1. ETHICAL ISSUES IN
ORGANIZATIONAL BEHAVIOR

2. Ethics: The study of Moral
Philosophy
• Centuries of examining the basic question of how people should live
their lives
• Some specific questions
• Some of he essence of ethics and moral philosophy is its reflective
quality – sitting back and looking at the way things are customarily done
and asking what is the way they ought to be done. Socrates’ questions:
“What we are talking about is how one should live” (as reported by
Plato)
• Ethical absolutism and ethical relativism. Only you can decide
• Remember the Golden Rule: “Do unto others as you would have them
do unto you”

3. Ethical behavior is
behavior judges as
good, right, just
honorable, or failing to
meet an obligation. The
judgment of behavior as
ethical or unethical is
based on
principles, rules, or guides
that come from an ethics
theory, character traits, or
social values. Some ethics
scholars have argued that
doing business ethically is
simply good business.

4. Moral
Philosophy

5. Moral Philosophy
Moral philosophy, or morality, refers to the concept of
human ethics used within three contexts:
1. individual conscience
2. systems of principles and judgments shared within a
culture or community
3. codes of behavior or conduct morality.
Since a single persons moral and ethical judgments are
affected by that persons environment (e.g. how one was
raised and what one was taught), personal morality
distinguishes and defines intentions, motivations or
actions as right or wrong. Thus, various individuals may
disagree about a certain moral or ethic, even if they
share many of the same morals and ethics. In
contraposition, individuals may agree about a certain
moral or ethic even if they subscribe to different moral
codes.
Everyone has their own moral philosophy and their own
morals. Philosophers probably want to keep this in mind
when engaging in philosophy of ethics and philosophy of
morality.

6. Ethical Values
(Ethics)

7. Ethics is the philosophical study of morality
and moral values. Ethics deals with the
analysis and employment of ideas such as
good, evil, right, wrong, and responsibility.
Ethics is divided into three primary areas:
 Meta-Ethics - Meta-ethics is the study
of the concept of ethics itself. Meta-
ethics is employed when philosophers
seeks to comprehend the nature of
ethical attitudes, statements, and
judgments, as well as ethical
properties.
 Normative Ethics - Normative ethics is
the study of how to determine ethical
values.
 Applied Ethics - Applied ethics is the
study of the use of ethical values.

8. Ethical Values of Societies and
Individuals
• Ethical values of societies
– Variations and similarities among societies
– Functions of societal ethical values
– Dynamics of societal ethical values
• Ethical values of individuals
– Built from societal-level values
– Learned from family, including religious training,
peers, education, and life experiences
– Dynamics of individual ethical values
– Levels of moral judgment

9. Ethical
Theories

10. Ethical Theories - Utilitarianism
• Utilitarianism - the proper course of action is the one that
maximizes the overall “happiness.” It is the “happiness principle.”
Utilitarianism asks a person to examine the effects of his actions to
decide whether these actions are morally correct under utilitarian
guidelines. An actions morally right if its total net benefits exceeds
the total net benefit for any other action.
Utilitarianism has been accused of looking only at the results of
actions, and disregarding the desires or intentions that motivate
them. Intentions seem somehow important: it seems undesirable to
call an action intended to cause harm but that inadvertently causes
good "overall good".

11. Ethical Theories - Right/Relativism
• Relativism - right and wrong are determined by what
my society believes
Moral relativism may be descriptive, meta-ethical,
or normative.
Meta-ethical position: the truth or falsity of moral
judgments is not objective, “It’s moral to me,
because I believe it is.”
• An actions morally right if its total net benefits
exceeds the total net benefit for any other action. A
right is a person’s just claim or entitlement. The right
can focus on what that person does or on the action
of other people toward him.

12. Ethical Theories - Justice
• Justice - determines just actions to be those
that emerge from the correct use of principles
that have been agreed to under conditions that
are fair.
• Justice-based ethics theories use a comparative
process, which looks at the balance of benefits
and burdens among members of a group or
resulting from the application of laws, rules, and
policies.

13. Ethical Theories – Egoism
• Egoism - a descriptive theory which states
that people always act to maximize their self-
interest (normative ethical positions).
• Egoism focuses on a person’s self-
interests, but can also include the interests of
others.

14. Ethical Theories – Applied Ethics
• Applied ethics is a discipline of philosophy that
attempts to apply ethical theory to real-life situations.
– Applied ethics is used in some aspects of determining
public policy and by those that face difficult decisions.
Questions that are typically addressed by applied ethics
include:
– “What are human rights and how do we determine them?”
“Do individuals have the right of self determination?” OR on
a more personal level, one may ask, “Is lying always wrong?”,
“If not, when is it permissible?”

15. Managing for
Ethical Behavior

16. Modern managers are feeling
increasing pressure to promote
ethical behavior in their
organizations, causing them to
look for ways of managing for
ethical behavior. Managers can
follow three steps to manage for
ethical behavior in their
organizations:
1. Understand the composition
of the present ethical
culture of their
organizations.
2. Improve that ethical culture.
3. Sustain ethical behavior so
that it becomes embedded
in their organizations.

17. Managing for Ethical Behavior
o Want to change an organization’s culture
organization. Decisions are not made by the
organizations, they are made by the people in
them, who are guided by their personal ethical
values and their perception of the organization
culture’s ethical values that such matters.
o Code of ethics – what is it in your organization, is
it up to date and matches all aspects of business
(internal, external, local, and international)

18. Managing for Ethical Behavior -
continued
o Policies – based upon the ethical theories;
specify what the organization wants to include in
decision-making processes, increases the
information used to include information tied to
the ethical implications of the decision:
o Employees’ right of dissent (whistle blowing)
o Guidelines for employee privacy
o Environmental effects
o Procedures – includes information for members
of decision-making groups

19. Managing for Ethical Behavior -
continued
o Standards of ethical performance – what are
they, what does it include?
o Ethics training and education – does it exist?
If so, does it need to be updated/revised? If
not, what is needed to get started?
o Reinforcing ethical behavior –
rewards, motivation, standards of behavior
o Peer reporting (whistle blowing) - protocol

20. International
Aspects of
Ethics

21. International Aspects of Ethics
• Interest in ethics in different countries
• Legal views
• Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions (OECD)
• Foreign Corrupt Practices Act (FCPA)
• Ethical views
• Cultural relativism- the principle that an individual’s human
beliefs and activities are understood by others I terms of
the individual’s own culture.
• Ethical realism- to see moral truth as grounded in the
nature of things rather than in subjective and variable
human reactions to things.

22. Important
Terms

23. act utilitarianism
Form of utilitarianism that asks a person to assess the effects of all actions according to their
greatest net benefit to all affected.
Convention on Combating Bribery of Foreign Public Officials in International Business
Transactions (OECD Convention)
Twenty-nine members and five nonmembers of the Organization for Economic Cooperation
and Development signed an ethics treaty. The treaty has strong sanctions for bribery. The
signatories represented economies in the major world regions.
Conventional
One of three stages of moral development in the ethic of justice theory; attributed mainly to
men; characterizes most adolescents and adults. Features a growing awareness of the
expectations important to other people and the internalization of the moral norms of the
person's group or society.
cultural relativism
An approach to international ethics that considers differences in ethical values among
cultures and takes a normative ethical view based on the premise that each society's
predominant ethical values decide what is right and wrong.
difference principle
Societies will have inequalities, but must help the disadvantaged (sick, disabled, etc.).

24. egoism
Ethical system that has two forms: individual (individuals judge their actions only by the
effects on their own interests) and universal (individuals include others' interests when
assessing the effects of their actions).
ethic of care
A theory of stages of moral development of individuals; attributed mainly to women. Three
stages of moral development: self-focused (concerned with survival); focus on others
(considers feelings, emotions, and situation); reflective understanding of caring for others
(focus on others but has a balanced view of self in moral decisions).
ethic of justice
A theory of stages of moral development of individuals; attributed mainly to men. Three
stages of moral development: preconventional (self-centered, obeys rules to avoid
punishment); conventional (growing social awareness and less focused on self-interest);
principled (behavior guided by freely chosen moral principles).
ethical absolutism
Holds that an ethical system applies to all people, everywhere, and always; based on an
authority such as a religion, custom, or written code.

25. ethical behavior
Behavior judged as good, just, right, and honorable based on principles, rules, or guides from a
specific ethics theory, character traits, or social values; may vary from person to person or
country to country.
ethical realism
Holds that morality does not apply to international activities, behavior, and transactions.
ethical relativism
Holds that ethical behavior is based on personal feelings or opinions and is whatever a person
or society says is ethical; rejects the view that moral judgments have objective validity.
focus on others
One of three stages of moral development in the ethic of care theory; attributed mainly to
women. Consider actions moral that take into account other people involved in the situation;
focus on feelings, emotions, and the unique qualities of the situation in which the act
happens.
focus on self
One of three stages of moral development in the ethic of care theory; attributed mainly to
women. Features a strong focus on self with the intent of ensuring survival; women often
engage in self-criticism for being selfish.

26. Foreign Corrupt Practices Act (FCPA)
A U.S. statute enacted in 1977 that prohibits a company from using bribes to get business in
another country or prevent the restriction of its business; allows small payments that are
part of the ordinary course of doing business in another country.
individual ethical egoist
Judges a person's actions based only on their effects on self-interests. Because this form of
egoism never considers other people's interests, moral philosophers usually reject it as a
defensible basis of ethics.
“It's good business”
The assumption that doing business ethically is beneficial for organizations, especially in the
long term.
justice
An approach to ethics that uses a comparative process that looks at the balance of benefits
and burdens that are distributed among group members or that result from applying laws,
rules, and policies.
legal right
A person's just claims or entitlements defined by the legal system.

27. moral right
A person's just claims or entitlements that exist because of ethical standards.
negative rights
A person's duty not to interfere with another person's rights.
objectively ethical
A person acts according to a rule or law.
positive rights
A person's duty to help others freely pursue an interest to which they have a right.
preconventional
One of three stages of moral development in the ethic of justice theory; attributed mainly to
men. In the early period of this stage, the person is self-centered, does not consider anyone
else's viewpoint, and obeys rules because they are backed by authority. In the later period of
this stage, the person becomes aware of the interests of others and the conflicts that arise
among multiple interests.
principle of equal liberty
Each person's basic liberties must equal those of others. Those liberties must also be
protected from attack by others.

28. principle of fair equality of opportunity
Everyone must have the same chance to gain the best positions offered by society.
principled
One of three stages of moral development in the ethic of justice theory; attributed mainly to
men. Features the development of moral principles that guide the behavior of those who
reach this stage.
reflective understanding of caring for others
One of three stages of moral development in the ethic of care theory; attributed mainly to
women. Features a strong focus on caring for others as the basis of moral action and a
balanced view of the self in moral decisions.
rights
A person's just claims or entitlements; can be legal (defined by the legal system) or moral
(universal rights that exist because of ethical standards).
rule utilitarianism
Form of utilitarianism in which a person assesses actions according to a set of rules designed
to yield the greatest net benefit to all affected.

29. stages of moral development
Stages in which people shift from an individual understanding of morality to a societal one
and then to a universal view. Some persons do not progress through all three stages, and
the stages may differ for men and women.
subjectively ethical
A person believes he or she acted ethically.
theory of distributive justice
Theory proposed by John Rawls that is based on three principles: equal liberty for all
persons, difference (society should care for its most needy while using its resources as
efficiently as possible), and fair equality and opportunity for all.
unethical behavior
Behavior judged as wrong, unjust, dishonorable, or failing to meet an obligation.

30. universal ethical egoism
Universal ethical egoism, although controversial, can include the interests of others when
assessing one's actions. Asks a person to weigh the effects of his or her actions on his or
her interests with the assessment based on pursuing pleasure and avoiding pain.
utilitarianism
An approach to ethics that asks people to examine the effects of an action to decide
whether its total net benefits exceed the total net benefits of any other action.

31. Summary
• Ethical behavior – behavior judged as good, just, right,
and honorable based on principles, rules, or guides
from a specific ethics theory, character traits, or social
values; varies from person to person and country to
country
• Moral right – a person’s just claims or entitlements
that exist because of ethical standards.
• Know your organization’s Code of Ethics
• Ethical decision-making is affected by:
– Law
– Morality
– Values
– Professional codes