Whether we are dealing with business, global diplomacy, or family matters, we are all perplexed by the complexity of ethics in negotiation. This article introduces a simple, straightforward exercise that can lead to very meaningful discussions regarding ethics, negotiation tactics, and the ramifications and effectiveness of the implementation of those tactics and ethical decisions.

Recent high-profile scandals at Penn State, MF Global Holdings, Olympus and elsewhere raise questions about why organizations often fail to address significant internal problems that at best impede performance, and at worst could have devastating effects. In hindsight, especially to observers, it is clear what should have been done. But for employees, exposing such problems is more complicated than telling right from wrong, say experts at Wharton and elsewhere.

Companies can take a wide variety of approaches to how to discuss ethics but what actually works in guiding employees' ethical behavior. While working with different organizations over the last six year, Francesca Gino has observed approaches across the entire spectrum. Her research suggests that subtle changes can produce big differences in the ethical conduct of organizational members. Three findings seem particularly relevant, and they identify some effective practices regarding how to communicate about values that every manager can implement.

In a new study, HBS professors Francesca Gino and Joshua D. Margolis look at two ways that companies can encourage ethical behavior: the promotion of good deeds or the prevention of bad deeds. It turns out that employees tend to act more ethically when focused on what not to do. That can be problematic in firms where success is commonly framed in terms of advancement of positive outcomes rather than prevention of bad ones.

A story from Keith Yost, an MIT grad, about his relatively short experience working at BCG in Dubai as a management consultant. [Hat tip to Brad Feld]

If you've ever been part of a discussion on ethics, in school or elsewhere, chances are you didn't spend much time talking about your feelings. It's believed that to live ethically, we must engage our reason, which reins in the whims and follies of emotion. Ethics, then, is heavy on Spock and light on Sally Struthers. But what if unethical behavior is actually spurred, rather than prevented, by reason?

One of the root problems with business schools is that too many are infected with assumptions that reinforce and bring out the worst in human-beings. In particular, the logic and discipline of economics usually rules the roost at business schools.

Editor's Note: The comments add as much or more value as the article itself.

Aine Donovan discusses the responsibility of schools to teach ethics.

Editor's Note: the main article isn't that enlightening, but some of the numerous comments posted are.

Business literature is replete with stories of unethical behavior in executive suites and board rooms, yet everyone is potentially capable of falling into the same traps. With a little insight into the psychological traps that increase the probability that individuals will behave unethically, perhaps such behavior can be curbed. To date, the authors have delineated a total of 45 traps, including "Obedience to Authority," "Need for Closure," "The False Consensus Effect," "Lost in the Group," and "Self-Enhancement," and they fully expect more to be discovered.

In recovering from a crisis, ethical business practice and high performance aren’t opposed.

If your company quietly allows employees to break some rules with the tacit approval of management, that's a moral gray zone. And your company is not alone. When rules are broken but privileges are not abused, such unspoken pacts between workers and management can allow both to achieve their respective goals of expressing professional identity and sustaining efforts in positive ways, says HBS professor Michel Anteby. Q&A.

People routinely engage in dishonest acts without feeling guilty about their behavior. When and why does this occur? Across three studies, people justified their dishonest deeds through moral disengagement and exhibited motivated forgetting of information that might otherwise limit their dishonesty. Using hypothetical scenarios (Study 1) and real tasks involving the opportunity to cheat (Studies 2 and 3), we find that dishonest behavior increased moral disengagement and motivated forgetting of moral rules. Such changes did not occur in the case of honest behavior or consideration of the behavior of others. In addition, increasing moral saliency by having participants read or sign an honor code significantly reduced or eliminated unethical behavior. While dishonest behavior motivated moral leniency and led to strategic forgetting of moral rules, honest behavior motivated moral stringency and diligent recollection of moral rules.

Finance professors often get criticised by ethics professors because they tell their students that the goal of the firm is to maximise shareholder value. Financial scandals such as Enron, Tyco and others are regularly blamed on the excessive focus on shareholder value maximisation. Theo Vermaelen, Professor of Finance at INSEAD, says this critique is misplaced and reflects a lack of understanding of what we teach in finance courses.

The originator of multiple intelligence theory prescribes a code of ethics for business.

Too often, workers are evaluated based on results rather than on the quality of the decision. Given that most consequential business decisions involve some uncertainty, the upshot is that organizations wind up rewarding luck rather than wisdom. From a rational decision-making perspective, people's decisions should be evaluated based on the information the decision maker had available to him or her at the time, and not based on the ultimate results. This paper tests predictions about this effect, known as the outcome bias, in two studies in which participants were asked to consider various ethically questionable behaviors. Participants were also given information about the outcome of such behaviors and were asked to rate the ethicality of the described actions with or without the outcome information. The findings extend prior research in psychology and ethics. Key concepts include:

* The tendency demonstrated in these two studies might lead people to blame others too harshly for making sensible decisions that have unlucky outcomes.
* The outcome bias could also partly explain the slow reactions that people tend to have when they observe others' unethical behavior.
* It is worth trying to understand a decision maker's state of mind. Judging decisions based on their outcomes will wind up condemning too many unlucky people and acquitting too many scoundrels.

Ten contributors ask whether companies can have the same code of ethics wherever they operate.
- Alan Strudler
- Tim Ambler
- Marianne M Jennings
- Chris Marsden
- Daryl Koehn
- Knut J Ims
- Michael Hoffman and Robert E McNulty
- Ulrich Thielemann and Thorsten Busch

Despite the rash of corporate scandals and the resulting rush to address the problem by adding more laws and regulations, seemingly little attention has been paid to how the nature (not the substance) of rules may or may not affect ethical decision-making. Drawing on work in the law, ethics, management, psychology, and other social sciences, this paper explores how several characteristics of rules may interfere with the process of reaching and implementing ethical decisions. Such a relationship would have practical implications for regulatory policy and managers of organizations, and the article concludes by suggesting how regulations and corporate ethics programs should be able to improve the ethical culture of business and enhance the ethical decision-making skills of employees.

The state of ethics in America today is of grave concern to many people. Several members of the Graziadio faculty recently engaged in a hearty dialogue on ethics in America and about teaching ethics to students. Here is a compilation of some of their thoughts.

What type of employee becomes a whistleblower? What type of company culture promotes whistleblowers? How should the company respond once a whistleblower steps forward? Can a silent employee be just as damaging as an employee who speaks out? These are relevant questions with serious consequences in today's business climate.

When it comes to ethics in business, many accept that standards can not only be different from, but even lower than, ethics in everyday life. That should definitely not be so, argues this author. In fact, he says, a corporation's obligations to its stakeholders bind it to those stakeholders, in turn creating new and specific moral obligations.

That the terrain of decision making is mined with moral hazards has never been much in doubt. But the real question for executives is this: Just how can you make your conscience your guide? This author has suggestions and strong advice that, when taken, can help restore public confidence in business leaders.

Editor's Note: discusses the author's concept of teleopathy...

A review of previous evidence suggested that a substantial proportion of managers may be expected to bring serious harm to others in situations where they feel it is proper behavior for their role. Further evidence was provided by the Panalba role-playing study, where 79% of the groups selected a highly irresponsible decision and none chose the decision that was free of irresponsibility. These results were due to the pressure of the role rather than to differences among individuals; differences in irresponsibility were not related to nationality or to age.

The stakeholder role led to a reduction in irresponsibility. Instructions that a board member should represent all interest groups, along with the evidence on how these groups were affected, led to a reduction in irresponsibility as only 23% chose the highly irresponsible decision. Reductions also occurred when the interest groups were represented on the board of directors; 22% of these groups selected the highly irresponsible decision.

Editor's Note: very interesting paper!

ManyWorlds takes a look at the work of William Damon on ethics and morality in business. In particular, it examines the four dimensions of morality and three underlying ethics assumptions.

Decades after Milton Friedman framed the debate over the social responsibility of business with an article in the New York Times Magazine, the discussion continues. Should businesses concentrate on achieving socially desirable outcomes? Can business be guided by the rule of law when governments are sometimes corrupt? How does operating globally affect a company's behavior? These and other issues were the focus of one of the sessions during Stanford's 75th anniversary celebration in May 2000. The participants included business leader Bowen "Buzz" McCoy, Stanford Business School faculty members Kirk Hanson and David Brady, and Nobel economist Milton Friedman.

The goals of this article are to propose a free-market model of business ethics for firms of all sizes and types (by describing a past attempt to promote such a standard), to comment on the history of regulation and on the emergence and teachings of the discipline of "business ethics," and to argue that Friedman's perspective on corporate responsibility as outlined in 1970 and his subsequent position on corporate lobbying are counterproductive to the furtherance of such a free-market model among leaders of the business community.