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© 2013 Cengage Learning. All Rights Reserved. 1
Part Three: The Decision Making Process
Chapter 6: Individual Factors: Moral Philosophies and Values
Moral Philosophy Defined
The specific principles or rules that people use to decide what is right or wrong Person-specific Guidelines for determining how to settle
conflicts and optimize mutual benefit Direct businesspeople in formulating strategies
and resolving ethical issuesNo single moral philosophy is accepted by everyone
© 2013 Cengage Learning. All Rights Reserved. 2
Economic Systems Adam Smith
The father of free market capitalism Developed the idea of the invisible hand
Milton Friedman Markets will reward/punish companies for unethical
behavior No need for government regulation Currently the dominant form of capitalism; is being
questioned
The U.S. has sought to export free market capitalism to other countries• Free market system is not a panacea
© 2013 Cengage Learning. All Rights Reserved. 3
Value Orientation
Economic value orientation: Associated with values that can be quantified by monetary means
Idealism: A moral philosophy that places special value on ideas and ideals as products of the mind
Realism: The view that an external world exists independently of our perception of it
© 2013 Cengage Learning. All Rights Reserved. 4
Goodness Theories Monists believe that only one thing is
intrinsically good Exemplified by hedonism: One’s pleasure is the
ultimate good Qualitative hedonism Quantitative hedonism
Pluralists believe that no one thing is intrinsically good
Instrumentalists reject the idea that Ends can be separated from the means that produce
them Ends, purposes, or outcomes are intrinsically good in
themselves© 2013 Cengage Learning. All Rights Reserved. 5
Obligation Theories
Goodness theories: Typically focus on the end result of actions and the goodness/happiness created
Obligation theories: Emphasize the means and motives by which actions are justified Teleology and Deontology
© 2013 Cengage Learning. All Rights Reserved. 6
Teleology
Considers acts as morally right or acceptable if they produce a desired result
Pleasure, knowledge, career growth, the realization of a self interest, utility
Consequentialism: Assesses moral worth by looking at the consequences for the individual
© 2013 Cengage Learning. All Rights Reserved. 7
Egoism
Right or acceptable behavior defined in terms of consequences to the individual
Maximizes personal interests
Enlightened egoists: Take a long-term perspective and allow for the well-being of others
© 2013 Cengage Learning. All Rights Reserved. 8
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
© 2013 Cengage Learning. All Rights Reserved. 9
Deontology
Moral philosophies that focus on the rights of individuals and on the intentions associated with a particular behavior
Believe that individuals have absolute rights Regard the nature of moral principles as stable and
believe that compliance with these principles defines ethicalness
Sometimes referred to as nonconsequentialism, based on respect for persons
© 2013 Cengage Learning. All Rights Reserved. 10
Deontology (continued)
Categorical Imperative: If you feel comfortable allowing the entire world to see your actions, and your rationale is suitable to become a universal principle, then the act is ethical Immanuel Kant
Rule deontologists: Conformity to general moral principles determines ethicalness
Act deontologists: Actions are the proper basis on which to judge morality
© 2013 Cengage Learning. All Rights Reserved. 11
Relativist Perspective
Individuals and groups derive definitions of ethical behavior subjectively from experience Descriptive relativism: Relates to observing
cultures Metaethical relativists: Understand that people
see situations from their own perspectives No objective way of resolving ethical disputes
between cultures Normative relativists: Assume that one person’s
opinion is as good as another’s
© 2013 Cengage Learning. All Rights Reserved. 12
Virtue Ethics
Ethical behavior involves adhering to conventional moral standards and considering what a mature person with “good” moral character would deem appropriate 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© 2013 Cengage Learning. All Rights Reserved. 13
Justice
Fair treatment and due reward in accordance with ethical or legal standards Distributive justice: An evaluation of the
results of a business relationship Procedural justice: Considers the processes
and activities that produce outcomes or results Interactional justice: Based on the
relationships between organizational members, including the way employees and management treat one another
© 2013 Cengage Learning. All Rights Reserved. 14
Moral Philosophy and Ethical Decision making
Individuals use different moral philosophies depending on whether they are making a personal decision or a work-related decision Behavior in business can be explained two
ways Pressures for workplace success differ from the
goals and pressures in outside life The corporate culture where individuals work
Moral philosophies must be assessed on a continuum
© 2013 Cengage Learning. All Rights Reserved. 15
Kohlberg’s Model of Cognitive Moral Development
Consists of six stages1. Punishment and obedience2. Individual instrumental purpose and exchange3. Mutual interpersonal expectations,
relationships, and conformity4. Social system and conscience maintenance5. Prior rights, social contract, or utility6. Universal ethical principles
© 2013 Cengage Learning. All Rights Reserved. 16
Kohlberg’s Model
Can be reduced to three levels of ethical concern1. With immediate interests and with rewards
and punishments2. Concern with right as expected by the larger
society or some significant reference group3. Seeing beyond norms, laws, and the authority
of groups or individuals
© 2013 Cengage Learning. All Rights Reserved. 17
Importance of Kohlberg’s Theory
Shows that individuals can change or improve their moral development
Supports management’s development of employee’s moral principles
The best way to improve employees’ business ethics is to provide training for cognitive moral development
© 2013 Cengage Learning. All Rights Reserved. 18
White Collar Crime
“Crimes of the suite” are more damaging than violent “crimes of the street”
White collar criminals tend to be educated people in positions of power and respectability
The financial sector has a high level of WCCs WCCs are increasing
Technology allows WCCs to be committed at lower levels
Peer influence is a cause of WCC Increased government efforts to detect and punish
WCCs
© 2013 Cengage Learning. All Rights Reserved. 19
Reasons for White Collar Crime
Patterns of activities associated with corporate cultures become institutionalized–may encourage unethical behaviors
Peer influence from acquaintances within an organization
WCCs increase after economic recessions
Some businesspeople may have inherently criminal personalities
© 2013 Cengage Learning. All Rights Reserved. 20
Individual Factors
Most unethical behavior is to meet performance goals
Not related to personal gain Rewards for performance goals and corporate
culture–most important drivers of ethical decision making Personal moral compass not sufficient to prevent
misconduct
Equipping employees with skills that allow them to understand/resolve ethical dilemmas will help them make good decisions
© 2013 Cengage Learning. All Rights Reserved. 23