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Business ethics ethical decision making and case 10e chapter 6

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.

1


Moral Philosophy
Defined

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

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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


Economic
Systems




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

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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.

3


Economic
Systems

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

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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.

4


Value
Orientation





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

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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.

5


Instrumental and
Intrinsic Goodness





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

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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.

6


Instrumental and
Intrinsic Goodness




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

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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.

7


Teleology

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

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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.

8


Egoism
in Teleology

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 wellbeing of others though their own self-interests remain paramount

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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.

9


Utilitarianism
in Teleology

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

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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.

10


Deontology

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

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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.

11


Deontology

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

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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.

12


Relativist
Perspective

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

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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.

13


Virtue
Ethics

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

© 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.

14


Justice

Fair treatment and due reward in accordance with ethical or legal
standards




Distributive justice: An evaluation of the results of a business relationship



Interactional justice: Based on relationships between organizational
members, including employees and managers

Procedural justice: Considers the processes and activities that produce desired
outcomes

© 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.

15


Moral Philosophy and
Ethical Decision-Making

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

© 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.

16


Kohlberg’s Model of
Cognitive Moral Development

Consists of six stages

1.
2.
3.
4.
5.
6.

Punishment and obedience
Individual instrumental purpose and exchange
Mutual interpersonal expectations, relationships, and conformity
Social system and conscience maintenance
Prior rights, social contract, or utility
Universal ethical principles

© 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.

17


Kohlberg’s
Model

Reduced to three levels of ethical concern

1.
2.
3.

Concern with immediate interests and rewards and punishments
Concern with right as expected by the larger society or some significant
reference group
Seeing beyond norms, laws, and the authority of groups or individuals

© 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.

18


Importance and Problems
Kohlberg’s Theory




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

© 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.

19


White Collar
Crime

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

© 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.

20


Reasons for
White Collar Crime






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

© 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.

21


Top Internet
Fraud Complaints

Source: IC 3 , Internet Complaint Center 2011 Internet Crime Report , http://www.ic3.gov/media/annualreport/2011_ic3report.pdf (accessed April 25, 2013).

© 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.

22


Common Justifications for
White Collar Crimes
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.)

Source: Adapted from Daniel J. Curran and Claire M. Renzetti, Theories of Crime (Needham Heights, MA: Allyn & Bacon, 1994).

© 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.

23


Individual
Factors




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

© 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.

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