Psychological Theories

Week 3
Recap – Lecture 2
• Consequentialist approach (teleology) v.
Non-Consequentialist approach (deontology)

• Utilitarianism, Duty-based theories,

Kantianism, Justice ethics & Virtue ethics.

2
Learning Overview

• Ethical decision making process

• Individual characteristics

• Organisational characteristics (situational factors)

3
Getting Started

Ethical Decision Making Process

4
Ethical Decision Making

• Ethical decision making is affected by two main factors:

o Individual characteristics

o Organisational characteristics (situational factors)

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Ethical Decision Making

Individual characteristics

Recognition/
Moral Moral Moral
Intent
awareness judgement behaviour

Organisational characteristics

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Ethical Decision Making
1. Recognition/Moral awareness: the moral agent/individual
recognises the moral issue(s).
Witness a colleague
2. Judgement: the individual engages in some form of moral stealing an office
reasoning (for example, using utilitarianism, duty based approach, printer
Kantianism, justice ethics, or virtue ethics) to arrive at moral
judgement.

3. Establish Moral Intent: the individual establishes moral intent

and decides to take moral action.

4. Moral Behaviour: the individual translates intent to behaviour.

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Moral Awareness

• Moral awareness = recognising moral issues

o i.e. recognising that a situation/issue/decision/action

• may have consequences for other human beings, and

• must be thought about in moral terms (right or wrong).

• Moral awareness is the initial step in the ethical decision making process.

(Trevino & Nelson 2006, p 121; Jones 1991)

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Moral Awareness at Work …

• Moral awareness about an issue is more likely to arise if

an individual believes that co-workers will also see the
issue as ethically problematic.
• Example:
o Ann is required by her boss to write a fake report to cover up
information about a defective car model.
o She believes that her co-workers would see such a fake report
as a normal thing in doing business.
(Trevino & Nelson 2006, pp 121-4)
o Is her moral awareness more or less likely to arise?
o What if she believes that her co-workers would see such a fake
report ethically problematic?

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Moral Awareness at Work …
• Moral awareness is more likely to arise if moral language is used to present the situation.
o Moral language: wrong, lack of integrity, dishonest, unfair, lying, cheating, stealing, unethical,
immoral,…
o Neutral language: questionable (unethical); corporate restructuring (massive layoffs); facilitation
payments (brides);
• Example:
o In a meeting, the manager said that “Some of you often provide false and misleading information
to consumers. Well. That’s not very nice”.

o Is it more or less likely for moral awareness to arise ?

o What if the manager said “That’s unethical” ?

(Trevino & Nelson 2006, pp 121-4)

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Moral Awareness at Work …
• Moral awareness is more likely if the issue potentially causes serious harm to others.

• Example:
o John just started his work at a medical equipment company.
o On his first week at the company, he finds that some of his co-workers often use social media at work.
o John also finds that some sales staff often provide false and misleading information to consumers.
o In which situation, moral awareness is more likely ? Why ?

(Trevino & Nelson 2006, pp 121-4)

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Part 1

The Influence of Individual Characteristics

on Ethical Decision Making

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Ethical Decision Making

Individual characteristics

Recognition/
Moral Moral Moral
Intent
awareness judgement behaviour

Organisational characteristics

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Individual Influences on Ethical Decision Making

• Age ?

• Gender ?

• National and cultural characteristics ?

• Education and employment ?

(Crane & Matten, 2008)

• Psychological factors:
o Cognitive moral development (Kohlberg)
o Locus of control

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a) Cognitive Moral Development
• The theory was first proposed by a Swiss psychologist, Jean Piaget,

• It was then extended further by an American psychologist,

Lawrence Kohlberg.

• Kohlberg’s model of cognitive moral development suggests that:

Human moral reasoning capacity develops sequentially

through three broad levels, each composed of two stages.

(3 levels – 6 stages)

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Kohlberg’s Stages of
Cognitive Moral Development (CMD)

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Stage 1: Focus on Punishment & Obedience

• At this stage, individuals focus on punishment to decide

what’s the right thing to do.
• For stage 1 people, an action is wrong if it results in
punishment.
• Do you know why stage 1 people consider stealing food
from a store or crossing red lights as something
wrong ?
• Implication: stage 1 people are likely to pursue wrong
action if the perceived risk of detection is low, and
punishment from wrongful behaviour is unlikely or
insignificant.

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Let’s Consider this Case …
• Evelyn works for an US automaker.
• She is responsible for investigating an operating problem developing in a new car model.
• She finds that the brake system is defective, which potentially results in deadly accidents.
• However, when Evelyn informs this finding to the president of the company, he asks her to
write a report concluding that the problem is just a minor mechanical issue and does not
affect the safety of the cars in that model.
• Such a report would help the company avoid a big recall, which undoubtedly affects the
company’s profit and reputation.
• Suppose that Evelyn is at stage 1 of moral reasoning, would she write a fake report ?

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 Stage 2: Self-Interest Orientation
• Individuals at stage 2 focus on self-interest to decide what’s the right thing to do.
• For stage 2 people, an action is right if it is in their best interest.
• Do you know why a stage 2 person might share his foods to his neighbour ?
• Why a stage 2 employee might work hard ?
• Note:
o At stage 2, people start showing a limited awareness of others’ needs and
desires, but only to a point where it might further their self interests.
o As a result, concern for others is not a matter of moral duties or caring, but an
issue of reciprocity, i.e., “you scratch my back and I’ll scratch yours”.
• Thus, stage 2 people will engage in behaviour that yields possible favours in
return.
• Do people at stage 2 feel obligated to repay a debt ?

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Evelyn Dilemma

• Suppose that Evelyn is at stage 2 of moral reasoning, would she write a fake
report ?

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Stage 3: Emphasize Others

• For people at stage 3, an action or a decision is right if…

o it pleases or helps others who are close to them (e.g., family members, friends,
or peers); or

o it is approved by those people.

• At this stage, people live up to the expectations of others who are close to them.
i.e., they try to be a ‘good boy’, ‘good girl’, ‘good friend’, ‘good student’, or ‘good employee’ to
please/help or to be approved by others.

• Dou you know why stage 3 people may do what is asked by their boss ?

• Stage 3 differs from Stage 2. In determining what is right, Stage 3 people will take
others into consideration.

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Evelyn Dilemma
• Suppose that Evelyn is at stage 3 of moral reasoning, would she write a fake report ?

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Stage 4: Duty to society – Rule followers
• People at stage 3 only consider others who are close to them (e.g., family,
friends, peers, or boss).
• However, people at stage 4 consider the interest of society.
• Stage 4 people believe that
o Rules (both social and legal rules) are necessary to promote the common good.
o They should follow rules because society works better when everyone follows rules.

• Therefore, stage 4 people tend to make decisions that are consistent

with relevant social and legal rules.

• Do you know why a stage 4 person would stop at red lights ?

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Evelyn Dilemma

• Suppose that Evelyn is at stage 4 of moral reasoning, would she write a fake
report ?

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 Stage 5: Just Rules Determined by Consensus

• People still regard laws as important because they maintain social order.

• However, at stage 5, people start questioning and evaluating the laws.

• Particularly, at this stage, people become aware that sometimes laws may work against the
general welfare of society.
• (e.g., one-child law: Is it just ? Is it good for society ?)

• In this case, stage 5 people would think that

o The bad law should be changed (e.g., one-child law should be changed); or

o The bad law could be broken to promote the general welfare of society (e.g., one-child law could be
broken).

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Stage 6: Universal Moral Principle Orientation

• People at this stage use universal moral principles to decide what is the right
thing to do.

• Justice, equality, respecting human rights, are examples of universal ethical

principles.

• For stage 6 people, a decision is right if it accords with universal moral

principles.

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Stage 6: Universal moral principle orientation

• If the laws violate universal moral principles, stage 6 people would uphold the
later.

• Exercise:

• Ben is the CEO at a car maker company. He decides to discontinue a car model
when he learns that the model may cause deathly accidents.

• Ben is aware that the current law does not require him to do so. However, he
Gandhi
thinks that it would be unfair and disrespectful to consumers’ safety and life if that
car model continues to be sold.

• At which stage should Ben be ?

• 4 ? 5 ? or 6 ?

• Only a few people could reach stage 6 (arguably, Gandhi, Nelson Mandela).

Nelson Mandela
Evelyn Dilemmas

• Suppose that Evelyn is at stage 6 of moral reasoning, would she write a fake
report ?

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Kohlberg’s CMD
• The pre-conventional level (stages 1 & 2) is especially common in children, although adults can
also exhibit this level.

• The conventional level (stages 3 &4) is typical of adolescents and adults.

• Very few adults actually reach the post-conventional level (stages 5 & 6), particularly stage 6.

• Although people generally progress through the stages in the same sequence, not everyone
progresses through all the stages.

• Many people remain stuck at one of the early stages throughout their lives.

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Kohlberg’s Central Argument

• The higher the reasoning stage, the more ethical the decision.

(Kohlberg, 1976)

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Limitations of Kohlberg’s Model

• Kohlberg's theory is not always correct.

• One can have a very high stage of moral reasoning, but still acts unethically.

o “I know telling lie to consumers is unfair and dishonest, but I have to meet the sale target”

• In business organisations, people regress morally (even though they may be able to
reason in a high level).

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Limitations of Kohlberg’s Model

• Kohlberg’s theory examines what a person thinks rather than how he or she
actually acts.

• One may think in a high level, but acts immorally. This is because the context
may affect how people behave.

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Limitations of Kohlberg’s Model
• Kohlberg’s theory suggests that with time, education, and experience, one may become more
ethical.

• However, this may not true in reality. An “adult’ may act like a “child” and vice versa.

• Are there distinct stages of moral reasoning ?

• In fact, stability in human’s moral reasoning capacity may not exist.

o One may justify a decision on the basis of a universal moral principle in one situation
(post conventional level), but may fall back on the conventional level in another
situation.

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Limitations of Kohlberg’s Model

• Kohlberg’s original research has limitations – data collected only from US males.

• Gilligan (1982) conducted other research and noted that women’s cognitive moral
development is different to that of man.

• Particularly, women emphasizes more on ‘ethics of care’, whereas men emphasizes

‘ethics of justice’

• To Gilligan, women go through three stages of moral development:

o Stage 1: Women tend to overemphasize interests of their selves

o Stage 2: Women overemphasize others’ interests

o Stage 3: Women balance their own interests with those of others

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b) Locus of control
(the theory was developed by Julian B. Rotter in 1954)
• Locus of control is defined as the degree to which people believe that they have control over events
affecting them.
• High internal locus of control: Individuals with a high internal locus of control believe that events in their
life result primarily from their own actions/effort.
o For example, when receiving exam results, people with a high internal locus of control tend to praise or blame themselves and
their abilities .

• High external locus of control: Individuals with a high external locus of control believe that outcomes
result from fate, luck, or the influence of others (such as parents, bosses, teachers, or government
officials).
o For example, when receiving exam results, people with a high external locus of control tend to praise or blame external factors
such as the teacher, teammates, or the exam.
• Individuals with a high internal locus of control are …
o more likely to take responsibility for the consequences of actions.
o more likely to resist pressure to be unethical.

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Part 2

The Influence of Organisational Characteristics

on Ethical Decision Making

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Ethical Decision Making

Individual characteristics

Recognition/
Moral Moral Moral
Intent
awareness judgement behaviour

Organisational characteristics

37
The Organisational Characteristics

• Issue related factors

o Moral intensity

• Context related factors

o Reward
o Work roles BAD APPLES OR BAD BARRELS ?
o Authority
o Diffusion of responsibility
o Group norms
o Organisational culture

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a) Moral Intensity - Jones (1991)
• Moral intensity is the seriousness of the moral issue

Issue: Stealing at work

• How serious is the moral issue ?

• Very serious => High moral intensity

• Would that high moral intensity affect ethical decision making (moral awareness, moral judgement, moral
intent, or moral behaviour) ?

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Moral Intensity

Issue:
Making some short personal calls at work

• How serious is the moral issue ?

• Would that high/low intensity affect ethical decision making (moral awareness, moral judgement,
moral intent, or moral behaviour) ?

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Moral Intensity
• Moral intensity is affected by
o The seriousness of potential harm
• The more serious the potential harm, the more intense the moral issue

• Defective cars – How serious is the harm ? How intense is the moral issue ?

• Releasing toxic waste into the ocean – How serious is the harm ? How intense is the moral issue ?

o Social consensus:
• The degree of social agreement that an act is evil

• Moral intensity is likely to increase when an act is considered as unethical by many people

• Releasing toxic waste water into the ocean – Would it be considered as wrong by many people?

• So, moral intensity is likely to increase or decrease ? (Jones 1991, 1998)

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Moral Intensity

• So, moral intensity may affect the process that a decision maker goes through
when faced with an ethical issue.

o The more intense the moral issue, the more likely that a person would

• have moral awareness,

• make a moral judgment,

• establish a moral intent, and

• engage in a moral behaviour

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b) Reward

• The reward system may affect individuals’ behaviour.

o People do what’s rewarded & avoid what's punished.

o Why ?

o Most adults are at the convectional level of moral development so they are highly
affected by external influences.

o “THEY LOOK UP AND LOOK AROUND” to decide what to do (Trevino & Nelson
2006, p 129)

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c) Work Roles
• When an individual is assigned a role, that individual normally

o does what’s expected by that role, and

o feels less morally responsible for what he/she’s doing.

• Examples: salesperson, security guard, policemen…

• The Zimbardo prison experiment

• This experiment confirms that individual behaviour is largely controlled by role rather than
personal characteristics
(Crane & Matten, 2007, p 161)

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Work Roles - Conflicting Roles
• Conflicting roles may lead to unethical behaviour (Trevino &
Nelson, 195).

• For example, nurses may be required to…

o look after patients closely and
o do the paper works (which takes them away from
patients).

• This may lead them to telling lies in the patient’s charts.

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d) Obedience to Authority

• People do what they are told to do, even that may be an unethical behaviour.

(Trevino & Nelson, 199)

• The Milgram experiments

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e) Diffusion of Responsibility
• Look at this scenario …

• No one calls the emergency service !

• Do we have similar problems when doing a team assignment ?

o (e.g., no one writes the report; no one does the proofreading, no one does the footnotes,…)

• Why do people fail to act ?

• When a task is placed before a group of people, there's a strong tendency for each individual
to assume that someone else will take responsibility for it - so no one does.

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f) Group Norms
• Group norms = the ways that members of a group usually do things

• Group norms affect behaviour of an individual in that group. Indeed,

1. People follow group norms. If ‘everyone’s doing it’, e.g., cheating customers, then there seems to
be a social consensus that the behaviour (e.g., cheating customers) is not an ethical issue. Thus,
ethical concerns/awareness just won’t come up at all.

2. Group norms can be used as a justification for an unethical behaviour. A person could
rationalize an unethical behaviour by saying that ‘everyone’s doing it’.

3. Group norms can also put pressure on an individual. He/she may need to do what everyone
does to get along with the crown, e.g., cheating customers so that he is not excluded from the sales
team
(Trevino & Nelson, 193-4)

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Conclusions
• The ethical decision making process

• The process is affected by both

o individual characters and

o organizational/situational characters.

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References
Crittenden, P 1990, Learning to be moral: Philosophical thoughts about moral development, Humanities Press
International New Jersey.
Chin, M.K., Hambrick, D.C., and Trevino, L.K. (2013), "Political ideologies of CEOs: Illustrative evidence of the influence of
executive values on corporate social responsibility", Administrative Science Quarterly
Ferrell, OC, Fraedrich, J & Ferrell, L 2005, Business ethics: Ethical decision making and cases, Houghton Mifflin, Boston.
Forsyth, DR 1992, 'Values, conceptions of science, and the social psychological study of morality', in WM Kurtines,
Azmitia, M., & Gewirtz, J. L. (ed.), The role of values in psychology and human development, John Wiley & Sons, New
York, pp. 239-55.
Gilligan, C 1982, In a different voice: Psychological theory and women's development, Harvard University Press,
Cambridge MA.
Gioia, DA 1992, 'Pinto fires and personal ethics: A script analysis of missed opportunities', Journal of Business Ethics, vol.
11, pp. 379-89.

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References
Janis, IL 1972, Victims of Groupthink, Houghton Mifflin, Boston.

Jones, TM 1991, 'Ethical decision making by individuals in organizations: An issue-contingent model', Academy of
Management Review, vol. 16, no. 2, pp. 366-95.

Jones, TM & Ryan, LV 1998, 'The effect of organizational forces on individual morality: Judgment, moral approbation, and
behavior', Business Ethics Quarterly, vol. 8, no. 3, pp. 431-45.

Kohlberg, L 1976, 'Moral stages and moralization: The cognitive-developmental approach', in T Lickona (ed.), Moral
development and behavior, Holt, Rinehart and Winston, New York, pp. 31-53.

Trevino, LK, & Nelson, K. A. 2006, Managing business ethics: Straight talk about how to do it right, 4 edn, John Wiley &
Sons, New York.

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