WHY GOOD PEOPLE DO BAD THINGS IN BUSINESS - AN EXISTENTIAL PERSPECTIVE Alistair Ping MBA (RMIT), Graduate Diploma in Applied Finance (RMIT), Graduate Diploma in Finance and Investment (SIA), Graduate Certificate in Financial Markets (SIA), Adv. Diploma in Financial Services (Finance & Mortgage Broking), Cert IV in Training and Assessment (Archer College), Cert IV in TAE (Liv Training) Supervisors Professor Rowena Barrett Dr Luca Casali Submitted in fulfilment of the requirements for the degree of Doctor of Philosophy School of Management QUT Business School Queensland University of Technology 2017 Keywords Business ethics, ethical decision making models, ethical leadership, ethics, moral intention, morals. Publication Note The text has been redacted where participants elected to have the information they provided during the study removed prior to publication of thesis material. Abstract Much research has been undertaken since the 1960s to determine how people make ethical decisions. Business schools around the world have also dedicated increased efforts to ethics education since the late 1980s. However, the research fails to support the effectiveness of this effort in preventing or reducing unethical outcomes in business. The majority of existing business ethics research makes two fundamental assumptions: firstly, that ‘bad’ people do ‘bad’ things owing to: a lack of character; bad values; or greed; and, secondly, that ethical decision making is a rational, cognitive process that can be taught. In this thesis emerging research in the fields of criminology, social psychology and neuro-cognitive science is built on, questioning these two assumptions. It is shown that ethical decision making is most often a subconscious process with higher order reasoning not engaged until after the event. It is also shown that in trying to understand our own and others’ behaviour, we overestimate the importance of dispositional qualities and under estimate the importance of situational and systemic factors. Research indicates the key factors in unethical behaviour to be: self-delusion; perceptual biases; and ethical blindness linked to learned justifications that neutralise moral intent. Therefore, the aim of this thesis is to understand why people of good character and without ill intent create unethical outcomes in business and how moral intention, perceptual blindness and moral neutralisations interact and impact upon this process. In addition, a further aim of this thesis is to determine what the implications are for ethics education and training. A representative theoretical model, shown on page 172, is deduced from existing inter-disciplinary literature and research in the fields of business ethics, criminology, Why Good People Do Bad Things in Business - An existential perspective 5 social psychology and neuro-cognitive science. The aim is to develop a model that shows how, in theory, ethical outcomes are created. Drawing on a social constructivist paradigm a multiple case study research design utilising qualitative data is determined to be the most appropriate method to test this theoretical model. Participants in the research were drawn from people at Board or senior executive levels who had either been charged with corporate crimes or who had been a whistle-blower in such crimes. Semi-structured interviews were conducted with the aim of encouraging participants to reflect on and describe the phenomenon they had experienced. The theoretical model was used as a starting point for these interviews to explore the events from the subjects’ perspective. These interviews were then supplemented and triangulated by an analysis of corporate documents, media reports and, where possible, court reports. The data gathered from the research was then coded and analysed for patterns to enable an induced causal factor model to be developed, shown on page 303. This induced model was then synthesized with the model deduced from the existing research to produce a synthesized causal factor model, shown on page 309 which explains how people of good character create unethical outcomes in business. The resulting findings encapsulated in the model are surprising for several reasons. Firstly, it indicates that the underlying initial trigger for the creation of unethical outcomes is the existence of a ‘sense of moral obligation’ or a ‘sense of entitlement’ which causes a person to use a moral neutralisation to justify the violation of an intrinsic value and take an action which they believe will balance the scales of justice. This initial act is a cognitive, rational process. Secondly, once a person takes this initial step it begins a spiral down the path of continued unethical actions that ultimately lead to the creation of unethical outcomes. This process is underpinned by subconscious reflexive pattern matching leading participants to feeling ‘out of Why Good People Do Bad Things in Business - An existential perspective 6 control’. The third, surprising outcome is that the research participants are held in this pattern by their sense of self-righteousness and the underlying belief that they could ‘fix it’. The primary contribution of the research in this thesis is the development of the causal factor model shown on page 309. This model has been developed from the existing inter-disciplinary research in the fields of business ethics, criminology, social psychology and neuro-cognitive science which have been synthesized to deduce a theoretical model of causal factors on moral outcomes. The theory and reality chasm has then been bridged by testing the validity of this model using qualitative data from actual criminal cases. This ‘real world’ data has then been used to develop the model further. The final synthesized inter-disciplinary model will contribute to business ethics theory and will have significant implications for actions to minimise unethical outcomes in business. Notably this would include ethics education and the training of business executives and Board members to understand how moral intention, perceptual blindness and moral neutralisations interact and impact upon the creation of unethical outcomes. Why Good People Do Bad Things in Business - An existential perspective 7 Publications relating to this thesis Conference publications • Ping, A.C. (2015). ‘Why Good People Do Bad Things in Business - and the application of existentialism to minimise unethical outcomes’, 5th Annual ABEN (Australasian Business Ethics Network) Conference, Sydney Australia December 7th to 8th. • Ping, A.C. (2016). ‘Levelling the score - the role of individual perceptions of justice in the creation of unethical outcomes in business’, ACERP 2016 – The Asian Conference on Ethics, Religion and Philosophy, Kobe, Japan, March 31st to April 3rd. Other publications • Ping, A.C. (2017). ‘Corporate Social Responsibility in an Age of Indifference’, The International Academic Forum (IAFOR) THINK, March 10th. http://think.iafor.org/corporate-social-responsibility-in-an-age-of- indifference/ Why Good People Do Bad Things in Business - An existential perspective 8 Table of Contents Keywords ..................................................................................................................................3 Publication Note........................................................................................................................3 Abstract .....................................................................................................................................5 Publications relating to this thesis .............................................................................................8 Table of Contents ......................................................................................................................9 List of Figures .........................................................................................................................13 List of Tables ..........................................................................................................................15 List of Abbreviations ..............................................................................................................16 Statement of Original Authorship ...........................................................................................17 Acknowledgements .................................................................................................................19 Chapter 1: Introduction .......................................................................................................21 1.1 Chapter Overview .............................................................................................................21 1.2 Definition of terms ............................................................................................................22 1.2.1 Ethics and Business Ethics ............................................................. 22 1.2.2 Good People and Bad People ......................................................... 26 1.2.3 Intention and Moral Intention ......................................................... 30 1.2.4 Existentialism ................................................................................. 32 1.3 Background and Context ...................................................................................................36 1.4 Problem Definition ............................................................................................................64 1.5 The underlying