Does Closeness with Others Influence Business Ethical Choices?

Decisions are a common occurrence in everyday life. Why some make ethical and others make unethical decisions is of interest. Wood, et. al. (2013) studied the decision-making process of managers and found that psychological distance and options influenced their ultimate choice. When proper choices are available, and reflections on courses of action are possible, better decisions result.

There are pillars that help formulate how psychological distance is created in people’s minds. These pillars are mental constructs and decision filters managers use judge course of action. They are as follows:

1.) Temporal Distance: Now versus later. Future events are more abstract while current events are more concrete.

2.) Spatial Distance: Researchers have shown that faraway locations are abstract while closer locations are more concrete.

3.) Social Distance: Us versus them mentality that lowers the perception of impact on other groups while raising the perception of harm to one’s own.  Think of in-group and out-group dynamics.

4.) Hypothetical Distance: When it appears that an outcome is unlikely it is evaluated more abstractly than likely outcomes.

The researchers used surveys of managers to determine their decision-making processes. They found that when faced with a forced choice those who are more psychologically distant from them often received the brunt of impact. When the choices are open they often distribute the impact equally. When they have an option not to choose they often reflect more on the potential consequences.

The research helps show that people will make poor decisions that influence the future, are geographically distant, are outside of their social group, and when it appears that, the outcome is unlikely. Reflection helps us to consider the potential consequences of choice and how they impact others. Sometimes to not choose is the best choice someone can make.

Wood, et. al. (2013). If you can’t see the forest for the trees, you might just cut down the forest: the perils of forced choice on “seemingly” unethical decision-making. Journal of Business Ethics, 118 (3).

The Need for Business Ethics in Commerce

Business ethics is important for maintaining a level of commercial trust between entities. According to a paper from Gabriel Abend (2013) such ethics were first formalized at the University of Yale in 1904 and the University of Chicago. The concerns and needs of ethics in the twentieth century are not all that different than that of the twenty first century. She moves onto discussing the nature and history of ethics. 

The need for business ethics is often seen as starting in the 1960’s and the corporate scandals that resulted. However, business ethics started much earlier as the complexities of business raise important concepts of public good. When ethics are not understood or enforced business decisions can have a large impact on the overall functioning of society and the very nature of people’s lives.

Her work offers a three-way understanding of ethics:

• 1.)    The history of ethics and business practices.
• 2.)    History of ideas about business practices.
• 3.)   History of public/private institutions and projects that influence ethical understandings.

By viewing the history of ethics, how the concepts were formed, and how organizations influence ethics, one can better get a rounded picture of the meaning of ethics. People may look into the actions of leaders, legal precedence, legislators, journalists, preachers, educators, and group statements to have a more clear understanding. Each contributes to what is the modern applied definition of appropriate business ethics. 

At its very earliest roots ethics comes from religious and philosophical thinkers. Some sources might include religious text (Bible, Quran, Torah, etc…) as well as famous philosophers and scientists such as Aristotle, Adam Smith, Spinoza, Plato, and Aquinas. The very nature of sophistication of intellectuals from different eras added to the overall concept of ethical standards. 

Business ethics can be seen as encouraging the highest truth and ideals. It is these truths and ideals that set the standard and allow for accurate assessment of problems. Furthermore, with a level of truth it is possible to use these assessments to further develop stronger methods thwarting damaging unethical decisions. It allows for the honest man to succeed in the business world and the dishonest man to be punished by the market. 

From a lecture in 1902 Harris Weinstock proposed at the University of California in a lecture, "to the belief that success in business is more probable and more lasting if conducted upon a high ethical plane, and that true success lies in developing character rather than in heaping up gold" (University of Califomia 1904: 103-04). It is a wider range of responsibility beyond money and status that leads to higher attainment of such things. Through character one achieves other goals.

The paper did not indicate this concept but one must wonder what ethics and economics have to do with each other? Ultimately, all business and economic systems are based in the concept of trust. Such trust is impossible if people are not working on the same fundamental system of values. As the world globalizes and people begin to communicate and conduct commercial activities at an increased place the ethics of a nation will begin to adjust to a global ethics approach. The individual arguments of particular sects will fade away to the need of cross border commercial understandings. As a question we can ask ourselves, "Which nation and economic system will influence those underlying global ethics?"

Abend, G. (2013). The origins of business ethics in American universities, 1902-1936. Business Ethics Quarterly, 23 (2).

University of California. 1898. The Establishment of the College of Commerce. The University Chronicle. An Official Record 1(6) (December): 552-68.

Ethics and Moral Courage in Leadership Positions

Organizations seek to develop stronger levels of ethical business practices in order to limit negative employee behaviors that can damage public image, lessen investor confidence, and improve upon contractual relationships with stakeholders. The first step in developing an ethical organization is to hire an ethical leader. Through proper leadership modeling in moral courage and ethical behaviors employees develop standards that apply to their own behaviors. 

Developing ethical organizations, and meeting the needs of people, requires strength of character (Hunter, 2003). It is difficult for leaders to deal with the multiple issues that often face them from competing interests. When leaders use an ethical value system they have an anchored value point that allows them to judge the validity of these competing interests. 

Strong leaders should have an impetus to act with moral purpose.  Such conation requires moral courage, moral efficacy and psychological ownership over one’s behavior (Hannah, Avolio, & May, 2011). Positive behaviors require an ownership over one’s life and responsibilities toward others. Such concepts need to be embedded in the way leaders view themselves and their purpose in leading.

Moral courage is “the ability to use inner principles to do what is good for others, regardless of threat to self, as a matter of practice” (Sekerka and Bagozzi, 2007, pp. 135).  It is a willingness to do what is in the best interest of others and the group even if one were to lose something of value. It can be further understood as, “a commitment to moral principles, an awareness of the danger involved in supporting those principles, and a willing endurance of that danger” (Kidder, 2005, pp. 7). 

Ethics and moral courage are associated but not exactly the same concept. Ethics is a minimal standard of behavior that avoids engaging in immoral actions (Treviño et al., 2006). It is more defined by compliance with the law, telling basic truths, and conducting business within standard societal constraints. It is a much lower level of investment in one’s decisions than moral courage. 

Ethical behavior also has a pro-social component. Moral courage is associated with the desire to use inner standards that encourage actions that help others (Sekerka & Bagozzi, 2007). It is this wider understanding of the needs of the group that creates a higher standards of existence. Through this moral courage one acts with effort to help others live happy and free lives based upon underlining principles of inherent value. 

Leadership has a huge impact on the moral and ethical actions of their organizations. Leaders impose significant influence on followers’ thoughts and behaviors related to ethical and moral expectations (Lester et. Al., 2010). It is through watching leaders that employees come to understand appropriate actions. 

Ethical and moral leadership is not easy when competing interests are pushing for certain results. However, such leadership can improve upon the overall financial and public image of the organization overtime. Furthermore, it creates workplace expectations and guiding behaviors that impact the  habits employees use to solve their own issues. Such ethical approaches require the focus on others beyond their own needs and the courage to follow through on guiding principles to make it happen despite the competing interests.

Hannah, S. T., Avolio, B. J., & May, D. R. 2011. Moral maturation and moral conation: A

capacity approach to explaining moral thought and action. Academy of Management

Review, 36.

Hunter, J. D. 2003. The death of character. New York: Basic Books.

Lester, P., Vogelgesang, G., Hannah, S., & Kimmey, T. (2010). Developing courage in followers: Theoretical and applied perspectives. In C. Pury & S. Lopez (Eds.), The psychology of courage: Modern research on an ancient virtue: 210-45. Washington, DC: American Psychological Association.

Sekerka, L. E., & Bagozzi, R. P. 2007. Moral courage in the workplace: Moving to and

from the desire and decision to act. Business Ethics: A European Review, 16,

pp. 132.

Treviño, L. K., Weaver, G. R., & Reynolds, S. J. 2006. Behavioral ethics in organizations:

A review. Journal of Management, 32, pp. 951-90.