1. Moral Psychology and Organizational Ethics
Dennis Wittmer
University of Denver

2. Building a Behavioral Model
What factors influence ethical / unethical behavior or decisions in an organizational context?

3. Leadership Style (Kurt Lewin) – Autocratic, Democratic, Laissez Faire
Some Factors from Videos and Reading: What Implications for leading and managing?
Leadership Style (Kurt Lewin) – Autocratic, Democratic, Laissez Faire
Group Conformity (Solomon Asche)
Beach Bystander Request
Positive Role and Responsibility (Langer) – flight simulator and vision
Authority (Milgram Experiments)

4. Dan Ariely– “(Honest)Truth about Dishonesty”
Most people will cheat a little…”up to the level that allows us to retain our self-image as reasonably honest individuals”
Reminders matter to cheating – 10 Commandments before opportunity to cheat
Psychological distance – cheating in golf
Less cheating –cash vs. tokens

5. Other possible factors
Organizational
Reward structure
Behavior of peers (significant others)
Modeling of leaders
Commitment of top management
Formal polices and codes
Ethical work climates
Opportunity
Training programs
Centralization / Decentralization
Control mechanisms
Individual
Level of cognitive moral development
Ethical sensitivity / awareness
Experience / tenure
Locus of control
Ego integrity
Machiavellianism
Gender

7. Kohlberg’s Theory of Cognitive Moral Development (Features and Assumptions)
Focus is on “structure” not “content”
Process or reasoning used, not outcome or conclusion
Heinz and the Drug
Not steal or not steal, but what kind of reasoning led to the conclusion
Developmental Stage Theory
Follows and extends Piaget (cognitive psychology)
Highest Correlates
Age and Education
Cognitive disequilibrium – challenging adequacy of reasoning
Correlation of CMD and Behavior
Significant but modest (R-squared = .3+)
Other factors (e.g. ego strength or susceptibility to authority)

8. Kohlberg’s Theory of Moral Development
Preconventional Level
Stage 1: Obedience to authority / reward– punishment
“It’s wrong because mommy said it is.”
Stage 2: instrumental exchange / quid pro
“Wrong to take Joe’s CD, because we made a deal (i.e. he won’t take my CD).
Conventional Level (Loyalty!)
Stage 3: Peers (Group Solidarity)
“Good Boy / Nice Girl (group norms make it right)
Stage 4: Society (Social Stability)
“Law and Order” (What would happen if everyone acted that way?)
Postconventional Level
Stage 5: Social Contract (fair process, good law)
Prior to society rights / Human rights
Stage 6: Universal Ethical Principles
independent rational, and universal principles
Reversible and universal principles

9. What do we know to date?
“… we might say that more ethical decision making behavior tends to be associated with those who have higher levels of moral development, who have greater awareness or sensitivity to the ethical dimensions of situations, who have greater sense of personal control, who are older and more experienced, who are female, and who are less manipulative.”
“Generally there is support that ethical decision making is affected by the behavior of peers and associates, by the actions of supervisors and top management, by the existence of policies and codes of conduct, by the reward and punishments, and by the general atmosphere of the organization.”

10. Leadership Styles Applied to Kohlberg (Jill Graham) Relating Leadership, Organizational Citizenship Behaviors, and Level of Cognitive Moral Development
Relating Leadership, Organizational Citizenship Behaviors, and Level of Cognitive Moral Development
Preconventional
Leader - Autocratic and coercive using unquestioning rules
OCB: Dependable task accomplishment
Leader – Path-Goal or Transactional with exchange agreements
Conventional
Leader – Member Exchange with interpersonal role obligations
OCB: Work group collaboration
Institutional Leadership to fulfill duties as group member and cultural expectations
Postconventional
Transforming or Servant Leader: costs and benefits for all stakeholders, principles of justice
OCB: Constructive participation in organization’s governance
* OCB = “organization citizenship behavior”

11. The Myths It’s Easy to be ethical
“Managing to be ethical: Debunking five business ethics myths” – Trevino and Brown (Academy of Management Executive, 2004)
The Myths
It’s Easy to be ethical
Complex decisions
Moral awareness
Multi-stage process
Organizational context
Unethical behavior in business is simply the result of ‘bad apples’
Ethics can be managed through formal ethics codes and programs (only) -- Arthur Andersen (Barbara Toffler – Final Accounting)
Ethical leadership is mostly about leader integrity
People are less ethical than they used to be

12. What executives can do: Guidelines for effective ethics management:
“Managing to be ethical: Debunking five business ethics myths” – Trevino and Brown (Academy of Management Executive, 2004)
What executives can do: Guidelines for effective ethics management:
“The overarching goal should be to create a strong ethical culture supported by strong ethical leadership.”

13. What to do: Understand the existing ethical culture
“Managing to be ethical: Debunking five business ethics myths” – Trevino and Brown (Academy of Management Executive, 2004)
What to do:
Understand the existing ethical culture
Communicate the importance of ethical standards
Focus on the reward system
Promote ethical leadership throughout the firm