Our selection of useful reading on making ethical decisions in business.

Ethical decision-making theory: an integrated approach 
Ethical decision-making (EDM) descriptive theoretical models often conflict with each other and typically lack comprehensiveness. To address this deficiency, a revised EDM model is proposed that consolidates and attempts to bridge together the varying and sometimes directly conflicting propositions and perspectives that have been advanced.

To do so, the paper is organized as follows:
First, a review of the various theoretical models of EDM is provided. These models can generally be divided into (a) rationalist-based (i.e., reason); and (b) non-rationalist-based (i.e., intuition and emotion).
Second, the proposed model, called ‘Integrated Ethical Decision Making,’ is introduced in order to fill the gaps and bridge the current divide in EDM theory. The individual and situational factors as well as the process of the proposed model are then described.
Third, the academic and managerial implications of the proposed model are discussed.
Finally, the limitations of the proposed model are presented.

Schwartz, M.S. 2016. Ethical Decision-Making Theory: An Integrated Approach.
Journal of Business Ethics, 139(4), 755–776.


Ethical competence: empathy, personal values, and the personality in ethical decision-making
The objective of the present research was two-fold: (1) to provide a new definition of ethical competence, and (2) to clarify the influence of empathy, personal values, and the five-factor model of personality on ethical competence.

The present research provides a comprehensive overview about recent approaches and empirically explores the interconnections of these constructs. 366 German undergraduate students were examined in a cross-sectional study that investigated the relationship of empathy, personal values, and the five-factor model of personality with moral judgment competence and counterproductive work behaviour as indicators of moral judgment and behaviour.

The authors found self-transcendence values to be related to both, high levels of empathy and ethical competence, in contrast to self-enhancement values. Multiple mediation analysis revealed unique effects of empathy on ethical competence through values as mediators. Affective (but not cognitive) empathy transmitted its effect on ethical competence through benevolence, conformity, tradition, power, and hedonism. Most importantly, perspective taking lost its predictive power when investigated alongside affective empathy dimensions.

These results converge to an important role of affective empathy, in particular empathic concern, with regard to personal values and ethical competence. Furthermore, the five-factor model of personality explained variance in measures of ethical competence. This research suggests that organizational decision makers should consider the role of empathy, personal values, and the five-factor model in their human resource management in order to select employees with high ethical competence.

Rico Pohling, Danilo Bzdok, Monika Eigenstetter, Siegfried  Stumpf & Anja Strobel. 2016. What is Ethical Competence? The Role of Empathy, Personal Values, and the Five-Factor Model of Personality in Ethical Decision-Making.
Journal of Business Ethics, 137(3), 449-474.


How can a deontological decision lead to moral behaviour?
Deontology and utilitarianism are two competing principles that guide our moral judgment. Recently, deontology is thought to be intuitive and is based on an error-prone and biased approach, whereas utilitarianism is relatively reflective and a suitable framework for making decision.

In this research, the authors explored the relationship among moral identity, moral decision, and moral behaviour to see how a preference for the deontological solution can lead to moral behaviour.

In study 1, a Web-based survey demonstrated that when making decisions, individuals who viewed themselves as moral people preferred deontological ideals to the utilitarian framework.

In study 2, the authors investigated the effect of moral identity and moral decision on moral behaviour in an experimental study. The results showed that when deontology was coupled with the motivational power of moral identity, individuals were most likely to behave morally.

Xu, Z.X. & Ma, H.K. 2016. How Can a Deontological Decision Lead to Moral Behavior? The Moderating Role of Moral Identity.
Journal of Business Ethics, 137(3): 537-549.


Mental models and ethical decision making: the mediating role of sensemaking 
The relationship between mental models and ethical decision making (EDM), along with the mechanisms through which mental models affect EDM, are not well understood. Using the sensemaking approach to EDM, the authors empirically tested the relationship of mental models (or knowledge representations about an ethical situation) to EDM.

Participants were asked to depict their mental models in response to an ethics case to reveal their understanding of the ethical dilemma, and then provide a response, along with a rationale, to a different ethical problem. Findings indicated that complexity of respondents’ mental models was related to EDM, and that this relationship was mediated by sensemaking processes (i.e., cause and constraint criticality, and forecast quality). The implications of these findings for improving integrity training in organizations, as well as ultimately understanding the role of mental models in EDM, are discussed.

Bagdasarov, Z., Johnson, J.F., Macdougall, A.E. Et Al. 2016. Mental models and ethical decision making: the mediating role of sensemaking. 
Journal of Business Ethics, 138(1), 133–144.


Board composition and corporate social responsibility: the role of diversity, gender, strategy and decision making 
This paper aims to critically review the existing literature on the relationship between corporate governance, in particular board diversity, and both corporate social responsibility (CSR) and corporate social responsibility reporting (CSRR) and to suggest some important avenues for future research in this field. Assuming that both CSR and CSRR are outcomes of boards’ decisions, this paper proposes that examining boards’ decision making processes with regard to CSR would provide more insight into the link between board diversity and CSR.

Particularly, the paper stresses the importance of studies linking gender diversity and CSR decision making processes, which is quite rare in the existing literature. It also highlights the importance of more qualitative methods and longitudinal studies for the development of understanding of the diversity–CSR relationship.

Rao, K. & Tilt, C. 2016. Board Composition and Corporate Social Responsibility: The Role of Diversity, Gender, Strategy and Decision Making.
Journal of Business Ethics, 138(2), 327–347.


Code of ethics and compliance 
Ethical codes have been hailed as an explicit vehicle for achieving more sustainable and defensible organizational practice. Nonetheless, when legal compliance and corporate governance codes are conflated, codes can be used to define organizational interests ostentatiously by stipulating norms for employee ethics. Such codes have a largely cosmetic and insurance function, acting subtly and strategically to control organizational risk management and protection.

In this paper, Adelstein and Clegg conduct a genealogical discourse analysis of a representative code of ethics from an international corporation to understand how management frames expectations of compliance. Their contribution is to articulate the problems inherent in codes of ethics, and the authors make some recommendations to address these to benefit both an organization and its employees. In this way, the authors show how a code of ethics can provide a foundation for ethical sustainability, while addressing management intentions and employees’ ethical satisfaction.

Adelstein, J. & Clegg, S. 2016. Code of Ethics: A Stratified Vehicle for Compliance.
Journal of Business Ethics, 138(1), 53–66.