Part Three

The DecisionMaking
Process
Chapter 6:
Individual Factors:
Moral Philosophies
and Values

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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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 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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Economic systems allocate resources/products

Influenced by, and directly influence
Individuals 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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 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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 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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 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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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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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 well-being of
others though their own self-interests remain
paramount
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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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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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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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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

persons opinion is as good as anothers
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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
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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 desired outcomes
Interactional justice: Based on relationships

between organizational members, including

employees and managers
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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
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Consists of six stages

1. Punishment and obedience

2. Individual instrumental purpose and

exchange
3. Mutual interpersonal expectations,

relationships, and conformity

4. Social system and conscience maintenance
5. Prior rights, social contract, or utility
6. Universal ethical principles
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Reduced to three levels of ethical concern

1. Concern with immediate interests and
rewards and punishments
2. Concern with right as expected by the larger

society or some significant reference group

3. Seeing beyond norms, laws, and the
authority of groups or individuals

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 Shows that individuals can change their values

through moral development

Supports managements development of

employees 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
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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
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 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

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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).

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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).
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 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

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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.

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