Business Ethics and Ethical Decision Making

1
CHAPTER 5

• Business Ethics and Ethical Decision Making

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Chapter Objectives

• To define and describe the importance of business
  ethics
• To understand the diverse and complex nature of
  existing and emerging ethical issues
• To discuss the individual factors that influence
  ethical or unethical decisions
• To explore the effect of organizational
  relationships on ethical decision making
• To evaluate the role of opportunity in ethical or
  unethical decisions

3
Business Ethics

• Principles and standards that guide the behavior
  of individuals and groups in the world of
  business

4
Ethical Issues in Business

• An ethical issue is a problem, situation, or
  opportunity requiring an individual, group, or
  organization to choose among several actions that
  must be evaluated as right or wrong, ethical or
  unethical.

5
Ethical Issues in Business

• Honesty and fairness
• Conflict of interest
• Fraud
• Discrimination
• Information technology

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The Ethical Decision Making Process

• Factors that influence the ethical
  decision-making process include
• Individual factors
• Organizational relationships
• Opportunity
• The strongest factor influencing employee
  behavior is organizational relationships.

7
Moral Philosophies

• Consequentialism
• Egoism
• Utilitarianism
• Ethical formalism
• Justice theory

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Stages of Moral Development

• Punishment and obedience
• Individual instrumental purpose and exchange
• Mutual interpersonal, expectation, relationships,
  and conformity
• Social justice and conscience maintenance
• Prior rights, social contract, or utility
• Universal ethical principles

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Kohlbergs Model

• People progress through the previous six stages.
• Cognitive moral development should be viewed as a
  continuum.
• Peoples moral beliefs and behavior change as
  they gain education and experience.
• There are universal values by whichpeople in the
  highest level of moraldevelopment abide.

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Social Needs that Motivate Ethical/Unethical
Behavior

• Need for achievement
• Need for affiliation
• Need for power

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Corporate Culture

• Values, beliefs, goals, norms, and rituals shared
  by members or employees of an organization.
• What is important?
• How do we treat each other?
• How do we do things around here?

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Significant Others

• Superiors, peers, and subordinates in the
  organization who influence the ethical
  decision-making process

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Opportunity

• Conditions that limit barriers or provide
  rewards
• Financial gain
• Recognition
• Promotion
• Positive feelings from a job well done

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How to Create EthicalRelationships in Business

• Listen and learn.
• Identify the ethical issue.
• Create and analyze options.
• Identify the best options.
• Explain decision and resolve any differences that
  may arise.

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Creating an Ethical Climate

• Top managers, employees, and stakeholders must
  support the philosophy that all organizations
  have responsibilities that extend beyond legal
  and economic obligations.