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Moral development constitutes a psychological adaptation theory on moral reasoning based on ethical behavior. One of the theories used to explain moral development was by Lawrence Kohlberg (1981), a psychologist who developed the theory from Jean Piaget. Piaget outlined a two-stage moral development process, and Kohlberg had six stages with three levels. He claimed that moral development happens throughout a person’s life (Kohlberg, 1981).

On the other hand, ethics describes a set of moral values. Hence business ethics refers to behavior constraints or decisions that affect interests, welfare and expectations of others in a business setting. Therefore, unethical behavior describes unacceptable and illegal behavior. Consequently, business ethics involves a complete personal ethical audit, recognition of the existence of ethical issues that are inherent in a specific situation and the identification of the parties affected. Business ethics codifies and emphasizes the adoption of ethical codes of behavior. The codes reassure trust amongst the government, suppliers, customers, employees and management. The empowerment of ethics is crucial in the post-bureaucratic organizations due to less reliance on the externally imposed rules; they greatly emphasize responsible autonomy (Kohlberg, 1981).

Honesty is considered an attribute of superior leaders, and integrity is associated with having certain convictions. Any desire to follow someone requires the reassurance of trust, ethics, honesty and acceptable principles. Unethical behavior is costly as far as business is concerned. It leads to credibility loss and reduction of the financial remuneration. According to Lewis (1985), unethical behavior by the management translates into negative impacts on their subordinates, who expect total integrity from their leaders (Lewis, 1985). Employees are believed to judge by their leaders’ integrity depending on the behavior. Failure of following agreements, cover-ups, the inconsistency in words and actions are strong indicators of dishonesty. This results in corporate values confusion for the employees and may lead to indecisions, conflicts and stress. Kohlberg (1981) claimed that moral crises are a result of breakdown of moral expectations.

According to Trevin%u0303o & Katherine (2007), almost every dimension taken towards achieving satisfaction in a job is negatively related to unethical behavior perceptions in a company. They contend that managers will achieve satisfaction in their jobs through the reduction of opportunities of unethical practices in their companies. In other words, they attempt to encourage ethics at an industrial level. In the prevention of unethical behavior, many companies will tend to create Code of Ethics, which is enforced to cover any conflicts, promote customer, government and competitor relationships, and facilitate the control of the government, assets as well as an enhancement of good judgment (Trevin%u0303o & Katherine, 2007).

In most cases, management does not have a clear outline of the ethical behavior in certain situations, a factor that makes workers unable to distinguish between right and wrong behaviors. Lewis (1985) warns of the danger of committing small unethical actions, whose eventual consequences are detrimental unethical practices.

Teaching of business ethics

Studies show that many companies prefer economic imperatives to moral imperatives. This is usually illustrated by the argument of bad apples. The greatest percentage of the unethical behavior  is due to individuals who initially did not learn ethics from family, school or even from their employers, popularly referred to as “bad apples” (Furnham & Taylor, 2011). 

Effects of Bad Apples in an Organization

Bad apple theory states that people are either good or bad, and the organization is powerless in changing them. The unethical conducts are associated with few individuals of poor character. Despite it is being unfair for any organization to fire its employees; the organization can identify few of the bad apples and discard them to avoid the rotting of the entire apple. A good general character is not a warrant of being able to deal with ethical problems. Training is critical for one to be able to recognize any ethical problem related to their occupation (Furnham & Taylor, 2011).

Unethical people can never achieve a business, which is ethical. In explanations, bad apples are considered people who join an organization having either good or bad morals. The organization usually has minimal influence on their morals. The idea of bad apples has a psychological appeal since people believe that badness is usually in other people who may be ‘removed’. This is considered a scapegoat and attribution error (Furnham & Taylor, 2011).

On the other hand, social scientists argue that poor definition of character contributes to weaknesses in the description of bad apples. Unethical personality is immeasurable, and many behave unethically due to several factors. People will often search for clues on how to be ethically behaved (Furnham & Taylor, 2011).

Moral Intelligence

Moral intelligence refers to the mental capacity in the determination of human principles. These principles include integrity, responsibility, forgiveness, and compassion. Studies show that moral intelligence is different from the technical, cognitive and the emotional intelligences (Trevin%u0303o & Katherine, 2007 and Lewis, 1985).

It encompasses the universal human principles, which are not based on ethnicity, gender, religion, or even culture, and instead they are applicable to the personal values, actions, and goals. The neuro-scientific advances in brain mapping indicate that people are born morally upright. The repercussions of loss of trust, honesty and confidence lead to huge business losses like the decrease in the capitalization of the traded stock to over $1 trillion (Lewis, 1985). Moral intelligence requires nurturing in the initial stages by family members or guardians. The achievement of an organizational as well as personal success that is sustainable calls for moral competence. This is an outgrowth associated with “living in alignment,” interconnecting the moral compass of an individual. These include the behaviors, emotions, external actions, and goals, which influence one’s beliefs, values and moral principles. Alignment living refers to the consistency of a person’s behavior with the goals and moral compass and requires a comprehensive understanding and edifying of every component, so that alignment is maintained in the components. Additionally, moral competence is enhanced throughout a person’s life and is reflected in the behavior (Lewis, 1985). In business organizations, the environment should be characterized by responsibility, integrity, forgiveness, and compassion. These are moral intelligence applications in real life.

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