Decision Making

Question 1

What are the five business ethics myths?

Answer 1

Myth 1: It is easy to be ethical
Myth 2: Unethical behaviour in business is simply the result of “bad apples.”
Myth 3: Ethics can be managed through formal ethical codes and programs
Myth 4: Ethical leadership is mostly about leader integrity
Myth 5: People are less ethical than they use to be

Question 2

Why is there a business ethics Myth 1: It is easy to be ethical?

Answer 2

Ethical decisions are complex  e.g. child labour (“What if respecting the rights of children in such situations produces the greater harm?”).

Decision makers may not recognize that they are facing an ethical issue 
> Ethical decision making is a complex, multi-stage process – moral awareness  moral judgement  moral motivation  moral character

> Organizational pressures

Question 3

What is Moral Myopia and Ethical Fading?

Answer 3

Moral Myopia:
Shortsightedness about values
The inability to recognize ethical issues  a distortion of moral vision that keeps ethical issues from coming clearly into focus

Ethical fading:
Occurs when we are so focused on other aspects of a decision that its ethical dimensions fade from view

In a business context, we can become so involved in meeting our goals (most often in finals terms) that we lose sight of the ethical aspects.

Question 4

How might a firm become myopic?

Answer 4

Main goal: Maximize “Short-Term” Shareholder Value
Companies whose directors focus on stock price will run firms in a way that raise the price in the short term, but harm firms’ long term prospects

How?
Ignoring stakeholders’ needs (i.e. shareholders; customers; suppliers; employees; community)
Accounting manipulations/fraud
Strategies to raise share price without improving real economic performance

Question 5

Why might a firm become myopic?

Answer 5

Why?
> Shareholder value myth (Stout, 2012)
> Clashing interests between short-term “speculators” and long-term investors
> Performance-based executives’ compensation: “It encourage executives to put their firm at risk because their bonuses are based on short-term profits” (Biktimirov & Cyr, 2013)

Moral Myopia: Shortsightedness about values
But, moral myopia does not occur in business alone.

Question 6

What are rationalizations?

Answer 6

Rationalizations  The reason people give themselves for not living up to their own, or society’s, own ethical standards - Ethics Unwrapped

Rationalizations “capitalize on inherent complexity, ambiguity, and dynamism” within organizations

Question 7

What is Moral Disengagement?

Answer 7

Moral Disengagement- the process that allows people to convince themselves that ethical standards do not apply to themselves in a particular context thereby allowing them to engage in negative behaviours without believing that they are doing harm or wrong.

Question 8

What is moral justification?

Answer 8

A Moral Disengagement process

Moral justification

Poor or harmful conduct is viewed as serving a worthy social or moral purpose
 breach ethical norms for the sake of a more important goal, in service of the greater good, in the service of a valued social or moral purpose.

Frame greater good in terms of family, friends, organization, society, some worthy purpose, etc.
“I know that I shouldn’t do this, but I have a family to feed.” – Anand et al (2009)

> This can eliminate bad feelings, and also lead to a sense of pride

Question 9

What is Advantageous comparison?

Answer 9

A Moral Disengagement process

Advantageous comparison

> Poor or harmful conduct contrasted with even worse examples
This makes the poor or harmful conduct look benign, relatively harmless, or of little consequence
“I know that I shouldn’t do this, but my competitors are doing even worse stuff.” – Anand et al (2009)
Bad feelings reduced

Question 10

What is Euphemistic language?

Answer 10

A Moral Disengagement process

Euphemistic language

“Sanitizes” language
Poor or harmful conduct  masked or made respectable, made benign

“the tango sheets” – Symbol Technology, false set of books

> Bad feelings can be reduced with euphemistic language

Question 11

What is Displacement of responsibility?

Answer 11

A Moral Disengagement process

Displacement of responsibility

> The individual is engaging in poor or harmful conduct because of social pressures or at the direction of another party/ parties (authority figure(s))

“I know I shouldn’t do this, but my boss is making me, so it’s not really my fault.” – Anand et al (2009)

> Bad feeling reduced because the person is not driving the actions, would not normally act this way, etc. but is doing so because of the other party

Question 12

What is Diffusion of responsibility?

Answer 12

A Moral Disengagement process

Diffusion of responsibility

Multiple parties are responsible for different aspects of a project, etc. that add up to a poor or harmful conduct/ situation, or for making a decision leading to poor or harmful outcomes

Bad feelings reduced, individual responsibility is less because the group is responsible

Question 13

What is Disregarding or distorting the consequences of actions?

Answer 13

A Moral Disengagement process

Disregarding or distorting the consequences of actions

The negative outcomes of poor or harmful conduct are ignored, minimized, distorted etc.

“I know that I shouldn’t do this, but who’s really being hurt?” – Anand et al (2009)

> Bad feelings reduced

Question 14

What is Attributing blame?

Answer 14

A Moral Disengagement process

Attributing blame

The other party is blamed for creating circumstances that force/ provoke/ cause the individual to act in poor or harmful manner

“I know that I shouldn’t do this, but this guy is so stupid that he deserves to get ripped off.” – Anand et al (2009)

> Bad feelings reduced

Question 15

What is Disparaging opponents or victims?

Answer 15

A Moral Disengagement process

Disparaging opponents or victims

This strategy focuses on how we regard the other party
> We are likely to feel more emotions (positive and negative) when we relate to the other party; less emotion (including feeling bad about our actions) if we see them as strangers, in the outgroup, as being subhuman, etc.
> Bad feelings reduced

Question 16

What is Script Processing?

Answer 16

Based on Schema – “ a cognitive framework that people use to impose structure upon information, situations, and expectations to facilitate understanding” (Gioia, 1992, p. 385)

> Prior experiences, vicarious learning  “organized” knowledge  prevents further active cognition

Scripts are -> “specialized type of schema that retains knowledge of actions appropriate for specific situations and contexts” (Gioia, 1992, p. 385)

Cognitive framework for simultaneously understanding information and events as well as for how to behave in response to the situation (i.e. what is an appropriate sequence of events)

> > > > Thus, scripts connect cognition and action

Question 17

When do scripts arise?

Answer 17

Arises in repetitive situations
> Helps avoid responsibility in situations where helping seems costly
> Can lead to unethical situations

the Creation of a Scripted criteria for a recall:
> Large number of cases
> Pattern of component failure
> Traceable cause to a design or manufacturing problem

Question 18

What are advantages and disadvantages of scripts?

Answer 18

Script advantage Efficiency

Script disadvantage
Script and selective perception  Looking past potential issues
Muffled emotions
Problematic for ethical decision making

Question 19

What factors make us more likely to realize a situation is an ethical decision?

Answer 19

We are more likely to recognize the ethical nature of a situation if:

> We believe our peers will consider it to be ethically problematic (social consensus)

> The decision is perceived as having the potential to cause significant harm to others

> Moral intensity – higher if consequences large, relatively immediate and likely, those affected psychologically/ physically close

> Ethical language is used to present the information
Euphemistic language

Question 20

What is Kohlberg’s theory of moral reasoning? What are the six stages?

Answer 20

The theory holds that moral reasoning, the basis for ethical behavior, has six developmental stages, each more adequate at responding to moral dilemmas than its predecessor

Level 1 (Pre-Conventional) ethical behaviour based on self-interest

1. Obedience and punishment orientation
(How can I avoid punishment?)
2. Self-interest orientation
(What's in it for me?)
(Paying for a benefit)

Level 2 (Conventional) ethical behaviour based on others’ expectations

3. Interpersonal accord and conformity
(Social norms)
(The good boy/girl attitude)
4. Authority and social-order maintaining orientation
(Law and order morality)

Level III: Post-conventional – ethical behaviour based on universal values

5. Social contract orientation
6. Universal ethical principles
   (Principled conscience)

Question 21

What is Kohlbergs first level of moral reasoning?

Answer 21

The pre-conventional level of moral reasoning is especially common in children and animals, although adults can also exhibit this level of reasoning. Reasoners at this level judge the morality of an action by its direct consequences.

Stage one (obedience and punishment driven), individuals focus on the direct consequences of their actions on themselves. For example, an action is perceived as morally wrong because the perpetrator is punished.

Stage two (self-interest driven) expresses the “what’s in it for me” position, in which right behavior is defined by whatever the individual believes to be in their best interest, or whatever is “convenient,” but understood in a narrow way which does not consider one’s reputation or relationships to groups of people.

Question 22

What is Kohlbergs second level of moral reasoning?

Answer 22

The conventional level of moral reasoning is typical of adolescents and adults. To reason in a conventional way is to judge the morality of actions by comparing them to society’s views and expectations.

Stage three (good intentions as determined by social consensus), the self enters society by conforming to social standards. Individuals are receptive to approval or disapproval from others as it reflects society’s views. They try to be a “good boy” or “good girl” to live up to these expectations

Stage four (authority and social order obedience driven), it is important to obey laws, dictums, and social conventions because of their importance in maintaining a functioning society. Moral reasoning in stage four is thus beyond the need for individual approval exhibited in stage three.

Question 23

What is Kohlbergs third level of moral reasoning?

Answer 23

post-conventional level, also known as the principled level, is marked by a growing realization that individuals are separate entities from society, and that the individual’s own perspective may take precedence over society’s view; individuals may disobey rules inconsistent with their own principles.

Some theorists have speculated that many people may never reach this level of abstract moral reasoning.

Stage five (social contract driven), the world is viewed as holding different opinions, rights, and values. Such perspectives should be mutually respected as unique to each person or community. Laws are regarded as social contracts rather than rigid edicts.

Stage six (universal ethical principles driven), moral reasoning is based on abstract reasoning using universal ethical principles. Laws are valid only insofar as they are grounded in justice, and a commitment to justice carries with it an obligation to disobey unjust laws

Question 24

What is a locus control?

Answer 24

Locus of control is conceptualized as referring to a one-dimensional continuum, ranging from external to internal:

Internal Locus of Control

Individual believes that his/her behaviour is guided by his/her personal decisions and efforts.
Belief in personal
control and personal
responsibility

External Locus of Control

Individual believes that his/her behaviour is guided by fate, luck, or other external circumstances

Question 25

Oh would a person with an internal locus of control behave?

Answer 25

Internals:
More likely to take responsibility for the consequences of their actions
Less likely to say “Well, it’s not my responsibility; I just work here,” or “I’m just following orders.”
Those who assume personal responsibility for their behaviours are likely to behave more ethically.

Less likely to be pressured into doing things that they regard as being wrong
Study 1: more internal, the more likely the protagonist resisted the pressure to violate a social norm
Study 2: in obedience-to-authority experiments, externals were more likely than internals to give electric shocks to subjects when the were told to do by the experimenter

Question 26

What lies at the heart of individual decision making?

Answer 26

Personal integrity lies at the heart of individual decision-making:
What kind of person am I?
What are my values?
What do I stand for?