II.
Normative Ethical Theories Used in Decision Making in Business:
Kohlberg’s Stages of Moral Development
1. The core idea of the theory (Key Thinker, Stage 3: Good Interpersonal Relationships
Principle, 2 Examples of the application); Orientation
● Behavior aims to gain approval and
Key Thinker: Lawrence Kohlberg trust.
● Lawrence Kohlberg (1927–1987) was ● Emphasizes loyalty and teamwork.
an American psychologist known for ● Intentions matter more than outcomes.
his influential work in developmental ● Business context: Managers avoid
psychology, especially moral whistleblowing to maintain harmony.
development.
● His experiences during World War II, Stage 4: Maintaining Social Order Orientation
particularly assisting Jewish refugees, ● Right action means following laws and
shaped his deep interest in moral rules.
reasoning and ethical decision-making. ● Authority maintains stability.
● In the 1950s, Kohlberg began research ● Moral duty is linked to one’s role.
using moral dilemmas, most notably ● Business context: Companies comply
the Heinz dilemma, to examine how with labor and financial laws.
boys aged 11 to 16 reasoned about
moral issues. Level 3: Postconventional Morality - Moral
● He developed a theory of moral reasoning is based on abstract principles and
development composed of six stages universal values.
organized into three levels:
preconventional, conventional, and Stage 5: Social Contract Orientation
postconventional. ● Laws should promote fairness and the
● The theory describes moral growth as common good.
a movement from self-interest toward ● Unjust rules can be challenged.
adherence to universal moral ● Decisions consider stakeholder impact.
principles. ● Business context: Firms support stricter
● Kohlberg taught at several leading environmental rules despite costs.
institutions, including Harvard
University, where he continued his Stage 6: Universal Ethical Principles Orientation
work on moral education, child ● Decisions follow justice, dignity, and
development, and socialization. equality.
● Individuals accept consequences to
Principle: uphold values.
Level 1: Preconventional Morality - Moral ● Conscience overrides unjust laws.
reasoning is based on self-interest and ● Business context: Leaders expose
consequences. corruption despite personal risk.
Stage 1: Obedience and Punishment Orientation
● Right and wrong are judged by
punishment avoidance.
● Authority is obeyed because it has
power.
● Rules are fixed and absolute.
● Business context: Employees follow
rules to avoid penalties.
Stage 2: Individualism and Exchange
Orientation
● Decisions are based on personal
benefit.
● Actions are right if they satisfy personal
needs.
● Relationships are transactional (“You
help me, I help you”).
● Business context: Salespersons
exaggerate benefits for commissions.
Level 2: Conventional Morality - Moral
reasoning is based on social norms,
expectations, and laws.
Key Takeaway of the Principle Too idealistic at higher stages
● Moral development is progressive and ❖ Stage 6 is rarely observed in real life
sequential. and may be unrealistic in business
● Higher stages represent more advanced environments where profit, competition,
ethical reasoning. and power dynamics exist.
● Ethical business leadership is strongest
at the postconventional level, where
decisions prioritize fairness, rights, and Ignores emotional and situational factors
social responsibility over profit or ❖ Business decisions are often shaped by
compliance alone emotions, loyalty, stress, and economic
2. Strengths; pressures, not just logical moral
Provides a clear structure for moral growth reasoning.
❖ The six stages show how ethical
reasoning develops from self-interest to Linear progression is questionable
universal principles. This helps explain ❖ People may not always move neatly
why people in the same company may from one stage to another. A manager
approach ethical issues differently. might think at Stage 5 in social issues
but act at Stage 2 when personal利益 or
Encourages higher ethical standards job security is at risk.
❖ It promotes movement toward
postconventional thinking, where
fairness, justice, and human rights guide
decisions—ideal for ethical leadership
and corporate social responsibility.
Useful for leadership training and
development
❖ Managers can use the theory to reflect
on their own moral reasoning and
improve ethical judgment in complex
business situations.
Explains real-life business behavior
❖ It accurately describes why some
employees follow rules only to avoid
punishment (Stage 1–2), others obey
laws and policies (Stage 4), and some
challenge unjust practices (Stage 5–6).
Supports ethical culture building
❖ Organizations can design policies and
training programs that encourage
employees to move beyond compliance
and toward principled decision-making.
3. Weaknesses.
Overemphasis on reasoning, not action
❖ Knowing what is right does not always
mean a person will do what is right.
Business decisions are also influenced
by pressure, fear, profit motives, and
organizational culture.
Culturally biased
❖ The theory was developed mainly from
Western perspectives and may not fully
reflect collectivist cultures where
harmony and relationships are more
valued than individual principles.