ETHICAL DECISION-MAKING

DECISION-MAKING ON AN INTERNATIONAL CONTEXT

Programmed Decision: simple, routine matter for which a manager has an established decision rule.

Non-programmed: complex decision about an unexpected situation. Requires creative solution.

Decision-making Process

Source: http://tutor2u.net/business/marketing/buying_decision_process.asp

Models:

·      Rational: ideal, optimize outcome.

·      Bounded rationality: select the first alternative “good enough”

·      Garbage can: random, without system.

Mixed-motive situation: individual interest is in conflict with collective interest.

Ex: prisoner’s dilemma game. Unilateral or bilateral confession or non-confession?

Collectivism: social patter that consists of closely linked individuals who see themselves as parts of one or more collectives. Are more cooperative.

Individualism: individuals who view themselves as independents. No social influence.  

They distinguish between in-groups (common interests, long-term) and out-groups (disagreement).

ETHICAL BEHAVIOR AND INTERNATIONAL BUSINESS

Social responsibility: obligation of an organization to behave in ethical way in the social environment in which it operate.

In the global business environment there is a desire to balance global policies with specific norms of various cultural contexts. (Bartett and Ghoshal, 1998). Cultural differences affects individuals’ ethical reasoning.

Rest’s Model of Moral Action defines morality as an individual’s cognitive conception of what is good or right.

1.    Ethical reasoning process:

2.    Ethical sensitivity: identification of dilemma

3.    Prescriptive reasoning: evaluate ideal outcomes

4.    Deliberative reasoning: value assessment of his intention

5.    Ethical action

The understanding of considering the influence of culture in ethical reasoning is useful to transnational organizations in their development of values and standards, communication across cross-cultural context. Now a days there is a call for transnational organizations to create a global code of ethics that transcend the bounds of any culture but it is not a solution because processes and mechanisms will remain different.

What are the impacts of culture in terms of mixed-motive decision-making?

Individuals are located in two social patterns, collectivism and individualism. Cultures can be described like that as well. When a culture characterizes for being collectivism, they give priority to group goals, the alternatives chosen will be oriented to give the group benefits. They work better with others and they tend to be more cooperative than individualists. Individualists seek to fulfill their own interests within the decisions they made. When an organization faces individualism from the other party it becomes a challenge because is difficult to socially influence them and other challenge is that they present more cognitive dissonance because there inconsistencies between attitudes and behavior. If there is a difference of interests, there is going to be a difference of values as well. For example in the study of cooperation facing individualism a stranger can be seen as in-group in a foreigner land of both actors, while if they were located in one’s land the other will be seen as out-group. Culture affects individual decision-making through its influence on individual values and is a powerful predictor of cooperative behavior.

REFERENCES

1.    Ethical decision making in organizations. Sin Kit I. Class 2011

2.    Xiao-Ping Chen and Shu Li (2005) Cross-National Differences in Cooperative Decision-Making in Mixed-Motive Business Contexts: The Mediating Effect of Vertical and Horizontal Individualism. Journal of International Business Studies, Vol. 36, No. 6 (Nov, 2005), pp. 622-636

3.    Thorne, L & Bartholomew, S. (2002) The Socio-Cultural Embeddedness of Individuals’ Ethical Reasoning in Organizations (Cross-cultural Ethics) Journal of Business Ethics, Vol. 35, No. 1(Jan, 2002), pp. 1-142002), pp. 1-14