Making Decisions

in Business Ethics
Descriptive Ethical Theories
Why ethical & unethical decisions get
made in the workplace
 Is unethical behavior simply a matter of individual human
ingenuity to do wrong or can we also put such problem down to
other factors? (perhaps as much as due to culture of certain
countries as personal)
 Why some people make what appear to be the right ethical
choices, while others do things that are unscrupulous or even
illegal?
 Whether people who make unethical decisions are inherently
bad, or whether there are other reasons that can explain the
incidence of ethics problems in business.
 Will discuss the way of addressing some of these questions by
examining what are called descriptive ethical theories.
What is descriptive ethical theories
 Describes how ethical decisions are actually made in
business, and what influences the process and outcomes
of those decisions.
 An addition to normative theories
 Rather than telling what business people should do
(normative theory), descriptive theories tell us what
business people actually do and more importantly why?
 Why? helps us to comprehend the factors that lead to
ethical and unethical decisions.
 Also useful for attempts to manage and improve
business ethics
What is an ethical decision?
 Concerned with a judgement about right and wrong
 Important process of identification that goes before
this, i.e. copying a latest album or video from your
friend. May be normal for a person but a recording
company may take it in a different perspective.
 They may argue that you are not only breaking the
law but also ‘stealing’ intellectual copyright for
free & depriving the company and artist of their
rightful return on investment
 How do we objectively decide whether a situation
should be assigned moral status?
Basic characteristics of ethical decision
 Significant effect on others:
 critical aspect of morality concerned with harm and benefits,
consideration of others beyond the self. Even egoism concerned
with others. Copying album?
 The decision likely to be characterized by choice:
 alternative courses of action are open, i.e. option to copy or
not to copy. Ethical choices – ethical dilemma
 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, the decision incurs some
degree of ethicality (the bank providing loan for a new dam
may take it as ethically neutral but campaigners against the
dam, i.e. local and environmentalist) may regard it as highly
ethically significant.
Models of ethical decision making – how
can we model the decision process?
 Normative consideration – possible consequences or
rights or relationships
 Less likely to know why we thought in this way or why
we even saw it as an ethical issue in the first place
 This is the purpose of descriptive model
 Many models derived from the work of psychologists
 Most influencing entering business ethics are those by
Linda Trevino (1986) and Thomas Jones (1991)
 Important contributions made is the contributions by
Hunt and Vitell (1986), O.C. Ferrell and Colleagues 1985,
1989)
 Not necessarily competing
Models seeking to represent 2
things:
 Thedifferent stages in decision making
people go through in responding to an ethics
problem in business context
 The different influences in that process
Stages in ethical decision making
 Various research by different people suggests Jones (1991) model to
provide the most comprehensive synthesis model of ethical decision
making.
 John bases his model on a four stage process:
 Recognize a moral issue
 Make some kind of moral judgement about that issue
 Establish an intention to act upon that judgement
 Act according to their intentions
 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.
 Salesperson lying to the customers and the need to meet aggressive
targets & purchasing manager receiving gifts from suppliers & actual
decision until someone questions
 Influence on ethical decision-making
 Factors which influence decisions is divided into two broad categories:
 Individual factors:
 Characteristics of an individual making the decision:
 given by birth: age and gender, and
 acquired by experience and socialization: education, personality and
attitudes
 Situational factor
 factors associated with the work context: reward system, job roles
and organizational culture, and
 associated with the issue itself: intensity of the moral issue or the
ethical framing of the issue
 Many versions of the ethical decision-making models attempt to link
certain influences to certain stages in the decision process.
 Ethical Dilemma 4 provides a specific scenario where we might
explore the impact of different influences on our decision making.
Limitations of ethical decision-making model
 Not straightforward to breakdown various elements into
discrete units.
 Many of the various stages and influences are to differing
degrees, related perhaps even interdependent
 Quite optimistic to separate out an individual factors and
attempt to identify its unique role in the process of
ethical decision making
 Intended not as definitive representation of ethical
decision making, but as a simple way to represent a
complex process such problems are not too serious
 Model largely generated in US and can give national or
cultural bias.
International perspective on ethical decision making
 Global difference between Europe, North America and Asia
 US & Asia: the central focus tends to be individual actors and their
behavior
 In Europe: there is more interest in the design of economic
institutions and how they function morally desirable way
 The difference quite visible with the topic of ethical decision
making – research on individual factors influencing ethical decision
making has a strong North American bias, whilst situational factors
have been subject to a lengthy debate principally originated by
European authors
 Europe stressed the influence of social contexts
 German socialist Max Weber distinguished between actions that
were guided by an “ethics of ultimate ends’ and ethics of social
responsibility. First represent idealistic view of man and the later
responsibility for the pursuit of organizational goal.
Influences in ethical decision making:
Individual factors
 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
 Entrepreneurs and small business owners think and act
differently than the others in ethical issues – more
achievement oriented, autonomous, opportunistic and
risk tolerant (Solymossy and Masters 2002)
 Small business owners are more ethical than others is
rather a too simplistic view
 Also, why some people perceive particular action to be
unethical while others do not.
No. of important influences
 Age and gender:
 Whether men or women are more ethical. The results have been
less than conclusive
 Feminist ethics – different way of thinking to dilemmas
 Similar problem with age as with gender
 National and cultural characteristics:
 Issues of nationality, ethnicity and religion : research has shown
that nationality can have a significant effect on ethical beliefs
 Education and employment:
 Type and quality of education received by individuals as well as
their professional training and experience
 Business students rank lower in moral development
 Business training on ethics
 Individual factors contd…
 Psychological factors:
 Cognitive process to find out how people actually think. Comes
from psychology discipline, namely Lawrence Kohlberg’s (1969)
theory of Cognitive Moral Development (CMD)
 CMD refers to the different levels of reasoning that an individual
can apply to ethical issues and problems: (Kohlberg suggested 3
broad levels):
 Level 1: The individual exhibits the concern with self interest and
external rewards and punishment
 Level 2: The individual does what is expected of them by others
 Level 3: Individual is developing more autonomous decision
making based on principle of rights and justice rather than
external influences
 Research tends to place them at level 2.
 In spite of criticism of CMD, it plays some role in decision making
 Contd ….
 Locus of control: second psychological factor
 Person with high internal locas of control: believes the events in
life can be shaped by their own efforts,
 Someone with high external locas of control: believes that events
tend to be result of the actions of others or luck or faith (i.e.
grade for your business ethics exam)
 Personal values: “moral principles or accepted standards of a
person”. Includes: self respect, freedom, equality, responsibility,
honesty etc.
 Values are important influences is one thing and what values
people have is different thing.
 Personal values – integrity, respect and innovation
 Integrity is defined as an adherence to moral principles or
values (stealing some items form co.’s store)
 Moral imagination
 Moral imagination is concerned less with whether one
has, or sticks to, a set of moral values, but with whether
one has a sense of 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)
 Creativity with which an individual is able to reflect
about an ethical dilemma
2. Situational influences on decision making
 Cannot be successfully explained simply in terms of
individual traits
 People make different decisions in different
situations
 Human beings are social animals & so our believes
and actions are shaped by what we see around us
 Two main types of situational influences:
 Issue-related factors
 Context related factors
 Issue-related factors

 Increasingly recognized as important influences in decision making

 Degree of moral intensity – how important the issue is to the decision
maker
 Regardless of the intensity of issue, also need to consider how that issue is
actually represented within the organization (moral framing)
 Moral intensity: will vary according to 6 factors:
 Magnitude of consequences – expected sum of harms (especially health problem
created by product)
 Social consequences – moral intensity increases if the act is deemed unethical
by others
 Probability effect – harms (or benefits) are actually going to happen
 Temporal immediacy – concerned with which the consequences are likely to
occur
 Proximity – feeling of nearness. Poor working condition in factories of own
country compared to in developing countries
 Concentration of effect – consequences of action are concentrated on a few, or
lightly on many (cheating a person or a MNE with millions of shareholders)
Issue related factors -
 Moral framing: People in different contexts are likely to perceive
the above moral intensity differently
 According to the way the issue is framed: (e.g. student cutting and
pasting some material from the internet” into their assignment. Will give
a different impression if they say I plagiarized or even stole
 The most important aspect of moral framing is the language (positive
words like integrity, honesty, fairness, propriety, or negative words like
lying, cheating, stealing)
 Reluctant to ascribe moral terms described as moral muteness by Bird
and Waters (1989)
 Managers talk doing things for reasons of practicality, organizational
interest and economic good sense. Managers do this because of the
perceived threat:
 Harmony: moral talk will disturb organizational harmony
 Efficiency: may make decision making more difficult & inflexible
 Image of power and effectively – felt that their own image may suffer &
lack robustness in effective management
Context related factors - Second group of
situational influence
 Organizational context in which an employee works
 Especially important in shaping ethical decision
making within an organization
 System of reward:
 People are likely to do what they are rewarded for, i.e.
organizations offer commission or bonuses for salesperson in order
to motivate them to achieve greater number of sales – will be
tempted to compromise ethical standards in their dealings with
customers to earn more commission., especially when unethical
sales persons are not penalized
 What is right in the corporation is not what is right in a man’s home
 What is right in the corporation is what the guy above you wants
from you
Authority
 Do not just do what is rewarded but what they are
told to do
 Sometimes by direct instruction, and other times
their instruction may appear to leave little option
but to act in questionable manner
 University professor asking PhD student to grade 200
students in 2 days – grading in an arbitrary and
unfair way
 Can also have an influence over subordinates ethical
behavior by setting a bad example
 Clearly, those in authority can influence their
employees ethical decision making
Bureaucracy
 Underlying the influence of rewards, punishments, and authority is
the degree of bureaucracy in business org.
 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
 Bureaucratic dimension having number of negative effects on
ethical decision making:
 Suppression of moral autonomy- employee to act only as ‘moral
robots’ – simply follow moral rules & procedures
 Instrumental morality – conformity to est. rules for achieving goals
 Distancing – distances us from the consequences of our action
(farmers producing coffee beans in Colombia)
 Denial of moral status – By dividing tasks & focusing on efficiency, the
individuals as moral beings is lost
Work roles
 Bureaucratic org. assign people to specific work
roles
 Functional roles –accountant, engineers etc. &
hierarchical roles – Director, Manager, Supervisor
etc.
 Role of student and teacher in a classroom
 In business ethics, prescribed work roles would
appear to be significant on decision making
 Work roles can have substantial effect on how we
behave
 Limited research on impact of role on ethical
decision making
 Organizational norms and culture
 Potentially powerful influences on ethical decision
making group norms, standard of behavior within work
community – be this in a small team, department or an
entire organization
 Group norms may conflict with organizational norms –
groups of officials deciding to use pirating licensed
software at home from work
 Org culture – overall environment or climate found in
an organization
 Culture and ethical decision interwoven
 Identified as key in shaping ethical decision, also
widely examined in empirical evidence
 Strong influence on what we think as “Right” or
“Wrong”
National and cultural context
 Finally, the country or culture in which the
individual’s organization is located influences
 Nation in which the decision is taking place
regardless of the decision makers’ nationality
 Different cultures maintain different views on what
is right and wrong.
 Issue of employment quite different in Europe and
Asia
 Globalization eroding some of these norms