Psychology and Business Ethics
David M. Messick
Psychology is the scientific study of human thought and action. An informal survey of several texts on business ethics suggests that Lawrence Kohlberg (1981) stands out from all other psychologists in his impact on this field. Kohlberg’s influence is also great in the study of moral psychology. But in business ethics, as in moral psychology, to focus on Kohlberg to the exclusion of others would seriously confine the ways in which psychological research illuminates the moral nature of humans generally and in business contexts specifically. We note, for in stance, that Kohlberg’s theory is developmental, internal, normative, and rule based. Following Piaget, Kohlberg proposes that humans undergo a fixed developmental sequence in the way they reason about moral issues. The sequence of stages is presumed to be invariant; people differ in the rate at which they progress through the stages; and people stop at different stages. Higher stages in the sequences are ‘‘better’’ than lower stages in that they represent more mature concepts of morality and justice. Morality, in Kohlberg’s theory, is a quality of mind, and it is a cognitive quality that characterizes one’s reasoning about moral dilemmas.
Kohlberg’s theory is, at best, an incomplete account of the psychology of human morality. For instance, it ignores the chasm that separates the way people reason about ethical dilemmas from the way they actually behave therein. It downplays the role of the environment in deter mining behavior and tends to portray judgments as rule based rather than context based. It privileges some ethical principles to the exclusion of others (e.g., justice as opposed to caring). It has little room for the emotional side of morality, for moral outrage directed at violators, for instance, or for sympathy, pity, shame, or guilt. Finally, Kohlberg’s theory tells us little about how people perceive the causal texture of behavior that underlies judgments of praise and blame.
There is a voluminous research literature on a number of psychological issues that are relevant to business ethics. These include empathy and sympathy, altruism, cooperation, social influence, social conflict and its management, behavioral decision making, lying, aggression, social comparison, prejudice, discrimination and inter group relations, illusions and self deception, distributive justice, procedural justice, and risk perception and communication, to mention only a few. In this article, I will describe three of these areas. I have chosen the three areas for their pertinence to problems in business ethics. They are intergroup relations, social influence, and cooperation.
Intergroup Relations
As business becomes more global and the demo graphics of the labor force change, it becomes critical to understand the dynamics of inter group processes, especially those that occur in the minds of individuals. Recent social psycho logical research has made progress understanding the interrelated phenomena of prejudice, discrimination, ethnocentrism, and stereotyping (Fiske and Taylor, 1991). All of these phenomena involve reacting to persons on the basis of their group membership rather than on information about them as individuals. Stereotyping consists of responding to a person in terms of presumed qualities of the group to which the person belongs – women, African Americans, Italians, Jews, or men, for instance. The content of stereotypes for all of those groups will generally be different, but the ways in which stereo typical information seeps into judgments and decisions about people will be the same. Ethno centrism, on the other hand, refers to the dis tinction that we draw between ‘‘us’’ and ‘‘them.’’ Recent work on the cognitive underpinnings of ethnocentrism suggests that we see and react to ‘‘outgroups’’ differently from ingroups even though the classification into ingroups and out groups is not stable. At this moment an ingroup can be your gender and the next it can be your country or your firm.
The ways in which stereotypes and ethnocentric views of outgroups work are subtle, especially in a time in which discrimination and bias are viewed as unacceptable and indeed illegal in many contexts. Managers know that it is illegal to deny a promotion to an employee because the person is a woman or a Catholic. However, that does not mean the effects of stereotypes are non existent. The use of stereotypical information is especially likely in a couple of circumstances. First, when the person is the only or one of just a few of the type, he or she is especially likely to be responded to stereotypically. A black employee who is the only black in the office will have her ‘‘blackness’’ highlighted more than if there were many other black employees. Thus the first person of ‘‘their’’ type to move into a position in a firm can expect to be labeled with ‘‘their’’ stereotype. Second, stereotyping is likely to occur when the criteria for evaluation are vague, ambiguous, or subjective. Being ‘‘able to get along with people’’ is more vague and subjective than ‘‘generating $100,000 of business a month.’’ Stereotypes are more likely to influence the former than the latter judgment.
Like stereotypes, ethnocentric decisions or judgments are often subtle. A promotion is given to someone who is like ‘‘us’’ because one feels uncomfortable with ‘‘them.’’ There is good evidence (Brewer, 1979) that discrimination often works through a process of ingroup favor ability rather than through outgroup derogation. We make little exceptions to aid in groupers that we fail to make for out groupers. This is a plausible hypothesis to explain why blacks and His panics are denied home loans proportionally more often than white applicants. Even when ‘‘equated’’ for credit worthiness, minority applicants are refused more often than whites. The ingroup favorability idea suggests that the difference may be less a matter of qualified minorities being refused than of unqualified whites being granted loans. Racial, gender, or ethnic discrimination in business settings may well work through the subtle ways of favoring the ingroup (otherwise known as white males) rather than by derogating or harming the outgroup.
Social Influence
Most experimental psychologists place great weight on the environment as a cause of human behavior and this is nowhere more important than with the social environment. A line of research that was begun more than 50 years ago has demonstrated the importance of the social surround. Milgram’s (1974) disturbing experiments on obedience to authority demonstrated how incorrect people’s beliefs were (and prob ably still are) about how difficult it would be to induce one person to harm another merely through the urging of a legitimate authority. Milgram coaxed his subjects to deliver what they believed to be exceedingly painful and possibly fatal electric shocks to another participant. He noted that the single most important consequence of submitting one’s self to the legitimate authority is the loss of the sense of responsibility. The subordinate becomes a pawn with no sense of moral responsibility for the harm that he is inflicting.
Latane and Darley (1970) and others found a somewhat paradoxical effect of the social environment that they called the bystander effect. This phenomenon refers to the finding that people are less likely to intervene in an emergency to help another person if they witness the emergency with other bystanders than if they witness it alone. In other words, the bystanders inhibit people’s natural tendencies to come to the aid of a person in need. (It does not follow because each person in a group is less likely to help than they would be alone, that the victim is less likely to receive help when witnessed by a group. All it takes to get help is one volunteer.) This by stander effect has several causes. One is that we learn about the world by observing how other people respond to it. If we witness an emergency and see that no one else is doing anything, we may interpret the situation as one that does not merit intervention. A second cause may be that we (self servingly) diffuse our responsibility and assume that someone else will take care of the problem. If there are multiple witnesses then we cannot be personally blamed (either by ourselves or others) for doing nothing.
Social circumstances that foster poor decision making are profoundly unethical in that poor decision making will squander resources and put people in harm’s way. One syndrome of this sort has been described as groupthink (Janis, 1982). Groupthink is a pattern of group decision making that results when a group places undue emphasis on conforming to the culture of the group and spends too little of its resources on getting the decision right. Group think represents the disastrous implosion of conformity pressures whose features include illusions of invulnerability, illusions of the group’s morality (and the immorality of out groups), and a powerful tendency to censor group members who appear to disagree with the group. Such suffocating social climates interfere with the accurate processing of information, with the exploration of alternative courses of action, and with the thorough appraisal of the risks and benefits of the options. Janis has attributed some of the worst political decisions of this century to groupthink, decisions including the disastrous Bay of Pigs invasion and the failure to prepare for the Pearl Harbor attack.
Finally, Cialdini (1988) has written about the psychological processes that subtend the strategies and tactics that are used to influence people’s behavior. He identifies six principles of social influence that are manifested in business applications ranging from selling cars to soliciting contributions to charitable organizations. Cialdini discusses the ways in which these six principles (they are reciprocation, commitment, authority, social validation, scarcity, and liking) can be and are used to attain compliance with the influencer’s goals. One interesting aspect of these ideas is that they all stem from basic social psychological processes. Reciprocation, for instance, appears to be a universal feature of human social interaction. People tend to return favors and to reciprocate harm. Such a principle is one of the cornerstones of our social nature. This principle is exploited, however, when a charitable organization sends addressed mailing labels to prospective contributors. Sending an inexpensive gift like mailing labels evokes the reciprocal favor of returning a cash contribution. The tactic is used with the intention of generating money, not with the intention of maintaining the fabric of a social community. The question is raised: When are such tactics manipulative and improper and when are they acceptable?
Most psychologists would look to the social environment to explain unethical behavior in business and other organizations. Darley (1992) offers an extreme position that most evil is organizationally grounded.
Cooperation in Social Dilemmas
Social dilemmas are situations in which there is a conflict between what is good for a group and what is good for the individual. More precisely, they are situations in which each individual in a group has a clear incentive to behave in a way which, if engaged in by all, produces less desirable outcomes than would have been achieved if all members did what was not in their individual interest. To illustrate a social dilemma, the world’s fisheries are critically depleted, partly because each nation’s interests are best served by harvesting as much as possible from the sea. The collective consequence is overharvesting that is the fault of no single nation. Corruption exists in some organizations because it is in no individual’s interest to report it. However, the corruption will eventually stain everyone in the organization, including those who declined to report it, and the damage may be far worse than the cost of blowing the whistle. Inducing people to cooperate in such situations, to act against their individual short term interest to achieve individual and collective long term benefits, is at the heart of the problem of cooperation (Messick and Brewer, 1983; Komorita and Parks, 1994).
Psychological research on cooperation has focused on two interrelated strategies: changing the people or changing the structure. The first of these strategies attempts to promote cooperation by altering individuals’ values, motives, expectations, or trust in the others in the group. It has been shown that in some circumstances people are willing to act on behalf of their group when there are no possible individual interests to be served. One factor that is essential to developing that level of cohesion and trust is the ability of the members to communicate about the task. Communication allows promises to be made, intentions to be expressed, and a sense of com munity to develop. Communication also pro motes empathy and friendship among group members.
Communication among members is not feasible in many contexts. In cases where the group is too large, dispersed, or diffuse, structural solutions can be sought. Structural solutions may involve changing the payoffs to individuals to enhance the incentive to cooperate, for in stance. Appointing a single individual or agency to make decisions on behalf of the group, or changing the nature of the alternatives that the people have, are other types of structural changes. Regulation of one sort or another may be called for. Some states, for instance, require teachers to pay a ‘‘fee’’ even if they are not members of the public teachers union, to eliminate the incentive for teachers to free ride on the union dues of those teachers who are union members. Proposals for California citizens to install catalytic converters voluntarily were dismal failures because citizens could not justify the cost of more than $100 when the impact of their single acts on the quality of the air in California would be negligible. California state law now mandates that all cars have these pollution control devices. This is a good structural solution to a behavioral problem of cooperation.
Bibliography
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