Thesis Literature Review (Ch. 3): TOOLS AND POLICIES REDUCING IMMORAL BEHAVIOUR

2011/03/17 § 4 Comments

ALL CHAPTERS OF MY MBA THESIS ON BUSINESS ETHICS:

Introduction: Ethics and morale in a Business context and the effect of honor codes

Chapter 1: PSYCHOLOGICAL BASIS OF MORALITY

Chapter 2: SOCIAL COGNITIVE THEORY OF MORALITY

Chapter 3: TOOLS AND POLICIES REDUCING IMMORAL BEHAVIOUR

Chapter 4: MEASURING MORALE AND ETHICS

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Tackling the main reasons for unethical behaviour
From the research reviewed so far one can easily conclude that there are four general drivers of dishonesty of immoral behaviour, namely:

1) Relatively low costs for large benefits through deception,
2) A lack of social norms,
3) Lack of self-awareness and a related low moral awareness, and
4) Self-deception (Nina, Dan et al. 2010).

Hence the resulting actions that are expected to lower unethical behaviour would be:

1) Increasing the probability of being caught deceiving. Interestingly, the magnitude of the punishment has been shown to be less of a deterrent for people who plan to commit unethical acts (Nagin and Pogarsky 2003).
2) Some argue that social norms must be communicated where there is a lack thereof. Suggestions include, but are not limited to, leaflets, movie-trailers, and similar types of measures in order to raise awareness for the conseuences of ones actions on other members of society. It has also been emphasized that such actions may need to be taken early in people’s life’s (Nina, Dan et al. 2010).
3) Asking people to sign an Honour Code has been suggested as a counter-measurement for a lack of self-awareness and moral awareness (Nina, Dan et al. 2010).
4) Contrary to what one might expect, educating people about self-serving bias is not successful in de-biasing people (Babcock and Loewenstein 1997).(Babcock, Loewenstein et al. 1997). Self-deception may be hard to tackle, some argue, and suggest that only eliminating the reason for bias may ultimately be successful (M H Bazerman 2001; Bazerman 2002).

Teaching ethics in courses
Results from studies investigating ethical courses for students that attempt to raise awareness of moral issues are conflicting. It has been shown in some studies with high-school students that merely learning about ethics had no positive effect on students’ ethicality. In fact, at the end of the course the students were slightly less ethically committed (Daniel 2010).

Another longitudinal study demonstrated the exact opposite effect, showing a significant increase in moral judgement scores (Geddes, Salvatori et al. 2009). It has been suggested that a lack of impact may rely on a lack of assessments and small group teaching which has been found to be beneficial for the impact of ethics teaching (John, Lisa et al. 2002).

There may be further reasons for these variations; one study found that of the nine ethical climate dimensions measured using a questionnaire some were correlated with unethical behaviours examined in the study, but not others (Peterson 2002). In conclusion the selection of investigation criteria have an impact on the outcome. Not all ethical dimensions may be equally suitable for the measurement of changes in ethical attitudes.


A study that reviewed studies on ethical training and investigated various types of ethics training arrived at the following conclusion: “People need environments that also support and encourage the practice of ethical reflection, dialog and action. Needed are additional activities that cultivate organizational process norms to develop ethical thinking in support of personal accountability and moral development. A greater focus on context implies that supervisors and managers need to bring forward ethical issues in staff meetings, become aware of and responsible for areas of ethical risk, and link ethical practice to organizational goals and personal performance. Finally, an emphasis on ethical competency development will help employees exercise ethics as an active ‘practice’ rather than seeing ethics as a form of forced compliance” (Sekerka Leslie 2009).

In essence, the “how” is equally important as the fact that a training in ethics exists. As a basis for ethics teaching Honour Codes have been suggested (Pavela 1993).

Business Ethical Codes of Conduct (BECC)
Another approach designed to raise moral awareness are business codes. Business codes or corporate ethics programs were introduced in the 1950s. In 2000 approximately 80% of the 500 largest US companies had an ethics code in place. The codes fall into three categories: Code and compliance, identity and values, and social outreach (Donaldson 2000). The content consist of behaviour and actions discussed in the codes, enforcement procedures, and penalties (Farrell, Cobbin et al. 2002).

96% of board members of 225 samples US companies had knowledge of the companies’ BECC in 2006 (Board 2006). A study of the Conference board in 1991 showed that the Compliance Code was the most common code type in all regions. Over 90% responded that their company’s statement requires particular types of employee or company behaviour (Board 1992).

75% of the responding organizations with codes said their statement is a credo that explains the company’s accountability to its key constituencies, like e.g. employees, customers and suppliers. Management philosophy declarations are the least common format – still, more than half of the companies with codes use this type of statement (Board 1992).

Effects of BECC on corporate behaviour
The National Business Ethics Survey® (NBES) is a study that samples ethical measures on a regular basis. The most recent survey in 2009 reported, confirming previous findings, that there’s a strong association between raising awareness for ethics and a strengthening ethical culture (Verschoor 2010).

Eight reviews covering approximately 700 individual research reports, investigating the effect of BECC on financial performance, showed that a small majority of studies found a positive effect, i.e. BECC influence financial performance to the better (Bickel 2009). One study compared companies that emphasize their ethics as an aspect of corporate governance performed better financially than without any special emphasize on ethics (Verschoor 1998).

35% of 79 studies found BECC or Codes of Honour to be effective, 16% found a weak effect, 14% showed mixed results, and 33% of the studies found no effect (Kaptein and Schwartz 2008). The reason for these difference may be the due to differences in study design, but also due to differences in the design of the codes and the communication of, and about the codes (Kaptein 2010).

These studies have mostly investigated the effects of BECC or Codes of Honour looking at the effects of codes in companies that apply them (Kaptein 2004; Kaptein 2010). The technique used in the studies has been to ask participants about their perception, i.e. how they perceive the ethical behaviour in their work place.

A further study tested Norwegian professionals from two different companies, i.e. companies with and without BECC, using vignettes. He concludes that the codes had no effect on people’s attitude to the presented dilemmas (Marnburg 2000).

Apparently the body of evidence pro- and contra BECCs is conflicting. The non-standardization of the test applied, and various differences that are hard to control for in a real-life situation apparently complicate the investigations. An alternative to cross sectional studies employing surveys is laboratory tests under controlled conditions.

Business codes in laboratory experiments
Only very few studies have employed laboratory experiments. Cleek and Leonard found no significant effect of a BECC on ethical behaviour in a questionnaire (Cleek and Leonard 1998). However, Cleek told all participants that they were to follow a BECC, but only gave on e group the content to read. Hence, the study did not measure the difference between the existences of the code versus no code, but rather the effect of the knowledge of the content of a BECC.

Mazar et al. showed that telling students that they had to follow a Code of Honour in an exam situation eradicated all attempts to cheat. The students had no knowledge of the content of the code; in fact such a code did not exist (Mazar, Amir et al. 2008). It is possible therefore that in Cleek’s study all participants had an increased ethical awareness and acted more ethical.

Hegarty and Sims on the other hand found in a simulation that handing students an alleged letter of the president of the company, emphasizing the importance of ethical behaviour, increased ethical behaviour (Sims 1979).

In a similar scenario Laczniak and Inderieden found that MBA students reacted more strongly to ethical scenarios describing illegal actions, following exposure to a letter or a code of ethics. The attitude towards unethical but legal scenarios on the other hand was unaltered (Inderrieden 1987).

Mathews conducted an analysis of 485 US companies and found that BECCs had a small but not significant positive effect on these companies in terms of frequency of civil actions, and price of shares (Mathews 1987).

Kaptein and Wempe so far have performed the only longitudinal study. They investigated the effect of a BECC by measuring several factors before and six months after introduction. The study found that the code had a positive effect on damage of corporate vehicles, which was down by 25%, and a reported improvement of the corporate culture (Kaptein and Wempe 1998).

Differences in the studies may partially be explained by differences in the way the BECC is communicated. Merely having a code does of course not guarantee that anyone read it, hence it should be frequently communicated. Stevens et al. found that training programs were positively related to ethical decisions (Stevens, Kevin Steensma et al. 2005).

The accessibility for the employees, the understandability, and the usefulness has an influence on the efficiency of the training. Furthermore, it has been argue that the quality of the code, i.e. the number of relevant ethical issues that are addressed, is crucial for its effectiveness (Kaptein 2010).

Content and structure of business codes
In order to apply the scientific method to the investigation of codes of business ethics their inherent complexity must be made available to classification schemes (Gaumnitz and Lere 2004). The following scheme has been suggested for structuring BECCs:
• Length: The number of statements included
• Focus: Such as a topic areas of the code
• Level of detail: How many statements per theme are included
• Shape: Defined as broadness of coverage versus depths of coverage
• Thematic content: General theme such as e.g. “honesty”
• Tone: For example inspirational, positive or regulatory, negative

Eighteen rules for the writing of a BECC have been suggested (Davis 2007):

1. Keep the writing of a code of ethics separate from any discussion of professional licensing (or other controversial projects)
2. Keep the drafting committee small
3. Keep preparation for the first draft simple
4. Get a draft as soon as possible but do not circulate it to any authoritative body or authoritative individual until the draft is ‘‘final’’
5. Have a well-defined procedure in place for turning the first draft into a final draft
6. Make the procedure as open as possible once there is a first draft
7. Email is no substitute for in-person meetings
8. Plan on a slow process from first draft to final adoption
9. Find ways to test the code by making people use it (user testing)
10. Work for consensus (rather than simple majority)
11. Get a writer to serve as the drafter or at least to work over the draft both at an early stage and again near the end
12. Keep objectives modest
13. Do not list authors, contributors, or the like in the code itself
14. Never suppose that there are experts on what a code should say
15. Don’t rely on those highly respected in a profession (prefer outside view)
16. Start planning early for dissemination, education, and administration
17. Establish a procedure for review and revision
18. Be wary of official translations of a code

As discussed by Kaptein and Schwartz, a BECC has to cover a range of integrated components in order to be efficient (Kaptein and Schwartz 2008). The components that influence the creation and efficiency of a BECC include the following:

1. Organization characteristics: Influence on efficiency of BECC (Weller 1988), e.g. company size (Murphy, Smith et al. 1992)
2. Stakeholder expectations: Pressure from stakeholders has shown an increased likelihood for financial executives to integrate a BECC into strategy (Stevens, Kevin Steensma et al. 2005)
3. Corporate objectives: Communicate core values (Paine 1994) and perception thereof (Linda Klebe Trevino 1999)
4. Development process: Creating support, raising awareness, create sense of ownership (Center 1990)
5. Personal characteristics and management style: Gender, age, nationality, educational level and religious background influence ethical decisions (Fallon and Butterfield 2005)
6. Implementation process: Distribution to employees for instance (Weaver 1999)
7. Conduct of employees and management: For example the existence of enforcement mechanisms influences behaviour (Hegarty 1979)
8. Corporate effects: As has been discussed above the actual effects of a BECC can vary, however, there are effects on the corporate climate, as well as feedback influencing stakeholders and the environment outside of the corporation.

Generally speaking a BECC can take various shapes and forms. Importance has been given to adjusting the code to the specific requirements of the field of business. More important than the content may, as discussed above, be the frequency and type of communication of the code (Kaptein 2010).

Previous chapter: Thesis Literature Review: PSYCHOLOGICAL BASIS OF MORALITY

Next chapter: Thesis Literature Review (Ch.4): MEASURING MORALE AND ETHICS

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REFERENCES

Babcock, L. and G. Loewenstein (1997). “Explaining Bargaining Impasse: The Role of Self-Serving Biases.” Journal of Economic Perspectives 11(1): 109-126.
Babcock, L., G. Loewenstein, et al. (1997). “Creating Convergence: Debiasing Biased Litigants.” Law & Social Inquiry 22(4): 913-925.
Bazerman, M. H., G. Loewenstein and D. A. Moore (2002). “Why good accountants do bad audits.” Harvard Business Review(November): 97-102.
Bickel, I. M. (2009). Corporate Social Responsibility: Einflussfaktoren, Erfolgswirkungen und Einbezug in produktpolitische Entscheidungen, Diplomica Verlag.
Board, T. C. (1992). “Corporate Ethics Practices.” from http://actrav.itcilo.org/actrav-english/telearn/global/ilo/code/main.htm#Formats of codes.
Board, T. C. (2006). Universal Conduct, An Ethics and Compliance Benchmarking Survey. T. c. board.
Center, E. R. (1990). Creating a Workable Company Code of Ethics, Ethics Resource Center.
Cleek, M. A. and S. L. Leonard (1998). “Can corporate codes of ethics influence behavior?” Journal of Business Ethics 17(6): 619-630.
Daniel, M. B. (2010). Ethics Test Results Before and After Ethics Training: A Disturbing Experience.
Davis, M. (2007). “Eighteen rules for writing a code of professional ethics.” Science and Engineering Ethics 13(2): 171-189.
Donaldson, T. (2000). “Adding corporate ethics to the bottom line.” from http://lgst.wharton.upenn.edu/documents/research/Final%20RP842(locked).pdf.
Fallon, M. J. and K. D. Butterfield (2005). “A Review of The Empirical Ethical Decision-Making Literature: 1996–2003.” Journal of Business Ethics 59(4): 375-413.
Farrell, B. J., D. M. Cobbin, et al. (2002). “Codes of ethics: Their evolution, development and other controversies.” The Journal of Management Development 21(2): 152-163.
Gaumnitz, B. R. and J. C. Lere (2004). “A Classification Scheme for Codes of Business Ethics.” Journal of Business Ethics 49(4): 329-335.
Geddes, E. L., P. Salvatori, et al. (2009). “Does moral judgement improve in occupational therapy and physiotherapy students over the course of their pre-licensure training?” Learning in Health and Social Care 8(2): 92-102.
Hegarty, W., Sims, H. (1979). “Organizational Philosophy, Policies, and Objectives related to Unethical Decision Behavior: A Laboratory Experiment.” Journal of Applied Psychology 64: 331-338.
Inderrieden, G. R. L. a. E. J. (1987). “The influence of stated organizational concern upon ethical decision making.” JOURNAL OF BUSINESS ETHICS 6(4): 297-307.
John, G., S. Lisa, et al. (2002). “The impact of three years’ ethics teaching, in an integrated medical curriculum, on students’ proposed behaviour on meeting ethical dilemmas.” Medical Education 36(5): 489-497.
Kaptein, M. (2004). “Business Codes of Multinational Firms: What Do They Say?” Journal of Business Ethics 50(1): 13-31.
Kaptein, M. (2010). “Toward Effective Codes: Testing the Relationship with Unethical Behavior.” Journal of Business Ethics: 1-19.
Kaptein, M. and M. S. Schwartz (2008). “The Effectiveness of Business Codes: A Critical Examination of Existing Studies and the Development of an Integrated Research Model.” Journal of Business Ethics 77(2): 111-127.
Kaptein, M. and J. Wempe (1998). “Twelve Gordian Knots When Developing an Organizational Code of Ethics.” Journal of Business Ethics 17(8): 853-869.
Linda Klebe Trevino, G. R. W., David G. Gibson, Barbara Ley Toffler (1999). Managing Ethics and Legal Compliance: What Works and What Hurts, University of California Press.
M H Bazerman, G. L. (2001). “Taking the out of bean counting.” Harvard Business Review 79(1): 28-.
Marnburg, E. (2000). “The behavioural effects of corporate ethical codes: Empirical findings and discussion.” Business Ethics: A European Review 9(3): 200-210.
Mathews, M. C. (1987). “Codes of Ethics: Organizational Behavior and Misbehavior.” Research in Corporate Social Performance and Policy 9: 107-130.
Mazar, N., O. Amir, et al. (2008). “The Dishonesty of Honest People: A Theory of Self-Concept Maintenance.” Journal of Marketing Research (JMR) 45(6): 633-644.
Murphy, P. R., J. E. Smith, et al. (1992). “Executive attitudes, organizational size and ethical issues: Perspectives on a service industry.” Journal of Business Ethics 11(1): 11-19.
Nagin, D. S. and G. Pogarsky (2003). “AN EXPERIMENTAL INVESTIGATION OF DETERRENCE: CHEATING, SELF-SERVING BIAS, AND IMPULSIVITY*.” Criminology 41(1): 167-194.
Nina, M., A. Dan, et al. (2010). “Dishonesty in everyday life and its policy implications.”
Paine, L. S. (1994). “Managing for Organizational Integrity.” Harvard Business Review 72(2): 106-117.
Pavela, G. a. M., Donald (1993). “The Surprising Return of Honor Codes.” Planning for Higher Education 21(4): 27-32.
Peterson, D. K. (2002). “The Relationship between Unethical Behavior and the Dimensions of the Ethical Climate Questionnaire.” Journal of Business Ethics 41(4): 313-326.
Sekerka Leslie, E. (2009). “Organizational ethics education and training: a review of best practices and their application.” International Journal of Training and Development 13(2): 77-95.
Sims, W. H. H. a. H. P. (1979). “Organizational philosophy, policies, and objectives related to unethical decision behavior: A laboratory experiment.” Journal of Applied Psychology 64(3): 331-338.
Stevens, J. M., H. Kevin Steensma, et al. (2005). “Symbolic or substantive document? The influence of ethics codes on financial executives’ decisions.” Strategic Management Journal 26(2): 181-195.
Verschoor, C. C. (1998). “A Study of The Link Between a Corporation’s Financial Performance and Its Commitment to Ethics.” Journal of Business Ethics 17(13): 1509-1516.
Verschoor, C. C. (2010). “Are we experiencing an Ethics bubble? .” Strategic Finance 91(7): 3.
Weaver, G., Treviño, L., and Cochrane, P. (1999). “Integrated and decoupled corporate social Performance: Manager Commitments, External pressure, and Corporate ethics pratices.” Academy of Management Journal 42: 539-552.
Weller, S. (1988). “The effectiveness of corporate codes of ethics.” Journal of Business Ethics 7(5): 389-395.

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Thesis Literature review (Ch.2): SOCIAL COGNITIVE THEORY OF MORALITY

2011/03/01 § 4 Comments

ALL CHAPTERS OF MY MBA THESIS ON BUSINESS ETHICS:

Introduction: Ethics and morale in a Business context and the effect of honor codes

Chapter 1: PSYCHOLOGICAL BASIS OF MORALITY

Chapter 2: SOCIAL COGNITIVE THEORY OF MORALITY

Chapter 3: TOOLS AND POLICIES REDUCING IMMORAL BEHAVIOUR

Chapter 4: MEASURING MORALE AND ETHICS

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4.2.1 Moral awareness and judgment
Apparently, different individuals take different decisions in relation to ethical issues. Social cognitive theory attempts to explain the basis of these differences (Reynolds 2008). The postulate of social cognitive theory is that moral decision is based on the traits of the individual, external stimuli, and the ensuing interaction of the two factors (Bandura 1986).

In accordance to social cognitive theory the difference in moral behaviour derives from a variation in attention to moral issue between individuals. The attention is influenced by the significance of the stimulus, how interesting the stimulus is, and the individual’s capacity to recognize and process the stimulus (Taylor 1991).

The basis of moral reasoning is moral judgment that derives from the questions “What is right and wrong?” and the concept of the self, as discussed above (Reynolds and Ceranic 2007). Ethical behaviour starts with a moral judgement based on the awareness of a moral issue, the intention to act morally, and finally the engagement in the appropriate behaviour (Kohlberg 1975).

The judgment of what is right and wrong is crucial in moral behaviour, and is influenced by two main factors, namely development of moral reasoning, which is explained in more details below (Kohlberg 1984; Hunt 1992; Green and Weber 1997; Abdolmohammadi and Sultan 2002; Greenberg 2002; Bernardi, Metzger et al. 2004), and ethical predisposition, which is defined as a cognitive framework that builds the basis for moral decisions (Brady and Wheeler 1996). Moral judgment is a process that is a process that in principles happens every time anew a moral decision has to be taken (Reynolds and Ceranic 2007).

4.2.2 Influencing moral awareness using psychological priming
Some studies have suggested that these factors are subject to priming, i.e. the activation of specific connectional frameworks by subliminal suggestion (Higgins 1989). Priming can for example act by having subjects sort phrases, or unscramble sentences, that are enriched with suggestive terms, for instance words that are associated with the term “mean”. By subconsciously directing attention towards the framework for judging actions as “mean” individuals can be influenced to judge vignettes as meaner than control subjects that have performed unscrambling task with no inbuilt bias (Skowronski John, Sedikides et al. 2010).

Other categories that have been addressed using priming are, racial categories (Devine 1989), gender stereotypes (McKenzie-Mohr and Zanna 1990), political advertisements (Shen 2004), anxiety (Robles, Smith et al. 1987), and violent crimes (James 1986), to name but a few examples of the wide array of possible applications.

4.2.3 Moral attentiveness, moral identity, and social consensus
Some authors distinguish moral awareness, that can be influenced by priming, from moral attentiveness, and define attentiveness as a more general sensitivity to moral topics that exists regardless of context (Jones 1991; Reynolds 2008). Moral attentiveness can be associated with a more intuitive moral reaction while awareness implies deliberation. Perceptual aspects play a role in moral attentiveness, which let an individual colour the information encountered, and a reflective aspect which lets the individual examine the experience (Reynolds 2008).

This is an intricate part of the moral identity of an individual which deals with moral aspects of one’s self (Bergman 2002). The moral identity acts as a motivator to behave in accordance to moral sets of rules that an individual has come to accept as basis for his own behaviour (Marc H. Bornstein 1999; Narvaez and Lapsley 2009).

“Social consensus indicates the extend to which there is a general concurrence within society about the moral status of the issue” (Reynolds and Ceranic 2007). Reynolds and others have argued that a high social consensus reduces the need for moral judgment of an individual, so that the behaviour of the individual is going to be influenced by his moral identity but not the moral judgment (Reynolds and Ceranic 2007).

4.2.4 Stages of moral development
As pointed out above, moral development is a key component in the decision process on moral behaviour (Kohlberg 1984; Hunt 1992; Green and Weber 1997; Abdolmohammadi and Sultan 2002; Greenberg 2002; Bernardi, Metzger et al. 2004). Kohlberg’s conventional level of moral development are a well accepted basis to describe the stages of such a development (Kohlberg 1984; Wikipedia 2011).

The model has- disregarding intermediate levels sometimes applied- three levels, composed of six developmental stages, each more adequate at responding to moral dilemmas than its predecessor (Wikipedia 2011).

The pre-conventional level consists of two stages that could be described as “punishment avoidance” and “benefit seeking”. The conventional, or second level, consist of the stages “social conformity” and “authority acceptance”. The third, or post-conventional level consists of the stages “social contract shaping” and “ethical principles orientation” (Kohlberg 1984).

Figure 1: Kohlberg’s model of moral development (Source: Wikipedia)

The stages describe the progression from a mostly egoistic and self-interested moral perspective, over the acceptance that social norms should be followed for a efficient social existence, to the realization of higher principles, such as ethical principles and social contracts. The final stage is composed of independent intellectual abstraction, and based on complex concepts and such as human rights, liberty and justice. It also incorporates basic principles, such as majority decision and minority protection (Kohlberg 1984).

The basic principles of this model apparently hold true for different cultures, although this circumstance is a matter of some debate (Boom, Wouters et al. 2007; Gibbs, Basinger et al. 2007).

A similar model, that in contrast to Kohlberg’s model does not concentrate so much on social development, but rather emphasizes infant development is Jean Piaget’s developmental stage theory (Carpendale Jeremy 2000).

Some studies have provided evidence that the stages do correlate with actual behaviour. Employees who had attained Kohlberg’s conventional level of moral development refrained from stealing money when they worked in an office that had an ethics program in place. Those on the other hand at the pre-conventional level of development and who worked at an office without an ethics program stole from their employers. Apparently the programs in place improved the moral development of the employees (Greenberg 2002).

Previous chapter: Thesis Literature Review: PSYCHOLOGICAL BASIS OF MORALITY

Next chapter: Thesis Literature Review: TOOLS AND POLICIES REDUCING IMMORAL BEHAVIOUR


REFERENCES:

Abdolmohammadi, M. and J. Sultan (2002). “Ethical Reasoning and the Use of Insider Information in Stock Trading.” Journal of Business Ethics 37(2): 165-173.
Bandura, A. (1986). Social foundations of thought and action: A social cognitive theory. Englewood Cliffs, N.J., Prentice-Hall.
Bergman, R. (2002). “Why Be Moral? A Conceptual Model from Developmental Psychology.” Human Development 45(2): 104-124.
Bernardi, R. A., R. L. Metzger, et al. (2004). “Examining the Decision Process of Students’ Cheating Behavior: An Empirical Study.” Journal of Business Ethics 50(4): 397-414.
Boom, J., H. Wouters, et al. (2007). “A cross-cultural validation of stage development: A Rasch re-analysis of longitudinal socio-moral reasoning data.” Cognitive Development 22(2): 213-229.
Brady, F. N. and G. E. Wheeler (1996). “An empirical study of ethical predispositions.” Journal of Business Ethics 15(9): 927-940.
Carpendale Jeremy, I. M. (2000). “Kohlberg and Piaget on Stages and Moral Reasoning.” Developmental Review 20(2): 181-205.
Devine, P. G. (1989). “Stereotypes and prejudice: Their automatic and controlled components.” Journal of personality and social psychology 56(1): 5.
Gibbs, J. C., K. S. Basinger, et al. (2007). “Moral judgment development across cultures: Revisiting Kohlberg’s universality claims.” Developmental Review 27(4): 443-500.
Green, S. and J. Weber (1997). “Influencing Ethical Development: Exposing Students to the AICPA Code of Conduct.” Journal of Business Ethics 16(8): 777-790.
Greenberg, J. (2002). “Who stole the money, and when? Individual and situational determinants of employee theft.” Organizational Behavior and Human Decision Processes 89(1): 985-1003.
Higgins, E. T. (1989). “Continuities and Discontinuities in Self-Regulatory and Self-Evaluative Processes: A Developmental Theory Relating Self and Affect.” Journal of Personality 57(2): 407-444.
Hunt, J. R. G. a. S. D. (1992). “Cognitive moral development and marketing.” Journal of Marketing 56(January 1992): 55-68.
James, K. (1986). “Priming and Social Categorizational Factors.” Personality and Social Psychology Bulletin 12(4): 462-467.
Jones, T. M. (1991). “Ethical Decision Making by Individuals in Organizations: An issue-Contingent model.” The Academy of Management Review 16(2): 366-395.
Kohlberg, L. (1975). “The Cognitive–Developmental Approach to Moral Education.” Phi Delta Kappan 56(10): 670-677.
Kohlberg, L. (1984). The psychology of moral development: The nature and validity of moral stages. San Francisco, Harper & Row.
Marc H. Bornstein, M. E. L. (1999). Developmental psychology: an advanced textbook, Lawrence Erlbaum Associates.
McKenzie-Mohr, D. and M. P. Zanna (1990). “Treating Women as Sexual Objects.” Personality and Social Psychology Bulletin 16(2): 296-308.
Narvaez, D. and D. K. Lapsley (2009). Chapter 8 Moral Identity, Moral Functioning, and the Development of Moral Character. Psychology of Learning and Motivation. H. R. Brian, Academic Press. Volume 50: 237-274.
Reynolds, S. J. (2008). “Moral attentiveness: Who pays attention to the moral aspects of life?” Journal of Applied Psychology 93(5): 1027.
Reynolds, S. J. and T. L. Ceranic (2007). “The Effects of Moral Judgment and Moral Identity on Moral Behavior: An Empirical Examination of the Moral Individual.” Journal of Applied Psychology 92(6): 1610-1624.
Robles, R., R. Smith, et al. (1987). “Influence of Subliminal Visual Images on the Experience of Anxiety.” Personality and Social Psychology Bulletin 13(3): 399-410.
Shen, F. (2004). “Chronic Accessibility and Individual Cognitions: Examining the Effects of Message Frames in Political Advertisements.” Journal of Communication 54(1): 123-137.
Skowronski John, J., C. Sedikides, et al. (2010). “On the Road to Self-Perception: Interpretation of Self-Behaviors Can Be Altered by Priming.” Journal of Personality 78: 361-391.
Taylor, S. F. a. S. (1991). Social Cognition, McGraw-Hill.
Wikipedia. (2011). “Kohlberg’s stages of moral development.” from http://en.wikipedia.org/wiki/Kohlberg’s_stages_of_moral_development.

Thesis Literature Review (Ch.1): PSYCHOLOGICAL BASIS OF MORALITY

2011/02/24 § 3 Comments

ALL CHAPTERS OF MY MBA THESIS ON BUSINESS ETHICS:

Introduction: Ethics and morale in a Business context and the effect of honor codes

Chapter 1: PSYCHOLOGICAL BASIS OF MORALITY

Chapter 2: SOCIAL COGNITIVE THEORY OF MORALITY

Chapter 3: TOOLS AND POLICIES REDUCING IMMORAL BEHAVIOUR

Chapter 4: MEASURING MORALE AND ETHICS

————————-

4.1.1 The self in the regulation of behaviour
The concept of the psychological self, self-consciousness or the self-concept, i.e. the way people view and perceive themselves, is a prerequisite in understanding the motivational- and other forces that move the individual to either behave ethical or unethical (Mazar, Amir et al. 2008).

The self-concept explains the reflections and interpretations of on-going behaviour. But most importantly it is today being viewed as dynamic and adjustable in its response to challenges from the social environment (Markus and Wurf 1987). Identity is viewed as something possessing hierarchies, networks or spaces, including personal characteristics’, feelings, roles and social status (Burke 1980). The self-concept consists of self-representations, i.e ways in which the self presents itself to the outer world. Some self-representations may be based on the actual self or images of the self, as it would like to appear (Stryker 2007).

The concepts can be at odds with each other, in so-called self-discrepancy (Higgins 1987). Not all self-representations are subject to conscious reflection, if the are they are called self-conceptions (Markus and Wurf 1987). Self-representations may be actively repressed or altered, as simple example being to substitute a sad mood with a happy memory (Josephson, Singer et al. 1996).

While it is an issue of debate what the origins of self-concepts are precisely, it can generally be agreed upon that the source include psychological reactions to a person watching their own actions and reactions to cognitions, emotions and motivations (Markus and Wurf 1987). At this point we are forced to expand on the realm of the psychology of the self and take the wider surrounding into account, which is the social environment.

Apparently there are two directions in the relationship between the individual and its social surrounding. From the social perspective of the surrounding the individual has internalized social roles through which it interacts with others, which is denominated identity theory (Stryker 2007; Wikipedia 2011).

From the psychological point of view of the individual the individual has inherited traits, which are rather stable, individual and shape a persons disposition and behaviour, and is called personality theory (Wikipedia 2011). Naturally, these concepts have large overlaps (Stryker 2007).

In the interaction with its surrounding the individual seeks to control certain behaviours, which is known as self-regulation (Markus and Wurf 1987). Self-regulation does occur also in-group contexts’ when individuals aim at regulating their behaviour in accordance to their perceived social identity (Sassenberg and Woltin 2008).

The believe in the ability, and the willingness to perform an activity contribute to what has been termed self-efficacy (Albert and Edwin 2009). Self-efficacy is being motivated or channelled by desires and needs, some of which may be the cause of dishonesty (Markus and Wurf 1987).

4.1.2 Causes for dishonest behaviour
Philosophers like Thomas Hobbes and economist such as Adam Smith have argued that behaving in line with moral expectations may merely be the result of a cost-benefit analysis, weighing desires against the costs of fulfilling them, an idea very much based on the concept of homo economicus (Smith and Cannan 1981; Nina, Dan et al. 2010). The idea is, that people are only honest to the extend that a planned trade-off favours honesty (Hechter 1990). In accordance to this economic model ethical behaviour is for example influenced by external incentives, the bigger the reward that can be derived from being dishonest the greater the incentive for dishonest behaviour (Lewicki 1983).

Another model concentrates on internal reward, felt due to the following of social norms (Joseph, Robert et al. 2009). There is evidence from game theory that people act not only in terms of selfish motives but also in accordance with considerations regarding social utility and the care for others’ as outcome (Ernst and Urs 2003; Fehr and Fischbacher 2004). In fact, brain-imaging studies have shown that people who followed moral conventions felt an intense reward. The intensity of the reward-feeling equalled that of other reward triggers, such as monetary gain (de Quervain Dominique, Fischbacher et al. 2004).

Interestingly, game theory also showed that people evaluate their counterparts’ situation when deciding to be dishonest or not. It has been demonstrated that people will be more prone to dishonesty in a game for personal gain, when their counterpart is wealthier than they themselves (Gneezy 2005). Apparently these internal reward mechanisms vary between different cultures and are shaped by the economic characteristics of the societies people live in, in other words socialization is key for altruistic behaviour (Joseph, Robert et al. 2009).

Additionally to these economic and sociological factor that influence human honesty behaviour, also personality traits, situational factors, and other individual factors contribute to the decision for or against dishonesty (Lewicki 1983). An example for a situational factor is the certainty of information. Studies have shown that uncertainty of information can be an inducing factor for dishonesty. For example, a manager may have an incentive to underreport the true dimension of costs for renovation of a house in sales negotiations, justifying the lie with the uncertainty of this information (Schweitzer and Hsee 2002).

4.1.3 Moral disengagement and immoral behaviour

Generally people strive to behave morally, even if they fail frequently (Aquino and Reed 2002). If their self-concept of being a moral individual is at odds with their immoral behaviour individuals may resort to self-deception in order to resolve the discrepancy (Trivers 2000) or disengage from their moral identity or their moral convictions (Bandura, Barbaranelli et al. 1996).

Self-deception is a common psychological strategy in aligning believes with reality. For example, people frequently maintain believes about themselves that are not in accordance with reality. More than 50% of people believe for instance that they are more intelligent than the average, a view that clearly violates logic (Alicke, Klotz et al. 1995). In order to align the internal self-concept with the outer reality people resort to self-deception to reduce this so-called psychological dissonance (Elliot and Devine 1994).

Self-deception has been considered an important psychological factor in the decision in favour of unethical behaviour (David M. Messick 2001; Tenbrunsel and Messick 2004). People also apply self-deception unconsciously to convince themselves of certain motives, hiding their true intention even to themselves (Anderson, Cohen et al. 2000; Dodson 2001). In this case of real self-deception there are no cues, such as increased pupil size, lip pressing and similar, to an observer to discern the dishonesty (Morris 2004).

As mentioned, another strategy of dealing with is cognitive dissonance is the process of emotionally distancing oneself from ones unethical behaviour, which has been termed “moral disengagement”. Moral disengagement means the separation of moral reactions from inhumane conduct and the disabling of mechanisms of self-condemnation (Bandura, Barbaranelli et al. 1996). It has been suggested that as a result of dishonest behaviour a person may disengage even further from moral behaviour, forgetting moral rules, and leading to a downward spiral (Shu Lisa, Gino et al. 2011).

A facet of moral disengagement is a self-justification process (Bandura, Caprara et al. 2001). The uncertainty of information may be used as the basis for the justification of dishonesty. The act of lying may then be justified by the fact that the information available is not clear cut, or reliable (Schweitzer and Hsee 2002). This act of conscious self-deception differs from the previously mentioned self-deception in that the perpetrator is aware of the betrayal, but chooses to justify (White, Bandura et al. 2009). An example that describes it well is the moral disengagement process that prison personnel must undergo in order to be able to carry out the death penalty or prisoners (Osofsky, Bandura et al. 2005).

An interesting example for self-deception and so-called can be found in a study by Shu et al. In the study students were given a chance to cheat in an exam after they had read a code of honour. The students were tested for their moral disengagement and also for how much information from the code they remembered. Interestingly, the students that had cheated remembered less of the code than the students that decided to be honest. The authors argue that this is “strategic forgetting” that prevents dissonance (Shu Lisa, Gino et al. 2011).

Bandura defines a number of strategies for moral disengagement that are also the basis for his test of moral-disengagement, which is described in more detail in a later chapter. (Bandura 2002). Briefly, these are:

• Moral justification: Portraying an act as socially worthy cause
• Euphemistic labelling: Sanitized language disguises immoral acts
• Advantageous comparison: Comparing immoral act against seemingly worse alternative
• Displacement of responsibility: Following the dictate of a higher authority
• Diffusion of responsibility: Division of labour as social diffusion
• Disregard of distortion of consequences: Argumentative minimisation of the actual harm caused
• Dehumanisation: Immoral acts against strangers or animals are psychological easier to carry out
• Attribution of blame: Portraying oneself as the victim of others or circumstances

Previous studies have shown that moral disengagement in boys is larger than in girls, and positively correlated with aggression, social competence, and in some cases delinquency, but unrelated with socioeconomic status or age (Bandura, Barbaranelli et al. 1996). Interestingly, it also has been shown that the acceptance of moral disengagement is higher in males and increases with age (Obermann 2011).

–> Read previous chapter: Thesis Background: Ethics and ethical business codes of conduct


REFERENCES:

Albert, B. and A. L. Edwin (2009). “Negative Self-Efficacy and Goal Effects Revisited.”
Alicke, M. D., M. L. Klotz, et al. (1995). “Personal contact, individuation, and the better-than-average effect.” Journal of personality and social psychology 68(5): 804.
Anderson, S. J., G. Cohen, et al. (2000). “Rewriting the past: some factors affecting the variability of personal memories.” Applied Cognitive Psychology 14(5): 435-454.
Aquino, K. and A. Reed, II (2002). “The self-importance of moral identity.” Journal of personality and social psychology 83(6): 1423.
Bandura, A., C. Barbaranelli, et al. (1996). “Mechanisms of moral disengagement in the exercise of moral agency.” Journal of personality and social psychology 71(2): 364.
Bandura, A., G. V. Caprara, et al. (2001). “Sociocognitive self-regulatory mechanisms governing transgressive behavior.” Journal of personality and social psychology 80(1): 125.
Burke, P. J. (1980). “The Self: Measurement Requirements from an Interactionist Perspective.” Social Psychology Quarterly 43(1): pp. 18-29
David M. Messick, M. H. B. (2001). The Next Phase of Business Ethics: Integrating Psychology and Ethics (Research in Ethical Issues in Organizations, Volume 3), Emerald Group Publishing Limited.
de Quervain Dominique, J. F., U. Fischbacher, et al. (2004). “The Neural Basis of Altruistic Punishment.” Science (Washington, D.C.) 305(5688): 1254-1258.
Dodson, D. L. S. a. C. S. (2001). “Misattribution, false recognition and the sins of memory.” Philos Trans R Soc Lond B Biol Sci. 29(356(1413)): 1385–1393.
Elliot, A. J. and P. G. Devine (1994). “On the motivational nature of cognitive dissonance: Dissonance as psychological discomfort.” Journal of personality and social psychology 67(3): 382.
Ernst, F. and F. Urs (2003). “The nature of human altruism.” Nature (London) 425(6960): 785-791.
Fehr, E. and U. Fischbacher (2004). “Social norms and human cooperation.” Trends in Cognitive Sciences 8(4): 185-190.
Gneezy, U. (2005). “Deception: The role of consequences,.” American Economic Review March 2005: 384-394.
Hechter, M. (1990). “The Attainment of Solidarity in Intentional Communities.” Rationality and Society 1990(2): 142-155.
Higgins, E. T. (1987). “Self-discrepancy: A theory relating self and affect.” Psychological review 94(3): 319.
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Josephson, B., J. Singer, et al. (1996). “Mood Regulation and Memory: Repairing Sad Moods with Happy Memories.” Cognition and emotion 10(4): 437-444.
Lewicki, R. J. (1983). Lying and deception: A behavioral model, with applications to negotiation, Beverly Hills: Sage Publications.
Markus, H. and E. Wurf (1987). “The Dynamic Self-Concept: A Social Psychological Perspective.” Annual review of psychology. 38(1): 299-337.
Mazar, N., O. Amir, et al. (2008). “The Dishonesty of Honest People: A Theory of Self-Concept Maintenance.” Journal of Marketing Research (JMR) 45(6): 633-644.
Morris, B. M. D. a. W. L. (2004). The Detection of Deception in Forensic Contexts, Göteborgs Universitet, Sweden.
Nina, M., A. Dan, et al. (2010). “Dishonesty in everyday life and its policy implications.”
Osofsky, M. J., A. Bandura, et al. (2005). “The Role of Moral Disengagement in the Execution Process.” Law and Human Behavior 29(4): 371-393.
Sassenberg, K. and K.-A. Woltin (2008). “Group-based self-regulation: The effects of regulatory focus.” European Review of Social Psychology 19: 126-164.
Schweitzer, M. E. and C. K. Hsee (2002). “Stretching the Truth: Elastic Justification and Motivated Communication of Uncertain Information.” Journal of Risk and Uncertainty 25(2): 185-201.
Shu Lisa, L., F. Gino, et al. (2011). “Dishonest Deed, Clear Conscience: When Cheating Leads to Moral Disengagement and Motivated Forgetting.” Personality & social psychology bulletin. 37(3): 330-349.
Smith, A. and E. Cannan (1981). An inquiry into the nature and causes of the wealth of nations. Chicago.
Stryker, S. (2007). “Identity Theory and Personality Theory: Mutual Relevance.” Journal of Personality 75(6): 1083-1102.
Tenbrunsel, A. E. and D. M. Messick (2004). “Ethical Fading: The Role of Self-Deception in Unethical Behavior.” Social Justice Research 17(2): 223-236.
Trivers, R. (2000). “The Elements of a Scientific Theory of Self-Deception.” Annals of the New York Academy of Sciences 907(1): 114-131.
White, J., A. Bandura, et al. (2009). “Moral Disengagement in the Corporate World.” Accountability in Research 16(1): 41-74.
Wikipedia. (2011). February 15, 2011, from http://en.wikipedia.org/wiki/Personality_theory.
Wikipedia. (2011, February 15, 2011). from http://en.wikipedia.org/wiki/Identity_(social_science).

Thesis Introduction: Ethics and morale in a Business context and the effect of honor codes

2011/02/21 § 3 Comments

ALL CHAPTERS OF MY MBA THESIS ON BUSINESS ETHICS:

Introduction: Ethics and morale in a Business context and the effect of honor codes

Chapter 1: PSYCHOLOGICAL BASIS OF MORALITY

Chapter 2: SOCIAL COGNITIVE THEORY OF MORALITY

Chapter 3: TOOLS AND POLICIES REDUCING IMMORAL BEHAVIOUR

Chapter 4: MEASURING MORALE AND ETHICS

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1. INTRODUCTION

Not only criminals but also citizens who are not habitually in conflict with the law exhibit dishonesty, or engage in actions harmful to their fellow citizens (Gabor 1994). Most members of society are aware of the rules that govern the truthfulness of our actions, namely morale and ethics; however, studies indicate that many engage in dishonest behaviour frequently and show for example that everybody lies on a daily basis (DePaulo BM 1996). As another example; more than a staggering 66% of high-school student in the USA report to have cheated in exams (Bernardi, Metzger et al. 2004).

Ethics and morale is of fundamental importance in business and economics, and unethical behaviour stands for great financial damage. Tax avoidance and tax evasion for instance may have caused a damage of 345 billion USD in 2007 alone (Kaufman 2007). Accountants describe tax evasion as morally questionable less frequently the lower their actual knowledge on the system of taxation is (Eriksen and Fallan 1996). Intellectual property theft worldwide costs the US industry alone more than 250 billion USD in 2004 (Nina, Dan et al. 2010). “Wardrobing”, i.e. the short-term use and return of recently bought clothing for refund, costs the retail industry approximately 16 billion USD, and 9% of all returns are thought to be fraudulent (Hilinski 2005).

Acceptance of fraud and deception is apparently widespread, as demonstrated by the fact that 10% of US Americans stated in a recent survey, that it was acceptable to hand in fraudulent insurance claims, for example when reporting goods as damaged or stolen if they were not. 25% of US Americans even agreed that overstating an insurance claim was acceptable (Accenture 2003). How can dishonest behaviour be curbed? As the Internal Revenue Service (tax office of the USA) noted for instance, more audits did not result in more taxes paid (Herman 2005).

If more control is not the answer, the question remains, which measures, techniques and strategies can be used to address, the problem of fraud and deception in the business arena? Certainly, any measure that does improve moral behaviour will improve the economic bottom line of any business fallen victim.

This thesis intends to review the possibilities of altering moral behaviour. In doing so it will investigate dishonesty in the business arena and evaluate what is known about the underlying reasons for deception, the psychological and sociological mechanisms accompanying this behaviour, and the tools that can be applied to contain deceit. In this context this study investigates the effect of formally agreed upon rules of conduct on human behaviour, such as an Ethical Code of Conduct.

–> Read the next chapter: Background: Ethics and ethical business codes of conduct

—————–
REFERENCES:

Accenture. (2003). “One-Fourth of Americans Say It’s Acceptable to Defraud Insurance Companies, Accenture Survey Finds.” Retrieved February 16, 2011, from http://newsroom.accenture.com/article_display.cfm?article_id=3970.
Bernardi, R. A., R. L. Metzger, et al. (2004). “Examining the Decision Process of Students’ Cheating Behavior: An Empirical Study.” Journal of Business Ethics 50(4): 397-414.
DePaulo BM, K. D., Kirkendol SE, Wyer MM, Epstein JA (1996). “Lying in everyday life.” J Pers Soc Psychol. 70(5): 979-995.
Eriksen, K. and L. Fallan (1996). “Tax knowledge and attitudes towards taxation; A report on a quasi-experiment.” Journal of Economic Psychology 17(3): 387-402.
Gabor, T. (1994). Everybody Does It: Crime by the Public Univ of Toronto Press.
Herman, T. (2005). “Study Suggests Tax Cheating Is on the Rise.” from http://online.wsj.com/article/SB111214123654192563.html.
Hilinski, D. S. a. M. (2005). “Return Fraud and Abuse: How to Protect Profits.” Retailing Issues Letter 17(1): 1-6.
Kaufman, W. (2007). “Random Tax Audits Return to the IRS.” Retrieved Feb. 13, 2011, 2011, from http://www.npr.org/templates/story/story.php?storyId=15111003.
Nina, M., A. Dan, et al. (2010). “Dishonesty in everyday life and its policy implications.”

Thesis Background: Ethics and ethical business codes of conduct

2011/02/21 § 3 Comments

ALL CHAPTERS OF MY MBA THESIS ON BUSINESS ETHICS:

Introduction: Ethics and morale in a Business context and the effect of honor codes

Chapter 1: PSYCHOLOGICAL BASIS OF MORALITY

Chapter 2: SOCIAL COGNITIVE THEORY OF MORALITY

Chapter 3: TOOLS AND POLICIES REDUCING IMMORAL BEHAVIOUR

Chapter 4: MEASURING MORALE AND ETHICS

————————-

1.1 THE ORIGIN OF DECEPTION
The terms moral and ethical behaviour include a wide variety of different actions. Commonly lying, cheating and stealing are defined as unethical behaviour (Trevino Linda, Weaver Gary et al. 2006). More generally speaking, deception of any kind is thought of as unethical, while behaviours such as honesty, obeying the law, and whistle-blowing are conform with ethical standards (Jones 1991).

Deception and the capacity to detect deceit are products of animal and human evolution (Buchanan 2006). While the way we are dealing with deception certainly is a product of our social evolution the psychological capabilities involved enabling us to lie and cheat have developed in our biology and are hardwired (Leighton 1906). Deceit and detection thereof is a universal human trait (Bond, Omar et al. 1990).

A scenario of deception in the animal kingdom could for instance be a signal warning of a predator when in fact no predator is present. After all animals have fled the scene the deceiver may have a resource such as feed for itself. Deception is thereby defined as a signalling act that in the broadest sense can be any exchange between two or more individuals (Buchanan 2006).

If this exchange manifests as an exchange of goods, a financial, social or material gain can manifest on the expense of the deceived. The origins of deceit may have been simple survival mechanisms that ensure that the more pushy ones, the more egoistic individuals, would survive more easily (Leutenegger 1987).

1.2 ETHICS AND MORALS IN SPACE AND TIME
Human society has come up with definitions for dishonesty and developed coping strategies for dealing with deception (Bond, Omar et al. 1990). However, these definitions are far from fixed, but rather vary in different societies and may change over time (Jones 1991).

In some instances deception may be punished and sanctioned, in others it may be a generally accepted occurrence or even be encouraged. For instance, law-enforcement may employ deception and use misrepresentation as a tool in a number of areas, such as setting up sting operations to catch corrupt officials, placing informants in various undercover situations, and falsifying documents in witness relocation plans (Shine 1989).

The example demonstrates, the line between deception and socially accepted behaviour is at times vague at best. The attempt of defining this line is the function of ethics and the study of morale. Some fields of study distinguish between ethics as being of a more universal relevance and morale as being applicable for a distinguished social group (Wiktionary 2011). In this thesis the terms ethics and morals are interchangeably used for “The rules or standards governing the conduct of a person or the members of a profession” (Dictionary 2011).

Honesty and deception are concepts of ethics and morale that are being investigated not only by moral philosophers, psychologists, psychiatrists and sociologists, but in a more applied arena in recent times by researchers from such fields as business studies (Ayres and Ghosh 1999; Chan, Fung et al. 2010).

1.3 UNETHICAL BEHAVIOUR IN BUSINESS AND ECONOMICS
The need for research on ethics and morale in a business context arises from the fact that lie, betrayal and deception are at the core of such problems as accounting fraud, as in recent cases such as the Enron scandal (Bazerman, Loewenstein et al. 2002; House, Watt et al. 2004) or the Bernard L. Madoff fraud scandal (Battalio and Loughran 2008). The Enron and WorldCom scandals alone are estimated to have cost the US economy 37-42 billion USD (Carol Graham 2002; BBC 2004; Rice 2010).

Some argue that these problems arise from a relentless application of the idea of the homo economicus and discuss the moral implications of the assumption that individuals are merely out to maximize their own gain, if needed on the expense of others, and if opportunity permits by deception (White 2004). In a similar vein, individuals in companies such as in accounting may, if presented with an opportunity to beget immoral advantage, may abuse the special position they are occupying (Kravitz 2009).

Past research has investigated deception in business contexts by investigating the importance internal psychological factors, such as motivation (Bazerman, Loewenstein et al. 2002), moral or religious identity (Vitell, Bing et al. 2009), measures of ethical sensitivity (Shawver and Sennetti 2009), self-concept and self-regulation (Markus and Wurf 1987) to name but a few, as well as external factors, such as incentives for ethical behaviour (Battalio and Loughran 2008), organizational structures, including company norms and climate (Nijhof, Fisscher et al. 2000), governmental legislation (Rockness and Rockness 2005) for example.

Maybe not surprisingly, all these factors pay their dues to a problem that is not only prevalent in many arenas of business but in our daily life (Serota Kim, Levine Timothy et al. 2010). But apparently it is a meticulous task to dissect which exact role the individual factors play. Notwithstanding, much progress has been made in understanding dishonesty and the underlying causes and psychological processes (Chan, Fung et al. 2010).

1.4 DEALING WITH UNETHICAL BEHAVIOUR
In a recent development, research has move on to the next level of the problem, i.e. how to remedy the occurrence of dishonesty with prudence (Tullberg 2009). In this context it naturally has been discussed how external factors can be altered in order to stifle the occurrence of fraught and deception (Amir, Ariely et al. 2005). One may look at this approach as the stick and carrot approach that tries to use incentives and penalties in an attempt to manoeuvre individuals away from committing fraught (Nina, Dan et al. 2010).

At the same time, others have begun understanding how internal factors manipulate moral decisions in order to accomplish the same end, i.e. improve morality (Shu Lisa, Gino et al. 2011). The question has been addressed: How can the moral attitude or the very sense of morality be altered in order to diminish unethical reflexes (Schweitzer and Hsee 2002; Reynolds and Ceranic 2007; Mazar, Amir et al. 2008)?

Methods that have been thought of are often directing attention towards raising awareness or attentiveness for moral problems arising from ethical dilemmas (Reynolds 2008). Attempts have been undertaken to do so by using lectures on ethics and by means of moral education (Kidwell 2001; Kulshreshtha 2005).

1.5 CODES OF HONOUR RAISE MORAL AWARENESS
An interesting approach is raising ethical attentiveness using another type of moral reminder, such as a Code of Honour, or more precisely, Business Ethical Codes of Conduct (BECC) (Kidwell 2001; Kaptein 2004). Several studies have shown that the effects of such codes or lectures on their content can be efficient in rendering immoral behaviour more ethical, but may even have detrimental effects at time, or be ineffective at others (Kaptein and Schwartz 2008) (Pater and Van Gils 2003).

The studies mostly have concentrated on long-term usage of the code though, and the multiple variables influencing the outcome of a BECC in such a long-term scenario include the content of the BECC, the mode of communication, the frequency of communication as well as the quality of the code (Kaptein 2010).

Only few studies so far have addressed the idea of measuring acute effects of BECC in real life scenarios, such as having students sign a BECC immediately before a written test at a university (Mazar, Amir et al. 2008; Shu Lisa, Gino et al. 2011).

–> Read the previous chapter: Thesis Introduction: Ethics and morale in a Business context and the effect of honor codes

–> Read next chapter: Thesis Literature Review: PSYCHOLOGICAL BASIS OF MORALITY

————–
REFERENCES:

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Ayres, F. L. and D. Ghosh (1999). “Research in ethics and economic behavior in accounting.” Journal of Accounting and Public Policy 18(4-5): 335-338.
Battalio, R. H. and T. Loughran (2008). “Does Payment For Order Flow To Your Broker Help Or Hurt You?” Journal of Business Ethics 80(1): 37-44.
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Chan, K. C., H.-G. Fung, et al. (2010). “Business Ethics Research: A Global Perspective.” Journal of Business Ethics 95(1): 39-53.
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Kaptein, M. (2004). “Business Codes of Multinational Firms: What Do They Say?” Journal of Business Ethics 50(1): 13-31.
Kaptein, M. (2010). “Toward Effective Codes: Testing the Relationship with Unethical Behavior.” Journal of Business Ethics: 1-19.
Kaptein, M. and M. S. Schwartz (2008). “The Effectiveness of Business Codes: A Critical Examination of Existing Studies and the Development of an Integrated Research Model.” Journal of Business Ethics 77(2): 111-127.
Kidwell, L. A. (2001). “Student Honor Codes as a Tool for Teaching Professional Ethics.” Journal of Business Ethics 29(1-2): 45-49.
Kravitz, R. H. (2009). “Socially Responsible Accounting.” CPA Journal 79(11): 16-22.
Kulshreshtha, P. (2005). “Business Ethics versus Economic Incentives:Contemporary Issues and Dilemmas.” Journal of Business Ethics 60(4): 393-410.
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Markus, H. and E. Wurf (1987). “The Dynamic Self-Concept: A Social Psychological Perspective.” Annual review of psychology. 38(1): 299-337.
Mazar, N., O. Amir, et al. (2008). “The Dishonesty of Honest People: A Theory of Self-Concept Maintenance.” Journal of Marketing Research (JMR) 45(6): 633-644.
Nijhof, A., O. Fisscher, et al. (2000). “Coercion, Guidance and Mercifulness: The Different Influences of Ethics Programs on Decision-Making.” Journal of Business Ethics 27(1-2): 33-42.
Nina, M., A. Dan, et al. (2010). “Dishonesty in everyday life and its policy implications.”
Pater, A. and A. Van Gils (2003). “Stimulating Ethical Decision-making in a Business Context: – Effects of Ethical and Professional Codes.” European Management Journal 21(6): 762-772.
Reynolds, S. J. (2008). “Moral attentiveness: Who pays attention to the moral aspects of life?” Journal of Applied Psychology 93(5): 1027.
Reynolds, S. J. and T. L. Ceranic (2007). “The Effects of Moral Judgment and Moral Identity on Moral Behavior: An Empirical Examination of the Moral Individual.” Journal of Applied Psychology 92(6): 1610-1624.
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Rockness, H. and J. Rockness (2005). “Legislated Ethics: From Enron to Sarbanes-Oxley, the Impact on Corporate America.” Journal of Business Ethics 57(1): 31-54.
Schweitzer, M. E. and C. K. Hsee (2002). “Stretching the Truth: Elastic Justification and Motivated Communication of Uncertain Information.” Journal of Risk and Uncertainty 25(2): 185-201.
Serota Kim, B., R. Levine Timothy, et al. (2010). “The Prevalence of Lying in America: Three Studies of Self-Reported Lies.” Human Communication Research 36(1): 2-25.
Shawver, T. J. and J. T. Sennetti (2009). “Measuring Ethical Sensitivity and Evaluation.” Journal of Business Ethics 88(4): 663-678.
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Swedes pay 25% less tax than Germans!

2011/02/20 § Leave a comment

Time an again you can hear the Swedes talk about their high taxes. And if you are aware of the issue you will find this myth repeated even in foreign media.

In Germany for instance, where they repeatedly talk of the large Swedish tax burden. This notion is so utterly and bizarrely wrong that one wonders what happened with simply checking the facts. But journalists today can obviously only copy and paste from Wikipedia, and even that only within tight limits.

The truths is that in Sweden the overall tax burden on wages and income is so low that it leaves an average earning person with approximately 25% more income after tax as compared to Germany!

Example:

The average income in Germany is 42535 Euro (data 2010), or per month 3544.58 EUR. Today this equals 31039.20 SEK.

After tax this gives the German employee 2141.50 EUR (18752.70 SEK).

The Swedish employee would after paying taxes keep a staggering 23282 SEK or 2658.73 EUR! A mind-boggling difference of 24.2% !!!

Please, keep that in mind next time someone mindlessly repeats what has so wrongfully been said too many times. If you compare income you cannot compare the actual income tax being paid, but you must also consider what is covered by the tax.

In Sweden, contrary to for example Germany, the tax includes health-care, social security, and pension. All this has to be paid extra in Germany. Hence you can look forward to a nice pension and yet have the money to save some extra for the retirement time.

This is a great advantage when you are younger which often means that wages are not that high yet. But even putting middle aged or older individuals in a better situation than in Germany. Yes, you got it good in Sweden…

Peak-oil: The End of Society as we know it

2011/02/06 § 1 Comment

Startling how the media works. I do not believe (contrary to some) that the topic of peak oil is suppressed actively by the media outlets that surround us, I think our journalists and reporters merely suck. They are writers, not thinkers or experts, and usually they have not learned anything but writing. Hence who would expect them to inform us about anything of real relevance to our life’s when all that counts are readers, listeners and viewers ratings.

Ultimately the fault therefore of course lies on the part of the audience. It does feel as if most americans are more interested in the superbowl than the pressing economical and ecological issues that surround them. Also many europeans apparently rather indulge in song-contests and sport events than the most pressing issues we will have to encounter during our life time’s.

It frustrates me to see that it is apparently more important to many if a player named Torres changes from one football club to another , or what fancy new sporting events are going on than if society as we know it will have a chance to continue. I do not mean to be alarmist, however, peak-oil is arguably the single most important incident for our generation, and it will change the life’s of generations to come. We could prevent the worst if we were willing to see. But the issue seems to be too complex and intangible for most.

Well, there is hope. Bizarrely it stems simply from the fact that people care about their economy more than anything else. Luckily, peak-oil is going to affect people’s economy rather dramatically by increasing prices on all goods, especially food. Let’s just hope that a change of attitude does not come to late. This rant ultimately is an appeal, that change for once should stem from reason rather than egoism. But maybe that is too much to expect from human kind? We will have to wait and see, I am afraid.

For more info on this feel free to read the articles I have written on the topic over the yeas:


UPDATE:

Pretty much as predicted by the peak-oil models, a world after peak-oil will experience a bumpy ride between economic crisis and recovery.

The actual reason for prices to react so erratic is the fact that in a recovering economic situation after peak-oil we produce already close at maximal capacity. Every small decrease in production hits through in full on the price since there is no reserve production capacity. This is really 101 of demand and supply curves…


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