Part Three

The Decision
Making Process

Chapter 5
Ethical Decision
Making

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.

 In business, people make decisions

differently than at home
Organizational pressures have a strong influence

The ethical decision making process includes

Ethical issue intensity
Individual factors
Organizational factors

The framework for ethical decision making

does not describe how to make ethical

decisions
Outlines the factors and processes related to

ethical decision making

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.

Framework for Understanding Ethical

Decision Making in Business

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.

The perceived relevance or importance of

an ethical issue to the individual, work
group, and/or organization
Reflects the ethical sensitivity of the

individual and/or work group

Triggers the ethical decision making process

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.

 Individuals are subject to six spheres of

influence
Workplace

Legal system

Family

Community

Religion

Profession

Moral intensity: Relates to a persons

perception of social pressure and the harm

his/her decision will have on others
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.

 People base their ethical decisions on their

own values and principles of right or wrong
Values are learned through socialization
Good personal values decrease unethical behavior

and increase positive work behavior

Values are subjective; vary across cultures

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.

 An organization may intend to do right, but

organizational or social forces can alter this

intent
Research shows that various factors influence
ethical behavior
Genderwomen are more ethical than men
Education, work experience, nationality, and age

affect ethical decision making

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.

Relates to individual differences in

relation to a general belief about how one
is affected by internal versus external
events or reinforcements

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.

 Managers with
External locus of control go with the flow

because thats all they can do

Internal locus of control believe they can
control events; are masters of their destinies and
trust in their capacity to influence their
environment

Unclear relationship between locus of

control and ethical decision making

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.

Organizational culture has a stronger

influence on employees than individual
values
Corporate culture: A set of values, norms,

and artifacts that members of an

organization share
Ethical culture: Reflects whether the firm has an

ethical conscience; is a function of many factors

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.

10

 Significant others: Those who have

influence in a work group
Obedience to authority: Helps to explain

why many employees unquestioningly follow

superiors orders

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.

11

The conditions in an organization that

limit/permit ethical/unethical behavior
Immediate job context: Where employees
work, with whom they work, and the nature
of the work

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.

12

 Opportunities for misconduct can be

reduced by establishing formal codes,

policies, and rules

Aggressive enforcement is required

Knowledge can sometimes lead to unethical

behavior
A person who has an information base, expertise,

or information about competition has an

opportunity to exploit knowledge

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.

13

Most Common Office Supplies

Stolen by Employees
1. Post-It notes

2. Tape
3. Scissors
4. Toilet paper
5. Copier paper
6. USB memory sticks

Source: Top Office Supplies that Are

Stolen and the Average Value of Contents
In A Womans Purse!
KMLE, May 16, 2012,
http://kmle1079.cbslocal.com/2012/05/16/to
p-office-supplies-that-are-stolen/
(accessed April 12, 2013).

7. Notepads
8. Pens
9. Staplers

10. Highlighters
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

Ethical dilemmas involve situations where

rules are vague or in conflict
Critical thinking skills and ability to take
responsibility are important
The final step is deciding what action to take

based on a persons intentions

Guilt or uneasiness is the first sign that an
unethical decision has occurred
Most businesspeople will make ethical
mistakes
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

Impossible to objectively determine if a

business decision is right or wrong
Understanding how ethical decisions are

made will not solve ethical problems

Business ethics involves value judgments and

collective agreement about acceptable patterns of

behavior

Ethical decision making in business does not

rely on personal values and morals
Organizations take on cultures of their own
Informal relationships enforce an ethical culture
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

 Normative approaches: How

organizational decision makers should

approach an issue
Different from a descriptive approach that

examines how organizational decision makers

approach ethical decision making

Concepts like fairness and justice are highly

important in a normative structure

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

 Most organizations develop a set of core

values to provide enduring beliefs about

appropriate conduct
Core values are central to an organization and

provide direction for action

By incorporating stakeholder objectives into

corporate core values, companies begin to

view stakeholders as significant

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

 Institutions are important in establishing a

foundation for normative values

Organizations face certain normative
pressures from different institutions to act a
certain way
Internally and/or externally
Sort institutions into three categories: Political,

economic, and social

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

 Political influences can take place within the

organization
An ethical organization has policies and rules
in place to determine appropriate behavior

Often the compliance component of the

firms organizational culture
Failure to abide by these rules results in

disciplinary action

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

 Normative business ethics takes into account

the political realities outside the legal realm

in the form of industry standards

Legal issues such as price fixing, antitrust
issues, and consumer protection are
important in maintaining a fair and equitable
marketplace
These issues must be major considerations for

business when making ethical 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.

21

 Competition affects how a company operates

as well as the risks employees take for the
good of the firm
Amount of competition in an industry can be
determined/described according to
Barriers to entry into the industry
Available substitutes for the products produced by

the industry rivals

Power of the industry rivals over their customers
Power of the industry rivals suppliers over the
industry rivals
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

 Social institutions include religion,

education, and individuals such as the family
unit
There are laws meant to ensure an
organization acts fairly, but there are no laws
saying people should do to others as they
would prefer to have done to them
Many cultures adopt this rule that has been

institutionalized into businesses with standards

on competing fairly, being transparent with
consumers, and treating employees with respect
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

 Industry shared values promote

organizational effectiveness when linked to
goals
Can also hinder effectiveness if more efficient
means of organization and structure are avoided
in exchange for stability
Risk that organizations might sacrifice new ideas

or methodologies in order to be more acceptable

Can limit innovativeness and productivity

Important that organization does not stray

too far from industry norms 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.

24

 When values from political, economic, and

social institutions are embedded into the
organizational culture to provide incentives
for appropriate behavior, firms tend to act

more socially responsible

If incentives do not align with institutional
normative values or if they contradict these
values, then misconduct is likely

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.

25

 John Rawls was one of the most influential

philosophers in his research on how

principles support the concept of justice

Veil of ignorance: A thought experiment that
examined how individuals would formulate
principles if they did not know what their
future position in society would be
Identified principles that were not biased by ones

social position

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.

26

Two main principles of justice

Liberty principle (equality principle): States that

each person has basic rights that are compatible

to the basic liberties of others
Difference principle: States that economic and
social equalities (or inequalities) should be
arranged to provide the most benefit to the leastadvantaged members of society

Does not advocate for the complete elimination of

inequalities in society
The most ethical decision seeks to benefit and not harm
disadvantaged populations

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.

27

 Companies take basic principles and

translate them into core values
Core values provide the abstract ideals that
are distinct from individual values and daily
operational procedures

Value practices evolve and are translated into

normative definitions of ethical or unethical
Individual and organizational values can

differ significantly because of ethical

diversity among 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.

28

 Leaders, stakeholders, and the organizational

culture impact the development of core
values
A firms core values provide a blueprint into
the firms purpose as well as how it views
ethical decision making and prioritizes
stakeholders
Organizations that have ethics programs
based on a values orientation are found to
make a greater contribution than those based
simply on compliance
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.

29

Principles 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.

30

Core Values of
Marriott

1. Put People First

2. Pursue Excellence
3. Embrace Change
4. Act with Integrity
5. Serve Our World
Source: Marriott, 2011 Annual Report, http://investor.shareholder
.com/mar/marriottAR11/index.html (accessed April 19, 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.

31

Ethical issue intensity, individual factors,

and opportunity result in business ethics
evaluations and decisions
An organizational ethical culture is shaped
by effective leadership
Top level support is required for ethical behavior

An ethical corporate culture needs shared

values and proper oversight
The more you know about ethical decision
making, the more likely you will be to 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.

32