Individual Factors: Moral Philosophies and Values Part Three: The Decision Making Process Chapter 6: Individual Factors: Moral Philosophies and Values © 2013 Cengage Learning. All Rights Reserved.

Moral Philosophy Defined The specific principles or rules that people use to decide what is right or wrong Person-specific Guidelines for determining how to settle conflicts and optimize mutual benefit Direct businesspeople in formulating strategies and resolving ethical issues No single moral philosophy is accepted by everyone © 2013 Cengage Learning. All Rights Reserved.

Economic Systems Adam Smith The father of free market capitalism Developed the idea of the invisible hand Milton Friedman Markets will reward/punish companies for unethical behavior No need for government regulation Currently the dominant form of capitalism; is being questioned The U.S. has sought to export free market capitalism to other countries Free market system is not a panacea © 2013 Cengage Learning. All Rights Reserved.

Value Orientation Economic value orientation: Associated with values that can be quantified by monetary means Idealism: A moral philosophy that places special value on ideas and ideals as products of the mind Realism: The view that an external world exists independently of our perception of it © 2013 Cengage Learning. All Rights Reserved.

Goodness Theories Monists believe that only one thing is intrinsically good Exemplified by hedonism: One’s pleasure is the ultimate good Qualitative hedonism Quantitative hedonism Pluralists believe that no one thing is intrinsically good Instrumentalists reject the idea that Ends can be separated from the means that produce them Ends, purposes, or outcomes are intrinsically good in themselves © 2013 Cengage Learning. All Rights Reserved.

Obligation Theories Goodness theories: Typically focus on the end result of actions and the goodness/happiness created Obligation theories: Emphasize the means and motives by which actions are justified Teleology and Deontology © 2013 Cengage Learning. All Rights Reserved.

Teleology Considers acts as morally right or acceptable if they produce a desired result Pleasure, knowledge, career growth, the realization of a self interest, utility Consequentialism: Assesses moral worth by looking at the consequences for the individual © 2013 Cengage Learning. All Rights Reserved.

Egoism Right or acceptable behavior defined in terms of consequences to the individual Maximizes personal interests Enlightened egoists: Take a long-term perspective and allow for the well-being of others © 2013 Cengage Learning. All Rights Reserved.

Utilitarianism Seeks the greatest good for the greatest number of people Rule utilitarians: Determine behavior based on principles designed to promote the greatest utility Act utilitarians: Examine a specific action itself; not the rules governing it © 2013 Cengage Learning. All Rights Reserved.

Deontology Moral philosophies that focus on the rights of individuals and on the intentions associated with a particular behavior Believe that individuals have absolute rights Regard the nature of moral principles as stable and believe that compliance with these principles defines ethicalness Sometimes referred to as nonconsequentialism, based on respect for persons © 2013 Cengage Learning. All Rights Reserved.

Deontology (continued) Categorical Imperative: If you feel comfortable allowing the entire world to see your actions, and your rationale is suitable to become a universal principle, then the act is ethical Immanuel Kant Rule deontologists: Conformity to general moral principles determines ethicalness Act deontologists: Actions are the proper basis on which to judge morality © 2013 Cengage Learning. All Rights Reserved.

Relativist Perspective Individuals and groups derive definitions of ethical behavior subjectively from experience Descriptive relativism: Relates to observing cultures Metaethical relativists: Understand that people see situations from their own perspectives No objective way of resolving ethical disputes between cultures Normative relativists: Assume that one person’s opinion is as good as another’s © 2013 Cengage Learning. All Rights Reserved.

Virtue Ethics Ethical behavior involves adhering to conventional moral standards and considering what a mature person with “good” moral character would deem appropriate Can be summarized as Good corporate ethics programs encourage individual virtue and integrity The virtues associated with appropriate conduct form a good person The ultimate purpose is to serve the public good The well-being of the community goes together with individual excellence © 2013 Cengage Learning. All Rights Reserved.

Justice Fair treatment and due reward in accordance with ethical or legal standards Distributive justice: An evaluation of the results of a business relationship Procedural justice: Considers the processes and activities that produce outcomes or results Interactional justice: Based on the relationships between organizational members, including the way employees and management treat one another © 2013 Cengage Learning. All Rights Reserved.

Moral Philosophy and Ethical Decision making Individuals use different moral philosophies depending on whether they are making a personal decision or a work-related decision Behavior in business can be explained two ways Pressures for workplace success differ from the goals and pressures in outside life The corporate culture where individuals work Moral philosophies must be assessed on a continuum © 2013 Cengage Learning. All Rights Reserved.

Kohlberg’s Model of Cognitive Moral Development Consists of six stages Punishment and obedience Individual instrumental purpose and exchange Mutual interpersonal expectations, relationships, and conformity Social system and conscience maintenance Prior rights, social contract, or utility Universal ethical principles © 2013 Cengage Learning. All Rights Reserved.

Kohlberg’s Model Can be reduced to three levels of ethical concern With immediate interests and with rewards and punishments Concern with right as expected by the larger society or some significant reference group Seeing beyond norms, laws, and the authority of groups or individuals © 2013 Cengage Learning. All Rights Reserved.

Importance of Kohlberg’s Theory Shows that individuals can change or improve their moral development Supports management’s development of employee’s moral principles The best way to improve employees’ business ethics is to provide training for cognitive moral development © 2013 Cengage Learning. All Rights Reserved.

White Collar Crime “Crimes of the suite” are more damaging than violent “crimes of the street” White collar criminals tend to be educated people in positions of power and respectability The financial sector has a high level of WCCs WCCs are increasing Technology allows WCCs to be committed at lower levels Peer influence is a cause of WCC Increased government efforts to detect and punish WCCs © 2013 Cengage Learning. All Rights Reserved.

Reasons for White Collar Crime Patterns of activities associated with corporate cultures become institutionalized–may encourage unethical behaviors Peer influence from acquaintances within an organization WCCs increase after economic recessions Some businesspeople may have inherently criminal personalities © 2013 Cengage Learning. All Rights Reserved.

Top Internet Fraud Complaints © 2013 Cengage Learning. All Rights Reserved.

Common Justifications for White Collar Crimes © 2013 Cengage Learning. All Rights Reserved.

Individual Factors Most unethical behavior is to meet performance goals Not related to personal gain Rewards for performance goals and corporate culture–most important drivers of ethical decision making Personal moral compass not sufficient to prevent misconduct Equipping employees with skills that allow them to understand/resolve ethical dilemmas will help them make good decisions © 2013 Cengage Learning. All Rights Reserved.