 Looping

Unit-4
Ethical Decision
Making in Business

Outline
• Ethical models that guide decision making
• Ethical decision making with cross – holder conflicts and competition
• Kohlberg’s model of cognitive moral development
• Influences on ethical decision making
• Personal values and ethical decision marking
Ethical Models that Guide Decision Making
 Utilitarian approach
 Common good approach
 Rights approach
 Virtue approach
 Fairness/Justice approach
Utilitarian Approach
 The ethical action is the one that produces the greatest good and does the least harm.
 it increase the good done and to reduce the harm done.
 The goal is to maximize overall happiness or utility.
Rights Approach
 The ethical action is the one that best protects and respects the moral rights of those
affected.
 Humans have the ability to choose what they do with their lives.
 e.g. what kind of life to lead, to be told the truth, not to be injured, to a degree of privacy.
 Ethical decisions should protect the legal and moral rights of individuals.
 decisions should respect and uphold rights.
Fairness/Justice Approach
 All human beings are treated equally.
 If treated unequally, there must be defensible reasons.
 E.g. people are paid more based on their greater contribution to the organization, and we say
that is fair.
Common Good Approach
 it is the moral responsibility of individuals to contribute to the common good.
Virtue Approach
 Virtues are habits that enable us to act according to the highest potential of our
character.
 Honesty, courage, love, loyalty, fairness, self-control, and wisdom are all examples of virtues.
 Virtue ethics asks of any action, "What kind of person will I become if I do this?“.
Which Approach to use
 Each theory have their own strength and weakness & different people, follow different approach.
 So it is difficult to tell which approach is best, they are right at their position.
Ethical Decision Making with Cross-Holder Conflicts & Competition
 Managers face a complex ethical dilemma in balancing the organization's financial goals
with the impact on employees.
 This is a common issue in industries.
 To address such conflicts, a solution with a "human face" is necessary.
 For instance, managers could ensure that displaced employees are trained to fit into other
divisions within the company.
 Ethical decision-making should consider both financial objectives and the human impact
of business choices.
 Barry's Decision-Making Rules:
 Choose the more significant responsibility when faced multiple tasks.
 Choose an action of higher ideal, when two or more ideals conflicts.
 Choose the action that produces greater good, or the leaser harm, when the effect are
mixed.
Kohlberg’s six stage Model of Cognitive Moral Development
 How children develop moral reasoning? whether morality is shaped more by parents or
society.
 Lawrence Kohlberg say that moral development is an ongoing process throughout life.
 His theory outlines six stages of moral development within three different levels.
 Stage 1: Decisions based on avoiding punishment.
 Stage 2: Decisions made to satisfy personal needs and gain benefits.
 Stage 3: Morality is defined by societal norms and expectations.
 Stage 4: Decisions for fulfill societal expectations (maintaining law).
 Stage 5: Moral decisions based on Basic Rights and Values.
 Stage 6: The highest stage where decisions are guided by universal ethical principles like
justice and equality.
The Heinz Dilemma
 Kohlberg presented to his study on moral dilemmas .
 Participants were also interviewed to determine the reasoning behind their judgments
 In the Heinz dilemma, Heinz's wife needs a life-saving drug priced at $2,000, but he can only
afford $1,000. heinz trying to negotiate or pay in installments, But the pharmacist refused to
sell it for any less or to accept partial payments. Heinz steals the drug to save his wife.
 Kohlberg was less concerned with whether Heinz's actions were right or wrong and more
interested in the reasoning behind participants' judgments. He asked, "Should the husband
have done that?“
 Heinz should steal the drug. Saving a life is more important than property rights. The
druggist's refusal to help, justifies Heinz's actions in this moral dilemma.
 Through interviews, Kohlberg classified participant‘s reasoning into stages of his theory of
moral development:
 Preconventional Morality
 Conventional Morality
 Postconventional Morality
Kohlberg’s Model of Cognitive Moral Development
 Preconventional Level:
 At this basic level, individuals see right and wrong in terms of personal benefit.
 Motivation is driven by a desire to avoid punishment or fulfill personal needs.
 right conduct is viewed as what's good for oneself.
 Conventional Level:
 referred to as the "good boy - good girl" orientation
 This stage is focused on maintaining social order.
 Considered societal norms and expectations, such as maintaining good relationships.
 Morality is defined by conforming to the expectations of one's family, group, or
community.
 Postconventional Level:
 At the highest level, individuals develop a personal understanding of right and wrong,
beyond societal norms.
 Moral decisions are based on principles such as justice, equality, and universal ethical
principles.

limitation of Kohlberg’s models
Cultural Bias: Kohlberg's stages are based on Western, particularly American, cultural values. moral
development can be influenced by culture.
Gender Bias: not fully capture the moral reasoning of females.
developed in the 1960s, and cultural attitudes towards morality may have change since then.
individuals may use a combination of moral principles from different stages depending on the context.

Gilligan's Theory:
 She think that Kohlberg approach is male biased.
 Gilligan introduces the concept of "ethics of care" for women, focus on relationship.
 Men, follow an "ethics of rules and justice.“
 Levels of Moral Development:
 Preconventional Level: right conduct is seen as what benefits oneself.
 Conventional Level: Intentions are not to hurt others; willingness to sacrifice self-
interest for the greater good.
 Postconventional Level: Balancing personal interests with caring for others.
Influences on Ethical Decision Making
 Following factors influences on Ethical Decision Making
1. Personal factors : Personal beliefs about right and wrong affect ethical decision-making.
2. Interpersonal factors : Relationships and trust levels influence ethical decision-making
within social interactions.
3. Small group factor : Peer pressure , Positive peer pressure encourages fairness.
4. Organizational factor : Pressure from the organization
Personal Values and Ethical Decision Making
 Business decisions are often driven by the need for profit, leading to conflicts with
personal values.
 The ethical environment and culture within the workplace impact decision-making.
 Implementing moral philosophies requires individuals to apply their accepted value systems
to real-world situations.
 People may be respected for goodness outside of work but make unethical decisions in the
workplace.
 Josephson Institute's Six Pillars of Character:
 Trustworthiness
 Respect
 Responsibility
 Fairness
 Caring
 Citizenship