Why Are We Strangely Blind to Our Own Ethical Lapses?
How can an executive make a decision that not only harms others but is also inconsistent with his or her conscious beliefs and preferences? The answer lies in the concept of “bounded ethicality,” which describes the systematic and predictable psychological processes that lead people to engage in ethically dubious behaviours that are not even aligned with their own view of the world.
In this abbreviated video presentation, leading management theorist Max H. Bazerman discusses how to spot the phenomenon and what we can do to arrive at more morally coherent decisions. Bazerman delivered this Douglas G. Cunningham public lecture at Queen’s School of Business on March 19, 2013.
Bazerman is the Jesse Isidor Straus Professor of Business Administration at Harvard Business School. His research focuses on decision making, negotiation, and ethics. He is the author, co-author, or co-editor of 19 books and more than 200 research articles and chapters.
0:24 The development of the concept of bounded ethicality can be traced to the economist Herb Simon’s work in the 1970s on “bounded rationality” — the idea that while people want to act rationally, they are limited in doing so because of cognitive constraints. That led to ideas of “bounded willpower” (I shouldn’t eat that chocolate, I have to eat that chocolate) and “bounded self interest” (why he feel joy when something good happens to a loved one or when something bad happens to an enemy).
4:15 “Bounded awareness” refers to the ways in which we systematically and predictably act unethically without any intention of doing wrong. There are so-called implicit associations (how people act toward African Americans or gay men), and in-group and out-group biases (doing favours for people similar to yourself without realizing you are harming others).
11:12 Why don’t we recognize when people around us are acting unethically? We’re motivated to not notice: an example is the notion of auditor independence, “where the industry claims to offer a service that it is structured to not offer that very service. . . We allow firms to pick their auditor and to fire their auditor. We allow auditing firms to sell things other than auditing services, like consulting services, at higher profit margins. And we create career paths for auditors to move from auditing firms to the corporate client that they audited.”
15:40 We see wrong only after the bad outcome occurs. “We tend to reward on results, not process, and we tend to only blame people for bad behaviour when the outcome occurs.” One problem is that unethical behaviour can happen gradually over time with small missteps, making it easier to rationalize not doing anything.
19:12 Indirect blindness in judging unethical behaviour: “We tend not to hold people culpable when they do their dirty work to others.”
25:00 Bazerman discusses the case of a pharmaceutical company seeking to raise the price of a slow-moving cancer drug without creating a public relations nightmare. The company decided to license the drug to another firm that then raised the price, with the pharmaceutical company continuing to manufacture the product. Bazerman used this case as the basis of a psychology experiment to see how people weigh the ethics of such efforts to hide corporate behaviour.
29:40 Another Bazerman experiment showing that when the transparency of an unethical action becomes clearer, a more rational assessment of the situation is made. “Thinking about multiple options at a time, what’s called joint decision-making, leads to more reflective and more moral thought.”
32:45 Bazerman’s view of ethics education in business schools, which has boomed since the collapse of Enron in 2001. “We have no idea what to do about the few bad apples that may be in our community, but we know a lot about the 95 percent of the folks in our community who have every intention of being a pretty good person but happen to do bad things on a fairly regular basis. . . To the extent that we can identify these behaviours that people would want to avoid with more reflection, we have a fundamentally different direction [in education], a direction that’s more relevant to the vast community of our students.”
— Alan Morantz