Week FIVE: Ethical Decision-Making

Question 1

What is the process that leads to ethical/unethical behaviours

Answer 1

• ethical issue intensity
• individual factors
• organisational factors
• opportunity

=>=> business ethics evaluation and intentions

=>=> ethical/unethical behaviour

Question 2

Explain the following:

• Ethical issue intensity/moral intensity
• individual factors
• organisational factors
• opportunity

Answer 2

Ethical issue intensity
= perceived relevance/importance of an ethical issue to the individual, work group, organisation
- Reflects the ethical sensitivity of the individual or work group and triggers the ethical decision process
positive/negative incentives can affect the perceived importance of an ethical issue
- Employees need education regarding potential problem areas

Moral intensity = person’s perception of social pressure and the harm the decision will have on others

• Posed that every ethical issue can be framed in terms of its moral intensity = situational intensity
• > Social consensus of evil = degree of social agreement that about the moral value (eg. evil) of proposed act
• > Magnitude of consequences = sum of the benefits/harm done to victims/beneficiaries of the moral act in question
• > Concentration of effect = how spread out/concentrated the harms/benefits of the proposed action
• > Probability of harm = joint of function of the probability that the act in question will actually take place and will actually cause predicted harm/benefit
• > Temporal immediacy of consequences = length of time between the present and onset of consequences of the moral act in question
• > Proximity to victim = feeling of neamness (social, cultural, psychological, physical) that the moral agent has for the victims/beneficiaries of the evil/good act in question

Individual Factors

• People base their ethical decisions on their own values/principles of right or wrong
• Values learned through socialisation
• Good personal values decrease unethical behaviour and increase positive work behaviour
• Values are subjective and vary across cultures
• How people resolve ethical issues in their daily lives is often based on values and principles learned through family socialisation
• In the workplace, ethical issues involve honesty, conflict of interest, discrimination, theft
• Individuals stage of cognitive development may affect conduct
• > Eg. gender, nationality
• > Education & work experience => more education, better at making ethical decisions
• > Age => complex relationship, older is more experience but younger rely on organisation’s culture
• > Locus of control => internal locus of control (formed own destiny) will be more ethical than external locus (believe their fate is in the hands of others)

Organisational Factors

• Consists of corporate culture (set of shared values, norms and artifacts that influence organisational behaviour), significant others, obedience to authority
• Organisational culture has stronger influence on employees than individual values

Significant Others

• Work group eg. peers, managers and subordinates
• Help on a daily basis with unfamniliar tasks and provide advice and information formally and informally
• Have more influence on daily decisions than any other factor

Obedience on Authority
- An aspect of influence that significant others can exercise
- Helps us explain why many employees resolve business issues by simply following the directives of a superior
Eg. Stanley Milgrim Experiment

Opportunity

• Relates to permitting ethical/unethical behaviour
• When employees act unethically, what are you encouraging them to do?
• Rewards and 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

Question 3

What are the political, economic and social aspects that make up normative values?

Answer 3

Political

• Political influences can take place within the organisation
• Ethical organisation has policies and rules in place to determine appropriate behaviour
• Often compliance component of the firm’s organisational culture
• Failure to abide by these rules result in disciplinary action
• Legal actions such as price fixing, antitrust issues and consumer protection are important in maintaining fair and equiable marketplace

Economic

• Competition affects how a company operates as well as risks employees take for the good of the firm
• Amount of competition in an industry can be determined according to:
• Barriers to entry in industry
• Available substitutes for the products produced by industry rivals
• Power of the industry rivals over customers
• Power of the industry rivals’ supplier over rivals

Social

• Social institutions incl religion, education and individuals such as family unit
• Laws meant to ensure an organisation acts fairly but no laws exist saying people should do to others as they would have done to them
• Many cultures adopt this rule that has been institutionalised nito businesses with standards on competing faily, being transparent with consumers and treating employees with respect

Question 4

Outline how companies implement principles and core values to ensure ethical decision-making

Answer 4

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

Two main principles of justice
= Liberty principle (equality principle) -> states each person has basic rights that are compatible to the basic liberties of others
= Difference principle: economic and social equalities (or inequalities) should be arranged to provide the most benefit to the least-advantaged members of society

• Companies take basic principles and translate them into core values
• Value practices evolve and are translated into normative definitions of ethical/unethical
• Organisations that have ethics programs based on a values orientation found to make a greater contribution than those based simply on compliance
• Ethical issue intensity, individual factors and opportunity result in business ethics evaluations and decisions
• Organisational ethical culture is shaped by effective leadership

Question 5

Explain morality and how it may impact on ethical decision-making

Answer 5

= the efforts to guide one’s conduct by reason - to do what there are the best reasons for doing, while giving equal weight to the best interests of each individual who will be affected by the conduct

• Amounts to guidelines that set the boundaries of acceptable behaviour - concerned with harming others, paying proper regard for others well-being and treating people with respect
• Are the specific principles/values people use to decide right from wrong
• > Person-specific
• > Guidelines for determining how to settle conflict and optimise mutual benefit
• > Provide direction in formulating strategies and resolving ethical issues
• > One single philosophy is never going to be accepted/agreed on by all
• Moral philosophies used to make personal and work-related decisions vary
• > Differences exist in professional and private goals and pressures
• > An individuals moral philosophy may change to become compatible with work environment

Question 6

Explain value orientation from the economic, idealism and realism perspectives

Answer 6

Economic value orientation: = values that can be quanitified 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:
= view that an external world exists independent of our perceptions
- Everyone guided by self interest
- Negative correlation to ethical decision-making

Question 7

Define teleology (consequentialism) and some of its sub components
eg. egoism and utilitarianism

Answer 7

Teleology (Consequentialism)
= Considers an act as morally right/acceptable if it produces the desired result or consequence such as pleasure, knowledge, career growth, realisation of self interest or utility
- Assesses moral worth by looking at the consequences for the individual

Egoism

• Right or acceptable behaviour defined in terms of consequences to the individual
• Maximises personal interests

Enlightened egoists

• Have long-term perspective
• Consider wellbeing of others
• Self-interest deciding factor

Utilitarianism

• Greatest good for greatest number of people
• Concerned with consequences
• Considers cost/benefit
• Behaviour base don principles of rules that promote greatest utility rather than on examination of each situation

Rule utilitarian
- Behaviour based on principles/rules
Act utilitarians
- Behaviour based on actions

Question 8

Define deontology

Answer 8

Nonconsequentialism/universalism

• Focuses on the rights of the individual, not consequences (considers intention)
• Believes in equal respect and views certain behaviours as inherently right
• Proposes that individuals have certain inherent freedoms
• Freedoms: conscience, consent, privacy, speech, due process

Rule deontologists
- Conformity to general moral principles
Act deontologists
- Evaluate ethicalness based on the act

Question 9

Explain the relativist perspective

Answer 9

• Defines ethical behaviour subjectively from the experiences of individuals/groups
• Use themselves or those around them as their basis for defining ethical standards
• Positive group consensus indicates an action is considered ethical by the group
• Acknowledges we live in a society in which people have different views

Question 10

Explain virtue ethics and justice

Answer 10

• What is moral in a given situation is not only what conventional wisdom suggests but also what ‘moral character’ would deem appropriate
• Includes truthfulness, trust, self control, empathy and fairness
• Contrasting attributes include lying, cheating, fraud, corruption
• Virtues that support business transactions

Justice
- Fair treatment and due reward in accordance with ethical/legal standards

Distributive justice:
= evaluation of the results of business relationship
Procedural justice:
= considers processes and activities that produce desired outcomes
Interactional justice:
= based on relationship between organisational members, incl employees & managers

Question 11

Explain Kohlbergs Model of Cognitive Moral Development and strengths and limitations of the theory

Answer 11

Level 1:

• childhood
• individuals concerned with their own immediate interests

Level 2:

• adolescence/early adulthood
• individual equates rights with conformity to expectations of good behaviour on large scale

Level 3:

• individual overlooks norms, laws and authority of groups/individuals
• understand there are differing morals out there and may disregard rules if they are inconsistent with their own personal values/ethics

+ Shows that individuals can change their values through moral development
+ Supports management’s development of employee’s moral principles

Three hit theory says

• Kohlberg used questionable research methods
• Theory contradicts basic moral philosophy
• Therefore, may not be valid