6

Making Decisions in Business Ethics

Intended Learning Outcome
 Know the several models and stages of ethical decision making
 Determine the importance of influences on ethical decision making to businesses
 Explain the different individual influences on ethical decision making
 Understand the various situational influences on ethical decision making
Introduction
Descriptive ethical theories provide an important addition to the normative theories:
rather than telling us what business people should do (which is the intention of normative theory),
descriptive theories seek to tell us what business people actually do—and more importantly, they
will help to explain why they do those things.
Understanding the reasons why people make certain decisions is clearly important from a
business ethics perspective, not least because it helps us to comprehend the factors that lead to
ethical and unethical decisions. From a practical point of view, though, this is also useful for
managing business ethics. obviously, we first need to know what shapes ethical decision-making
before we can try and influence it. Therefore, descriptive theories can be said to provide a
practical understanding of how the ethical theories covered in the previous chapter can be
applied, as well as assisting in identifying points of leverage for managing business ethics
By looking at what exactly an ethical decision is and then go on to examine the various
models that have been put forward to explain the process of ethical decision-making in the
workplace. This shows us that although ethical decision-making is very complex, extensive
research over the years from psychologists, sociologists, management scholars, and others has
provided us with a relatively clear picture of the important stages and influences that are central
to understanding the ethical decision making process.
Ethical Decision
As Morris (2004) suggests, by using the language of right and wrong, we have already
identified that a situation is moral in nature. So, there is an important process of identification
that goes before this, whereby we examine situations and determine whether they are
characterized by such considerations in the first place.
Imagine, for example, a situation where you are downloading a copy of an accounting
book’s latest edition, are you faced with a moral dilemma? is this an ethical decision? Perhaps,
for you, this is simply a normal practice that has no apparent moral dimensions. But authors and
publishing companies may take a very different view. They may argue that there is an important
moral dimension to this decision, since you are not only breaking the law, you are ‘stealing’
intellectual copyright for free and depriving the company and the authors of their rightful return
on their investment. So how do we objectively decide whether a situation should be assigned
moral status in the first place?
There are several factors that we might identify here, the most important of which are
these:
 The decision is likely to have significant effects on others. Two of the most critical
aspects of morality are that it is concerned with harms and benefits, and that it is
about considerations of social good, i.e. considerations of others beyond the self. even
egoism is concerned with others in that one is expected to act in one’s own self-
interest because that is for the good of society.
 The decision is likely to be characterized by choice, in that alternative courses of
action are open. A moral decision requires that we have a choice. When decision-
makers recognize that they have ethical choices, then they face an ethical dilemma.
 The decision is perceived as ethically relevant by one or more parties. Regardless of
whether the decision-maker sees a decision as having ethical content, if others do,
then the decision immediately incurs some degree of ethicality.
Stages in Ethical Decision-Making
The most frequently used framework for conceptualizing ethical decision-making in
business is the four-stage process of ethical decision-making introduced by James Rest (Treviño
et al. 2006; craft 2013). according to this model, individuals move through a process whereby
they:
1. Recognize a moral issue.
2. Make moral judgement about that issue.
3. Establish an intention to act upon that judgement.
4. Act according to their intentions.
As Jones (1991) suggests, these stages are intended to be conceptually distinct, such that
although one might reach one stage in the model, this does not mean that one will necessarily
move onto the next stage. Hence, the model distinguishes between knowing what the right thing
to do is and actually doing something about it; or between wanting to do the right thing, and
actually knowing what the best course of action is.
Influences on Ethical Decision-Making
Models of ethical decision-making generally divide the factors that influence decisions
into two broad categories: Individual and Situational (Ford and Richardson 1994).
 Individual factors. these are the unique characteristics of the individual actually making
the relevant decision. these include factors that are given by birth (such as age and gender)
and those acquired by experience and socialization (such as education, personality, and
attitudes).
 Situational factors. these are the particular features of the context that influence whether
the individual will make an ethical or an unethical decision. these include factors
associated with the work context (such as reward systems, job roles, and organizational
culture) and those associated with the issue itself (such as the intensity of the moral issue
or the ethical framing of the issue).
Taken broadly, these two groups of factors help to explain why certain business decisions
get made, and why people behave in ethical and unethical ways in business situations. This gives
rise to the framework in Figure 6.1, which is the one that we shall use to structure our discussion
in this chapter. In the rest of this chapter we shall examine the two sets of factors in much more
detail, with the intention of providing the basis for assessing their relative importance to ethical
decision-making. Before we do, however, it is worth offering a brief word of warning about
using a model such as this to structure our discussions.

Figure 6.1 Framework For Understanding Ethical Decision Making

As we have said, the model depicted in Figure 6.1 is very useful for structuring our
discussion and for seeing clearly the different elements that come into play within ethical
decision-making. however, such an approach is not without its problems, and as we go through
the chapter you might notice that it is not always particularly straightforward (nor some would
argue, sensible) to break down these various elements into discrete units. Many of the various
stages and influences are, to differing degrees, related, perhaps even interdependent. it can thus
seem quite optimistic at times to separate out an individual factor and attempt to identify its
unique role in the process of ethical decision making.
Nonetheless, these are criticisms that can be levelled at all models of this type, and we
feel that as long as one is aware that the model is intended not as a definitive representation of
ethical decision-making but as a relatively simple way to represent a complex process, such
problems are not too serious. Finally, it is also worth mentioning that ethical decision-making
models have largely originated in the us, and this can sometimes give a national or cultural bias
to the types of issues and considerations that might be included. Let us just briefly review the
different international perspectives before continuing.
Individual Influences on Ethical Decision-Making
What is it about you or your classmates that causes you to act in different ways when
confronted by the same ethical dilemmas? individual influences on ethical decision-making
relate to these facets of the individual who is actually going through the decision-making process.
clearly all employees bring certain traits and characteristics with them into an organization, and
these are likely to influence the way in which the employee thinks and behaves in response to
ethical dilemmas. For example, evidence suggests that entrepreneurs and small business owners
may think and act differently than others in response to ethical issues because they tend to be
more achievement-oriented, autonomous, opportunistic, and risk tolerant (Solymossy and
Masters 2002). Although this could be taken to suggest that some people, such as small business
owners, are simply more ethical than others, this is rather too simplistic a view.
Individual factors can more readily account for why some people are perhaps more
swayed than others into unethical conduct because of the influence of their colleagues. Similarly,
individual factors can help to explain why some people perceive particular actions to be
unethical while others do not. Hence, the issue is not so much about determining the reasons why
people might be more or less ethical, but about the factors influencing us to think, feel, act, and
perceive in certain ways that are relevant to ethical decision-making. Over the years, researchers
have surfaced several important individual influences, as we shall now see.
Age and Gender
A good place to start in examining the individual influences on ethical decision-
making is to consider some basic demographic factors, such as age and gender. For
example, one common question is whether men or women are more ethical. This is no
doubt an interesting question, and gender has in fact been one of the individual influences
on ethical decision-making in business most often subjected to investigation (O’Fallon
and Butterfield 2005; craft 2013). However, overall, the results have been less than
conclusive, with different studies offering contradictory results, and often no differences
found at all (Loe et al. 2000; O’Fallon and Butterfield 2005; Craft 2013).
It is rather simplistic to assume that some people are just more ethical than others,
and even if this could be claimed, there seems no obvious reason why gender would be
an important determinant. However, as we saw when discussing feminist ethics, there is
evidence to suggest that the way in which men and women think and act in response to
ethical dilemmas might differ.
Another basic factor we might look at is whether age makes any difference to
ethical decision-making. however, a similar problem is present with age as with gender.
Empirical tests have tended to report very mixed results, with no clear picture emerging
on the influence of age on ethical beliefs and action (Craft 2013). Indeed, again it would
seem to be too generalized to categorize certain age groups as ‘more ethical’ than others,
although certain experiences might in themselves shape the way in which we recognize
and respond to ethical problems.

National and Cultural Characteristics

Another basic demographic characteristic is nationality. When we meet people
from different countries and cultures, either at home or overseas, it does not take long
before we start to see certain differences in what they perceive as ethical or unethical, or
how they might go about dealing with ethical issues. Issues of nationality, ethnicity, and
religion have therefore been of increasing interest to researchers of ethical decision-
making, as one might expect, given the trends towards globalization.
People from different cultural backgrounds are still 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. There is again a problem
here with assuming that people from particular nations, religions, or ethnic groups can
simply be deemed to be ‘more ethical’ or ‘less ethical’ in their decision-making than
others. However, research has suggested that nationality can have a significant effect on
ethical beliefs as well as views of what is deemed an acceptable approach to certain
business issues. These differences have been noted not just in the somewhat obvious
cases of managers from developed and from less-developed countries, but also between
those from different countries within Europe, those from Europe and the us, or even
between those from different ethnic groups in the same country.
Geert Hofstede’s research has been extremely influential in shaping our
understanding of these differences. Based initially on surveys completed by IBM
employees throughout the world, Hofstede suggests that differences in cultural
knowledge and beliefs across countries—our ‘mental programming’—can be explained
in terms of six dimensions:
 Individualism/collectivism. This represents the degree to which one is
autonomous and driven primarily to act for the benefit of one’s self, contrasted
with a more social orientation that emphasizes group working and community
goals.
 Power distance. This represents the extent to which the unequal distribution of
hierarchical power and status is accepted and respected.
 Uncertainty avoidance. This measures the extent of one’s preference for
certainty, rules, and absolute truths.
 Masculinity/femininity. The extent to which an emphasis is placed on valuing
money and things (masculinity) versus valuing people and relationships
(femininity).
 Long-term/short-term orientation. This addresses differences in attention to
future rewards, where long-term-oriented cultures value perseverance and thrift,
while short term ones emphasize more preservation of ‘face’, short-term results,
and fulfilment of social obligations.
 Indulgence. This measures the degree to which societies permit or suppress
gratification of basic and natural human drives related to enjoying life and having
fun.
Hofstede’s dimensions can be seen to explain certain differences in ethical
decision making. For example, someone from an individualist culture, such as are found
in Northern Europe and America, might be more likely to reflect on ethical problems
alone in order to make their own independent decision, while 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. Similarly, a high power distance culture (i.e. one that
respects and accepts stratification in power and status) like Japan or china might be less
willing to question the orders given by their superiors, even if they felt they were being
asked to do something ethically questionable. empirical work has generally tended to
support these sorts of relationships (e.g. Jackson 2001; christie et al. 2003), although
Hofstede’s framework remains open to criticism (Baskerville-Morley 2005).
Education and Employment
The type and quality of education received by individuals, as well as their
professional training and experience, might also be important individual influences on
ethical decision-making. For example, research reveals that business students not only
rank lower in moral development than students in other subjects such as law, but are also
more likely to engage in academic cheating, such as plagiarism (Mccabe et al. 1991;
Mccabe and Treviño 1993). Business students have also been found to be driven more by
self-centered values than other students (Mccabe et al. 1991).
Similarly, individual values may shift as a result of exposure to particular working
environments. During the financial crisis of the late 2000s, figures as diverse as us
President Barack Obama, the archbishop of Canterbury, Rowan Williams, and Rajan Zed
(the president of the universal society of Hinduism) criticized the ‘culture of greed’ that
many commentators suggested had allegedly ‘poisoned’ those working in the banking
and finance industry.
Clearly, business training devoid of ethics can reinforce the ‘myth of amoral
business’ (De George 1999)—the idea that business is not expected to be concerned with
questions of morality. hence, although some aspects of individual morality may be
developed through upbringing and general education, there is also a place for ethics
training in enhancing people’s ability to recognize and deal with ethics problems in the
workplace (treviño and nelson 2014).
Overall then, while the relationships between ethical decision-making and
employment experience and education still remain somewhat unclear (Loe et al. 2000),
some definite differences between those with different educational and professional
experience seem to be present.
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 and locus of control.
Cognitive Moral Development
The most common theory to have been utilized to explain these cognitive
processes comes from the psychology discipline, namely Lawrence Kohlberg’s (1969)
theory of cognitive moral development (CMD). Kohlberg developed CMD theory to
explain the different reasoning processes that individuals would use to make ethical
judgements as they matured through childhood into adulthood. He suggested that three
broad levels of moral development could be discerned, namely:
  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.
Kohlberg identified two specific stages within each of the three levels, giving six
stages of moral development altogether. Figure 4.4 sets out these six stages, providing an
illustration of how each stage might be manifested in business ethics decisions.
CMD theory proposes that as one advances through the different stages, one is
moving to a ‘higher’ level of moral reasoning. The important thing to remember about
CMD theory, however, is that it is not so much what is decided that is at issue, but how
the decision is reached in terms of the individual’s reasoning process. Two people at
different levels could conceivably make the same decision, but because of different ways
of thinking. All the same, Kohlberg argued that the higher the stage of moral reasoning,
the more ‘ethical’ the decision.
Empirical research by Kohlberg and others has led to the conclusion that most
people tend to think with Level II reasoning (hence its ‘conventional’ tag). Research into
the cognitive schema of business managers has also tended to place them at level ii (e.g.
Weber 1990). This means that most of us decide what is right according to what we
perceive others to believe, and according to what is expected of us by others. as Treviño
and Nelson (2014: 82) suggest, ‘[Most] individuals aren’t autonomous decision-makers
who strictly follow an internal moral compass. They look up and around to see what their
superiors and their peers are doing and saying, and they use these cues as a guide to
action.’
This implies that the situational context in which employees might find
themselves within their organization is likely to be very influential in shaping their
ethical decision-making—although according to Kohlberg, this influence will vary
according to whether employees are at sub-stage 3 or 4 in moral development. Although
CMD theory has been very influential in the ethical decision-making literature, there
have been numerous criticisms of the theory. It is worth remembering that the theory was
initially developed in a non-business context, from interviews with young American
males—hardly representative of the vast range of people in business across the globe.
Hence, according to Fraedrich et al. (1994), the most notable criticisms of CMD are the
following:.
 Gender bias. Perhaps the most well-known of Kohlberg’s critics is one of his
former students, Carol Gilligan, who claimed that the theory was gender biased
due to its emphasis on the abstract principles esteemed by Kohlberg and his male
subjects.
 Implicit value judgements. Derry (1987) and others have expanded Gilligan’s
criticism to suggest that CMD privileges rights and justice above numerous other
bases of morality. Kohlberg has thus interjected his own value judgements
regarding the ‘most ethical’ way of reasoning into what is essentially supposed to
be a descriptive theory of how people actually think.
 Invariance of stages. Kohlberg’s contention that we sequentially pass through
discrete stages of moral development can be criticized if we observe that people
either regress in CMD or, more importantly, if they use different moral reasoning
strategies at different times and in different situations.
 Figure 4.2 Stages of Cognitive Moral Development

Locus of Control
The second psychological factor commonly identified as an influence on ethical
thinking is locus of control.
An individual’s locus of control determines the extent to which he or she believes
that they have control over the events in their life.
So someone with a high internal locus of control believes that the events in their
life can be shaped by their own efforts, whereas someone with a high external locus of
control believes that events tend to be the result of the actions of others, or luck, or fate.
In terms of ethical decision-making, Treviño and Nelson (2014) suggest that those
with a strong internal locus of control might be expected to be more likely to consider the
consequences of their actions for others, and may take more responsibility for their
actions. internals may also be more likely to stick to their own beliefs, and thus be more
resistant to peer-group pressure to act in a way that violates those beliefs.
However, there has not actually been a great deal of empirical research on the
effects of locus of control on ethical decision-making in business. What research has been
conducted, though, gives a generally mixed picture: while some studies have discerned
no significant effect (e.g. Singhapakdi and Vitell 1990), others have identified a
noticeable influence (e.g. Chiu 2003).
Overall, even among the individual factors, it would appear that locus of control
has, at most, only a relatively limited effect on ethical decision-making. nonetheless,
understanding whether your co-workers have internal or external loci of control can be
important for predicting how they will respond to business ethics problems, and
particularly how they apportion blame or offer approbation when faced with the
consequences of those decisions.
Personal Values
Conventionally speaking, personal values might be regarded as ‘the moral
principles or accepted standards of a person’. This makes sense superficially, but such a
view does not capture what is distinctive about values and sets them apart from, say,
principles or standards. Sociologists, psychologists, philosophers, and others have
therefore invested a great deal of work in defining, identifying, and even measuring the
values that we have, giving rise to a diverse and multifaceted literature. Probably the
most frequently cited definition from a psychological point of view comes from Milton
Rokeach (1973: 5) who stated that a personal value is 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’.
This means that values are about the behaviors and things that we deem important
in life, but crucially, Rokeach identifies that values
(i) persist over time (i.e. they are ‘enduring’);
(ii) influence behavior (i.e. they are concerned with ‘conduct’ and ‘end
states’); and
(iii) are concerned with individual and/or collective well-being (i.e. ‘personally
or socially preferable’). Hence, common values include examples such as
self-respect, freedom, equality, responsibility, and honesty.
Personal values have long been argued to be influential in the type of decisions
we make in organizations (Agle and Caldwell 1999). This is particularly true of ethical
decisions since values are key repositories of what we regard to be good/bad and right/
wrong. For example, it has been shown that the values of executives influence the extent
to which they will encourage CSR initiatives in their companies (chin et al. 2013;
Hemingway 2013). However, knowing that values are important influences is one thing,
but finding out exactly what values people have, and which ones influence which
decisions, is fraught with difficulty and represents a tricky conceptual and empirical
endeavour (Meglino and Ravlin 1998).
After all, researchers such as Rokeach (1973) have suggested that people typically
have more than 70 operative values, and even amongst these, some values will be more
influential on behavior than others. Moreover, there is a great deal of disagreement
among researchers even over whether values can be relied upon to predict behaviour or
whether environmental influences should be given greater emphasis (Meglino and Ravlin
1998). Researchers have also found that although individuals may espouse certain values,
they also have a number of unconscious biases that shape their decision-making (Banaji
et al. 2003). That is, although most people might consciously abhor racism or sexism,
many of us actually make racist or sexist decisions without even knowing it.
Whatever the case, values are clearly an important aspect of ethical decision-
making, and corporations are increasingly recognizing that they cannot simply ignore
their employees’ personal values in tackling ethical problems in their business. PIC, the
biotechnology multinational whose business ‘is the genetic improvement of pigs’, puts it
this way: ‘personal values describe the way we operate as individuals—we expect them
to guide the decisions and behavior of our employees around the world’. the company has
identified three personal values—integrity, respect, and innovation—that its employees
should possess, stressing that ‘we are honest and ethical in all aspects of our business’.
Personal integrity
Integrity is typically seen as one of the most important characteristics of an ethical
person of a ‘virtuous’ decision-maker. As such, it is no surprise that personal integrity has
increasingly surfaced in relation to ethical decision making. Although a variety of
meanings are applied to integrity, the most common meaning refers to integrity as
consistency (Brown 2005: 5).
The original meaning of the word ‘integrity’ is concerned with unity and
wholeness, and we can see that an adherence to moral principles essentially means that
 one maintains a consistency or unity in one’s beliefs and actions, regardless of any
inducement or temptation to deviate from them. another way of looking at this is to
consider integrity as being a matter of ‘walking the talk’, i.e. being consistent in word and
action (Brown 2005). An interesting example of how some students and businesses have
tackled this issue is in signing integrity pledge.
Integrity frequently plays a central role in incidents of whistleblowing, which
refers to acts by employees to expose their employers for perceived ethical violations. If,
for instance, an engineer identifies a safety problem with one of their firm’s products,
they may decide to tell their work colleagues or their boss. As a result, the engineer may
be encouraged to ignore the problem or desist from taking any further action as their
superiors have taken on responsibility for the issue. However, if the problem persists,
even after further warnings from the engineer, they may choose to reveal the problem—
or ‘blow the whistle’—by approaching an industry regulator, a journalist, or some other
outside agency.
Although there are clearly various other factors involved, such acts of external
whistleblowing often require the employee to maintain their personal integrity or
commitment to a set of principles despite being confronted with numerous difficulties,
obstacles, and opposition. this is because the organizational context within which
individuals elect to blow the whistle can act as a powerful force in suppressing personal
integrity in favor of the priorities and goals of the organization. also, whistleblowers are
often faced with a range of negative consequences for their actions. this includes
victimization by colleagues or superiors as a result of their ‘betrayal’; being passed over
for promotion; job loss; even ‘blacklisting’ to prevent them getting another job in the
same field (Rothschild and Miethe 1999).
Moral imagination
Finally, another individual factor that has been accorded increasing attention in
business ethics over the past few years is moral imagination. Moral imagination is
concerned less with whether one has, or sticks to, a set of moral values, but more 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’ (Werhane 1998: 76).
This means that moral imagination is the creativity with which an individual can
reflect about an ethical dilemma. interest in moral imagination has been driven by the
recognition that people often disregard their personal moralities and moral considerations
while at work (Jackall 1988). According to Werhane (1998), higher levels of moral
imagination can allow us to see beyond the rules of the game that seem to be operating in
the workplace, and beyond the day-to-day supposed ‘realities’ of organizational life, so as
to question prevailing ways of framing and addressing organizational problems. thus,
rather than accepting the usual organizational recipe for looking at, prioritizing, and
dealing with things, those with greater moral imagination should be able to envisage a
greater set of moral problems, perspectives, and outcomes.
Situational Influences on Decision-Making
There are a number of important factors to consider regarding situational influences. For
a start, the decision process we go through will vary greatly according to what type of issue it is
that we are dealing with. some issues will be perceived as relatively unimportant, and will
therefore prompt us into fairly limited ethical decision making, whereas issues seen as more
intense may well necessitate deeper, and perhaps somewhat different, moral reflection. For
example, if you worked in a bar, you might think rather more deeply about the morality of taking
P2,000 out of the cash register for yourself than you would pouring your friends a couple of
unauthorized drinks ‘on the house’. These differences in the importance we attach to ethical
issues are what we call issue-related factors.
At another level, we must also remember that we are, after all, ‘social animals’. hence our
beliefs and actions are largely shaped by what we see around us: the group norms, expectations,
and roles we are faced with; the nature of the climate in which we work; and the rewards and
punishments that we can expect as a consequence of our actions. after all, we have already seen
that Kohlberg’s theory of cognitive moral development suggests that the majority of us are at a
conventional level of morality, which prompts us to seek guidance from those around us. these
types of influences are called context related factors.
Accordingly, we can identify two main types of situational influences:
 Issue related influences
 Context related influences

Figure 4.2 Situational Influences

Issue-Related Factors
Although initially absent from many models of ethical decision-making, issue-
related factors have been increasingly recognized as important influences on the
decisions business people make when faced with ethical problems. At one level, we need
to consider the nature of the ethical issue itself, and its degree of moral intensity—that is,
how important the issue is to the decision-maker. However, it is also evident that,
regardless of the intensity of an issue, we need also to consider how that issue is actually
represented within the organization, in that some issues will be presented as important
ethical issues while others may not. Hence, we need to also consider the issue’s moral
framing. Such 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
The notion of moral intensity was initially proposed by Thomas Jones (1991) as a
way of expanding ethical decision-making models to incorporate the idea that the relative
importance of the ethical issue would itself have some bearing on the process that
decisionmakers go through when faced with ethical problems. Jones (1991: 374–8)
proposes that the intensity of an issue will vary according to six factors:
 Magnitude of consequences. This is the expected sum of the harms (or benefits)
for those impacted by the problem or action. obviously, an issue will be felt more
intensely if the consequences are significant, such as health problems or death as a
result of a faulty product.
 Social consensus. This is the degree to which people are in agreement over the
ethics of the problem or action. Moral intensity is likely to increase when it is
certain that an act will be deemed unethical by others.
 Probability of effect. This refers to the likelihood that the harms (or benefits) are
actually going to happen.
 Temporal immediacy. This is concerned with the speed with which the
consequences are likely to occur. When outcomes are likely to take years to have
much effect, decision-makers may perceive the moral intensity to be much
lower—for example in the case of the long-term effects of smoking or other
‘unhealthy’ products.
 Proximity. This factor deals with the feeling of nearness (social, cultural,
psychological, or physical) the decision-maker has for those impacted by their
decision. For example, poor working conditions in one’s own country might be
experienced as a more intense moral issue than poor conditions in a far away
country.
 Concentration of effect. Here we are concerned with the extent to which the
consequences of the action are concentrated heavily on a few or lightly on many.
For example, many people may feel that cheating a person out of P1,000 is much
more morally intense than cheating the same sum out of a large multinational with
millions of shareholders.
Moral intensity’s role in ethical decision-making has also been exposed to
empirical testing, providing good support for Jones’ original propositions. o’Fallon and
Butterfield (2005), for example, reviewed 32 such studies and concluded that there was
strong support for the influence of moral intensity on ethical decision-making, especially
with respect to magnitude of consequences and social consensus. however, we would
suggest that the intensity of an issue is not necessarily an objective, factual variable, but
rather depends on how the issue and its intensity are understood and made meaningful
within and around organizations.
Moral Framing
While it may be possible to determine the degree of intensity that a moral issue
should have for decision-makers according to Jones’ (1991) six variables, it is clear that
people in different contexts are likely to perceive that intensity differently. The same
problem or dilemma can be perceived very differently according to the way that the issue
is framed. The moral framing of an issue—i.e. the language used to expose or mask the
ethical nature of the issue—is therefore a key influence on ethical decision-making.
The most important aspect of moral framing is the language in which moral issues
are couched. This is because using moral language—whether negative terms such as
stealing or cheating, or positive terms like fairness or honesty—is likely to prompt us to
think about morality because the words are already associated with cognitive categories
that consist of moral content. The problem is that many people in business are reluctant to
ascribe moral terms to their work, even if acting for moral reasons or if their actions have
obvious moral consequences. Bird and Waters (1989) describe this as moral muteness. in
a widely cited research project based on interviews with managers, they found that
groups of managers tend to reframe moral actions and motives, and talk instead of doing
things for reasons of practicality, organizational interests, and economic good sense.
according to Bird and Waters (1989), managers do this out 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.
These are very real concerns for people employed at all levels in companies, and
the dangers not only of moral talk but of being seen as overly involved in business ethics
can impact negatively on employees working in organizations where such issues are
viewed with suspicion. Andrew Crane’s (2001) study of managers involved in
environmental programmed highlights some of these concerns and problems, suggesting
that fears of being marginalized can lead managers to engage in a process of a
moralization.
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 justifications
rationalization tactics—namely ‘mental strategies that allow employees (and others
around them) to view their corrupt acts as justified’. they identify six such strategies—
denial of responsibility, denial of injury, denial of victim, social weighting, appeal to
higher loyalties, and the metaphor of the ledger—which are described and illustrated in
Figure 4.3. People in organizations tend to use these rationalizations in order to neutralize
regrets and negative associations of unethical practices.

Figure 4.3 Rationalizing Unethical Behavior

Context Related Factors

Our second group of situational influences are 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 to take. These
factors appear to be especially important in shaping ethical decision-making within
organizations.
Systems of Reward
We tend to take it for granted that people are likely to do what they are rewarded
for— for example, many organizations offer commission or bonuses for salespeople in
order to motivate them to achieve greater numbers of sales—yet it is easy to forget that
this has implications for ethical conduct too.
Similarly, adherence to ethical principles and standards stands less chance of
being repeated and spread throughout a company when it goes unnoticed and
unrewarded—or still worse, when it is actually punished, as we saw with the example of
whistleblowing above. In fact, survey evidence suggests that something like one in five
employees actually experiences some form of retaliation for reporting ethical
misconduct—and as a result, around 40% who observe misconduct do not report it (ethics
Resource center 2013). Sometimes, however, the effects of rewards and punishments may
not even be direct; employees may sense the prevailing approach to business ethics in
their organization by looking at who gets promoted and who does not, or who seems to
get the favor of the boss and who does not, and interpret ‘correct’ behavior from the
experiences of their more or less fortunate colleagues.
Authority
Authority, which is the exercise of hierarchical power by managers on
subordinates. People do not just do what gets rewarded, they do what they are told to
do—or perhaps more correctly, what they think they are being told to do. Sometimes this
can be a direct instruction from a superior to do something that the subordinate does not
question because of their lower status in the hierarchy. at other times, the manager may
not be directly instructing the employee to do something unethical; however, their
instructions to the employee may appear to leave little option but to act in a questionable
manner.
Managers can also have an influence over their subordinates’ ethical behavior by
setting a good or bad example (Brown and Mitchell 2010; Mayer et al. 2013). Many of us
tend to look up to our superiors to determine what passes for ethical behavior in the
workplace. Significantly, however, employees sometimes seem to perceive their
superiors as lacking in ethical integrity.
Bureaucracy
Underlying the influence of rewards, punishments, and authority is the degree of
bureaucracy in business organizations. Bureaucracy is 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.
Based on the work of Max Weber (1947) regarding the bureaucratic form, as well
as later discussions of bureaucracy in relation to morality by Robert Jackall (1988),
Zygmunt Bauman (1989, 1993), and René ten Bos (1997), the bureaucratic dimension
has been argued to have 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 ‘frees’ 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 organization
members’ attentions on the efficient achievement of organizational goals. hence,
morality will be made meaningful only in terms of conformity to established rules
for achieving those goals—i.e. instrumentalized—rather than focusing attention
on the moral substance of the goals themselves. accordingly, ethical decision-
making will centre around whether ‘correct’ procedures have been taken to
achieve certain goals rather than whether the goals themselves are morally
beneficial. thus, loyalty rather than integrity ultimately becomes the hallmark of
bureaucratic morality.
 Distancing. 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 farm workers producing the supermarket’s coffee beans in
Columbia.
 Denial of moral status. Finally, 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 ‘resources’ that are means to some organizational
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 focusing on efficiency, the totality of
individuals as moral beings is lost and they are ultimately denied true moral status.
Work Roles
Work roles can be functional—for example, the role of an accountant, an engineer,
or a shop assistant—or they can be hierarchical—the role of a director, manager, or
supervisor for example. Roles can encapsulate a whole set of expectations about what to
value, how to relate to others, and how to behave.
In the business ethics context, prescribed work roles, and the associated
expectations placed on the person adopting the role, would appear to be significant
influences on decision-making. our individual morality, the values and beliefs we might
normally hold, can be stifled by our adoption of the values and beliefs embedded in our
work role.
While there is considerable evidence supporting a significant impact for work
roles on organizational behaviour generally, there has been rather limited research to date
that has specifically addressed the impact of roles on ethical decision-making and
behavior. nonetheless, the important thing to remember is that many of us will adopt
different roles in different contexts, reinforcing this idea of people having multiple ethical
selves.
Organization and Culture
Another set of potentially powerful influences on ethical decision-making are the
group norms that delineate acceptable standards of behavior within the work
community— be this at the level of a small team of workers, a department, or the entire
organization. Group norms essentially express the way in which things are, or should be,
done in a certain environment, and might relate to ways of acting, talking, justifying,
dressing, even thinking and evaluating. Group norms may well conflict with the official
rules or procedures laid down by the organization. As such, group norms tend to be
included within a more or less unofficial or informal set of characteristics, including
 shared values, beliefs, and behaviors that are captured by the notion of organizational
culture.
Culture is further said to constitute meanings, beliefs, and common-sense
knowledge that are shared among the members of the organization, and which are
represented in taken-for-granted assumptions, norms, and values. The organizational
culture explanation of ethical decision-making suggests that as employees become
socialized into particular ways of seeing, interpreting, and acting that are broadly shared
in their organization, this will shape the kinds of decisions they make when confronted
with ethical problems. such cultural expectations and values can provide a strong
influence on what we think of as ‘right’ and ‘wrong’.
National and Cultural Context
Finally, just as the culture of the organization or work group may influence ethical
decision-making, so might the country or culture in which the individual’s organization is
located. This factor varies from the national and cultural characteristics discussed
previously under individual influences on ethical decision-making: at that time, we were
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. As we have discussed a number of times in the module so far, to
some extent different cultures still maintain different views of what is right and wrong,
and these differences have significant effects on whether a moral issue is recognized, and
the kind of judgements and behaviours entered into by individuals.
However, with globalization eroding some of these national cultural differences,
we might expect to see shifts in the influence of this factor, perhaps with more complex
effects and interactions emerging. While some models have incorporated factors relating
to the social and cultural environment (e.g. hunt and Vitell 1986; Ferrell et al. 1989),
there has been relatively little empirical research investigating the effect of this on ethical
decision-making.

Module Activity Test 1

In a group of three (3), look at a recent business scandal that has made the headlines.
Identify the main people involved in the scandal and investigate their individual characteristics.
Then identify the key situational factors that may have influenced their behavior. Which of these
individual and situational factors seem to have been most important in causing the scandal?
Would you have any suggestions for how to avoid such a situation recurring in the future?

Module Activity Test 2

In group of five (5), research and examine the events about the News Of The World, a
UK newspaper, phone hacking scandal and answer the following questions:
1. What is phone hacking and why is it considered unethical and illegal? Do you think
that hacking the phones of celebrities and non-celebrities should be considered
ethically equivalent?
2. Describe the ‘rogue reporter’ defence adopted by the News of the World in response
to the phone hacking allegations and explain why it might be an appealing response to
ethical misconduct by a company.
3. Which individual traits, if any, do you think are most likely to lend themselves to a
‘rogue reporter’ type of explanation?
4. What were the main situational influences that appear to have encouraged reporters at
the newspaper to engage in phone hacking? How would you prioritise them?
5. Do you think that News International and its parent company News Corporation
handled the phone hacking scandal well? Explain your answer.
6. What, if anything, should (a) News International, and (b) News Corporation do now
to enhance their approach to ethics management?