CHAPTER: 4

ETHICAL DECISION MAKING IN BUSINESS

 Ethical Model That Guides Decision Making

 Ethical theories are often broadly divided into three types:

 i) Consequentialist theories, which are primarily concerned with the ethical consequences of
particular actions;
 ii) Non-consequentialist theories, which tend to be broadly concerned with the intentions of
the person making ethical decisions about particular actions and
 iii) Agent-centered theories, while less well-known, focus on the overall ethical character or
status of individuals (agents) rather than evaluating specific actions or consequences.
 Three Broad Types of Ethical Theory

Consequentiality Theories
 The Utilitarian Approach
 The Egoistic Approach
 The Common Good Approach
Non-consequentialist Theories
 The Duty-Based Approach
 The Rights Approach
 The Fairness or Justice Approach
 The Divine Command Approach
Agent-centered Theories
 The Virtue Approach
 The Feminist Approach
 Ethical Decision-Making with Cross Holder
Conflicts and Competition
 Ethical decision-making in the context of conflicts and competition among stakeholders,
especially cross-holder conflicts, can be a complex and challenging process.
 Cross-holder conflicts arise when different stakeholders within an organization or a
business have conflicting interests or values.
 Balancing these conflicts while upholding ethical principles is crucial for maintaining
trust and integrity.
Key steps and considerations in ethical
decision-making in situations involving
cross-holder conflicts and competition.
 Step
1. Identify Stakeholders
2. Understand Interests and Values
3. Ethical Principles
4. Competition Analysis
5. Conflict Resolution
6. Transparency
7. Ethical Leadership
8. Legal Compliance
9. Seek Expert Advice
10. Long-Term Impact
11. Ethical Decision-Making
Models
12. Whistleblower Protection
13. Review and Reflect
14. Continuous Improvement
Description
Identify all parties affected by the decision.
Recognize the interests and values of each stakeholder.
Be guided by ethical principles (e.g., honesty, fairness, transparency).
Analyze the competitive landscape and adhere to fair competition
standards.
Seek ways to resolve or mitigate cross-holder conflicts through
negotiation.
Clearly communicate the decision-making process and reasoning.
Lead by example and foster a culture that values ethics and integrity.
Ensure compliance with all relevant laws and regulations.
Consult with experts, such as legal counsel or ethics consultants.
Consider the long-term consequences of the decision on all stakeholders.
Utilize ethical frameworks like utilitarianism, deontological ethics, etc.
Establish mechanisms to protect and encourage whistleblowers.
Periodically review outcomes and adjust decisions as needed.
Foster a culture of continuous improvement in ethical decision-making.
 Kohlberg’s Model of Cognitive Moral
Development
 Lawrence Kohlberg's Model of Cognitive Moral Development is a theory that describes how
individuals develop their moral reasoning and ethical decision-making abilities over the course of
their lives.
 Kohlberg's theory is an extension of the earlier work of Swiss psychologist Jean Piaget, who
focused on cognitive development in children. Kohlberg, however, expanded on Piaget's ideas to
explain how individuals continue to develop their moral reasoning into adulthood.
 Kohlberg's model consists of six stages organized into three main levels, with each level
representing a different level of moral development:
 Kohlberg's Model of Cognitive Moral Development
outlines the six stages organized into three main levels
and describes the key features of each stage.
Level Stage Description of Moral Development

Level I: Pre-Conventional Stage 1 - Obedience and Moral judgments based on avoiding

Morality Punishment Orientation punishment.

Stage 2 - Individualism and

Focus on self-interest and reciprocal exchanges.
Exchange
Level II: Conventional Stage 3 - Good Interpersonal Concern for approval and maintaining
Morality Relationships relationships.
Stage 4 - Maintaining Social Order Emphasis on upholding societal rules and laws.
Level III: Post- Stage 5 - Social Contract and Recognition of differing societal values and
Conventional Morality Individual Rights social contracts.

Adherence to universal ethical principles and a

Stage 6 - Universal Principles
strong sense of justice.
 Criticisms for Kohlberg's Theory of Moral
Development
Criticisms Description
Cultural and Cross-Cultural Kohlberg's stages are seen as influenced by Western cultural values, which may not
Bias apply to non-Western cultures.
Original research suggested women are at lower stages, leading to concerns of gender
Gender Bias
bias.
Stagnation in Adulthood Limited evidence of consistent progression through all stages in adulthood.
Cognitive vs. Behavioral Focus on cognitive moral reasoning without accounting for actual moral behavior.
Fails to explain variations in moral values and principles across individuals and
Moral Diversity
cultures.
Moral Emotions and
Downplays the role of emotions and intuition in moral decision-making.
Intuition
Overemphasizes consistency in moral reasoning, neglecting the significance of
Situational Ethics
situational ethics.
Offers limited practical guidance for promoting moral development and addressing
Lack of Practical Guidance
real-world ethical dilemmas.
 Heinz Dilemma
 The Heinz Dilemma is a moral dilemma often used by Lawrence Kohlberg to assess an individual's
level of moral development. It is a hypothetical scenario that presents a moral quandary and asks
individuals to respond, revealing their moral reasoning. The dilemma typically goes as follows:
 The Heinz Dilemma: "Heinz's wife is dying from a rare form of cancer, and there is only one
medicine that can save her. The medicine is owned by a local pharmacist who is charging an
exorbitant price for it. Heinz cannot afford the medicine, and despite his pleas, the pharmacist
refuses to lower the price or provide any assistance. Heinz is left with a difficult decision: should he
steal the medicine to save his wife's life, or should he respect the law and the pharmacist's property
rights?"
 Kohlberg used this moral dilemma to explore an individual's moral reasoning by examining the
justifications they provide for their decision. He categorized the responses into different stages of
moral development based on the reasoning used. Here's how individuals at different stages of moral
development might approach the Heinz Dilemma:

Moral Dilemma:
Stage of Moral Development
Pre-Conventional Level
Stage 1 (Obedience and
Punishment Orientation)
Stage 2 (Individualism and
Exchange)
Conventional Level
Stage 3 (Good Interpersonal
Relationships)
Stage 4 (Maintaining Social Order)
Post-Conventional Level
Stage 5 (Social Contract and
Individual Rights)
Stage 6 (Universal Principles)
Heinz's wife is dying, and he cannot afford life-saving medicine. Should he steal
it or respect property rights?
Description of Moral Reasoning in Response to the Dilemma
Heinz should not steal the medicine because it's against the law and he might get
punished.
Heinz should steal the medicine because saving a life is more important than
property rights.
Heinz should steal the medicine to show his love and commitment to his wife and
maintain a positive relationship.
Heinz should not steal the medicine because it would disrupt social order and break
the law.
Heinz should steal the medicine because the law is unjust, and he has a duty to
protect the right to life.
Heinz should steal the medicine because the value of preserving human life, justice,
and human rights outweigh property rights and laws.
Influences on Ethical Decision Making
 Personal Values and Ethical Decision Making

 The "Six Pillars of Character" is a framework developed by the Josephson Institute of

Ethics, which provides a set of core ethical values and principles that are important for
ethical decision-making and moral behavior. These pillars serve as a guide to help
individuals and organizations cultivate a strong ethical foundation. Let's explain each of
these six pillars of character:
 Six pillars of character

Pillar Description
Being honest, reliable, and keeping promises. Demonstrating truthfulness and
Trustworthiness
transparency in actions and communication.
Valuing and showing consideration for others, regardless of differences. Treating people
Respect
with dignity and acknowledging their rights and opinions.
Acknowledging one's duties and obligations, taking ownership of actions and their
Responsibility
consequences, and upholding commitments and societal duties.
Treating all individuals equitably and justly, avoiding discrimination and prejudice, and
Fairness
ensuring impartial decisions and actions.
Demonstrating compassion, empathy, and kindness towards others, showing concern for
Caring
their well-being, and prioritizing their welfare.
Engaging actively in one's community and society, taking responsibility, abiding by laws,
Citizenship
and making positive contributions to the collective well-being.
THANK YOU