Part Three
The Decision
Making Process
Chapter 5
Ethical Decision
Making
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 In business, people make decisions
differently than at home
 Organizational pressures have a strong influence
 The ethical decision making process includes
 Ethical issue intensity
 Individual factors
 Organizational factors
 The framework for ethical decision making
does not describe how to make ethical
decisions
 Outlines the factors and processes related to
ethical decision making
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Framework for Understanding Ethical
Decision Making in Business
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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The perceived relevance or importance of
an ethical issue to the individual, work
group, and/or organization
 Reflects the ethical sensitivity of the
individual and/or work group
 Triggers the ethical decision making process
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 Individuals are subject to six spheres of
influence…
Workplace
Legal system
Family
Community
Religion
Profession
 Moral intensity: Relates to a person’s
perception of social pressure and the harm
his/her decision will have on others
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 People base their ethical decisions on their
own values and principles of right or wrong
 Values are learned through socialization
 Good personal values decrease unethical behavior
and increase positive work behavior
 Values are subjective; vary across cultures
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 An organization may intend to do right, but
organizational or social forces can alter this
intent
 Research shows that various factors influence
ethical behavior
 Gender—women are more ethical than men
 Education, work experience, nationality, and age
affect ethical decision making
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Relates to individual differences in
relation to a general belief about how one
is affected by internal versus external
events or reinforcements
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Managers with…
 External locus of control go with the flow
because that’s all they can do
 Internal locus of control believe they can
control events; are masters of their destinies and
trust in their capacity to influence their
environment
 Unclear relationship between locus of
control and ethical decision making
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Organizational culture has a stronger
influence on employees than individual
values
 Corporate culture: A set of values, norms,
and artifacts that members of an
organization share
 Ethical culture: Reflects whether the firm has an
ethical conscience; is a function of many factors
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Significant others: Those who have
influence in a work group
 Obedience to authority: Helps to explain
why many employees unquestioningly follow
superior’s orders
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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The conditions in an organization that
limit/permit ethical/unethical behavior
 Immediate job context: Where employees
work, with whom they work, and the nature
of the work
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Opportunities for misconduct can be
reduced by establishing formal codes,
policies, and rules
 Aggressive enforcement is required
 Knowledge can sometimes lead to unethical
behavior
 A person who has an information base, expertise,
or information about competition has an
opportunity to exploit knowledge
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Most Common Office Supplies
Stolen by Employees
1. Post-It notes
2. Tape
3. Scissors
4. Toilet paper
5. Copier paper
6. USB memory sticks
Source: “Top Office Supplies that Are
Stolen and the Average Value of Contents
In A Woman’s Purse!”
KMLE, May 16, 2012,
http://kmle1079.cbslocal.com/2012/05/16/to
p-office-supplies-that-are-stolen/
(accessed April 12, 2013).
7. Notepads
8. Pens
9. Staplers
10. Highlighters
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Ethical dilemmas involve situations where
rules are vague or in conflict
 Critical thinking skills and ability to take
responsibility are important
 The final step is deciding what action to take
based on a person’s intentions
 Guilt or uneasiness is the first sign that an
unethical decision has occurred
 Most businesspeople will make ethical
mistakes
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Impossible to objectively determine if a
business decision is right or wrong
 Understanding how ethical decisions are
made will not solve ethical problems
 Business ethics involves value judgments and
collective agreement about acceptable patterns of
behavior
 Ethical decision making in business does not
rely on personal values and morals
 Organizations take on cultures of their own
 Informal relationships enforce an ethical culture
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Normative approaches: How
organizational decision makers should
approach an issue
 Different from a descriptive approach that
examines how organizational decision makers
approach ethical decision making
 Concepts like fairness and justice are highly
important in a normative structure
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Most organizations develop a set of core
values to provide enduring beliefs about
appropriate conduct
 Core values are central to an organization and
provide direction for action
 By incorporating stakeholder objectives into
corporate core values, companies begin to
view stakeholders as significant
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Institutions are important in establishing a
foundation for normative values
 Organizations face certain normative
pressures from different institutions to act a
certain way
 Internally and/or externally
 Sort institutions into three categories: Political,
economic, and social
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Political influences can take place within the
organization
 An ethical organization has policies and rules
in place to determine appropriate behavior
 Often the compliance component of the
firm’s organizational culture
 Failure to abide by these rules results in
disciplinary action
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Normative business ethics takes into account
the political realities outside the legal realm
in the form of industry standards
 Legal issues such as price fixing, antitrust
issues, and consumer protection are
important in maintaining a fair and equitable
marketplace
 These issues must be major considerations for
business when making ethical decisions
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Competition affects how a company operates
as well as the risks employees take for the
good of the firm
 Amount of competition in an industry can be
determined/described according to…
 Barriers to entry into the industry
 Available substitutes for the products produced by
the industry rivals
 Power of the industry rivals over their customers
 Power of the industry rivals’ suppliers over the
industry rivals
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Social institutions include religion,
education, and individuals such as the family
unit
 There are laws meant to ensure an
organization acts fairly, but there are no laws
saying people should do to others as they
would prefer to have done to them
 Many cultures adopt this rule that has been
institutionalized into businesses with standards
on competing fairly, being transparent with
consumers, and treating employees with respect
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Industry shared values promote
organizational effectiveness when linked to
goals
 Can also hinder effectiveness if more efficient
means of organization and structure are avoided
in exchange for stability
 Risk that organizations might sacrifice new ideas
or methodologies in order to be more acceptable
 Can limit innovativeness and productivity
 Important that organization does not stray
too far from industry norms and values
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 When values from political, economic, and
social institutions are embedded into the
organizational culture to provide incentives
for appropriate behavior, firms tend to act
more socially responsible
 If incentives do not align with institutional
normative values or if they contradict these
values, then misconduct is likely
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 John Rawls was one of the most influential
philosophers in his research on how
principles support the concept of justice
 Veil of ignorance: A thought experiment that
examined how individuals would formulate
principles if they did not know what their
future position in society would be
 Identified principles that were not biased by one’s
social position
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Two main principles of justice…
 Liberty principle (equality principle): States that
each person has basic rights that are compatible
to the basic liberties of others
 Difference principle: States that economic and
social equalities (or inequalities) should be
arranged to provide the most benefit to the leastadvantaged members of society


Does not advocate for the complete elimination of
inequalities in society
The most ethical decision seeks to benefit and not harm
disadvantaged populations
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Companies take basic principles and
translate them into core values
 Core values provide the abstract ideals that
are distinct from individual values and daily
operational procedures
 Value practices evolve and are translated into
normative definitions of ethical or unethical
 Individual and organizational values can
differ significantly because of ethical
diversity among individuals
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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 Leaders, stakeholders, and the organizational
culture impact the development of core
values
 A firm’s core values provide a blueprint into
the firm’s purpose as well as how it views
ethical decision making and prioritizes
stakeholders
 Organizations that have ethics programs
based on a values orientation are found to
make a greater contribution than those based
simply on compliance
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Principles and
Values
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Core Values of
Marriott
1. Put People First
2. Pursue Excellence
3. Embrace Change
4. Act with Integrity
5. Serve Our World
Source: Marriott, 2011 Annual Report, http://investor.shareholder
.com/mar/marriottAR11/index.html (accessed April 19, 2013).
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Ethical issue intensity, individual factors,
and opportunity result in business ethics
evaluations and decisions
 An organizational ethical culture is shaped
by effective leadership
 Top level support is required for ethical behavior
 An ethical corporate culture needs shared
values and proper oversight
 The more you know about ethical decision
making, the more likely you will be to make
good decisions
© 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part,
except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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