Crane and Matten
Business Ethics (3rd Edition)
Chapter 4
Making Decisions in Business Ethics
Descriptive Ethical Theories
Lecture 4
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
• Decision likely to be characterised by choice,
in that alternative courses of action are open
• 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).
Relationship with normative theory
The role of normative theory in the stages of ethical
decision-making is primarily in relation to moral
judgement
• Moral judgements can be made according to
considerations of rights, duty, consequences, etc.
• Commercial managers tend to rely on consequentialist
thinking
• However, the issue of whether and how normative theory
is used by an individual decision-maker depends on a
range of different factors that influence the decisionmaking 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
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
International perspectives on ethical
decision-making
• Research on individual factors influencing
ethical decision-making has a strong US and
Asian bias
– Consistent with choice within constraints
• Research on situational factors originated
by European authors
– Consistent with concern for constraints
themselves
Individual influences on ethical decisionmaking
Individual influences on ethical decision-making
Factor
Influence on ethical decision-making
Age and gender
Very mixed evidence leading to unclear associations with ethical decision-making.
National and cultural characteristics
Appear to have a significant effect on ethical beliefs, as well as views of what is deemed
an acceptable approach to certain business issues.
Education and employment
Somewhat unclear, although some clear differences in ethical decision-making between
those with different educational and professional experience seem to be present.
Psychological factors:

Cognitive moral development

Locus of control

Small but significant effect on ethical decision-making.

At most a limited effect on decision-making, but can be important in predicting the
apportioning of blame/approbation.
Personal Values
Significant influence – some empirical evidence citing positive relationship.
Personal integrity
Significant influence likely, but lack of inclusion in models and empirical tests.
Moral imagination
A new issue for inclusion with considerable explanatory potential.
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)
Level
Stage
1
I
Preconventional
2
3
II Conventional
4
Obedience
and
punishment
Instrumental
purpose and
exchange
Interpersonal
accord,
conformity
and mutual
expectations
Social accord
and system
maintenance
Explanation
Individuals define right and
wrong according to expected
rewards and punishments from
authority figures
Illustration
Whilst this type of moral reasoning is usually
associated with small children, we can also
see that businesspeople frequently make
unethical decisions because they think their
company would either reward it or let it go
unpunished (see Gellerman 1986).
Individuals are concerned with
An employee might cover for the absence of
their own immediate interests and a co-worker so that their own absences might
define right according to whether subsequently be covered for in return – a
there is fairness in the exchanges “you scratch my back, I’ll scratch yours”
or deals they make to achieve
reciprocity (Treviño and Nelson 1999).
those interests.
Individuals live up to what is
An employee might decide that using
expected of them by their
company resources such as the telephone, the
immediate peers and those close
internet and email for personal use whilst at
to them
work is acceptable because everyone else in
their office does it.
Individuals’ consideration of the A factory manager may decide to provide
expectations of others broadens to employee benefits and salaries above the
social accord more generally,
industry minimum in order to ensure that
rather than just the specific
employees receive wages and conditions
people around them.
deemed acceptable by consumers, pressure
groups and other social groups.
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 on ethical
decision-making
Type of
factor
Factor
Influence on ethical decision-making
Moral intensity
Reasonably new factor, but evidence suggests significant effect on ethical decisionmaking.
Fairly limited evidence, but existing studies show strong influence on some aspects of
the ethical decision-making process, most notably moral awareness.
Strong evidence of relationship between rewards/punishments and ethical behaviour,
although other stages in ethical decision-making have been less investigated.
Good general support for a significant influence from immediate superiors and top
management on ethical decision-making of subordinates.
Issue-related
Moral framing
Rewards
Authority
Contextrelated
Bureaucracy
Work roles
Significant influence on ethical decision-making well documented, but actually
exposed to only limited empirical research. Hence, specific consequences for ethical
decision-making remain contested.
Some influence likely, but lack of empirical evidence to date.
Organizational
culture
Strong overall influence, although implications of relationship between culture and
ethical decision-making remain contested.
National Context
Limited empirical investigation, but some shifts in influence likely.
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)
• Moral muteness (Bird & Walters 1989) because
of concerns regarding perceived threats to:
– Harmony
– Efficiency
– Image of power and effectiveness
How ethical decisions are justified:
rationalization tactics
Strategy
Denial of responsibility
Denial of injury
Denial of victim
Social weighting
Appeal to higher
loyalties
Metaphor of the ledger
Description
The actors engaged in corrupt behaviours
perceive that they have no other choice than to
participate in such activities.
The actors are convinced that no one is harmed
by their actions; hence the actions are not really
corrupt.
The actors counter any blame for their actions
by arguing that the violated party deserved
whatever happened.
The actors assume two practices that moderate
the salience of corrupt behaviour: 1. Condemn
the condemner, 2. Selective social comparison.
The actors argue that their violation of norms is
due to their attempt to realize a higher-order
value.
The actors argue that they are entitled to
indulge in deviant behaviours because of their
accrued credits (time and effort) in their jobs.
Examples
“What can I do? My arm is being twisted.”
“It is none of my business what the corporation
does in overseas bribery.”
“No one was really harmed”
“It could have been worse.”
“They deserved it.”
“They chose to participate.”
“You have no right to criticise us.”
“Others are worse than we are.”
“We answered to a more important cause.”
“I would not report it because of my loyalty to my
boss.”
“It’s all right for me to use the internet for personal
reasons at work. After all, I do work overtime.”
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
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
National and cultural context
• Instead of 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
• Different cultures still to some extent maintain
different views of what is right and wrong
Summary
In this lecture we have:
• Discussed the various stages of and influences on ethical
decision-making in business
• Presented basic model of decision-making
• Outlined individual and situational influences on ethical
decision-making
• Suggested that some individual factors – such as
cognitive moral development, nationality and personal
integrity – are clearly influential
• Suggested that in terms of recognising ethical problems
and actually doing something in response to them, it is
situational factors that appear to be most influential