Psychology

Decision-Making Processes on Ethical Issues: The Impact of a Social Contract Perspective
Author(s): Diana C. Robertson and William T. Ross, Jr.

Source: Business Ethics Quarterly, Vol. 5, No. 2, Social Contracts and Business Ethics (Apr.,
1995), pp. 213-240
Published by: Philosophy Documentation Center
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PROCESSES
DECISION-MAKING
THE
OF
IMPACT
Diana
A SOCIAL
C. Robertson
ON
CONTRACT
and William
ETHICAL
ISSUES:
PERSPECTIVE
T. Ross,
Jr.
Abstract: This paper develops a framework for examining decision making

about ethical issues and tests the applicability
of a social contract per?
we
spective.
Using two separate samples of students and salespeople,
tend to judge a po?
determine
that community members (salespeople)
tentially unethical act to constitute a violation of an implicit social con?
tract and non-community
members (students) do not. Also, consistent
with the emphasis
on context specificity of integrative social contracts
of ethicality for the
theory, situational variables influence perceptions
of individuals
community members, but do not affect the perceptions
outside the community. The study finds considerable
support for the use
of a social contractarian perspective
in the study of decision-making
proc?
esses about ethical issues.
of a social contract
purpose of this study is to test the applicability
The perspective
and
1994; Gauthier,
1982; Donaldson
Dunfee,
(Donaldson,
1986; Keeley, 1988) to decision making about ethical issues. We will build on
the fundamental
of social contract theory that community
norms and
proposition
the existence
of an implicit social contract within the community can be used to
establish
an understanding
We are interested
of ethical decision
and ethical
making processes
in discovering:
1) whether individuals judge a par?
ticular behavior to be a breach of a social contract; 2) whether this judgment
reduces the likelihood
of engaging in the behavior; and 3) whether individuals'
behavior.
are influenced
norms of ethical conduct.
judgments
by community
a decision-making
We develop
framework
and formulate hypotheses
how the nature of a potentially
unethical act interacts with situational
from the job context to influence the individual's
judgment
of
the act. Our interest in situational
factors is consistent
cality
contractarians'
on understanding
"context specificity"
emphasis
arising
about
factors
of the ethi?
with social
in order to
and
we
test the
Dunfee,
(Donaldson
1994). Further,
judgments
that
the
individual's
that
an
act
is
unethical
will
be
associ?
assumption
judgment
ated with a reduced likelihood
of engaging in the act. We use a scenario meth?
in which
of a sales situation
features
are
odology
among
salespeople
based
on
an
manipulated
experimental
design.
make
ethical
Integrative
Social
Contracts
Theory
Donaldson
(1982) has applied the concept of a social contract to business

and has been instrumental
in fostering social contract theory in
organizations
business ethics. More recently, Donaldson
and Dunfee (1994) have proposed a
?1995. Business Ethics Quarterly, Volume 5, Issue 2. ISSN 1052-150X. 0213-0240.

214
BUSINESS
ETHICS
QUARTERLY
social contracts
which "recognizes
ethical obligations
theory of integrative
based upon two levels of consent: first, to a theoretical
'macro' social contract
appealing to all rational contractors and second, by members of numerous localized communities
who consent to the terms of specific 'micro' real social con?
tracts" (p. 3). Consent to the macro social contract is to terms that recognize the
obligatory status of micro social contract norms. Our interest lies in the discov?
ery of whether individuals recognize the existence of micro social contracts, that
bound by local community norms. Further
is, whether they consider themselves
we are interested in the effect of the normative dimension of micro social con?
tracts on individuals'judgments
of the ethicality of an act.
ofa community is itself
Donaldson and Dunfee point out that the identification
self-circumas a "self-defined,
an empirical task. They describe "community"
scribed group of people who interact in the context of shared tasks, values or
norms of ethical behavior for them?
goals and who are capable of establishing
whose norms
selves" (p. 13, 1994). Individuals belong to multiple communities
may belong to
may be operant in any given situation. For example, salespeople
of their employing
the community
salespeople,
company, to that of professional
and Dunfee
and community
as well as to family, religious,
groups. Donaldson
contend that, for a community to exist, it must pass a self-awareness
test, that is,
with the group and view
members ofthe community "recognize their association
it as a source of obligatory ethical norms" (p. 27, 1994).
norms as a means
the importance of specifying
Richardson
(1990) discusses
that very general ethical norms, for
to resolve ethical problems,
suggesting
a presumption against lying, can be made more specific and
example, employing
thus more helpful in facing ethical issues. In a sales situation a specific norm
the benefits of the product being sold to the
might exist about never over-stating
so?
and Dunfee (1994) conclude that integrative
potential customer. Donaldson
cial contracts theory is useful in addressing ethical issues because it takes into
elements that other general ethical theories fail to
consideration
context-specific
that situ?
directs our expectation
include. Their emphasis on context specificity
ational factors will influence the judgment of an act as ethical or unethical.
Previous studies have attempted to determine the ways in which individuals
that an utili?
think about ethical issues. Fritzsche and Becker (1984) discovered
was
to
affected
of costs and benefits
tarian calculation
predominant
parties
processes of the marketing managers studied. Sub?
among the decision-making
jects were less likely to rely on theories of rights and theories of justice. Simi?
larly, Cohen, Pant and Sharp (1993) found heavy reliance on an utilitarian
dimen?
construct in their accounting-based
sample, as well as a relativist/justice
sion. Other studies have found some support for a social contractarian
perspec?
construct
1992;
(Hansen,
tive, along with a broad based ethical judgment
Robin and Dawson, 1991).
and Robin, 1990; Reidenbach,
Reidenbach
Impact
Decision-Making
of Situational
Factors
in Ethical
Decision
Making
Models
about ethical issues aspires to identify

An empirical model of decision-making
the factors that lead an individual to engage in an ethical or unethical act (Ferrell

ON ETHICAL
DECISION-MAKING
and Gresham,
ISSUES
215
Hunt and Vitell, 1986; Pervin, 1989; Stead, Worrell and

Stead, 1990; Trevino, 1986). Most of these models remain untested. Empirical
social scientists do not specify how people ought to act, but instead specify the
will act in a particular way. Empirical mod?
conditions
under which individuals
1985;
els are necessarily

at least implicitly,
conditional,
upon some normative frame?
work that can define ethical and unethical acts. By contrast, normative models
typically delineate a set of criteria by which an individual can judge if an action
is ethical or not (Cavanaugh,
and Moberg,
1981; Laczniak,
1983;
Velasquez
Williams and Murphy, 1990).
interEmpirical models of ethical decision making tend to be person-situation
or person
actionist models that acknowledge
the importance of both individual
factors of moral reasoning
as well as
and development,
variables,
including
characteristics
of the situation (organizational
and external factors),
and the
interaction
that takes place between individual
and situational
variables.
The
situational variables because we believe that too little
present study emphasizes
attention has been paid to the situationist perspective
and Pfeffer,
(Davis-Blake
We
of
in
also
the
situational
factors
1989).
recognize
importance
judging the
of
an
act
and
Dunfee, 1994).
(Donaldson
ethicality
Expected
Utility
A perspective
Theory
Based
Models
of Decision
Making.
in examining decision making on ethical issues is that of

1947). Under an ex?
expected
utility theory (Von Neumann and Morgenstern,
the tradeoffs
calculates,
pected utility model, an individual
perhaps implicitly,
involved in any decision. The individual will consider what the risks and poten?
useful
tial costs
and benefits of any decision are likely to be. Thus the model is appro?
for
decision making in which the risks associated
with making the wrong
priate
decision
are not negligible
(Shoemaker,
1982). Decision
making about ethical
issues involves
the possibility
of significant
gain or loss. At the extreme, an
individual
(and in this
may face a jail sentence for a decision to act unethically
as
that
loss
be
a
well).
example, illegally
Balancing
possible
may
possible gain
of large sums of money, acquired through an activity such as insider trading or
embezzlement.
Fritzsche and Becker (1983) found that a sample of marketing
in the dilemmas
ethically
posing serious conse?
in less risky situations" (p. 297).
some?
Expected utility theory is consistent with the argument that individuals
times behave unethically
in organizations
because they are subject to pressures
managers
quences
"would
act more
than they would
to perform (Baumhart, 1961; Brenner

1984). These pressures are believed
utilities
associated
with adherence
and Molander, 1977; Posner and Schmidt,

to result in utilities which outweigh
the
to the individuals'
ethical principles.
In other
words, the individual perceives that it "doesn't pay" to be ethical in her particu?
lar organization.
An example of the performance
pressures argument was the
behavior of Sears auto repair center employees
who recommended
and comautomobile
pleted unnecessary
repairs. One immediate
response to the revelation of the sales abuses was to eliminate
"commissions
and product-specific

216
BUSINESS
ETHICS
QUARTERLY
sales goals for auto center employees

nation wide" (Business
Week, 1992, p. 24),
that is to reduce the rewards associated
with selling more and the punishment
associated
with not selling enough.
A related theoretical
approach that is promising in ethical decision making is
that of prospect theory (Kahneman
and Tversky 1979). Prospect theory's pri?
contribution
to the expected utility model is the idea that decision alterna?
mary
tives are evaluated as gains or losses relative to a reference point determined by
the decision
point is an important part of the decision

who is
is made. For example,
an individual
be
to
a
different
can
use
reference
$20,000
currently earning
point to
expected
evaluate a job offer of $25,000 than will an individual now earning $30,000.
"frame"
This reference
maker.
under
which
and
Ambiguity
a decision
Uncertainty.
of ambiguity
about decision
making under conditions
the
of
are
also
to
ethical
decision
making.
tainty
appropriate
study
tion that individuals
perceive varying levels of ambiguity, and that
ambiguity they perceive affects their choices, has been confirmed
Theories
and uncer?
The contenthe level
of
in a number
1964; Curley, Yates and Abrams, 1986; Einhorn and Hogarth, 1986; Hogarth, 1986; Kahn and Sarin, 1988; MacCrimmon
and Larson, 1979; and Yates and Zukowski,
1976). In addition, Ellsberg (1961)
has demonstrated
that a large majority of subjects are ambiguity averse, tending
of ambiguity,
to ambiguous situations. Under conditions
to react conservatively
of studies
(Becker
bad outcomes
and Brownson
and good outcomes underweighted,

tend to be overweighted
in decision making (Einhorn and Hogarth, 1985).
lead?
ing to conservatism
Effects
of Situational
A number
on individual's
an individual's
of studies
Variables
on Ethical
have confirmed
Attitudes
that situational
and
variables
Behavior
have an effect
in regard to ethical issues. It is not only

adherence to ethical principles such as honesty, nor an inherent
the attitude held or the action
that determines
to act ethically,
attitudes
and behavior
predisposition
taken. Zey-Ferrell,
asso?
Weaver, and Ferrell (1979) found that an individual's
ciation with referent others who are unethical and the opportunity to engage in
and
unethical behavior both are associated with unethical behavior. Singhapakdi
on ethics, and
the effects of organizational
policies
(1990) examined
the impact of organizational
Fritzsche (1988) investigated
position and role of
the individual on decisions made. Robertson and Anderson (1993) looked at the
Vitell
effects
of organizational
under an outcome
rewards
and found that salespeople

oper?
(evaluated
solely on output, minimal
and controls
control system
under
were more likely to make unethical choices than salespeople
control system (evaluated on input, closely supervised).
that
In an experimental
setting, Hegarty and Sims (1978, 1979) demonstrated
of corporate codes of ethics reduced unethical decision behavior.
the existence
the impact of cor?
More recently, Laczniak and Inderrieden (1987) investigated
ating
supervision)
a behavioral
porate codes
of ethics on ethical
decision
making
in an in-basket

experiment.
An
DECISION-MAKING
ON ETHICAL
217
ISSUES
in-basket
experiment
requires the subject to play the role of a specific decision
in an organization
in responding
to a series of
(e.g., plant manager)
and
calls.
Laczniak
and
conclude
Inderrieden
memos, letters,
hypothetical
phone
that codes with sanctions attached are most effective
for impeding individuals'
choice of illegal behavior,
but not unethical
behavior that is legal. A more
maker
of conditions
specific
investigation
leading to decision
making about ethical
issues is provided by Trevino and Youngblood's
that found
(1990) experiment
that vicarious
for
reward
ethical
is
behavior
with
related
corporate
indirectly
ethical decision-making
behavior.
Relationship
Between
Ethical
Judgment
and Action
models tend to specify some relationship

between evalu?
Decision-making
ation of an act as ethical and likelihood
of engaging in the act (Ferrell, Gresham
and Fraedrich,
1989; Hunt and Vitell, 1986; Jones, 1991). However, the nature
of the relationship
between ethical judgment
and action has not been clearly
established
Blasi (1980) reviews a number of empirical studies and
empirically.
concludes
that there is a great deal of support for a relationship
between moral
and moral action, but qualifies
his conclusions
with the need for
judgment
ofthe processes bridging judgment and action. In an experimental
understanding
Brabeck
correlation between higher stages of
(1984) found considerable
study
moral reasoning
and the act of whistle blowing.
Weber and Green
Similarly,
between
(1991) report a statistically
significant
relationship
higher stages of
moral reasoning and ethical action.
Evidence
to the contrary is provided
by Forsyth and Berger's (1982) experi?

ment in which understanding
subjects' ethical ideology had no predictive ability
about whether or not the subjects could be induced to cheat. Previous research
had indicated
that a taxonomy
of ethical
was useful in predicting

ideologies
1980). Forsyth and Berger conclude,
judgments
(Forsyth,
"...ideology
of actual moral behavior"
may not be predictive
(p. 56). They do not speculate about what other variables may have significant
impact on actual moral
behavior.
moral
Fishbein
and Ajzen's (1975) theory of reasoned action hypothesizes

that be?
havior is determined by one's intention to perform the behavior which in turn is
determined both by attitude about the behavior and by subjective norm, i.e., the
social pressure to perform or not perform the behavior. This perceived
is
consistent with the social contractarian argument that specific ethical
pressure
norms govern the implicit social contract. Thus, predictions
about how likely
perceived
individuals
are to engage in a certain behavior cannot be based solely

of
the
individuals'
attitudes towards the behavior.
edge
Development
Our hypotheses
in Figure 1.
on knowl?
of Hypotheses
are based on a model of ethical
decision
making

demonstrated
218
BUSINESS
ETHICS
QUARTERLY
o
IZ
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o
UJ
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OZ
IQ.
LU
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cr
LU
o.
U_ ^
oz
jO
ujcn
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3

DECISION-MAKING
ON ETHICAL
219
ISSUES
is
the figure indicates that the process of judging an act's ethicality
Basically,
closely linked to the nature ofthe act itself on one side ofthe model and intention
of engaging in the act on the other side. Situational factors influence
norms.
and are in turn influenced
by awareness of community
The Act,
Judgment
One view
results
of ethical
of ethical
ment. However,
of Ethicality,
and
this process
Likelihood
1969, Rest 1979) is that the

making (Kohlberg
moral develop?
are
a
function
of
individuals'
making
decision
decision
are "issue con(1991) contends that all moral decisions

or moderating
tingent," i.e., that features of the issue itself act as independent
variables. Jones (1991) defines moral intensity as "a construct that captures the
extent
Jones
of issue-re\dXz<\
in a situation" (p.372,
moral imperatives
is entirely separate from individual or situational factors
in part on the normative arguments of philosophers.
is based not only on situational
Thus, the judgment of ethicality
dimension
1991). This
and is based
factors
and
of the person who is judging the act, but is also based on the
act itself. We present Hl as a basis for further reasoning.
Hl The nature of the act directly influences judgment of ethicality.
individual
factors
concerns the relationship

between the nature of the act
hypothesis
and the individual's
likelihood of engaging in it. Ferrell, Gresham, and Fraedrich
(1989) develop a model of ethical decision
making that includes five stages:
Our second
awareness
of ethical issues, cognitions

or moral development,
moral evaluor intentions,
and actions. According
to their model, fea?
ations, determination
tures ofthe organizational
and role-set
culture, including differential association
and
"individual
moderators"
factors,
(characteristics),
configuration,
opportunity
all have an effect on both moral evaluations
and intentions.
other
Similarly,
models include the step of moral evaluation
or ethical judg?
decision-making
ment as a predecessor
to action (Hunt and Vitell, 1986; Jones, 1991).
We expect the nature of the act to have an influence
on the likelihood
only
through the individual's
judgment ofthe ethicality ofthe act. In other words, we
expect perception of the ethicality of the act to mediate
the act itself and likelihood
of engaging in the act.
the relationship
between
H2 Controlling for judgment of ethicality, the nature of the act does not directly
influence likelihood.
Next we expect judgment of ethicality to have a direct effect on the likelihood
of engaging in the act, i.e., if an individual judges an act to be ethical, he or she
will be more likely to engage in it. Although to our knowledge
this relationship
has not been tested directly in business ethics research, our hypothesis
is based
on the perceptual deterrence literature found in the field of criminology
(Paterwho be?
noster, 1989; Tittle, 1980). This literature suggests that an individual
lieves that an act is a crime will be less likely to engage in the act. Although we
do not expect complete overlap between judgment of ethicality and behavioral
intention, we do believe that the two will be highly
H3 Judgment of ethicality influences likelihood.
correlated.

220
BUSINESS
ETHICS
QUARTERLY
We expect direct effects of situational factors on both the judgment of ethical?

of engaging in the act. Moreover, we expect moderating
ity and the likelihood
effects of situational
factors on the relationships
between the act and the judg?
ment of ethicality and between the judgment of ethicality and the likelihood
of
in the act. This expectation
is represented
in our model by the box
engaging
labeled "Situational
Factors" with arrows indicating the effects of these factors
on the judgment of an act, as well as intention to engage in the act.
In line with expected utility theory we suggest that subjects will be likely to
calculate
at least implicitly
the costs and benefits to themselves
of engaging in
in
the
scenarios.
Thus
of
the
present
judgment
ethicality of an act
the behaviors
can be altered
and by the
by the size of the potential reward to the individual
of
the
the
individual's
act.
probability
getting caught performing
one of the salesperson's
Using prospect theory the present study considers
to be annual sales quota (Ross, 1991) and the question of how
is to meeting that quota. We also test decision
close the salesperson
making
under conditions
of ambiguity by investigating
about
the impact of ambiguity
the probability of getting caught on an individual's
likelihood of engaging in the
reference
points
act. The assumption

is that individuals
who are uncertain about whether or not
and will
bad outcomes
they will be caught will tend to overweight
possible
behave more conservatively,
i.e., ethically.
Thus, we propose the following
hypothesis:
H4 Situational factors (size of the potential order, position against quota, prob?
ability of getting caught, and ambiguity about probability of getting caught)
will:
a) directly influence judgment of ethicality, but
b) indirectly influence likelihood of engaging in the act.
Awareness
of Community
Norms
For the most part, previous decision-making

with social contracts and the role that a social
models
have not explicitly
dealt
may play in
perspective
whether an act is ethical and deciding
an individual's
process of evaluating
is Jones (1991) who includes a
whether to engage in the act. The exception
"social consensus" dimension as one of six that determine moral intensity. Social
consensus
is defined
contract
as the degree of social agreement that an act is good or evil.

consensus is to reduce the degree of moral ambiguity for
One function
of social
the individual
decision
to be based on a social
maker. Thus, Jones'
social
construct appears
such as that of Ferrell
making a moral judg?
consensus
Other models
contract
perspective.
(1985) include the process of the individual
ment, but do not specify a contractarian basis for that judgment.
know the ethical norms of their own com?
is that individuals
Our assumption
about
when making decisions
munities and take those norms into consideration
in our model by the box labeled "Awareness
ethical issues. This is represented
to lead to
in a given community
Norms." We expect membership
of Community
and thus to
norms to evaluate ethical situations
the use of that community's
and Gresham
affect
all of the relationships
described
above.

DECISION-MAKING
ON ETHICAL
ISSUES
221
is that in groups with well-formulated

our expectation
norms of
Additionally,
a
is
more
to
be
rationalization
behavior,
process
likely
helpful in explaining
evaluations
of behavior
The assumption
as unethical.
is that without group
are more likely to rely on their
norms, individuals
making ethical evaluations
own personal ethical evaluation
of an act rather than taking situational
factors
into account. In other words, if I am an individual who is not part of a group with
established
norms, I am more likely to make a decision about whether or not an
act is unethical by looking inward to my own set of moral standards, rather than
if I am part of the
by looking outward at features of the situation. Conversely,
group, I will use features of the situation surrounding the unethical act as clues
as to how ethical it is. For example, as a non-student
I may consider cheating on
an exam
to be a violation
of a principle of fairness. However, if I am a student

about
assessment
whether or not cheating is unethical,
I may be
making my
of
the
situation
as
such
how
is
and the
considering
aspects
prevalent cheating
attitudes of my fellow students concerning
to be
whether cheating is considered
acceptable.
We expect
that people in a community

will recognize the existence of a social
contract in evaluating
who are
a potentially
unethical act, but that individuals
not part of the community
will not. In fact, Donaldson
and Dunfee explicitly
state that students may not be an appropriate sample for studying integrative
social contracts theory because they "may not identify with the communities
to
which their attitudes are being projected, and, most importantly, they may lack
the extant norms in those communities"
knowledge
concerning
(p. 28, 1994).
Thus, we expect that students will be forced to see the decision more in cultural
terms rather than contractual terms because their inexperience
leads to a lack of
with contractual norms.
familiarity
We also anticipate that our subjects who lack knowledge
of norms about sales
will evaluate the two acts in the scenario differently from the salesper?
son subjects. Furthermore,
we expect students to make ethical judgments
based
on factors other than those presented
in the sales scenario.
This means that
students may have greater difficulty than salespeople
in differentiating
between
the degree of unethical behavior presented in the two different acts of giving a
gift and using a friendship. Because students are not familiar with the norms of
situations
sales situations,
between these two acts
they may not see the ethical distinction
that the salespeople
do.
Compared to subjects who are familiar with the norms of the community, sub?
jects who are not familiar with the norms of the community
H5 Will be less likely to base their likelihood of engaging in the act on contrac?
tual factors.
H6 Will be less likely to differentiate between the unethical nature of the two
acts.
A number of studies have examined the relationship
between age and ethical
behavior and generally
have concluded
that older individuals
tend to respond
more ethically to questions or scenarios posed (See, for example, Kelly, Ferrell
and Skinner, 1990; McDonald
and Zepp, 1988; Ruegger and King, 1992), al?
though some studies have been unable to establish a correlation between age and

222
BUSINESS
ETHICS
QUARTERLY
ethical
behavior (Fraedrich,
1993; Wahn, 1993). Overall these studies suggest
that our sample of students may give less ethical answers than the salesperson
sample. It can also be argued that older subjects are more likely to view the acts
as unethical (Serwinek,
1992). Hembroff (1987), for example, found that older
were
more
likely to judge criminal activities in a series of scenarios
respondents
to be "serious."
will be
is that the salespeople
However, a competing hypothesis
more likely to see the activities
as ethical because these are activities
that are
more familiar to them than they would be to marketing students. Weber (1991)
finds that individuals
in
tend to engage in higher stages of moral reasoning
situations
that are less familiar
to them than in situations
that are more familiar.
Method
ma?
the hypotheses
presented above, we ran an experimentally
de?
and
We
two
of
students
task
subjects,
salespersons.
nipulated
using
groups
the
in
the
evaluated
which
a
sales
scenario
respondent
veloped
hypothetical
likelihood of engaging in a given behavior and then the ethicality ofthe behavior
To examine
in question. A number of factors were manipulated in the scenario: the ethicality

of the act in question, the size of the order to be gained by engaging in the act,
had made quota or not, the probability of getting caught,
whether the salesperson
with that probability.
and the ambiguity associated
Trevino (1992) argues that laboratory experiments
may be particularly fitting
because experiments
for the study of ethical decision making in organizations
variable or variables on the dependent
can test the effects of the independent
Trevino also sees advantages in
variable and eliminate competing explanations.
terms of reducing social desirability effects and in testing behaviors that may be
observed in field settings. Although our study does not conduct a
infrequently
we retain some of the advantages Trevino notes by util?
laboratory experiment,
izing the experimental approach with separate samples of salespersons and students
? the former surveyed in the field, the latter surveyed in classroom settings.
This study focuses on the decision-making
process in sales situations for three
first, and most importantly, because sales transactions are an exchange
of social contract
and thus an appropriate setting for the application
1978; Dwyer, Schurr and Oh, 1987; Gundlach and Murphy,
theory (Bagozzi,
are
because
and Gassenheimer,
salespeople
1987); secondly,
1993; Houston
that
activities
in
their
situations
face
to
independent
require
day-to-day
likely
decision
instantaneous
and sometimes
making; and third, because sales situ?
reasons:
process
numerous ethical issues, such as giving preferential treatment

ations encompass
to certain customers,
quotations, providing
seeking information on competitors'
to a customer, using "hard sell" tactics, and selling
gifts and free entertainment
a product that has little or no value to customers (Bellizi and Hite, 1989; Dubin?
1987;
Jolson, Kotabe and Lim, 1991; Hite and Bellizi,
sky, 1985; Dubinsky,
the
with
of
The
and Anderson,
Robertson
honesty
complete
1993).
question
and
situation
in
sales
a
1983).
is always present
customer
Dubinsky,
(Levy
and often at some physical distance
tend to operate autonomously
Salespeople
from their sales managers,
and therefore
are required
to become

adept at making
DECISION-MAKING
ON ETHICAL
ISSUES
223
their own decisions
about how to make a sale. In addition, the salesperson

often
the needs of both employer and customer, needs that may well conflict.
The conflict can be compounded
by the salesperson's
compensation
system in
which incentives
to make the sale may outweigh other considerations
(as in the
Sears automotive
centers
repair
example).
answers
Samples
As noted
above, there were two samples, a student sample and a salesperson

The
student subjects were solicited from approximately
800 undergradu?
sample.
ate students (roughly equally divided among men and women) enrolled in an
introductory marketing course at a large, urban northeastern university. Subjects
had the option of completing
the survey as part of course activities but not for
course credit; 385 students completed
the survey, a response rate of approxi?
mately 48 percent.
The salesperson
sample was obtained from a mail questionnaire
survey which
was sent to approximately
3000 industrial field salespeople
and managers whose
names
were obtained
mailed
out, 367 were

were not undeliverable,
through a commercial
mailing list; of the questionnaires
returned as undeliverable.
Of those questionnaires
that
195 usable surveys were returned for a response rate of

7
approximately
percent; a number of other surveys were returned but were
unusable.
because the task is a manipulated
task, and
Fortunately,
judgment
because all of the conditions
were returned in sufficient
numbers to facilitate
our response rate, albeit a problem, is by no means as significant
a
estimation,
problem
as it would
be with a simple
opinion
survey.
Procedure
In both samples, subjects followed
a basically similar procedure. They were
to read the description
of a sales scenario and then to answer a series of
about how they would respond to the scenario. The student sample
questions
received the questionnaire
in one class period, responded to it at their conven?
asked
class period. The salesperson

ience, and returned it in the following
sample
received
the questionnaire
to it at their convenience,
and
by mail, responded
returned it via stamped, self-addressed
return envelope.
No follow-up
activities
were conducted
with either sample.
Instrument
The instrument
asked to examine
was a paper and pencil questionnaire

in which the subject was
a hypothetical
selling scenario and then respond to a number
of questions
about the situation.
The selling situation was one in which the
subject took the role of a salesperson
engaged in attempting to win a sale. In that
role the salesperson
had to decide
or may not have been considered
whether
unethical act and other characteristics

across subjects and will be described
response
section,
subjects
or not to engage in an act which may

The exact nature of the potentially
of the selling situation were manipulated
in the next section. In the questionnaire's
unethical.
were first asked
about how likely

they would
be to
224
BUSINESS
ETHICS
QUARTERLY
engage in the act described in the scenario and second asked their beliefs about
the ethical dimensions
of the act described
in the scenario. A sample of the
instrument is included as Appendix A.
and
Manipulations
Sixteen
versions
of the sale.
fractional
Independent
Variables
of the sales scenario were generated by manipulating conditions

were manipulated,
each at two levels. A half-fraction
Five
factors
factorial
was used for the design to reduce the number of cells from
to
sixteen.
Because of the fractional factorial design, only main
thirty-two (25)
effects and two-factor interactions can be tested. The factors are discussed below.
unethical act. A difference
Our study includes two versions of the potentially
in perceived ethicality between the two acts is necessary to enable us to test the
considers cultivating
rest ofthe framework. Thus, in one version the salesperson
a purchasing agent's friendship and using appeals to friendship to gain an order.
In the second version the salesperson
considers giving an expensive
present to
the purchasing agent to gain an order. Our interest in choosing these two versions
of
on the dimension
is to ensure that the two acts will be evaluated differently
It is our expectation
that subjects will perceive
gift giving to be more
is based on the fact that gift
than using friendship.
This expectation
giving may be illegal (depending on state law), whereas cultivating friendship is
stated that the activity is a
legal. In both versions of the scenario it is explicitly
not attempting to make a
We
are
violation of the salesperson's
company policy.
of the two acts
statement about the normative basis upon which the ethicality
ethicality.
unethical
we recognize the importance of a normative framework

the normative dimension
of the acts, establishing
for evaluating
the ethicality
lies outside the scope of our study. Certainly, we do not consider compliance
behavior to be
basis for determining
a sufficient
with the law to constitute
would
be based.
While
ethical; our study is concerned only with the perception of ethicality.

The expectation
that gift giving would be perceived to be more unethical than
was tested in a pilot study in which 40 student subjects
cultivating
friendship
Each
subject saw only one of the two acts and rated it with respect
participated.
As ex?
In the pilot, only the act was manipulated.
of ethicality.
to dimensions
seen
as
was
to
the
a
signifi?
statistically
agent
purchasing
gift
pected, giving
of the purchasing
the friendship
than was cultivating
cantly more unethical
the extent to
to
influence
was
this
difference
Recall
that
hypothesized
agent.
which subjects were willing to perform the act in question.
The second factor was size of the potential order. The size of the order was
in one version and $40,000 in the other. The third factor, the salesper?
$100,000
son's quota and sales to date towards attaining that quota, also had two levels.
For the first level, the subject had already attained quota; for the second level,
the subject had sold nothing during the period. The order size manipulation
necessitates
that the quota level differ across those two conditions.
Thus, in the
as
or $40,000 order conditions,
$100,000
quota already met was operationalized
in
that
or
of
the
attained
the salesperson
$40,000
$100,000
quota
having already
having sold nothing against the
period, and quota not met as the salesperson
quota of $100,000
or $40,000
in the period.

DECISION-MAKING
The fourth
factor
both versions
is the likelihood
of the sales
scenario,
ON ETHICAL
ISSUES
of getting caught in the unethical

it is made clear that the unethical
225
act. In
act is
is caught,
against the salesperson's
company policy and that, if the salesperson
the order will be canceled and given instead to the salesperson's
competitor. One
level of the probability
of getting caught factor is stated to be 40%; the other is
20%. The fifth factor is ambiguity about the probability of getting caught. This
is operationalized
the probabilities
that
either as point estimates,
by specifying
is with no ambiguity,
or as ranges, that is with ambiguity.
In one ambiguous
of getting caught was stated as 25%-55% (instead of
version, the probability
40% in the unambiguous
In the other ambiguous
version, it was
condition).
5%-35% (instead of 20% in the unambiguous
condition).
Dependent
Variables
The first dependent

variable is the subject's belief that the act is ethical or
This judgment is measured in a series of eight items forming a scale
and Robin (1990). The scale was developed
from
developed
by Reidenbach
normative moral philosophy, and it identifies five major dimensions to the "ethicalunethical.
unethical" construct: justice, relativism,

egoism, utilitarian, and deontological.
The original scale consisted of 33 items and was later refined to an eight-item
instrument that can be reduced to three factors: a moral equity dimension
comof the items, "fair," "just," "morally acceptable,"
and "acceptable
to my
a
relativist
factor
the
and
items,
family;"
containing
"culturally
acceptable,"
and
a
social
contract
dimension
of
the
"traditionally
acceptable;"
consisting
"does
not
violate
an
and
"does not violate an unwrit?
items,
unspoken promise,"
ten contract" (Reidenbach
and Robin, 1990). The study's assessment
of the
prised
importance ofthe social contract dimension

Other studies have utilized the Reidenbach
have
is consistent
with our approach.

and Robin scale and in some cases
validated
and extended it (Cohen, Pant and Sharp, 1993; Hansen, 1992;

Robin
and Dawson, 1991; Tsalikis and Nwachukwu,
Reidenbach,
1989; Tsalikis
and Nwachukwu,
1991). For example, Hansen (1992) used the original 33-item
scale with a sample of marketing students and his study confirmed the relevance
contractarian
ethical judgment
dimension,
finding a broad-based
construct and a social contract construct. In addition, his results suggest that two
of the social
other constructs
are important?deontological
judgment and teleological
judg?
ment. It is important to note that the Reidenbach
and Robin scale is not without
Reidenbach
and Robin (1993) have responded to issues raised by
controversy.
Hansen (1992), and Skipper and Hyman (1993) identify a number of points about
the scale that they consider problematic.
The difficulties
have to do with what
the scale
is actually measuring,
the consistency
of the semantic
differential
the
omission of other important ethical rationales, and the scale's use by
items,
managers. Of these only the first is relevant to the present study.
a number of
Skipper and Hyman argue that the scale could be measuring
different dimensions:
ethical opinions, the intensity of those opinions, the norms
used to justify those opinions,
the issues most salient in given scenarios,
the

226
BUSINESS
ETHICS
QUARTERLY
people apply a certain norm to a certain issue, and the level of comprepeople have about the ethics of a scenario. This criticism seems appro?
priate only when a study does not make it very clear exactly what it is measuring.
of
That is not the case in the present study. We are measuring the propensity
respondents to consider unspoken promises and implicit contracts in their ethical
decision making. We agree with Skipper and Hyman that no opinion survey can
determine if an act is ethical or unethical; however, an opinion survey can tell us
reasons
hension
if people consider
an act to be ethical
the Reidenbach
and Robin scale.
The second
act depicted
hood scales
dependent
in the sales
variable
scenario.
or unethical;
is the subject's
This construct
surely this is the purpose

likelihood
is measured
of
of engaging in the
using two likeli?
scale is a seven
scale. The first likelihood
and a single confidence
scale anchored by 1 labeled "not at all likely" and 7 labeled "ex?
scale requires an estimate ranging from
tremely likely." The second likelihood
0% to 100% ofthe probability that the subject would engage in the unethical act.
Finally, a seven point Likert scale is included on which the subject is asked to
point Likert
she is of the likelihood response given. The anchors for that

scale are 1, labeled "not at all confident," and 7 labeled "very confident." There
were no significant differences in subjects' responses to the confidence scale.
Our approach is similar to that of Trevino and Youngblood
(1990) who present
a model of ethical decision making that asks subjects not only what they would
but also
with an ethical issue in an in-basket experiment,
do when confronted
Trevino
decision.
of
their
correctness
felt
to
the
how strongly committed
they
di?
"normative-affective
the
this
that
and Youngblood
captures
question
argue
is
mension" of Etzioni (1988). However, it is not obvious that the commitment
In our study we
of their decision.
or appropriateness
to the moral correctness
of ethicality.
examine the dimension of individuals'judgments
explicitly
indicate how confident
Results
and the
general linear model based analyses of the salesperson
factors
situational
the
act
and
well
how
to
examine
predict
i)
samples
of
well
the
how
act
the
and
of
of
the
ethicality
ii)
judged
ethicality
judgments
the act, the nature of the act, and other situational factors predict the likelihood
related to how the
in the act. We then examine the hypotheses
of engaging
ideas. We
on
contractarian
based
differ
should
and
student
samples
salesperson
of these results.
end this section by examining the implications
We use separate
student
Judgment
of Ethicality
A factor analysis ofthe ethics scale items indicated that a three factor solution
the eight items were collapsed into three
was the most appropriate. Accordingly,
This result was identical to what
scales for the remainder of these analyses.
found.
Reidenbach and Robin (1990)
Following Reidenbach and Robin, we label
cultural
the three scales general ethicality,
ethicality, and contractual ethicality.
coefficient
had
scales
three
All
alphas greater than .7, the cutoff Nunnally (1978)
Results of this scale analysis are available
of
research.
kind
this
for
suggests
from the authors upon request.

DECISION-MAKING
ON ETHICAL
ISSUES
227
of
Table 1 shows the results of our analysis of what influences
judgments
In both samples, the act itself had a statistically
efffect in
ethicality.
significant
the hypothesized
direction on the perception of ethicality. Both samples are very
clear that it is the act itself that has the greatest impact on their judgment of its
nature as ethical. The most significant
differences
obtained in judged ethicality
were between the two versions ofthe act itself, cultivating
friendship and giving
a gift. Thus, Hypothesis
1 is supported, and the remainder of our framework can
be examined.
o o
o o o o o
o o o o
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oS
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o o o o
u u
? o o o o
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s o
u u
ONOs(N O C^
VO(N rn wnvO
? ? ? ? ?
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o o ? o
^ s
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t,s-f 3
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8
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228
BUSINESS
ETHICS
QUARTERLY
Recall that we proposed that manipulation of situational variables would change

respondents' judgments of the ethical nature of the act. In other words, variables
such as order size can be expected to influence the degree to which respondents
thought that it might be ethical to engage in the behavior.
The results in Table 1 answer the question in the positive for the salesperson
sample for all three ethicality scales and in the negative for the student sample, again
for all three ethicality scales. For the salesperson sample, the interaction of at least
one situational factor with the act is statistically significant for each of the three
ethicality scales. For example, for the contractual ethicality scale, if the salesperson
has made quota, then engaging in the more unethical act is seen as even less ethical.
On the other hand, manipulation of the situational variables does not alter percep?
tions about the ethical nature of the act for the students. Thus, Hypothesis 4a is
supported only for the salesperson sample, an effect we will discuss further in the
next section.
Likelihood
of Engaging
in the Act
Table 2 shows the results of our analysis of what influences likelihood. As hy?
pothesized, for both samples, at least two of the judgment of ethicality scales have
a statistically significant effect on the likelihood of engaging in a given act. Thus,
of
3 is supported. We examine the specific results in our discussion
Hypothesis
5.
Hypothesis
Likelihood
of Performing
Table 2
Act, General
Linear
Model
Results
Note 1: Coefficients marked with a single asterisk are statistically significantly different
from zero at probability < .10; those marked with two asterisks are statistically significantly
different from zero at probability < .05.

ON ETHICAL
DECISION-MAKING
ISSUES
229
of engaging
In addition, situational variables have an effect on the likelihood
that size of the order
in the behavior in both samples. We had hypothesized
of getting caught
(large), position
against quota (not yet made), probability
of
the
about
and
(small),
probability
getting caught (large), would all
ambiguity
of engaging in the behavior. Table 2 shows the results of
a general linear models analysis for the two samples. For the salespeople,
only
variables has significant
effects; with greater
ambiguity
among the situational
the likelihood
of engaging in the act is reduced. For the students, a
ambiguity
increase
the likelihood
of getting
variables, the size of order, the probability
had
effect
on
likelihood
had
been
the
made,
expected
caught,
quota
4b is supported.
of engaging in the behavior. Thus, Hypothesis
friend?
Table 2 also shows that the act itself (either gift giving or cultivating
number
of the situational
and whether
of engaging in the behavior for the salesperson

ship) does affect the likelihood
with
Jones' (1991) moral intensity argument. How?
a
sample,
finding compatible
2 is only
ever this effect is not present for the student sample. Hypothesis
student
and
the sales?
difference
between
the
The
sample
marginally supported.
be?
person sample aligns with the predicted student difficulty in distinguishing
tween the ethical nature of the two acts. For the students it is primarily the
in the act;
of ethicality
that influences
their likelihood
of engaging
judgment
since they tend to view both behaviors as more ethical than do the salespeople,
and since the ethical
it is not surprising
Students
versus
distinction
the two acts is blurred for the students,

does not affect likelihood.
between
that the act itself

Salespersons
In this section, we examine the differences

and stu?
between the salesperson
are
based
on
a
contractarian
under?
dent samples. Recall that these hypotheses
5 which specifies
We turn first to Hypothesis
standing of the role of salespersons.
that judgment of ethicality will influence the likelihood
For students as compared to salespersons,
because of the differing awareness of
the norms
of selling, we hypothesized
contractual
would have less
ethicality
on the likelihood
of engaging in the act. Examination
of Table 2 supports
has
this hypothesis
entirely. For both samples, the general ethicality dimension
effect
a significant
of engaging in the act. For the salesperson
effect on the likelihood
the
contractual
dimension
is also significant,
but the cultural
sample,
ethicality
dimension
is
not
For
the
student
ethicality
statistically
significant.
sample, the
results are precisely
is not
the reverse. The contractual
dimension
ethicality
but the cultural ethicality
dimension
statistically
significant,
5 is supported by these data.
Clearly, Hypothesis
Table 3 shows
the results
for the remaining
contractarian
Hypothesis
6.

is significant.
hypothesis,
230
BUSINESS
ETHICS
Table
Students
versus
QUARTERLY
3
Salespeople,
General
Results
Notes: 1. Measured as the sum of the three 1 to 7 Likert scales with larger numbers
indicating more ethical
2.Measured on a 1 to 7 Likert scale with larger numbers indicating more likely
to engage in the act.
3.Means with the same superscripted letter are statistically significantly differ?
ent from each other at the probability <.05 level according to a t-test for
differences between two means.
for simplic?
more
significantly
likely to
=
10.20 versus
see the gift giving action as more ethical than do salespeople
(M
and the argument that
M = 8.65, p < .02). This is consistent with our hypothesis
individuals who are not familiar with the norms ofthe sales community tend to give
For this analysis, we have summed the three judged
ity. Our results indicate that students are statistically
ethicality
scales
less ethical responses. However, they are not more likely to view using a friendship
as more ethical than do salespersons
(M = 12.63 versus M = 13.68, p < .20). Our
and Rudelius (1980) who report that
those of Dubinsky
findings corroborate
students consider giving gifts to a purchasing agent to be less ethically troubleand Rudelius suggest that more tangible
than do salespeople.
Dubinsky
consistent
a speculation
are more ethically troubling to salespeople,
with the context specificity
of integrative social contracts theory.
of engaging in the act, students are more likely to
With respect to likelihood
in
the gift giving version of the scenario than are
would
that
say
they
engage
= 1.50, P < .0001) but not the using friendship
=
M
2.90
versus
(M
salespeople
between judgments
scenario (M = 3.83 versus M = 4.25). Thus the relationship
some
situations

DECISION-MAKING
ON ETHICAL
ISSUES
231
to be close for the two samples. It should be noted that

across
the two samples assume no response bias in the sales?
statistical analyses
sample,
person sample. With the relatively low response rate for the salesperson
and likelihoods
seems
this assumption
must be made explicit.
between the two acts (P < .05 in
Finally, both samples are able to distinguish
both cases). However, the student results show less difference between the two
acts both in judged ethicality
(M = 2.40 versus M = 5.03, P < .05) and in
of engaging
in the act (M = 0.93 versus M = 2.75, P < .05). Sales?
likelihood
act than using
more unethical
and
less
are
friendship
likely to indicate
salespeople
intention to give a gift than to use friendship.
results
These
imply a clearer
to discriminate
with respect to the ethicality of acts than
ability for salespersons
for students, supportive
of Hypothesis
6 with respect to student inexperience
people
tend to view
to influence
giving a gift
a purchase,
as a much
with norms in the selling domain.

These results support a social contractarian perspective
we demonstrate
that community
members tend to judge
in several
a potentially
ways. First,
unethical
mem?
of an implicit social contract and that non-community
bers do not. We argue that salespeople
as described by
constitute a community
Donaldson
and Dunfee (1994) and that students who are not part of that commu?
cannot
be expected to perceive and understand its ethical norms. Secondly,
nity
act to be a breach
members do not make the same distinctions

between the two
non-community
unethical acts that community
members make. Third, as hypothe?
potentially
sized, situational variables influence the judgment of ethicality for those who are
but are not germane to the ethical judgments
of those
part of the community,
individuals
outside the community.
Finally, our findings indicate that judgment
of an act as a breach of a social contract is significantly
linked to reduction in
likelihood
Limitations
and
Research
Implications
Potential
limitations ofthe study should be noted. First, our study is concerned

with
of ethical and unethical behavior and is unable to draw any
only
perceptions
conclusions
about what constitutes
ethical behavior. Secondly, social desirabil?
research in the area of individuals'
ity bias is always a factor in conducting
attitudes and behavioral intentions about ethical issues (Randall and Fernandes,
between the student and sales?
1991). It is possible that some ofthe differences
person samples are attributable to greater social desirability
response on the part
of the salespeople.
On the other hand, a more likely effect of social desirability
is simply to diminish the likelihood
of engaging
in the unethical act for both
samples. Finally, because ofthe moderate difference in methodologies
employed
with our two samples, (mail questionnaire
to the salespeople
versus the student
in-class questionnaire),
of
questions remain about the complete comparability
the findings.
Our low response rate among the salesperson
also
sample may
contribute to the issue of comparability.
Our demonstration
of the importance of a social contract perspective
suggests
a number of avenues of exploration
for future research. Future empirical models

232
BUSINESS
ETHICS
QUARTERLY
of decision
making about ethical issues should consider the inclusion of a con?

dimension
in addition to the theories of rights and duties, justice, and
utilitarianism
that have been advanced in previous models. Further testing of the
salience of the contractarian perspective
among different samples is also needed.
tractarian
In particular, investigation
of communities
such as professional
communities,
e.g., accountants;
corporate communities,
e.g, the sales and marketing division
of a large company; and reference communities,
e.g., feminists, would contrib?
ute to our understanding
of possible group differences
in the importance of the
contractarian
We believe that the communitarian
model holds sig?
perspective.
nificant
of corporate ethics.
promise for the practical examination
The community
exert
considerable
influence
on the individual
in the
may
about
ethical
issues.
One
avenue
of
future
research
on
decision-making
process
business ethics could consider the group as the unit of analysis and focus on
instances in which the group norm may be said to influence individual judgments
about what is ethical. In particular, there are numerous possibilities
for further
research on the question of the formation of a community
and of community
norms. Donaldson
and Dunfee (1994) suggest that in some instances norms may
across
industries
so that it would be possible to investigate
the salesperson
vary
norms specific to a particular industry.
The individual's
of membership
in the community
is a critical
acceptance
but
one
that
was
the
of
the
dimension,
beyond
scope
present study. Our findings
are aware of community
norms. However, community
suggest that individuals
is complicated
from a theoretical
and an empirical
membership
perspective.
There may be cases in which a person does not wish to be a part of the commu?
who does not wish to be thought of as a "typical
nity, e.g., the salesperson
or conversely,
the marketing service representative
who accepts
salesperson,"
the normative
self
standards
of the salesperson
but never thinks of her?
community
The relationship
between an individual's
of
perception
and acceptance
of community
norms could be investi?
membership
as a salesperson.
community
gated.
Another
issue is that of membership

in multiple communities
and
interesting
this
us
have.
Let
assume
that
a
is
an
accountant
pulls
might
person
for a somewhat crooked real estate firm. Accountants
as a group ascribe to tough
the various
ethical
cut
standards; members of a crooked real estate firm may habitually
corners. Which community's
ethics win out? Or is there a predictable
of different communities'
ethical norms?
mixing function for the utilization
Does one set of ethics win out in one set of circumstances
and the other in other
or even across time in the same set of circumstances?
The prior?
circumstances,
ethical
and Dunfee (1994) as well as theories of role

ity rules proposed by Donaldson
or
role
conflict
could
be useful in exploring these questions.
inconsistency
Our study also finds that non-community
members are more likely to engage
of
in the potentially
unethical act when they are "tempted" by the possibility
of
or
a
lower
a
of
making
probability
getting caught.
large sale,
making quota,
choose to engage in it.
They may judge the act to be unethical, but nevertheless
This appears to corroborate
studies that have shown younger, less
previous
experienced
individuals
to be more likely
to intend to act unethically.

However,
DECISION-MAKING
ON ETHICAL
233
ISSUES
this may also have implications

for social contract theory and the process of
norm formation within a community.
Students were selected because they were
context.
and were operating outside the community
not part of the community
Future research may further explore the process by which an individual judges
to engage in the act. It would be
an act to be unethical, yet indicates willingness
to see if they might
variables
useful to test the impact of other situational
referent
judgment of an act as ethical. For example, if an individual's
of its
that
evaluation
in
would
affect
the
individual's
the
act,
engage
to
or
would
that
fact
affect
some
individuals'
engage
only
willingness
ethicality,
influence
others
in the act?
Implications
for
Practitioners
The proliferation
of codes of ethics, the appointment of ethics
of ethics training programs attest to corporate
establishment
1988; Ethics Resource Center, 1990). Despite this
(Berenbeim,
their
are always effective
at achieving
clear that corporations
officers, and the

interest in ethics
interest,
it is not
in the
objectives
under the corpora?
Our findings suggest that situational variables

attached to making quota) may have a
(such as the importance
In addition, the organiza?
notable impact on the ethical behavior of employees.
tional culture or climate can be expected
to affect ethical behavior, and our
findings suggest that managers need to focus on the ethical norms that are part
area of ethics.
tion's
control
The social contractarian

is useful to the extent that
perspective
be
or
of
can
said
to
constitute
communities.
corporations
parts
corporations
Firms should pay attention to the effect of their structures and policies,
par?
chose a sales
We deliberately
ticularly on young, inexperienced
salespeople.
of that culture.
situation
because
performance,
and position
system in sales is typically tied very directly to

more so than in many other jobs. Because size of the order
of unethical behavior among
quota affect the likelihood
the incentive
perhaps
against
students, firms may need to examine their reward and compensations
systems for
which
their em?
to
be
the possible performance
they may
subjecting
pressures
and
who
Gatewood
Carroll
those
are
less
experienced.
especially
ployees,
of
have
framework
for
the
"ethical
a
(1991)
evaluating
proposed
performance"
Firms
heed
to
the
within
an
need
to
organization.
pay particular
employees
ethical behavior
design features on employee
organizational
(Stephens and Lewin, 1991).
In addition, implications
for the teaching of ethics in business schools can be
from the salesperson-student
is that
differences
drawn. One possible conclusion
impact
of their
members may have difficulty relating to hypothetical

non-community
depictions
of ethical issues in business. Students seem to be more likely to intend to engage
in the unethical
acts partially because they do not know what constitutes
an
unethical
sales practice. Thus, examples
used in the classroom
to talk about
ethics should have more relevance to a student setting, e.g., cheating, in order to
offer a realistic task for student moral reasoning. Also, our findings suggest that
perhaps students should be taught the ethical norms of the professional
group in
for
of
conduct.
codes
question,
example, by studying professional

234
BUSINESS
ETHICS
QUARTERLY
In conclusion,
our study finds considerable
support for the use of a social
in the study of decision making about ethical issues.
contractarian
perspective
Social contract theory promises to enhance our understanding
of how individu?
als judge what is ethical and decide whether to engage in a potentially
act. Decision
multi-faceted
making about ethical issues is a complex,
that warrants considerable
future investigation.

unethical
process
ON ETHICAL
DECISION-MAKING
ISSUES
235
A
Appendix
Instrument
Sample
You are a salesperson for the Xanthin company trying to win a large order, worth
$40,000 ($100,000) to your company, from the Quibic Company. Orders this big do not
come along more than about once a year. You earn 2% commission on sales until you
meet quota. Once you make quota, your commission is 4% on all of your sales. Your
quota is $40,000 ($100,000) for the current period, and you have sold $40,000 (or
$100,000) (nothing) to date.
You have heard that the purchasing agent for Quibic is considering your company's
product and that of your prime competitor EXOFF which makes a product that is comparable to your product. You have also heard through the grapevine that the purchasing
agent, who is an acquaintance, is significantly influenced by expensive presents from
sales people (is significantly influenced by appeals to friendship), although this practice
is against your company's policy. If you give the purchasing agent a present (If you
deliberately cultivate the purchasing agent's friendship), it is your considered judgment
that you will get the order.
You know that the purchasing director engages in a post mortem of purchases about
20% (40%) or (5% to 35%) (25% to 55%) of the time, If the director finds that if the
purchasing agent awarded the order to you because he received a gift (because you were
his friend), the order will be canceled, and will be given to your competitor, EXOFF.
1.
How likely would you be to give the purchasing agent an expensive present
(cultivate the purchasing agent's friendship)? Circle the appropriate number.
Not at all
Likely
2.
12
12
Fair
Very
Likely
Very
Confident
What is the range-between zero and one?of probability that you would
decide to give the purchasing agent an expensive gift?
Lowest Probability_to
4.
How confident are you of your response above? Circle the appropriate number.
Not at all
Confident
3.
Highest Probability_
Please give your beliefs about the action described in the scenario by circling
the appropriate number.
12
4
3
5
7
6
Unfair
Violates an unwritten contract 1
Does not violate an

unwritten contract
Traditionally
acceptable
12
Traditionally
unacceptable
Acceptable to
my family
12
Morally right
12
Not acceptable
tomy family
Not morally right
Not culturally
acceptable
Does not violate an

unspoken promise
Unjust
Culturally
12
acceptable
Violates an unspoken promise 1
Just
12

236
BUSINESS
ETHICS
QUARTERLY
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Decision-Making Processes on Ethical Issues: The Impact of a Social Contract Perspective

Author(s): Diana C. Robertson and William T. Ross, Jr.

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

Abstract: This paper develops a framework for examining decision making

(1982) has applied the concept of a social contract to business

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

about ethical issues aspires to identify

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

Hunt and Vitell, 1986; Pervin, 1989; Stead, Worrell and

els are necessarily

in examining decision making on ethical issues is that of

than they would

to perform (Baumhart, 1961; Brenner

and Molander, 1977; Posner and Schmidt,

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

sales goals for auto center employees

point is an important part of the decision

and good outcomes underweighted,

in regard to ethical issues. It is not only

and found that salespeople

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

models tend to specify some relationship

by Forsyth and Berger's (1982) experi?

was useful in predicting

and Ajzen's (1975) theory of reasoned action hypothesizes

are to engage in a certain behavior cannot be based solely

are based on a model of ethical

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

1969, Rest 1979) is that the

are "issue con(1991) contends that all moral decisions

concerns the relationship

of ethical issues, cognitions

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

We expect direct effects of situational factors on both the judgment of ethical?

act. The assumption

For the most part, previous decision-making

have not explicitly

as the degree of social agreement that an act is good or evil.

maker. Thus, Jones'

all of the relationships

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

is that in groups with well-formulated

of a principle of fairness. However, if I am a student

that people in a community

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

that are less familiar

to them than in situations

that are more familiar.

in question. A number of factors were manipulated in the scenario: the ethicality

numerous ethical issues, such as giving preferential treatment

This content downloaded from 135.245.192.10 on Fri, 21 Mar 2014 09:58:53 AM

their own decisions

about how to make a sale. In addition, the salesperson

above, there were two samples, a student sample and a salesperson

out, 367 were

195 usable surveys were returned for a response rate of

class period. The salesperson

was a paper and pencil questionnaire

unethical act and other characteristics

or not to engage in an act which may

were first asked

about how likely

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