A Framework for Understanding Ethical Decision Making in Business

1
Chapter 5

• A Framework for Understanding Ethical Decision
  Making in Business

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Ethical Issue Intensity

• the perceived relevance or importance of an
  ethical issue to the individual, work group,
  and/or organization
• reflects the ethical sensitivity of the
  individual or work group and triggers the ethical
  decision process
• positive or negative incentives can affect
  the perceived importance of an
  ethical issue
• employees need education regarding
  potential problem areas

3
Under the Federal Sentencing Guidelines
for Organizations

• firms must assess their key risk areas
  (ethical legal)
• ethical issue intensity has been found to have a
  strong impact on both ethical judgment
  behavioral intentions
• the more important an ethical issue, the less
  likely an individual is to engage in questionable
  or unethical behavior associated with the issue

4
Role of Cognitive Moral Development

• individuals make different decisions in similar
  ethical decisions because they are in different
  stages of CMD
• Kohlbergs six stages include
• punishment obedience
• fairness to oneself
• emphasizes others rather than themselves
• right is determined by considering ones duty to
  society
• concern for upholding the basic rights, values,
  legal contracts of society
• right is determined by universal ethical
  principles

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Kohlbergs Six Stages

• can be reduced to three levels
• concern for ones own immediate interests with
  external rewards punishment
• define right as conforming to the expectations of
  good behavior of the larger society or some
  significant reference group
• see beyond the norms, laws, and authority of
  groups or individuals

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Kohlbergs Model Suggests

• as people progress through stages of CMD, and
  with time, education, and experience, they may
  change their values and ethical behavior

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Corporate Culture

• a set of values, beliefs, goals, norms, and ways
  to solve problems that members (employees) of an
  organization share
• some corporate cultures support and reward
  unethical behavior
• ethical climate is a component of
  corporate culture

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Ethical Climate

• the character or decision processes used to
  determine whether actions are ethical or
  unethical
• consists of corporate codes of ethics, top
  management actions, ethical policies, coworker
  influence, and the opportunity for unethical
  behavior
• the perceived ethics of the immediate work group
  has been found to be a major factor influencing
  ethical behavior

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Significant Others

• the work group, which includes people such as
  peers, managers, and subordinates
• help on a daily basis with unfamiliar tasks
  provide advice and information formally
  informally
• significant others have more influence on daily
  decisions than any other factor

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Role of Stress in Affecting Behavior

• stress influences ethical/unethical behavior
• stress creates strain, conflict, or disruption as
  a result of a lack of agreement as to job-related
  activities
• role stress situations have a
  tendency to increase the
  likelihood of unethical behavior

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Role of Opportunity in Influencing Ethical
Behavior

• opportunity relates to permitting ethical or
  unethical behavior
• rewards punishment play a key role
• relates to the employees immediate job context
• can be eliminated by establishing
  formal codes, policies, and rules
  that are enforced

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Business Ethics Evaluations Intentions...

• ethical dilemmas involve decision rules which are
  often vague or in conflict
• critical thinking plays a key role
• a persons intentions and the final decision as
  to what actions to take are the last step in the
  ethical decision-making process
• if intentions behavior are not consistent with
  ethical judgments, the individual may feel guilt