Abstract
Business scandals, such as those at News Corp, Barclays, Enron, and Foxconn, have become ubiquitous and arguably the fastest way a firm can become a global media sensation. One reason is perhaps because scandal is inherently more titillating than the doing of good deeds, but the other is more substantive: Many believe that it was unethical conduct by leading firms in the real estate/mortgage and financial trading sectors that more than anything else caused the deep 2008 global recession and housing market collapses that continue to hamper economic growth in many countries today. These scandals can ruin a firm’s public reputation, cost it millions or even billions of dollars in fines, lawsuits, and lost customer revenue and result in firings and jail terms for implicated employees. Thus, understanding unethical business conduct has become a front-burner business research and practice issue. Behavioral Business Ethics, which seeks to explain the causes of such conduct, is thus a very timely contribution to the organization studies literature.
As indicated by its title, Behavioral Business Ethics is not a work of ethical or moral philosophy. Eschewing a normative approach to business ethics, which would entail describing what managers should do, it adopts a descriptive approach aimed at understanding the psychological and social factors that explain how people make decisions that lead to ethical or unethical conduct. Unless we understand the process by which employees resolve ethical dilemmas, we will be hard-pressed to develop policies that can reduce the frequency of unethical conduct. Since this behavioral model is newly emerging, the editors intend this book to help shape a research agenda.
The volume is organized as 10 chapters grouped into 5 sections that introduce the behavioral approach and address issues such as ethics and social context, fairness and morality, and bounded ethicality. Chapter 1/Section 1, an introduction by editors David De Cremer and Ann E. Tenbrunsel, lays out the central theme of the book, that whereas the traditional normative approach to business ethics is underpinned by the questionable assumption that employees are rational, purposive actors who consciously choose to do “good” or “bad” things, the behavioral approach proposes that much unethical behavior occurs “outside the awareness” of the individual, who is assumed to make intuitive, emotion-laden snap judgments in contexts characterized by “bounded ethicality,” incomplete information about the moral dimensions of the situation, such that rather than unethical behavior being the product of a few “bad apples,” some contexts may be sufficiently compelling for almost anyone to engage in unethical behavior. The challenge for business ethicists, therefore, is to conduct research into human psychology to understand the processes that characterize how people make such decisions.
In Chapter 2, also labeled Section 2, Art Brief attempts to develop a research agenda by surveying the nascent behavioral ethics literature with an eye toward noting its blind spots. Chief among these is an overemphasis on underlying processes such that the specific kind of unethical behavior is assumed to be irrelevant, for example, whether a professor sexually exploits a student, falsifies data, or takes a pad of paper home from work are all implicitly assumed to result from the same underlying psychological processes, a notion Brief finds untenable. He argues that behavioral ethicists need to take seriously the “moral domain” of behavior, such as that mapped by Jonathan Haidt and colleagues, so as to formulate theories that can explain different kinds of unethical behavior. Brief’s contribution is noteworthy in that unlike other chapters, it acknowledges a weakness of the behavioral approach as compared to the traditional normative model, which does take degrees/kinds of moral actions seriously.
Section 3, which consists of Chapters 3 (Schminke and Priesemuth) and 4 (Hernandez and Sitkin), explores the impact of organizational context on business ethics. Chapter 3 posits that behavioral ethics research should study the impact of the “ethical infrastructure,” the formal and informal aspects of organizational structure related to ethics, on ethical decisions, such as codes of conduct and ethical climate. The authors do an admirable job of addressing the research design and methodological issues needed to do this. Chapter 4 focuses on the impact of leadership on ethical conduct. While acknowledging that organizational leaders can help create an “ethical climate” for followers, the authors emphasize the role that underlings have in influencing the ethicality of leader conduct. They paint a nuanced portrait of a firm’s ethical climate as resulting from this reciprocal relationship.
Section 4, consisting of Chapters 5 through 8, addresses the role of morality and fairness in business ethics. In Chapter 5, van Dijk et al. review experimental research into bargaining behavior to show how everyone, not just upper-level managers, leverage concepts of fairness to allocate rewards to themselves and others when in a position to do so. They propose that certain stable personality traits, such as social value orientation, predispose employees to engage in self-interested versus “fair” behaviors, and thus underlie ethical and unethical conduct. Chapter 6, by Robert Folger, proposes deonance theory as a framework for understanding some kinds of ethical conduct, namely, those that occur in situations in which employees experience a sense of duty or obligation to behave consistently with established moral norms. These norms serve to bound the autonomy of the individual and establish conditions under which employees may internalize these norms as legitimate, may merely comply with, or resist them as unjustified fetters on behavior.
Moral foundations theory is leveraged in Chapter 7 (Weaver and Brown) to root employee’s moral responses to ethical dilemmas into five categories reflecting fairness, harm, in-group preference, authority, and purity concerns. The authors contend that current behavioral ethics research is characterized by a narrow focus that neglects key aspects of the moral domain implicit in the minds of most employees. They single out the justice literature, arguing that procedural, distributive, and interactional justice research typically only focuses on matters of harm and fairness. But this focus misses how, for example, purity concerns might influence an employee’s willingness to get involved in “messy” ethical situations, such as sexual harassment or supervisor abuse. This point seems well-taken: I immediately thought of the recent scandal at Penn State, where the popular football coach Joe Paterno and other top university officials apparently turned a blind eye to child molestation allegations against coach Jerry Sandusky. Chapter 8, by Tom Tyler, is similarly strong. Tyler’s contribution is arguably the most focused in this volume. A series of research questions are posed pertaining to the role that values and morals play in influencing employee behavior, with the goal of trying to explain how organizations can motivate employees to voluntarily and willingly commit to ethical conduct, thus saving firms investment in costly surveillance and oversight mechanisms. While some of the other chapters seem to discuss values and ethics in a general sense, Tyler’s analysis teases out how these forces might play out specifically at work.
Section 5, consisting of Chapters 9 (Dana et al.) and 10 (Shu et al.), addresses the role of “bounded ethicality,” an ethical analogue to Simon’s concept of bounded rationality, in behavioral ethics research. Chapter 9 provides a fascinating account of experimental research, much of it from the field of behavioral economics, which shows how easily people can rationalize their unethical behavior as ethical. This is particularly likely to happen when the business situation is fraught with uncertainty and where responsibility for the decision is diffused among many people, because they facilitate the “mind games” people play to justify their morally questionable conduct as fair and just. Since these conditions are by no means rare in business settings, self-interest is an important bound on employee’s ethical conduct. The authors argue that attempts to foster ethical behavior that rely on helping employees recognize when they face an ethical dilemma are unlikely to be effective, since we are highly skilled at rationalizing our way around that recognition. They argue for formal constraints, such as mandatory self-disclosure statements, that establish self-accountability for the employee. In Chapter 10, Shu et al. emphasize a social–psychological approach to understanding business ethics that focuses on situational factors that shape ethical behavior. Like Dana et al. in Chapter 9, these authors describe the numerous ways in which employees use mental tricks, like revisionist history, motivated forgetting, and moral disengagement, to rationalize their unsavory conduct. They argue that organizations can reduce unethical conduct by having employees frequently and positively affirm their commitment to ethical conduct by signing honor codes and the like. This is because experimental research has shown that merely prompting people to think of moral standards has a dramatic and negative impact on unethical behavior.
Behavioral Business Ethics has much to recommend it. The editors are leading figures in the organizational ethics field and have assembled an exemplary team of contributors. Thus, organization scientists interested in studying the phenomena will benefit from insights provided by cutting-edge researchers in the behavioral business ethics area. Yet the authors manage to make substantive theoretical and empirical points without heavily relying on jargon and statistical analyses, thus making the volume user-friendly for management practitioners, as well as undergraduate courses focusing on business ethics. That said, Business Behavioral Ethics has limitations. While the editors and authors emphasize the importance of studying context as an important influence on employee ethical decision making, the context dimensions discussed strike me as overly micro in focus, being confined to factors such as the ethical climate, culture, and leadership of the organization. Yet major ethical business failures such as those that contributed to the collapse of the US housing market and the global financial crisis involved simultaneous unethical conduct by employees in many firms, which implies that the context of ethical decision making includes broader societal factors such as political and governmental policies, cues from customers, and ethical/moral trends such as the ascendancy of free-market rhetoric and discourses in Western societies. Additionally, the chapters in this volume make it clear that the behavioral ethics field favors an experimental approach to understanding unethical conduct. Experimental methods have the advantage of allowing for the isolation of theorized causes and establishing cause and effect relationships. But this methodological approach is seemingly at odds with the favored theoretical models proposed by chapter authors, which emphasize that ethical decisions are made in “messy” business circumstances in which the employee is buffeted by many psychological, social–psychological, and (at least in my view) broader cultural forces. Experiments conducted in university laboratories may ultimately be too limited in their ability to capture the decisional processes that occur in real-time, real-life business settings. Finally, and given the self-described “emerging” state of the field, perhaps inevitably, Behavioral Business Ethics raises a lot more questions than it answers, with little in the way of practical advice to business managers or shapers of government oversight bodies about how to limit unethical business conduct. Of course, the limitations I describe here are speculative, and perhaps future research in the emerging field of behavioral business ethics sparked by this book will disconfirm them.