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Both normative theories of ethics in philosophy and contemporary models of moral judgment in psychology have focused almost exclusively on the permissibility of acts, in particular whether acts should be judged on the basis of their material outcomes (consequentialist ethics) or on the basis of rules, duties, and obligations (deontological ethics). However, a longstanding third perspective on morality, virtue ethics, may offer a richer descriptive account of a wide range of lay moral judgments. Building on this ethical tradition, we offer a person-centered account of moral judgment, which focuses on individuals as the unit of analysis for moral evaluations rather than on acts. Because social perceivers are fundamentally motivated to acquire information about the moral character of others, features of an act that seem most informative of character often hold more weight than either the consequences of the act or whether a moral rule has been broken. This approach, we argue, can account for numerous empirical findings that are either not predicted by current theories of moral psychology or are simply categorized as biases or irrational quirks in the way individuals make moral judgments.

The field of behavioral ethics has seen considerable growth over the last few decades. One of the most significant concerns facing this interdisciplinary field of research is the moral judgment-action gap. The moral judgment-action gap is the inconsistency people display when they know what is right but do what they know is wrong. Much of the research in the field of behavioral ethics is based on (or in response to) early work in moral psychology and American psychologist Lawrence Kohlberg's foundational cognitive model of moral development. However, Kohlberg's model of moral development lacks a compelling explanation for the judgment-action gap. Yet, it continues to influence theory, research, teaching, and practice in business ethics today. As such, this paper presents a critical review and analysis of the pertinent literature. This paper also reviews modern theories of ethical decision making in business ethics. Gaps in our current understanding and directions for future research in behavioral business ethics are presented. By providing this important theoretical background information, targeted critical analysis, and directions for future research, this paper assists management scholars as they begin to seek a more unified approach, develop newer models of ethical decision making, and conduct business ethics research that examines the moral judgment-action gap.

The study of moral judgements often centres on moral dilemmas in which options consistent with deontological perspectives (that is, emphasizing rules, individual rights and duties) are in conflict with options consistent with utilitarian judgements (that is, following the greater good based on consequences). Greene et al. (2009) showed that psychological and situational factors (for example, the intent of the agent or the presence of physical contact between the agent and the victim) can play an important role in moral dilemma judgements (for example, the trolley problem). Our knowledge is limited concerning both the universality of these effects outside the United States and the impact of culture on the situational and psychological factors affecting moral judgements. Thus, we empirically tested the universality of the effects of intent and personal force on moral dilemma judgements by replicating the experiments of Greene et al. in 45 countries from all inhabited continents. We found that personal force and its interaction with intention exert influence on moral judgements in the US and Western cultural clusters, replicating and expanding the original findings. Moreover, the personal force effect was present in all cultural clusters, suggesting it is culturally universal. The evidence for the cultural universality of the interaction effect was inconclusive in the Eastern and Southern cultural clusters (depending on exclusion criteria). We found no strong association between collectivism/individualism and moral dilemma judgements.Including participants from 45 countries, Bago et al. find that the situational factors that affect moral reasoning are shared across countries, with diminished observed cultural variation.

In five studies, we explored whether power increases moral hypocrisy (i.e., imposing strict moral standards on other people but practicing less strict moral behavior oneself). In Experiment I, compared with the powerless, the powerful condemned other people's cheating more, but also cheated more themselves. In Experiments 2 through 4, the powerful were more strict in judging other people's moral transgressions than in judging their own transgressions. A final study found that the effect of power on moral hypocrisy depends on the legitimacy of the power: When power was illegitimate, the moral-hypocrisy effect was reversed, with the illegitimately powerful becoming stricter in judging their own behavior than in judging other people's behavior. This pattern, which might be dubbed hypercrisy, was also found among low-power participants in Experiments 3 and 4. We discuss how patterns of hypocrisy and hypercrisy among the powerful and powerless can help perpetuate social inequality.

Developmental trajectories and individual differences in 70 American middle-income 2½ -to 4-year olds' moral judgments were examined 3 times across 1 year using latent growth modeling. At Wave 1, children distinguished hypothetical moral from conventional transgressions on all criteria, but only older preschoolers did so when rating deserved punishment. Children's understanding of moral transgressions as wrong independent of authority grew over time. Greater surgency and effortful control were both associated with a better understanding of moral generalizability. Children higher in effortful control also grew more slowly in understanding that moral rules are not alterable and that moral transgressions are wrong independent of rules. Girls demonstrated sharper increases across time than boys in understanding the nonalterability of moral rules.

In view of the numerous accounting and corporate scandals associated with various forms of moral misconduct and the recent financial crisis, economics and business programs are often accused of actively contributing to the amoral decision making of their graduates. It is argued that theories and ideas taught at universities engender moral misbehavior among some managers, as these theories mainly focus on the primacy of profit-maximization and typically neglect the ethical and moral dimensions of decision making. To investigate this criticism, two overlapping effects must be disentangled: the self-selection effect and the treatment effect. Drawing on the concept of moral judgment competence, we empirically examine this question with a sample of 1773 bachelor's and 501 master's students. Our results reveal that there is neither a self-selection nor a treatment effect for economics and business studies. Moreover, our results indicate that—regardless of the course of studies—university education in general does not seem to foster students' moral development.

Corporate social responsibility (CSR) aspirations by companies have been identified as a motivating factor for active employee participation in CSR implementation. However, a failure to practise what one preaches can backfire and lead to attribution of hypocrisy. Drawing on a qualitative study of an award-winning sustainability pioneer in the cosmetics sector, we explore the role of moral judgement in how and when employees interpret word–deed misalignment in CSR implementation as hypocritical. First, our case reveals that high CSR aspirations by companies raise employees’ moral expectations. Second, we develop a framework that explains variations in employees’ hypocrisy interpretations based on consequentialist and deontological forms of moral judgement. Our research advances a contextual view of hypocrisy, not as an objective characteristic of an organisation, but as an outcome of interpretative processes of perceived motives and results in CSR implementation. Our framework thereby explains why even highly committed organisations may face accusations of hypocrisy.

Public figures' transgressions attract considerable media attention and public interest. However, little is understood about the impact of celebrity endorsers' transgressions on associated brands. Drawing on research on moral reasoning, we posit that consumers are not always motivated to separate judgments of performance from judgments of morality (moral decoupling) or simply excuse a wrongdoer (moral rationalization). We propose that consumers also engage in moral coupling, a distinct moral reasoning process which allows consumers to integrate judgments of performance and judgments of morality. In three studies, we demonstrate that moral coupling is prevalent and has unique predictive utilities in explaining consumers' evaluation of the transgressor (Studies 1 and 2). We also show that transgression type (performance related vs. performance unrelated) has a significant impact on consumers' choice of moral reasoning strategy (Study 2). Finally, we demonstrate that consumers' support for (or opposition toward) a brand endorsed by a transgressor is a direct function of moral reasoning choice (Study 3). Findings suggest that public figure's immoral behavior and its spillover to an extended brand is contingent on consumers' moral reasoning choices.

We develop and test a model that extends the understanding of how people react to news of organizational unethical behavior and how such reactions impact stock performance. We do so by taking into account the interplay between the features of specific unethical acts and the features of the organizational context within which unethical acts occur. We propose a two-stage model in which the first stage predicts that unethical acts that benefit the organization are judged less harshly than are unethical acts that benefit the actor, when the organization is seen as pursuing a moral goal (e.g., producing inexpensive medicine rather than tobacco products). In such cases, the motives behind the unethical act are construed as an individual’s intentions to pursue a moral end. The second stage of our model connects moral judgment to action against the organization as a whole. We propose that moral judgments of an unethical act are more likely to translate into negative economic consequences for the organization when the unethical act is seen as benefiting the organization, because in such cases the organization is construed as an accomplice. Study 1 is an event study of stock market reactions to organizational unethical behavior in which the features of organizational unethical behavior were operationalized by coding media coverage of unethical acts. Study 2 is an experiment that used news stories to manipulate features of unethical behavior and measured participants’ estimates of stock performance, while incentivizing participants for accuracy. Both studies found support for our model. The online appendix is available at https://doi.org/10.1287/orsc.2018.1244 .

The CNI model of moral decision-making is a formal model that quantifies (1) sensitivity to consequences, (2) sensitivity to moral norms, and (3) general preference for inaction versus action in responses to moral dilemmas. Based on a critique of the CNI model’s conceptual assumptions, properties of the moral dilemmas for research using the CNI model, and the robustness of findings obtained with the CNI model against changes in model specifications, Baron and Goodwin (2020) dismissed the CNI model as a valid approach to study moral dilemma judgments. Here, we respond to their critique, showing that Baron and Goodwin’s dismissal of the CNI model is based on: (1) misunderstandings of key aspects of the model; (2) a conceptually problematic conflation of behavioral effects and explanatory mental constructs; (3) arguments that are inconsistent with empirical evidence; and (4) reanalyses that supposedly show inconsistent findings resulting from changes in model specifications, although the reported reanalyses did not actually use the CNI model and proper analyses with the CNI model yield consistent findings across model specifications. Although Baron and Goodwin’s critique reveals a need for greater precision in the description of the three model parameters and for greater attention to properties of individual dilemmas, the available evidence indicates that the CNI model is a valid, robust, and empirically sound approach to gaining deeper insights into the determinants of moral dilemma judgments, overcoming major limitations of the traditional approach that pits moral norms against consequences for the greater good (e.g., trolley dilemma).