ECI Week 3

61MKT3ECI/FMT/HANU/2022
Ferrell, O.C., Fraedrich, J., & Ferrell, L.,

Business Ethics: Ethical Decision Making and Cases
Chapter 5,6,7
PART 3: The Decision-Making Process

5: Ethical Decision Making 126
6: Individual Factors: Moral Philosophies and Values 152
7: Organizational Factors: The Role of Ethical Culture and Relationships 181
CHAPTER 5: Ethical Decision Making

• Provide a comprehensive model for ethical decision making in
business
• Examine the intensity of ethical issues as an important element
influencing the ethical decision making process
• Introduce individual factors that may influence ethical decision
making in business
• Introduce organizational factors that may influence ethical decision
making in business
• 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
A FRAMEWORK FOR ETHICAL

DECISION MAKING IN BUSINESS
Ethical issue intensity

• Ethical issue intensity can be defined as the
relevance or importance of an event or decision in
the eyes of the individual, work group, and/or
organization.
o Individuals are subject to six “spheres of influence”: the workplace, family,
religion, legal system, community, and profession different individuals
perceive ethical issues differently.
o managers can affect the degree to which employees perceive the
importance of an ethical issue through positive and/or negative
incentives
o Ethical awareness: Identifying the ethical issues and risks employees might
encounter is a significant step toward developing their ability to make
ethical decisions.
Individual Factors
• Gender:
o Women seem to be more sensitive to ethical scenarios and less tolerant of
unethical actions
• Education
• Nationality
• Age
• Locus of control: how people view themselves in
relation to power (external control & internal
control).
o Those who believe they formed their own destiny were more ethical than
those who believed their fate was in the hands of others.
Organizational Factors
• Ethical choices in business are most often made
jointly, in work groups and committees, or in
conversations and discussions with coworkers.
o An alignment between a person’s own values and the values of
the organization help create positive work attitudes and
organizational outcomes.
o The ethical values embodied in an organization’s culture are
positively correlated to employees’ commitment to the firm and
their sense that they fit into the company.
o Obedience to authority helps explain why many employees
resolve business ethics issues by simply following the directives of
a superior.
o Significant others help workers on a daily basis with unfamiliar
tasks and provide advice and information in both formal and
informal ways.
Opportunity
• Opportunity describes the conditions in an
organization that limit or permit ethical or unethical
behavior.
o Ex: rewards, whether internal or external, or fail to erect barriers against
unethical behavior.
• Opportunity relates to individuals’ immediate job

context —where they work, whom they work with,
and the nature of the work
o Pay raises, bonuses, and public recognition act as carrots or positive
reinforcements
o Demotions, firings, reprimands, and pay penalties act as sticks, or
negative reinforcements
NORMATIVE CONSIDERATIONS IN ETHICAL

DECISION MAKING
• Normative approaches: how organizational
decision makers should approach an issue.
o The word “normative” is equivalent to an ideal standard.
CHAPTER 6:
Individual Factors: Moral Philosophies and Values
• Understand how moral philosophies and values influence
individual and group ethical decision making in business
• Compare and contrast the teleological, deontological, virtue,
and justice perspectives of moral philosophy
• Discuss the impact of philosophies on business ethics
• Recognize the stages of cognitive moral development and its
shortcomings
• Introduce white-collar crime as it relates to moral philosophies,
values, and corporate culture
MORAL PHILOSOPHY
• Moral philosophy refers to the specific principles or
values people use to decide what is right and
wrong.
o Adam Smith
o Capitalism
o Economic value orientation
o Idealism
o Realism
MORAL PHILOSOPHIES
MORAL PHILOSOPHIES
• Teleology: Thuyết cứu cánh
o an act is considered morally right or acceptable if it produces some desired
result, such as pleasure, knowledge, career growth, the realization of self-
interest, utility, wealth, or even fame
• Deontology: Đạo Nghĩa Luận
o Deontologists believe individuals have certain absolute rights, including
freedom of conscience, freedom of consent, freedom of privacy, freedom of
speech, and due process.
• Egoism: Thuyết vị kỷ
o Egoism defines right or acceptable behavior in terms of its consequences for
the individual.
• Utilitarianism: Thuyết vị lợi
o Rule utilitarians
o Act utilitarians
• Relativism: Thuyết tương đối
o Descriptive relativism
o Meta-ethical relativism
o Normative relativism
• Virtue: Luân Lý Luận
Kohlberg’s model of cognitive moral development (CMD)

White-Collar Crime
CHAPTER 6: Organizational Factors:

The Role of Ethical Culture and Relationships
• Understand the concept of corporate culture

• Examine the influence of corporate culture on business ethics
• Determine how leadership, power, and motivation relate to
ethical decision making in organizations
• Assess organizational structure and its relationship to business
ethics
• Explore how the work group influences ethical decisions
• Discuss the relationship between individual and group ethical
decision making
Corporate culture
• Corporate culture refers to the set of values, beliefs, goals,
norms, and ways of solving problems that members
(employees) of an organization share.
• These shared values may be formally expressed or unspoken.
LEADERS INFLUENCE CORPORATE CULTURE
• Power Shapes Corporate Culture

o Reward power refers to a person’s ability to influence the
behavior of others by offering them something desirable.
o Coercive power is essentially the opposite of reward
power. Instead of rewarding a person for doing something,
coercive power penalizes actions or behavior
o Legitimate power stems from the belief that a certain
person has the right to exert influence and certain others
have an obligation to accept it.
o Expert power is derived from a person’s knowledge (or a
perception that a person possesses knowledge)
o Referent power may exist when one person perceives that
his or her goals or objectives are similar to another’s.
Organizational Structure and Business Ethics

ECI Week 3

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61MKT3ECI/FMT/HANU/2022

Ferrell, O.C., Fraedrich, J., & Ferrell, L.,

PART 3: The Decision-Making Process

CHAPTER 5: Ethical Decision Making

A FRAMEWORK FOR ETHICAL

Ethical issue intensity

• Opportunity relates to individuals’ immediate job

NORMATIVE CONSIDERATIONS IN ETHICAL

Kohlberg’s model of cognitive moral development (CMD)

CHAPTER 6: Organizational Factors:

• Understand the concept of corporate culture

LEADERS INFLUENCE CORPORATE CULTURE

• Power Shapes Corporate Culture

Organizational Structure and Business Ethics

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