An integrative model for understanding and managing ethical behavior in business organizations

Managing ethical behavior is a one of the most pervasive and complex problems facing business organizations today. Employees' decisions to behave ethically or unethically are influenced by a myriad of individual and situational factors. Background, personality, decision history, managerial philosophy, and reinforcement are but a few of the factors which have been identified by researchers as determinants of employees' behavior when faced with ethical dilemmas. The literature related to ethical behavior is reviewed in this article, and a model for understanding ethical behavior in business organizations is proposed. It is concluded that managing ethics in business organizations requires that managers engage in a concentrated effort which involves espousing ethics, behaving ethically, developing screening mechanisms, providing ethical training, creating ethics units and reinforcing ethical behavior. W. Edward Stead, Ph.D., is Professor of Management at East Tennessee State University, Johnson City, TN. His research interests include ethical behavior, cancer in the workplace, social strategy implementation, the ethical implications of cost-benefit analysis, and managing professional employees. His articles have appeared in Psychological Reports, Personnel Journal, Business and Society Review, and the Journal of Accountancy among others, and he has published cases in leading business policy and social responsibility texts. Dan L. Worrell, Ph.D., is Professor of Management and Department Chairperson at Appalachian State University, Boone, NC. He has published articles in such Journals as Academy of Management Journal, Journal of Management, Business Horizons, and Psychological Reports among others. His research interests include managerial succession, ethical behavior and social responsibility. Jean Garner Stead, Ph.D., is Associate Professor of Management at East Tennessee State University, Johnson City, TN. Her research interests include ethical behavior, cancer in the work place, social strategy implementation, and the ethical implications of cost-benefit analysis. Her articles have appeared in Psychological Reports, Personnel Journal, Business and Society Review and the International Journal of Management among others, and she has published cases in leading business policy and social responsibility texts.     

Ethical ideology and ethical judgment regarding ethical issues in business

Differences in ethical ideology are thought to influence individuals' reasoning about moral issues (Forsyth and Nye, 1990; Forsyth, 1992). To date, relatively little research has addressed this proposition in terms of business-related ethical issues. In the present study, four groups, representing four distinct ethical ideologies, were created based on the two dimensions of the Ethical Position Questionnaire (idealism and relativism), as posited by Forsyth (1980). The ethical judgments of individuals regarding several business-related issues varied, depending upon their ethical ideology.Tim Barnett is Assistant Professor of Management at Louisiana Tech University. He has published in such journals asPersonnel Psychology, theJournal of Business Research, andHuman Relations. His research interests include ethical decision making and ethical issues in HRM.Ken Bass is Assistant Professor of Management at East Carolina State University. He has articles published in several journals, including theJournal of Personal Selling and Sales Management. His research interests include ethical decision making, ethical strategy, and methodology.Gene Brown is Associate Professor Marketing at Louisiana Tech University. He is published in such journals as theJournal of Retailing, the Journal of the Academy of Marketing Science, theJournal of Business Research, Psychology and Marketing, and Industrial Marketing Management. His main interests include personal selling, retailing, ethics, and methodology.     

An applied ethical analysis system in business

Much of the discussion on business ethics is philosophical in nature. There is no lack of theories and ideals on moral reasoning. What is missing is translating these moral theories and principles into specific, operational procedures that can indicate a proper course of action. Although most business actions are routine and do not raise serious ethical questions, many people experience difficulty in applying their personal moral principles to specific business decisions in ethically-dilemmatic situations.This study seeks to develop a framework that can be utilized to implement personal moral reasoning based on the teleological theory of Utilitarianism and the deontological theory of Ross's Prima Facie Duties in the business decision-making process. The central feature in the framework is a point-system that quantities the ethical worth of a proposed business action and determines whether the action would be ethically desirable if taken. It provides an objective element in an otherwise qualitative ethical inquiry process. This study also illustrates practical applications of the system by analyzing the ethical implications of a proposed action where foreign bribery is involved.Alan Wong is Assistant Professor of Finance, Indiana University Southeast. His areas of academic research are managerial ethics and financial options. He has published in theReview of Business and Economic Research.Eugene Beckman is the Director of the MBA Program at Indiana University Southeast. He was awarded the Faculty Excellence Award in 1989 and his primary areas of research are business ethics and marketing.     

Economic rationality and ethical behaviour: ethical business between venality and sacrifice

This paper argues that economic rationality and ethical behavior cannot be reduced one to the other, thus casting doubt on the validity of assertions such as 'profit is ethical' or 'ethics pays'. In order to express ethical dilemmas in a way which opposes economic interest with ethical concerns, we propose a model of rational behavior that combines these two irreducible dimensions in an open but not arbitrary manner. Behaviors that are neither ethical nor profitable are considered irrational (non-arbitrariness). However, behaviors that are profitable but unethical, and behaviors that are ethical but not profitable, are all treated as rational (openness). Combining ethical concerns with economic interest, ethical business is in turn seen as an optimal form of rationality between venality and sacrifice. Because everyone prefers to communicate that they act ethically, ethical business remains ambiguous until some economic interest is actually sacrificed. We argue, however, that ethical business has an interest in demonstrating its consistency between communication and behavior by a transparent attitude. On the other hand, venal behaviors must remain confidential to hide the corresponding lack of consistency. This discursive approach based on transparency and confidentiality helps to further distinguish between ethical and unethical business behaviors.     

Promoting ethical reflection in the teaching of business ethics

A case study provides the basis for consideration of the purpose of business ethics teaching, the importance of reflection and the evaluation of ethics teaching. The way in which personal reflection and an increased capacity for ethical action can be encouraged and openly identified as aims of the course is discussed. The paper considers changes in the design and delivery of the international management ethics and values course taught at the University of South Australia as part of the undergraduate management degree in Australia, Singapore and Hong Kong. As a result of student and teaching staff responses, and course evaluations, the course design, teaching and assessment has moved steadily toward an aim which explicitly refers to behaviour, without losing the significant conceptual base. Ways in which opportunities can be provided to enhance the development of a reflective capability are considered, including narrative, role models, ethical reflection, journal‐keeping and practice. The changes required a change in assessment practice. The difficulties of assessing intention and commitment to ethical action, whether in an individual course or across the curriculum, are discussed.     

Alienation and empowerment: Some ethical imperatives in business

The issue of worker alienation in the context of business ethics is critically examined. From a normative perspective, it is assumed that the minimal ethical requirement in business should include accountability for adverse consequences of management practice for workers in organizations. Using this standard, managerial actions that are responsible for worker alienation are considered unethical. The nature of work alienation and the organizational conditions responsible for it are outlined. Several dealienation measures in the form of empowerment strategies for management are presented as ethical imperatives.Rabindra N. Kanungo, Chaired Professor of Management, McGill University. Concentrating on the basic and applied areas of psychology and management, his publications include eight books and more than 100 articles in professional journals.The preparation of the paper is supported by the Power Corp. International Management Centre. The author is thankful to Manuel Mendonca for his suggestions and critical comments.     

Organizational influences on individual ethical behavior in public accounting

A framework is presented for studying ethical conduct in public accounting practice. Four levels of analysis are distinguished: individual, local office, multi-office firm and professional institute. Several propositions are derived from the framework and discussed: (1) The effects of ethical vs. unethical behavior on an accountant's prospects for advancement are asymmetrical in nature; (2) the way individuals perceive or frame the decision problem at hand will make an ethical response more or less likely; (3) the economic incentives present in competitive markets influence the work goals of firms and offices, and lead to ethical dilemmas for individuals; and (4) initiatives at the firm or institute level aimed at compliance with professional ethical standards will by themselves have little effect on individual ethical behavior. Research into ethical behavior of practitioners will capture self-conscious and biased responses unless it is designed so as to permit indirect observation and recording of spontaneous comments. To assure valid research findings, practitioners should be interviewed and their motives assessed indirectly. A longitudinal approach is recommended, beginning with students who are choosing an accounting career. Two types of questions for use in these interviews are described.Paul J. Schlachter is an assistant professor in the School of Accounting, Florida International University. As a certified management accountant (CMA), he studies ethical dilemmas in both corporate and public accounting, in south Florida and in Latin America.     

Profit maximization: The ethical mandate of business

The authors propose a model for business ethics which arises directly from business practice. This model is based on a behavioral definition of the economic theory of profit maximization and situates business ethics within opportunity costs. Within that context, they argue that good business and good ethics are synonymous, that ethics is at the heart and center of business, that profits and ethics are intrinsically related.Marist Father Pat Primeaux is a Professor of Theology at Saint John's University, (New York). John Stieber is a Professor of Finance and Economics at Southern Methodist University's Edwin L. Cox School of Business (Dallas). They have collaborated on several articles on the behavioral dimension of economic efficiency. They have also designed and taught courses in business ethics at both the graduate and undergraduate level.     

The challenge of ethical behavior in organizations

This paper is designed to do three things while discussing the challenge of ethical behavior in organization. First, it discusses some reasons why unethical behavior occurs in organization. Secondly, the paper highlights the importance of organizational culture in establishing an ethical climate within an organization. Finally, the paper presents some suggestions for creating and maintaining an ethically-oriented culture.Ronald R. Sims is Associate Professor in the School of Business Administration at the College of William and Mary. His research interests include ethical behavior, experiential learning, employee and management training and development, and organizational transitions. His articles have appeared in a variety of scholarly and practitioner-oriented journals.     

Economic constraints and ethical decisions in the context of European ventures

Relying on personal experience of political European venture during the last four years, this paper aims at illustrating the role of ethics in public policy-making.Crucial importance of ethics is stressed upon at three different stages of the decision-making process: shaping a vision, devising strategy and choosing options in everyday life.Assuming that these stages could apply also to business management, the paper focusses finally on conditions for ethic's effectiveness: providing cohesion but no definite legitimacy, enforcing courage for taking risks in uncertainty but offering no insurance, it needs to be subject to mutual questioning.Jerôme Vignon belongs to the Cellule de Perspective (Central Advisory Group of the Commission), Brussels. Before joining the Commission of the European Communities, he held the rank of Civil servant at the French Ministry for Economy and Finance, Paris.     

The role of existentialism in ethical business decision‐making

This paper presents an integrated model of ethical decision‐making in business that incorporates teleological, deontological and existential theory. Existentialism has been curiously overlooked by many scholars in the field despite the fact that it is so fundamentally a theory of choice. We argue that it is possible to seek good organisational ends (teleology), through the use of right means (deontology), and enable the decision‐maker to do so authentically (existentialism). More specifically, we provide a framework that will enable the decision‐maker to integrate the various ethical schools of thought available to them and to apply this framework in the ethical decision‐making process. The model presented makes explicit the existential position of choice and takes into account other contextual moderating factors. Negative Option Marketing is used as a running application to illustrate the role of existentialism in the decision‐making process.     

The ethical behavior of retail managers

A measure of ethics termed ethical behavior (EB) is postulated and tested across the moral philosophy types of managers. The findings suggest that certain managers, classified as rule deontologists, appear to rank higher on the EB scale than any other philosophy type tested.John Fraedrich is an Assistant Professor of Marketing at Southern Illinois University of Carbondale. His areas of interest include ethical decision making and international marketing. He has published inJournal of Business Ethics, Journal of Macro-marketing, Journal of Academy of Marketing Science, Journal of Business Research, Journal of Marketing Management, International Journal of Value Based Management, andJournal of International Consumer Marketing. Dr. Fraedrich has also recently completed a book(Business Ethics: Ethical Decision Making and Cases, 1991, Houghton Mifflin) on the topic of ethics.     

Linking management behavior to ethical philosophy

This study investigates current linkages between ethical theory and management behavior. The vignettes used in this investigation represent ethical dilemmas in the areas of coercion and control, conflict of interest, physical environment, and personal integrity. The results indicate that even with the heightened state of ethical awareness that has evolved in recent years the link between ethical philosophy and management behavior remains basically the same as it was in the mid 1980s. Specifically, practitioners still rely almost totally on the utilitarian ethical philosophy when making business decisions.Shane R. Premeaux is a Professor of Marketing, and the Associate Dean at McNeese State University, Lake Charles, Louisiana. He is an avid author with over fifty articles appearing in such journals asPersonnel, Peronnel Journal, Personnel Administrator, Transportation Journal, theLogistics and Transportation Review, and theJournal of Small Business Management. He has also co-authored books entitled:Personal Selling: Function, Theory, and Practice, 3rd ed.,Supervision, 2nd ed.,Human Resources Management, 4th ed.,Management and Organization Behavior, 1st ed., andManagement Concepts, Practices, and Skills, 5th ed.R. Wayne Mondy is a Professor of Management and Dean of the College of Business at McNeese State University. Dr. Mondy has authored or co-authored seven college textbooks, two trade books, fifty-one articles, and twenty papers. Dr. Mondy is an avid author with numerous articles in various refereed journals. He has coauthored the following books:Staffing the Contemporary Organization, 1st ed.,Personal Selling: Function, Theory, and Practice, 3rd ed.,Supervision, 2nd ed.,Human Resources Management, 4th ed.,Management and Organizational Behavior, 1st ed., andManagement Concepts, Practices, and Skills, 5th ed.     

A comparison of ethical perceptions of business and engineering majors

Previous research has reported that ethical values of business students are lower than those of their peers in other majors. The purpose of this study was to investigate whether a self-selection bias with respect to ethical values exists among students enrolled as business majors when compared with students planning to enter the engineering profession. Engineering students are exposed to a similar technical orientation in academic curricula and also supply the market for managers.A survey instrument was administered to 195 students enrolled in undergraduate business and engineering programs and a graduate business program. The research instrument measured how business and engineering students perceive their own ethical beliefs and actions and how they perceived the ethical beliefs and actions of their peers.The results indicate a perceptual trap, or the self-versus-others disparity exists for the entire sample. However, there was a divergence between the two groups on the issue of whistle blowing. Engineers may be more sensitive to this issue. It was concluded that if a self-selection process exists, it is present for both business and engineering professional tracks with implications for educators in both disciplines.It is not enough to teach a man a specialty. Through it he may become a kind of useful machine, but not a harmoniously developed personality. It is essential that the student acquire an understanding of and a lively feeling for values. He must acquire a vivid sense of the beautiful and of the morally good. Otherwise he — with his specialized knowledge — more closely resembles a trained dog than a harmoniously developed person. He must learn to understand the motives of human beings, heir illusions, and their sufferings in order to acquire a proper relationship to individual fellow men and to the community.— Albert EinsteinPriscilla O'Clock, Ph.D., 1991, CPA, Assistant Professor, Xavier University.Marilyn Okleshen, Ph.D., 1991, CPA, Associate Professor, Mankato State University.     

Ethics from the top: top management and ethical business

Codes of ethics and conduct typically demand the highest standard of ethical behaviour from every single employee. This implies a democratic or lobbyist understanding of ethics in business. The contrasting view would argue that business ethics is an elitist undertaking that can only be instigated from the top, by managing directors or owner managers. This article looks at three types of ethical businesses, three types of approaches to ethical problem-solving, and three possible incentives for ethical business to see which of the above is more convincing. It will be argued that the impulse for value-driven business has to come from the top. Only top management and owner managers have the opportunity to foster major change in business practice.     

Economic criteria versus ethical criteria toward resolving a basic dilemma in business

Today's headlines suggest that economic criteria alone is the basis for business decision-making. This paper argues that while profitability is a legitimate end of business, it must be moderated by ethical considerations. But can business be both successfuland ethical? Practical examples highlight individuals who chose profitability over ethical responsibility and those who chose and continue to choose both. The authors propose that there is an ethical person profile. Corporate managers can resolve the profits vs ethics dilemma by modeling ethical behavior.     

A corporate model of sustainable business practices: An ethical perspective

This paper considers contemporary business practice and its sustainable performance from the view of stakeholders and their perceived value. A company has responsibilities and commitments to many different internal and external stakeholders in the marketplace and society. This view underlines the need for organizations to, not only provide value, but do so in a sustainable and socially responsible manner. A model is developed based on five, separate but interconnected, elements. The model is iterative and acknowledges its elementary state, suggesting further development and refinement in the field of sustainable business practices from an ethical perspective.     

The influence of culture on ethical perception held by business students in a New Zealand university

The demand for principled and transparent corporate moral judgement and ethical decision making in the workplace makes it necessary for business students as future managers to understand the expectations of ethical workplace conduct. Corporate scandals mean that there is enhanced interest in ensuring that ethical content is included in curricula in universities. In this study, we re‐visit the question of whether culture has an influence on ethical perceptions of workplace scenarios, using students enrolled in a College of Business in a New Zealand (NZ) university as respondents. Consistent with current research, this study demonstrated mixed results. However, we also found evidence to suggest some identifiable patterns in the data across cultural groups. Overall, Chinese and Other respondents were more likely than NZ European to consider the scenarios as ethical. On the other hand, Chinese respondents were significantly less likely to report that their peers would carry out ethically questionable actions.