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Business Ethics Essay

2450 words - 10 pages

Running Head: BEHAVIOURAL BUSINESS ETHICS

Understanding Ethical Behavior and Decision Making in Management:
A Behavioural Business Ethics Approach

David De Cremer
Rotterdam School of Management, Erasmus University
London Business School

Rolf van Dick
Goethe University Frankfurt, Germany

Ann Tenbrunsel
Notre Dame University, Mendoza College of Business, USA

Madan Pillutla
London Business School

J. Keith Murnighan
Northwestern University, Kellogg School of Management, USA

Abstract
Management and businesses in general are constantly facing important ethical challenges. In the current special issue, we identify the widespread emergence of unethical decision ...view middle of the document...

As the morals and actions of the representatives of the business world seem to go downhill on rollerblade speed, it becomes increasingly necessary to not only evaluate but also understand how and why unethical behavior and decision making can emerge so easily, despite the presence of multiple control and monitoring systems (De Cremer, 2010; Tenbrunsel and Smith-Crowe, 2008). Principal-agent models (Jensen and Meckling, 1967) with their assumptions of individual self-interest and possibly even greed are early examples of behavioral approaches that have emerged as a counterpoint to the traditional, normative approach to the understanding of business ethics. These models have alerted scholars and practitioners to the possibility that individual employees may put their own interests before those of the organization or its shareholders.
The behavioral approach that we advocate will add to principal agent models by explicitly arguing that much unethical behavior occurs outside of the awareness of individual actors (in contrast to the assumption of deliberate cheating in the principal agent models). This approach enhances our understanding of how ethical awareness and norms are interpreted and how they influence decision making and behavior. Improving our knowledge in this way will help to enhance an ethical climate that can lead to sustainable and effective management. Here, in the present special issue, we suggest that a study of behavioral ethics—which focuses on how people behave as opposed to how they should behave--can supplement the traditional, normative approach to business ethics and hence provide a more comprehensive account of contemporary ethical failures in management.
A Normative and Behavioral Business Ethics Approach
The standard approach to the study of ethics in business and management has been a normative or prescriptive approach, which focuses on what managers, employees and people in general “should” do to act as morally responsible actors (Jones, 1991; Rest, 1986; Trevino and Weaver, 1994). The prescriptive tones that are inherent in this literature are clearly reflected in the popularity of organizational codes of conduct and moral guidelines issued by management (Adams, Taschchian, and Shore, 2001; Weaver, 2001). An interesting and important underlying assumption of this approach is that it promotes the idea that individuals are rational purposive actors who act in accordance with their intentions and understand the implications of their actions. This approach leads to the rather erroneous conclusion that most business scandals must be the responsibility of a few bad apples. This logic is consistent with early explanations of business scandals. Charles Ponzi, the originator of the now-infamous Ponzi scheme, and Bernie Madoff’s forefather, clearly knew that he was doing wrong (Dunn, 1975). Larger corporate scandals also tend to focus on the actions and the responsibility of a few ‘bad apples’ (De Cremer,...

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