Behavioral Business Ethics

Shaping an Emerging Field

David De Cremer, Ann E. Tenbrunsel, David De Cremer, Ann E. Tenbrunsel

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136636196
• Edition: 1
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

This book takes a look at how and why individuals display unethical behavior. It emphasizes the actual behavior of individuals rather than the specific business practices. It draws from work on psychology which is the scientific study of human behavior and thought processes. As Max Bazerman said, "efforts to improve ethical decision making are better aimed at understanding our psychological tendencies."

Section 1

Introduction

1

On Understanding the Need for a Behavioral Business Ethics Approach

David De Cremer

Erasmus University Rotterdam and London Business School

and

Ann E. Tenbrunsel

University of Notre Dame

INTRODUCTION

The numerous international scandals in business such as those at AIG, Tyco, WorldCom, Enron, and Ahold have made all of us concerned about the emergence of unethical and irresponsible behavior in organizations. Bad leadership behavior, as shown by the arrest of the former chief executive officer (CEO) of Converse in Namibia, the CEO at United Healthcare being forced to step down, and Patricia Dunn of Hewlett Packard being charged in an ethics scandal, are no exception anymore. More recently, our concerns over ethics have become even stronger due to the worldwide financial crisis, in which it became strikingly clear that the irresponsible (and unethical) behavior of managers and organizations inflicts pain on society and its members (De Cremer, 2011). In addition to the unethical behavior of those who contributed to the crisis, we see continued moral lapses in institutions like AIG, who have doled out millions in bonuses to the very people who drove the company and the country into a financial crisis. It seems that no matter where we look today, the erosion of ethics and basic moral principles of right and wrong have taken us to the point at which trust in our institutions and the very systems that make our society work is in imminent danger of oblivion.

The seemingly unending occurrence of instances of corruption and fraud has also activated consciousness about ethics in general and business ethics in particular (Bazerman & Tenbrunsel, 2011; De Cremer, Mayer, & Schminke, 2010). Although there may be no universal definition of business ethics, and one scholar likened defining it to “nailing Jello on a wall” (Lewis, 1985), most definitions focus on evaluating the moral acceptability of the actions of management, organizational leaders, and their employees. As the morals and actions of the representatives of the business world seem to go downhill at Rollerblade speed, it becomes increasingly necessary not only to evaluate these actions but also to understand how and why unethical behavior can emerge so easily, despite the presence of multiple control and monitoring systems (De Cremer, 2010; Tenbrunsel & Smith-Crowe, 2008).

A NORMATIVE AND BEHAVIORAL BUSINESS ETHICS APPROACH

Business ethics generally deals with evaluating whether practices of employees, leaders, and organizations as a whole can be considered morally acceptable (Ferrell, Fraedrich, & Ferrell, 2008). 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; Messick & Tenbrunsel, 1996; Rest, 1986; Trevino & 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, & 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. That is, it assumes that all people are aware of the moral dilemmas they face and therefore in a conscious and controlled manner can decide what to do: do “good” or do “bad.” This rational nature is clearly reflected in the important work of Kohlberg (1981) on moral development. Because the approach advocated in his work relied heavily on Piaget’s theory of cognitive development (1932), reasoning was considered crucial in understanding people’s moral experience.

This approach leads to the rather erroneous conclusion that most business scandals must be the responsibility of a few bad apples. Indeed, an important consequence of a rational approach is that people interpret moral dilemmas in a conscious manner in which cognitive corrections can be applied. If this rational process is valid, then it also implies that if people engage in bad behavior they do so consciously. In other words, bad behavior suggests actions by a bad apple. 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, 2009).

This assumption is intuitively compelling and attractive in its simplicity. On a practical level, it also facilitates both identification and actual punishment of those deemed responsible. More generally, a normative perspective suggests, or at least implies, that people interpret moral dilemmas in a conscious manner, and that cognitive guidelines can be used to avoid ethical lapses. This rational approach, however, may not be able to account for the emergence of a wide range of unethical behaviors. Ethicality and intentionality are two important but distinct dimensions: Individuals make both intentional and unintentional ethical and unethical choices (Tenbrunsel & Smith-Crowe, 2008). For instance, there is considerable evidence indicating that good people sometimes do bad things (Bersoff, 1999) and may not even realize that they are doing so. Research on ethical fading (Tenbrunsel & Messick, 2004, p. 204) asserts that, “Individuals do not ‘see’ the moral components of an ethical decision, not so much because they are morally uneducated, but because psychological processes fade the ‘ethics’ from an ethical dilemma.” As a result, we fall prey to bounded ethicality, engaging in behavior that goes against our own morals and values without awareness that we are doing so (Chugh, Banaji, & Bazerman, 2005).

How can we explain this? To do this, a common understanding has emerged that, in addition to a prescriptive approach in which a moral principle is communicated and evaluated, we need a descriptive approach that examines how individuals make actual decisions and engage in real actions when they are faced with ethical dilemmas. For this reason, in the field of business ethics we also need a behavioral approach that zooms in on why people do the things they do.

The behavioral approach that we advocate explicitly argues that much unethical behavior occurs outside 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.

The idea that our decisions and judgments are not always colored by conscious reasoning processes is supported by recent research on morality, intuition, and affect. This intuitionist framework suggests that moral judgments and interpretations are the consequence of automatic and intuitive affective reactions. Haidt (2001, p. 818), for instance, defined moral intuition as “the sudden appearance in consciousness of a moral judgment, including an affective valence (good-bad, like-dislike), without any conscious awareness of having gone through steps of searching, weighing evidence, or inferring a conclusion.” This approach suggests that moral judgments are (or at least can be) quick and affect laden rather than driven exclusively by elaborated and reflexive reasoning processes.

Evidence for this moral intuition view can be found in experiments using the trolley problem. Consider, for example, a variant of the familiar trolley car problem discussed by philosophers. You are standing on a footbridge when you see an out-of-control trolley car about to strike a group of five people standing on the tracks ahead. There is a large stranger standing next to you, and if you push him off the bridge onto the tracks below, his body will derail the trolley, in the process killing him but sparing the lives of the five strangers. Utilitarianism would predict that people should push the large stranger from the bridge since this would result in a net savings of four lives. Yet, when people are asked what they think should be done in this situation, most feel strongly that it would be wrong to push the stranger to his death. This finding illustrates that moral intuition plays a significant role in making moral decisions and judgments. Research examining this trolley problem by means of functional magnetic resonance imaging (fMRI) techniques has revealed that emotions, rather than reflexive cognitive processes, are indeed influencing people’s decisions (Greene, Sommerville, Nystrom, Darley, & Cohen, 2001).

Based on this recent research, it becomes increasingly clear that it is not a select few who succumb to unethical action. Instead, almost everyone is susceptible to the forces that ultimately result in questionable decisions and unworthy actions, “There but for the grace of God go I.” This research takes the perspective that most individuals involved, both within and outside the business world, know that a range of behaviors is not acceptable in the workplace, the marketplace, and society. Businesspeople, in particular, are aware of appropriate, ethical decision rules and moral behaviors and how they might be promoted (e.g., the rules in a code of conduct for a company or the ethical guidelines of a profession). Despite this awareness, however, irresponsible and unethical behaviors and decisions still emerge. In essence, some contexts may be sufficiently compelling for almost anyone to engage in unethical behavior. Arriving at a more complete understanding of these circumstances should enable leaders to create organizations that are more ethical. This is a fundamental, foundational idea in the emerging field of behavioral ethics.

A major assumption of the behavioral business ethics approach is that many of the ethical failures witnessed in society and organizations are not the result of so-called bad apples (some are, but the majority of such events are not) but come from a much wider set of individuals (Bazerman & Banaji, 2004). Research on this issue suggests that all of us may commit unethical behaviors, given the right circumstances. Treviño, Weaver, and Reynolds (2006, p. 952) defined behavioral ethics as a notion that “refers to individual behavior that is subject to or judged according to generally accepted moral norms of behavior.” Tenbrunsel and Smith-Crowe (2008, p. 548) interpret this definition as saying that “behavioral ethics is primarily concerned with explaining individual behavior that occurs in the context of larger social prescriptions.” Because of its focus on the actual behavior of the individual (i.e., advocating thus a descriptive approach rather than a prescriptive one), it becomes clear that research in behavioral ethics largely draws from work in psychology. The field of psychology is indeed referred to as the scientific study of human behavior and thought processes (Morris & Maisto, 2001). In 1996, Messick and Tenbrunsel called for the intersection of psychology and business ethics. In 2001, Dinehart, Moberg, and Duska compiled a series of papers entitled, entitled The Next Phase of Business Ethics: Integrating Psychology and Ethics, aimed at the synergy to be gained through the intersection of these two fields. Bazerman and Banaji (2004, p. 1150) noted “that efforts to improve ethical decision making are better aimed at understanding our psychological tendencies.” We concur with these authors and propose that psychology can provide an ideal foundation for examining and promoting our understanding of why good people sometimes can do bad things.

It thus stands to reason that a behavioral ethics approach is well suited to enhance our understanding of how ethical behavior in organizations and management can be promoted (De Cremer, van Dick, Tenbrunsel, Pillutla, & Murnighan, 2011) and ethical failures can be dealt with effectively (De Cremer, Tenbrunsel, & van Dijke, 2011). We would like to note immediately, however, that looking at behavior is one thing, but we also need to understand the processes underlying the behavior (De Cremer, 2010). Therefore, a behavioral ethics approach should thus not only include a focus on what kind of behavior is actually engaged in but also attempt to identify the psychological processes underlying the different behaviors. This approach, in which we combine the search for a smoking gun with a focus on the psychology of the behavior, should be the primary scientific task of behavioral ethics.

OVERVIEW OF THE BOOK

The present book is divided into five sections. is composed of this introductory chapter by David De Cremer and Ann Tenbrunsel presenting a short overview of how business ethics has been studied so far and how a behavioral approach can add to the value and approach of the business ethics field. provides a chapter by Art Brief (Chapter 2) discussing the field of business ethics and how behavioral approaches can help develop the field. In so doing, Brief outlines what behavioral business ethics researchers should be studying. For example, he suggests that research attention should be paid to (a) the moral domains of in-group/loyalty, authority/respect, and purity/sanctity; (b) virtues and character; (c) the role of implicit affect and associations as drivers of moral behavior; and (d) perhaps most of all, the possibility that the mechanisms producing moral behaviors vary as a function of the moral nature of the issues encountered. All of the suggestions provided reflect a belief that the “business” in “behavioral business ethics,” at least sometimes, matters.

In , we zoom in on how ethics is influenced by the situation. The social context can have a significant impact on people’s decisions and behaviors, but people’s decisions can also shape the context in which business emerges. Thus, context dictates ethical behavior to a certain extent, whereas some individuals (like leaders) can influen...