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Chapter 5
A Framework for
Understanding Ethical
Decision Making in Business
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
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
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
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
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
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
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
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
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
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
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