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Chapter 5 Ethical Decision Making

Multiple elements work on individuals to affect their behavior. While an individual may intend to do the right thing, oranizational or social forces can alter this intent.
Business Ethics and Age
The relationship between business ethics and age is complex, although experience leads to better ethical decision making.
High levels of competition create a higher probability that firms cut corners because margins are usually low.
Corporate Core Values
By incorporating shareholder objectives into corporate core values, companies may begin to view stakeholders as significant.
Corporate Culture
Corporate culture is a set of values, norms, and artifacts, including ways of solving problems shared by members of an organization. Codes, rules, and compliance are essential in organizatins. However an organization built on informal relationships is more likely to develop a high integrity corporate culture. Corporate culture is an organizational factor that gives a company specific characteristics. Over time, stakholders begin to see the copany as like a living organism with a mind and will of its own.
An ethical corporate culture needs organizational factors along with individual factors to establish an ethics program and monitor the complex ethical decisions being made by employees.
Cultural Differences and Natinality
Research concerning nationality and the ability to make ethical decisions is hard to interpret in a business context because of cultural differences.
Difference Principle
States that economic and social equalitites should be arranged to provide the most benefit to least-advantaged members of society.
Equality Principle
The thought experiment used by John Rawls that examined how individuals would formulate principles if they did not know what their future position in society would be.
Ethical Awareness
The ability to percieve whether a situration or decision has an ethical dimentsion.
Ethical Culture
Ethical culture reflects the integrity of decisions made and is a function of many factors, including corporate policies, top management’s leadership on ethical issues, the influence of coworkers, and the opportunity for unethical behavior.
Ethical Decision Making Framework
According to the ethical decision-making framework, the absence of punishment provides an opportunity for unethical behavior.
Ethical Decision Making Process
The first step in the ethical decision making process is to recognize that an issure requires an individual or work group to make a choice that ultimately will be judged by stakeholders as right or wrong. Issues that help in business ethics evaluations and decisions include ethical issue intensity, individual factors, organizational factors, and opportunity.
Ethical Decision Making and Opportunity
Despite the existence of rules, misconduct can still occur without proper oversight. The opportunities that employees have for unethical behavior in an organization can be eliminated through formal codes, policies, and rules adequately enforced by management. Opportunity also comes from knowledge. Opportunity results from conditions that either provide rewards or fail to erect barriers against unethical behavior.
Ethical Issue Intensity
The perceived relevance or importance of an ethical issue, event or decision to the individual, work group, and/or organization.
Ehical organizational Factors
1. an alignment between a person’s own values and the values of the organizatin which help create positive organizational outcomes 2. congruence in personal an organizational values is related to commitment, satisfaction, motivation, ethics, work, stress, and anxiety 3. ethical choice in organizatins are most ofter made individually 4. just as a family guides an individual, specific industries give behavioral cues to firms.
Ethical Problem Areas
If management fails to identify and educate employees about ethical problem areas, ethical sissus may no reach the critical awarness level.
External Locus of Control
People who believe in the external locus of control, go with the flow because they feel the events in their lives are uncontrollable.
Factors That Affect Business Ethics
Include nationality, age, religion, and education.
Research shows that in many aspect there are no differences between men and women, but when differences are found, women are generally more ethical than men. Women seem to be more sensitive to ethical scenarios and less tolerant of unethical actions. Females were also found to be more likely to report fraudulent intentions on financial reporting.
The first sign that an unethical decision has occurred. For people who begin the value shift that leads to unethical decisions, usual justifications to reduce and eliminate guilt include: 1. I need a paycheck and cannot afford to quit right now. 2. Those around me are doing it so why shuldn’t I 3. If I don’t do this, I might not be able to get a good reference from my boss when I leave; and 4./ If I don’t do this, I might never be promoted.
Immediate Job Context
Opportunity relates to individuals’ immediate job context – where they work, whom they work with, and the nature of the work. The immediate job context includes the motivational “carrots and sticks” superiors use to influence employee behavior. Pay raises, bonuses, and public recognition act as carrots, or positive reinforcements, whereas demotions, firings, reprimands, and pay penalties acts as sticks, or negative reinforcements.
Stakeholders closely align with institutins. The regulatory system aligns with political institutions. Competition relates to exonomic institutions. Personal values and norms derive from social institutions.
Internal Locus of Control
Those who believe they control the events in their lives by their own effort and skill, viewing themselves as masters of their destinies and trusting in their capacity to influence their environment.
Locus of Control
Relates to individual differences in relation to a generalized belief about how you are affected by internal versus external events or reinforcements. The concept relates to how people view themselves in relation to power.
Measures of Success
Money, security, family, power, wealth, and personal or group gratification are all types of success measures people use.
A major type of misconduct observed among employees in the workplace is lying to employees, customers, vendors, or the public or withholding needed information from them.
Moral Intensity
Relates to individuals’ perceptions of social pressure and the harm they believe their decisions will have on others.
Negative Reinforcement of Employee Behavior
Includes reprimands, pay penalties, demotions, and firings.
Normative Approaches to Business Ethics
Involve how organiziational decision makers should approach an issue. A normative approach for business ethics is concerned with general ethical values implemented into business. Concepts like fairness and justice are highly important in a normative structure. Strong normative structures in organizations are positively related to ethical decision making.
Normative Ethics
Takes into account the political realities outside the legal realm in the form of industry standards. Normative approaches refer to how organizational decision makers should approach an issue.
Obedience to Authority
Involves subordinates simply following the directives of a superior without question. It demonstrates the influence that significant others can exert in the workplace. (This works well in the military.) Following th ethical directives of a superior relates to obedience to authority.
Personal Values
Good personal values have been found to decrease unethical practices and to increase positive work behavior.
External and internal rewards relate to the ethical decision-making opportunity framework.
Significant others in the Workplace
Those who have influence in a work group are referred to as significant others and include peers, managers, coworkers, and subordinates. Studies have shown that significant others within the oraganization have more impact on a worker’s decision on a daily basis than nay other factor.
Social Institutions
Include religion, education, and individuals such as the family unit.
Spheres of Influence
Include the workplace, family, community, and the legal system.
One survey reports more than two-thirds of employees steal from their workplaces, and most do so repeatedly.
Unethical Situations
Studies have found that more than one third of the unethical situations that lower-level and middle-level managers face come from internal pressures and ambiguity (uncertainty) surrounding internal organizational rules.
Values provide guidance to organizations. Values are subjective and related to choice. Values are used to develop norms. Values differ across cultures and firms. Companies take basic customs and translate them into core values. Organizations that have ethics programs based on a values orientation are found to make a greater contribution than those based simply on compliance, or obeying laws and regulations.
Work Experience
Work experience is defined as the number of years in a specific job, occupation, and/or industry.

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