The role of ethical theories in ethical reasoning and behavior

within organizations - Research proposal

Sigalit Pasternak, Phd student

The Faculty of Management

Tel Aviv University

Supervisor: Dr. Ishak Saporta

Introduction

Business ethics is a specialized branch of ethics focusing on how moral standards

apply to business organizations and behavior (Velasques, 1998). As such, it cannot be

understood separately from the general ideas of ethics, and the general ethical theories

apply to business ethics as well (Hunt & Vitell, 1986; Fritzsche & Becker, 1984;

Schumann, 2001; Lahdesnati, 2005). Normative ethical theory offers different moral

theories, each prescribing a set of moral rules that individuals can apply in the process

of deciding whether an action is morally right or wrong in various situations (Ferrell

& Gresham, 1985; Weber, 1990; Alder, Schminke, Noel, & Kuenzi, 2008). Research

on the role of ethical theories in business usually focuses on the application of ethical

guidelines in human resources practices (Shultz & Brender-Ilan, 2004; Schumann,

2001), corporate social responsibility policies (Frederiksen, 2010), and the assessment

of managers’ ethical evaluations (Reidenbach & Robin, 1990). Most studies aim to

identify basic ethical rules that individuals can follow in business or to prescribe

frameworks of moral principles to apply in decision making. These moral principles

are derived from various traditional ethical theories.

The role of ethical theories is less dominant in the field of ethical decision making.

Only a few ethical decision-making models rely directly on ethical theories. One

example is Hunt and Vitell's (1986) ethical decision making model according to

which the evaluation phase of a decision-making process is carried out through a

combination of utilitarian and deontological assessments. Some ethical decision-

making models keep ethical theories in the background, implying that the theories are

reflected in the process (e.g., Trevino, 1986). Others ignore the theories completely or

rely on other theoretical foundations, such as cognitive moral development (e.g.,

McDevitt, Giapponi, & Tromely, 2007) or ethical values (e.g., Fritzsche & Oz, 2007).

Studies that have explored the link between ethical theories and ethical decision

making usually focus on the ethical reasoning or justification that individuals use to

explain their decisions and actions in morally challenging situations. These reasons

are assumed to be derived from various ethical theories that differ in the basic criteria

used for moral reasoning (Victor & Cullen, 1988). These studies demonstrate that

individuals usually rationalize their decisions using terminology that expresses

different ethical theories such as utilitarianism (Fritzsche & Becker, 1984; Premeaux

& Mondy, 1993; Premeaux, 2004), egoism (Granitz & Loewy, 2007), deontology, and

virtue ethics (Lahdesmati, 2005). Note that most of these studies focus on utilitarian

and deontology theories, or limit their research to three ethical theories, disregarding

other theories and moral rules that people may resort to in making decisions within

organizations (Reidenbach & Robin, 1988; Shultz & Brender-Ilan, 2004). Indeed,

studies that have included more than three ethical theories (for example, Granitz &

Loewy, 2007; Shultz & Bender-Ilan, 2004) revealed more diversity in ethical

reasoning than did studies that focused on fewer theories. Exploring the application of

six different ethical theories and moral principles in the ethical reasoning individuals

assign to their decisions in ethically challenging situation is the main objective of the

proposed research. Moreover, examining the link between the specific content of

different ethical issues typically encountered by individuals within organization and

the specific ethical reasoning individuals assign to the resolutions of these issues is

another major objective of the proposed research. The research on the content of

ethical issues is almost exclusively focused on the moral strength of an issue as

defined by Jones (1991). Only a few qualitative researches in business ethics focus on

the unique content of business ethical decisions (for example, Payne & Joyner, 2006;

Lahdesmaki, 2005) or discusses the relevance of ethical theories to decisions

regarding different management practices (for example, Schumann, 2001; Shultz &

Brender Ilan, 2004). Finally, most of the empirical research on the connection

between ethical theories and ethical reasoning is carried out in separation from

research on the ethical decision-making process. Although there is a consensus as to

the role of important individual and contextual components on ethical decision

making within organizations (for review, see Kish – Gephart, Harrison and Trevino,

2010 Meta analysis), relatively little is known about the effect of these components on

ethical reasoning within organizations. The third objective of this research is to

explore the link between different individual and environmental factors and the

application of different ethical theories in ethical reasoning.

The proposed research can generate a theoretical contribution to the literature on

ethical decision making within organizations in several ways. First, the research

attempts to resolve the differences in past research finding in regard to the role of

ethical theories in ethical reasoning by examining the connection between the specific

content and context of ethical dilemmas and the ethical rule or theory applied by

individuals to explain their resolution. Secondly, it can deepen our understanding

about the content of ethical reasoning by exploring the role of a wide range of

normative ethical theories and rules individuals can apply to reason their ethical

decision. In addition, the proposed research addresses the possible connection

between individual and environmental factors on one hand and ethical reasoning on

the other. These factors have been found to be connected to ethical decision making

but their connection with ethical reasoning has not been explored before. Finally, the

proposed research can also make a methodological contribution, since it combines

qualitative and quantitative methods to the study of ethical reasoning within

organizations. I believe that using qualitative methods to the study of ethical

reasoning is necessary in order to deeply explore and understand the theory based

ethical guidelines that individuals apply when making and reasoning ethical decisions

in different challenging situations. Quantitative methods will be employed in order to

explore the connections between individual and environmental factors and ethical

decision making and reasoning within organization.

Ethical decision making within organizations

Ethical decision making is described in theory and research as a process comprising

several stages, each one affected by different individual, environmental, and

situational variables (for review, see Bartlett, 2003; Loe, Ferrell, & Mansfield, 2000;

Conrad, 1993). Rest (1986) describes the process of decision making as a four-

component model in which a moral agent must first recognize the moral issue, make a

moral judgment, place moral concerns ahead of other concerns, and act according to

these moral concerns. Most research on the process of ethical decision making has

been aimed at examining the influence of individual characteristics and environmental

factors on this process. For example, Trevino (1986, 1992) proposed that ethical

decision making is the result of the interaction between individual and situational

components, with the individual's way of thinking about ethical dilemmas being

moderated by individually and situationally based moderators. Some authors

developed models that attempt to explain and elaborate the cognitions involved in

moral reasoning and evaluation (e.g., Hunt & Vitell, 1986; Leidtka, 1991; Harris &

Sutton, 1995; McDevitt, Giapponi, & Tromley, 2007; Ferrell & Gresham, 1985;

Ferrell, Gresham, & Fraedrich, 1989; Dubinsky & Loken, 1989). Hunt and Vitell's

(1986) sense-making model outlines two general cognitive stages: a stage of

perception, in which the decision maker perceives the ethical problems, the available

alternatives, and the expected consequences of decisions; and a stage of deontological

and utilitarian evaluations and judgment. According to this model, the first sense-

making stage is affected by personal experience, organizational culture, and the wider

cultural environment. The extensive research on the process of ethical decision

making generally confirms the involvement of contextual and individual factors in

this process (Liedtka, 1991; Hunt & Vitell, 1986, Trevino et al., 1986, 1992, 2005;

Kelly & Elm, 2003). More important for the purpose of the proposed research is the

finding that the ethical decision-making process begins with recognition of the moral

elements of an issue (Rest, 1986; Jones, 1991; Ferrell & Gresham, 1985; Trevino,

1986). This stage is contingent upon several factors, such as the moral intensity of the

issue (Jones, 1991), different individual ethical orientations (Forsyth 1980; Douglas et

al., 2001; Forsyth, 1992; Vitell & Paolillo, 2004), and environmental influences

(Weber & Gillespe, 1998; Kelly & Elm, 2003). Some studies treat this first stage as

the perception of the ethical problem (Hunt & Vitell, 1986) or the framing of the

situation (Liedetka, 1991). Each deliberative ethical decision model also contains a

second, ethical evaluation or judgment stage which is affected by several factors,

including the perceived importance of ethics (Singhapakdi, Vitell, Rallapall, & Kraft,

1996), the possible models or scripts for action available to choose from, and the

perceived durability of different actions within the relevant context (Hunt & Vitell,

1986; McDevitt et al., 2007). Following this and in line with Rest's (1986) decision

making model, I argue that ethical theories play an important part in the decision-

making process from its beginning, with the recognition and framing of the ethical

issue, through the evaluation and judgment stages, and until an intended decision is

made and reasoned when needed. Moreover, following previous research, I hold that

we can learn about the role of ethical theories in decision making through exploration

of individuals' ethical reasoning.

Ethical issues and ethical decision making

Ethical or unethical behavior and judgment usually occur in situations that raise

ethical considerations or issues. "An ethical issue is a problem, situation or

opportunity requiring an individual or organization to choose among several actions

that must be evaluated as right or wrong, ethical or unethical" (Ferrell & Fraedrich,

1991). Ethical issues are equivocal, meaning that they can be interpreted in more than

one way, and are uncertain with regard to the future (Sonenshein, 2007). Ethical

issues may be problematic because they are nontraditional: they have not been

encountered in the past and do not easily fit into well-used categorization schemes

(Clegg et al., 2006). Issues may also be problematic because of the feeling they evoke

or because they contain a dilemma of some kind (Dutton & Dukerich, 1991).

Situations that are ambiguous and uncertain elicit a process of sense making and issue

construction (Weick, 1995) through which people frame the situation and create

rational accounts that enable them to take action (Weick & Roberts, 1993; Maitlis,

2005). An important factor that has been found to affect this process is the moral

intensity of an issue or a dilemma (Jones, 1991). The moral intensity of a situation is

determined by six factors: the magnitude of consequences of the act, the social

consensus regarding the act, the probability of effect, the temporal immediacy of the

results, the proximity to the object, and the concentration of the effect (Jones, 1991).

Research shows that the moral intensity of an issue has a fundamental impact on

ethical decision making (Jones, 1991; Weber, 1996; Douglas et al., 2001; Fritzsche &

Becker, 1983; Kish- Gepnant et al, 2010). Weber (1990), for example, found that

different types of moral issues elicit different levels of moral reasoning. Respondents

in Fritzsche and Becker's (1983) study reported that they would act more ethically in

dilemmas involving serious consequences than in less risky situations. Kelly and Elm

(2003) found that the moral intensity of an issue also influences the recognition of an

issue as an ethical dilemma. Another factor that has been found to be involved in the

recognition of the ethical content of an issue is moral philosophy. It has been

suggested that to varying degrees and extents individuals appear to rely, knowingly or

unknowingly, on different strains of moral philosophy for assessing the ethical

content of a particular issue (Ferrell & Gresham, 1985; Hunt & Vitell, 1986;

Riedenbach & Robin, 1990). The extent of this awareness is not known, but the

language of some of the ethical philosophies is clearly represented in the evaluative

ethical process and in people’s ethical reasoning. Moreover, researches that explored

individuals' verbal responses to different ethical dilemmas demonstrate that

individuals assign different reasoning criteria to different issues (Fritzsche and

Becker, 1983; Premeaux & Mondy, 1993; Premeaux, 2004). Redenbacher and Robin

(1988) for example, found that different scenarios content elicited different

organization of response criteria from respondents and suggested that individuals

organize and use the evaluative ethical criteria differently from situation to situation.

Given the diversity of ethical issues within organizations, it is reasonable to speculate

that certain issues are logically connected to some ethical principles and not to others.

Issues that involve the distribution of benefits, for example, may elicit criteria related

to justice or rights, whereas conflicts of interest situations may focus the individual's

attention to ethical criteria grounded in egoism, utilitarian considerations, or

deontology. I propose that individuals exhibit significant differences in ethical

reasoning across different ethical issues, because different contents evoke different

evaluations and ethical reasoning criteria.

Ethical reasoning and cognitive moral development

What is ethical reasoning?

Ethical reasoning and judgment refer to the ways in which individuals determine

whether a course of action or a stance about an ethical issue is morally right by

evaluating various courses of action and taking into account ethical principles

(Pettifor et al., 2000; Rest, 1993). Ethical reasoning is considered to be necessary for

moral decision making and behavior (Rest, 1984; Pettifor et al., 2000), and it

represents the process involved in the second stage of Rest's (1986) ethical decision-

making model, i.e., judging what is morally right (Trevino, 1992). Research on moral

or ethical reasoning has been concerned with discovering people's moral judgment

strategies by presenting them with hypothetical moral dilemmas and asking them to

judge what is right or wrong, and to explain their judgments. Their explanations and

justifications are then used to define their reasoning about moral issues (Trevino,

1992).

Moral reasoning and cognitive moral development

The most influential account of individuals' moral reasoning process is Kohlberg's

theory of "Cognitive Moral Development" (1969). Building on Jean Piaget's (1932)

study of moral development in children, Kohlberg explored the reasons behind an

individual's moral perception and decision-making behavior and categorized the

various reasons given to justify an action into six stages of moral development. The

stages are grouped into three levels of moral reasoning: pre-conventional level,

conventional level, and the post-conventional level. The pre-conventional level carries

a concrete individual perspective (Colby & Kohlberg, 1987). At this level (stages one

and two), the individual attempts to follow rules for fear of punishment or personal

harm, and moral decisions are reasoned based on specific outcomes for the individual

(Trevino, 1992). At the conventional level, individuals internalize the rules and

expectations of significant others and are concerned with laws, social approval, and

the welfare of others. This level grouping indicates concern for interpersonal

conformity and maintaining relationships (Colby & Kohlberg, 1987). Most managers

use this level to resolve workplace dilemmas (Weber & Gillespie, 1998; Weber &

Wasieleski, 2001). Specifically, at stage three, the individuals are interested in

interpersonal trust and social approval, and at stage four the individuals’ perspective

broadens to consider the society of which they are a part. At this stage moral

reasoning places the individuals in the context of the social system (Weber &

Wasieleski, 2001; Trevino, 1992). Laws are to be upheld, and the social system

respected and preserved. At the post-conventional or principle level, the individual

makes decisions autonomously and adopts a broader perspective on society when

making a decision about right or wrong. Reasoning at this level favors universal moral

principles, above the laws and values of society. Individuals who reason at stage five

still emphasize laws and rules but they consider the possibility of changing these for

social purposes. At stage six, the individual is guided by self-chosen ethical principles

of justice and the rights of human beings (Trevino, 1992). Few managers consistently

reason at stage five, and stage six is rarely used by managers to reason about their

decisions (Weber, 1990). The cognitive moral development model is based on the

conception that the development in moral judgment along the three levels involves a

more complex scheme representing higher-level moral judgment (Kohlberg, 1981;

Rest, 1999), with the cognitive complexity underlying the reasoning at each stage

increasing as the reasoning reaches a higher level. Kohlberg (1981) also claimed that

according to moral criteria, higher-stage judgments are objectively "better" and

therefore more desirable then lower-stage judgments (Trevino, 1992).

Moving away from relying exclusively on moral reasoning

Most of the research on ethical reasoning is based on Kohlberg's cognitive moral

development theory and is focused on assessing the level of moral reasoning among

different populations of managers (e.g., Weber, 1990; Weber, 1996; Weber &

Wasieleski, 2001) or business students (e.g., Flemimg, Chow, & Su, 2010; Jones,

2009). Additionally, a large number of researchers have devoted their efforts to the

development of new instruments and the improvement of existing methods for

measuring cognitive moral reasoning (for example, Rest, 1979; Gibbs & Widaman,

1982; Weber, 1990; Weber & Wasieleski, 2001; Loviscky et al., 2007). Research on

cognitive moral reasoning and decision making has contributed to our knowledge

about the ethical reasoning process, but some interesting findings call for further

investigation of the ethical reasoning process, from different perspectives. First, there

is a general consensus that moral reasoning patterns vary from issue to issue (Jones,

1991; Weber, 1990; Weber, 1996) and that moral reasoning is influenced significantly

by how the decision maker frames the situation (Weber & Wasieleski, 2001). It has

been proposed that the context of the dilemma is one of the factors that affect the

framing of the situation and the moral reasoning process (Marshall & Pewe, 1997;

Weber & Wasieleski, 2001). Second, the consistent finding that most adults reason

their decisions at the conventional level reveals little about the content of the different

ethical criteria people use to reason their decisions and behavior. Some studies have

tried to address this issue and connect Kohlberg's three levels of moral reasoning with

different ethical theories. Victor and Cullen (1988) argued that the first pre-

conventional level represents egoism theory, the conventional level represents a

theory of rules, and the final level represents ethical reasoning based on individual

principles. Rest (1979) and Reidenbach and Robin (1990) stated that the last three

stages of the cognitive moral development model are tied to different concepts of

justice. Derry (1987) argued that Kohlberg's theory emphasizes rights and justice

theory at the expense of other moral principles. The ethics of care has been proposed

as one example for this type of neglect (Fraedrich et al., 1994). Nevertheless, there is

still confusion about the nature of the moral criteria people apply when making an

ethical decision. This confusion could be clarified by a thorough exploration of the

ethical content of the reasons people use to justify their decisions. Several researchers

have even expressed the need to expand the research on ethical reasoning and to

employ other personal and cultural factors that have been shown to strongly influence

ethical reasoning (Fraedrich, Thorne, & Ferrell, 1994; Trevino, 1992).

Ethical theories as criteria for ethical reasoning

Another approach to the study of ethical reasoning focuses on the role of ethical

philosophies in ethical reasoning. According to this approach, the ethical explanations

and reasons people use in order to explain their decisions and behavior express ethical

criteria grounded in some ethical theory (Victor & Cullen, 1988). The theory-based

criteria contain information about the recommended action and about the reasons for

that recommendation. These criteria comprise the logic for action, "the underlying

assumptions, deeply held, often unexamined, which form a framework within which

reasoning takes place" (Horn, 1983). Normative ethical theories differ in their logic

for action and sometimes recommend different actions, but not always. Collins and

Wray-Bliss (2005) demonstrated how three individuals discursively constructed and

legitimized their support of sex discrimination within the same context, using three

entirely different institutional logics and vocabularies, such as care, friendship, and

responsibility. Lahdesmaki (2005) also found that managers use different ethical

arguments to justify the same business decision. Because the same behavior can be

attributed to different and even contradicting reasoning, as demonstrated by Collins

and Wray-Bliss (2005) and others (for example, Victor & Cullen, 1988; Lahdesmaki,

2005), observing behavior itself is not sufficient to understand the logic underlying

that behavior; it is equally important to learn about the ethical criteria people use to

reason their actions and about the moral foundations of these criteria. Several

qualitative studies have explored the connection between ethical theories and ethical

judgment and reasoning. Their results are mixed and confusing, apparently because

each study included different ethical theories as the basis of ethical reasoning.

Fritzsche and Becker (1984), who studied the link between ethical theory and

managers' behavior, found that most individuals use utilitarian reasoning for their

ethical behavior. Premeaux and Mondy (1993) and Premeaux (2004) found similar

results in their follow-up studies. Lahdesmaki (2005) found that the ethical reasoning

of entrepreneurs in the nature-based industry was not based exclusively on utilitarian

ethics: virtue ethics and deontological reasoning were also in evidence. Granitz and

Loewy (2007), who investigated the ethical theories students apply to justify

plagiarism, found that the dominant theory used by the students was deontology

(almost 42%), the second largest category was situational, expressed in the denial of

responsibility (20%), and the third was Machiavellianism or egoism (18%).

Another line of research that employs ethical theory as a basis for ethical reasoning is

the exploration of the difference between formalistic and utilitarian reasoning, and

their influence on ethical behavior. Utilitarian reasoning refers to the tendency to

assess ethical situations based on their consequences for people. Formalistic reasoning

represents the tendency to assess ethical situations based on their conformity to rules

or some other formal patterns of behavior (Brady & Wheeler, 1996; Alder et al.,

2008). Studies that focus on classifying individual ethical decision frameworks reveal

that formalism and utilitarianism represent distinct approaches to ethical problem

solving, and that different situations can elicit a different ethical decision framework,

formalistic or utilitarian, to varying degrees (Alder et al., 2008).

These different and inconclusive findings, together with the various theories and

constructs that have been used in the reported studies, make comparison between

them difficult. Nevertheless, they provide a promising starting point for further

research that should rely on past studies and overcome their shortcoming.

Most of the studies that have explored the connection between ethical theories and

reasoning considered only two or three ethical theories at most as possible criteria for

ethical reasoning. The field of ethics, however, contains additional moral philosophies

and classification systems that have unique core elements and criteria (Reidenbach &

Robin, 1988; Victor & Cullen, 1988; Shultz & Bender-Ilan, 2004). Those studies that

considered more than three ethical theories (for example, Granitz & Loewy, 2007)

were mainly descriptive and did not assess the relationship between reasoning,

judgment, and other components of the ethical judgment process. The objective of the

proposed research is to explore the possible connection between six ethical theories

and ethical reasoning within organizations.

Review of six ethical theories

I intend to focus on six normative ethical theories, representing relatively different

moral principles that individuals can apply to reason their decisions and actions within

organizations: ethical egoism, utilitarianism, deontology, the ethics of care, rights

theory, and the theory of justice. My original intention was to include as many ethical

theories as possible, since prior research has demonstrated that individuals use a wide

range of different ethical criteria in order to reason their decisions and behaviors

(Granitz & Loewy, 2007; Reidenbach & Robin, 1988; Schumann, 2001; Shultz and

Brender – Ilan, 2004). Nevertheless, there are some ethical theories that I have

decided to exclude from the proposed research. Generally, the reasons for the

exclusions of these theories are overlap with another, more salient theory, and the

absence of definite observable criteria for action. Specifically, the selection of the

following six ethical theories is based on a few reasons. First, as noted earlier in this

proposal, only a few researches have explored the link between ethical theories and

ethical reasoning. The focus on the distinction between deontological reasoning and

utilitarian reasoning and the tendency to exclude other possible ethical frames and

theories has been based on the assumption, that these two theories dominate ethical

reasoning within organizations. Nevertheless, it has been shown by some researches

that utilitarian thinking does not dominates reasoning in some situations. Granitz and

Loewly (2005) for example, demonstrated in their research on students' plagiarism

that students use ethical theories like deontology, egoism, and situational ethics to

justify their behavior and did not rely on utilitarian reasoning in this situation.

Schumann (2001) and Shultz and Brender – Ilan (2004) discussed the relevance of

different ethical theories to the practice of human relations within organizations.

Reidenbach & Robin (1990) also concluded that individuals do not use either a purely

deontological or utilitarian reasoning and that individual organize and use evaluative

criteria differently from situation to situation. There are three ethical theories that

have been addressed in prior research but I have decided to exclude from the proposed

research. First, cultural relativism (employed by Granitz and Loewly, 2007 and

Reidenbach & Robin, 1990) according to which ethical standards are different across

cultures and an act that is ethical in one culture may be considered unethical in

another culture (Robertson & Fedill, 1999; Vitell et al 1993, Granitz and Loewly,

2007). Since my research will be held at the same culture, it is reasonable to assume

that major cultural differences will not be found. Situational or contingent ethics was

also employed by students in Granitz and Loewly (2007) research and represent

reasoning which is based on circumstances beyond one's control and the specific

surrounding of the ethical dilemma. I excluded this theory since exploring the

influence of ethical context is one of the research purposes. In addition, the vignettes

method directs the respondent to take the role of the decision maker (i.e. take control)

and make a reasoned decision and not to justify an action previously performed by the

respondent. I excluded Virtue ethics from the list of possible ethical theories although

used in Lahdesmaki's (2005) qualitative research and in other theoretic works (for

example, Schuman, 2001; Jones et al, 2007) because virtue ethics is a general theory

that does not specify direct ethical criteria for actions and because it overlaps with the

ethics of care (Budd, 2004), which, in my view, is more appropriate to the study of

business decision. In addition, recent theoretic advancements in the field of human

resources management (Schumann, 2001) and organizational behavior (Jones et al,

2007) stress the importance of moral criteria that are based on the ethics of care.

Generally, I propose that Individuals use at least one of the following six ethical

theories to reason their ethical decisions within organizations: ethical egoism,

utilitarianism, deontology, ethics of care, rights theory, and the theory of justice.

Ethical Egoism

Teleological or consequentiality theories measure morality based on the consequences

of actions. Ethical egoism focuses exclusively on maximizing the good for the moral

agent (Reidenbach & Robin, 1990). There are a few variations of the theory, but two

forms of egoism are the most dominant: psychological egoism and ethical egoism.

Psychological egoism is a descriptive theory of human behavior that holds that people

are naturally programmed to behave only in their own self-interest. Ethical egoism is

the normative theory whereby people ought to act exclusively in their self-interest

(Reidenbach & Robin, 1990; Jones et al., 2007). Thus, the moral principle of ethical

egoism suggests that an act is ethical when it promotes the individual's long-term

interest (Shultz & Brender-Ilan, 2004; Jones et al., 2007). Note that it is possible for

people to help others, follow the rules of society, and even grant gifts if they believe

that those actions are in their own best interest.

Utilitarianism

Utilitarianism represents the dominant and most influential normative teleological or

consequential ethical philosophy, and its different forms incorporate various concepts

of utility. Jeremy Bentham (1789) and John Stuart Mill (1863) embraced a

"hedonistic" conception of "pleasure" or "happiness." Pluralistic utilitarians have

developed an approach that added a list of other intrinsically good things to pleasure,

such as knowledge, freedom, friendship, etc. Preference utilitarianism proposes a

firmer basis for theories of utility, based on peoples' desires, choices, and behavior

rather than on pleasure (Snoeyenbos & Humber, 2002). Utilitarianism focuses on ends

and not on the means required to achieving those ends, and it takes into account all

present and future benefits and harms that accrue or might accrue to anyone who is

affected by the action, including items that may be difficult to evaluate accurately

(Schumann, 2001).

According to the utilitarian moral principle, an act is morally acceptable if it produces

the greatest net benefit to society as a whole, where the net social benefit equals social

benefits minus social costs (Bentham, 1789; Mill, 1957; Brandt, 1979; Rachels, 1999;

Velasquez, 1998; Schumann, 2001; Cavanagh, 1981). Utilitarianism regards the

welfare of any single individual as no more or less important than the welfare of any

other individual, but it does not assume that all individuals should be treated in the

same way. For example, it would endorse unequal treatment that maximizes the

general welfare (Airaksinen, 1987; Lyons, 1994). Research generally distinguishes

between two forms of utilitarianism: act utilitarianism, which includes maximizing

benefits relative to costs for a specific decision at hand, and rule utilitarianism, which

involves following rules designed to achieve the greatest net positive consequences

over time (Fritzsche & Becker, 1984; Premeaux & Mondy, 1993; Premeaux, 2004).

Utilitarian decision makers are required to estimate the effect of each alternative on

all parties concerned, and to select the one that optimizes the satisfaction of the

greatest number (Cavanagh, 1981; Velasquez, 1998).

Deontology

Deontology is associated mostly with Immanuel Kant who argued that the highest

good was the good will, and morally right actions are those carried out with a sense of

duty (Kant, 1998 (1781; 1785)). Thus, it is the intention behind an action rather than

its consequences that make that action good (Bowie, 2002). Kantian moral philosophy

is based on the categorical imperative: "Act only on that maxim by which you can at

the same time will that it should become a universal law." Kant's second formulation

of the categorical imperative dictates that human beings should be treated not simply

as a means to one's own ends but also as ends in themselves (Bowie, 1999; Sullivan,

1989). It follows that people in business relationships should not be used, coerced, or

deceived, and that business organizations and practices should be arranged so that

they contribute to the development of human rational and moral capacities (Bowie,

2002). The third Kantian rule requires that one should act as if he were a member of

an ideal “kingdom of ends,” in which he is both king and sovereign at the same time.

In the organizational arena, this means that the rules that govern an organization must

be such that can be endorsed by every member in the organization. Moreover, a

person who adopts a Kantian point of view sees the organization as a moral

community within which each member of the organization stands in a moral

relationship with all others (Bowie, 1999). A manager who accepts Kantian morality

would ask whether the principle on which any given decision is based passes the test

of the categorical imperative. Is the principle based on good will? Does it treat people

as ends in themselves? And can it be willed universally without contradictions?

Unless the principle of your action can be universalized, it is immoral to make an

exception for yourself (Bowie, 2002).

The ethics of care

The ethics of care emerged out of the feminist literature. Gilligan (1982), Dillon

(1992), and others have objected to the impersonal, male-dominated view of ethics

that ignores the importance of the special relationship between individuals. The ethics

of care is related to virtue theory, but emphasizes virtues that are important to

personal relations, such as compassion, sympathy, empathy, and loyalty (Budd, 2004).

The ethics of care argues that a person's moral obligation is not to follow impartial

principles but rather to care for the good of the particular individuals with whom the

person has concrete special relationships. Each of us must attend to our own needs as

well as to those of the people in our web of relationships, which includes the people

with whom we have close relationships as well as those in the larger communities in

which we live (Schumann, 2001). According to the perspective of the ethics of care,

an ethical dilemma is not an abstract problem with only one ethically correct solution

that can be agreed on by impartial observers and by applying universally accepted

principles. Rather, solutions should emerge from relationships of mutual care and

from the context in which the problems are embedded (Jones et al., 2007). When

applying the ethics of care to business, some situations may be more challenging than

others. There may be situations, in which our desire to express care for individuals

with whom we have a special relationship conflicts with the care we wish to express

for others. For example, a manager making a hiring decision may wish to favor a

friend over strangers for the job, but this desire conflicts with the desire to hire the

best qualified candidate, which follows from his care for his relationships with other

employees, customers, and stockholders of the organization. Managers can resolve the

conflict by disqualifying themselves from making a hiring decision that involves a

friend (Velasquez, 1998). The ethics of care has received little attention as a

normative ethical theory in business ethics research (for examples, see Schumann,

2001; Jones et al., 2007), but there is growing interest in it in business because of the

increased interest in the relational aspect of business life.

Rights theory

According to the theory of moral rights, human beings have certain fundamental

rights that should be respected in all decisions: the right to free consent, privacy,

freedom of conscience, free speech, and due process (Cavanagh et al., 1981). A right

is a capacity, a possession, or condition of existence that entitles either an individual

or a group to enjoy some object or state of being. For example, the right to free speech

is a condition of existence that entitles one to express one's thoughts as one chooses

(Duska, 2002). Rights theories distinguish between negative and positive rights. In the

case of negative rights, the duty is to allow the party to act freely within the domain

covered by the right. In the case of positive rights, the obligation is to provide the

party with a benefit of some type. The moral force of a right depends on its strength in

relation to other moral considerations applicable to the context in question (Jones et

al., 2007). According to rights theory, as long as the distribution of wealth in society

is achieved through fair acquisition and exchange, the distribution is a just one

regardless of any degree of inequalities that may ensue (Budd, 2004). The morally

correct action is the one that a person has the moral right to do, that does not infringe

on the moral rights of others, and that furthers the moral rights of others (Rachels,

1999; Velasques, 1998; Cavanagh et al., 1981; Schumann, 2001).

People who rely on rights theory to reason their actions emphasize the entitlement of

individuals (Cavanagh et al., 1981). Restrictions on behavior should prevent harm to

others, but unless your actions harm others, you should be free to do as you please. A

manager making a decision based on this theory should avoid violating the rights of

others who may be affected by the decision (Cavanagh et al., 1981).

Theory of justice

According to Rawls (1971), under a veil of ignorance, rational, self–interested, and

equal individuals will agree that each person is to have an equal right to the most

extensive total system of equal basic liberties. Moreover, social and economic

inequalities are to be arranged so that they are both to the greatest benefit of the least

advantaged, and attached to offices and positions open to all under conditions of fair

equality of opportunity (Budd, 2004). In Rawls's opinion, the first virtue of social

institutions is justice for the individual and not aggregate welfare. He is concerned

more with how the pie is divided than with how large it is. Inequalities are just only if

they result in benefits for everyone, with particular emphasis on the least advantaged

(Jones, 2007).

The theory of justice requires decision makers to be guided by equity, fairness, and

impartiality (Cavanagh et al., 1981). It relies on three types of moral prescriptions: (a)

that individuals who are similar in a relevant respect should be treated similarly and

individuals who are different in a relevant respect should be treated differently in

proportion to the difference between them; (b) that rules should be administrated

fairly and clearly; and (c) that individuals should not be held responsible for matters

over which they have no control, and should be compensated for the cost of their

injuries by those responsible for these injuries (Cavanaugh et al., 1981). Decision

making and reasoning based on the theory of justice focus on the distributional effect

of actions (Cavanagh et al., 1981).

The link between ethical theories and ethical issues

It has been proposed that ethical judgment occurs in situations that involve a dilemma

between at least two conflicting systems of believes and the individual has to make a

decision to follow one of these believes (Ferrell & Fraedrich, 1991; Dutton &

Duterich, 1991). Each system of believes can serve as criteria for ethical judgment

and ethical reasoning. In other words, each decision the individual make regarding an

ethical issue could be based on and reasoned by some kind of logic based on an

ethical theory or a moral principle. Some decisions could be reasoned by more than

one theory or principle and even by a combination of a few theories and principles

(Alder et al, 2008; Wray-Bliss, 2005; Redenbacher and Robin, 1988).

Research findings from studies that have used the vignette method demonstrate that

different ethical content invoke different ethical reasoning. For example, dilemmas

that involve the issue of "coercion and control" invoke rule and act utilitarian ethical

reasoning (Fritzsche & Becker, 1984; Premeaux, 2004). Act utilitarian reasoning is

based on the total consequences and rule utilitarian reasoning is based on an

evaluation of the rule under which the act falls (Barry, 1979). Dilemmas that involve

"conflict of interests" elicit reasoning based on the theory of rights in addition to act

and rule utilitarian theories (Fritzsche & Becker, 1984; Premeaux, 2004). It is worth

mentioning that there are only a few examples of researches that have addressed the

possible link between the specific content of an ethical dilemma and the ethical

reasoning employed by individuals facing this dilemma. Most researches focus on the

moral intensity of an ethical dilemma as the determinant of ethical intentions and

behavior. Following the two propositions that I outlined previously and the review of

the six ethical theories that will be addressed in this study, I suggest that the specific

content of an ethical issue elicit ethical criteria and reasoning that are based on at least

one of the six ethical theories: ethical egoism, deontology, utilitarianism, the ethics of

care, rights theories or the theory of justice.

One of the issues that have been studied in previous researches is the issue of

"deception" (For example, Fritzsche & Becker, 1984; Premeaux, 2004; Weber, 1990;

Redenbacher and Robin, 1990). An ethical dilemma that involves the issue of

deception confronts the individual with the need to decide whether to deceive or not

given certain circumstances. This dilemma is challenging because deceiving could

lead to certain personal or organizational gains and it could even prevent harm

sometimes. On the other hand, deceiving could lead to undesired consequences as

well. Deception can directly harm the deceived party, it could have future harmful

consequences to a group of people and it could even damage the agent and his or her

organization if the deception is discovered. In addition, the dilemma of deception

confronts the individual with the issue of personal integrity. Existing findings on the

ethical reasoning individuals employ in order to reason a decision to deceive or not to

deceive are mixed and confusing. Granitz & Loewy (2007) found that students mostly

used deontological principles to reason plagiarism. Within the business domain,

Fritzsche & Becker (1984) and Premeaux (2004) found that individuals utilize ethical

reasoning which is based on rights theory, act and rule utilitarian in a dilemma that

involve the issue of hiding important information. Redenbacher and Robin (1990)

found that ethical decisions in situations that involve a deception of some kind are

evaluated essentially in terms of their inherent fairness, justice, goodness and

rightness. In fact, previous research shows that individuals use almost every possible

ethical theory to reason their decisions in the case of a possible deception. I argue that

the diversity of the ethical theories used for ethical reasoning could be attributed to

the different "deception" scenarios that have been used in different studies.

Specifically, different content and the unique specification of each scenario yield

different reasoning. For example, some scenarios confront a manager with the

dilemma of a direct deception while others only present the case of collaborating with

an organizational deception. Some scenarios contain information about a possible

serious consequence to the organization and its members, while others focus on the

consequences to another group of people or society at large. I claim that the dominant

content of the ethical issue actually affect the ethical reasoning and the decision being

made in regard to that issue. For example, when the decision to deceive could have a

serious immediate effect on the company and its employees, this decision could be

reasoned using arguments that are based on the ethics of care. In addition, the decision

to deceive could be reasoned differently from the decision not to deceive in regard to

the same dilemma. Taking together my argument and previous studies' findings I

outline seven different hypotheses about the connection between the theories based

ethical reasoning individuals apply and the specific ethical content of a dilemma that

involves a deception.

Generally, deception raises the ethical issue of moral duty and personal integrity.

Redenbacher and Robin (1990) and Granitz & Loewy (2007) found that individuals

rely on ethical reasoning which is based on deontology principles when they decide to

avoid deception or cheating. I hold that when the situation contains no other serious

salient reasons to avoid deception and when the deception is not severe a decision not

to deceive will be reasoned based on deontology principles. Following that, I

hypothesize that:

a1. In the case of deception, if the situation raises no serious concerns in regard to

the welfare of employees, future harmful consequences to the agent, to the

organization or to others, individuals will employ deontology principles in order to

reason their decision not to deceive.

A decision not to deceive can also rely on reasoning which is based on rights theory

or the theory of justice. Fritzsche & Becker (1984) and Premeaux (2004) showed that

respondents used the theory of rights to explain their reluctance to deceive.

Redenbacher and Robin (1990) highlight the role of fairness and justice in decisions

that involve deception against customers. I claim that individuals use these two

theories to reason their decision not to deceive depending on the specific content of

the issue. For example, if a situation specifically violates a contract or other people

rights, than individuals will use arguments from the theory of right to explain their

decision not to deceive. Similarly, if the deception is against a weak party or has a

potential to create a salient unjust distribution of goods, than individuals will explain

their decision not to deceive based on principles of justice. Therefore, I hypothesize

that:

a2. In the case of deception, if the deception upholds potential to violate a contract

or other people rights, individuals will use rights theory to reason their decision not

to deceive.

a3. In the case of deception, if the deception is to be held against a weak party or

will create an unjust distribution of goods, individuals will use the theory of justice

to reason their decision not to deceive.

Sometimes the dilemma of deception arises when the organization is experiencing

hard times and facing the threat of failure and possible layoffs. These situations could

have a strong effect on the relationship with employees. Lahdesmati (2005) found that

mangers present their duty to take care of their employees as one of their ethical

duties. Shultz and Brender – Ilan (2004) and Schumann (2001) also stress the

importance of fostering special relationships with employees when managing human

resource issues within organizations. I claim that Individuals may use reasoning

which is based on the ethics of care in the case of a possible deception, if the

deception could have a positive effect on the relationship with employees or could

prevent harmful consequences and hypothesize that:

a4. In the case of deception, if the deception can settle serious concerns in regard to

the welfare of employees, individuals will use the ethics of care to reason their

decision to deceive.

Utilitarian ethical reasoning emphasizes the consequences of a decision. When a

deception has the potential to harm the company's image or its reputation (if the

deception is discovered or if the decision could seriously harm people who are

affected by it) so that the total negative results of the deception outweigh its positive

results (if any), than a decision not to deceive will rely on utilitarian ethical reasoning.

On the other hand, utilitarian reasoning could be employed to reason a decision to

deceive if the positive results of the deception significantly outweigh its negative

consequences. In regard to dilemmas that emphasize the consequences of the

deception I hypothesize that:

a5. In the case of deception, if the chances are high that the deception will damage

the organization's future successes, individuals will use utilitarian theory to reason

their decision not to deceive.

a6. In the case of deception, if the chances are high that the deception will have a

significant net positive effect, individuals will use utilitarian theory to reason their

decision to deceive.

Finally, some ethical dilemmas dealing with deception present a conflict between

obedience to a superior against a concern for personal integrity. Ward's dilemma used

by Fritzsche & Becker (1984) and Premeaux (2004) and Evelyn's and Roger's

dilemmas used in Weber's (1990) research all present a scenario of this kind. The

Ward's vignette asks the individual to decide whether to be loyal to his company or to

reveal the truth. In Evelyn's case the individual faces a conflict between a desire to

show obedience to a superior and honesty as guiders for one's action. In Roger's case,

a duty to his profession is being challenged by the need to obey his corporate superior

and the threat of professional punishment if he does not. In cases like these three

scenarios, being honest could jeopardize ones career and it is reasonable to expect that

ethical egoism reasoning will be employed if the individual decides to follow his / her

superior's instructions. Therefore I hypothesize that:

a7. In the case of deception, if the deception raises the issue of obeying the boss or

being loyal to the organization, individuals will use egoism theory to reason their

decision to participate in a deception.

Personal ethical orientation and ethical reasoning

Differences in behavior among individuals who are confronted with ethical dilemmas

can be attributed to differences in the way people perceive ethical issues (Dillard &

Ferris, 1989; Marshall & Dewe, 1997), their interpretations of ethical issues (Ross,

1987; Ross & Nisbett, 1991; Singer, 1996; Sonenshein, 2007), or differences in their

set of perceived alternatives (Hunt & Vitell, 1986). Several constructs have been

proposed and tested over the years as personal determinants of ethical decision

making and behavior. The most influential are personal values (Ferrell & Gresham,

1985; Fritzsche, 2004; Fritzsche & Oz, 2007; Schwartz, 2005; Chun, 2005), cognitive

moral development, which was discussed in the previous sections, and ethical

orientation (Forsyth, 1980; Douglas et al., 2001; Forsyth, 1992; Vitell & Paolillo,

2004). Ethical orientation has received special attention as a component that affects

ethical judgment and the perceived importance of ethics (Forsyth 1980; Douglas et al.,

2001; Forsyth, 1992; Vitell & Paolillo, 2004). Individuals’ ethical orientation is

described by their position on two basic factors: the extent to which they reject

universal moral rules in favor of a more "relativist" approach to moral decisions

(relativists believe that there are many ways to look at moral issues and are skeptical

of specific ethical principles), and the extent to which individuals assume that good

consequences always can be obtained (an "idealistic" approach that ignores the fact

that consequences are often a mix of good and bad). In general, the stance individuals

take with regard to these two factors affects the ethical judgments they reach.

Forsyth's taxonomy has proven useful in explaining differences in moral judgment

and sensitivity to ethical issues (Douglas et al., 2001; Forsyth, 1992; Vitell & Paolillo,

2004). Douglas et al. (2001) found that ethical orientation is related to ethical

judgment in high moral intensity situations. Vitell and Paoiliio (2004) found that

idealistic individuals are more likely to believe in the importance of ethics for the

success of their firm, and that people who score high on relativism are less likely to

hold such a belief. Ethical orientation can also affect the perception of the ethical

content of an issue and the various theoretical criteria an individual can use to resolve

an ethical dilemma. By its effect on the perceived importance of ethics, ethical

orientation can affect the logical criteria for one's behavior in conflicting situations.

Specifically, it can lead to the preference of one ethical theory over others.

Differences that were found in ethical judgment may be attributable to the use of

different ethical criteria grounded in different ethical theories. It is possible, for

example, that idealistic people prefer definite ethical criteria that are based on Kant's

categorical imperative, the justice theory or rights theory or even ethical egoism. In

contrast, relativists are unlikely to prefer deontology rules and other absolute ethical

theories and they prefer ethical criteria that take into account broader definitions and

circumstances like utilitarian or the ethics of care. Although ethical orientation has

been found to affect the perception of ethical content and the ethical decision process,

its relationship with ethical reasoning has not been studied. Following past research

on ethical orientation, I argue that significant differences in individuals' ethical

reasoning are found when considering the individual's ethical orientation.

Following my proposition and the arguments presented previously, I specifically

hypothesize that:

b1. Highly idealistic individuals will reason their decisions based on deontology

reasoning, the theory of justice, ethical egoism and rights theory.

b2. Highly relativist individuals will reason their decisions based on utilitarian

reasoning and the ethics of care.

The effects of context on ethical reasoning

Organizational ethical environment

Context as a factor affecting people’s judgment and actions is well documented.

March and Simon (1958) stressed the impact of information from the environment on

the judgment and actions of people in organizations. Berger and Luckmann (1967)

emphasized the centrality of "common sense knowledge" to interaction and managing

doubtful situations. In the business ethics arena, much of the research on

organizational ethical culture and ethical climate demonstrates the significant

influence of context on the perception and framing of ethical issues (Weber &

Gillespe, 1998; Kelly & Elm, 2003) as well as on decision making (Douglas,

Davidson, & Schwartz, 2001; Adams, Tashchian, & Shore, 2001; Vitell & Paolillo,

2004; Kelley & Elm, 2003). The ethical context is represented in the literature by two

dominant constructs: ethical culture and ethical climate. Organizational "ethical

culture" represents a multidimensional interplay among various "formal" and

"informal" systems of behavior control capable of promoting either ethical or

unethical behavior (Trevino, Butterfield, Donald, & McCobe, 1998). The formal

systems include such factors as policies, leadership, authority structure, reward

systems, and training programs. Informal systems include peer behavior and ethical

norms. The ethical decision-making literature considers ethical culture to be a

significant component in the decision-making process (Trevino, 1986; Hunt & Vitell,

1986). Specifically, ethical culture provides directions for day-to-day behavior

(Cohen, 1993) and helps establish what is considered to be legitimate or unacceptable

in an organization (Trevino & Ball, 1992). The code of ethics is an important cultural

sense-making and learning mechanism in an organization. The code of ethics

legitimizes the appropriate behavior, teaches those who are not certain what behavior

is appropriate in the organization, and warns those who do not operate according to

the code about sanctions for unethical behavior (Trevino & Nelson, 2005; Valentain

& Fleishman, 2008; Schwartz, 2004). Codes influence ethical decision making and

contribute to the general level of awareness of ethical issues (Loe et al., 2000; Adams

et al., 2001). Codes of ethics also have a symbolic meaning because they encourage

individuals within organizations to follow a particular ethical course of action in

conflicting situations (Adams et al., 2001). The code of ethics can also supply

linguistic means for reasoning ethical decisions.

Organizational ethical climate and ethical reasoning

Organizational "ethical climate" (Victor & Cullen, 1987, 1988, 1993) represents the

shared perceptions of what behavior is ethically correct and of how ethical issues

should be handled. The organizational ethical climate is defined by two elements that

determine the quality of ethical reasoning within the organization: ethical theory,

based on Kohlberg's (1969) three levels of moral judgment (egoistic, deontological,

and utilitarian), and the locus of analysis, which can be cosmopolitan, local, or

individual. The ethical climate expresses a particular normative ethical expectation

(Victor & Cullen, 1993) that reflects the criteria individuals use in ethical decision

making. Victor and Cullen (1988) found that most organizations have a dominant type

of ethical climate, and that different ethical climates exist at various organizations and

even within the same organization. Their empirical investigation confirms five of nine

possible ethical climates. They named these caring (a combination of the three levels

of benevolence and the cosmopolitan level of egoism), law and code (principle –

cosmopolitan), rules (principle – local), instrumental (the individual and local levels

of egoism), and independence (principle – individual). Some of the ethical climates

they confirmed reflect criteria that are similar to those of some ethical philosophies.

The caring climate criteria resembles the criteria of the ethics of care, the law and

code climate overlaps with deontology theory, and the instrumental climate reflects

ethical egoism. Victor and Cullen (1987, 1988) suggested that the type of ethical

climate existing in an organization or a group influences what ethical conflicts are

considered, the process by which these conflicts are resolved, and the characteristics

of their resolution. Research on the connection between ethical climate dimensions

and ethical or unethical behavior has yielded only modest results (Wimbush &

Shepard, 1994; Wimbush et al., 1997; Fritzsche, 2000). Kish-Gephart et al (2010)

found in their Meta analysis a positive (weak) connection between egoistic climates

and unethical behavior and a negative connection between benevolence and principle

climates and unethical behavior. The three types of organizational ethical climate

provide behavioral guidance for individuals within the organization. These behavioral

guidelines are based on different ethical criteria (Victor and Cullen, 1988) that are

reflected in the names of the three types of ethical climate. Egoistic climates

encourages decision making based on self interests (Victor and Cullen, 1988). Ethical

reasoning within an egoistic climate emphasizes the principle of ethical egoism and

possibly utilitarian reasoning when the interests of the group represent the interest of

the individual. Benevolence climates foster a larger point of view and emphasizes that

what is best for employees, customers and the larger community is important in the

organization (Victor and Cullen, 1988). Ethical reasoning in benevolence climates is

guided by the care for others and the importance of the relationships with various

stakeholders. In principled organizational climates decisions are perceived to be based

on formal guidelines for behavior (Victor and Cullen, 1988) and ethical reasoning is

expected to be based on a rigid compliance with the organizational rules and the law.

Rights theories, the theory of justice and deontology principles outline rigid

guidelines for behavior. I propose that significant differences in individuals' ethical

reasoning will be found when considering the organizational ethical climate. In regard

to the three types of ethical climates I hypothesize that:

c1. Egoistic climates will be related to ethical reasoning based on ethical egoism

and utilitarian theory.

c2. Benevolence climates will be related to the ethical reasoning based on the ethics

of care and justice theory.

c3. Principled climates will be related to ethical reasoning based on deontology

principles, the theory of justice and rights theory.

Industry context and ethical reasoning

It has been suggested that cultural environment and industry environment also affect

the process of decision making (Hunt & Vitell, 1986; Weber & Wasieleski, 2001;

McDevitt et al., 2007) through their influence on the perception of the ethical

problem, the perception of alternatives to solve the problem, and the possible

consequences of each alternative (Hunt & Vitell, 1986). Specifically, it has been

suggested that certain industries may attract certain people, or that the values,

practices, and socialization within the culture of an industry can influence individuals'

reasoning as they consider and filter information when making a decision (Robertson

& Fadil, 1999). Moral reasoning research has generally not explored the interaction

between managerial moral reasoning and the influence that industry membership may

have on the moral reasoning process. In a pioneering effort, Weber and Wasieleski

(2001) found some significant differences in managers' moral reasoning related to

industry membership. They found that managers belonging to the service industry

group reached a significantly higher stage of the cognitive moral reasoning model

than those in the manufacturing industry group. These finding are based on an

assessment of managers' level of cognitive moral reasoning, which is different from

assessing their ethical reasoning based on ethical theories. I argue that the industry

context is related to ethical reasoning. Since no prior research on the connection

between ethical reasoning and industry context exists, I can not generate specific

hypotheses in regard to the connection between different industries and the six ethical

theories applied for ethical reasoning. Instead I hypothesize that:

d. Significant differences in individuals' ethical reasoning will be found when

considering the industry context.

Summary of the research design

The proposed research will be conduct in two phases: an initial pilot among

management students from Tel Aviv University and a study within 3-4 organizations

from different industries. Data for the analysis will be collected using questionnaires

and interviews. Ethical reasoning and judgments will be assessed using the vignettes

method. The influences of personal ethical orientation and ethical environment on

ethical reasoning will also be assessed along with the influence of a few other

individual and contextual factors using specific scales and questions. In order to fully

understand the ethical environment and the ethical climate within the studied

organizations and to check the relevance of the vignettes used in the study to the

actual ethical dilemmas mangers encounter at work, a few interviews will be

conducted with mangers and top managers within the studied organizations.

References

Adams, J.S, Tashchian, A. and Shore, T.H.2001.Codes of Ethics as Signals for Ethical

Behavior. Journal of Business Ethics, 29,199-211.

Airaksinen, T. 1987. Berkeley and the Justification of Beliefs. Philosophy and

Phenomenological Research, 48(2): 235-256.

Alder, G.S., Schminke, M., Noel, T.W., and Kuenzi, M.2008.Employee Reactions to

Internet Monitoring: The Moderating Role of Ethical Orientation Journal of Business

Ethics, 80:481-498.

Alexander, C.S., and Becker, H.J.1978. The Use of Vignettes in Survey Research. The

Public Opinion Quarterly, 42(1): 93-104.

Bartlett, D.2003. Management and Business Ethics: A Critique and Integration

of Ethical Decision-Making Models. British Journal of Management, 14, 223-

235.

Barry, V.1979. Moral Issues in Business. Belmont, Cal: Wadsworth.

Brady, F.N., and Wheeler, G.E.1996. An Empirical Study of Ethical Predispositions.

Journal of Business Ethics: 15(9): 927-940.

Brandt, R.B. 1979. A Theory of the Good and the Right. New York: Oxford Univ.

Press.

Bentham, J.1789. An Introduction to the Principles of Moral and Legislation. New

York: Hafner, 1948.

Berger, P.L., and Luckmann, T.1967. The Social Construction of Reality. London:

Penguin.

Borkowski, S., and Ugras, Y.J.1998. Business Students and Ethics: A Meta –

Analysis. Journal of Business Ethics, 17: 1117-1127.

Bowie, N.E.1999. Business Ethics: A Kantian Perspective. Malden, Mass: Blackwell.

Bowie, N.E. 2002.A Kantian Approach to business Ethics. in Frederick, R.E. A

Companion to Business Ethics, Blackwell, UK.

Budd, J.W.2004. Employment with a Human Face Balancing Efficiency, Equity, and

Voice. Cornell University Press.

Chun, R. 2005. Ethical Character and Virtue of Organizations: An Empirical

Assessment and Strategic Implications. Journal of Business Ethics, 57,269-284.

Clegg, S., Kornberger, M and Rhodes, C.2006. Business Ethics as Practice. British

Journal of Management, 17, 1-16.

Colby, A. and Kohlberg, L.1987. The Measurement of Moral Judgment: Theoretical

Foundations and Research Validations, and Standard Issue Scoring Manual (Vols. 1

and 2), Cambridge University Press, Cambridge, Mass.

Collins, H., and Wray-Bliss, E. 2005. Discriminating Ethics. Human Relations,

58:799-824.

Conrad, C.1993. The Ethical Nexus. Ablex, New Jersey.

Conroy, S.J., Emerson, T.L.N., & Pons, F. 2010. Ethical Attitudes of Accounting

Practitioners: Are Rank and Ethical Attitudes Related? Journal of Business Ethics

91:183-194.

Cullen, J.B., Parboteeah, K.P., and Victor, B.2003. The Effect of Ethical Climates on

Organizational Commitment: A Two – Study Analysis Journal of Business Ethics,

46,127-141.

Derry, R.1987. Moral Reasoning in Work-Related Conflicts, In W.C. Frederick

(Ed)Research in Corporate Social Performance and Policy, Vol. 9 JAI Press,

Greenwich, CT.

Dillard, J.F., and Ferris, K.R. 1989. Individual Behavior in Professional Accounting

Firms: A Review and Synthesis. Journal of Accounting Literature, 8: 208-234.

Dillon, R.S. 1992. Care and Respect. In E. Browning Cole, & S. Coultrap-MCQuin

(Eds), Explorations in Feminist Ethics: Theory and Practice (pp.69-81).Bloomington,

IN: Indiana University Press.

Douglas, P.C., Davidson, R.A. and Schwartz, B.N.2001. The Effect of Organizational

Culture and Ethical Orientation on Accountants' Ethical Judgments Journal of

Business Ethics, 34,101-121.

Dubisky, A.J., & Loken, B.1989. Analyzing Ethical Decision Making in Marketing.

Journal of Business Research, 19(2): 83-107.

Duska, R. 2002. The Ethics of Reward Systems in the Financial Services Industry.

Business and Society Review, 104 (1): 34-41.

Dutton, J.E. and Dukerich, J.M. 1991. Keeping an Eye on the Mirror: Image and

Identity in Organizational Adaptation. Academy of Management Journal, 34(3), 517-

554.

Ferrell, O.C. and Fraedrich, J. 1991.Business Ethics: Ethical Decision Making and

Cases. Boston: Houghon Mifflin Company.

Ferrell, O.C. and Fraedrich, J.1989.A Synthesis of Ethical Decision Models for

Marketing. Journal of Macro marketing, 9(2): 55-64.

Ferrell, O.C., and Gresham, L.G. 1985.A Contingent Framework for Understanding

Ethical Decision Making in Marketing. Journal of Marketing, 49(3): 87-96.

Fleming, D.M., Chow, C.W., and Su, W. 2010.An Explanatory Study of Chinese

Accounting Students' and Auditors' Audit – Specific Ethical Reasoning. Journal of

Business Ethics, 94: 353-369.

Forsyth, D.R. 1980. A Taxonomy of Ethical Ideologies. Journal of Personality and

Psychology, 39: 175-184.

Forsyth, D.R. 1992. Judging Morality of Business Practices: The Influence of

Personal Moral Philosophies. Journal of Business Ethics, 11: 461-470.

Fraedrich, J., Thorne, D.M., and Ferrell, O.C. 1994. Assessing the Application of

Cognitive Moral Development Theory to Business Ethics. Journal of Business Ethics,

13: 829- 838.

Fritzsche, D.J., and Oz, E. 2007. Personal Values' Influence on the Ethical

Dimensions of Decision Making. Journal of Business Ethics, 75: 335-343.

Fritzsche, D.J. 2004. Business Ethics: A Global and Managerial Perspective

McGraw – Hill Irwin, Burr Ridge, IL.

Fritzsche, D.J., & Becker, H. 1983. Ethical Behavior of Marketing Managers. Journal

of Business Ethics, 2: 291-299.

Fritzsche, D.J., & Becker, H. 1984. Linking Management Behavior to Ethical

Philosophy - An Empirical Investigation. Academy of Management Journal, 27(1):

166-175.

Gibbs, J.C., and Widaman, K.F. 1982. Social Intelligence: Measuring the

Development of Sociomoral Reflection. Prentice – Hall, Englewood Cliffs, NJ.

Granitz, N. and Loewy, D. 2007. Applying Ethical Theories: Interpreting and

Responsibility to Student Plagiarism. Journal of Business Ethics, 72: 293-306.

Gilligan, C. 1982. In a Different Voice: Psychological Theory and Women's

Development. Cambridge, MA: Harvard Univ. Press.

Horn, R. 1983. An Overview of Trialectics within Applications of Psychology and

Public Policy. In Horn, R.(ed), Trialectics: Toward a Practical Logic of Unity: 1-39.

Lexington, MA: Information Resources.

Hunt, S.D. and Vitell, S.A.1986. A General Theory of Marketing Ethics. Journal of

Macromarketing, 8(2), 5-16.

Hunt, S.D., Wood, Van R. and Chonko, L.B. 1989. Corporate Ethical Values and

Organizational Commitment in Marketing. Journal of Marketing 53(3): 79-90.

Jones, T.M. 1991. Ethical Decision Making by Individuals in Organizations: An

Issue- Contingent Model. Academy of Management Review,16(2):366-395.

Jones, T.M., Felps, W., and Bigley, G.A. 2007. Ethical Theory and Stakeholder –

Related Decisions: The Role of Stakeholder Culture Academy of Management

Review, 32(1): 137-155.

Jones, D.A. 2009. A Novel Approach to Business Ethics Training: Improving Moral

Reasoning in Just a Few Weeks. Journal of Business Ethics, 88: 367-379.

Kant, I. 1998. (1781). Critique of Pure Reason. Edited by Paul Guyer and Allen W.

Woods. Cambridge: Cambridge University Press.

Kant, I. 1998. (1785) Groundwork of the Metaphysics of Morals. Edited by Mary

Gregor. Cambridge: Cambridge University Press.

Kelley, P.C., and Elm, D.R. 2003. The Effect of Context on Moral Intensity Issues:

Revising Jones's Issue – Contingent Model. Journal of Business Ethics: 48: 139-154.

Kish-Gephart, J.J., Harrison, D.A., and Trevino, L.K. 2010. Bad Apples, Bad Cases,

and Bad Barrels: Meta – Analytica Evidence About Sources of Unethical Decisions at

Work. Journal of applied Psychology, 95(1): 1-31.

Kohlberg, L.1969.Stage and Sequence: The Cognitive Development Approach to

Socialization. In Goslin, D.A.(eds) Handbook of Socialization Theory. Rand

McNally, Chicago #47-480.

Lahdesmaki, M. 2005. When Ethics Matters – Interpreting the Ethical Discourse of

Small Nature – Based Entrepreneurs. Journal of Business Ethics, 61: 55-68.

Liedtka, J.M. 1989. Value Congruence: The Interplay of Individual and

Organizational Value Systems. Journal of Business Ethics, 8, 805-815.

Liedtka, J.M. 1991. Organizational Value Contention and Managerial Mindsets.

Journal of Business Ethics, 10, 543-557.

Loe, T.W., Ferrell, L., and Mansfield, P. 2000. A Review of Empirical Studies

Assessing Ethical Decision Making in Business. Journal of Business Ethics, 25: 185-

204.

Loviscky, G.E., Trevino, L.K., and Jacobs, R.R. 2007. Assessing Managers' Ethical

Decision – Making. An Objective Measure of Managerial Moral Judgment. Journal of

Business Ethics, 73: 263-285.

Lyons, D. 1994. Rights, Welfare, and Mill's Moral Theory. New York: Harper

Collins.

March, J.G., and Simon, H.A.1958. Organizations. New York: John Wiley.

Maitlis, S. 2005. The Social Processes of Organizational Sensmaking. Academy of

Management Journal, 48(1), 21-49.

Marshall, B., and Dewe, P. (1997) An Investigation of the Components of Moral

Intensity. Journal of Business Ethics, 16(5), 521-529.

McDevitt, R., Giapponi, C. and Tromley, C. 2007.A Model of Ethical Decision

Making: The Integration of Process and Content. Journal of Business Ethics, 73:219-

229.

Mill, J.S. 1957. Utilitarianism. Indianapolis: Bobbs-Merrill.

Morrison, E.W. 2002. Newcomers' Relationships: The Role of Social Network Ties

during Socialization. The Academy of Management Journal, 45(6): 1149-1160.

Peterson, D.K. 2002. The Relationship Between Unethical Behavior and the

Dimensions of the Ethical Climate Questionnaire. Journal of Business Ethics, 41:313-

326.

Pettifor, J.L., Estay, I. and Paque, S. 2000. Preferred Strategies for Learning Ethics in

the Practice of a Discipline, Canadian Psychology, 43(4): 260-269.

Piaget, J. 1932. The Moral Judgment of the Child. New York: Free Press.

Premeaux, S.R. 2004. The Current Link Between Management Behavior and Ethical

Philosophy. Journal of Business Ethics, 51: 269-278.

Rachels, J. 1999. The Elements of Moral Philosophy (3rd

ed). Boston: McGraw-Hill.

Rawls, J. 1971. A Theory of Justice Cambridge, MA: Harvard Univ. Press.

Reagans, R., and McEvily, B. 2003. Network Structure and Knowledge Transfer: The

Effect of Cohesion and Range Administrative Science Quarterly, 48: 240-267.

Reidenbach, R.E. and Robin, D.P. 1988. Some Initial Steps Toward Improving the

Measurement of Ethical Evaluations of Marketing Activities. Journal of Business

Ethics, 7:11, 871-879.

Reidenbach, R.E. and Robin, D.P. 1990. Toward the Development of a

Multidimensional Scale for Improving Evaluations of Business. Ethics.Journal of

Business ethics, 9:8, 639-653.

Rest, J.R. 1979. Development in Judging Moral Issues. University of Minnesota

Press, Minneapolice, MN.

Rest, J.R.1984.Research on Moral Development: Implications for Training

Psychologics. The Counseling Psychologist, 12: 19-30.

Rest, J.R.1986. Moral Development: Advances in Research and Theory. New York

Praeger, NY.

Rest, J.R., Narvaez, D., Thoma, S.J., and Bebeau, M.J. 1999. DIT2: Devising and

Testing a Revised Instrumental of Moral Judgment Journal of Educational

Psychology, 4: 644-659.

Robertson, C., and Fadil, P.A. 1999. Ethical Decision Making in Multinational

Organizations: A Culture – Based Model. Journal of Business Ethics, 19: 385-392.

Rokeach, M.M.1979. From Individual to Institutional Values: with Special Reference

to the Values of Science in M.M. Rokeach (ed) understanding human values:

individual and Societal. The Free Press, New York, NY.

Ross, L.1987. The problem of Construal in Social Inference and Social Psychology.

In N.E. Grunberg, R.E. Nisbett, J. Rodin & J.E. Singer (Eds), A Distinctive Approach

To Psychological Research: The Influence of Stanley Schachter: 118-130. Hillsdale,

NJ: Lowrence Erlbaum Associates.

Ross, L.D.,& Nisbett, R.E. 1991. The Person and The Situation. New York: McGraw-

Hill.

Schumann, P.L. 2001. A Moral Principles Framework for Human Resource

Management Ethics, Human Resource Management Review, 11: 93-111.

Schwartz, M.S. 1992. Universals in the Content and Structure of Values: Theoretical

Advances and Empirical Tests in 20 Countries. Advances in Experimental Social

Psychology, 25: 1-65.

Schwartz, M.S. 2004. Effective Corporate Codes of Ethics: Perceptions of Code

Users. Journal of Business Ethics 55: 323-343.

Schwartz, M.S. 2005. Universal Moral Values for Corporate Codes of Ethics Journal

of Business Ethics 59: 27-44.

Shultz, T. and Brender-Ilan, Y. 2004. Beyond Justice: Introducing Personal Moral

Philosophies to Ethical Evaluations of Human Resources Practices. Business Ethics:

A European Review, 13:4, 302-316.

Singer, M.S. 1996. The Role of Moral Intensity and Fairness Perception in Judgment

of Ethicality: A Comparison of Managerial Professionals and the General Public.

Journal of Business Ethics 15: 469-474.

Singhapakdi, A., Vitell, S.J., Rallapalli, K.C. and Kraft, K.L. 1996. The Perceived

Role of Ethics and Social Responsibility: A Scale Development. Journal of Business

Ethics 15(11): 1131-1140.

Snoeyenbos, M. and Humber, J.2002. Utilitarianism and Business Ethics, in

Frederick, R.E. A Companion to Business Ethics, Blackwell, UK.

Sonenshein, S. 2007. The Role of Construction, Intuition, and Justification in

Responding to Ethical Issues at Work: The Sense making – Intuition Model. Academy

of Management Review, 32: 1022-1040.

Sullivan, R.J.1989. Immanuel Kant's Moral Theory. Cambridge: Cambridge

University Press.

Trevino, L.K. 1986. Ethical Decision-Making in Organizations: A Person-Situation

Interactionist Model. Academy of Management Review, 11(3), 601-617.

Trevino, L.K. 1992. Moral Reasoning and Business Ethics: Implications for Research,

Education and Management. Journal of Business Ethics, 11, 445-459.

Trevino, L.K. and Ball, G.A. 1992. The Social Implications of Punishing Unethical

Behavior: Observers' Cognitive and Affective Reactions. Journal of Management, 18:

751-768.

Trevino, L.K., Butterfield, K.D., and McCabe, D.L.1998.The Ethical Context in

Organizations: Influences on Employee Attitudes and Behavior. Business Ethics

Quarterly, 8(3): 447-476.

Trevino, L.K., Brown, M. and Hartman, L.P.2003. A Qualitative Investigation of

Perceived Executive Ethical Leadership: Perceptions from Inside and Outside the

Executive Suite. Human Relations, 56: 5-37.

Valentine, S. and Fleischman, G. 2008. Ethics Programs, Perceived Corporate Social

Responsibility and Job Satisfaction. Journal of Business Ethics, 77: 159-172.

Velasquez, M.G.1998. Business Ethics: Concepts and Cases (4th

ed). Upper Saddle

River. NJ: Prentice-Hall.

Victor, B. and Cullen, J.B.1988. The Organizational Bases of Ethical Work Climates.

Administrative Science Quarterly, 33(1), 101-125.

Vitell, S.J. and Paolillo, J.G.P.2004. A Cross-Cultural Study of the Antecedents of the

Perceived role of Ethics and Social Responsibility Business Ethics: A European

Review,

Weber, J. 1992. Scenarios in Business Ethics Research: Review, Critical Assessment,

and Recommendations. Business Ethics Quarterly, 2(2): 137-160.

Weber, J.1990. Managers' Moral Reasoning: Assessing Their Responses to Three

Moral Dilemmas Human Relations, 43(7):687-702.

Weber, J. 1996. Influences upon Managerial Moral Decision Making: Nature of the

Harm and Magnitude of Consequences. Human Relations, 49:1-16.

Weber, J., and Gillespie, J. 1998a. Differences in Ethical Beliefs, Intentions, and

Behaviors: The Role of Beliefs and Intentions in Ethical Research Revisited. Business

and Society, 37: 447-467.

Weber, J. and Wasieleski, D. 2001. Investigating Influences on Managers' Reasoning.

Business and Society, 40(1): 79-111.

Weick, K.E. 1977. Enactment Processes in Organizations. In Staw, B.M. and

Salancik, G.R. (eds), New Directions in Organizational Behavior: 267-300. Chicago:

St. Clair Press.

Weick, K.E. 1995. Sensemaking in Organizations. Sage, Thousand Oaks, CA.

Weick, K.E. and Robert, K.H. 1993. Collective Mind in Organizations: Heedful

Interrelating on Flight Decks. Administrative Science Quarterly, 38: 357-381.

Wimbush, J.C., Shepard, J.M., and Markham, S.E. 1997. An Empirical Examination

of the Relationship Between Ethical Climate and Ethical Behavior from Multiple

Levels of Analysis. Journal of Business Ethics, 16: 1705-1716.

Wimbush, J.C., and Shepard, J.M.1994. Toward An Understanding of Ethical

Climate: Its Relationship to Ethical Behavior and Supervisory Influence. Journal of

Business ethics, 13: 637- 647.