Business ethics ethical decision making and case 10e chapter 6

Part Three The Decision-Making Process Chapter 6: Individual Factors: Moral Philosophies and Values... Moral PhilosophyDefined The specific principles or values people use to decide ri

Part Three The Decision-

Making Process

Chapter 6:

Individual Factors: Moral Philosophies and

Values

Moral Philosophy

Defined

The specific principles or values

people use to decide right from

wrong

 Person-specific

 Guidelines for determining how to settle

conflicts and optimize mutual benefit

 Provide direction in formulating

strategies and resolving ethical issues

No single moral philosophy is accepted

by everyone

Systems

 Adam Smith

 The father of free market capitalism

 Developed the idea of the invisible hand

 Milton Friedman

 Markets reward or punish for unethical

conduct without the need for government regulation

 Currently the dominant form of capitalism

The U.S is exporting the idea of free market capitalism to other

countries

 Free markets may not solve all problems

Systems

Economic systems allocate

resources/products

 Influenced by, and directly influence

 Depend on individuals coming

together and sharing philosophies

allowing the system to work

Value Orientation

 Economic value orientation: Values that

can be quantified by monetary means

 If an act produces value, accept it as ethical

 Idealism: Places special value on ideas and

ideals as products of the mind

 Positive correlation to ethical decision-making

 Realism: The view that an external world

exists independent of our perceptions

 Everyone is guided by self-interest

 Negative correlation to ethical decision-making

Instrumental and Intrinsic Goodness

 Monists believe that only one thing is

 Instrumentalists reject the ideas that

intrinsically good in and of themselves

 Goodness theories: Focus on the

end result of actions and the

goodness or happiness created by them

 Obligation theories: Emphasize the

means and motives by which actions

Considers acts as morally right or

acceptable if they produce a

desired result

realization of self interest, utility, wealth

or even fame

 Theological philosophies assess the

moral worth of a behavior by looking

at the consequences, so these theories are often referred to as

Consequentialism

Teleology

Egoism

in Teleology

Two important teleological philosophies

are egoism and utilitarianism

 Egoism defines right or acceptable

behavior in terms of consequences to the individual

 Enlightened egoists: Take a

long-term perspective and allow for the well-being of others though their own self-interests remain paramount

Utilitarianism

in Teleology

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

Moral philosophies focusing on the

rights of individuals and on the

intentions associated with a

particular behavior

rights

principles defines ethicalness

nonconsequentialism, a system of

ethics based on respect for persons

Contemporary deontology

 Categorical Imperative – Immanuel

Kant

 Ethical acts can be viewed by everyone and

the rationale behind the act is suitable as a universal principle

 Rule deontologists: Conformity to

general moral principles determines ethicalness

 Act deontologists: Actions are the

proper basis on which to judge morality

Relativist Perspective

Individuals and groups derive

definitions of ethical behavior

subjectively from experience

 Descriptive relativism: Relates to

observations of other cultures

 Metaethical relativism: Proposes people

see situations from their own perspectives

 No objective way of resolving ethical disputes between different value systems and

individuals

 Normative relativism: Assumes one

person’s opinion is as good as another’s

Virtue Ethics

Ethical behavior follows conventional

moral standards and compares behavior against a standard “good” moral

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 desired outcomes

 Interactional justice: Based on

relationships between organizational members, including employees and managers

Moral Philosophy and Ethical Decision-Making

Individuals use different moral

philosophies for personal decisions

than they use for work-related

decisions

 Two things may explain this behavior

 Pressures for workplace success differ

from the goals and pressures in outside life

 Morale character may change to become

compatible with the work environment

Moral philosophies must be assessed on a continuum

Kohlberg’s Model of

Cognitive Moral

Development

Consists of six stages

1 Punishment and obedience

2 Individual instrumental purpose and

exchange

3 Mutual interpersonal expectations,

relationships, and conformity

4 Social system and conscience

maintenance

5 Prior rights, social contract, or utility

6 Universal ethical principles

Model

Reduced to three levels of ethical

concern

1 Concern with immediate interests

and rewards and punishments

2 Concern with right as expected by

the larger society or some significant reference group

3 Seeing beyond norms, laws, and the

authority of groups or individuals

Importance and Problems

Kohlberg’s Theory

 Shows that individuals can change their

values through moral development

 Supports management’s development

of employee’s moral principles

However, the three hit theory says

 Kohlberg used questionable research

White Collar

Crime

Illegal acts committed for personal and/or

organizational gain by abusing the trust and

authority associated with a given position

 White collar criminals are educated people in positions of power and respectability

 The financial sector has a high level of WCCs

 WCCs are increasing steadily

 Technology allows WCCs to be committed at all levels, not just the top levels of management

 Resulting in increased government efforts to detect and punish WCCs

Reasons for White Collar Crime

 Patterns of activities become

institutionalized and may encourage unethical behaviors

 Undecided employees go along with

the majority, whether ethical or unethical

 WCCs increase after economic

recessions

 Some businesspeople may have

inherently criminal personalities, corporate psychopaths

Top Internet Fraud Complaints

Source: IC 3 , Internet Complaint Center 2011 Internet Crime Report ,

http://www.ic3.gov/media/annualreport/2011_ic3report.pdf (accessed April 25, 2013).

Common Justifications

for White Collar Crimes

1 Denial of responsibility (Everyone can, with varying degrees

of plausibility, point the finger at someone else.)

2 Denial of injury (White-collar criminals often never meet or interact with those who are harmed by their actions.)

3 Denial of the victim (The offender is playing tit-for-tat and claims to

be responding to a prior offense inflicted by the supposed victim.)

4 Condemnation of the condemners (Executives dispute the

legitimacy of the laws under which they are charged, or impugn the

motives of the prosecutors who enforce them.)

5 Appeal to a higher authority (“I did it for my family” remains a

popular excuse.)

6 Everyone else is doing it (Because of the highly competitive

marketplace, certain pressures exist to perform that may drive people

to break the law.)

7 Entitlement (Criminals simply deny the authority of the laws they

have broken.)

Factors

 Most unethical behavior is not for

personal gain, but to meet performance goals

 Rewards for performance goals and

corporate culture in general are the most important drivers of ethical

decision making

Equipping employees with skills that allow them to understand and resolve ethical dilemmas will help them make

good decisions