Ethical Decision-Making: Key Concepts in Business Ethics and Moral Philosophy

Ethical awareness

The ability to perceive whether a situation or decision has an ethical dimension

Ethical issue intensity

The relevance or importance of an event or decision in the eyes of the individual, work group, and/or organization

What are the 6 spheres of influence?

workplace, family, religion, legal system, community, profession

Moral intensity

Individuals' perceptions of social pressure and the harm they believe their decisions will have on others

What are some individual factors?

gender, education, nationality, age, locus of control

Locus of control

Individual differences in relation to a generalized belief about how one is affected by internal versus external events or reinforcements

What are some organizational factors?

Corporate culture, ethical culture, significant others, obedience to authority

Corporate culture

A set of values, norms, and artifacts, including ways of solving problems that members (employees) of an organization share

Ethical culture

Acceptable behavior, defined by the company and industry

Normative approaches

How organizational decision makers should approach an issue

Institutional theory

theory that organizations operate according to taken-for-granted institutional norms and rules

three categories of institutions with normative pressures

politcal, social, econmic

Veil of ignorance

A thought experiment that examined how individuals would formulate principles if they did not know what their future position in society would be

Equality 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

Moral philosophy

The specific principles or values people use to decide what is right and wrong

considered the father of free-market capitalism

Adam Smith

The "invisible hand"

The opposing but complimentary forces of self-interest and competition, guide the market to provides the most value to society

Who is Karl Marx

Author of The Communist Manifesto

Economic value orientation

Associated with values quantified by monetary means; according to this theory, if an act produces more economic value for its effort, then it should be accepted as ethical

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 independent of our perceptions

Intrinsic goodness

Something that is good for its own sake

Monists

Believe only one thing is intrinsically good

Hedonism

The idea that pleasure is the ultimate good, or the best moral end involves the greatest balance of pleasure over pain

Quantitative hedonists

Those who believe more pleasure is better

Qualitative hedonists

those who believe it is possible to get too much of a good thing

Pluralists

Take the opposite position that no one thing is intrinsically good

Instrumentalists

Reject the ideas that • (1) ends can be separated from the means that produce them and • (2) ends, purposes, or outcomes are intrinsically good in and of themselves

Teleology

Refers to moral philosophies in which an act is considered morally right or acceptable if it produces some desired result, such as pleasure, knowledge, career growth, the realization of self-interest, utility, wealth, or even fame

Consequentialism

Teleological philosophies that assess the moral worth of a behavior by looking at its consequences

Egoism

Defines right or acceptable behavior in terms of its consequences for the individual

Enlightened egoism

A long-range perspective and allows for the well-being of others although their own self-interest remains paramount

Utilitarianism

Seeks the greatest good for the greatest number of people

Rule utilitarians

Argue that general rules should be followed to decide which action is best

Act utilitarians

The rightness of each individual action must be evaluated to determine whether it produces the greatest utility for the greatest number of people

Deontology

Refers to moral philosophies that focus on the rights of individuals and the intentions associated with a particular behavior rather than its consequences

Nonconsequentialism

Regard for certain behaviors as inherently right or wrong, and determination of this rightness focuses on individual actor, not on society

Categorical imperative

If you feel comfortable allowing everyone in the world to see you commit an act and if your rationale for acting in a particular manner is suitable to become a universal principle guiding behavior, then committing that act is ethical

Rule deontologists

Conformity to general moral principles based on logic determines ethicalness

Act deontologists

Hold that actions are the proper basis to judge morality or ethicalness

Relativist perspective

Definitions of ethical behavior are derived subjectively from the experiences of individuals and groups

Descriptive relativism

Relates to observations of other cultures

Meta-ethical relativism

Proposes that people naturally see situations from their own perspectives, and there is no objective way of resolving ethical disputes between different value systems and individuals

Normative relativism

The assumption that one person's opinion is as good as another's

Virtue ethics

Argues that ethical behavior involves not only adhering to conventional moral standards but also considering what a mature person with a "good" moral character would deem appropriate in a given situation

Justice

Fair treatment and due reward in accordance with ethical or legal standards, including the disposition to deal with perceived injustices of others

Distributive justice

Based on the evaluation of the outcomes or results of a business relationship

Procedural justice

Considers the processes and activities that produce a particular outcome

Interactional justice

Based on the relationships between organizational members, including the way employees and management treat one another

Kohlberg's Model Stage 1: Punishment and obedience

Right and wrong are not connected with any higher order or philosophy but rather with a person who has power.

Kohlberg''s Model Stage 2: Individual instrumental purpose and exchange

Right is what serves individual needs. Individuals evaluate behavior on the basis of its fairness to them

Kohlberg's Model Stage 3: Mutual interpersonal expectations, relationships, and conformity

Emphasizes the interests of others rather than simply those of themselves, although ethical motivation is still derived from obedience to rules.

Kohlberg's Model Stage 4: Social system and conscience maintenance

What is right is determined by considering duty to society, not just to certain other people. Duty, respect for authority, and the maintenance of the social order all become focal points at this stage.

Kohlberg's Model Stage 5: Prior rights, social contract, or utility

Individuals are concerned with upholding the basic rights, values, and legal contracts of society. Individuals feel a sense of obligation or commitment to other groups and recognize that in some cases legal and moral points of view may conflict.

Kohlberg's Model Stage 6: Universal ethical principles

Right is determined by universal ethical principles everyone should follow. People have certain inalienable rights that are universal in nature and consequence. These rights, laws, or social agreements are valid not because of a particular society's laws or customs, but because they rest on the premise of universality.

White-collar crime

Crimes perpetrated every year by nonviolent business criminals

Organizational culture

Shared values, norms, and artifacts that influence employees and determine behavior

Key Components of ICFR

Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities

Four organizational culture classifications

Apathetic culture, Caring culture, Exacting culture, and Integrative culture

Apathetic culture

Minimal concern for either people or performance

Caring culture

High concern for people but minimal concern for performance issues

Exacting culture

Little concern for people but a high concern for performance

Integrative culture

High concern for people and performance

Differential association

The idea that people learn ethical or unethical behavior while interacting with others who are part of their role-sets or belong to other intimate personal groups

Whistle-blowing

Exposing an employer's wrongdoing to outsiders such as the media or government regulatory agencies

Centralized organization

Decision-making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels

Decentralized organization

Decision-making authority is delegated as far down the chain of command as possible.

Formal group

An assembly of individuals with an organized structure that is explicitly accepted by the group

Informal group

Two or more individuals with a common interest but without an explicit organizational structure

Group norms

Standards of behavior groups expect of their members

The 10-40-40-10 Rule

Bottom 10%- Take advantage of situations to further their own personal interests, more likely to manipulate, cheat, act in a self-serving manner

Middle-bottom 40%- Go along on most matters, most concerned about the social implications of their actions

Middle-top 40%- Always try to follow company policies, rules, strong grasp of corporate culture's definition of acceptable behavior

Top 10%- Maintain formal ethical standards that focus on rights, duties, and rules, believe that their values are right and superior to the values of others

Wells Fargo whistleblower case

employees exposing unethical sales practices at the bank. Workers revealed that the company pressured staff to meet unrealistic sales targets, which led employees to secretly open millions of unauthorized accounts in customers' names.