Research Essay Board Paper
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L3.19.MV2.pptxLecture 3: Business Ethics – Psychological Theories
Dr Warren Staples
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Recap – Lecture 2
Moral agency
Moral responsibility
Principal-Agent relationships
Teleology & Deontology
Utilitarianism, Virtue ethics, Kantianism & Justice ethics
Guidant consultant
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Clivosaurus
Queensland Nickel (QNI)
Dispersed more than $170m from the company’s accounts.
Palmer (Smee 2019): “People all across Australia are having trouble now with liquidators and receivers, businesses are closing ... because of their unconscionable behaviour,” Palmer huffed.
“So when that happens to someone like me, I’ve got a moral responsibility not to give up. That’s what I’m doing. It is the greater good.”
Linden – “More front than a mine Haulpak”
3rd week of case - Palmer settles
Shadow director case awaits? Instructing directors to move $
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Learning overview
Ethical decision making process
Cognitive Moral Reasoning/Development (CMR/CMD)
Moral intensity
Making decisions in business
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Ethical decision making 1
The developing consensus in business ethics is that ethical decision making is affected by:
the person and personal variables (values, character, personality, identity, CMD, etc.)
the situation and situational variables (organisational culture, climate, industry etc.) and
the issue (moral intensity).
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Ethical decision making 2
Individual characteristics
Recognition/ Moral awareness
Moral judgement
Intent
Moral behaviour
Organisational characteristics
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Ethical decision making 3
Recognition/Moral awareness - Moral agent recognizes the moral issue(s)
Judgement - Agent engages in some form of moral reasoning to arrive at moral judgement
Intent - Moral agent establishes moral intent and decides to take moral action
Behaviour - Agent translates intent to behaviour
Witness a colleague steal an office printer
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Moral awareness
the initial step in the ethical decision making process
the situation or issue is interpreted as a moral issue
leads to moral judgement
The person recognizes that a decision or action has consequences for other human beings and he/she has some choice in dealing with the issue (Jones 1991)
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Moral awareness at work
is more likely if an individual believes that co-workers will see it as ethically problematic
is more likely if moral language is used to present the situation to the decision maker
is more likely if the decision is seen as having the potential to produce serious harm to others (magnitude of consequences)
(Trevino & Nelson 2006)
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Ethical decisions & behaviour
Individual characteristics
Recognition/ Moral awareness
Moral judgement
Intent
Moral behaviour
Organisational characteristics
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Individual influences on ethical decision making
Age and gender
National and cultural characteristics
Education and employment
Psychological factors:
Cognitive moral development (Kohlberg)
Locus of control
Personal values – (Chin, Hambrick & Treviño 2013)
Personal integrity
Moral imagination
(Crane & Matten, 2008)
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Cognitive moral development
Developmental psychologist Jean Piaget studied the moral reasoning of Swiss children and suggested it went through stages
American psychologist Lawrence Kohlberg extended Piaget’s developmental approach to include adults and teenagers
The main criteria of Kohlberg’s model of cognitive moral development reflect consciousness: babies are naturally selfish (psychological egoism), children grow also to focus on their family and friends, and adults naturally come to develop broader perspectives
Kohlberg’s theory is widely employed in the study and practice of business ethics
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Kohlberg’s stages of cognitive moral development (CMD)
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Kohlberg’s stage 1: punishment & obedience
The decision as to what behaviour is right is largely determined by the rewards and punishments and favours associated with the action.
This suggests people follow laws and rules automatically because they do not want the negative consequences.
Conversely, they are likely to pursue wrong action if the perceived risk of detection is low, and punishment from wrongful behaviour is unlikely or insignificant.
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Stage 2: Fairness to oneself
Recognition of personal reward and satisfaction and a duty to oneself develops. One make decisions not only on the basis of specific rules/authority (Stage 1)
This concept is known as reciprocity. The “you scratch my back and I’ll scratch yours” approach.
People engage in behaviour that they know will yield possible favours in return, or feel obliged to repay a debt.
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Kohlberg’s stage 3: emphasizes others
What is morally right is that which either helps or is approved by others close to you.
Important concepts : trust and loyalty.
People may do what is asked of them by a boss or managers because they want to please them or because others whom we respect say its important to follow the directions of our bosses.
Stage 3 differs from Stage 2 as one will consider others in one’s motives in Stage 3.
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Kohlberg’s stage 4: one’s duty to society
Our perspective broadens to consider the wider societal group.
People tend to make decisions based on the agreed duties and following rules which are designed to promote the common good.
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Kohlberg’s stage 5: just rules determined by consensus
People still regard rules and laws (Stages 1-4) as important, because they maintain social cohesion (known as the concept of social contract). But, moral reasoning shifts from established rules to reliance on personally held principles.
Stage 5 differs from Stage 4 people. The latter accepts laws without questions or evaluation.
E.g. Complying with existing rules shareholders are given an Annual Report (Stage 4). But, consensus/feedback/questioning (Stage 5) argue that not all shareholders need the full annual report. Hence, summary annual reports are given nowadays (with requests for full report if necessary)
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Kohlberg’s stage 6: universal ethical principles
People have moved to a higher level in which the notion of universal laws and principles are applied.
Justice and equality are examples of universal principles.
One will be more concerned with societal ethical issues and not rely on business organization for ethical direction. E.g. discontinue a product if death is caused. Company profits would not be a justification for continued sales.
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CMD and moral philosophy
the consensus on moral development is generally contained in three levels (Crittenden, 1993)
a pre-moral or proto-moral stage (Level 1)
a middle stage where morality is heteronomous (Level 2) and
a mature stage where morality is autonomous (Level 3).
The three levels correspond with the egoism, benevolence (teleology) and principle (deontology) classes of ethical theory.
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Kohlberg’s CMD
Kohlberg (1976) claims that to act in a morally high way one has to have a high stage of moral reasoning. He accepts however that reasoning in a high level does not necessarily lead to behaving in a moral way.
“One can, … reason in terms of such principles and not live up to them” because a variety of factors determine whether a person will act his or her stage of moral reasoning in a particular situation
In business organisations people regress morally…
CMD explains little of the variance in moral behaviour in business research (Jones and Ryan, 1998)
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Limitation of Kohlberg’s model
With time, education, and experience, one may change their values and ethical behavior which is not true in reality. An “adult’ does act like a “child” and vice versa. Stability in human behaviour often may not exist
Different cultures might rank different stages differently –e.g. Stage 3: Emphasizes others rather than themselves in Asian context may be regarded as Stage 5: Just rules determined by consensus in Western countries
Does not take into account the context of decision making. It examines what a person thinks rather than how he or she thinks, and how the moral action that follows the thought.
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Limitations of Kohlberg’s model
Kohlberg’s original research has limitations – data collected only from US males.
Gilligan (1982) ‘care voice’ conducted other research and noted that women rarely surpass Kohlberg’s stage 3:
Stage 1: Women tend to overemphasize interests of their selves
Stage 2: Women overemphasize others’ interests
Stage 3; Women weave their own interests together with those of others
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Locus of control
Individual’s perception of how much control s/he exerts over events in life.
High internal locus of control: perception that outcomes result from own efforts
More likely to take responsibility for the consequences of actions.
More likely to help another person, resist pressure to be unethical.
High external locus of control: perception that outcomes result from fate, luck, powerful others.
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Ethical decisions & behaviour
Individual characteristics
Recognition/ Moral awareness
Moral judgement
Intent
Moral behaviour
Organisational characteristics
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Situation influences on ethical decision making
Issue related:
Moral intensity
Moral framing
Context related:
Rewards
Authority
Bureaucracy
Work roles
Organisational culture
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Moral intensity – Jones (1991)
Strength/seriousness of the moral issue
affects the recognition of the moral issue, the making of moral judgement, the establishment of moral intent and the engagement in moral behaviour.
managers' ethical decision making is a function of the moral intensity of the encountered dilemma.
focuses on the moral issue, not on the moral agent or the organisational context.
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Components of moral intensity
Magnitude of consequences: the sum of the harms or benefits done to victims or beneficiaries of the moral act in question.
Social consensus: the degree of social agreement that a proposed act is evil or good.
Probability of effect: the act in question will actually take place and the act in question will cause the harm or benefit predicted.
Temporal immediacy: the length of time between the present and the onset of consequences of the moral act in question
Proximity: the feeling of nearness (social, cultural, psychological, or physical) that the moral agent has for victims or beneficiaries of the evil or beneficial act in question.
Concentration of effect: an inverse function of the number of people affected by an act of a given magnitude.
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Moral certainty
Silo mentality, organisational structure and unethical culture may reduce moral certainty
The lack of moral dialogue in organisations may reduce moral certainty
Codes of ethics and ethics training in organisations may increase moral certainty
(Jones and Ryan 1998)
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Fulfillment of roles – deindividuation process
Conflicting roles may lead to unethical behaviour
The Zimbardo prison experiment
People do what they are told- obedience to authority
The Milgram experiments
Obedience to authority at work
Diffusion of responsibility:
individuals encouraged to push responsibility up the organisational hierarchy
diffusion of responsibility in groups
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Other influences on ethical decision making
Groupthink (Janis 1972)
When pressure for consensus prevents the group from making a proper appraisal of alternative courses of action
Symptoms include: Illusion of invulnerability, belief in inherent morality of the group, collective rationalization, out of group stereotypes, self-censorship, illusion of unanimity, direct pressure on dissenters
Scripts and Schemata (Gioia 1992)
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Ethical decision in business
Gather the facts
Define ethical issues (moral awareness)
Identify the affected parties (stakeholder analysis)
Identify the consequences (teleology)
Identify the obligations (deontology)
Consider your character and integrity (virtue ethics)
Think creatively about potential actions (moral imagination)
Check your gut feeling (hunch, intuition)
(Trevino & Nelson 2006)
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Conclusions
Org v Individual characteristics
Morality develops passively, ethics actively
Decisions in Orgs – hierarchy & diffusion
Multiple perspectives – normative & psychological
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The hiring decision
After reading the case write a list of issues that Pat should consider.
Identify the ethical issues Pat is facing.
Identify the elements that are likely to affect Pat’s decision (personal, organisational and issue related).
How would you describe the (moral) language used in the dialogue between Pat and Taylor?
How would you rate the moral intensity (consider the components of moral intensity) of the issue Pat is facing?
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Review questions:
1. Explain what Kohlberg meant by cognitive moral development (CMD). What did Kohlberg mean by “conventional”, “pre-conventional” and “post-conventional” levels of CMD?
2. Describe the ethical decision making process.
3. What is moral awareness and why is it the most important step in the ethical decision making process?
4. What is moral approbation and moral intensity?
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1. Kohlberg’s stages of cognitive moral development (CMD).
Level 1 – Preconventional (self-orientation) (ego)
Stage 1 – Avoiding punishment by not breaking rules
Stage 2 – Acting to receive rewards. Awareness of Other’s needs, but not of right wrong as abstract consequences.
Level 2 – Conventional (Other orientation) Teological
Stage 3 – Acting “right” to be a “good” person, to be accepted by family and friends
Stage 4 – Acting “right” to comply with the law.
Level 3 – Autonomous (Humankind orientation) Deontological
Stage 5 – Acting “right” to reach consensus by due process. Aware of relativity of values, tolerates differing views.
Stage 6 – Acting “right” according to universal abstract principles, able to defend those principles through reason.
Ethical Decision making – Recognition – Judgement - Intent – Behaviour.
Moral approbation – the desire to be seen as moral by themselves an others
Moral intensity - affects recognition of the moral issue – magnitude, social consensus, probability of effect, temporal immediacy, proximity, concentration of effect
Cognitive biases – consideration of consequences, underestimation of risk, consequences over time (escalation), illusion of superiority, groupthink, scripts
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References
Crittenden, P 1990, Learning to be moral: Philosophical thoughts about moral development, Humanities Press International New Jersey.
Chin, M.K., Hambrick, D.C., and Trevino, L.K. (2013), "Political ideologies of CEOs: Illustrative evidence of the influence of executive values on corporate social responsibility", Administrative Science Quarterly
Ferrell, OC, Fraedrich, J & Ferrell, L 2005, Business ethics: Ethical decision making and cases, Houghton Mifflin, Boston.
Forsyth, DR 1992, 'Values, conceptions of science, and the social psychological study of morality', in WM Kurtines, Azmitia, M., & Gewirtz, J. L. (ed.), The role of values in psychology and human development, John Wiley & Sons, New York, pp. 239-55.
Gilligan, C 1982, In a different voice: Psychological theory and women's development, Harvard University Press, Cambridge MA.
Gioia, DA 1992, 'Pinto fires and personal ethics: A script analysis of missed opportunities', Journal of Business Ethics, vol. 11, pp. 379-89.
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References
Janis, IL 1972, Victims of Groupthink, Houghton Mifflin, Boston.
Jones, TM 1991, 'Ethical decision making by individuals in organizations: An issue-contingent model', Academy of Management Review, vol. 16, no. 2, pp. 366-95.
Jones, TM & Ryan, LV 1998, 'The effect of organizational forces on individual morality: Judgment, moral approbation, and behavior', Business Ethics Quarterly, vol. 8, no. 3, pp. 431-45.
Kohlberg, L 1976, 'Moral stages and moralization: The cognitive-developmental approach', in T Lickona (ed.), Moral development and behavior, Holt, Rinehart and Winston, New York, pp. 31-53.
Trevino, LK, & Nelson, K. A. 2006, Managing business ethics: Straight talk about how to do it right, 4 edn, John Wiley & Sons, New York.
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