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
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.
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.
1. A moral philosophy is a person’s principles and values. They are guidelines for
2. Adam Smith—the father of free-market capitalism—believed business was and should be
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
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
2. Pluralists (non-hedonists) take the position that no one thing is intrinsically good.
3. Sometimes called pragmatists, instrumentalists reject the idea that
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.
3. Egoism defines right or acceptable behavior in terms of the consequences for the
individual. They believe in making decisions to maximize self-interest.
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.
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
3. Deontology is greatly influenced by the philosopher Immanuel Kant’s categorical
5. Deontologists believe that individuals have certain absolute rights, including
a. freedom of conscience
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
E. Relativist Perspective
1. Definitions of ethical behavior are derived subjectively from the experiences of
individuals and groups.
3. Meta-ethical relativism proposes that people naturally see situations from their own
4. Normative relativism assumes that one person’s opinion is as good as another’s.
5. A problem with relativism is that it emphasizes peoples’ differences while ignoring their
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
2. Individual virtue and integrity count, but good corporate ethics programs encourage
individual virtue and integrity.
4. The ultimate purpose is to serve society’s demands and the public good and to be
rewarded in one’s career.
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.
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.
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 Problems
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
2. An individual’s moral development can be influenced by corporate culture, especially
3. Several problems with CMD relate back to its origin. These problems are termed the three
hit theory. Questionable research practices, contradictions, and validity issues plague this
36 Chapter 6: Individual Factors: Moral Philosophies and Values
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. 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
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
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
“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.
Chapter 6: Individual Factors: Moral Philosophies and Values 37