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A Framework for Understanding Ethical Decision Making in Business

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1 A Framework for Understanding Ethical Decision Making in Business
Chapter 5 A Framework for Understanding Ethical Decision Making in Business

2 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 judgement & 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 Kohlberg’s 6 stages include: punishment & obedience fairness to oneself emphasizes others rather than themselves right is determined by considering one’s duty to society concern for upholding the basic rights, values, & legal contracts of society right is determined by universal ethical principles

5 Kohlberg’s Six Stages…
can be reduced to 3 levels: concern for one’s 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

6 Kohlberg’s Model Suggests…
as people progress through stages of CMD, and with time, education, and experience, they may change their values and ethical behavior

7 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

8 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

9 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

10 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 liklihood of unethical behavior

11 Role of Opportunity in Influencing Ethical Behavior…
opportunity relates to permitting ethical or unethical behavior rewards & punishment play a key role relates to the employee’s immediate job context can be eliminated by establishing formal codes, policies, and rules that are enforced

12 Business Ethics Evaluations & Intentions...
ethical dilemmas involve decision rules which are often vague or in conflict critical thinking plays a key role a person’s 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 judgements, the individual may feel guilt

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