46 ‘evelopment orate pending on UNDERSTANDING BUSINESS ETHICS 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 dif ferences 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 devel ‘opment and locus of contol Cognitive moral development ‘The most common theory to have been utlized 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 se and punishments, Finterest and extemal rewards + 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 tages within each of the three levels, giving six stages of moral development altogether. Figure 4.4 sets out these six stages, providing an illus tration of how each stage might be manifested in business ethics decisions. CMD theory proposes that as one advances through the different stages, one is mov. ing to a ‘higher’ level of moral reasoning, The important thing to remember about CMD theory, however, is that itis 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 differ. ent levels could conceivably make the same decision, but as a result 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 otherst has led to the conclusion that most people tend to think with level II reasoning (hence Its ‘conventional’ tag). Research into the cog nitive schema of business managers has also tended to place them at level Il (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 Trevinto 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 thelr superiors and their peers are doing and saying, and they use these cues as a guide to action.” As we shall sce shortly, this implies that the situational context in which employees. ‘aight 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 las been very influential in the ethical decision-making lt erature, 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,“7 MAKING DECISIONS IN BUSINESS ETHICS “1oz) own pu opis eet jung usu poadepy nog juowsdoyasap yeious aanrufo> jo safes Fp aun Suyoqs wos, 204 2g oy ybu yeurue yosdss1 "moj pnoys auoKLana arayoq foun UOIUM ud eons ressanun, 9 pur samen Bupiose ‘6s jenpiwpuy——_feuoquanuo> ue penuo> [eos 5 2 aunssaud “siowinsuod Aq ajgendaa2e pawssep SuonpU0> ur sabem ansnassoafojciue yeypaunsua 0} J9p10 warsks pue pios2e [eos suoneedio Jemanu pue fjauo}u09 ‘pioo2e jevosiodianyy € — yeuonuaAve> 1 a6ueux0 pur asodind jruauinsisuy Z 06 y2.0 3 puemas aun asne3q rucnuanuosaig 1 ‘uonensny or148 UNDERSTANDING BUSINESS ETHICS 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 eriticisms of CMD are the following: + Gender bias, Perhaps the most well known of Kohlberg’ 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 Koblberg and his male subjects. As ‘we saw in Chapter 3, Gilligan (1982) argued that women tended to employ an ‘ethic of care’ in deciding what was morally right, emphasizing empathy, harmony, and the maintenance of interdependent relationships, rather than abstract principles. 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, such as those discussed in Chapter 3. Kolberg 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 aetually 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 lUmes and in different situations. Studies by Fraedrich and Ferrell (1992) and Weber (1990), for example, both revealed cognitive inconsistency amongst managers across ‘work and non-work situations when making ethical decisions. Essentially, we do not always use the same reasoning when we are at work as we do at home or om the sports field. This is the reason why in this chapter we highlight the context dependency of ‘business people's reasoning about ethical problems. Despite these criticisms, CMD appears to be widely accepted as an important element in the individual influences on ethical decision-making. Various empirical studies have suggested that it atleast plays some role in the decision-making process (e.g. Trevino and Youngblood 1990; Goolsby and Hunt 1992), although its influence appears to be rather ‘more limited than that proposed by Kohlberg. Locus of control The second psychological factor commonly identified as an influence on ethical think Ang is locus of contol. ‘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 thelr life ‘can be shaped by their own efforts, whereas someone with a high external locus of con. trol believes that events tend to be the result of the actions of others, or hick, or fate. You ‘ight think of this in terms of how you might respond if you received a grade for your ‘business ethics exam that was lower than you expected. If you had an external locus of conttol, you might automatically blame your professor for setting a difficult test, o: you ‘might blame Crane and Matten’s book for not preparing you properly. If you had an internal locus of control, however, your first thoughts would probably be more along the lines of questioning whether you had really done enough preparation for the exam,