Chapter
6
Ethical Reasoning and
Corporate Programs
 The
Core Elements of Ethical Character
 Analyzing Ethical Problems in Business
 Whistle-blowing
 Making Ethics Work in Corporations
Exhibit 6.Aa
Managers’ values in contrast



American managers were found to be more protective of
organizational resources and more interested in compliance with
rules than Russian managers.
German managers were found to be more ethical, although more
difficult to work with, than other managers within the European
Union.
Chinese were more concerned with profits and more willing to
accept bribes than Americans, although Americans were less
ethical in their reasoning than subjects from the developing
country of Belize.
Exhibit 6.Ab
Managers’ values in contrast



Spanish executives were found to be more ethical than American
managers and they were more concerned with global harmful
impacts than Americans.
Chilean managers scored higher than Australian managers on
issues of bribery, and American and Australian mangers were
more concerned with who was being harmed in their ethical
reasoning than Chilean or Ecuadorian managers.
Iranian managers were found to be conformists and were
sociocentric. These traits were found in other predominantly
Arab countries and differed significantly from traits exhibited by
American managers.
Figure 6.1
Stages of moral development and
ethical reasoning
Age Group
Development Stage and Major Ethics
Referent
Basis of Ethics
Reasoning
Mature adulthood
Stage 6 Universal principles: Justice,
fairness, universal human rights
Principle-centered
reasoning
Mature adulthood
Stage 5 Moral beliefs above and beyond
specific social custom: Human rights, social
contract, broad constitutional principles
Principle-centered
reasoning
Adulthood
Stage 4 Society at large: Customs,
traditions, laws
Society-and-lawcentered reasoning
Early adulthood,
adolescence
Stage 3 Social groups: Friends, school,
coworkers, family
Group-centered
reasoning
Adolescence,
youth
Stage 2 Reward seeking: Self-interest, own
needs, reciprocity
Ego-centered
reasoning
Childhood
Stage 1 Punishment avoidance: Punishment
avoidance, obedience to power
Ego-centered
reasoning
Corporate culture and ethical climates
Corporate culture
A blend of ideas, customs, traditional practices, company values,
and shared meanings that help define normal behavior for
everyone who works in a company.
Ethical climate
The unspoken understanding among employees of what is and is
not acceptable behavior.
Figure 6.2
The components of ethical climates
Ethical Criteria
Focus of
Ethical Company Concern Society
Individual Person
Egoism (selfcentered approach)
Self-interest
Company interest
Economic efficiency
Benevolence
(concern-for-others
approach)
Friendship
Team interest
Social responsibility
Principle (integrity
approach)
Personal morality
Company rules and
procedures
Laws and
professional codes
Source: Adapted from Bart Victor and John B. Cullen, “The Organizational Bases of Ethical Work Climates,”
Administrative Sciences Quarterly 33(1988), p. 104.
Figure 6.3
Three methods of ethical reasoning
Method
Critical
An Action is
Determining Factor Ethical When…
Limitations
Utilitarian
Comparing benefits
and costs
Net benefits exceed
net costs
Difficult to measure
some human and
social costs;
majority may
disregard rights of
minority
Rights
Respecting
entitlements
Basic human rights
are respected
Difficult to balance
conflicting rights
Justice
Distributing fair
shares
Benefits and costs
are fairly distributed
Difficult to measure
benefits and costs;
lack of agreement on
fair shares
Figure 6.5a
An analytical approach to ethical problems
Step 1
Ask
Utility
Do benefits
exceed costs?
Yes
No
Rights
Are human
rights
respected?
Yes
No
Justice
Are benefits
and costs
fairly
distributed?
Yes
No
Figure 6.5b
An analytical approach to ethical problems
Step 2
Compare results
If yes is the answer to all
three questions, it is
probably ethical
If no is the answer to all
three questions, it is
probably unethical
If the answers are
mixed, it could be either
ethical or unethical
Exhibit 6.Ba
Whistle-blowing protection around the world

United Kingdom—The U.K. Public Interest Disclosure Act protects
most workers from retaliation by their employers, including dismissal,
disciplinary action, or transfer.
 European Union—The EU published a charter for whistle-blower
protection, identifying terms under which commission staff may blow
the whistle, imposing a duty upon officials to report suspected
wrongdoing, and outlining the channels for reporting malpractice.
 South Africa—The Protected Disclosures Act 2 prohibits employers
from subjecting an employee to an occupational detriment for raising
concerns about unlawful or irregular conduct.
Source: Lori Tansy Martens and Amber Crowell, “Whistle-blowing: A Global Perspective (Part 1),”
Ethikos, May-June 2002, pp.6-8.
Exhibit 6.Bb
Whistle-blowing protection around the world

Israel—This country adopted whistle-blowing protection legislation
that protects corporate and government workers.
 Ghana—A whistle-blower protection act has been proposed to offer
rewards and protection to people who volunteer information leading to
the prosecution of white-collar criminals.
 South Korea—The Anti-Corruption Act established the Korea
Independent Commission Against Corruption, whose mission includes
the encouragement, protection, and compensation of whistle-blowers.
Source: Lori Tansy Martens and Amber Crowell, “Whistle-blowing: A Global Perspective (Part 1),”
Ethikos, May-June 2002, pp.6-8.
Stigmas against whistle-blowing




Divided loyalties—In some Asian countries, members of the
company are treated as family members and it is considered
wrong to report on family members.
History—The country may have a tragic history of reporting on
others.
Logistics—Employees of global companies may be faced with
numerous time zones and language differences that could prevent
whistle-blowing or make it more difficult.
Fear of retribution—Despite government laws to protect whistleblowers, many employees of global businesses fear retaliation.
Figure 6.5
Organizations’ ethics safeguards at work
Ethics safeguard
Fortune
1000
(1992)
Promoted ethics at work
93%
Developed code of ethics
93
Fortune
1000
(1999)
SW PA
Organizations
(1996)
1,500
employees
(2000)
71%
57
79
Created ethics office
17
30
--Ethics hotline
9
51
20
55
11
23
--Ethics office or hotline
Offered ethics training
Conducted audit/evaluation
98
50
25
Corporate ethics awards
Business Ethics Awards criteria:
 Be a leader in the field, showing the way ethically.
 Have programs or initiatives that demonstrate sincerity and
ongoing vibrancy that reaches deep into the company.
 Have a significant national presence whose ethical behavior sends
a loud signal.
 Be a standout in at least one area of ethical performance.
 Have recently faced a challenging situation and overcome it with
integrity.