Ethics and the Future of Business
Lecture 2: Behaviors & Actions
16 September 2022 | Arno Kourula
Table of Contents
1. Descriptive Theories in Ethics
1.1. Ethical Decision-making Process
1.2. Individual and Situational Factors
2. Cognitive Biases
3. Ethics in Action
3.1. Ethical Leadership
3.2. Business Ethics Tools
1. Descriptive Theories in Ethics
Money Division Game
You need to divide 100 euros between yourself and someone you don’t know. You don’t know
where the money is coming from (”money from the heavens”). You don’t know anything about the
other person you are dividing the money with. Thus, neither you nor the one you are dividing the
money with does not have any particular right to the money.
If the person you are dividing the money with accepts your offer, both of you get the share of the
money as you divided it. If the person you are dividing the money with does not accept your offer,
neither gets anything. The game is played only once. Everyone involved knows the amount of money
involved and the rules of the game.
Questions:
1. If you are the one dividing the money, what kind of division would you offer?
a. Frequent decisions are 60-40, 50-50 and 90-10.
2. What would be the minimum amount of money you would accept as the other person?
a. Depends per person, but personally 30. Many people would also say even 1 euro.
Economic Decision-Making
Economic view:
The motive of human decision-making is their own economic interest and well-being. Humans are
perceived as rational.
In practice:
1. People care about their economic interest.
2. People consider the interests of people close to them.
3. People will sacrifice their own economic interest to help those who are friendly and punish
unfriendly people.
4. People consider the welfare of strangers when making decisions.
5. People are interested in their reputation.
6. People care about their self-image.
1
,Ethics and the Future of Business
1.1. Ethical Decision-making Process
1.2. Individual and Situational Factors
Individual Factors in Ethics
- Age and gender: Very mixed results.
- Education and employment: Business school students argued to have more egoistic values
and amoral view of economy.
o Experience brings decision-making skills.
o Profession matters: Doctors think differently from engineers.
- Psychological factors: Cognitive moral development (Kohlberg’s stages: 1. Rewards and
punishments, 2. social expectations, 3. autonomous thinking) and locus of control (internal
vs. external).
- Personal values and integrity: Holding on to your own ethical principles and values.
o Impact on whistleblowing.
- Moral imagination: Seeing the decision as ethical, and imagining alternative solutions.
National and Cultural Characteristics
People from different cultures have different perceptions about right and wrong, which cause
differences in ethical decisions. Hofstede defines cultural dimensions:
1. Individualism/collectivism
2. Power distance
a. In the Netherlands there is lower distance between hierarchies than in, for example,
China.
3. Uncertainty avoidance
4. Masculinity/femininity
a. Men are more assertive. Women tend to make decisions for groups more.
5. Long-term/short-term time orientation
6. Indulgence
- Individualistic background supports independent decision-making.
- Collectivist background can lead to mirroring the common morality.
- Hierarchy can lead to following an executive’s orders.
2
, Ethics and the Future of Business
Intra-Cultural Divides
Within cultures, there is a divide between individualizing and binding moral orientations, which
cause ”culture wars”.
Situational Factors in Ethics
Situational factors are seen to affect ethical decision-making more than individual factors.
Example of the good samaritan experiment (Darley & Batson 1973):
- Seminary students
- In one building, asked to go to another building.
- On the way they meet a man slumped in the alleyway.
- A part of the students were asked to perform tasks in the other building.
- The level of “hurriness” had a significant impact on helping behavior: 63% of low hurry
helped compared to 10% of high hurry.
Nature of the Moral Question
Moral intensity: The following factors can determine the relative importance of a moral issue (Jones
1991):
- Magnitude of consequences
- Social consensus
- Probability of effect
- Temporal immediacy
- Moral proximity
- Concentration of effect
Moral Framing: How a problem is presented (Anand et al., 2004).
Individuals can rationalize unethical decision-making through various strategies:
1. Denial of responsibility: It was not my fault.
2. Denial of injury: No one was harmed.
3. Denial of victim: It was deserved.
4. Social weighing: Others are worse.
5. Appeal to higher loyalties: There is a more important cause.
6. Metaphor of the ledger: I deserve to behave like this (due to surplus of good will).
3
Lecture 2: Behaviors & Actions
16 September 2022 | Arno Kourula
Table of Contents
1. Descriptive Theories in Ethics
1.1. Ethical Decision-making Process
1.2. Individual and Situational Factors
2. Cognitive Biases
3. Ethics in Action
3.1. Ethical Leadership
3.2. Business Ethics Tools
1. Descriptive Theories in Ethics
Money Division Game
You need to divide 100 euros between yourself and someone you don’t know. You don’t know
where the money is coming from (”money from the heavens”). You don’t know anything about the
other person you are dividing the money with. Thus, neither you nor the one you are dividing the
money with does not have any particular right to the money.
If the person you are dividing the money with accepts your offer, both of you get the share of the
money as you divided it. If the person you are dividing the money with does not accept your offer,
neither gets anything. The game is played only once. Everyone involved knows the amount of money
involved and the rules of the game.
Questions:
1. If you are the one dividing the money, what kind of division would you offer?
a. Frequent decisions are 60-40, 50-50 and 90-10.
2. What would be the minimum amount of money you would accept as the other person?
a. Depends per person, but personally 30. Many people would also say even 1 euro.
Economic Decision-Making
Economic view:
The motive of human decision-making is their own economic interest and well-being. Humans are
perceived as rational.
In practice:
1. People care about their economic interest.
2. People consider the interests of people close to them.
3. People will sacrifice their own economic interest to help those who are friendly and punish
unfriendly people.
4. People consider the welfare of strangers when making decisions.
5. People are interested in their reputation.
6. People care about their self-image.
1
,Ethics and the Future of Business
1.1. Ethical Decision-making Process
1.2. Individual and Situational Factors
Individual Factors in Ethics
- Age and gender: Very mixed results.
- Education and employment: Business school students argued to have more egoistic values
and amoral view of economy.
o Experience brings decision-making skills.
o Profession matters: Doctors think differently from engineers.
- Psychological factors: Cognitive moral development (Kohlberg’s stages: 1. Rewards and
punishments, 2. social expectations, 3. autonomous thinking) and locus of control (internal
vs. external).
- Personal values and integrity: Holding on to your own ethical principles and values.
o Impact on whistleblowing.
- Moral imagination: Seeing the decision as ethical, and imagining alternative solutions.
National and Cultural Characteristics
People from different cultures have different perceptions about right and wrong, which cause
differences in ethical decisions. Hofstede defines cultural dimensions:
1. Individualism/collectivism
2. Power distance
a. In the Netherlands there is lower distance between hierarchies than in, for example,
China.
3. Uncertainty avoidance
4. Masculinity/femininity
a. Men are more assertive. Women tend to make decisions for groups more.
5. Long-term/short-term time orientation
6. Indulgence
- Individualistic background supports independent decision-making.
- Collectivist background can lead to mirroring the common morality.
- Hierarchy can lead to following an executive’s orders.
2
, Ethics and the Future of Business
Intra-Cultural Divides
Within cultures, there is a divide between individualizing and binding moral orientations, which
cause ”culture wars”.
Situational Factors in Ethics
Situational factors are seen to affect ethical decision-making more than individual factors.
Example of the good samaritan experiment (Darley & Batson 1973):
- Seminary students
- In one building, asked to go to another building.
- On the way they meet a man slumped in the alleyway.
- A part of the students were asked to perform tasks in the other building.
- The level of “hurriness” had a significant impact on helping behavior: 63% of low hurry
helped compared to 10% of high hurry.
Nature of the Moral Question
Moral intensity: The following factors can determine the relative importance of a moral issue (Jones
1991):
- Magnitude of consequences
- Social consensus
- Probability of effect
- Temporal immediacy
- Moral proximity
- Concentration of effect
Moral Framing: How a problem is presented (Anand et al., 2004).
Individuals can rationalize unethical decision-making through various strategies:
1. Denial of responsibility: It was not my fault.
2. Denial of injury: No one was harmed.
3. Denial of victim: It was deserved.
4. Social weighing: Others are worse.
5. Appeal to higher loyalties: There is a more important cause.
6. Metaphor of the ledger: I deserve to behave like this (due to surplus of good will).
3
