Ethics

Ethics is a concept in which individuals act in accordance with norms, which can vary depending on culture and other sociological factors. Norms are a kind of framework and boundaries that a person creates himself or get exposed on by the communities based on the environment, values, and culture (Možina et al., 2002). There are different subtypes of ethics, one of them is business ethics, in fact, business ethics is the same ethics, only considered in the context of the organization, where people need to make business decisions based on the business norms established by the organization and general ethical standards, i.e. business ethics is the ethics of management. Ethical behavior in the corporate sphere is constantly evolving and is one of the most important indicators of the success of an organization. Today, there are lots of studies that describe what determines the ethical behavior of individuals and their ethical decision-making in the organization.

Loe, Ferrell, & Mansfield (2000) and Crane and Matten (2004) discuss that ethical theories can help clarify and address various moral aspects that which should be taken into consideration when making various decisions, hence ethical theories are an integral part of business ethics.

Business ethics cannot be reviewed without the fact that it is a part of the culture and cannot be considered outside of its context (see Hofstede, 1991; Scott, 2001; Trompenaars, 1993).

The very traditional view on the ethics implies existence of the three main streams of theories:

1) Utilitarian theories assessing the behavior of individuals from the perspective of consequences of the actions; 2) Theories of rights putting the emphasis on the rights of individuals (mainly including rights to privacy, rights to freedom, rights to free speech, etc.);

3) Theories of justice being based on the social contract theory (Cavanagh, Moberg, &

Velasquez, 1981).

However, the contemporary view on the ethics is a bit more complicated than previously.

Nowadays theories are mainly divided as follows: 1) Consequential theories – which claim that consequences of any action shall be ultimate tool for judgement; 2) Single-rule non-consequential theories which imply that except for the morality the are other factors to be considered when judging; 3) Multiple-rule non-consequential theories relying on the same assumptions as previous group but applying more than one rules. These three groups of theories are going to be explored in the following section.

2.2.1. Consequential theories

As per Tsalikis and Fritzsche (2012), those are the theories that assess the moral rightness of any actions from the perspective of consequences. Basically, if the consequences are good, the act can be considered as good, and vice versa. However, there are several streams of the generic theory. Egoism stream claims that from the perspective of an individual the actions that pursue the long-term “best” option for that particular individual are ethical. However, the pure egoism is widely criticized as the logic of it does not stand against the evidence of real life such as, for instance, business practice or any other situation involving conflicts of two individuals (Tsalikis and Fritzche, 2012).

Utilitarianism suggests that the actions shall be considered ethical when it is aimed at producing as much as it could for everyone. The crucial element here is to be able to determine all the parties involved as the whole point of the action should be evaluating the alternatives of “all”

to choose the option being the best for the whole society (Fletcher, 1966). Sherwin (1983) claims that business in the paradigm of utilitarianism shall be conducted in a way that all the

involved parties (e.g.: owners, workers, customers) shall share fairly the business gains, however, lashing out the interests of the other stakeholders, which might be considered as the key drawback of the theory as assessing the consequences for all the parties involved can be considered impossible in the contemporary world.

2.2.2. Single-rule nonconsequential theories

The stream of philosophy implies that decision on action shall not take into consideration the consequences as the actions is being evaluated by itself. The most traditional example would be Golden Rule commonly being interpreted as: “Do to others as you would like them to do to you” (Tsalikis and Fritzsche, 2012).

However, not only this Rule but others such as, for instance, categorical imperative falls into the category of such theories. Kant (1959) claimed that consideration of consequences should not have any influence on the decision-making of individuals, and the action shall be based purely on the concept of duty for each individual. As the philosophy itself is complicated for understanding without deep-diving, for the purpose of this paper we would limit its presentation by the above-mentioned ideas.

2.2.3. Multiple-rule nonconsequential theories

Ross (1939) in his theory made efforts to connect the ideas of utilitarian theory with the ideas of Kant. According to his theory, consequences should be taken into account in decision-making, however, they cannot be solely determination factor for alternative selection. Ross claims that the majority of the decisions include the components of multiple duties, for instance: the businessman is obliged to earn profit but at the same moment has the obligation not to injure people around him (Tsalikis and Fritzsche, 2012). To solve this issue Ross proposes the principle called “prima facie duties” claiming that the people should stick to the most “dictating” duty when not in conflict with the others.

Rawls (1971) proposes different approach aiming at the same goal as Ross’s theory: he introduced two guiding principles of actions – equal liberty and difference principles. The first one implies that each person involved in any action shall possess the equal right to the maximum amount of liberty (taking into account liberty of others), while difference principle frames the justifiable inequalities.

Garrett & Pangle (1966) suggests that any actions involves in itself three elements to be considered: intention, means, and ends. In the own words of the author: “I am responsible for whatever I will as a means or an end. If both the means and the end I am willing are good in

and of themselves, I may ethically permit or risk the foreseen but unwilled side effects if, and only if, I have a proportionate reason for doing so” (Garrett and Pangle, 1966, p. 8). By synthesizing the consequential view (emphasis on ends) and Kant’s view (means) Garrett and Pangle suggested to balance the decision-making process and not to fall within the trap of Absolut.

Despite being guiding generally, the theories themselves rarely clarify the particularities of personal decision-making process, which is going to be explored in the following section of the paper.

2. 3. Ethical decision-making process

One of the most frequently referred to frameworks for ethical decision-making was developed by Rest and Narvaez (1994). The model explains the cognitive process of an individual consolidating theories on moral development and ethical behavior from the variety of the perspectives. Rest and Narvaez (1994) in their model derived from the assumption that moral judgement or in other words evaluation of the decision as good or bad is neither the only nor the most important element on individual’s decision-making towards ethical matters. His model represented visually by figure 2 involves four separate psychological processes explained below.

Figure 2: Categories of influences on behavioral ethics outcomes. Source: Rest & Narvaez, 1994.

2.3.1. Moral awareness

Rest (1986) claimed that the first stage of decision-making process is identification of the moral issue. Basically, the stage includes realization of an individual that the moral problem exists in a particular setup. The first stage is considered to be critical as being the prerequisite of the further cognitive activities. There are two main approaches towards moral awareness:

awareness being solely individuals’ moral sensitivity or ability to detect ethical context (Sparks

& Hunt, 1998) and more holistic approach viewing individuals’ perspective as only one of the factors contributing to development of moral awareness (Jones, 1991).

Several researches were conducted in various industries and spheres in support of the first approach such as: accounting (Shaub, Finn, and Munter, 1993) or marketing (Sparks & Hunt, 1998). In general, the findings suggested that the skills to identify the ethical issues can be honed and trained and are not defined by the genes or any other inherited factors.

Reynolds (2006) in his research supporting more holistic approach claimed that issue characteristics (situational factors) are often in interaction with the personal differences of people to shape the moral awareness. He argued that people tend to pay more attention to issues that correspond with their predispositions. The findings also suggested that there is substantial difference between people focusing on ends (utilitarians) and means (formalists or supporters of nonconsequential theories), and that the former are less likely to detect the issues related to behavior itself, which only contributes to the idea of at least equal importance of situational factors in formation of moral awareness (Reynolds, 2006).

2.3.2. Moral judgement

The second stage of the ethical decision-making process is moral judgement. The most comprehensive scientific theory on the ethical judgements, which is incorporated in the majority of the subsequent research, belongs to Kohlberg and Kramer (1969). The empirical evidence of his research showed very similar results to the work conducted by his apprentice and follower – Rest (1986) – that ethical reasoning similarly to moral awareness becomes better over the time and experience. Consolidating the evidence into the model Kohlberg and Kramer (1969) suggested 6 sequential steps (as each next one requires higher cognitive capacities) model of moral judgement including the following categorized into three levels:

1) Preconventional level characterizing the lowest level of moral development of an individual includes two stages – individual reasoning regarding right or wrong based on fear of punishment (stage 1) or exchange in return (stage 2);

2) Conventional level – reasoning based on expectations of others who are significant to individual (stage 3) or laws (stage 4) is claimed to be the most common for the adult population all over the world;

3) Principled level – reasoning based more on the general principals of rights and justice (stage 5 and 6), attribute of the highest level of moral development of an individual.

Empirical research of Rest et al. (1999) showed that only 20% of the US society of those days could be categorized as belonging to principled level. That could be used as a significant argument in favor of holistic approach as only the very minority of the population could be oriented more on the internal factors. Despite being criticized for rigid stage-based model (Siegler, 1997) or self-reports as a data source (Shweder, Mahapatra, & Miller, 1987), the theory of Kohlberg still remains to be the most referred to as well as adopted for the further explorations of the related topics and could be considered to be the most substantial work in the field (Greenberg, 2002; Weber, 1990).

2.3.3. Moral motivation

Despite logical linkage between judgement, intention, and behavior several research (Treviño

& Youngbood, 1990; Weber & Gillespie, 1998) found out that there are significant differences between expected behavior based on the results of issue identification and actual behavior of individuals. Thus, motivation component of the framework presents key importance in understanding the linkage between reasoning and actions.

The author of the framework (Rest et al., 1999) defined moral motivation as “degree of commitment to taking the moral course of action, valuing moral values over other values, and taking personal responsibility for moral outcomes” (p. 101). As per Bergman (2004), the main problem of inconsistency between judgement and intentions is basically weakness of will as many individuals struggle with committing to actions while not having motive to act according to the own judgement, in other words not being able to select moral values over the other value types.

Bergman (2004) and Blasi (2004, 2005) discovered that there is a significant disruption of the process at the stage of intent formation as moral motivation frequently turns out to be disconnected totally from the process of moral reasoning. Substantial amount of evidence collected by the further research (Blasi, 2005; Lapsley & Narvaez, 2004) enable us to state that moral behavior quiet frequently involves high level of automatic responses and absence of any attentive reasoning process or internal struggle before performing the action. Similarly, Haidt’s

(2001) model of approach to moral judgement is built on the evidence against direct linkage between ethical judgement and behavior and instead attributes ethical behavior to intuitive judgement. He claims that situations including ethical issues mainly get resolved by intuitive responses without preliminary reasoning process (Haidt, 2001) opposing the model to theory of Kohlberg and Kramer (1969) and claiming the embedded physiological and cultural factors playing the quintessential role in the process.

2.3.4. Moral behavior

The fourth stage or element of the model is basically the behavior itself – action or inaction.

Not coming as a surprise, moral development of an individual is linked to the ethical behavior (Ashkanasy, Windsor, & Treviño, 2006; Treviño & Youngblood, 1990), which was originally suggested by Kohlberg and Kramer (1969). However, not only extent of personal development but also other not always developed traits play significant role in behavior formation: for example, people with internal locus of control (which is not always result of moral development but in a lot of cases can be attributed to culture or even inherited) tend to behave as seeing more linkage between their actions and situation resolution (Forte, 2005). Or people having high score of ego strength were observed to follow the similar logic (Treviño, 1986).

However, it is obvious that as people live in the society, they are influenced widely by the individuals and groups around them. Several researches have been conducted on the ethical climate and ethical cultures of the organizations (Victor and Cullen, 1988; Schminke, Ambrose

& Neubaum, 2005; Treviño, Butterfield, & McCabe, 1998) proving the substantial influence of the organizational practices on the ethical behavior. The attitudes and behavior of the peers in the organizations have also been found to affect an individual’s ethical behavior (Brass, Butterfield, & Skaggs, 1998).

Another stream of research concentrated on exploring the role of leadership on ethical conduct within organizations. Bandura (1986) suggested that leaders influence ethical behavior through the social learning, thus, influencing significantly the expected behavior of organization members. Blau (1964) and Treviño & Brown (2004) emphasized the elements of reciprocity, claiming that proper ethical leaders being fair and caring support willingness of their subordinates and peers to act accordingly and exemplify ethical conduct.

Not only social networks themselves but also the nature of the underlying communication and hierarchical mechanisms play a huge role in affecting ethical behavior of organizations’

members. Treviño (1986) and his consequitive research (Treviño, Butterfield, & Mccabe, 1998;

Treviño et al., 1999) found out that organizations with high level of rigidity in the line of command and expected authority orientation tend to observe significantly higher levels of unethical behavior. These findings are very in line with the social science research conducted by Kelman (1989) claiming high level of authority dependence to be prerequisite of unethical behavior.

In the following section, I will explore into the scientific evidence of the linkage between ethical decision-making and cultural component in order to highlight the uncontested waters and provide the solid justification of the importance of inter-related research on the topic.