Making Decisions in Business Ethics Conventional Morality & Ethical Relativism & Moral Development and what influences the Moral Decision

Overview Examine the question of why ethical and unethical decisions get made in the workplace. Determine what is an ethical decision. Examine prominent ethical decision-making models. Discuss the importance of differences between individuals in shaping ethical decision-making. Critically evaluate importance of situational influences on ethical decision-making (issues & context based). I am there

Heinz and the Drug A woman was near death from cancer. There was one drug doctors thought might save her. The drug was expensive to make, but the druggist charged ten times what it cost. He paid $200 for the raw materials and charged $2,000. The sick woman’s husband, Heinz, went to everyone he knew to borrow the money but could only come up with $1,000: half the cost. He approached the druggist and told him that his wife was dying, and asked him to sell it to him for less or let him pay half now / half later. But the druggist said, “No, I discovered the drug and I intend to make a profit from it.” So Heinz got desperate and began to think about breaking into the man’s store to steel the drug for his wife. Should Heinz steal the drug? (check one) ___ He should steal it ___ I can’t decide ___ He should not steal it.

Heinz and the Drug 1. Whether a community’s laws are going to be upheld. 2. Isn’t it natural for a loving spouse to care so much for his wife that he’d steal? 3. Is Heinz willing to risk getting shot as a burglar or going to jail for the chance that stealing the drug might help? 4. Whether Heinz is a pro. wrestler, or has lots of influence with pro. wrestlers. 5. Whether Heinz is stealing the drug for himself or doing this for someone else. 6. Whether the researcher’s rights to his invention have to be respected. 7. Whether the essence of living is more encompassing than the termination of dying, socially and individually. 8. What values will be the basis for governing how people act towards each other. 9. Whether the researcher is going to be allowed to hide behind a worthless law which only protects the rich anyhow.  10. Whether the law here gets in the way of the most basic claim of a member of society. 11. Whether the researcher deserves to be robbed for being so greedy and cruel.  12. Would stealing in such a case bring about more total good for all of society or not?

Conventional Morality and Ethical Relativism

Characteristics of Subjective and Objective Morality Moral judgments are universally applicable. If a particular action is right or wrong for one person, it is also right or wrong for all similarly situated people. Moral judgments are important. Thus, moral judgments must override all other considerations. Moral praise must accompany morally right actions & moral blame must accompany immoral behavior (i.e. there are rewards and punishments).

Descriptive Transcultural Relativism Describes the differences between cultures & differences in the way particular languages define moral terms. Recognize that terms such as “right” and “wrong” are not universally defined in all cultures or languages.

Moral Absolutism There are eternal moral values & principles that are always applicable in all situations. This is an alternative to ethical relativism.

Moral Pluralism Radical Moral Pluralism: people hold mutually irreconcilable views about morality, including what is “right” or “wrong”. Pluralism of moral principles: diversity of moral principles, but not irreconcilable. Pluralism of moral practices: basic agreement on moral principles, but diversity of opinion regarding specific actions. Pluralism of self-realization: members of society must adhere to basic moral norms, but are other-wise free to pursue differing values and lifestyles.

Moral Pluralism and the Law The law is a tool for responding to moral pluralism. It’s dangerous to equate the legal with the ethical. While many laws prohibit immoral or unethical behaviors, those behaviors were immoral before they were illegal. The law is primarily reactive, which results in a lag between behavior being identified as socially harmful and legislation being passed to make it illegal. Not all laws are morally defensible. Not all immoral behavior can be made illegal. Behaviors that are not, in themselves, unethical can become unethical because of laws that are passed.

Business and Religious Ethics Religion is an important guide for many individuals in their business lives, but religion cannot provide a universal moral code for business. Different religions have different ethical codes. An eye for an eye & a tooth for a tooth is the basis for individual & equitable justice (the guilty individual must be found and proportional justice must be meted out). ”If we practice an eye for an eye and a tooth for a tooth, soon the whole world will be blind and toothless.” Gandhi On a global level, there are many religions with varied moral principles. This is also true on a national level, unless a single religion is enforced by the state.

Normative Ethical Relativism Claims that when any two people or cultures hold different moral views of an action, both can be right. An action may be right for one person or society, and the same action, taken in the same way, may be wrong for another person or society — and both are equally correct.

Ethical Theory There’s no single ethical theory upon which all people or philosophers agree, but two basic approaches to moral reasoning have prevailed over time. The teleological approach argues on the basis of ends. For example, a particular action is right or wrong based upon the consequences of the action. The deontological (rules based) approach argues that actions are morally right or wrong independent of consequences. Ethical monists follow a single moral theory and ethical pluralists are willing to join components of different ethical theories.

Making Decisions in Business Ethics Moral Development and what influences the Moral Decision

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. Yet, 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 decision-making process.

Is not there an inherent tension between business & ethics? Can we teach ethics? By exposure to the topic we can enhance the ability of business students to recognize ethical issues. What's new pussycat? Rick Gautschi & Tom Jones, As a developmental attribute Kohlberg would argue we could. Enhancing the Ability of Business Students to Recognize Ethical Issues…, Journal of Business Ethics, 1998, 17(2): 205-216. Should we teach ethics? Is not there an inherent tension between business & ethics? Is not there a special ethics for business? Is ethics ‘practical’ in the ruthless world of business? What’s the cost of being unethical in business?

Influences on ethical decision-making Individual factors - unique characteristics of the individual making the relevant decision (Trevino, 1986). Situational factors - particular features of the context that influence whether the individual will make an ethical or unethical decision.

Individual Influences on ethical decision-making 1/5 Individual factors include: Age and gender National & cultural characteristics Education and employment Psychological factors: Cognitive moral development Locus of control Personal Values Personal integrity Moral imagination

Individual Influences on ethical decision-making 2/5 Age Results contradictory. However experiences may have impact. Gender Individual characteristic most often researched.

Individual Influences on ethical decision-making 3/5 National and cultural characteristics People from different cultural backgrounds are likely to have different values / beliefs about right & wrong. This will inevitably lead to variations in ethical decision- making across nations, religions & cultures. Our ‘mental programming’ is influential in shaping our understanding of differences - Hofstede (1980; 1994) Individualism / collectivism Power distance Uncertainty avoidance Masculinity / femininity

Individual Influences on ethical decision-making 4/5 Basic Questions Society must Address (Kluckholm) a. What is the innate nature of people (evil, neutral, good). b. What are People’s Relation to Nature (subjugation, harmony, mastery). c. People’s Time Orientation (past, present, future). d. Nature of Human Activity (being, becoming, doing). e. Peoples Relationship with one Another (lineal, collateral, individual).

Individual Influences on ethical decision-making 5/5 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 ed. reinforces myth of amoral business. And Lawyers rank high?

Psychological factors Cognitive moral development (CMD) refers to different levels of reasoning that individuals can apply to ethical issues and problems 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

Psychological factors Stages of cognitive moral development1/3

Psychological factors Stages of cognitive moral development2/3

Psychological factors Stages of cognitive moral development3/3 Level Stage Explanation Illustration III Postconventional 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 self-chosen 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. Level Stage Explanation Illustration III Postconventional 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 self-chosen 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.

Psychological factors Rest: Components of Moral Action Make the Moral Judgment Kohlberg (1969) Establish the Moral Intent Recognize the Moral Issue Execute & implement the moral action plan Taking a moral act depends on more than just your stage of Moral development Lawrence Kohlberg, Jim Rest, 1982 at the Moral Ed. Conference in Fribourg, Switzerland

Psychological factors 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 end state’ (Rokeach 1973:5) Personal integrity Defined as an adherence to moral principles/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 ethical decision-making Issue Related Situations 1/2 Jones: Moral Intensity: Magnitude of Consequences Social Consensus Probability of Effect Temporal Immediacy Concentration of Effect Proximity

Situational influences on ethical decision-making Issue Related Situations 2/2 Moral framing: The same problem/dilemma can be perceived very differently according to the way the issue is framed Language is an important aspect of moral framing Moral muteness (Bird & Walters 1989) because of: Harmony Efficiency Image of power & effectiveness

Situational influences on ethical decision-making Context Related Situations 1/4 Rewards Strong evidence of relationship between rewards, punishments & ethical behaviour. Authority Great influence from immediate superiors & top management on ethical decision-making. Bureaucracy Significant influence on ethical decision-making is well documented. Work roles Some learning differences evident (quant. vs. non). Organizational Culture Strong influence implies relationship between culture & ethical decision-making contested. Strong evidence of relationship between rewards, punishments & ethical behaviour. Great influence from immediate superiors & top management on ethical decision-making. Significant influence on ethical decision-making is well documented. Some learning differences evident (quant. vs. non). Strong influence implies relationship between culture & ethical decision-making contested.

Situational influences on ethical decision-making Context Related Situations 2/4 Systems of reward Adherence to ethical principles & standards stands less chance of being repeated & spread throughout a company when it goes unnoticed & unrewarded “What is right in the corp. is not what is right in a man’s home or in his church. What is right in the corp. is what the guy above you wants from you. That’s what morality is in the corporation” (Jackall, 1988:6)

Situational influences on ethical decision-making Context Related Situations 3/4 Authority People do what they are told to do – or what they think they’re being told to do (Milgram). Bureaucracy Jackall (1988), Bauman (1989, 1993) & ten Bos (1997) argue bureaucracy has a number of negative effects on ethical decision-making. Suppression of moral autonomy Instrumental morality Distancing Denial of moral status

Situational influences on ethical decision-making Context Related Situations 4/4 Work roles Work roles can capture a whole set of expectations about what to value, how to relate to others, and how to behave. Can be either functional or hierarchical. Organisational culture and norms Group norms delineate acceptable standards of behaviour within the work community. E.g. ways of talking, acting, dressing or thinking etc.

How ethical decisions are justified: Rationalization tactics 1/2

How ethical decisions are justified: Rationalization tactics 2/2

Summary In this lecture we have: Discussed various stages of and influences on ethical decision-making in business. Presented basic model of ethical decision-making. Outlined individual and situational influences on ethical decision-making. Suggested that some individual factors – such as cognitive moral development, nationality & personal integrity – are clearly influential. Suggested that in terms of recognising ethical problems & actually doing something in response to them, it is situational factors are influential. end