஽ Academy of Management Executive, 2004, Vol. 18, No. 2 ........................................................................................................................................................................ Managing to be ethical: Debunking five business ethics myths Linda Klebe Trevin˜ o and Michael E. Brown Executive Summary In the aftermath of recent corporate scandals, managers and researchers have turned their attention to questions of ethics management. We identify five common myths about business ethics and provide responses that are grounded in theory, research, and business examples. Although the scientific study of business ethics is relatively new, theory and research exist that can guide executives who are trying to better manage their employees’ and their own ethical behavior. We recommend that ethical conduct be managed proactively via explicit ethical leadership and conscious management of the organization’s ethical culture. ........................................................................................................................................................................ The twenty-first century has brought corporate eth- Ethical Decisions Are Complex ics scandals that have harmed millions of employ- First, ethical decisions aren’t simple. They’re com- ees and investors, and sent shock waves through- plex by definition. As they have for centuries, phi- out the business world. The scandals have losophers argue about the best approaches to mak- produced “perp walks” and regulatory backlash, ing the right ethical decision. Students of business and business ethics is once again a hot topic. Ac- ademics and managers are asking: What caused ethics are taught to apply multiple normative the recent rash of corporate wrongdoing, and what frameworks to tough dilemmas where values con- can we do, if anything, to prevent similar trans- flict. These include consequentialist frameworks gressions in the future? Perhaps because everyone that consider the benefits and harms to society of a has opinions about ethics and personal reactions potential decision or action, deontological frame- to the scandals, a number of pat answers have works that emphasize the application of ethical circulated that perpetuate a mythology of business principles such as justice and rights, and virtue ethics management. In this article, we identify sev- ethics with its emphasis on the integrity of the eral of these myths and respond to them based upon moral actor, among other approaches.2 But, in knowledge grounded in research and practice. the most challenging ethical dilemma situations, the solutions provided by these approaches con- flict with each other, and the decision maker is left Myth 1: It’s Easy to Be Ethical with little clear guidance. For example, multina- A 2002 newspaper article was entitled, “Corporate tional businesses with manufacturing facilities in ethics is simple: If something stinks, don’t do it.” developing countries struggle with employment The article went on to suggest “the smell test” or “If practice issues. Most Americans believe that it is you don’t want to tell your mom what you’re really harmful and contrary to their rights to employ chil- doing...orread about it in the press, don’t do it.”1 dren. But children routinely contribute to family The obvious suggestion is that being ethical in income in many cultures. If corporations simply business is easy if one wants to be ethical. A fur- refuse to hire them or fire those who are working, ther implication is that if it’s easy, it doesn’t need these children may resort to begging or even more to be managed. But that suggestion disregards the dangerous employment such as prostitution. Or complexity surrounding ethical decision-making, they and their families may risk starvation. What if especially in the context of business organizations. respecting the rights of children in such situations 69 70 Academy of Management Executive May produces the greater harm? Such business deci- Two dimensions of moral intensity–magnitude of sions are more complex than most media reports consequences and social consensus–have been suggest, and deciding on the most ethical action is found in multiple studies to influence moral far from simple. awareness.5 An individual is more likely to iden- tify an issue as an ethical issue to the extent that a particular decision or action is expected to produce Moral Awareness Is Required harmful consequences and to the extent that rele- Second, the notion that “it’s easy to be ethical” vant others in the social context view the issue as assumes that individuals automatically know that ethically problematic. Further, the use of moral they are facing an ethical dilemma and that they language has been found to influence moral 6 should simply choose to do the right thing. But awareness. For example, in the above cases, if the decision makers may not always recognize that words “stealing” music (rather than downloading) they are facing a moral issue. Rarely do decisions or “forging” documents (rather than signing) were come with waving red flags that say, “Hey, I’man used, the individual would be more likely to think ethical issue. Think about me in moral terms!”3 about these issues in ethical terms. Dennis Gioia was recall coordinator at Ford Motor Company in the early 1970s when the company Ethical Decision-Making Is a Complex, Multi- decided not to recall the Pinto despite dangerous Stage Process fires that were killing the occupants of vehicles involved in low-impact rear-end collisions. In his Moral awareness represents just the first stage in a 7 information-overloaded recall coordinator role, complex, multiple-stage decision-making process Gioia saw thousands of accident reports, and he that moves from moral awareness to moral judg- followed a cognitive “script” that helped him de- ment (deciding that a specific action is morally cide which situations represented strong recall justifiable), to moral motivation (the commitment candidates and which did not. The incoming infor- or intention to take the moral action), and finally to mation about the Pinto fires did not penetrate a moral character (persistence or follow-through to script designed to surface other issues, and it did take the action despite challenges). not initially raise ethical concerns. He and his col- The second stage, moral judgment, has been leagues in the recall office didn’t recognize the studied within and outside the management liter- 8 recall issue as an ethical issue. In other examples, ature. Lawrence Kohlberg’s well-known theory of students who download their favorite music from cognitive moral development has guided most of the Internet may not think about the ethical impli- the empirical research in this area for the past 9 cations of “stealing” someone else’s copyrighted thirty years. Kohlberg found that people develop work. Or, a worker asked to sign a document for from childhood to adulthood through a sequential her boss may not recognize this as a request to and hierarchical series of cognitive stages that “forge” legal documents. characterize the way they think about ethical di- lemmas. Moral reasoning processes become more complex and sophisticated with development. Rarely do decisions come with waving Higher stages rely upon cognitive operations that red flags that say, “Hey, I’m an ethical are not available to individuals at lower stages, issue. Think about me in moral terms!” and higher stages are thought to be “morally bet- ter” because they are consistent with philosophi- cal theories of justice and rights. Researchers have begun to study this phenome- At the lowest levels, termed “preconventional,” non, and they refer to it as moral awareness, eth- individuals decide what is right based upon pun- ical recognition, or ethical sensitivity. The idea is ishment avoidance (at stage 1) and getting a fair that moral judgment processes are not initiated deal for oneself in exchange relationships (at unless the decision-maker recognizes the ethical stage 2). Next, the conventional level of cognitive nature of an issue. So, recognition of an issue as an moral development includes stages 3 and 4. At “ethical” issue triggers the moral judgment stage 3, the individual is concerned with conform- process, and understanding this initial step is key ing to the expectations of significant others, and at to understanding ethical decision-making more stage 4 the perspective broadens to include soci- generally. ety’s rules and laws as a key influence in deciding T. M. Jones proposed that the moral intensity of what’s right. Finally, at the highest “principled” an issue influences moral issue recognition,4 and level, stage 5, individuals’ ethical decisions are this relationship has been supported in research. guided by principles of justice and rights. 2004 Trevin˜ o and Brown 71 Perhaps most important for our purposes is the agement with suspicions that “managing earn- fact that most adults in industrialized societies are ings” has somehow morphed into “cooking the at the “conventional” level of cognitive moral de- books.” Or to walk away from millions of dollars in velopment, and less than twenty per cent of adults business because of concerns about crossing an ever reach the “principled” level where thinking is ethical line. Or to tell colleagues that the way they more autonomous and principle-based. In practi- do business seems to have crossed that line. In cal terms, this means that most adults are looking these situations, the individual