Managerial Effectiveness and Business Ethics

Module 1:
Corporate Governance and Ethics
 Corporate governance and ethics are two interrelated concepts that play a crucial
role in shaping the behavior and decision-making processes within organizations.
 The relationship between corporate governance and the importance of ethics is
fundamental to maintaining transparency, accountability, and sustainable business
practices.
 Ethics is closely linked to transparency and accountability, two pillars of good
corporate governance.
 An ethically governed organization is more likely to provide accurate and transparent
information to stakeholders.
CORPORATE GOVERNANCE
• Corporate Governance refers to the way a corporation is governed.
• It is the technique by which firms are directed and managed.
• It means carrying the business as per the shareholders’ desires.
• It is the interaction between various participants in shaping corporation’s
performance and the way it is proceeding towards.
CORPORATE GOVERNANCE
• Corporate Governance is the
 application of best management practices,
 compliance of law in true letter and spirit and
 adherence to ethical standards for effective management and distribution of
wealth and discharge of social responsibility for sustainable development of
all stakeholders.
CORPORATE GOVERNANCE vs. MANAGEMENT
• “Corporate governance is different from management. Management runs the
enterprise. The board or governing body ensures that it is being run well and in the
right direction.”
• "If management is about running the business, governance is about seeing that it is
run properly." - Robert Ian Tricker
Corporate Governance - OECD definition
• CG is the system by which business corporations are directed and controlled.
• The CG structure specifies the distribution of rights and responsibilities among
different participants in the corporation, such as, the board, managers, shareholders
and other stakeholders and spells out the rules and procedures for making decisions
on corporate affairs.
 • By doing this, it also provides the structure through which the company objectives
are set, and the means of attaining those objectives and monitoring performance.
Corporate Governance
• Corporate governance
o refers to the relationship among different aspects, namely
 the board of directors, top management and shareholders in
determining the direction and performance of the corporation

Four P’s of Corporate Governance

• People
• Purpose
• Process
• Performance

Four Ps of Corporate Governance

People: This 'P' emphasizes the importance of the individuals involved in corporate
governance, including the board of directors, executives, and employees. The composition of
the board, their skills, independence, and diversity are crucial factors.
Purpose: Purpose refers to the overarching mission and goals of the company. Corporate
governance ensures that the company's purpose aligns with ethical standards and is focused
on creating long-term value for shareholders and stakeholders.
Processes: This 'P' involves the systems and procedures established to oversee and manage
the company. Governance processes include how decisions are made, how risk is assessed
and managed, and how accountability is maintained.
Practices: Performance in corporate governance relates to the company's overall success in
achieving its goals while adhering to ethical standards. The governance framework monitors
and evaluates the performance of the company against established benchmarks.

Why Corporate Governance?

• Better access to external finance
• Lower costs of capital – interest rates on loans
• Improved company performance – sustainability
• Higher firm valuation and share performance
• Reduced risk of corporate crisis and scandals
Principles of Corporate Governance
• Sustainable development of all stakeholders
o To ensure growth of all individuals associated with or effected by the
enterprise on sustainable basis
• Effective management and distribution of wealth
o To ensure that enterprise creates maximum wealth and judiciously uses the
wealth so created for providing maximum benefits to all stakeholders and
enhancing its wealth creation capabilities to maintain sustainability
• Discharge of social responsibility
o To ensure that enterprise is acceptable to the society in which it is functioning
• Application of best management practices
o To ensure excellence in functioning of enterprise and optimum creation of
wealth on sustainable basis
• Compliance to law in letter & spirit
o To ensure value enhancement for all stakeholders guaranteed by the law for
maintaining socio – economic balance
• Adherence to ethical standards
 o To ensure integrity, transparency, independence and accountability in
dealings with all stakeholders.

Four Pillars of Corporate Governance

• Accountability
–To ensure that management is accountable to the Board
–To ensure that the Board is accountable to the shareholders
• Fairness
–Protect shareholders’ right
–Treat all shareholders including minorities, equitably
–Provide effective redress for violations
• Transparency
– Ensure timely, accurate disclosure on all material matters, including the financial
situation, performance, ownership and corporate governance
• Independence
– Procedure and structures are in place so as to minimize, or avoid completely
conflicts of interest
– Independent Directors and Advisors, that is, free from the influence of others

Elements of Corporate Governance

• Good Board practices
• Control Environment
 • Transparent disclosure
• Well – defined shareholder rights
• Board commitment
Good Board Practices
• Clearly defined roles and authorities
• Duties and responsibilities of Directors understood
• Board is well structured
• Appropriate composition and mix of skills
• Appropriate Board procedures
• Director remuneration in line with best practice
• Board self – evaluation and training conducted
Primary functions of the Board
• SELECT (CEO, board members, management, compensation)
• REVIEW AND APPROVE (financial objectives, strategic plan, adequacy of the system
to law)
• ADVICE AND COUNCEL (to the top management)
• EVALUATE (board processes, performance)
• OTHERS (umbrella definition)

Responsibilities of the Board

• Due care
–the board is required to direct the affairs of the corporation but not to manage
them
• If a director or the board as a whole fails to act with due care and, as a result, the
corporation is some way harmed, the careless director or directors can be held
personally liable for the harm done.
Roles of the Board in Strategic Management
• Monitor developments inside and outside the corporation
• Evaluate and Influence management proposals, decisions and actions
• Initiate and determine the corporation’s mission and specify strategic options
Responsibility of Management
• Shared responsibility with the Board
• Management of day-to-day operation
• Functional and structural organization of business
• Management of key processes and functions. (e.g. production, marketing,
controlling, logistic, human resources, sales, finances, organizational development)
• Expertise for the Board and General Assembly
How to improve Corporate Governance?
• Five steps to improve CG
–Increase diversity
–Appoint competent board members
–Ensure timely information
–Prioritize risk management
–Evaluate board performance
Benefits of Corporate Governance
• Good corporate governance ensures success and economic growth
• Strong corporate governance maintains investors’ confidence, as a result of which,
company can raise capital efficiently and effectively
• It lowers the capital cost
• There is a positive impact on the share price
• It provides proper inducement to the owners as well as managers to achieve
objectives that are in interests of the shareholders and the organization
• CG minimizes wastages, corruption, risks and mismanagement.
• It helps brand formation and development
• It ensures organization is managed in a manner that fits the best interests of all.

Good Governance
• UNESCAP (the UN’s Economic and Social Commission for Asia and the Pacific)
summarizes good governance as “participatory, consensus oriented, accountable,
transparent, responsive, effective and efficient, equitable and inclusive and follows
the rule of law.”
• As a result, good governance:
o Minimizes the potential for corruption
o Increases inclusion and the ability to benefit from diverse thinking
o Reacts to the needs of society, both now and in the future
• The Good Governance Institute believes that “Good governance is not about
ownership, it is about stewardship” — that is, it’s about taking responsibility for an
organization’s ESG and related principles, like corporate social responsibility and
governance for a set time, ultimately leaving the organization in better shape than it
was when you were at the helm.
Structure of Corporate Governance
• Structure of CG provides a comprehensive framework to
o enhance accountability to shareholders and other stakeholders;
o ensure timely and accurate disclosures of all material matters,
o deal fairly with shareholders and other stakeholder interests, and
o maintain high standards of business ethics and integrity.
• It is specifically designed to enable HKEX to discharge its statutory duty of ensuring
an orderly, informed and fair market and of ensuring risks are managed prudently,
while pursuing its business objectives, which helps reinforce Hong Kong’s position as
an international financial centre.
Board of Directors
 Board of Directors – is responsible for providing leadership, either directly or through
its committees, to HKEX and its subsidiaries (Group) in order to deliver long-term
value to shareholders and other stakeholders.
 It also leads and supervises the Group’s management to act in the interest of the
public as well as its shareholders, but in case of conflict, the former shall prevail.
 It establishes corporate policies, sets strategic direction, ensures that an effective
internal control environment is in place, and oversees the management which is
responsible for day-to-day operations.
 The Board however recognizes that delegating its functions and authorities to its
committees and the management does not absolve its overall responsibility for the
sound governance of HKEX.
Board Committees
 9 Board Committees – assist the Board in focusing on specific matters, fulfil their
roles and responsibilities delegated by the Board, report to the Board on decisions
and actions taken, monitor the management’s performance, and make any necessary
recommendations.
 o Audit Committee
o Board Executive Committee
o Corporate Responsibility Committee
o Investment Committee
o Listing Operation Governance Committee
o Nomination and Governance Committee
o Remuneration Committee
o Risk Committee
o Risk Management Committee (statutory)

Board Committees
 Company Secretary – is responsible for facilitating the Board process, as well as
communications among Board members, with our shareholders and the
management, and advising the Board and its committees on all governance matters.
 International Advisory Council – comprises experts in economics, business,
technology and finance from around the world, acting as advisors to provide HKEX's
Board with expert insight and perspective.
 Mainland China Advisory Group – comprises senior industry experts with deep China
market experience, acting as advisors to provide HKEX's Board with high-level views
on the economic outlook of Mainland China and other insights on Mainland China
development.
 Management Committee – has delegated authority from the Board for performing
the day-to-day management functions of the business and implementing all projects
and initiatives as approved by the Board.
 External auditor and Internal Audit Department – provide assurance on financial
reporting and/or internal controls to ensure accountability and audit quality.
 Shareholders – elect their representatives as directors of HKEX (Directors) at general
meetings to oversee the Group’s business.
 Other stakeholders – interact with the Group on daily operations.
o They include institutional investors, market regulators, government bodies,
listed/potential issuers and market intermediaries, Exchange/Clearing
Participants/Members, Information Vendors and market participants,
Mainland exchanges, overseas exchanges, investing public, media and
analysts, non-governmental organizations, industry associations, professional
bodies, market users, suppliers/business partners and employees.
MEANING OF BUSINESS
The term business refers to
 an organization or enterprising entity
 engaged in commercial, industrial, or professional activities.
 The purpose of a business is to organize some sort of economic production (of goods
or services).
WHAT IS MEANT BY ETHICS?
An ethic is a moral principle or set of moral values held by an individual or a group.
Ethical behaviour is behaviour which is considered to be right and moral.
Business ethics are the values and principles which operate in the world of business. They
form the moral framework of the organisation.
DEFINITION OF BUSINESS ETHICS BY T.M. GARRETT
Business ethics is a study of the moral rightness or wrongness of the acts involved in the
production, distribution and exchange of economic goods and services.
WHAT ARE ETHICS?
Ethics: To know right from wrong and to know when you’re practicing one instead of
the other.
Acting ethically in business means more than simply obeying applicable laws and
regulations: It also means being:
 Honest
 Doing no harm to others
 Competing fairly
 Declining to put your own interests above those of your company, its owners,
and its workers.
MEANING OF BUSINESS ETHICS
Business ethics refers to implementing appropriate business policies and practices with
regard to arguably controversial subjects. Some issues that come up in a discussion of ethics
include corporate governance, insider trading, bribery, discrimination, social responsibility,
and fiduciary responsibilities.
TWO SIDES TO EVERY STORY
 Companies often find it difficult to please all of its stakeholders, as they have
different interests.
 Being ethical depends on an individual view of what is right and wrong. What might
be considered good behaviour to one individual, may seem bad to another.
 Ultimately companies aim to make a profit and sometimes this can conflict with
acting in a responsible way.
 Larger, global companies can often find it difficult to regulate their activities
in other countries.

WHY IS BUSINESS ETHICS IMPORTANT?

 Business ethics ensure that companies operate according to all applicable
laws. This maintains the company's respect among its peers and customers
and protects it from legal liability. A company's ethics also help it attract
quality team members. Businesses that care for their teams according to
the highest ethical standards are often attractive to job seekers. Ethical
treatment can also increase employee retention and reduce hiring and
training costs.
 A business that treats its customers or clients ethically can build trust and
create longstanding relationships. These customers are likely to return and
may recommend the business to people within their sphere of influence.
Also, a business known for its effective ethical principles can gain respect
and elevate the quality of its brand.
BASIC MORAL VALUE
Doing things RIGHT
● Integrity
● Respect for human life
● Self-control
● Honesty
● Courage
● Self-sacrifice
Doing things Wrong
● Cheating
● Cowardice
● Cruelty

NEED FOR BUSINESS ETHICS

 Survival of the Business Unit
 Growth of Business Unit
 Earning Goodwill
 Improving the Confidence
 Maintaining Inter-relationship
 Solving Social Problems
FACTORS WHICH NECESSITATE ETHICAL BEHAVIOR IN BUSINESS
 Ours is an industrial society and its values tend to become those of the entire
culture.
 There is a growing awareness among the public. The society insists the business
leaders to shoulder the responsibility for maintaining their welfare.
 If an organization fails to live upon the expectations of the society, it will lose its
market share, its prestige and reputation.
 Unethical practices shall lead to Government control ultimately through legislation.
Hence, prevention is better than cure.
HOW TO IMPROVE BUSINESS ETHICS
1. Top management must adopt and unconditionally support an explicit corporate code of
conduct.
2. Employees must understand that senior management expects all employees to act
ethically
3. Managers and others must be trained to consider the ethical implications of all business
decisions
4. An ethics office and/or forum must be set up with which employees can communicate
anonymously. Whistleblowers --People who report illegal or unethical behavior.
5. Involve outsiders (other Stakeholders) such as suppliers, subcontractors, distributors and
customers.
6. The ethics code must be enforced.
Global Convergence of Corporate Governance
 Global convergence of corporate governance refers to the idea that public
corporations from different countries will increasingly adopt similar governance
practices.
o Cultural differences
o Legal, policy and institutional reasons
o Complexity of transmission
o Process of convergence
• International convergence has been identified as a recent trend in corporate
governance.
• However, current trends in German corporate governance point to an enhanced
stakeholder form of corporate governance, rather than to shareholder value.
• The continuing strength of employee representation on supervisory boards and other
factors colour the interpretation of shareholder value, even in companies regarded as
shareholder-oriented.
• The case of The Bayer Group — one of the exemplars of shareholder value in
Germany — illustrates both this continuity and change.
Top Corporate Governance best practices
• A clear strategy
• Organizational discipline
• An effective policy of risk management
• Fairness in the organization
• Organizational transparency - Be transparent, accountable, fair and responsible
• Self-evaluation to mitigate budding issues
• Corporate social responsibility
• Leverage data
• Keep up with news and public opinion
• Know where your organization stands
• Establish informed policies and strategies
• Disclosure practices
• Executive compensation structure
• Risk management (the checks and balances on decision-making)
 • Policies and procedures for reconciling conflicts of interest (how the company
approaches business decisions that might conflict with its mission statement)
• The members of the board of directors (their stake in profits or conflicting interests)
• Contractual and social obligations (how a company approaches issues such as climate
change)
• Relationships with vendors
• Complaints received from shareholders, employees, and community members, and
how they were addressed
• Audits (the frequency of internal and external audits and how any issues that those
audits raised have been handled)
Bad Corporate Governance Practices
• Auditing
• Compensation
• Board makeup
Corporate Governance Models
• The Anglo-American Model
o This model can take various forms, such as the Shareholder, Stewardship, and
Political Models.
o The Shareholder Model is the principal model at present.
• The Continental Model
o Two groups represent the controlling authority under the Continental Model.
They are the supervisory board and the management board.
• The Japanese Model
o The key players in this model are:
 Banks, Affiliated entities, Management, The government
BUSINESS ETHICS
 Business ethics is a study of the moral rightness or wrongness of the acts involved in
the production, distribution and exchange of economic goods and services.
• Business ethics refers to moral principles and social values that business should
adopt in its code of conduct.
• These are rules that business must accept and follow in its day to day operations for
the welfare of society and all its stakeholders.
Differences between Business Ethics and CSR
• Business Ethics: The whole encompassing behaviour of businesses
• CSR as an element business ethics
• Business Ethics is the VERY broad field of study concerning good ethical decision-
making in commercial contexts.
• CSR is more narrowly about a company’s SOCIAL obligations, that is, a company’s
obligations to society in general.
 • Business Ethics is concerned with not just social obligations, but also obligations to
employees, customers, suppliers and competitors.
• CSR is about the extent to which companies owe something to “society at large” (i.e.,
those who do not have a direct involvement with the business).
• Business ethics is more about “good” or “bad” conduct according to moral standards
• CSR: integrating economic, social and environmental targets in one strategy
EVOLUTION OF BUSINESS ETHICS
• Timeline of ethical and socially responsible concerns
• BEFORE 1960s: ETHICS IN BUSINESS
o Theological discussion of ethics emerged
o The protestant work ethic encouraged hard work
• THE 1960s: THE RISE OF SOCIAL ISSUES IN BUSINESS
o Societal social consciousness emerged
o Consumer Bill of Rights – A new era of consumerism
o Consumer protection groups fought for consumer protection legislation
• THE 1970s: BUSINESS ETHICS AS AN EMERGING FIELD
o Business professors started to write about social responsibility
o Philosophers became involved
o Businesses became concerned with public image
o Conferences and seminars were held and centers developed
o Certain issues also faced during this period:
 Bribery – product safety
 Deceptive advertising – environment
 Price collusion
• THE 1980s: CONSOLIDATION
o Membership in business ethics organizations increased
o Ethics centers provided
 Publications, courses, seminars and conferences
 Firms established ethics committees
 Corporates support for ethics
• THE 1990s: INSTITUTIONALISATION OF BUSINESS ETHICS
o Guidelines for organizations
o Set tone for compliance
o Preventative actions against misconduct
o A company could avoid or minimize potential penalties
• THE 21st CENTURY: A NEW FOCUS
o Continued issues with corporate non-compliance
o Growing public or political demand for improved ethical standards
o Sarbanes-Oxley Act (2002) – as a result or Enron scandal
o Most extensive ethics reform
o Increased accounting regulations
o Federal Sentencing Guidelines for Organizations reform in 2004
 o Requires governing authorities to be well-informed regarding business ethics
programs
o Firms’ greatest danger is not discovering misconduct early

BRANCHES OF BUSINESS ETHICS

• Two key branches of Ethics are:
o Descriptive Ethics: It involves describing, characterizing and studying
morality –That is, “What is”
o Normative Ethics: It involves supplying and justifying moral systems –That
is, “What should be”

THEORIES OF BUSINESS ETHICS

• Ethics is a normative study, i.e., an investigation that attempts to reach normative
conclusions.
• Ethical theories in business include:
o Consequentialist normative theory: Normative themes—egoism,
utilitarianism.
o Non-consequentialist normative theory: Non- consequentialist normative
themes—duties, moral rights, and prima facie principles
CLASSIFICATION OF NORMATIVE THEORIES

NORMATIVE THEMES
Egoism
• contends that an act is morally right if and only if it best promotes an agent’s long-
term interests
• makes use of self-interest as the measuring rod for actions performed
• is equated with an individual’s personal interest but it is equally identified with the
interest of an organization or society
• intends to provide positive consequences to the party’s interest without considering
the consequence to the other parties.
• Philosophers distinguish between two kinds of egoism: personal and impersonal.
o Personal egoism: One should pursue his/her long-term interest and not
dictated what others should do.
o Impersonal egoism: Everyone should follow their best long-term interest.

UTILITARIANISM
Jeremy Benthan (1748–1832)
John Stuart Mill (1806–1873)
Utilitarian principle: An action is ethically right only if the sum total of utilities produced by
that act is greater than the sum total of utilities produced by any other act that could have
been performed in its place.
How it works?
KANTIAN ETHICS
Immanuel Kant (1724–1804)
This theory introduces an important humanistic dimension to business decisions, which is to
behave in the same way that one would wish to be treated under the same circumstances
and to always treat other people with dignity and respect.
NORMATIVE THEORIES OF BUSINESS ETHICS: CLASSIFICATION
• Stockholder Theory
• Stakeholder Theory
• Social Contract Theory
Stockholder Theory
• Expresses business relationship between stock owners and their managers running
the day-to-day business of the company.
• As per the theory, managers should pursue profit only by all legal, non-deceptive
means.
Stakeholder Theory
• This theory argues that a corporate’s success in the marketplace can best be assured
by catering to the interests of all its stakeholders (shareholders, customers,
employees, suppliers, management and the local community).
• This objective is achieved when corporations adopt policies that ensure an
optimal balance among all stakeholders.
Social Contract Theory
• This is based on the principles of “social contract”, wherein it is assumed that there is
an implicit agreement between the society and any created entity such as a business
unit, in which the society recognizes the existence of a condition that it will serve the
interest of the society in certain specified ways.
Values
• Values - enduring beliefs that a specific mode of conduct or end state of existence is
personally or socially preferable to an opposite or converse mode of conduct or end
state of existence
• Instrumental - values that represent the acceptable behaviours to be used in
achieving some end state
• Terminal - values that represent the goals to be achieved, or the end states of
existence
Work Values
• Achievement (career advancement)
• Concern for others (compassionate behaviour)
• Honesty (provision of accurate information)
 • Fairness (impartiality)
Ethical Behaviour
• Ethical Behaviour - acting in ways consistent with one’s personal values and the
commonly held values of the organization and society.
Qualities Required for Ethical Decision-making
• The competence to identify ethical issues and evaluate the consequences of
alternative courses of action
• The self-confidence to seek out different opinions about the issue and decide what is
right in terms of a situation
• Tough-mindedness--the willingness to make decisions when all that needs to be
known cannot be known and when the ethical issue has no established,
unambiguous solution
Individual/Organizational Model of Ethical Behavior

Machiavellianism
 A personality characteristic indicating one’s willingness to do whatever it takes to get
one’s own way
Values, Ethics & Ethical Behavior
• Value Systems - systems of beliefs that affect what the individual defines as right,
good, and fair
• Ethics - reflects the way values are acted out
• Ethical behaviour - actions consistent with one’s values
Ethics
• The system of rules that governs the ordering of values. Addresses such questions
as:
1. What are the meanings of the ethical concepts of good and right?
2. How can a person reach a conclusion about an ethical dilemma?
 3. Do ethical dilemmas have answers that would be universally accepted as
right, proper, and appropriate?
• Universalism – States that individuals should uphold certain values, like honesty,
regardless of the results. The important values are the ones society needs to
function. (Rule based or deontological, an inherent ‘right’ apart from any
consequences.)
• Utilitarianism – States that the greatest good for society should be the overriding
concern of decision makers. (Consequential, or teleological) emphasizes the results
of behavior.)
• Justice Theories – State moral standards are based upon the primacy of a single
value, which is justice. Everyone should act to ensure a more equitable distribution
of benefits, for this promotes self-respect, essential for social cooperation.
• The Four Way Test
1. Is it the TRUTH?
2. Is if FAIR to all concerned?
3. Will it build GOODWILL and better friendships?
4. Will it be BENEFICIAL to all concerned?
Moral Reasoning
• The thinking processes involved in judgments about questions of right and wrong.
• Kohlberg’s work (’63, ’75, ’81):
o Divided moral development into three levels
• Pre-conventional
o Judgment based solely on a person’s own needs and perceptions
• Conventional
o Expectations of society and law are taken into account
• Post-Conventional
o Judgment based on abstract, personal principles not necessarily defined by
society’s laws.
Kohlberg’s Moral Dilemmas
• Hypothetical situations in which no choice is clearly and indisputably right.
The Heinz Dilemma
• A man’s wife is dying. There is one drug that could save her life, but it is very
expensive, and the druggist who invented it will not sell it at a price low enough for
the man to buy it. Finally, the man becomes desperate and considers stealing the
drug for his wife. What should he do and why?
Kohlberg’s Work
• Stage 1 (Pre conventional)
o Punishment-obedience orientation
  Fear of authority and avoidance of punishment are reasons for
behaving morally.
• Stage 2 (Pre conventional)
o Personal reward orientation
 Satisfying personal needs determines moral choice.

• Stage 3 (Conventional)
o Good boy-nice girl orientation
 Maintaining the affection and approval of friends and relatives
motivates good behaviour
• Stage 4 (Conventional)
o Law and order/authority orientation
 A duty to uphold rules and laws for their own sake justifies moral
conformity
• Stage 5 (Post conventional)
o Social contract orientation
 We obey rules because they are necessary for social order, but rules
can be changed if there were better alternatives
• Stage 6 (Post conventional)
o Morality of individual principles and conscience
 Behaviour which conforms to internal principles (justice and equality)
and may sometimes violate society’s rules.
Carol Gilligan - “In a Different Voice” (1977, 1981), Moral reasoning is delimited by “...two
moral perspectives that organize thinking in different ways.”
 Men: define morality in terms of justice.
 Women: less in terms of rights and more in terms of standards of responsibility and
care.
Gilligan’s Perspective:
 Males = typically a justice/rights orientation
 Females = care response orientation
 Orientations arise form rational experiences of inequality and attachment
o Girls attached to and identify with mothers
o Boys attached to mothers and identify with fathers

Believes that:
 That response orientation is of a higher order than justice rights orientation
 Because Kohlberg’s theory is hierarchical with justice/rights the basis--women would
necessarily show a less reasoned perspective on his scales.
The two perspectives are not opposite ends of a continuum, “...with justice uncaring and
caring unjust...”, but rather, “...a different method of organizing the basic elements of moral
judgment: self, others, and the relationship between them.”
(Gilligan, 1987, p.22)
“One moral perspective dominates psychological thinking and is embedded in the most
widely used measures for measuring maturity of moral reasoning.”
C. Gilligan, 1987, p.22
Gilligan’s Theory
 Based on two observational studies.
o Study One: 25 college students
o Study Two: 29 women considering abortion
 “shift[s] the focus of attention from ways people reason about hypothetical
dilemmas to ways people construct moral conflicts and choice in their lives...and
[makes] it possible to see what experiences people define in moral terms, and to
explore the relationship between the understanding of moral problems and the
reasoning strategies used and the actions taken in attempting to solve them.”
Gilligan, 1987, p.21
Alternative Stage Sequence:
Three levels with transitional phases between each:
 Level One: Complete concern for self (Individual Survival).
o Transitional Phase: From self to care and concern for others.
 Level Two: Primary interest in the care of others (to gain their acceptance) (Self-
sacrifice and Social conformity).
o Transitional Phase: awareness of self-relative to developing relationships with
others: responsibility toward their care and needs.
 Level Three: Nonviolence and universal caring.
o “Articulates an ethic of responsibility that focuses on the actual consequences of
choicer, the criterion of adequacy or moral principles changes from objective
truth to ‘best fit’, and can only be established within the context of the dilemma
itself.” (Murphy and Gilligan, 1980, p.83)
Good Points:
 Concept of care giving and nurturing
 Relationship of self to others, responsibility
 Empathy
 Effect on environment
Hawthorne Effect:
 Subjects may try harder simply because they are in the control group.
Rosenthal Effect:
 Researcher’s biases tend to sway the results to be what the researcher wants to find
 “Rather than arguing over the extent to which sex bias is inherent in Kohlberg’s theory of
moral development, it might be more appropriate to ask why the myth that males are
more advanced in moral reasoning than females persists in light of such little evidence.”
(Walker, 1984, p.688)
Cognitive Moral Development
 Cognitive Moral Development - The process of moving through stages of maturity in
terms of making ethical decisions.
o Level l – Premoral
o Level ll – Conventional
o Level lll - Principled
Contemplating an Ethical Decision