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Much of the recent interest in ethics and moral behavior in business comes from Enron and Worldcom, as scholars, educators, practitioners, and the public seek to understand the behavior of executives in these firms. Many have chosen to view these cases from the perspective of ethics, that is, the behavior of these executives is seen as unethical and the explanation is that they are unethical or immoral people. Furthermore, the solution is improved moral education in business programs. “Somehow, we need to make future executives more moral or more ethical” and we can do this in the context of an undergraduate business program or MBA degree program. Some have even suggested that today’s business programs not only do not facilitate the “moral development” of students, but students leave these programs “less moral” than they were when they entered the programs. Here a couple of points to consider:

What is Ethical or Moral?

What do we mean by ethical decision making? Are there decisions that are not ethical in that there is not ethical component to a choice? In their review of ethical decision making, Tenbruensel and Smith-Crowe (2008) present a distinction between moral decision making and amoral decision making. Within each class of decisions, one can make ethical decision or unethical decisions. They further argue that social scientist should not be in the business of telling people what they should do, that is define what is ethical and what is not, but they do acknowledge the necessity to define the criteria by which decisions are placed into their typology for analytical purposed. It is very difficult to define ethical behavior. Many definitions exist, but most depend on using some standard of ethical behavior from which to judge the individual’s behavior. Any standard used is subjective and cultural in nature and subject to intensive debate.

Schulman (2002) defines moral behavior as “acts intended to produce kind and/or fair outcomes (p. 500).” This is similar to prosocial behavior or goal identification as a source of motivation in that the behavior is “labeled” moral if it is intended to produce a positive outcome for others. He argues that “moral motivation” is rooted in three moral systems: (1) Empathy, (2) Moral Affiliations, and (3) Principles. If we accept this notion that moral behavior is defined in terms of intention to help others (as opposed to egoistic motives), then we need to examine the relevant other.

In attempting to define ethical decisions, Jones writes that "An ethical decision is a decision that is both legally and morally acceptable to the larger community. (1991, p. 387)". This definition moves away from absolute standard of judgment to a social standard, based on cultural, organizational, or community standards. It still begs the issue to which stand to use when one is operating in over-lapping reference groups. I find the other inclusion in this definition very interesting. He adds to concept of "legality" in is definition implying that "breaking the law" is by definition unethical or immoral. Personally, I can think of countless examples of individuals breaking the law and being very moral or ethical. For me, a useful conceptualization of ethics has to differentiate between legal and ethical. In fact, these are two of the many social control mechanisms used to curtail unwanted social behavior. Laws and ethical standards may coincide or reinforce each other, supplement each other, or conflict with one another.

There is an inherent problem in attempting to define ethical decision-making or moral behavior.  What we are doing in trying to define these concepts is starting with the answer rather than the question.  While the concept of ethics provides a nice category of inquiry, it isolates the concepts associated with what we call ethics from other models of decision-making and motivation.  Why do we need special models of ethical decision-making and moral motivation when we have spent been years developing models of motivation and decision-making.  If our "mainstream" behavioral models are not robust enough to include ethical issues within them, then they need to be expanded.  Rather than start with the answer, let's start with defining the behavioral phenomena that the concepts of ethics and morals are attempting to explain.  From an organizational or even societal perspective, we are interested in explaining and understanding cross-individual behavioral consistency (CIBC).  What organizational or societal forces or mechanisms create consistency of behavior among members?  How is behavioral control of organizational and societal members achieved?

The Question of Social Control

How do groups and organizations stops people from doing undesirable things and do desirable things? Katz and Kahn (1966) argue that there are three fundamental forces reducing human variability creating some degree of social control. The first control mechanism is environmental pressures. Task requirements of group and social goals act to achieve a level of coordinated effort among group members.  Individuals sacrifice their individual short-term needs to accomplish long-term objectives.  In doing so they give up their individual freedoms to the control of the group. The second control mechanism discussed by Katz and Kahn, is shared values and expectations.  When members of a group develop common goals and mutual expectations these social goals and group norms become the basis of behavior of the group's members through a system of internalization of these behavioral standards.  Finally, Katz and Kahn argue that variability is reduced by rule enforcement.  Rules can come in the form of laws, regulations, or codes, and are enforced through a system of an external control.  External control systems require some level of monitoring of behavior and the use of some base of power to ensure that individuals follow these rules. Rules can also be more in formal, presenting themselves in the form of social norms, which are enforced through a system of monitoring and contingent use of social power.

We can use the Katz & Kahn model as a basis for understanding CIBC. Individual behavioral control can come through internal or external control mechanisms.  The standards of social monitoring can be through observation of processes or behavior or the outcomes or results of behavioral patterns.  A typology of social control mechanisms can be developed as shown in Figure 1.

Figure 1


External Control

Internal Control

Process/Means Deontological

Codes of Ethics

Instrumental values


Social values
Stakeholder interests

Terminal values
Personal Standards
Internalized interests of others

In most situations when we refer to unethical behavior, we mean one of four things.

Behavior that is Dishonest

When we lie, cheat or steal to achieve a personal or group goal, others view our behavior as unethical. Using this standard of ethics, it is the means used to achieve an outcome and not the outcome itself that determines whether the decision leading to the behavior is ethical or not. Falling into this category are making false representations, not meeting promised commitments, and misleading others

Compliance with ethical standards

Another important ethical standard is the use of codes, rules, guidelines and other systems that attempt to identify certain behaviors or means which are in themselves unethical. These culturally designed and promulgated codes of conduct or ethical systems generally provide lists of what things one should do and not do. They range from very general, such as the Ten Commandments, to professionally or organizationally specific, like a legal code of ethics or a company code of conduct. Most of these rules are designed to create fairness and equity, respect for others, and systems of non-discrimination. They also function to balance power and protect the powerless.

From a social psychological perspective these ethical codes operate like other process based control systems such as state laws, company rules and policies, or social norms in that they are enforced through both external and internal means. Figure 2 presents a model of rule or behavioral standard compliance which should apply to any behaviorally-based or process based standard whether it be termed a norm, rule, guideline or ethical code.

Enforcement. How do social units ensure standards of desirability are adhered to?  Another way to phrase this question is why to individuals adhere to social standards of desirability?  External or internal control mechanisms.

  1. External Control Mechanisms. How are rule and social norms enforced by groups?  The short answer is that group members reward compliance and punish noncompliance- To the extent that members hold some base of power, individuals can be made to comply with standards.
  2. Internal Control.  What would happen is all social units had to rely on a system of monitoring and enforcement to ensure stability?  The result could be that half of the population would be employed to monitor the other half.  Who would monitor the control agents?  It would be like Deadwood, South Dakota in the 1880’s which had no laws and few if any social standards.  Many of the residents believed that anything was acceptable including murder. You can see why it would be impractical to rely entirely on external control.  In most cases, external control is only necessary for a small portion of the population.  Most societal or organizational members internalize important standards in the form of private instrumental and terminal values.  Individual adopt religious creeds, professional codes of ethics and civic laws as their own personal standards.
Figure 2

While this model does not provide an answer to resolving an ethical crisis, it does depict the various factors that may come into conflict when one is making a decision.

Consistency with personal and social Values

Ethics is sometimes referred to as "the study of values and moral behavior" and "Ethical behavior is acting in ways consistent with one's personal values and the commonly held values of the organization and society (Nelson and Quick, 2008, p, 107). In essence this means using personal and social variables as criteria in organizational decision making and behavioral choice decisions

Impact on others

A number of the ethical definitions listed above refer to a decision's effect on others. This stakeholder-based approach is based on the belief that organizational decisions that bring harm to one or more stakeholders are unethical. This is especially true if the relevant stakeholder are relatively powerless "at the decision makers mercy." A more rigid standard in this category holds that individuals should not only avoid doing harm to others, but even more they should work to help others.

Jones’ definition of ethical decision making (taken from Velasquez & Rostankowski, 1985) states that, “a moral issue is present where a person’s action, when freely performed, may harm or benefit others (1991). It is hard for me to image an organizational decision that does not impact on others. So why then have a special model for ethical decision making distinct from a model of organizational decision making? For this reason, I think a unified model of organizational decision is essential, complete with the impact of ethics, morals or values on the decision maker.

I start with the stakeholder/claimant approach I used in developing the political paradigm (Scholl, 1981). Using this approach, decision makers base organizational decisions on the way in which these decisions impact claimants to the decision (see Figure 3).

Figure 3


Basic Question. How do decision makers respond when the demands made by the various claimants are in conflict? The approach that I took is that the relative power of each claimant over the decision maker determines the degree to which the decision maker attempts to satisfy this demand. Later Mitchell, Agle, and Wood (1997) developed a model of stakeholder salience in which they argue that resolution of competing stakeholder claims we be based on the relative power, legitimacy and urgency of the stakeholder and its claim.

Enter Morals, Values and Ethics. As I later developed the model, I realized the omission of the values of the decision maker in the model. I added values as an additional claimant. It is unrealistic to assert that a manager acts as an impartial arbiter of competing stakeholder claims. When none of the claimants hold significant power over the decision maker, the manager is free to make a decision based solely on his or her own interests and values (Autonomous decision maker). The managers or decision makers' perceptions of legitimacy and urgency are colored by their own values and managers often identify more with the interests of one stakeholder than with others.

New Question. Why do decision makers attempt to satisfy the interests of claimants with little to no power over them? In my view, this is the question answered by Jones’ (1991) model. He argues that a variable called moral intensity determines the degree to which the interests (effects of the decision) of non powerful claimants are considered. Moral Intensity has 6 components:

  1. Magnitude of consequences
  2. Social consensus
  3. Probability of effect
  4. Temporal immediacy
  5. Proximity
  6. Concentration of effect

I would add another factor derived from the self concept model. This factor is the degree to which the decision maker’s social identity is tied to the claimant in question (identification), or the degree to which the decision maker personally identifies with the claimant’s interest.

ethical conflicts

We are fond of the term ethical or moral dilemmas to refer to intrapersonal conflicts involving our interests, values and various ethical codes. Here is a partial list of some of the sources of ethical conflicts. These conflicts are sometimes discussed on the concept of moral-expediant conflict or want versus should conflict (see Bazerman, Tenbrunsel & Wade-Benzoni, 1998).

  1. Personal values and social values
  2. Self interests and benefit to others
  3. Personal values and organizational rules
  4. Ethical codes and benefit to others
  5. Honesty and benefit to others
  6. Personal values and social norms


Bazerman, M. H., Tenbrunsel, A. E., & Wade-Benzoni, K. A. 1998. Negotiating with yourself and losing: Making decisions with internal competing preferences. Academy of Management Review, 23(2): 225-241..

Handelsman, M. M., Knapp, S., & Gottlieb, M. 2002. Positive ethics. In C. R. Snyder, & S. J. Lopez (Eds.), Handbook of Positive Psychology: 731-744. Oxford: University Press.

Jones, T. M. 1991. Ethical decision making by individuals in organizations: An issue-contingent model. Academy of Management Review, 16(2): 366-395.

Mitchell, R. K., Agle, B., R., & Wood, D. J. 1997. Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4): 853-886.

Nelson, D.L. & Quick, J.C. 2008. Understanding Organizational Behavior. Mason, OH: Centage Learning.

Scholl, R. W. 1981. An analysis of macro models of organizations: The goal and political models. Administration and Society, 13: 271-298.

Schulman, M. 2002. How we become moral. In C. R. Snyder, & S. J. Lopez (Eds.), Handbook of Positive Psychology: 499-512. Oxford: University Press.

Tenbrunsel, A. E., & Smith-Crowe, K. 2008. Ethical decision making: Where we've been and where we're going. The Academy of Management Annals, 2(1): 545-607.

Trevino, L. K. 1986. Ethical decision making in organizations: A person-situation interactionist model. Academy of Management Review, 11: 601-617.

Velasquez, M. G., & Rostankowski, C. 1985. Ethics: Theory and Practice. Englewood Cliffs, NJ: Prentice-Hall.