© 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 Part Three The Decision- Making Process Chapter 6: Individual Factors: Moral Philosophies and Values

© 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2 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

3 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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

4 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Economic systems allocate resources/products  Influenced by, and directly influence  Individual’s actions and beliefs (morals)  Society (laws) as a whole  Depend on individuals coming together and sharing philosophies  Creates values, trust and expectations, allowing the system to work

5 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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

6 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Monists believe that only one thing is intrinsically good  Hedonism: Pleasure is the ultimate good  Qualitative hedonism  Quantitative hedonism  Pluralists believe that no one thing is intrinsically good  Instrumentalists reject the ideas that  Ends can be separated from the means  Ends, purposes, or outcomes are intrinsically good in and of themselves

7 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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 are justified  Divided into two categories  Teleology  Deontology

8 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Considers acts as morally right or acceptable if they produce a desired result  Pleasure, knowledge, career growth, 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

9 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Two important teleological philosophies are egoism and utilitarianism  Egoism defines right or acceptable behavior in terms of consequences to the individual  Maximizes personal interests  Enlightened egoists: Take a long-term perspective and allow for the well-being of others though their own self-interests remain paramount

10 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

11 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Moral philosophies focusing on the rights of individuals and on the intentions associated with a particular behavior  Believe individuals have certain absolute rights  Believe compliance with stable moral principles defines ethicalness  Sometimes referred to as nonconsequentialism, a system of ethics based on respect for persons

12 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

13 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

14 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Ethical behavior follows conventional moral standards and compares behavior against a standard “good” moral character  Can be summarized as  Good corporate ethics programs encourage individual virtue and integrity  The virtues associated with appropriate conduct form a good person  The ultimate purpose is to serve the public good  The well-being of the community goes together with individual excellence

15 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

16 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

17 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

18 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

19 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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 methods  His theory contradicts basic moral philosophy  His theory, while reliable, may not be valid

20 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

21 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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

22 Top Internet Fraud Complaints © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Source: IC 3, Internet Complaint Center 2011 Internet Crime Report, (accessed April 25, 2013).

23 Common Justifications for White Collar Crimes © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Source: Adapted from Daniel J. Curran and Claire M. Renzetti, Theories of Crime (Needham Heights, MA: Allyn & Bacon, 1994). 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.)

24 © 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  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