Making Decisions in Business Ethics Descriptive Ethical Theories

Overview • Examine the question of why ethical and unethical decisions get made in the workplace • Determine what an ethical decision is • Review prominent ethical decision-making models • Discuss the importance of differences between individuals in shaping ethical decision-making • Critically evaluate the importance of situational influences on ethical decision-making (issues and context based) • Identify points of leverage for managing and improving ethical decision-making in business

Descriptive Ethical Theories Descriptive business ethics theories seek to describe how ethics decisions are actually made in business, and what influences the process and outcomes of those decisions.

What is an ethical decision?

Main factors in deciding the moral status of a situation • Decision likely to have significant effects on others • There is a choice, and alternatives are possible • The Decision is perceived as ethically relevant by one or more parties

Models of ethical decision-making

Stages in ethical decision-making Ethical decision-making process Recognise moral issue Make moral judgement Establish moral intent Engage in moral behaviour Source: Derived from Rest (1986), as cited in Jones (1991). Distinct stages. You don't necessarily go through all of this in a single process.

Influences on ethical decision-making Two broad categories: individual and situational (Ford and Richardson 1994) • Individual factors - unique characteristics of the individual making the relevant decision – Given at birth – Acquired by experience and socialisation • Situational factors - particular features of the context that influence whether the individual will make an ethical or unethical decision – Work context – The issue itself including • Intensity • ethical framing

Influences on ethical decision-making Two broad categories: individual and situational (Ford and Richardson 1994) • Individual factors • Situational factors What could these things involve? Discuss

Framework for understanding ethical decision-making Individual factors Recognise moral issue Make moral judgement Establish moral intent Situational factors Engage in moral behaviour

Limitations of ethical decision-making models • Models useful for structuring discussion and seeing the different elements that come into play • Limitations – Not straightforward or sensible to break model down into discrete units – Various stages related or interdependent – National or cultural bias • Model is intended not as a definitive representation of ethical decision-making, but as a relatively simple way to present a complex process

Individual influences on ethical decisionmaking

Individual influences: what, how and how much?

Individual influences on ethical decision-making

Age and gender • Age – Results contradictory – However experiences may have impact • Gender – Individual characteristic most often researched – Results contradictory • These categories too simplistic

National and cultural characteristics • People from different cultural backgrounds 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 • Hofstede (1980; 1994) influential in shaping our understanding of these differences – our ‘mental programming’: – – – Individualism/collectivism Power distance Uncertainty avoidance Masculinity/femininity Long-term/short-term orientation

Education and employment • Type and quality of education may be influential – E. g. business students rank lower in moral development than others and more likely to cheat • ‘Amoral’ business education reinforces myth of business as amoral

Psychological factors Cognitive moral development (CMD) refers to the different levels of reasoning that an individual can apply to ethical issues and problems • 3 levels (details over the next two slides) • Criticisms of CMD – Gender bias – Implicit value judgements – Invariance of stages An individual’s locus of control determines the extent to which they believe that they have control over the events in their life

Stages of cognitive moral development (I) Source: Adapted from Ferrell et al. (2002); Kohlberg (1969); Trevino and Nelson (1999)

Stages of cognitive moral development (II) Level III Stage Explanation Illustration 5 Social contract and individual rights Individuals go beyond identifying with others’ expectations, and assesses right and wrong according to the upholding of basic rights, values and contracts of society. The public affairs manager of a food manufacturer may decide to reveal which of the firm’s products contain genetically modified ingredients out of respect for consumers’ rights to know, even though they are not obliged to by law, and have not been pressurised into by consumers or anyone else. 6 Universal ethical principles Individuals will make decisions autonomously based on selfchosen universal ethical principles, such as justice, equality, and rights, which they believe everyone should follow. A purchasing manager may decide that it would be wrong to continue to buy products or ingredients that were tested on animals because he believes this doesn’t respect animal rights to be free from suffering. Postconventional

Personal values, integrity & moral imagination Personal values • ‘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 endstate’ (Rokeach 1973: 5) Personal integrity • Defined as an adherence to moral principles or values Moral imagination • Concerned 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)

Situational influences on decision-making

Situational influences : what, how and how much?

Situational influences on ethical decision-making

Moral Intensity • Jones (1991: 374 -8) proposes that the intensity of an issue will vary according to six factors: – – – Magnitude of consequences Social consensus Probability of effect Temporal immediacy Proximity Concentration of effect

Moral framing • The same problem or dilemma can be perceived very differently according to the way that the issue is framed – Language important aspect of moral framing (using moral language likely to trigger moral thinking)

How ethical decisions are justified: rationalization tactics

Systems of reward Adherence to ethical principles and standards stands less chance of being repeated and spread throughout a company when it goes unnoticed and unrewarded • “What is right in the corporation is not what is right in a man’s home or in his church. What is right in the corporation is what the guy above you wants from you. That’s what morality is in the corporation” (Jackall, 1988: 6)

Authority and Bureaucracy Authority • People do what they are told to do – or what they think they’re being told to do • Recent survey of government employees (Ethics Resource Center, 2008: 9): – 20% think top leadership is not held accountable – 25% believe top leadership tolerates retaliation against those reporting ethical misconduct – 30% don’t believe their leaders keep promises Bureaucracy • Jackall (1988), Bauman (1989, 1993) and ten Bos (1997) argue bureaucracy has a number of negative effects on ethical decisionmaking – Suppression of moral autonomy – Instrumental morality – Distancing – Denial of moral status – HOW? And how could this be improved?

Work roles and organizational norms and culture Work roles • Work roles can encapsulate a whole set of expectations about what to value, how to relate to others, and how to behave • Can be either functional or hierarchical Organizational norms and culture • Group norms delineate acceptable standards of behaviour within the work community – E. g. ways of talking, acting, dressing or thinking

application Elastic REAL case study Edmodo: Business schools case study