Teaching Empathy and Ethical Decision Making in Business Schools

Abstract

Researchers in behavioral ethics seek to understand how individuals respond to the ethical dilemmas in their lives. In any given situation, multiple social and psychological variables interact to influence ethical decision making. The purpose of this article is to explore how one such variable, empathy, affects the ethical decision-making process and to identify specific instructional strategies that both increase empathy and challenge students to consider the role that empathy plays in their own decisions. Two learning activities are described. The first requires students to recommend median salaries for several positions in a fictitious company and then use those salaries to create two family budgets, one for an entry-level position and another for the CEO. The second activity measures students’ empathic concern and encourages students to consider the relationship between empathic concern and decision making in business. Increased awareness of self and others prompts a more deliberate, thoughtful decision-making process when assessing ethical situations.

Keywords

behavioral ethics empathy moral education emotion decision making

A growing body of research across multiple disciplines such as psychology, management, and neuroscience suggests that emotion affects how we respond to ethical dilemmas, often at an unconscious level. Consider, for example, how emotion influenced the decisions made at WorldCom, the telecommunications company, whose managers responded to sudden and significant revenue declines with fraud (Pulliam, 2003). Scott Sullivan, WorldCom’s CFO, relied on the compassion of his staff to encourage them to continue the fraud. He told them that the situation was like an aircraft carrier and the accounting adjustments were needed so that the “planes” (the investors, employees, and pensioners who were counting on them) could safely “land” with their financial security intact. This was clearly an emotional appeal and it worked; the accountants were willing accomplices despite their misgivings and otherwise ethical records. A more rational and ethical response would have been to identify the root cause of the revenue declines, explore numerous options to address the source of the problem, and choose a course of action that was most likely to lead to favorable economic outcomes without violating ethical or legal codes. Instead, numerous cognitive biases and an escalation of commitment led to continued illegal behaviors, the downfall of the company and the felony convictions of the CEO, CFO, controller, and several other accountants.

An instructor of business ethics could apply utilitarian, deontological, or moral developmental models in the classroom to evaluate the morality of employee actions in a case like WorldCom. Classic models of ethical decision making encourage thoughtful assessment of responsibilities and outcomes and can reveal fallacies in thinking. However, these models are less effective at exploring the affect that social and psychological factors have on an employee’s motivation or willingness to behave ethically when faced with an actual dilemma. In the case of WorldCom, for example, any number of contextual and personal factors may have been affecting employee decisions (see Cooper, 2008; Pulliam, 2003). Their decisions were no doubt influenced by their loyalty to a highly regarded company (the only Fortune 500 company in the state), their respect for the opinions of their intelligent CFO, the fear of losing their jobs, reputations and wealth, the concern over the fate of their coworkers and community, and the social dynamics that affect any group when making decisions. Research in behavioral ethics is intended to clarify how contextual factors, including social and psychological influences, affect ethical decision making in situations such as the one in which WorldCom accountants agreed to break the law (Bazerman & Sezer, 2016).

Multiple social and psychological variables interact to affect an individual’s decision in any given situation. This article will focus on the role that emotion, specifically empathy, has on ethical decision making. Researchers have found that emotion in general and empathy in particular influences decision making, often at an unconscious level (e.g., Batson et al., 2003; Bazerman & Moore, 2009; Cohen, 2010; Eisenberg et al., 2002; Haidt, 2001; Hoffman, 2000; Reynolds, 2006; Valdesolo & DeSteno, 2006; Welsh & Ordóñez, 2014). Emotion, including empathic concern, does not dictate the ethicality of the behavior, however. If the WorldCom accountants were moved by concern for their coworkers or community, for example, their empathy nevertheless led to unethical decisions and illegal behavior. Greater empathy simply means that greater insight may be brought to bear on a decision, if the decision maker takes the time to reflect on an action’s consequences.

As business instructors, it is important to understand the role of emotion in ethical decision making so we can create instructional strategies that better prepare our students for the decisions they will face. The goal is to increase students’ awareness of the social and psychological context in which their decisions are made and train them to assess the impact of potential outcomes on others. Increased awareness of how an emotion such as empathy affects decisions may encourage greater thoughtfulness and reduce, in the terminology of Bazerman and Sezer (2016), “bounded ethicality” (p. 99). The purpose of this article is to summarize key findings in the research about the effect of emotion, specifically empathic concern, on the ethical decision-making process and identify instructional strategies that both increase empathy and challenge students to consider the role that empathy plays in their own decisions.

The Role of Emotion in Ethical Decisions

Numerous researchers have described a dual process that is involved when people are faced with an ethical dilemma, one that is nonconscious, reflexive, and intuitive, and another that is conscious and effortful (e.g., Bazerman & Moore, 2009; Haidt, 2001; Reynolds, 2006; Valdesolo & DeSteno, 2006; Welsh & Ordóñez, 2014). These researchers generally argue that both cognition and emotion are at work during the nonconscious, intuitive process. Haidt (2001) claimed that moral intuition, an automatic response that is influenced by an emotional reaction, comes before moral reasoning, which is a conscious, intentional effort to look at the evidence and draw a reasoned conclusion. Reynolds (2006) called the initial, nonconscious response to an ethical dilemma the “X system.” The X system reflexively matches characteristics of the current dilemma to stored prototypes. Prototypes can include emotional sensations that inform the interpretation of the situation. Once the prototype has been selected by the X system, Reynolds suggested that the “conscious reasoning cycle,” or “C-system,” may analyze the situation to justify the decision rule that was selected by the X system or find an appropriate decision rule if no appropriate prototype was found.

Bazerman and Moore (2009) also embraced a dual-process model, using the term bounded ethicality to acknowledge that people are not always aware of the forces that lead them to behave unethically. Bounded ethicality is more likely to occur when managers respond to an event quickly, automatically, and emotionally. In the case of accounting fraud, for example, the immediate worry about investor reactions to a negative quarterly report feels more intense than the worry about what may or may not happen in the future as a result of altering the report. Evidence summarized by Bazerman and Moore (2009) suggests that the initial emotional response to a problem has significant, but often unconscious, influence over decision makers, even if they later engage in more reasoned analysis of the problem.

The empirical studies that support a dual-process approach typically assess participants’ responses to a variety of moral dilemmas, sometimes using subconscious priming tasks to manipulate an emotion or schema. For example, Welsh and Ordóñez (2014) found that students who were given subconscious ethical/unethical priming tasks were less likely to cheat on another task that immediately followed. The researchers suggested “that subconscious priming . . . does not directly change moral values but instead triggers existing schemas related to values that individuals already possess” (p. 737). Valdesolo and DeSteno (2006) found that participants who had higher levels of positive affect after watching a film clip of sketch comedy were more likely to choose the utilitarian response to the footbridge dilemma than those who had lower levels of positive affect after watching a clip from a neutral documentary. Thus, without being aware of the process, participants’ responses were influenced by how they felt when they read the dilemma. Studies have shown that distress, anger, disgust, sadness, guilt, shame, and empathy affect moral decisions (Cialdini, Schaller, Houlihan, Arps, & Fultz, 1987; Haidt, 2001; Piazza, Russell, & Sousa, 2013; Ugazio, Lamm, & Singer, 2012).

Studies in neuroscience provide additional evidence that both reason and emotion affect moral decision making. Greene, Sommerville, Nystrom, Darly, and Cohen (2001) conducted functional magnetic resonance imaging brain scans on participants as they considered a series of moral and nonmoral and personal and impersonal dilemmas. Engagement in moral, personal dilemmas, such as the footbridge dilemma, triggered more activity in the areas of the brain associated with emotion. When participants responded with answers that were inconsistent with the emotion, those responses took more time. The researchers suggested that the slower response time likely indicated that moral reasoning, the more effortful process, stepped in to override moral intuition, the reflexive response. Experiments using repetitive transcranial stimulation revealed that disrupting parts of the brain can change a person’s response to emotionally charged moral dilemmas (e.g., Kuehne, Heimrath, Heinze, & Zaehle, 2015; Tassy et al., 2011). For example, Tassy et al. (2011) found that a stronger utilitarian response, signaling the use of reason, was more likely when the right dorsolateral prefrontal cortex was disrupted by a transcranial magnetic stimulation, indicating that the disruption reduced the impact that emotion had in the decision-making process. Hutcherson, Montaser-Kouhsari, Woodward, and Rangel (2015) used functional magnetic resonance imaging scans to map the emotional, utilitarian, and moral judgment responses to ethical dilemmas onto the brain. They concluded that emotional and utilitarian appraisals of an ethical dilemma occur in different parts of the brain and largely involve independent processing. These researchers found that when a moral judgment was required, yet another part of the brain, the ventromedial prefrontal cortex, was primarily utilized and integrated the emotional and utilitarian appraisals into the decision process. The exact relationship between emotional and cognitive responses is unclear, but evidence from neuroscience strongly indicates that both emotions and reason affect moral decision making.

Emotions can be triggered by observing someone else’s joy or pain. Evidence from neuroscience research on mirror neurons has shown that when observers see someone experience pain or joy, their brains react in a manner that is congruent with the target’s experience (Baird, Scheffer, & Wilson, 2011; Harada, Hayashi, Sadato, & Iidaka, 2016; Morelli, Rameson, & Lieberman, 2014). Such a response is automatic and some have hypothesized that it is linked to our ability to empathize (see Baird et al., 2011). However, a distinction is made in the literature between this automatic response, or mimicry, and concern for other (Baird et al., 2011; Decety & Michalska, 2010; Harada et al., 2016). There is no clear evidence that an observer’s emotional reaction to another person’s pain, for example, leads to a concern for that person. Nevertheless, this instinctual imitation of another’s emotions may at least serve as a first step in empathizing with another’s situation.

Empathy and Ethical Decision Making

The concern for others often motivates a prosocial behavioral response (Batson et al., 2003; Bazerman & Moore, 2009; Cohen, 2010; Eisenberg et al., 2002; Hoffman, 2000). Hoffman (2000), concluded that “ . . . only empathy can provide the internal motive basis for acting in accord with the principle. . . . Empathy’s contribution to moral principles is to transform them into prosocial hot cognitions” (pp. 236, 239). Eisenberg et al. (2002) drew a similar conclusion when they wrote, “ . . . empathy/sympathy bonds with moral principles, provides the motivational force to act on those principles, and stimulates the development of internalized moral reasoning reflecting concern for others’ welfare” (p. 994). Cohen (2010) concluded, “empathy is more likely to stimulate moral action, possibly because it is more difficult to take advantage of people once you have considered their feelings as opposed to their thoughts” (p. 570).

Empathy is generally defined by researchers in terms of either a cognitive or an affective response to another person’s situation (Hoffman, 2000). Davis’s (1983) interpersonal reactivity index (IRI) is frequently used to measure empathy for research studies, and his instrument includes both cognitive and affective subscales. He called the cognitive dimension of empathy “perspective-taking,” and defined it as “the tendency to spontaneously adopt the psychological point of view of others” (p. 114). The subscale, “empathic concern,” measures the feelings of concern or sympathy that a person has toward another. The medical profession has long recognized the importance of empathy in the treatment of patients, defining it as “an intellectual rather than emotional form of knowing” how another person feels (Halpern, 2003, p. 670; see also Hojat, 2009). Goldman (1995) defined empathy as “the ability to know how another feels” (p. 96), also emphasizing the cognitive component, and included it in his characterization of emotional intelligence. Hoffman (2000) preferred defining empathy as an affective response, specifically, “the involvement of psychological processes that make a person have feelings that are more congruent with another’s situation than with his own situation” (p. 91).

Consistent with current scholarship, the term empathy will be used here to include both cognitive and affective aspects but will use “perspective taking” or “cognitive-based empathy” and “affect-based empathy” or “empathic concern” when distinction is needed.

The WorldCom example from the introduction demonstrates that empathy does not guarantee that a person will act ethically. In the research, however, both cognitive and affect-based measures of empathy have been linked to prosocial attitudes and behavior, such as sharing, helping, comforting, and caring (see Eisenberg, Cumberland, Guthrie, Murphy, & Shephard, 2005; Hoffman, 2000, for reviews). Cohen (2010) found that those with higher levels of empathic concern were more likely to disapprove of unethical negotiation tactics. Studies done by Cote, Piff, and Willer (2013) and Gleichgerrcht and Young (2013) found that those who used utilitarian judgment felt less empathic concern for the individual they sacrificed for the good of the group. Dietz and Kleinlogel (2014) averaged the IRI scales for perspective taking and empathic concern and noted that the combined measure was weakly associated with resisting a supervisor’s request to cut employee pay. Perspective taking has been found to be related to moral engagement and/or judgment (see Eisenberg et al., 2005, for a review; see also Brown, Sautter, Littvay, Sautter, & Bearnes, 2010; Detert, Trevino, & Sweitzer, 2008). In a study by Mencl and May (2009), those with higher cognitive empathy were more likely to use principle-based ethical reasoning. While greater empathy does not ensure that people will respond ethically, the research evidence indicates that empathy often has a positive effect on their attitudes and behaviors toward others, consciously or unconsciously.

Teaching Empathy

Can the business school teach empathy? In a survey of business students, empathy was the least valued among a set of 10 leadership characteristics (Holt & Marques, 2012). Numerous students justified this rating by indicating that empathy was not appropriate in a business setting. In research conducted by Bergman, Westerman, Bergman, Westerman, and Daly (2014), business students had a higher rate of narcissism than students from other disciplines. Detert et al. (2008) found that business students had less empathy than education students, although this study did not clarify why. Finance students have been found to have lower empathy scores than other types of majors in business school (Brown et al., 2010). Importantly, it is not clear if the students in these studies learned to become less empathic during their time in business school, or if those who are less empathic were more likely to choose a business major.

Eisenberg et al. (2005) found that empathy, when measured as a trait, tends to stabilize by early adulthood. Other studies indicate that change is possible. Numerous researchers have concluded that perspective taking can be developed in college (e.g., Eisenberg et al., 2005; Hoffman, 2000; Holt & Marques, 2012; Kohlberg, 1984; Mencl & May, 2009). Perspective taking requires complex, abstract thinking and should improve through practice and feedback (Gagne, Briggs, & Wager, 1992). In a study by Hojat et al. (2009), cognitive-based empathy scores decreased over time for medical students, particularly in the third year, a finding that was consistent with other medical school research. A study by Konrath, O’Brien, and Hsing (2010) found a general decline in both empathic concern and perspective taking among college students between 1979 and 2009. However, research by Batt-Rawden, Chisolm, Anton, and Flickinger (2013) found that educational interventions can increase empathy in medical students. Their research led them to conclude that the relationship between one’s environment and empathic tendencies was dynamic and open to changes in societal and situational variables. Taken together, these findings suggest that change in empathy may be possible over the course of an education, although it can be in either a positive or negative direction.

Professors in social work and medicine have created classroom activities to nurture student empathy. Gerdes, Segal, Jackson, and Mullins (2011) suggested intense emotional and behavioral activities for social work students intended to develop “new tracks in their brains” (p. 118) and increase their empathy for clients. University of California–Irvine students who completed the undergraduate course, Compassion in Medicine, had higher scores on the Jefferson Scale of Empathy–Health Professional Student Version than the control group (Cheung & Reeves, 2014). In a course on mindfulness at Georgetown University, first-year medical students learned meditation and facilitators guided open sharing and listening classes (Harwani et al., 2014). Self-reported measures showed an increase in empathic concern. Educational experiences that encourage empathy can be appropriate in business classes as well because empathy potentially stimulates an expanded search for solutions that have more positive outcomes for those affected by business decisions.

For professors who want to develop student empathy and explore its impact in a variety of settings, suggestions abound in the literature. Hoffman (2000) recommended several strategies to help students see life through the eyes of others, including using films, role plays, and interaction with people from different walks of life. Hojat (2009) reported that these methods, in addition to role modeling, training in interpersonal skills, shadowing, mentoring, and studying the humanities and the arts, have led to improvement in perspective taking or related outcomes such as improved communication in medical education. Bowen (2014) provided ideas, such as retelling others stories, role plays, interviews, negotiation, and cross-cultural exchanges to encourage empathy. Taylor and Ladkin (2009) argued that empathy can be developed in business students through theater, storytelling, and poetry.

Bergman et al. (2014) suggested that case studies, role plays, and trips abroad may help develop empathy and offset negative impacts of narcissism. Movies can be used as case studies to provide a much more vivid depiction of how people are affected by business decisions. For example, Company Men (Hall, 2010), Up in the Air (Beugg, Griffin, Medjuck, & Pollock, 2009), and Margin Call (Blum et al., 2011) can give students a more personal view of the effect of economic layoffs on employees and families. Filmmakers are skilled at getting viewers to empathize with characters in their films, an outcome that business instructors can exploit as they teach the ethical implications of decisions.

Perhaps the most authentic way to help students empathize with others is through community engagement, such as travel abroad programs, service-learning projects, and internships in nonprofit organizations. Hoffman (2000) noted empathy is more likely to lead to prosocial action when those involved are members of one’s own family, friendship circle, ethnic group, and so on (in-group bias); hold similar values and have similar personality characteristics (similarity bias); or are in the presence of others and the situational and personal cues are salient (here-and-now bias). Community engagement activities potentially reduce all three types of bias as students work side-by-side with people from all backgrounds, thereby enlarging their in-group, discovering the similarities that they share, and directly observing the needs and gifts of people who would otherwise remain nameless and misunderstood. In a meta-analysis of studies done on a variety of college courses with service learning, Yorio and Ye (2012) found that service learning increased students’ perceptions about social issues.

Management theories and case studies are traditionally taught from the perspective of upper managers and shareholders. Business professors can also design and offer a variety of learning experiences that encourage students to empathize with other stakeholder groups. Perhaps some of these activities will trigger emotional reactions that activate empathic concern. Any classroom activity that arouses empathy provides an opportunity for professors and students to recognize their own emotional responses and thoughtfully consider how emotions, including empathy, can or should affect decisions.

Nurturing Empathy: A Classroom Exercise in Wage Disparity

An activity developed for a human resource management class demonstrates how easily instructors can incorporate empathy learning objectives into a management topic. In this exercise on wage surveys and compensation decisions, students are asked to compare the household budgets for someone making minimum wage with the salary of the CEO for a large company. The learning objectives for the exercise are (a) use credible Internet sources to retrieve median salary data on a variety of jobs, (b) discuss the advantages and limitations of using wage surveys to inform a company’s salary and wage decisions, (c) describe the financial challenges experienced by low-wage workers, and (d) explore the ethical implications of a business decision.

Students are given the following background and instructions:

SuperCenter Store is a general merchandise discount store with headquarters in Chicago, IL. They have 1500 stores across the country, including three in the local metro area. Listed below are the types of jobs available at SuperCenter. What should the company’s median salary or wages be for these jobs? Assume that all the jobs listed are located in our area except for CEO, which is located in Chicago. Find and use a credible Internet source to retrieve salary data. Before recommending a CEO salary, search the Internet to determine what SuperCenter’s competitors are paying their CEO’s (WalMart, Target, Costco, etc.).

Students are given a worksheet with brief job descriptions for a cashier, store manager, district manager, and CEO. Job descriptions come from O*NET OnLine. In groups, students work together to decide on median salaries or hourly wages for each position. Once completed, responses from the groups are compared. This exercise can lead to a discussion of various compensation issues but relevant for this article is the development of empathy, which is the focus of the second half of the assignment.

Using the median wages that students recommended, each group creates family budgets for the CEO and cashier, assuming a single parent and two dependents in both cases (see Appendix A for the form). Students are encouraged to use the Internet to help them estimate various costs.

Each group posts their budgets, or key components of their budgets, on the board or in a document (such as Word or PowerPoint) that can be projected onto a screen, allowing the class to make comparisons among the groups. The instructor should facilitate a discussion with the goal of identifying challenges that low-wage workers face and debating the ethical responsibilities of employers as they make compensation decisions. The discussion may begin with a broad question: What did you discover? Other questions may include the following: Are the budgeted numbers you recommended realistic? Which budget items did groups prioritize and which items went unfunded? What are the implications for the family, society, and the company? What is a living wage in our community? What ethical responsibilities do businesses have (if any) to ensure their workers are making a living wage? How can families cope with low wages?

The class is unlikely to reach consensus on these issues. The real objective is to encourage students to think about a company’s compensation strategy, not simply from the organization’s perspective but also from the perspective of a low-wage worker. This exercise in empathy widens the lens through which students view this decision, bringing more information to bear on a decision that affects the quality of people’s lives.

Assessing Empathy in the Business Classroom: An Instructional Exercise

An intriguing question remains: Are your business students empathic? The classroom exercise described here answers that question. It was designed to heighten students’ awareness of their own emotions in business decisions and encourage them to consider the role that empathy has in decision making. In this exercise, students must choose between the interests of shareholders/owners and the well-being of other stakeholder groups. Before actually making a decision, however, students complete an instrument that measures their empathic response to those who are potentially harmed. The instructor then facilitates a discussion to clarify the relevant issues and help students think critically and empathically about their choices. This activity is appropriate in any business course at any level.

The Scenarios

Students are asked to read and respond to the following scenarios:

Scenario 1:

Suppose the CEO of a publicly-traded company must decide whether to close a plant in a rural part of your state. If the company closes the plant, the goods currently manufactured there would be made in sister plants located in other states. It is estimated that the company’s return on investment will increase from its current level of 7% to 10%, once the initial costs associated with closure are paid. Four hundred people in a small rural community in your state will lose their jobs.

Scenario 2:

Suppose a hurricane hit a small U.S. island off the coast of Florida. Most of the island was without power and water. It was estimated that power would be down for at least two weeks. Roads were blocked from downed power lines and trees, making it difficult to get on or off the island or to travel to those parts of the island that still had power. One particularly forward thinking business owner stocked up on water and batteries. The business owner had one of the few stores on the damaged part of the island with these vital items. After the hurricane, these items were in great demand. The business owner must now decide how much he will charge for these items.

These scenarios are simple but realistic and serve as the basis for a stakeholder analysis. The downsizing scenario is so common in the United States that students may not recognize that the decision has ethical implications. Natural disasters, such as the one described in the second scenario, are common enough that some areas have laws against raising prices for necessities in their aftermath. Other scenarios can be used; the objective is to have students evaluate the competing interests of multiple stakeholder groups.

The Survey

Before students come to class on the day of the activity, they must first privately respond to the two scenarios using a paper or online survey format (see Appendix B for the survey). Alternatively, if students have access to the Internet, a software package (e.g., SurveyMonkey) can be used at the start of class that will allow students to respond privately to questions and still provide the instructor with summary data. Once all the data have been collected and summarized, students can compare their own responses with those of their peers and may be more likely to critically reflect on their choices and reasoning.

For each scenario, the key question is, “What would an ethical CEO or business owner do?” Before they commit to a decision, students complete a brief affect-based empathy measure similar to that developed and tested by Cote et al. (2013). In contrast to a global measure of empathy like the IRI (Davis, 1983), the instrument by Cote et al. (2013) assesses empathic response to the situation presented. It includes items such as, “Circle the number that best reflects the degree to which you feel compassion for the people [in this scenario].” In addition to compassion, items ask students about the degree to which they feel sympathy, worry, upset, and sad for the people in the scenario. A 7-point scale from not at all (1) to very much (7) is used. Once students complete the five-item empathy measure, they decide what an ethical owner/CEO would do.

The last item on the survey asks students to respond to the following statement on a 7-point scale from strongly agree (7) to strongly disagree (1): “For business decisions, the concerns of the shareholders have higher priority than the concerns of other groups such as employees, customers or the community.” This final question helps identify the fundamental dilemma at the heart of this exercise: At what point do we sacrifice the needs of other stakeholders to maximize profits for shareholders?

As an example, the results from surveys taken by students in three different management classes are provided in Tables 1 and 2. The first course, Introduction to Management, was a sophomore-level course required for all business majors (n = 57). The second course, Business Strategy, was a senior-level capstone course that is taken during the last semester of a business student’s undergraduate career (n = 32). The third course was an intensive, 15-week certificate program designed to teach fundamental business principles to working professionals who had not majored or minored in business in college. The participants in this third course worked in nonprofit organizations in health, education, and social service industries (n = 22). Thus, three distinct groups were compared as follows: (a) undergraduates who had limited exposure to the business curriculum, (b) undergraduates in the business capstone course who had completed the majority of their business studies, and (c) working professionals without a business background who were completing a business certificate program. There were 75 students who identified as male and 34 students who identified as female in this sample (2 did not specify).

Table 1.

Class Means for Empathic Concern and Shareholder Prioritization.

	Empathy/plant closure	Empathy/hurricane	Shareholder prioritization
Introduction to management	4.39 (1.28)	4.87 (1.19)	3.35 (0.94)
Strategy	4.45 (1.06)	5.06 (1.10)	3.88 (1.67)
Professionals	5.24 (1.04)	5.63 (.94)	3.23 (1.80)
All students	4.57 (1.21)	5.07 (1.15)	3.48 (1.38)
Analysis of variance	F = 4.36, p = .015	F = 3.67, p = .029	F= 1.96, p = .146

Note. Standard deviations are in parenthesis.

Table 2.

Decisions.

	Plant closure		Price of goods after hurricane
	Close plant	Keep plant open	Raise in prices	Same/lower prices
Introduction to management	27 (47%)	30 (53%)	21 (37%)	36 (63%)
Strategy	12 (37.5%)	20 (62.5%)	6 (19%)	26 (81%)
Professionals	6 (27%)	16 (73%)	3 (14%)	19 (86%)
Total	45 (40.5%)	66 (59.5%)	30 (27%)	81 (73%)
Empathic concern, M (SD)	4.21 (1.36)^a	4.82 (1.04)^a	4.77 (1.39)^b	5.19 (1.03)^b

Empathic concern was statistically higher for those choosing to keep the plant open compared with those choosing to close the plant (t = 2.70, p = .008). ^bDifferences in empathic concern were not statistically significant between those who kept the same or lowered the price compared with those who raised prices in the hurricane scenario (t = 1.70, p = .093).

Outcomes for the empathic concern measure varied based on scenario (plant closure or hurricane), gender, and class. For this group of 111 students, Cronbach’s alpha for empathic concern was .88 for the plant closure items and .85 for the hurricane items. Students were generally empathic toward those who suffered due to a plant closure or hurricane; overall, mean ratings were 4.57 for the plant closing and 5.07 for the hurricane on a 7-point scale (see Table 1). Empathic concern was higher in the hurricane scenario compared with the plant closure (t = 5.09, p = .000). Women had higher empathic concern than men for those negatively affected by both the plant closure (Ms = 5.09, 4.34; t = 3.09; p = .003) and the hurricane (Ms = 5.55, 4.88; t = 2.92; p = .004). Analysis of variance indicated that the working professionals had higher levels of empathy than the undergraduates for the plant closure scenario (F = 4.36, p = .015) and for the hurricane scenario (F = 3.67, p = .029). In summary, women had greater empathy than men, the professionals from nonprofit organizations had greater empathy than undergraduate business students and there was greater empathy for those coping with a hurricane than with a plant closure.

Only 21% of all students in these classes agreed that the concerns of the shareholders have higher priority than the concerns of other stakeholder groups. In class discussion, these students argued that decisions to maximize shareholder value increase the likelihood that the company thrives and are therefore in the best interest of all stakeholders. The other students were either neutral (27%) or disagreed (52%) that shareholder concerns should be prioritized. They argued for balance among the competing concerns; profitability is essential but the needs of other stakeholders are also important and deserve consideration. Responses ranged from 1 to 6 on a 7-point scale, with a mean of 3.48 (SD = 1.38) and a median of 3. There were no statistical differences for this measure among the classes or between men and women.

Almost 60% of all students decided to keep the plant open and 73% did not raise prices after the hurricane (see Table 2). In follow-up discussions, some students worried about the financial repercussions from negative publicity that might come as a result of closing the plant or raising prices after a hurricane. Others made their decision based on their concern for the damages done to employees and the community. Those who wanted to keep the plant open had a higher level of empathic concern than those that were willing to close the plant (Ms = 4.21, 4.82; t = 2.70; p = .008). In the hurricane scenario, students who wanted to keep the same or lower prices scored higher on empathic concern, but the differences did not reach statistical significance (Ms = 4.77, 5.19; t = 1.70; p = .093).

It is important to recognize that there are good arguments to close the plant or raise prices following a hurricane. For example, allowing an inefficient plant to remain open may reduce a company’s ability to compete in the industry and reduce the value of its stock. There is a danger that such a decision will put the entire company, and many more jobs, at risk. Raising prices after a disaster is illegal in some cases, but one can argue that higher prices encourage more sellers to enter the market, increasing supply. The objective of this exercise is not to figure out the right answer, but to encourage a lively debate and expand the perspectives of students beyond those of stockholders and managers.

Classroom Discussion

Once all the data have been collected, the class discussion begins with students taking a stand on one or both scenarios. Possible scenario solutions can be posted around the classroom. Students then stand next to their preferred solution or indicate their decision on poster paper with a marker or sticker. Alternatively, an app like Socrative Student can be used to increase participation and confidentiality. With these approaches, all students participate and responses are clearly visible.

Students then defend their responses. There are legitimate arguments for whatever position students take, but it is important to make explicit the criteria that are being used and the assumptions being made. For example, in scenarios such as these, some will argue that managers must maximize shareholder value. Shareholder value can then be listed as one of the criteria used to evaluate a decision. When this issue is raised, the professor may want to point out that a significant percentage of the class (in this case, well over half) did not prioritize shareholder value over the concerns of others. Why not? Is this realistic?

Some students may argue that the employees will suffer if their plant is closed, affecting their families and the economy of the community. Thus, the welfare of employees, families, and communities may be considered among criteria considered. In the hurricane example, people may experience physical harm if they do not have access to basic food, water, and necessities. As various positions are offered and evaluated, the instructor can use a stakeholder framework to organize ideas and clarify the criteria, assumptions, and values that affect decision making.

Perspective taking can be encouraged throughout this process, if the stakeholder analysis is done from the perspective of each stakeholder group. Questions such as, “If the plant closes, what will life be like for the employees who are let go?” or “Shareholders invest their money but what do other stakeholder groups invest on behalf of the company?” force students to see the situation from each group’s perspective. Discussion can then turn to the empathy measure that students completed. An important goal is to help students reflect on their feelings triggered by the scenarios, because research tells us that emotions do affect how we respond. What is the relationship between empathy and our decision? When should our compassion for others affect our business decisions? The compassion of the WorldCom employees, described earlier, did not lead to an effective decision (although there were selfish motives at work as well). When should shareholders’ concerns be prioritized over other groups? Why are people more empathic toward those in the hurricane scenario?

The survey allows each student’s perspective to be shared and encourages students to consider business decisions from the perspective of multiple stakeholder groups. Responses indicated that many students do feel empathic concern for those affected by a plant closing or devastating hurricane. Some students support the primacy of the shareholder, but among this particular group of students, over half did not. These documented differences force students to evaluate their own choices and are intended to clarify assumptions and encourage more thoughtful analysis of business decisions that have ethical implications. Together with the measures on empathy and shareholder prioritization, these scenarios serve to engage participants in debating the role of empathy in decision making and the responsibility that the corporation has to its employees and community. The exercise helps students explore the roles that they want to play when they are forced to make similar decisions.

Conclusion

A review of the literature from multiple disciplines provides significant evidence that emotions influence moral judgment. Research from neuroscience indicates that the initial response to a personal ethical dilemma is automatic and activates parts of the brain associated with emotion (Greene et al., 2001; Kuehne et al., 2015; Tassy et al., 2011). The brain’s response when observing someone in pain or joy is congruent with the actual response of the person experiencing the pain or joy (Baird et al., 2011; Harada et al., 2016; Morelli et al., 2014). Scholars such as Haidt (2001) and Reynolds (2006) concluded that conscious, moral reasoning occurs after the decision maker has already experienced an initial, intuitive response to an ethical dilemma. This intuitive response is influenced by the emotional reactions and preexisting schemas or decision rules. These findings are relevant for those who design instruction in ethical decision making.

Bazerman and Sezer (2016) argued that greater awareness of our emotions and biases, combined with a commitment to more conscious, deliberate decision making, promote more effective responses to ethical dilemmas. Empathy, specifically empathic concern, is one of those emotions that can have a powerful impact on both decisions and actions. Greater empathy does not guarantee an individual will make ethical decisions, but it has been linked to prosocial behaviors, including those relevant in negotiation and pay decisions (Cohen, 2010; Dietz & Kleinlogel, 2014). Learning objectives related to empathy are often included in the medical and social work professions to improve the quality of care. In business, decision quality may also improve when managers are aware of their emotions, recognize potential biases, and are sensitive to the perspectives of multiple stakeholders. Business curriculum can be designed to help students recognize the role of emotion in their decisions and discern when it is appropriate for emotions to inform decision making. We cannot inoculate our students from the powerful social and psychological influences that affect their decisions, nor can we make them act ethically. However, we can create educational experiences that encourage perspective taking, improve emotional insight, and stimulate a broader and more thoughtful assessment of ethical dilemmas.

Footnotes

Appendix A

Appendix B

This article is part of the Special Issue “Behavioral Ethics”

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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