Teaching Business Ethics with Cases: The Effect of Personal Experience Susanna Cahn and Victor Glass Susanna Cahn Associate Professor of Management/ Mgt Science Lubin School of Business Pace University 861 Bedford Road Pleasantville, NY 10570 USA Tel: (914) 773-3517 (201) 385-4570 ecahn@pace.edu Fax: (914) 773-3920 (country code 001) Victor Glass Director of Demand Forecasting and Rate Development National Exchange Carrier Association Whippany, NJ vglass@neca.org Teaching Business Ethics with Cases: The Effect of Personal Experience Abstract As a final project for a business and society course, students presented analyses of ethical dilemmas in business settings; each dilemma was different, chosen either from the student’s personal business experience or from a recent business news event Students identified multiple decision criteria (financial, ethical, etc.) relevant to the dilemma and then recommended a decision, reflecting a prioritizing of the multiple decision criteria The goal of this research was to learn whether personal experience led to different decision priorities Analyses from 121 students taken from six semesters of the course were sorted by choice of topic, as well as by which decision criterion was given top priority Results showed significant differences (Chi-square value of 38.50562, significance level of 5.45963E-10) between the personal examples and the news examples Students typically put ethical concerns first when analyzing news events However, when it came to personal events, more self-serving concerns often took priority These disparate results suggest that even when knowledge is gained from study of theory and cases, it may not be applied to dilemmas that arise in students’ own experience Keywords: teaching business ethics, ethical dilemmas, decision criteria, cases, personal experience, self-serving bias Teaching Business Ethics with Cases: The Effect of Personal Experience INTRODUCTION Tension between ethical priorities and financial priorities typifies many ethical dilemmas in business decision making Ethical business practices may lead to long term financial success by boosting a company’s reputation as honest and fair dealing But it can also happen that short term financial gains may follow from practices that are morally questionable This is especially likely when customers not make repeat purchases, and the unethical actions are legal Not surprisingly, research shows that some business organizations treat ethics as a contributor to long-term financial success, while others treat ethics as potentially conflicting with profit-making objectives (Lii, 2001) It is the latter perspective that is most likely to lead to ethical dilemmas for business decision makers A goal of business ethics training is to help prepare students, who will become business decision makers, to resolve such ethical dilemmas Part of this process is awareness of dilemmas as having multiple decision criteria In this context, a decision opportunity is considered a dilemma if some decision criteria favor choice A while other decision criteria favor choice B Classes in business ethics should help students recognize which decision criteria lead to preference for a given decision alternative This paper examines the extent to which teaching business ethics helps students resolve such dilemmas The question of how to effectively teach business ethics is not fully resolved (Piper, et al., 1993) Abdolmohammadi and Reeves (2000) conducted a pre and post study of business students’ ethical reasoning, both for a business ethics course and over their four years in business school Low to moderate gains were reported over the course, while effect was high for the four-year education Wilhelm (2008) used the Defining Issues Test (Rest, 1999) to evaluate how well a variety of teaching methods and materials increased students’ moral reasoning He concluded that time intensive case-based instruction using an ethical decision-making framework had the most impact An interesting illustration is the research by Martin (1982) It examines how the teaching of ethics affects the ethical judgment of students No significant impact was found for university courses, although a Catholic education did have some impact Sanyal (2000) champions the value to learning of having students personally involved In a report of the Office of Research of the U.S Department of Education, Maramark and Maline (1993) assert that regardless of the method used to incorporate ethics into the classroom, the ethical experience must be related to the students’ personal life That advice is reflected in the course assignment under study here Personal involvement in a decision heightens the possible influence of biases, even decisions with ethical dilemmas (Prentice, 2004) Overconfidence, over optimism, and, particularly, self-serving bias can affect subjective views about the ethics of a decision alternative He cites Bazerman’s (2002) observation that traditional ways of teaching business ethics will not have an impact on the self-serving bias Subjective judgments of fairness can also be influenced by the self-serving bias (Jolls, et al 1998) The present research lends credence to those claims Yet, in studies of business ethics teaching, there is an implicit assumption that what students learn in class will later be applied to their own careers and decisions in the companies they work for Arguably, it is how students act after a course is completed that is a meaningful assessment of the value of that course of study In this study, students’ end-of-semester analyses of their own experience with business ethical dilemmas provide a glimpse into such after-the-course behavior The style of analysis used here is similar to that used by Hosmer (2000) It uses a standardized format for case analysis that integrates ethical principles and classic business decision criteria with a mechanism for choosing alternatives METHOD This paper assesses the end-of-semester work of students in a business and society course Course content was dominated by business ethics and issues involving multiple stakeholders Ethics is defined in the course as including consideration of principles of right and wrong, consequences to others, and justice Throughout the course there were discussions and written analyses of assigned cases At the conclusion of the course, each student selected, analyzed, and presented a final analysis of an ethical dilemma in a business setting Each student analyzed a different dilemma chosen either from a personal work experience or from a recent business news event Their analyses identified multiple decision criteria (financial, ethical, etc.) relevant to the business's dilemma and recommended a decision The student’s recommendation reflected a prioritizing of the multiple decision criteria The brief, standardized format for that analysis is in Appendix A This research examines the students’ prioritized decision criteria for patterns Students' analyses were sorted according to the choice of topic, either a dilemma chosen from a personal business experience or from a recent business news event Students' analyses were also sorted according to which decision criterion each of them gave top priority Data were collected for 121 students from six semesters of the same course between 1995 and 2006 Chi-square tests were used to compare the observed proportion with the expectation that in the absence of any relationship 50% of the analyses would prioritize financial concerns and 50% of the analyses would prioritize ethical concerns RESULTS The data are presented in Table I along with Chi-square statistics Results showed significant differences (Chi-square value of 38.50562, significance level of 5.45963E-10) between the personal examples and the news examples Analyzing news events students put ethical concerns ahead of financial concerns in most of the situations However, when it came to personal events, financial concerns more often took priority {Table near here} CONCLUSION When analyzing business-ethics dilemmas in news events where they were not personally involved, more students gave first priority to ethical criteria This is what would be expected in a course where there is an emphasis on the analysis of ethical issues in a business setting However, when analyzing the same types of events, except where they or someone they know personally is involved, most students gave first priority to financial criteria The implication is that student success in a case-based business ethics course will not necessarily lead to increased incorporation of ethics in their business decision making It substantiates the literature on self-serving bias and reaffirms the common law idea that a person who has a personal interest in an outcome will likely be prejudiced on his or her own behalf This finding casts doubt on the impact that skills learned analyzing cases in class will carry over to applications in the business world where the financial risks are real and personal REFERENCES Abdolmohammadi, M J & Reeves, M F (2000), “Effects of Education and Intervention on Business Students’ Ethical Cognition: A Cross Sectional and Longitudinal Study”, Teaching Business Ethics, (3), pp 269-284 Bazerman, M., Loewenstein, G., & Moore, D (2002), “Why Good Accountants Do Bad Audits”, Harvard Business Review, 80 (November), 97-102 Hosmer, L T (2000), “Standard Format for the Case Analysis of Moral Problems”, Teaching Business Ethics, (2, May): pp 169-180 Jolls, C., Sunstein, C., & Thaler, R (1998), “A Behavioral Approach to Law and Economics”, Stanford Law Review, 50, 1471-1550 Lii, P (2001), “The Impact of Personal Gains on Cognitive Dissonance for Business Ethics Judgments”, Teaching Business Ethics, (1, February): pp 21-33 Maramark, S., & Maline, M B (1993), “Academic Dishonesty and College Students”, Washington, D C.: U S Department of Education, Office of Research Martin, T R (1982), “Do Courses in Ethics Improve the Ethical Judgment of Students?” Business and Society, Winter/Spring, 17-26 Piper, T R., Gentile, M C., & Parks, S D (1993), Can Ethics Be Taught? Perspectives, Challenges, and Approaches at Harvard Business School Boston, Massachusetts: Harvard Business School Prentice, R (2004), “Teaching Ethics, Heuristics, and Biases”, Journal of Business Ethics Education, (1), 55-72 Rest, J., Narvaez, D., Bebeau, M J., & Thoma, S J (1999), Postconventional Moral Thinking: A Neo-Kohlbergian Approach Lawrence Erlbaum Associates Richmond, S B (1964), Statistical Analysis (2nd ed.) New York: The Ronald Press Company Sanyal, R N (2000), “An Experiential Approach to Teaching Ethics in International Business”, Teaching Business Ethics, (2): pp 137-149 Wilhelm, W J (2008), “Integrating Instruction in Ethical Reasoning into Undergraduate Business Courses”, Journal of Business Ethics Education, 5, pp 5-34 {APPENDIX here} Table I: Number of Students Giving Highest Priority to Ethics or Financial Criterion personal news Ethics Financial Chi2 12 73 20 16 38.50562 significance level 5.45963E-10 APPENDIX Assignment: An analysis of a current business issue relevant to this course It may be drawn from library research, interviews, or personal experience Topics are due on Written essays are due on or before Presentations of essay topics will be scheduled during the last few classes Topic should be relevant to business and society, and involve multiple decision criteria, which may potentially conflict Format: • Describe facts of your topic • Discuss relevant decision criteria and their relative importance • State your preferred solution and support it with reasons (from book, class, your own thinking) and/or parallel examples • References Topics should be approved by _ Approximately 2-5 pages, written essays are due on or before the final date Oral presentation will be scheduled 10 ... value to learning of having students personally involved In a report of the Office of Research of the U.S Department of Education, Maramark and Maline (1993) assert that regardless of the method... dilemmas for business decision makers A goal of business ethics training is to help prepare students, who will become business decision makers, to resolve such ethical dilemmas Part of this process...Teaching Business Ethics with Cases: The Effect of Personal Experience Abstract As a final project for a business and society course, students presented analyses of ethical dilemmas in business