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Abstract
The purpose of the paper is to gain understanding of how and why ethical choices and business choices are often in conflict. Specifically, the paper uses an interpretative case study approach to highlight a common ethical dilemma - decision-making in a performance-based compensation environment, and to provide a discussion on the nature of the dilemma, who it involves, the advantages and disadvantages of both business and ethical sides, and what, if anything, companies are doing to mitigate conflicts. The paper highlights the need for companies to consider a broader focus in the compensation system's design, one that steps further outside the boundaries of individual motivations and short-term profits.
Introduction
Decision making in business may involve ethical considerations that, if ignored, can ultimately harm the organization and/or one or more of its stakeholders. Choices perceived to be of maximum benefit to the organization (business choices) are not always entirely ethical. The converse is also frequently true, further drawing the lines of separation between what can be considered business choices and ethical choices. But are these two so mutually exclusive that there can be no resolution or compromise? The answer is likely no, but the issue remains that some business decisions are clearly not ethical and vice versa. Indeed, textbook case studies that focus on ethics and ethical conflicts abound, describing arguably typical situations whereby management must either make a decision that will serve one or more appropriate constituencies (the ethical choice) or one that will maximize the company's bottom line (the business choice). The typical discussion that ensues is how and why the choices are in conflict. Though it is recognized that ethical cases are rarely, if ever, so black and white, perhaps their frequent opposing presentation in business and managerial studies are one reason why the two seem to be mutually exclusive. In any case, whether or not the business choice can in fact also be the ethical choice is a matter worth considering. Reconciling the two in practice however, is a more difficult matter.
Realizing that what actually is ethical is difficult to define (and beyond the scope of this discussion), this discussion assumes the following definitions:
* Business choices are those which are intended to maximize profits and/or improve business performance