Chapter 5

Ethical Decision
Making

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Learning Objectives
 Provide a comprehensive model for ethical decision
making in business
 Examine issue intensity as an important element in
the ethical decision-making process
 Introduce individual factors that influence business
ethical decision making
 Introduce organizational factors that influence
business ethical decision making

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Learning Objectives (continued)
 Explore the role of opportunity in ethical decision
making in business
 Understand normative considerations in ethical
decision making
 Recognize the role of institutions in normative
decision making
 Examine the importance of principles and core
values to ethical decision making

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Figure 5.1 - Framework for Understanding
Ethical Decision Making in Business

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Ethical Issue Intensity

Relevance of an event or decision in the eyes of

an individual, work group, and/or organization

Reflects the ethical sensitivity of an individual or

a group in facing the ethical decision making
process

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Individual Factors in Ethical Decision
Making
Gender

Locus of Education
control

Age Nationality

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Organizational Factors

Corporate
Ethical culture
culture

Significant Obedience to
others authority

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Opportunity
 Conditions in an organization that limit or permit
ethical or unethical behavior
 Results from conditions that either provide rewards
or fail to erect barriers against unethical behavior
 Relates to an individual’s immediate job context
 Can be eliminated by formal codes, rules, and
policies
 Gained by individuals through exposure to company
information
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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Business Ethics Intentions, Behaviors,
and Evaluations
 Ethical dilemmas occur when rules governing
decisions are vague or in conflict
 There are no substitutes for critical thinking and the
ability to take responsibility for one’s decisions
 Ethical decision making process includes
individuals’ intentions and the final decision
regarding what action they choose
 Work culture impacts recognition and judgement

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Using the Ethical Decision-Making Model to
Improve Ethical Decisions
 Ethical decision-making model does not help in
determining if a business decision is right or wrong
 Provides insights about ethical decision making in
businesses
 Business ethics involves value judgments and
collective agreement about acceptable patterns of
behavior
 Gaining an understanding of the factors that make up
ethical decisions helps in differentiating between an
ethical issue and a dilemma
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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Normative Considerations in Ethical
Decision Making
 Normative approach: Examines what the ideal
standard should be in ethical decision making
 Within the firm as well as the industry
 Normative rules and standards are based on
individual moral values and the collective values of
the organization

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Institutions as the Foundation for
Normative Values
 Organizations operate based on institutional
norms and rules
 Organizations face normative pressures from
different institutions to act in a way prescribed by
the institution
 Normative business ethics considers the political
realities outside the legal realm as industry
standards

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Institutions as the Foundation for
Normative Values (continued)
 Nature of competition can be shaped by the
economic system
 Helps determine how a particular country or society
distributes its resources in the production of products
 Values made normative by social institutions are
followed by businesses to compete fairly

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Implementing Principles and Core Values in
Ethical Decision Making

• Believed justice principles were beliefs that everyone

could accept
John Rawls

• Examined how individuals would formulate principles

if they were uncertain about their future position in
Veil of society
ignorance by
Rawls

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Implementing Principles and Core Values in
Ethical Decision Making (continued 1)
 Principles of justice by Rawls
 Liberty 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 least-advantaged
members of society

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Implementing Principles and Core Values in
Ethical Decision Making (continued 2)
 Companies convert basic principles into core values
 Core values:
Provide the abstract ideals that are distinct from
individual values and daily operational procedures
Include operating in a sustainable manner,
collaboration and teamwork, and avoiding bribery
Provide a blueprint into the firm’s goals and how it
views ethical decision making

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Figure 5.2 - Principles and Values

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Understanding Ethical Decision Making

 Top level support for ethical behavior is

instrumental in helping employees engage in their
personal approaches to ethical decision making
 Normative perspectives set forth ideal goals to
which organizations should aspire
 Knowledge about ethical decision making helps in
making good decisions

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.