1. Chapter 5 Ethical Decision Making

2. Learning Objectives
Provide a comprehensive model for ethical decision making in business
Examine issue intensity as an important element in the ethical decision-making process
Introduce individual factors that influence business ethical decision making
Introduce organizational factors that influence business ethical decision making

3. Learning Objectives (continued)
Explore the role of opportunity in ethical decision making in business
Understand normative considerations in ethical decision making
Recognize the role of institutions in normative decision making
Examine the importance of principles and core values to ethical decision making

4. Figure 5.1 - Framework for Understanding Ethical Decision Making in Business

5. Ethical Issue Intensity
Relevance of an event or decision in the eyes of an individual, work group, and/or organization
Reflects the ethical sensitivity of an individual or a group in facing the ethical decision making process

6. Individual Factors in Ethical Decision Making
Gender
Education
Locus of control
Age
Nationality

7. Organizational Factors
Corporate culture
Ethical culture
Significant others
Obedience to authority

8. Opportunity
Conditions in an organization that limit or permit ethical or unethical behavior
Results from conditions that either provide rewards or fail to erect barriers against unethical behavior
Relates to an individual’s immediate job context
Can be eliminated by formal codes, rules, and policies
Gained by individuals through exposure to company information

9. Business Ethics Intentions, Behaviors, and Evaluations
Ethical dilemmas occur when rules governing decisions are vague or in conflict
There are no substitutes for critical thinking and the ability to take responsibility for one’s decisions
Ethical decision making process includes individuals’ intentions and the final decision regarding what action they choose
Work culture impacts recognition and judgement

10. Using the Ethical Decision-Making Model to Improve Ethical Decisions
Ethical decision-making model does not help in determining if a business decision is right or wrong
Provides insights about ethical decision making in businesses
Business ethics involves value judgments and collective agreement about acceptable patterns of behavior
Gaining an understanding of the factors that make up ethical decisions helps in differentiating between an ethical issue and a dilemma

11. Normative Considerations in Ethical Decision Making
Normative approach: Examines what the ideal standard should be in ethical decision making
Within the firm as well as the industry
Normative rules and standards are based on individual moral values and the collective values of the organization

12. Institutions as the Foundation for Normative Values
Organizations operate based on institutional norms and rules
Organizations face normative pressures from different institutions to act in a way prescribed by the institution
Normative business ethics considers the political realities outside the legal realm as industry standards

13. Institutions as the Foundation for Normative Values (continued)
Nature of competition can be shaped by the economic system
Helps determine how a particular country or society distributes its resources in the production of products
Values made normative by social institutions are followed by businesses to compete fairly

14. Implementing Principles and Core Values in Ethical Decision Making
John Rawls
Believed justice principles were beliefs that everyone could accept
Veil of ignorance by Rawls
Examined how individuals would formulate principles if they were uncertain about their future position in society

15. Implementing Principles and Core Values in Ethical Decision Making (continued 1)
Principles of justice by Rawls
Liberty 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 least-advantaged members of society

16. Implementing Principles and Core Values in Ethical Decision Making (continued 2)
Companies convert basic principles into core values
Core values:
Provide the abstract ideals that are distinct from individual values and daily operational procedures
Include operating in a sustainable manner, collaboration and teamwork, and avoiding bribery
Provide a blueprint into the firm’s goals and how it views ethical decision making

17. Figure 5.2 - Principles and Values

18. Understanding Ethical Decision Making
Top level support for ethical behavior is instrumental in helping employees engage in their personal approaches to ethical decision making
Normative perspectives set forth ideal goals to which organizations should aspire
Knowledge about ethical decision making helps in making good decisions