2. Ethical Reasoning and Corporate Programs
Chapter 6
Ethical Reasoning and Corporate Programs
The Core Elements of Ethical Character
Analyzing Ethical Problems in Business
Whistle-blowing
Making Ethics Work in Corporations

3. Managers’ values in contrast
Exhibit 6.Aa
Managers’ values in contrast
American managers were found to be more protective of organizational resources and more interested in compliance with rules than Russian managers.
German managers were found to be more ethical, although more difficult to work with, than other managers within the European Union.
Chinese were more concerned with profits and more willing to accept bribes than Americans, although Americans were less ethical in their reasoning than subjects from the developing country of Belize.

4. Managers’ values in contrast
Exhibit 6.Ab
Managers’ values in contrast
Spanish executives were found to be more ethical than American managers and they were more concerned with global harmful impacts than Americans.
Chilean managers scored higher than Australian managers on issues of bribery, and American and Australian mangers were more concerned with who was being harmed in their ethical reasoning than Chilean or Ecuadorian managers.
Iranian managers were found to be conformists and were sociocentric. These traits were found in other predominantly Arab countries and differed significantly from traits exhibited by American managers.

5. Stages of moral development and ethical reasoning
Figure 6.1
Stages of moral development and ethical reasoning
Age Group
Development Stage and Major Ethics Referent
Basis of Ethics Reasoning
Mature adulthood
Stage 6 Universal principles: Justice, fairness, universal human rights
Principle-centered reasoning
Mature adulthood
Stage 5 Moral beliefs above and beyond specific social custom: Human rights, social contract, broad constitutional principles
Principle-centered reasoning
Adulthood
Stage 4 Society at large: Customs, traditions, laws
Society-and-law-centered reasoning
Early adulthood, adolescence
Stage 3 Social groups: Friends, school, coworkers, family
Group-centered reasoning
Adolescence, youth
Stage 2 Reward seeking: Self-interest, own needs, reciprocity
Ego-centered reasoning
Childhood
Ego-centered
Childhood
Stage 1 Punishment avoidance: Punishment avoidance, obedience to power
Ego-centered reasoning

6. Corporate culture and ethical climates
A blend of ideas, customs, traditional practices, company values, and shared meanings that help define normal behavior for everyone who works in a company.
Ethical climate
The unspoken understanding among employees of what is and is not acceptable behavior.

7. The components of ethical climates
Figure 6.2
The components of ethical climates
Ethical Criteria
Focus of Individual Person
Ethical Company
Concern Society
Egoism (self-centered approach)
Self-interest
Company interest
Economic efficiency
Benevolence (concern-for-others approach)
Friendship
Team interest
Social responsibility
Principle (integrity approach)
Personal morality
Company rules and procedures
Laws and professional codes
Source: Adapted from Bart Victor and John B. Cullen, “The Organizational Bases of Ethical Work Climates,”
Administrative Sciences Quarterly 33(1988), p. 104.

8. Three methods of ethical reasoning
Figure 6.3
Method
Critical Determining Factor
An Action is Ethical When…
Limitations
Utilitarian
Comparing benefits and costs
Net benefits exceed net costs
Difficult to measure some human and social costs; majority may disregard rights of minority
Rights
Respecting entitlements
Basic human rights are respected
Difficult to balance conflicting rights
Justice
Distributing fair shares
Benefits and costs are fairly distributed
Difficult to measure benefits and costs; lack of agreement on fair shares

9. An analytical approach to ethical problems
Figure 6.5a
An analytical approach to ethical problems
Step 1
Ask
Utility
Do benefits
exceed costs?
Rights
Are human
rights
respected?
Justice
Are benefits
and costs
fairly
distributed?
Yes No
Yes No
Yes No

10. An analytical approach to ethical problems
Figure 6.5b
An analytical approach to ethical problems
Step 2
Compare results
If yes is the answer to all
three questions, it is
probably ethical
If no is the answer to all
three questions, it is
probably unethical
If the answers are
mixed, it could be either
ethical or unethical

11. Whistle-blowing protection around the world
Exhibit 6.Ba
Whistle-blowing protection around the world
United Kingdom—The U.K. Public Interest Disclosure Act protects most workers from retaliation by their employers, including dismissal, disciplinary action, or transfer.
European Union—The EU published a charter for whistle-blower protection, identifying terms under which commission staff may blow the whistle, imposing a duty upon officials to report suspected wrongdoing, and outlining the channels for reporting malpractice.
South Africa—The Protected Disclosures Act 2 prohibits employers from subjecting an employee to an occupational detriment for raising concerns about unlawful or irregular conduct.
Source: Lori Tansy Martens and Amber Crowell, “Whistle-blowing: A Global Perspective (Part 1),”
Ethikos, May-June 2002, pp.6-8.

12. Whistle-blowing protection around the world
Exhibit 6.Bb
Whistle-blowing protection around the world
Israel—This country adopted whistle-blowing protection legislation that protects corporate and government workers.
Ghana—A whistle-blower protection act has been proposed to offer rewards and protection to people who volunteer information leading to the prosecution of white-collar criminals.
South Korea—The Anti-Corruption Act established the Korea Independent Commission Against Corruption, whose mission includes the encouragement, protection, and compensation of whistle-blowers.
Source: Lori Tansy Martens and Amber Crowell, “Whistle-blowing: A Global Perspective (Part 1),”
Ethikos, May-June 2002, pp.6-8.

13. Stigmas against whistle-blowing
Divided loyalties—In some Asian countries, members of the company are treated as family members and it is considered wrong to report on family members.
History—The country may have a tragic history of reporting on others.
Logistics—Employees of global companies may be faced with numerous time zones and language differences that could prevent whistle-blowing or make it more difficult.
Fear of retribution—Despite government laws to protect whistle-blowers, many employees of global businesses fear retaliation.

14. Organizations’ ethics safeguards at work
Figure 6.5
Organizations’ ethics safeguards at work
Ethics safeguard
Fortune 1000 (1992)
Fortune 1000
(1999)
SW PA Organizations (1996)
1,500 employees (2000)
Promoted ethics at work
93%
71%
Developed code of ethics 93 98 57 79
Created ethics office 17 30
--Ethics hotline 9 51
--Ethics office or hotline 50
Offered ethics training 25 20 55
Conducted audit/evaluation 11 23

15. Corporate ethics awards
Business Ethics Awards criteria:
Be a leader in the field, showing the way ethically.
Have programs or initiatives that demonstrate sincerity and ongoing vibrancy that reaches deep into the company.
Have a significant national presence whose ethical behavior sends a loud signal.
Be a standout in at least one area of ethical performance.
Have recently faced a challenging situation and overcome it with integrity.