LESSON 3 – ETHICAL DECISION MAKING
What is an ethical decision?
A decision which;
◦ is likely to have significant effects on others.
◦
is likely to be characterized by choice, in that alternative
courses of action are open.
◦ is perceived as ethically relevant by one or more parties.
Ethical theories in decision-making
◦ Ethical theories provide part of the decision-making
foundation for decision making when ethics are in play
because these theories represent the viewpoints from which
individuals seek guidance as they make decisions.
◦ Each theory emphasizes different points – a different
decision-making style or a decision rule—such as predicting
the outcome and following one’s duties to others in order to
reach what the individual considers an ethically correct
decision.
◦ When individuals find themselves in a decision-making
situation when ethics are in play, there are a variety of ethical
theories (decision rules) which provide decision-making
guidance as individuals strive to make ethically correct
answers.
◦ Most individuals adopt a preferred decision-making style but
might adjust it depending on decision circumstances.
LESSON 3 – ETHICAL DECISION MAKING
◦ However, going forward in the lesson it is important to
understand that not everyone makes decisions in the same
way, using the same information, employing the same
decision rules. In the lesson we will be employing two
theories namely, Normative and Descriptive theory to
perceive ethical decision making in a corporation.
An ethical decision is one that follows moral principles and reflects a
concern for what is right and fair. It's a choice that considers the impact
on others and avoids causing harm.
Key aspects of ethical decision making:
1. Respecting moral principles
2. Considering the consequences
3. Balancing competing values
LESSON 3 – ETHICAL DECISION MAKING
Normative Ethical Theories:
Normative ethics is the branch of ethics that studies the actions of
people and dives into the "how" of moral behaviour. It's all about figuring
out what makes an action right or wrong.
◦ The normative theories provide prescriptive functions or
decision rules to help people maximize expected utility of
outcomes.
◦ The normative rules serve as the rational standards to which
people's actual behaviors are compared.
◦ The assumption underlying some of these models has been
that an optimal decision could be arrived at in a very rational,
mathematical sort of way.
◦ How people “ought to act…”
Descriptive ethical theories:
This theory describes how ethical decisions are actually made in
business, and explains what factors influence the process and outcomes
of those decisions. It studies people’s views of moral beliefs
◦ The descriptive theories are therefore less concerned with
determining the ideal “rationality” of a decision-maker and are
more attentive to identifying the circumstances under which
decision-makers exhibit correct or fallacious reasoning.
LESSON 3 – ETHICAL DECISION MAKING
Descriptive ethics, unlike normative ethics, is all about understanding
what is, not what should be. It doesn't tell you how to act morally, but
rather focuses on describing moral beliefs, moral decision-making,
moral phenomena.
Descriptive ethics Vs. Normative ethics.
: Normative - How to act morally, Descriptive - How people
understand and make moral judgments.
: Normative - Often philosophical arguments, Descriptive
- Relies on empirical research like surveys, psychological experiments,
and anthropological studies.
of Questions:

Normative: Is it ever okay to lie?

Descriptive: Do people from different cultures agree on what
constitutes a lie?
Models of ethical decision-making
 The different stages in decision-making that people go through in
responding to an ethics problem in a business context.
 The different influences on that process.
Stages in ethical decision-making:
1. Recognize a moral issue.
2. Make some kind of moral judgement about that issue.
3. Establish an intention to act upon that judgement.
4. Act according to their intentions.
LESSON 3 – ETHICAL DECISION MAKING
The model distinguishes between knowing what the right thing to do is
and actually doing something about it; or between wanting to do the right
thing, and actually knowing what the best course of action is.
The models of ethical decision-making generally divide the factors that
influence decisions into two broad categories: individual and situational.
INFLUENCES ON ETHICAL DECISION-MAKING
Individual Influences: These are the unique characteristics of the
individual actually making the relevant decision. These include factors
that are given by birth (such as age and gender) and those acquired by
experience and socialization (such as education, personality, and
attitudes)
◦ Evidence suggests that entrepreneurs and small business
owners may think and act differently than others in response
to ethical issues because they tend to be more achievementoriented, autonomous, opportunistic, and risk tolerant.
◦ Age
◦ Gender
◦ Personal values
◦ Moral imagination
◦ Psychological factors
LESSON 3 – ETHICAL DECISION MAKING
◦ Cognitive moral development - Explains about selfinterest, concerns on others opinions and autonomous
decision making
◦ Locus of Control - An individual’s locus of control
determines the extent to which he or she believes that
they have control over the events in their life.
◦ Personal values - Individual beliefs about desirable
behaviours and goals that are stable over time and
which influence decisions
◦ Personal Integrity - An individual’s adherence to a
consistent set of moral principles or values.
LESSON 3 – ETHICAL DECISION MAKING
National and cultural characteristics:
 Individualism/collectivism.
 Power distance.
 Uncertainty avoidance.
 Masculinity/femininity
 Long-term/short-term orientation.
 Indulgence
Education and employment
 The type and quality of education received by individuals, as well
as their professional training and experience, might also be
considered to be important individual influences on ethical
decision-making.
Psychological factors
 Psychological factors are concerned with cognitive processes, in
other words, how people actually think.
Cognitive moral development
 A theory explaining the different levels of moral reasoning that an
individual can apply to ethical issues and problems, depending on
their cognitive capacity.
Locus of control
 An individual’s locus of control determines the extent to which he
or she believes that they have control over the events in their life.
LESSON 3 – ETHICAL DECISION MAKING
Personal values
 Individual beliefs about desirable behaviours and goals that are
stable over time and which influence decision-making.
Personal integrity
 An individual’s adherence to a consistent set of moral principles or
values.
Whistleblowing
Intentional acts by employees to expose, either internally or externally,
perceived ethical or legal violations by their organization.
LESSON 3 – ETHICAL DECISION MAKING
LESSON 3 – ETHICAL DECISION MAKING
Situational Factors - These are the features of the context that
influence whether the individual will make an ethical or an unethical
decision. These include factors associated with the work context
(such as reward systems, job roles, and organizational culture) and
those associated with the issue itself (such as the intensity of the
moral issue or the ethical framing of the issue).
These two groups of factors help to explain why certain business
decisions get made, and why people behave in ethical and unethical
ways in business situations.
◦ Situational influencing factors include: Moral intensity,
Bureaucracy, Work roles, Rewards, Organizational culture
LESSON 3 – ETHICAL DECISION MAKING
Issue related factors
Moral intensity:
1. Magnitude of consequences.
2. Social Consensus
3. Probability of effect
4. Temporal immediacy
5. Proximity
6. Concentration effect
Moral framing:
The use of language to expose or mask the ethical nature of certain
behaviours or decisions. It is mostly used to make an unethical action
look more acceptable to oneself and/or third parties.
Context related factors
Systems of reward
Authority:
The exercise of hierarchical power to compel a subordinate to act in a
certain way. It is a key factor in shaping ethical decisions because
employees tend to follow the explicit and implicit preferences, orders,
and rules of their superiors.
Bureaucracy:
A type of formal organization based on rational principles and
characterized by detailed rules and procedures, impersonal hierarchical
relations, and a "fixed division of tasks. It tends to prevent personal
moral reflection in favour of prescribed organizational policies.
LESSON 3 – ETHICAL DECISION MAKING
The bureaucratic dimension has been argued to have a number of
negative effects on ethical decision-making:
1. Suppression of moral autonomy.
2. Instrumental morality.
3. Distancing.
4. Denial of moral status
Organizational culture:
The meanings, beliefs, and common-sense knowledge that are shared
among members of an organization, and which are represented in taken
for-granted assumptions, norms, and values.
Limitations of ethical decision-making models