Chapter 5

1. Chapter 5 A Framework for Understanding Ethical Decision Making in Business

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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