ETHICAL DECISION

MAKING IN BUSINESS
MADE BY : 1.Panchal Sweta Amrutbhai ( 190130116030)
2.Patel Minalben Manojbhai (190130116047)
3.Rathwa Sonal Malsingbhai (190130116059)
4. Vivardhana Pandita (190130116078)

GUIDED BY :
Chetan Kapdiya sir
 OUTLINE
• DEFINITIONS
• PROCESS OF DECISION MAKING IN BUSINESS
• ETHICAL MODELS THAT GUIDE DECISION MAKING
• ETHICAL DECISION MARKING WITH CROSS HOLDERS CONFLICTS AND
COMPETITION
• APPLYING MORAL PHILOSOPHY TO ETHICAL DECISION MAKING
• KOHALBERG’S MODEL OF COGNITIVE MORAL DEVELOPMENT
• INFLUENCES ON ETHICAL DECISION MAKING
• PERSONAL VALUES AND ETHICAL DECISION MAKING
What is Decision making ?

“Decision-making involves the selection of a

course of action from among two or more
possible alternatives in order to arrive at a
solution for a given problem”.
What is decision making in business ?
• A decision can be defined as a course of action purposely chosen from a
set of alternatives to achieve organizational or goals.

What is ethical decision making in business?

• A number of different ethical principles can be used to make
Business decisions.
Process of Decision Making in Business

Define a problem
Analysis a problem

Develop Alternative
Evaluate and select the best

Evaluation of Decision
Follow up
Ethical Models that Guide Decision making

• Utilitarian approach
• Rights approach
• Justice approach
• Common good approach
• Virtue approach
UTILITARIAN APPROACH

• The ethical action is the one that produces the greatest good and does the
least harm for all stakeholders.

• The utilitarian approach deals with consequences; it tries to increase the

good done and to reduce the harm done.
RIGHTS APPROACH

• The ethical action is the one that best protects and respect the moral rights
of those affected.
• Humans have a right to be treated as ends and not merely puppets where
the end justifies the mean.
example : what kind of life to lead, to be told the truth.
JUSTICE APPROACH

• Ethical actions should treat all humans beings equally, or if unequally,

then fairly based on some standard that is defensible.
example : people are paid more based on their greater contribution to the

organization.
COMMON GOOD APPROACH

• This approach suggests that the interactions with your community are the
basic of ethical reasoning.
• Respect and compassion for all others, especially the vulnerable.
VIRTUE APPROACH

• Virtues are dispositions and habits that enables us to act according to the
highest potential of our character.
example : Honesty, self control, compassion, love, courage.
Ethical Decision Making with Cross-holder Conflicts and
Competition

• The problem for ethical decision making becomes more complicated with
the conflicts of shareholders' interests in business. There are many
situations that occur very often in industries that arise conflicting interests
of shareholders.
• For instance, when an organization with a view to increasing profits and
declaring higher dividends to shareholders on a long-term basis, resorts to
the introduction of high-technology labor-saving devices and dismissal of
its labor in hundreds.
• This leads to a very complex ethical decision making to managers. Though
managers are obliged to the shareholders to make provisions for declaring
high dividend, the adopted measures of cost cutting through dismissal of
hundreds of employees will create severe human problems as well as an
ethical dilemma for managers.

• This type of situation calls for a solution with a "human face". For example,
the managers can ensure that the displaced employees from one division can
be trained suitably to enable them to be absorbed in the company's other
divisions.

• This type of solution is not an easy job so ethicists find it difficult to offer a
proper solution to these conflicting situations. Barry proposed the following
decision making rules regarding cases of conflicts and mixed effects.
1. Choose the more important obligation between the two or more
obligations.

2. Choose an action of higher ideal when two or more ideals conflict or

when ideals conflict with obligations.

3. Choose the action that produces the greater good, or the lesser harm,
when the effects are mixed.
Applying Moral Philosophy to
Ethical Decision Making
What is moral philosophy ?

• Moral philosophy is about making moral choices- about how people decide
what is moral/immoral.
• Morality is concerned with ideas of right and wrong.
• A moral philosophy is a person’s principles and values.
• Presents guidelines for determining how to settle conflicts in human
interests.
• Guides businesspeople in formulating strategies resolving specific ethical
issues.
Moral Philosophy Perspectives

• Teleology
• Deontology
• The Relativist Perspective
• Virtue Ethics
• Justice Perspectives
1. Teleology
• It refers to moral philosophies in which an act is considered
morally right or acceptable if it produces some desired result such
as pleasure, knowledge, career growth, the realization of self
interest, wealth.
• Categories of Teleology :
1. Egoism : Right or acceptable behavior defined in terms of
consequences to the individual.
2. Utilitarianism : determine behavior on the basis of principles of
rules that promote the greatest utility rather than on an
examination of each situation.
2. Deontology

• It refers to moral philosophies that focus on the right of individuals

and the intentions associated with a particular behaviour rather than its
consequences.
• Example : deontologist would consider it wrong to kill an innocent
person or commit it a serious injustice someone, no matter how much
greater social utility might result from doing so, because such an
action would infringe an individual right.
3. The Relativist Perspective

• Ethical behavior is defined by experiences of the individual and

group.
• Acknowledges that we live in a society in which people have different
views.
• There are many different bases from which to justify a decision as
right or wrong.
• Such beliefs may change over time (i.e., advertising in the accounting
profession).
4. Virtue Ethics

• What is moral in a given situation is not only what conventional

wisdom suggests, but also what a moral character would deem.
• Appropriate Elements include, TRUTHFULLNESS, TRUST, SELF
CONTROL, EMPATHY.
• Negative virtues include LYING, CHEATING, FRAUD,
CORRUPTION.
5. Justice Perspective
• Justice, for many people, refers to fairness. But while justice is
important to almost everyone, it means different things to different
groups.
• There are three main perspectives of justice:
1. Distributive
2. Procedural
3. Interactional
 Kohlberg’s Model of Cognitive
Moral Development
• Lawrence Kohlberg agreed with Piaget’s theory of
moral development in principle but he wanted to
develop his idea further.
• He used to Piaget’s storytelling technique to tell
people stories involving moral dilemmas.
• One of Kohlberg’s best known experiments is
known as Heinz Dilemma. In this experiment,
Kohlberg presented a story about a man named
Heinz.
 Heinz Dilemma

• Heinz’s wife was dying from a particular type of

cancer. Doctors said a new drug might save her.
The drug had been discovered by a local chemist,
and the Heinz tried desperately to buy some, but
the chemist was charging ten times the money it
cost to make the drug, and this was much more
than the Heinz could afford.
 Heinz Dilemma

• Heinz could only raise half the money, even after

help from family and friends. He explained to the
chemist that his wife was dying and asked if he
could have the drug cheaper or pay the rest of the
money later.
• The chemist refused, saying that he had
discovered the drug and was going to make money
from it. The husband was desperate to save his
wife, so later that night he broke into the chemist’s
and stole the drug.
 Kohlberg asked a series of questions such as :

Should Heinz have stolen Would it change anything if

the drug ? Heinz did not love his
wife ?

What if the person dying Should the police arrest the

was a stranger, would it chemist for murder if the
make any difference ? women died ?
• By studying the answer from children of different ages to these question ,
Kohlberg hoped to discover how moral reasoning changed as people grew
older.
Chart of Kohlberg’s Theory of Moral Development :
Stage 1 : Obedience and Punishment
Level 1 : Orientation
Pre-conventional Morality Stage 2 :Individualism and Exchange

Stage 3 :Good Interpersonal Relationships

Level 2 :
Conventional Morality Stage 4 :Maintaining the Social Order

Stage 5 :Social Contract and Individual Rights

Level 3 :
Post-conventional Morality Stage 6 :Universal Principles
Level 1 : Pre-conventional Morality
• Stage 1 : Obedience and Punishment Orientation
The child/individual is good in order to avoid being punished. If a person is
punished , they must have done wrong.
Example : I would cheat if I knew I wouldn’t get caught.
• Stage 2 : Individualism and Exchange
At this stage, children recognise that there is not just one right view that is
handed down by the authorities . Different individual have different
viewpoint.
Example : I’ll let you copy mine if you do my homework.
Level 2 : Conventional Morality
• Stage 3 : Good Interpersonal Relationships
The child/individual is good in order to be seen as being a good person by
others. Therefore, answers relate to the approval of others.
Example : I am not going to tell because I want her to like me.
• Stage 4 : Maintaining the Social Order
The child/individual becomes aware of the wider rules of society, so judgements
concern obeying the rules in order to uphold the law and to avoid guilt.
Example : You can’t do that because the teacher said no.
Level 3 : Post-conventional Morality
• Stage 5 : Social Contract and Individual Rights
The child/individual becomes aware that while rules /laws might exist for
the good of the greatest number, there are times when they will work against
the interest of particular individuals.
Example : In Heinz dilemma, the protection of life is more important than
breaking the law against stealing.
• Stage 6 : Universal Principles
People at this stage have developed their own set of moral guidelines which
may or may not fit the law. The principles applies to everyone. E.g human
rights, justice, and equality.
Limitation of Theory

• The Dilemmas are Artificial

• The Sample is Biased
• The Dilemmas are Hypothetical ( Not real )
• Poor Research Design
Influences on Ethical Decision Making

1. Individual Factors :

• Significant individual factors that affect the ethical decision making process
include personal moral philosophy, stage of moral development , motivation,
and other personal factors such as gender, age, and experience.
• Moral philosophies are the principles or rules that individual apply in
deciding what is right or wrong.
 Demographics Moral
(Gender, Age, Philosophy
Geography etc.) and Values

Knowledge, Stage of Moral

Education etc. Development
Individual
Factors
External
Motivation
Factors

Goals(Long Experience
Personality and
term and and
Professionalism
Short term) achievement
 Organization
Mission,
Culture
Vision,
External
Moral
Factors
Philosophy
and Values

Nature of Organizational Peers,

Superiors,
work Factors Subordinates

Authority Executive
and Power Leadership
Rewards and
Recognition
3. Opportunity

• Opportunity is a set of condition that limit barriers

or provide rewards.

• If an individual takes advantage of an opportunity

to act unethically and escapes punishment or gains
a reward, that person may repeat such acts when
circumstances favor them.

4. Issue Intensity

• Ethical intensity is the degree of importance of an issue for an individual or group.

• There are six characteristics that determine issue intensity.
 How many people
Issue Intensity will be harmed ?
How concentrated is How much agreement
the effect of the action is there that this action
on the victims ? Greatness is wrong ?
of harm
Concentration Consensus
of effect of wrong
Issue
Intensity
Proximity Probability
to victim of harm
Immediacy
or How likely is it that
How close are the
consequences this action will cause
potential victims ?
harm

Will harm be felt

Immediately
Personal Values and Ethical Decision Making
• The six pillars of character from the book “ Making Ethical Decisions”
include Trustworthiness, Respect, Responsibility, Fairness, Caring, and
Citizenship.
• Honesty
In communication
Truthfulness
Sincerity/non-deception
Trustworthiness Frankness
In conduct
• Integrity
• 4 enemies of integrity
Self-interest
Self-protection
Self-deception
Self-righteousness
 • Reliability
Avoid bad-faith excuses
Avoid unwise commitments
Avoid unclear commitments
Trustworthiness • Loyalty
Expectation from Relationships
Prioritizing Loyalties
Safeguarding confidential information
Avoiding Conflict of Interest

Civility
Respect Courtesy
Decency
 Accountability
Pursuit of Excellent
Responsibility Diligence
Perseverance
Continuous Improvement
Self-Restraint

Process
Fairness Impartiality
Equity
 Care for others
Caring Care for self

Citizenship Fair dealing

Be a part of Community
Thank you….