CHAPTER 6
Individual Factors: Moral Philosophies and
Values
SUMMARY
This chapter provides a description and analysis of how individuals’ background and philosophies
influence their decisions. It is important to determine when one action is considered right and when
another is viewed as wrong, as well as the individual moral philosophies that are often used to justify
decisions or explain actions. To understand how people make ethical decisions, it is useful to have a grasp
of the major types of moral philosophies. This chapter compares and contrasts the teleological,
deontological, virtue, and justice perspectives of moral philosophy in order to give students a solid
working basis of the different moral philosophies and to understand how they impact business. This
chapter discusses the stages of cognitive development as it relates to these moral philosophies, along with
their shortcomings. We then examine white-collar crime as it relates to moral philosophies and values.
INSTRUCTOR NOTES FOR “AN ETHICAL DILEMMA”
In this scenario, Connor feels he must choose worker safety or meeting a production deadline. His
immediate supervisor advocates cutting safety corners and skipping breaks in favor of a higher daily
output. Connor knows this compromises worker safety, and workers are following orders because they
fear losing their jobs. This case helps students understand the difficulties faced by middle managers who
value ethics.
After refusing to let his workers cut safety corners and work through breaks, Connor begins hearing
rumors of injuries on other shifts. The situation deepens when his immediate supervisor informs Connor
that Connor’s shift is not performing up to expectations. Lay-offs of underachieving workers from his
shift will start soon if they do not begin producing up to speed. Connor recognizes this as a veiled threat
but refuses to compromise his workers’ safety. He decides he will approach the general manager about the
situation. He knows she has the power to fire him, but he does not want to be a part of putting workers in
harm’s way. Connor believes that the benefits of increased production do not outweigh the risks of
potential injury. He feels like this situation will eventually backfire. What could happen? How should
Connor approach his general manager?
LECTURE OUTLINE
I. Moral Philosophy Defined
A. Moral philosophy refers to the specific principles or values that people use to decide what is
right or wrong.
B. Moral philosophies are person-specific, whereas business ethics is based on decisions made by
groups or when carrying out tasks to meet business objectives.
33 Chapter 6: Individual Factors: Moral Philosophies and Values
1. A moral philosophy is a person’s principles and values. They are guidelines for
“determining how conflicts in human interests are to be settled and for optimizing mutual
benefit of people living together in groups.”
2. Adam Smith—the father of free-market capitalism—believed business was and should be
guided by the morals of good people.
3. Milton Friedman believed that the market would reward or punish companies for
unethical conduct without the need for government intervention, but free markets will not
solve all problems.
a. Economic systems within a society influence, and are influenced by, the actions and
beliefs of individuals (morals) and of society (laws) as a whole.
4. Moral philosophies are ideal moral perspectives that provide individuals with abstract
principles for guiding their social existence.
C. The concept of the economic value orientation is associated with values that can be quantified
by monetary means. If an act produces more value than its effort costs, then it should be
accepted as ethical.
D. Idealism is a moral philosophy that places special value on ideas and ideals as products of the
mind. There is a positive correlation between idealistic thinking and ethical decision making.
E. Realism is the view that an external world exists independent of our perceptions. Realists
assume that humankind is not naturally benevolent and kind but instead is inherently
self-centered and competitive.
1. Research shows there is a negative correlation between realistic thinking and ethical
decision making.
II. Moral Philosophies
A. Although there are many moral philosophies, the text focuses on those that are most applicable
to the study of business ethics. There is no one “correct” way to resolve ethical issues.
B. Instrumental and Intrinsic Goodness
1. Two basic concepts of goodness are monism and pluralism. Monists believe that only
one thing is intrinsically good, and pluralists believe that two or more things are
intrinsically good.
a. Monists are often characterized by hedonism—one’s pleasure is the ultimate
intrinsic good or moral end.
b. Quantitative hedonists are those who believe that more pleasure is better
c. Qualitative hedonists are those who believe that it is possible to get too much of a
good thing
2. Pluralists (non-hedonists) take the position that no one thing is intrinsically good.
a. All pluralists are non-hedonists, but not all monists are hedonists because an
individual can believe in a single intrinsic good other than pleasure.
3. Sometimes called pragmatists, instrumentalists reject the idea that
a. ends can be separated from the means that produce them
b. ends, purposes, or outcomes are intrinsically good in and of themselves
4. Goodness theories typically focus on the end result of actions and the goodness or
happiness created by them.
Chapter 6: Individual Factors: Moral Philosophies and Values 34
5. Obligation theories emphasize the means and motives by which actions are justified.
These obligation theories are teleology and deontology, respectively.
C. Teleology
1. Refers to moral philosophies in which an act is considered morally right or acceptable if it
produces some desired result.
2. Teleology assesses the moral worth of a behavior by looking at its consequences, and thus
moral philosophers today often refer to these theories as consequentialism.
3. Egoism defines right or acceptable behavior in terms of the consequences for the
individual. They believe in making decisions to maximize self-interest.
a. Enlightened egoists take a long-range perspective and allow for the well-being of
others, although their own self-interest remains paramount.
4. Utilitarianism seeks the greatest good for the greatest number of people. Utilitarians look
for the greatest total utility, or benefit, that can come of a decision using cost/benefit
comparisons of all affected parties.
a. Utilitarians use various criteria to judge the morality of an action.
i) Rule utilitarianism determines behavior on the basis of principles, or rules,
designed to promote the greatest utility.
ii) Act utilitarianism examines a specific action itself, rather than the general
rules governing it.
D. Deontology
1. Refers to moral philosophies that focus on the rights of individuals and on the intentions
associated with a particular behavior rather than on its consequences.
2. They regard certain behaviors as inherently right, and the determination of this rightness
focuses on the individual actor, not society. Thus, these perspectives are sometimes
referred to as nonconsequentialism, a system of ethics based on respect for persons.
3. Deontology is greatly influenced by the philosopher Immanuel Kant’s categorical
imperative: “Act as if the maxim of thy action were to become by thy will a universal law
of nature.”
4. They regard the nature of moral principles as permanent and stable, and they believe that
compliance with these principles defines ethicalness.
5. Deontologists believe that individuals have certain absolute rights, including
a. freedom of conscience
b. freedom of consent
c. freedom of privacy
d. freedom of speech
e. due process
6. Deontologists may be divided into those who focus on moral rules and those who focus on
the nature of the acts themselves.
a. Rule deontologists believe that conformity to general moral principles based on
logic determines ethicalness.
b. Act deontologists hold that actions are the proper basis on which to judge morality
or ethicalness.
E. Relativist Perspective
35 Chapter 6: Individual Factors: Moral Philosophies and Values
1. Definitions of ethical behavior are derived subjectively from the experiences of
individuals and groups.
2. Descriptive relativism relates to observing cultures.
3. Meta-ethical relativism proposes that people naturally see situations from their own
perspectives and argue that there is no objective way of resolving ethical disputes between
different value systems and individuals.
4. Normative relativism assumes that one person’s opinion is as good as another’s.
a. The relativist observes the actions of members of an involved group and attempts to
determine that group’s consensus on a given behavior. A positive consensus signifies
that the group considers the action to be ethical.
5. A problem with relativism is that it emphasizes peoples’ differences while ignoring their
basic similarities. Research indicates that relativism is negatively related to a person’s
sensitivity to ethical issues.
F. Virtue ethics
1. Argues that ethical behavior involves not only adhering to conventional moral standards
but also considering what a mature person with a “good” moral character would deem
appropriate.
a. A virtue is considered praiseworthy because it is an achievement that an individual
developed through practice and commitment.
2. Individual virtue and integrity count, but good corporate ethics programs encourage
individual virtue and integrity.
3. By the employee’s role in the community (organization), these virtues form a good person.
4. The ultimate purpose is to serve society’s demands and the public good and to be
rewarded in one’s career.
5. The well-being of the community goes together with individual excellence.
6. The elements of virtue most important to business transactions are trust, self-control,
empathy, fairness, and truthfulness.
a. Critics of virtue ethics argue that virtue is an unattainable goal, but virtue ethicists
believe in the universality of the elements of virtue.
G. Justice
1. Justice is the fair treatment and due reward in accordance with ethical or legal standards,
including the disposition to deal with perceived injustices of others.
2. Three types of justice provide a framework for evaluating fairness of different situations.
a. Distributive justice is based on the evaluation of outcomes or results of the
business relationship.
b. Procedural justice is based on the processes and activities that produce the
outcome or results.
c. Interactional justice is based on the relationships between organizational members,
including the way that employees and management treat one another.
III. Applying Moral Philosophy to Ethical Decision Making
A. Individuals use different moral philosophies depending on whether they are making a personal
or making a work-related decision.
B. Two possible reasons may explain this behavior.
Chapter 6: Individual Factors: Moral Philosophies and Values 36
1. In the business arena, some goals and pressures for success differ from the goals and
pressures in a person’s life outside of work.
2. Moral philosophies may change to become compatible with the work environment.
C. The concept of a moral philosophy is inexact. Moral philosophies must be assessed on a
continuum rather than as static entities.
IV. Cognitive Moral Development and its ProblemsLimitations
A. Many people believe that individuals advance through stages of moral development as their
knowledge and socialization continue over time. Some models attempt to explain, predict, and
control individual’s ethical behavior.
B. According to Kohlberg’s model of cognitive moral development (CMD), people pass
through six cognitive moral development stages, divided into three different stages of ethical
concern. (1. Punishment and obedience; 2. Individual instrumental purposes and exchange; 3.
Mutual interpersonal expectations, relationships, and conformity; 4. Social system and
conscience maintenance; 5. Prior rights, social contract, or utility; 6. Universal ethical
principles)
1. The model suggests that people continue to change their decision-making priorities after
their formative years, and as a result of time, education, and experience, they may change
their values and ethical behavior.
2. An individual’s moral development can be influenced by corporate culture, especially
ethics training. Some experts believe that experience in resolving moral conflicts
accelerates an individual’s progress in moral development.
3. Several problems with CMD relate back to its origin. These problems are termed the three
hit strikes theory. Questionable research practices, contradictions, and validity issues
plague this theory.
V. White-Collar Crime
A. White-collar crimes (WCCs) do more damage in monetary and emotional loss in one year than
the crimes of the street over several years combined. A WCC is a “non-violent criminal act
involving deceit, concealment, subterfuge and other fraudulent activity.”
1. White-collar criminals tend to be highly educated people who are in positions of power,
trust, respectability, and responsibility within a business or organization.
2. Online WCC is a growing problem globally because technology allows people to hack
into systems and access sensitive information.
a. Cybercrime, such as identity theft and online fraud, is a major concern of the Federal
Trade Commission.WCCs that previously originated at the top of organizations are
now able to be committed at lower levels.
b. Advocates of the organizational deviance perspective argue that a corporation is a
living, breathing organism that can collectively become deviant. When companies
have lives that are separate and distinct from biological persons, the corporate
culture of the company transcends the individuals who occupy these positions.
c. Peer influence is a cause of WCC.
d. White-collar crime tends to increase in the years following an economic recession.
37 Chapter 6: Individual Factors: Moral Philosophies and Values
e. Some businesspeople may have personalities that are inherently criminal.
f. The focus of the Federal Sentencing Guidelines for Organizations is that all
organizations should develop effective ethics and compliance programs to prevent
WCC.
VI. Individual Factors in Business Ethics
A. Not everyone agrees on the roles of traditional moral philosophies in ethical decision making in
an organization.
B. Although a personal moral compass is important, it is not sufficient to prevent ethical
misconduct in an organizational context.
C. Both the rewards for meeting performance goals and the corporate culture, especially for
coworkers and managers, have been found to be the most important drivers of ethical decision
making.
D. Equipping employees with intellectual skills that will allow them to understand and resolve the
complex ethical dilemmas they encounter in complex corporate cultures will help them make
the right decisions.
DEBATE ISSUE: TAKE A STAND
Have your students split into two teams. One team will argue for the first point, and the other will
argue for the opposing view. The purpose is to get students to realize that there are no easy answers to
many of these issues. This debate asks students to speculate on the causes behind white–collar crime
cases. The team who argues that white–collar criminals tend to have psychological disorders might
point to the narcissistic nature of many white–collar criminals, their tendency to blame the victims,
and the fact that many continue to commit fraud despite their knowledge of the consequences. Those
who argue that white-collar crime results more from the organizational culture could give examples of
white-collar criminals who were coerced by managers and co-workers to commit a crime.
“RESOLVING ETHICAL BUSINESS CHALLENGES” NOTES
From this case, students should identify Saul’s ethical challenge as deciding whether to report his brother
for Medicaid fraud or say nothing and risk losing his accounting license. Students should realize what
Robert is doing is illegal and considered a white-collar crime.
Robert regretfully gave up his dream of becoming a heart surgeon to become the family doctor in his small
hometown. Robert initially stayed on to support his father after his mother’s sudden death. He ended up
staying and has helped many other families with quality medical care. Many years passed and Saul,
Robert’s brother, began working for him as his accountant and business manager. While organizing his
brother’s papers, Saul recognized what appeared to be Medicaid fraud. When he approached Robert about
a discrepancy, Robert brushed it off as a simple mistake. However, Saul knew about more than one
discrepancy; in fact, there were several adding up to over $75,000.
Robert could go to jail for Medicaid fraud. If Saul reports Robert, his own brother, how could that affect
the family? If Saul does not report the discrepancies and Medicaid investigates his brother, Saul could lose
his license and face charges. How should Saul approach the situation?