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Affective Morality: The Role of Emotions in theEthical Decision-Making ProcessVirginia Kim BrattonFlorida State University

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Recommended CitationBratton, Virginia Kim, "Affective Morality: The Role of Emotions in the Ethical Decision-Making Process" (2004). Electronic Theses,Treatises and Dissertations. Paper 3097.

THE FLORIDA STATE UNIVERSITY

COLLEGE OF BUSINESS

AFFECTIVE MORALITY: THE ROLE OF EMOTIONS IN THE ETHICAL DECISION-MAKING PROCESS

By

VIRGINIA K. BRATTON

A dissertation submitted to the Department of Management in partial fulfillment of the

requirements for the degree of Doctor of Philosophy

Degree Awarded: Summer Semester, 2004

The members of the Committee approve the dissertation of Virginia K. Bratton defended on May 19, 2004.

____________________________ K. Michele Kacmar Professor Directing Dissertation

____________________________ John Corrigan Outside Committee Member

____________________________ Monica Hurdal Committee Member ____________________________ Dave Ketchen Committee Member ____________________________ Pamela Perrew Committee Member Approved: _________________________________________ Bill Anthony, Chair, Management Department _________________________________________ Melvin T. Stith, Dean, College of Business The Office of Graduate Studies has verified and approved the above named committee members.

ii

This dissertation is dedicated to my family. They have provided a never-ending supply of support, inspiration, and love, without

which I would never have been able to start or finish this or any other project.

Thanks to you all: Mom, Dad, Laura, & Andy I love you very much.

iii

ACKNOWLEDGEMENTS

I would like to thank my dissertation chair and mentor, Micki Kacmar, for guiding me

through this dissertation process, helping me get a job, motivating me when I got a little

sluggish, and providing me with peace of mind when I needed it most. You have taught me so

much, and I am eternally grateful and proud to be your student.

I would also like to thank Dave Ketchen for his constant support and encouragement

throughout my doctoral program. I have thoroughly enjoyed your seminars, your research

projects that you shared with me, and your presence and guidance on my dissertation

committee.

Thanks as well to the other members of my dissertation committee. Through conversations

with Monica Hurdal, I was able to focus the topic of my dissertation on emotions. Thank you

Monica for you help on this project and your advice on life in Australia! My first business

class ever was with Pam Perrew. You taught me what organizational behavior is and supported

me all the way through to the completion of my dissertation. Thank you for the opportunity to

research with you and for your help throughout this program. Finally, thank you to John Corrigan,

my outside committee member who braved renegade frisbee enthusiasts to attend my proposal

defense and provided me with insights from his extensive knowledge of emotion in spite of being

injured! Lastly, I want to thank a vast support network of family, friends and professors without

whom I would never have embarked upon this journey or seen its completion. Through work

and study with George Riordan, Bill Byrnes, Diane Greer, Maxine Stern, Ed Huttlin, Max

Richardson, and Per Anderson, my future as a management professor first opened up to me. And

a final thanks to my peers at Florida State- thank you for the laughs, the talks, the ideas, and the

drinks. Because of you this process, while challenging, has been an absolute pleasure. This is

just the beginning- I know that good things are in store for all of us much love and thanks to

you all!

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TABLE OF CONTENTS

List of Tables ................................................................................................ vi List of Figures ................................................................................................ vii Abstract ............................................................................................................... ix 1. Introduction ................................................................................................ 1 2. Literature Review ........................................................................................... 10 3. Methods ................................................................................................ 57 4. Results ................................................................................................ 67 5. Discussion ................................................................................................ 90 APPENDICES ................................................................................................ 105 A Human Subjects Application ................................................................ 104 B Human Subjects Approval .................................................................... 112 C Complete Pre-experiment Survey ......................................................... 113 D Reading Excerpt.................................................................................... 128 E Quiz ................................................................................................ 131 F Post-Experiment Survey ....................................................................... 136 G Control Variables .................................................................................. 137 H Abbreviated Positive and Negative Affect Schedule............................ 138 I Neuroticism, Extraversion, and Conscientiousness Scales................... 139 J Emotional Intelligence Scale ................................................................ 142 K Machiavellianism Scale ........................................................................ 144 L Multidimensional Ethics Scale ............................................................. 146 M Locus of Control Scale ......................................................................... 149 N Strength of Religious Beliefs Scale ...................................................... 152 O Self-Monitoring Scale........................................................................... 153 P Hypothesis 7 Results............................................................................. 155 REFERENCES ................................................................................................ 158 BIOGRAPHICAL SKETCH .............................................................................. 173

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LIST OF TABLES Table 2.1: Kohlbergs Six Stages of Cognitive Moral Development .................. 12 Table 2.2: Rests Four Component Model of Morality ....................................... 15 Table 2.3: Reidenbach & Robins (1998, 1990) Three-Dimensional

Measure of Moral Judgment [Multidimensional Ethics Scale] .......... 30 Table 2.4: Proposed Hypotheses.......................................................................... 57 Table 4.01: Descriptive Statistics ........................................................................ 68 Table 4.02: Correlation Matrix ............................................................................ 70 Table 4.03: Proposed Hypotheses........................................................................ 77 Table 4.04: Mean Values for Hypothesis 1 Tables 4.05 and 4.06 ................... 79 Table 4.05: Anova Results for Positive Affect (Hypothesis 1) ........................... 79 Table 4.06: Anova Results for Negative Affect (Hypothesis 1).......................... 79 Table 4.07: Mean Values for Hypothesis 2 Tables 4.08 and 4.09.................... 81 Table 4.08: Anova Results for Positive Affect (Hypothesis 2) ........................... 81 Table 4.09: Anova Results for Negative Affect (Hypothesis 2).......................... 81 Table 4.10: Hierarchical Regression Results for Positive Affect

(Hypothesis 3a) ................................................................................. 83 Table 4.11: Hierarchical Regression Results for Negative Affect

(Hypothesis 3b)................................................................................. 83 Table 4.12: Hierarchical Regression Results for Ethical Behavior

(Hypothesis 4a and 4b) ..................................................................... 85 Table 4.13: Mean Values for Hypothesis 5 ......................................................... 85 Table 4.14: Anova Results for Ethical Behavior (Hypothesis 5) ........................ 86 Table 4.15: Hierarchical Regression Results for Ethical Behavior

(Hypothesis 6).................................................................................. 86 Table 4.15: Summary of Significant Relationships ............................................. 89 Table 5.1: Summary of Hypothesis and Findings................................................ 91 Table P1: Summary of Regression Results for the Mediating Effect

of Positive Affect on the Relationship Between Peer Influence and Ethical Behavior (Hypothesis 7a-1).............................................. 155

Table P2: Summary of Regression Results for the Mediating Effect of Positive Affect on the Relationship Between Trait Affect and Ethical Behavior (Hypothesis 7b-1).............................................. 155

Table P3: Summary of Regression Results for the Mediating Effect of Positive Affect on the Relationship Between Gender and Ethical Behavior (Hypothesis 7c-1).............................................. 156

Table P4: Summary of Regression Results for the Mediating Effect of Negative Affect on the Relationship Between Peer Influence and Ethical Behavior (Hypothesis 7a-1).............................................. 156

Table P5: Summary of Regression Results for the Mediating Effect of Negative Affect on the Relationship Between Trait Affect and Ethical Behavior (Hypothesis 7b-1).............................................. 157

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Table P6: Summary of Regression Results for the Mediating Effect of Negative Affect on the Relationship Between Gender and Ethical Behavior (Hypothesis 7c-1).............................................. 157

vii

LIST OF FIGURES Figure 1.1: Affective Events Theory Applied to Moral Reasoning .................... 4 Figure 1.2: Moral Deliberation Rests (1986, 1994) Four-Component

Conceptualization of Morality ......................................................... 6 Figure 1.3: Affective Influence on Moral Deliberation ...................................... 7 Figure 2.1: Ferrell & Greshams (1985) Contingency Framework

of Ethical Decision Making In Marketing ......................................... 18 Figure 2.2: Hunt & Vitells (1986, 1992) General Theory of

Marketing Ethics .............................................................................. 20 Figure 2.3: Dubinsky & Lokens (1989) Framework for Analyzing

Ethical Decision Making in Marketing ............................................. 22 Figure 2.4: Trevinos (1986) Interactional Model of Ethical Decision

Making in Organizations ................................................................... 24 Figure 2.5: Jones (1991) Issue-Contingent Model of Ethical Decision

Making .............................................................................................. 26 Figure 2.6: Larsens (2000) Model of the Role of Personality in

Moderating & Mediating Affective Responses ................................ 42 Figure 2.7: Proposed Conceptual Model of Affective Morality ......................... 45 Figure 2.8: Proposed Testable Model of Affective Morality .............................. 47 Figure 4.1: Depiction of Hypotheses 1, 2, & 3 ................................................... 74 Figure 4.2: Depiction of Hypotheses 4, 5, & 6 ................................................... 75 Figure 4.3: Depiction of Hypothesis 7 ................................................................ 76 Figure 5.1: Future Research on Business Ethics ................................................. 100

viii

ABSTRACT

This dissertation integrated the role of emotions into the ethical decision-making process,

which traditionally has been conceptualized as an exclusively logical process. The study

examined the process by which the arousal of emotion impacts individual moral deliberation and

ultimately moral behavior. Although most existing research emphasizes the cognitive elements

of ethical decision-making, this study provides evidence to support a new conceptualization of

moral deliberation -- one in which emotion is a necessary component leading to ethical decisions

and ethical behavior.

Theory and research in the areas of ethical decision-making and affective events offer

insights into how emotion specifically impacts moral deliberation and behavior. Based on these

insights, a model of affective morality is developed and tested. The model suggests that ethical

decisions and behavioral outcomes depend upon the content and degree of individual affective

reactions in response to ethical situations.

The sample used to examine the proposed model consisted of 227 college students from 5

different disciplines at a large 4-year public research university. The results provided empirical

evidence, which suggests that peer influence is a stronger determinant of ethical behavior than

individual affective reactions. Specifically, an individual seems to be more likely to engage in

ethical behavior when his/her peers also behave ethically.

Although, affective reactions were not a significant antecedent to ethical behavior, the

form of the relationship observed does suggest that moral deliberation may be shaped by

individual affective reactions and future study is warranted. Furthermore, the results suggest that

previous conceptualizations of moral deliberation have been incomplete in their neglect to

include the role of affect or emotion. Both theoretical and practical implications of these

research findings are discussed.

ix

CHAPTER 1

INTRODUCTION

The topic of ethics (or morality) has attracted a great deal of interest in business practice

and research over the past three decades. In spite of an accumulation of research on the subject, a

steady stream of corporate ethical scandals continues to produce indignation among both

shareholders and the general public. The business community rightly feels pressure to respond to

public outrage regarding corporate unethical behavior, as these incidents can be quite costly.

Corporate ethics and its deficiency of public and shareholder confidence poses a threat to the

stability of the American dollar and raises the worlds interest in promoting the appearance of

corporate integrity as well as the incidence of ethical behavior.

Highly publicized incidents of unethical behavior in a broad range of contexts (from

government to retail to corporate trade) have prompted research into the determinants of and

processes leading to ethical behavior. This requires a better understanding of ethical decision-

making processes. An ethical decision is defined by Jones (1991) as a decision that is consistent

with the law as well as the overarching moral norms of the community at large. It is the cognitive

nature of ethical deliberation that has been especially problematic for researchers who seek to

empirically examine these processes. Ethical deliberation is one of the more elusive

unobservables in organizational research. In effect, one of the greatest criticisms of ethical or

moral research to date is that it suffers in terms of method (Collins, 2000; Loe, Ferrell, &

Mansfield, 2000), and relies primarily on scenario-based measures that are difficult, if not

impossible, to validate.

While many criticize ethics research for its methodological shortcomings, few have

offered viable solutions for this problem. The root of this methodological problem, however,

may lie in the improper theoretical specification of moral deliberation. Recently, researchers

from management (Folger, Cropanzano, & Van De Boss, 2002; Gaudine & Thorne, 2001) as

well as social neuroscience (Damasio, 1994; Greene, Sommerville, Nystrom, Darley, & Cohen,

1

2001; Moll, Eslinger, Oliveira-Souza, 2001; Vogel, 1997) suggest that emotion is an important

and underemphasized component in the ethical decision-making process. For the purposes of

this discussion, emotion is defined as a feeling and its associated thoughts, encompassing

psychological as well as physiological states and subsequent behaviors (Goleman, 1995), that

arise in reaction to an object or event (Weiss & Cropanzano, 1996).

Studies in social neuroscience, a multi-disciplinary field that examines the neural

foundations of social cognition and behavior, have provided evidence to suggest that it is

insufficient to conceptualize ethical decision-making as an exclusively logical process in which

emotion is controlled as a biasing factor. These studies (Greene et al., 2001; Moll et al., 2001;

Vogel, 1997) have revealed that emotion plays an important role particularly in the recognition

of an ethical dilemma. This coincides with scarce but recent conceptual work in management

literature (Folger et al., 2002; Gaudine & Thorne, 2001) that also acknowledges the role of

emotion in the ethical decision-making process. While this recent work in management suggests

that there is some kind of relationship between emotion and ethical behavior, researchers up to

this point have not specified the actual process delineating how emotion affects ethical decisions

and behavior.

In this vein, the purpose of this dissertation is to examine the process by which

individuals make ethical decisions and engage in ethical behavior. By incorporating the role of

emotion in this process, this research provides greater insight into how and why some individuals

behave ethically while others do not. Where past research has predominantly approached the

study of ethics from a rational cognitive point of view (Dubinsky & Loken, 1989; Ferrell &

Gresham, 1994; Hunt & Vitell, 1986; Rest, 1986; Trevino, 1986), it is suggested here that

subsequent empirical validation is best accomplished by incorporating emotion into the ethical

process model. More specifically, this research suggests that it is individual affective reactions

that differentiate ethical individuals from unethical individuals in business. This study further

makes a first effort in delineating the actual process by which affect influences moral

deliberation.

Toward this goal, the present research is designed to explore whether individuals who

become emotionally aroused upon perceiving a moral dilemma are more likely to make an

ethical decision and engage in ethical behavior. Research into the areas of affective events

theory and moral reasoning will be used to develop a model of affective morality to be applied to

2

business ethics. An investigation will be conducted into subject affective and moral responses to

generic ethical scenarios, recalled ethical incidents, and an actual ethical situation.

Theoretical Background

Affective Events Theory

Affective events theory (AET) was developed by Weiss and Cropanzano (1996) in an

effort to differentiate affect and emotions from the specific work attitude of job satisfaction.

Although research on AET is still in its infancy, its key tenets have been largely supported thus

far (Ashkanasy, Hrtel, & Daus, 2002). AET asserts that emotion and affect underlie much of

how individuals think and act at work (Fisher & Ashkanasy, 2000; OShea, Ashkanasy, Gallois,

& Hrtel, 1999; Weiss, Nicholas, & Daus, 1999). Specifically, it suggests that workplace

conditions lead to distinct affective events that cause a worker to have affective responses such

as moods or emotions. In the short term, these affective responses lead to impulsive actions, but

in the long-term they influence employee work attitudes, behavior, and ultimately performance.

The process by which emotion impacts an individuals ethical deliberation may be

explained by affective events theory (AET). As Figure 1.1 illustrates, most individuals have

some type of emotional reaction upon perceiving an ethical situation in the form of an

environmental stimulus. Depending upon the actual nature of this stimulus as well as individual

dispositional differences, it is likely that some individuals will respond with higher levels of

emotional arousal than others, which will impact an individuals perception of a given ethical

situation. An example may facilitate the illustration of this idea. If a female employee has

struggled with issues of gender discrimination in the past, upon perceiving a work event where

her co-worker is the subject of sexual harassment this employee will be more likely to have

intense affective reactions to this event. As a result, she also will be more inclined to perceive

this event as an ethical situation and engage in some sort of moral deliberation to decide how

best to respond to the situation. In effect, this employees moral behavior is largely driven by

her affective responses to the triggering work event (sexual harassment of co-worker).

The utility of AET when analyzing ethical behavior lies specifically in its constitution of

emotion as an essential link between an employees work environment and subsequent behavior.

While AET can explain how emotion can impact ones moral reasoning and formulation of

behavioral intentions, it cannot stand alone as an explanation for moral behavior. Recently,

3

Affect Driven Behaviors

Moral Deliberation

Judgment Driven

Behaviors

Affective Reactions

Dispositions

Work Events

(Ethical Dilemma)

Work Environment

Features

FIGURE 1.1

AFFECTIVE EVENTS THEORY APPLIED TO MORAL REASONING

4

Folger and colleagues (2002) further developed the basic tenets of AET to conceptualize how an

individuals emotions can impact not only his/her own moral behavior but also the moral

behavior of others. Their work takes a theoretical look at the impact of specific emotions (i.e.,

guilt, shame, embarrassment, anger, contempt, disgust) on subsequent propensities to commit

moral behavior. However at this time, there has not been any empirical research linking emotion

to ethical behavior in the field of management.

Moral Reasoning

Both morality and ethics generally refer to a set of principles that distinguish right

behavior from wrong behavior. While some researchers have attempted to better differentiate

the two terms, their efforts have not resulted in any commonly accepted distinction (Rest &

Narvez, 1994). Thus, following the lead of prior researchers, morality and ethics will be used

interchangeably throughout this dissertation.

Early conceptions of morality have centered upon moral reasoning or judgment (i.e.,

Kohlberg, 1984). In the past 20 years, however, a more complex conceptualization of morality

has dominated organizational research (Jones, 1991). Rest (1986) proposed a four-component

model (see Figure 1.2) where morality is presented as a multidimensional construct that includes:

moral sensitivity (recognizing a moral dilemma), moral judgment (judging which action is right

or wrong), moral motivation (prioritizing moral values compared to other values to develop

moral intentions), and moral character (having courage to behave consistent with moral

intentions). As such, workplace events are perceived by an employee and cause affective

reactions of varying content and intensity. These affective reactions will then feed into Rests

(1986, 1994) four-component model of morality.

Although Rest contended that these four components need not occur sequentially, they

are loosely conceptualized as a sequential process and form the basis of the ethical decision-

making model in this research. Here, it is theorized that affective reactions directly impact the

level of an employees moral sensitivity and later indirectly influence the other three components

(see Figure 1.3). In effect, Rests four-component model of morality becomes a four-stage

model of the moral process. However, staying true to Rests original holistic picture of morality

and acknowledging the conceptual overlap that exists between these four components, they are

grouped together in this study. Although a sequential conceptualization of moral deliberation is

5

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7

not inconsistent with its treatment in the literature, the primary theoretical emphasis in past

research has been on the relationship between moral judgment and subsequent behavior (Jones,

1991; Rest & Narvez, 1994), and the empirical relationship between these stages are less clear.

Recognizing a moral dilemma. The first component or stage of Rests model is moral

sensitivity. In order for an individual to make an ethical decision, s/he must first recognize that

an ethical situation exists which requires that such a decision be made (Rest & Narvez, 1994).

A moral dilemma (or ethical situation) is a situation that has consequences for other people and

requires that a choice be made by the actors or decision makers (Jones, 1991). Moral sensitivity

is one of the most researched topics in business ethics (Collins, 2000). It has been described as a

personal characteristic that enables individuals to recognize the presence of an ethical issue

(Hunt & Vitell, 1992), and further implies that the individual ascribes importance to that issue

(Sparks & Hunt, 1998).

Making a moral judgment. The second stage of Rests model is moral judgment. This

dimension involves deciding which potential responses to the recognized ethical dilemma are

morally right and/or justifiable (Rest & Narvez, 1994). While this is a subjective process,

research indicates that moral judgments tend to adhere to social or cultural norms (Hegarty &

Sims, 1978; Vitell, Rallapalli, & Singhapakdi, 1993; Zey-Ferrell & Ferrell, 1982). Additionally,

several dispositional traits (e.g., self-efficacy, Big Five) have been linked to the general decision-

making process. Thus, it is expected that dispositional traits also will impact moral judgment.

Forming moral intentions. The third stage of Rests model is moral motivation. This

dimension involves prioritizing the level of importance of moral values in comparison with other

values (Rest & Narvez, 1994). Through this consideration of values, an individual develops

his/her behavioral intentions regarding the ethical dilemma. Thus, after deciding which actions

are morally right and justifiable, an individual then must consider whether behaving morally

(moral value) is as important as behaving in such a way as to keep his/her job (instrumental

value).

Implementing moral behavior. The final stage of Rests model is moral character, which

enables individuals to behave in a manner consistent with the moral intentions they developed in

stage three (Rest & Narvez, 1994). This may be the most difficult stage in moral behavior, for

many pressures from an individuals environment can push him/her to behave unethically. For

example, in a resource-scarce and highly competitive work environment, the operant norms of an

8

organizational culture may cause an individual to behave unethically in spite of his/her

knowledge of and desire to engage in moral behavior.

In this research, moral sensitivity is conceptualized as being issue-contingent. In other

words, an individuals moral sensitivity will vary from situation to situation. For example,

consider a young mans ability to recognize a moral dilemma that involves the administration of

experimental medical treatment to the elderly in contrast to a dilemma that involves a co-

workers personal use of a company credit card. It is not hard to fathom that the young man will

be more likely to recognize the moral dilemma involving the medical well being of an elderly

person than the abuse of a company credit card. As this example illustrates, moral sensitivity can

and will be considered an issue-contingent construct, not a personal characteristic.

Summary of Present Research

The purpose of this research is to incorporate the influence of emotion into moral

reasoning by integrating affective events theory with Rests four-stage model of the moral

process. In particular, this dissertation will investigate the differences among individuals

affective responses to ethical work events and the process by which such differences ultimately

lead to varying moral behavioral responses to these work events. Specifically, this study will

examine whether affective intensity causes increased moral sensitivity and whether increased

moral sensitivity ultimately results in the increased incidence of moral behavior. Thus, the key

relationship to be studied is the linkage between affective reactions and moral sensitivity, as the

occurrence of the three other components is contingent upon the recognition of a moral issue.

In what follows, Chapter Two provides a selective review of the literature on ethical

decision-making, social neuroscience, and emotions (which will include but not be limited to

AET). This literature provides the theoretical foundation for the proposed model of affective

morality. The model, presented in Chapter Two, will be used as a guide in selecting testable

variables and developing specific hypotheses respective to those variables. Chapter Three

discusses the method used to test the proposed model, and Chapter Four presents the results.

Discussion and areas for future research follow in Chapter Five.

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CHAPTER 2

LITERATURE REVIEW

This chapter is comprised of three major sections: a comprehensive review of research on

ethical decision-making, a review of relevant emotion literature, and the introduction of the

model and its hypotheses.

Ethical Decision-Making

Most ethical decision making research in the past 20-30 years builds upon the work of

Kohlberg (1969, 1971, 1976). Research interest in ethics aroused originally in the fields of

philosophy and political science (i.e., Kant and Aristotle) as well as psychology (i.e., Kohlberg,

1969, 1971; Piaget, 1965). However, as incidents of unethical behavior in the business sector

became more common, the topic of ethics gained interest by researchers in marketing,

accounting, and management. Devising explanations for unethical behavior and formulating

models to better describe the ethical decision making process has been a daunting task. Several

ethical decision making theories have been proposed across a variety of disciplines, and while

some researchers have made valiant efforts to integrate existing models of ethical decision-

making behavior, there is a scarcity of good empirical development to test these models. As will

become evident during the course of this review of literature, the primary challenge in ethics

literature has been to accurately conceptualize the full domain of ethics while devising tests that

capture this domain. The key proposition of this dissertation is that previous conceptualizations

and tests of ethical decision-making and behavioral processes are incomplete in their omission of

emotional components in this process. Early Theoretical Work in Ethics

Prior to Kohlbergs renowned work in the 1950s, research in ethics primarily centered on

the socialization view of moral development (Rest & Narvez, 1994). Most of these approaches

reflected the dominance of behaviorism in psychology (Pittel & Mendelsohn, 1966). This

approach suggested that individuals develop morality by learning the operant norms of their

10

culture, accepting and internalizing these norms, and behaving in a manner to conform to these

norms (Rest & Narvez, 1994). From this perspective, individuals, who behave in accordance

with the dominant social norms of their cultures, are in fact behaving morally. For example, if

the norms of a culture sanction polygamy, then it is moral for an individual in this culture to take

on several wives. Similarly, if the norms of a culture allow for executive perks to be built into

the company budget, then it is moral for individual executives to spend a portion of their

company budgets to secure such benefits. In other words, society dictates morality.

What is lacking from this socialization perspective on moral development is the element

of cognition on the part of the individual actor. Although Piaget first introduced the concept of

moral judgment in 1932, it was the research efforts of Kohlberg that caused the academic world

to notice this construct in the 50s and 60s (Rest, 1979). He pointed out that conformity with

some social norms does not necessarily lead to moral behavior and may sometimes lead to

immoral behavior. Kohlberg asserted that it is the individual, not society, who differentiates

between right and wrong through the process of making moral judgments (Kohlberg, 1964).

Cognitive Moral Development

Much of the foundation of Kohlbergs work resonates the earlier research of Piaget. For

instance, both Kohlberg and Piaget emphasize the role of cognition in their study of morality.

The researchers also shared the assumption that there are stages in the development of an

individuals moral judgment (Rest & Narvez, 1994). Kohlberg especially focused his research

on describing the stages of moral development and developing methods to assess an individuals

stage.

According to Kohlbergs theory of cognitive moral development (1969, 1971, 1976),

there are six stages of moral development that individuals advance through sequentially and one

by one as they develop more sophisticated structures for managing ethical information. These

stages can be distinguished into three levels according to the social perspective base from which

individual actors function. In level one, the lowest level (stages one and two), individuals base

moral reasoning on their personal interests. In level two (stages three and four), individuals

develop their moral judgments from the perspective that they are part of a group whose members

share common interests. At level three (stages five and six) individuals function rationally and

morally in an effort to maintain the ethical standards upon which a just society is built

11

(Kohlberg, 1976). These stages are displayed in Table 2.1. In this table, the stages emphasize

morality in relation to cooperative behavior (Rest & Narvez, 1994).

In stage one, individuals behave morally in an effort to avoid punishment or

consequences for immoral behavior. Individuals at stage two base their moral judgments on a

type of cost-benefit analysis, primarily reflecting their personal interests and occasionally the

interests of others. Moral reasoning at stage three involves individuals who behave morally in

order to satisfy the interests of significant others, where individuals at stage four base their moral

judgments on whether the behavior maintains social order or reflects their obligations to society.

Finally, individuals at stage five base moral judgments on upholding the inalienable rights of all

members of society, and at stage six, moral behavior is based on maintaining universal principles

of justice and ethics (Kohlberg, 1969; Carlson & Kacmar, 1997).

TABLE 2.1

KOHLBERGS SIX STAGES OF COGNITIVE MORAL DEVELOPMENT

1st Stage The morality of obedience - Do what you're told. 2nd Stage The morality of instrumental egoism and simple exchange - Let's

make a deal. 3rd Stage The morality of interpersonal concordance - Be considerate, nice,

and kind: you'll make friends. 4th Stage The morality of law and duty to the social order - Everyone in

society is obligated to and protected by the law. 5th Stage The morality of consensus-building procedures - You are

obligated by the arrangements that are agreed to by due process procedures.

6th Stage The morality of nonarbitrary social cooperation - Morality is defined by how rational and impartial people would ideally organize cooperation.

Content based on Rest, J. R., & Narvez, D. (1994).

12

Kohlbergs research has provided the central ideas for several decades of moral research

in psychology as well as business (Jones, 1991; Rest, Narvez, Bebeau, & Thoma, 1999). Yet,

this work is not without criticisms, some more valid then others. Rest and others (1999)

reviewed and synthesized these criticisms, identifying four key limitations to Kohlbergs

approach.

The first limitation is the exclusive focus on moral judgment as the primary determinant

of moral behavior. Critics assert that cognition is merely one part of the ethical process, and

other constructs such as emotion are neglected (Gilligan, 1982). The second limitation is that

Kohlbergs theory is too abstract to provide useful guidance for day-to-day moral behavior

(Strike, 1982). Rather, the emphasis is on the development of high-level, abstract principles of

moral judgment, and these abstract levels cannot sufficiently represent all levels of cognition that

can be involved in ethical decision-making (Rest et al., 1999).

A third limitation addresses Kohlbergs conceptualization of morality in that it is

confined to the concept of justice. Critics assert that not all moral behavior necessarily reflects

justice. For example some moral behavior may be motivated by care (Pritchard, 1991).

Consider the story from Les Misrables, where a young man, who steals a loaf of bread to feed

his loved ones, is arrested for this crime. His behavior was motivated not by concerns for

maintaining universal principles of justice, but rather by concerns to provide care for his family.

From Kohlbergs perspective, this behavior is not very moral; however, others (i.e., Gilligan,

1982; Pritchard, 1991; Rest et al., 1999) would assert that this young man indeed behaved in a

moral manner.

The final limitation identified by Rest and colleagues (1999) deals with the assessment

techniques used with the cognitive moral development theory. This is related to the criticism

discussed in the previous paragraph, for if Kohlbergs concept of morality is weighted toward the

concept of justice, it follows that the assessments developed to gauge to which stage individuals

have evolved when making moral judgments are also weighted toward this limited view of

morality. Several critics point out that the moral dilemmas devised by Kohlberg as assessments

do not provide an adequate test of the full moral domain. While this criticism rings true, no other

technique has been developed that does provide such a test (Rest et al., 1999). Continued

research effort is needed to develop new methods, refine existing methods, and ultimately

improve the overall assessment of morality.

13

Four Component Conceptualization of Morality

Building upon Kohlbergs work and primarily addressing the first mentioned limitation

(moral judgment is merely one part of the moral decision-making process), Rest (1979)

developed a four component model of morality as a result of conducting a comprehensive review

of ethics literature. He found that not all literature in ethics pertained to moral judgment. As a

result, he needed to either consider such research to be outside of the domain of ethics or

acknowledge that such research covered other facets of morality (outside of moral judgment).

Accordingly, he formulated a broader, multidimensional conceptualization of morality where

each dimension represents a psychological process that must occur in order for individuals to

behave morally (Rest, 1986). In effect, the four component model of morality was developed as

a structure for understanding disparate research in ethics as well as a theory of the determinants

of moral behavior (Rest, 1979; Rest & Narvez, 1994).

The four components of this model, summarized in Table 2.2, do not represent a

sequential moral progression. They are conceptually distinct, and each must be satisfied in order

for moral behavior to result. If any component is not satisfied, a moral failure will result (Rest,

1986).

The first component, moral sensitivity, requires that individuals imagine what types of

actions are possible and how these actions will ultimately affect everyone involved. It is not

necessary for individuals to label the situation as constituting a moral problem. However, actors

must realize that their potential actions will affect the interests, well-being, and expectations of

others.

Rest (1986) acknowledges three key findings from psychology that are related to moral

sensitivity. First, not all individuals are capable of interpreting situations with the same skill due

to individual differences in cognitive ability (Staub, 1978). Second, individuals differ greatly in

their concern for the needs and interests of others (Schwartz, 1977). Some individuals may be

very empathetic with others who may suffer minor consequences in a moral situation, where

other individuals may not recognize that welfare of others is at stake unless they see that physical

harm has been suffered. Finally, some situations result in very strong emotions that occur before

cognitive encoding. These strong feelings may immediately result in a type of affect toward or

empathy with a participant in the situation, and this occurs before the individuals have time to

14

think about the actual situation (Zajonc, 1980). Thus, a strong relationship between emotion and

cognition is inherent in this first component.

The second component, moral judgment, involves deciding which possible action

(identified in component one) is morally right. Drawing from the cognitive developmental

research, Rest (1986) asserts that individuals who make moral judgments have: accrued

substantial social experience and developed complex structures to organize this experience,

developed a clear sense of fairness in relation to themselves and others that is derived from these

complex structures, and are driven in their moral judgments by this sense of fairness. The link

between cognition and affect is presupposed in this component (Rest, 1986). The impact of

affect has already shaped the cognitions individuals form throughout their acquisition of social

experience. While most of Rests conceptualization is based on Kohlbergs cognitive moral

development, other aspects of moral judgment may include care and love in addition to the

justice approach of Kohlberg (Rest, 1986; Rest & Narvez, 1994).

TABLE 2.2

RESTS FOUR COMPONENT MODEL OF MORALITY

Component One Moral Sensitivity

The actor must interpret the situation to understand what actions were possible, who would be affected by each possible action, and how concerned participants would interpret these effects in terms of their welfare.

Component Two Moral Judgment

The actor must judge which action is right or wrong. In this process, actors can identify a moral (right) action as what should be done in a given situation.

Component Three Moral Motivation

The actor must prioritize ethical principles over his/her own personal values so that a decision results where the actor pursues an action that is morally right.

Component Four Moral Character

The actor must have ample determination, strength of personality, and implementation abilities in order to carry out intentions to behave morally and overcome any obstacles along the way.

* Content based on Rest (1986) and Rest and Narvez (1994).

15

The third component, moral motivation, involves the individual prioritization of moral

values in relation to other personal values. Having identified the morally right action to pursue

in component two, individuals have to decide whether the moral value of this action is

meaningful to them relative to other potential value that can be derived from alternative courses

of action. An individuals motivation to behave morally, even at their own expense, can stem

from a number of things including shame, social norms, commitment to a higher good, empathy,

care and affection, and self-integrity (Rest, 1986). The interconnections between affect and

cognition are present in moral motivation. For example, individuals must be motivated to

perform an action (moral or immoral) in order to achieve a particular outcome, and they must

feel affect towards this outcome. Furthermore, some research (Isen, 1970) has found that

individuals tend to behave more cooperatively when they are simply in a good mood.

The final component, moral character, is where individuals convert their behavioral

intentions into actual behavior. Individuals who carry out their intentions must keep the goal or

outcome of their actions in mind while they plan a sequence of actions and overcome internal

and external obstacles. Such individuals must have perseverance, resoluteness, competence,

and character (Rest, 1986, p. 15). Individuals with strong character compositions and who are

able to regulate their own actions are more likely to behave morally.

Although these components seem to imply a sequential process, the process resulting in

moral behavior is much more complex. It is possible that upon considering components two and

three, individuals realize that they stand to lose too much in order to behave morally. Thus, such

individuals may defensively go back to the first component and reassess the situation in order to

avoid labeling it as a moral situation (Rest, 1986).

Other Influential Models

Since the leading work of Kohlberg and Rest, several researchers have sought to develop

theoretical explanations for ethical behavior specifically in the context of business. The common

theme underlying the earlier models of ethical decision-making is the emphasis of the individual.

However in the realm of business, influential work has sought to incorporate both the influence

of the individual as well as environment in the study of ethics. Five key models are briefly

reviewed in the following paragraphs. Marketing researchers contributed the first three models,

and researchers in management developed the final two models.

16

Several models have been developed to better understand ethical decisions specifically in

the area of marketing (Dubinsky & Loken, 1989; Ferrell & Gresham, 1985; Hunt & Vitell,

1986). This research springs from a recurring debate in ethics literature that is, do normative

standards, resulting in ethical decisions, reflect a teleological or deontological philosophical

base? Teleological theories suggest that individuals, who behave ethically, first determine the

consequences of the potential behavioral paths in a given situation and evaluate the inherent

good or bad of these consequences. On the other hand, deontological theories assert that the

ethical behavior of individuals is driven by their internalized moral principles, a universal sense

of what is right and what is wrong (Frankena, 1963; Hunt & Vitell, 1986). Kohlberg and Rest

both acknowledged the existence of this debate in their work. In fact, Kohlberg attempted to

settle this debate by suggesting that stage six of moral development (the highest stage of moral

development) reflected deontological principles whereas the lesser stages in moral development

were derived more from teleological lines of reasoning (Kohlberg, 1984; Rest & Narvez, 1994).

In spite of Kohlbergs efforts, this debate is unresolved and continues to stimulate critical

thought and dialogue on the ethical decision-making process.

Incorporating teleological as well as deontological philosophies, Ferrell and Gresham

(1985) developed a contingency framework (see Figure 2.1) to synthesize existing research and

better understand the determinants of ethical decision-making in marketing. Their framework

includes both individual variables (knowledge, values, attitude, intentions) and context variables

(significant others, opportunity) that impact individual ethical behavior in organizations.

Individual variables are shaped by the dominant moral philosophy (teleological v.

deontological) operant in the decision-maker, and these variables in turn impact the actual

decision-making process. Significant others from the decision-makers professional and private

life also will shape an ethical decision. Finally, the opportunity to engage in unethical behavior,

which relates to codes of ethics as well as rewards and punishments for unethical behavior, will

impact the ethical decision process.

Thus, the authors propose that three categories of variables should interactively shape the

ethical decisions of individuals in this contingency model. These decisions then result in various

behaviors and an evaluation of these behaviors. Ultimately, these evaluations feed back to shape

the individual and context factors at the beginning of this process (Ferrell & Gresham, 1985;

Jones, 1991). This model differs from Kohlbergs moral theory, which is a normative approach

17

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that postulates how individuals should make ethical decisions. In contrast, this contingent

model, as well as a model developed by Hunt and Vitell (1986), takes an alternative approach,

focusing how individuals actually make ethical decisions on what is rather than what ought to

be in the ethical decision-making process.

Hunt and Vitells (1986) general theory of marketing ethics, a simplified version of

which is pictured in Figure 2.2, is somewhat reminiscent of Rests 4-component model of

morality. Separating Rests first component, moral recognition, into two separate steps, these

researchers assert that the moral process begins with individuals perceiving an ethical situation

and envisioning the possible behavioral responses to this issue. At this point, the individual

evaluates the outcomes of each behavioral alternative via a deontological and/or a teleological

philosophical lens. Most individuals draw upon both philosophical bases when considering these

alternatives. From a deontological perspective, individuals attempt to determine the intrinsic

rightness or wrongness of each behavior. From a teleological perspective, individuals attempt to

assess the relative good or bad that will result from each behavior. Similar to the final three

components of Rests model, these evaluations of inherent and relative right and wrong then feed

into ethical judgments, which lead to the formation of moral intentions and ultimately result in

behavior.

However, not all ethical judgments translate into moral intentions or moral behavior.

Moral intentions are directly shaped by teleological evaluations of behavioral alternatives in

addition to ethical judgments. Thus, individuals may make moral decisions, but not follow

through with moral intentions or behavior because their teleological evaluations inform them that

more can be gained by implementing a different behavior. Furthermore, situational constraints

may impede the ability of individuals to implement their behavioral intentions. For example an

individual, who decides that her bosss sexual harassment is immoral and intends to report this

behavior to the human resources department, may discover that her organization does not

condone such whistleblowing behavior. In this case, it is conceivable that this individual

would not follow through with her moral intentions.

19

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20

Finally, afterwards individuals evaluate the results of their selected behaviors. These

evaluations link back to inform and shape their personal experiences. Personal experiences in

combination with cultural, industry, and organizational norms, influence the processes of ethical

perception and evaluation at the beginning of the model. Hunt and Vitell (1992) subsequently

revised this model to better define what variables should be examined when considering these

contextual norms and personal experiences.

The third influential perspective of ethical decision-making in marketing research was

developed by Dubinsky and Loken (1989) in order to address several shortcomings of the

comprehensive and complex frameworks previously discussed. While, the models proposed by

Ferrell and Gresham (1985) and Hunt and Vitell (1986) are thorough, they do not necessarily

offer parsimonious explanations for ethical behavior in organizations, and as a result they have

been difficult to operationalize and validate. Furthermore, both marketing frameworks, as well

as Rests model of moral behavior, depend on the assumption that individuals perceive a given

situation to pose an ethical dilemma (Dubinsky & Loken, 1989).

Dubinsky and Loken (1989) offer a more focused, rational view of ethical behavior

drawing upon the theory of reasoned action (Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975).

This theory suggests that individuals will behave rationally when deciding to engage in a

particular behavior so long as they feel they are ultimately in control of making the final

behavioral decision. Dubinsky and Loken apply this theory (see Figure 2.3) to the realm of

business ethics as a parsimonious way of explaining how individuals arrive at both ethical and

unethical decisions. Ethical behavior results from intentions to commit ethical behavior. These

intentions are shaped by both individual attitudes and subjective norms regarding the behavior.

Attitudes are influenced by individual beliefs about the potential results of a particular behavior

as well as the evaluations of these results. Finally, subjective norms are shaped by how

individuals perceive relevant others feel about the behavior and motivating factors to ensure

individuals act in accordance with the beliefs of these relevant others.

Trevino (1986) developed an interactionist model of ethical decision making in the field

of management. Similar to the marketing ethics perspectives discussed above, Trevino felt that

ethical behavior in organizations cannot be adequately explained by moral philosophies alone.

More likely, such behavior results from an interaction of individual and situational influences.

21

Intent to Commit Behavior (ethical or unethical)

Behavior (ethical or unethical)

Subjective Norm for

Behavior (ethicalor unethical)

Attitude for Behavior (ethical or unethical)

Motivation to Comply

Normative Beliefs

Outcome Evaluation

Behavioral Beliefs

FIGURE 2.3

DUBINSKY & LOKENS (1989) FRAMEWORK FOR ANALYZING ETHICAL DECISION MAKING IN MARKETING

22

Trevinos (1986) model of ethical decision-making claims that individuals have cognitive

reactions to ethical situations that depended largely upon where they were in Kohlbergs stages

of moral development. In these cognitive reactions, individuals determine what components of

the situation are right or wrong. The relationship between cognitive activity and subsequent

behavior is moderated by both individual and situational influences. Trevino proposed that three

key individual factors will interact with cognitive activity to influence behavior: ego strength,

field dependence, and locus of control. Additionally, several situational factors are proposed to

moderate the relationship between cognitive activity and ethical behavior. These situational

factors arise from the actors: job context, organizational culture, and characteristics of the job

itself. Finally, the actors organizational culture and job characteristics also will influence

his/her cognitive moral development. Trevinos interactionist theory of ethical decision making

is displayed in Figure 2.4. Later work further developed the situational influences in this model,

adding emphasis to the role of operant social norms in an actors work context (Trevino &

Youngblood, 1990).

Jones (1991) contributed what is perhaps the most influential and comprehensive work in

business ethics theory (Loe et al., 2000). Jones first noted the existence of the several theoretical

descriptions of ethical decision-making discussed above. He did not contradict what these earlier

models proposed. Rather, he synthesized these models and identified an overlooked component

in this body of theory: the moral intensity of the ethical issue. Jones agreed with his

predecessors that moral philosophies as well as other individual and contextual factors influence

the ethical decisions and subsequent behavior of individuals. However, he further believed that

the actual content of the moral issue itself will affect this ethical decision making process,

especially the perception of a moral issue. In other words, Jones proposed that ethical decision-

making is issue-contingent. In this vein, he proposed a new construct, moral intensity, to

characterize a moral issue.

Moral intensity is a multidimensional construct that describes the actual characteristics of

a moral issue that can lead to differing responses by the individual decision maker. Jones (1991)

suggested that every moral issue can be described in terms of moral intensity. There are six

components of this construct: magnitude of consequences, social consensus, probability of effect,

temporal immediacy, proximity, and concentration of effect. Building upon Rests (1986) four

component model of morality, Jones proposed that issues high in moral intensity are more likely

23

Situational Moderators (Job Context, Organizational Culture, Job Characteristics)

Ethical/ Unethical Behavior

Cognitions (Stage of

Cognitive Moral Development)

Individual Moderators (Ego Strength, Field

Dependence, Locus of Control)

Ethical Dilemma

FIGURE 2.4

TREVINOS(1986) INTERACTIONAL MODEL OF ETHICAL DECISION MAKING IN ORGANIZATIONS

24

to be recognized as moral issues, to stimulate more sophisticated moral judgments, to lead to the

formation of moral intentions, and to result in ethical behavior.

The following example illustrates Jones (1991) propositions, pictured in Figure 2.5. Let

us assume that illegal waste disposal at a nuclear power plant is an issue high in moral intensity.

An employee who discovers that this illegal waste is being dumped behind his childrens

playground will be more likely to recognize the moral implications inherent in this issue and

ultimately engage in a decision-making process that will result in ethical behavior. On the other

hand, an issue of less moral intensity, such as a coworkers theft of office supplies, may be less

likely to elicit such moral behavior.

Jones (1991), however, did acknowledge that organizational factors temper the impact of

moral intensity upon the formation of moral intent and actual behavior. In other words, in

especially strong organizational environments individuals may recognize a moral issue and

subsequently make a moral judgment; yet, because of organizational norms and pressures, these

individuals can conceivably not follow through on their moral judgments.

Empirical Approaches

The overwhelming challenge in empirical research in ethics is the difficulty in

realistically assessing and explaining the variance in the ethical decision making process. Earlier

work tends to focus on the relationship between various demographic variables and ethical

decisions in individuals (Ford & Richardson, 1994; Loe et al., 2000). As the research stream has

gradually progressed, studies have shifted their focus and examined more sophisticated

individual and contextual influences on this process. However, a preponderance of these studies

relies on questionnaire and survey methods. Thus, the state of research in business ethics is

limited, as this research stream appears to be unbalanced in terms of methodology. It seems that

Platts (1964) caution to researchers is especially relevant to todays business ethics researchers,

[b]eware of the man of one method or one instrument, either experimental or theoretical. He

tends to become method-oriented rather than problem-oriented (p. 351).

The inception of the Journal of Business Ethics in 1982 reflected and stimulated an

increased interest in the topic of ethics as well as more conceptual and empirical research in this

area. Although a majority of the research in business ethics has been conceptual (Collins, 2000;

Trevino, 1986), the past two decades of empirical research in ethics have led researchers to

25

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critically examine the quantitative methods employed in this area (e.g., Ford & Richardson,

1994; Loe et al., 2000; Randall & Gibson, 1990).

One of the earlier assessments of methodology in ethics research was conducted by

Randall and Gibson (1990). The primary purpose of this review seemed to be twofold: to

summarize the quantitative research in ethics and to critically evaluate the quality of this research

in an effort to improve future empirical investigations. Their assessment included 94 articles

from the early 1960s through the late 1980s, 34% of which were published in the Journal of

Business Ethics.

The findings of this review painted a rather bleak picture of the state of empirical

research in ethics in the late 1980s. Less than half of the articles reviewed included a detailed

description of methods, two thirds of the surveyed articles did not include any theory nor did

they offer hypotheses, and over one third of the research used samples of convenience.

Furthermore, only 20% of the surveyed research used instruments that were pretested in their

analyses. Finally, the research designs employed were largely sample surveys (81%), with

predominantly simplistic analytic techniques (univariate or bivariate). The primary

recommendations of the authors were that future researchers carefully specify and explain their

methods, and that journals more critically evaluate the methodologies of research in their review

processes.

Since Randall and Gibsons (1990) critique, there have been two additional analyses of

empirical research (Ford & Richardson, 1994; Loe et al., 2000). Both of these analyses took

similar approaches to their assessments of quantitative work in ethics research. They separated

quantitative work into general categories of variables and summarized the research that examines

each variable under each category. Overall, not much has changed in the past 10 years: there

continues to be more qualitative than quantitative studies in ethics, and survey methods remain

dominant in this research.

Ford and Richardson (1994) concentrated on empirical work associated with ethical

beliefs and ethical decision-making processes. They looked at just under 50 studies, over 67% of

which used questionnaires to collect their data. A majority of the surveyed studies focused on

personal and demographic factors. Few studies examined attitudinal factors or contextual

variables. Acknowledging the dominance of survey methods in ethics research, Ford and

27

Richardson called for increased lab experiments to better delineate ethical decision making

processes.

Loe and colleagues (2000) updated the work of Ford and Richardson, focusing on

empirical work in organizational settings and linking this work to Jones (1991) issue-contingent

model of ethical decision-making. Of the research examined by Loe and colleagues,

approximately 90% of this empirical work used survey methods (either questionnaire

instruments or some combination of questions and scenarios or vignettes). Of the remaining

10% of this work, only two studies used open-ended questions and/or interview methods, and six

studies used experimental methods. Longitudinal studies in business ethics are virtually non-

existent- the only exception is Tyson (1992) who looked at the age differences in ethical

perceptions (students v. accountants). Most of these studies tested models on student samples,

indicating a need to shift to industry samples in this research in order to establish face validity

and demonstrate relevance to practitioners. By and large, Loe and colleagues assert their

analysis reveals a need for increased consideration of methodological issues in ethics research.

These reviews of empirical research in ethics indicate both an overuse of questionnaires

and scenarios/vignettes as well as an abundance of instruments that have not been well

developed or validated. In spite of this trend, there are three empirical techniques that stand out

from others, as they have been well tested across contexts and samples: the Defining Issues Test

(Rest, 1979), the Multidimensional Ethics Scale (Reidenbach & Robin, 1988, 1990) and

Trevinos (1986) In-Basket Exercise.

Defining Issues Test. The Defining Issues Test (DIT) is derived from the earlier work of

Kohlberg and Piaget as a method to assess moral judgment. Its development is based on the

assumption that moral judgment is a fundamental structure by which people perceive and make

decisions about their rights and responsibilities, (Rest, 1979, p. 76) rather than trivial

phenomena that differs randomly between individuals. In other words, individuals interpret

moral dilemmas differently based on where they are in their cognitive moral development.

These differences are considered to be indications of the underlying tendencies of individuals to

organize social events (Rest, 1979, 1986). This test was designed to gather information on how

individuals interpret a dilemma more so than how they rationalize a course of action (Rest,

1979).

28

In the DIT, subjects are first presented with a moral dilemma. Then they are provided

with a list of issues or questions that might be considered when making decisions about what

should be done in response to the given dilemma. The task of subjects is to deliberate on each

issue and identify which are important in making a decision as to what one ought to do. The DIT

is comprised of six dilemmas that are borrowed from Kohlberg (1964, 1969, 1976) and

Lockwood (1970). Each dilemma is supplemented with a series of 12 items, which amounts to

72 items for the whole test.

In a period of 13 years from the time that Rest initially developed this measure (1979),

over 500 studies employed the DIT to elicit meaningful results in their research in ethics (Rest,

1986). More recently however, there has been growing interest in modifying the DIT and

developing new instruments altogether. This interest primarily stems from two lines of

reasoning: the dilemmas used in the DIT are somewhat antiquated and not specific to any given

profession; and the DIT is based on Kohlbergs limited conceptualization of moral judgment and

thus may not adequately assess an individuals ethical decision-making processes.

Multidimensional Ethics Scale. Acknowledging the complex nature of ethical judgment,

Reidenbach and Robin developed the Multidimensional Ethics Scale (1988, 1990) based on a

three-dimensional conceptualization of the construct. They used normative moral philosophies

as a basis for this measure, meaning they focused on what is done rather than what should be

done in business ethics. Modeling their procedure for scale development on the work of

Nunnally (1969), Churchill (1979), and Campbell and Fiske (1959), Reidenbach and Robin

(1988) produced a pool of 33 items derived from contemporary normative moral philosophies.

The development and refinement of this scale (Reidenbach & Robin, 1990) included tests of the

original scale and refined versions thereof on several samples including 218 business students,

108 retail managers, 105 small business managers, and 152 managers in a business association.

The results from these iterations yielded the final three-dimensional, 8-item ethics scale. These

dimensions, described in Table 2.3, are broad moral equity, relativism, and contractualism.

The Multidimensional Ethics Scale has stimulated much subsequent research and

discussion (e.g., Cohen, Pant, & Sharp, 1993; Hansen, 1992; Robin, Gordon, Jordan, &

Reidenbach, 1996; Skipper & Hyman, 1993). Although the number of items in this scale varies

somewhat across studies, they are always accompanied with at least 3 business scenarios as

stimulus for subject responses. Comparing the predictive performance of this scale with the

29

Defining Issues Test, Robin and colleagues (1996) provided evidence in favor of the utility of the

Multidimensional Ethics Scale particularly when examining ethical/unethical behavior. While

substantial evidence exists to support the validity and reliability of this measure across a variety

of business contexts (retail, marketing, management, accounting), it shares a weakness with the

DIT and other survey approaches in its reliance on scenarios. The use of scenarios as stimulus

for subject responses presumes that subjects interpret these scenarios as realistic and meaningful.

TABLE 2.3

REIDENBACH AND ROBINS (1988, 1990) THREE-DIMENSIONAL MEASURE OF MORAL JUDGMENT [MULTIDIMENSIONAL ETHICS SCALE]

Dimension One

Broad-Based Moral Equity

Based on intrinsic fairness, justice, goodness, and rightness, as well as family acceptance. Includes a basic decision rule for the evaluation of moral content in business settings.

Measured by Four Items: Fair/unfair Just/unjust Acceptable/Unacceptable to

my family Morally/not morally right

Dimension Two Relativism

Concerned with guidelines, requirements, and parameters that are intrinsic parts of social/cultural context. Individual beliefs vary relative to the beliefs of society and culture.

Measured by Two Items: Traditionally

acceptable/unacceptable Culturally

acceptable/unacceptable

Dimension Three Contractualism

Derived from implied obligation, contracts, duties, or rules. Relates to idea that a social contract exists between business and society.

Measured by Two Items: Violates/does not violate an

unspoken promise Violates/does not violate an

unwritten contract

* Content based on Reidenbach and Robin (1988, 1990).

30

In-Basket Exercise. The in-basket exercise was introduced to business ethics in management by

Trevino (1986). This exercise was developed to provide a realistic and precise test of the actual

ethical behavior of subjects. While the details of each exercise may vary from study to study, the

in-basket exercise generally contains a number of items in the form of memos, letters, and phone

messages to be sorted by subjects. Within these items, a couple of ethical dilemmas are hidden.

Subjects prioritize these items and receive reward, punishment, or neither based on their

prioritization.

Trevino and Youngblood (1990) employed this exercise to examine the influences of

cognitive moral development, locus of control, and social learning on ethical decision-making.

The exercise required a 2-hour time commitment from their subjects. Here, the in-basket

included 15 items, which included an organization chart, a company newsletter, and a

combination of 13 letters, memos, or phone messages. The experimental manipulation employed

was advanced notice as to whether ethical behavior is rewarded or punished. The control group

received no indication or feedback either way. After this exercise was completed, subjects

completed postexercise questionnaires to clarify subjects positions on the ethical issues at hand

and check for manipulation effectiveness.

There are several potential weaknesses to this measure. For instance, subjects may

perceive the sensitive ethical content in this exercise and thus, influenced by social desirability,

respond in a way contrary to what they would normally do (Kerlinger & Lee, 2000; Trevino &

Youngblood, 1990). Furthermore, the large time requirements for this exercise causes difficulty

in gathering subjects for these studies. As a result, this exercise seems to be tested primarily on

students, which raises questions of external validity. This also may explain why it appears so

infrequently in ethics research. However, the strengths of this procedure nicely complement the

strengths of survey methods, and as the field disproportionately relies on surveys and

questionnaires, there is need for additional studies that use this exercise or an alternative

experimental method.

Summary of Empirical Approaches. As in any discipline, the overriding goal in ethics

research is to advance scientific knowledge. Such knowledge, however, is bound by time and

method. As evidenced in the earlier discussion of theories of business ethics, there has been

improvement in the explanation of ethical decision making due to developments that have

occurred over time. The apparent imbalance in methods employed to test these theories,

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however may be limiting the advancement of this field due to the inherent weaknesses of any

given method. Although there is no single correct research method or group of methodological

choices (Kerlinger & Lee, 2000, McGrath, 1982), each method brings both strengths and

weaknesses to research conclusions. Thus, the consistent use of a limited array of methods (e.g.,

surveys and questionnaires) not only threatens the progress of the research in ethics, but also the

validity of existing conclusions in the field.

To be fair, the imbalance of research method in business ethics seems to be consistent

with a research stream that is at a relatively early stage in its development. As McGrath (1964)

outlined in his theory of method, specific stages within the development of a research stream

call for certain methods. For example, in an earlier, exploratory stage within a research area, a

sample survey would be appropriate to draw out information and start to shape hypotheses and

theories. At a later stage however, a researcher may want to refine and test these hypotheses in a

controlled environment and would employ a laboratory experiment. If business ethics is indeed

at an earlier developmental stage in its research stream, the current state of empirical research

here is not necessarily disheartening. Yet, it does indicate the need for increased use of

experimental methodologies (i.e., in-basket exercises) in this research.

Current Knowledge of Ethical Decision-Making Process

Given the difficulty of assessing ethical decision processes, the question becomes- what

do we know now? The bulk of empirical work in business ethics has sought to identify key

influences in ethics, focusing particularly on the characteristics of the moral actor and the

situation in which the actor behaves ethically. The following discussion summarizes current

knowledge of the ethical decision-making process under two general categories (individual and

situational variables) and is centered upon the variables that will be examined in this dissertation.

Individual variables. As noted in earlier reviews of ethics research, demographic

variables are most commonly included in ethics studies in business (Ford & Richardson, 1994;

Loe et al., 2000). One demographic variable in particular, gender, is the most researched area in

ethics, often as a control variable. Loe and colleagues (2000) surveyed 26 studies that examine

gender in ethics. The results of these studies are mixed, indicating either that gender is not a

significant influence in ethical decision-making or that females are more ethical than males. Loe

and colleagues suggest more attention to methodology in these studies is necessary to clear up

the ambiguity in this area. Furthermore, Collins (2000) points to a need for a theoretical

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explanation for the gender differences in ethical behavior. In other words, while there appears to

be a trend in research indicating that females behave more ethically than males, no study thus far

has offered an explanation for this gender-based difference in behavior.

Other demographic variables such as education, work experience, and age have also

yielded mixed findings in relation to ethical decision-making. While some studies did find a

relationship between higher educational levels and ethical decision-making in organizations

(Browning & Zabriskie, 1983; Jones & Gautschi 1988; Lane, Schaupp, & Parsons, 1988), the

bulk of research produced no significant differences (Loe et al., 2000). Similarly, type of

education, work experience, and age generated mixed findings. However, older workers and/or

students generally tend to be more ethical than those who are younger (Barnett & Karson, 1987;

Brady & Wheeler, 1996; Kelley, Ferrell, & Skinner, 1990; Muncy & Vitell 1992; Ruegger &

King, 1992; Serwinek, 1992; Stevens, Harris, & Williamson, 1993).

Next to gender, moral philosophy has been most frequently included in ethics studies.

Moral philosophy has most commonly been studied in terms of deontological versus teleological

perspectives underlying ethical decisions. Research has generally established a link between

moral philosophy and ethics where deontological perspectives tend to result in ethical decisions

more so than teleological perspectives (Barnett & Karson, 1987; DeConinck & Lewis, 1997;

Fraedrich, 1993; Mayo & Marks, 1990). Interestingly, an alternative view of moral philosophy

was uncovered by Peachment, McNeil, Soutar, and Moister (1995) where individuals who

behaved appropriately in response to ethical dilemmas drew upon both deontological and

teleological bases. However overall, moral philosophy has not been systematically linked to the

level of ethical behavior that results from these decision processes which is another opportunity

for future research (Loe et al., 2000).

Machiavellianism is another individual variable that has been studied in relation to

business ethics. This trait has been treated as both a moral philosophy and a personality variable

in ethics research (Loe et al., 2000). To be consistent with the preponderance of management

research, Machiavellianism is treated here as a personality trait. Individuals who are

Machiavellians (Machs) will consider nearly any alternative that may advance their personal

interests (Christie & Geis, 1970). High Machs are likely to participate in manipulative and

opportunistic behaviors. Past research in ethics has demonstrated that Machiavellianism is

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negatively related to ethical perceptions, decisions, and/or behavior (Cyriac & Dharmaraj, 1994;

Hegarty & Sims, 1978; Singhapakdi & Vitell, 1990; Verbeke, Ouwerkerk, & Peelen, 1996).

Cognitive moral development (Kohlberg, 1969, 1971, 1976) also has been linked to

ethical decision processes in business research. Moral development is typically measured in

business research by Rests Defining Issues Test. As would be expected, individuals with higher

levels of moral development tend to make more ethical decisions and behave more ethically in

business (Everett, Thorne, & Danehower, 1996; Goolsby & Hunt, 1992; Mason & Mudrack,

1997; Trevino & Youngblood, 1990). These results are consistent with past research on moral

development in psychology (McGeorge, 1975; Rest, 1974; Rest, Turiel, & Kohlberg 1969;

Walker, deVries, & Bichard, 1984).

There is evidence that in more competitive settings, moral development declines (Reall,

Bailey, & Stoll, 1998). This would indicate that even though individuals are capable of

functioning at a more advanced stage of moral