decision-
Issue-related making.
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.

Context- Bureaucracy Significant influence on ethical decision-making well documented, but actually
related 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 Strong overall influence, although implications of relationship between culture and
culture ethical decision-making remain contested.

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

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 Moral Intensity
– Magnitude of consequences (sum of the harms or benefits
by the problems or actions)
– Social consensus (agreement over the ethics of the problem or
action)
– Probability of effect (harms or benefits are actually going to
happen)
– Temporal immediacy (consequences are likely to occur)
– Proximity (feeling of nearness social, cultural, psychological and
physical decision-making)
– Concentration of effect (actions are concentrated)

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 Moral framing
• 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 silence (Bird & Walters 1989) because of concerns
regarding perceived threats to:
– Harmony (moral talk disturb organizational harmony)
– Efficiency (moral decision making is difficult, time consuming)
– Image of power and effectiveness

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 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
• What is right in a man’s home
• What is right in the corporation
• What the guy above you wants from you
• That’s what morality is in the corporation” (Jackall, 1988:6)

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 Authority and Bureaucracy
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 revenge 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
– Dominance of moral
autonomy
– Instrumental morality
– Distancing
– Rejection of moral status
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 Work roles and organizational norms
and culture
Work roles Organizational
• Work roles can summarize norms and culture
a whole set of • Group norms define
expectations about what acceptable standards of
to value, how to relate to behaviour within the work
others, and how to community
behave – E.g. ways of talking, acting,
• Can be either functional dressing or thinking
or hierarchical

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 National and cultural context
• Instead of looking at the nationality
• 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
• Different cultures still to some extent maintain different views
of what is right and wrong

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