MGT 340 second-half Flashcards
Chapter 7
Organizational Factors: The Role Of Ethical Culture And
Relationships
Corporate Culture
• Corporate culture and organizational culture can be
used interchangeably.
• Shared values, norms, and artifacts that influence
employees and determine behavior, including ways of
solving problems that members (employees) of an
organization share.
• Shared beliefs top managers in a company have
about how they should manage themselves and other
employees, and how they should conduct their
business(es).
Characteristics of an Ethical Corporate Culture
• Sarbanes–Oxley 404 Compliance Section
1. Requirement that management assess the effectiveness of the organization’s internal controls and commission audits of these controls by an external auditor in conjunction with
the audit of its financial statements.
2. Requires firms to adopt a set of values that forms a portion of the company’s culture.
3. Mandates an evaluation of corporate culture to provide insight into the character of an organization, its ethics, and transparency.
4. The intent is to expose mismanagement, fraud, theft, abuse, and to sustain a corporate culture that does not allow these conditions and actions to exist
Steps in Measuring an Ethical Corporate Culture
• Management and the board demonstrate their
commitment to integrity, core values, and ethics
codes through their communications and actions.
• Employees are encouraged/required to have
hands-on involvement in compliance, especially
internal control systems and reporting systems.
• Ethical leadership
• Employees must receive communication through
resolutions and corrective actions related to
ethical issues.
• Employees must have the ability to report policy
exceptions anonymously to any member of the
organization, including the CEO, other members
of management, and the board of directors.
The Role of Corporate Culture in Ethical Decision Making
• Some cultures are so strong, they come to
represent the character of the entire
organization.
• Explicit statements of values, beliefs, customs,
and expected behavior usually come from upper
management. (Memos, written codes of conduct,
handbooks, manuals, forms, and ceremonies are
formal expressions of an organization’s culture.)
• Corporate culture can be expressed through
gestures, looks, labels, promotions, programs,
and legends (or the lack thereof).
• When leaders are perceived as trustworthy,
employee trust increases; leaders are seen as
ethical and as honoring a higher level of duties.
Ethical Frameworks and Evaluations of Corporate Culture
• Two basic dimensions in an organization’s
culture:
1. Concern for people—the organization’s efforts to
care for its employees’ well-being.
2. Concern for performance—the organization’s
efforts to focus on output and employee
productivity.
Figure 7-2 Company Examples of the Four Organizational Cultures Ben & Jerry’s—A Caring Culture Ben & Jerry’s embraces community causes, treats its employees fairly, and expends numerous resources to enhance the well-being of its customers.
Starbucks—An Integrative Culture Starbucks always looks for ways to expand and improve performance. It also exhibits a high concern for people through community causes, sustainability, and employee health care.
Countrywide Financial—An Apathetic Culture Countrywide seemed to show little concern for employees and customers. The company’s culture appeared to encourage unethical conduct in exchange for profits.
United Parcel Systems—An Exacting Culture Employees are held to high standards to ensure maximum performance, consistency of delivery, and efficiency.
Example of Four Culture Types
• Apathetic: Minimal concern for either people or
performance. Individuals focus on their own selfinterest.
• Caring: High concern for people but minimal
concern for performance issues. It is difficult to
find nationally recognizable companies that
maintain little or no concern for performance.
• Exacting: Little concern for people but a high
concern for performance. Focuses on the
interests of the organization.
• Integrative: Combines a high concern for people
and performance. An organization becomes
integrative when superiors recognize employees
are more than interchangeable parts—
employees have an ineffable quality that helps
the firm meet its performance criteria.
Cultural Audit
• Assessment of an organization’s values.
• Usually conducted by outside consultants but
may be performed internally as well.
• Communication about ethical expectations and
support from top management help to identify a
corporate culture that encourages ethical
conduct or leads to ethical conflict
TABLE 7-2 Corporate Culture Ethics Audit page 14
Ethics and Corporate Culture
• A significant factor in ethical decision making.
• Culture dictates hiring people with specific,
similar values. If those values are perceived as
unethical by society, society will view the
organization and its members as unethical.
• If a company’s primary objective is to make as
much profit as possible through whatever means,
its culture may foster behavior that conflicts with
stakeholders’ ethical values.
• If an organization values ethical behavior, it
rewards them thru recognition and awards in a
consistent and balanced manner.
• All performance at the threshold level should be
acknowledged, and praise or rewards given as
close to the performance as possible
Compliance versus ValuesBased Ethical Cultures
• Compliance-based: The accounting professional model.
• Rules create a compliance culture organized around risk.
• Compliance-based cultures use a legalistic approach to ethics.
• Codes of conduct are established with compliance as their focus, with rules and policies enforced by management.
• Instead of revolving around an ethical culture, the company revolves around risk management.
• The approach is good in the short term because it helps
management, stakeholders, and legal agencies ensure
laws, rules, and the intent of compliance are fulfilled.
• Compliance-based: The accounting
professional model.
• Problem 1: Its lack of long-term focus on values
and integrity.
• Problem 2: Does not teach employees to
navigate ethical gray areas.
• Values-based
• Relies on an explicit mission statement that
defines the core values of the firm and how
customers and employees should be treated.
• Board of directors/upper management should add
to value statements by formulating specific value
statements for its strategic business units (SBU).
• Certain areas may have rules associated with
stated values, enabling employees to understand
the relationship between the two.
• The focus is on values such as trust,
transparency, and respect to help employees
identify and deal with ethical issues.
• When using this approach, explain why rules
exist, what the penalties are if rules are violated,
and how employees can help improve the ethics
of the company.
Differential Association
• People learn ethical or unethical behavior while
interacting with others.
• The learning process is more likely to result in
unethical behavior if the individual associates
primarily with persons who behave unethically.
• Associating with others who are unethical,
combined with the opportunity to act unethically,
is a major influence on ethical decision making.
• Differential association influences ethical
decision making, and superiors in particular have
a strong influence on the ethics of their
subordinates.
• Employees, especially young managers, tend to
go along with their superiors’ moral judgments to
demonstrate loyalty.
Whistle-Blowing and Legal Protection
• Whistle-blowing: Exposing an employer’s
wrongdoing to outsiders such as the media or
government regulatory agencies.
• Sometimes used to refer to internal reporting of
misconduct to management, especially through
anonymous reporting mechanisms often called
hotlines.
• Legal Protection
• Sarbanes–Oxley Act
• The Federal Sentencing Guidelines for
Organizations (FSGO)
• The U.S. Department of Labor (DOL)
• The Corporate and Criminal Fraud Accountability
Act (CCFA)
• Securities and Exchange Commission
• The Dodd–Frank Act
Explanation of Legal Protection
• CCFA: Protects employees of publicly traded
firms from retaliation if they report violations of
any rule or regulation to the Securities and
Exchange Commission, or any provision of
federal law relating to fraud against shareholders.
• Requires attorneys to become internal whistleblowers.
• The Dodd–Frank Act: Additional incentives for
whistle-blowers (> $1 million = 10-30%)
• The Sarbanes–Oxley Act and the Federal
Sentencing Guidelines for Organizations
(FSGO):
• If an employee provides information to the
government about a company’s wrongdoing under
the Federal False Claims Act, the whistle-blower
is known as a qui tam relator.
• Can receive between 15 and 25 percent of the
recovered funds.
• The Sarbanes–Oxley Act and FSGO:
• Must have adequate knowledge of wrongdoing that could damage society.
• Illegal to “discharge, demote, suspend, threaten,
harass, or in any manner discriminate against” a
whistle-blower and set penalties of up to 10 years in
jail for executives who retaliate against whistleblowers.
• Specific protections including the right to seek
investigation and review by federal Inspectors General
for “adverse actions” such as termination or
demotions.
Table 7-3 Questions to Ask before Engaging in External Whistle-Blowing
1. Have I exhausted internal anonymous reporting opportunities within
the organization?
2. Have I examined company policies and codes that outline acceptable
behavior and violations of standards?
3. Is this a personal issue that should be resolved through other means?
4. Can I manage the stress that may result from exposing potential wrongdoing in the organization?
5. Can I deal with the consequences of resolving an ethical or legal conflict within the organization
Table 7-4 Receiver of Reports of Misconduct
Reporting Location
Immediate supervisor
Top management
Human resource management
Hotline/Help Line
Ethics officer
Outside the company (not governmental or regulatory authority)
Legal
Power Shapes Corporate Culture: Five Power Bases
• Reward: Ability to influence the behavior of others by
offering them something desirable (money, status, or
promotion).
• Coercive: Penalizes actions or behavior and relies
on fear to change behavior. More effective in
changing behavior in short versus long run. Often
employed where there is an extreme imbalance of
power. People continually subjected to coercion may
seek a counterbalance and align themselves with
other, more powerful persons or leave the
organization.
• Legitimate: Stems from the belief that a certain
person has the right to exert influence and certain
others have an obligation to accept it (titles and
positions of authority).
• Expert: Derived from a person’s knowledge (or a
perception that a person possesses knowledge).
Usually stems from a superior’s credibility with
subordinates. Credibility (expert power), is positively
correlated to the number of years a person worked in
a firm or industry, education, and honors he/she has
received for performance.
• Referent: Exists when one person perceives that
his/her goals or objectives are similar to
another’s with an attempt to influence the first to
take actions that allows both to achieve their
objectives. Identification with others helps boost
the decision maker’s confidence, thus increasing
the referent power
Motivating Ethical Behavior
• Motivation: A force within that focuses behavior
toward achieving a goal.
• Job performance is considered to be a function
of ability and motivation [job performance =
ability × motivation].
• An increase in promotion touches higher-order
needs (social connections, esteem, and
recognition) rather than lower-order (salary,
safety, and job security).
• Research shows an individual’s career stage, age,
organization size, and geographic location affect the
relative priority given to satisfying respect, selfesteem, and basic physiological needs.
• An individual’s hierarchy of needs may influence his
or her motivation and ethical behavior.
• Relatedness needs are satisfied by social and
interpersonal relationships.
• Growth needs are satisfied by creative or productive
activities.
Organizational Structure
• Decision making authority is concentrated in the
hands of top-level managers, and little authority is
delegated to lower levels.
• Responsibility, both internal and external, rests with
top-level managers.
• Structure especially suited to organizations that make high-risk decisions and have lower-level managers are not highly skilled in decision making.
• Suitable for organizations when production processes are routine and efficiency is of primary importance.
• Decision making authority is concentrated in the
hands of top-level managers, and little authority is
delegated to lower levels.
• Division of labor is typically well defined and a clear understanding of how to carry out assigned tasks.
• Stress formal rules, policies, and procedures backed up with elaborate control systems.
• Codes of ethics may specify the techniques used for decision making.
Decentralized Organization
• Decision making authority is delegated as far
down the chain of command as possible.
• Relatively few formal rules, and coordination and
control are usually informal and personal.
• Focus on increasing the flow of information.
• Strength: Adaptability and early recognition of
external change. With greater flexibility,
managers can react quickly to changes in their
ethical environment.
• Weakness: Difficult to respond quickly to changes in
policy and procedures established by top
management.
• Independent profit centers may deviate from
organizational objectives.
• May have fewer internal controls and use shared
values for their ethical standards.
• May have more variation in behavior.
• May be harder to control rogue employees engaging
in misconduct.
Corporate Structure, Culture, and Types of Groups
• Formal group: An assembly of individuals with
an organized structure that is explicitly accepted
by the group.
• Committee: Group assigned to a specific task,
represent different constituencies, meet regularly
to review performance, develop plans, or make
decisions.
• Weaknesses—lack of individual responsibility and
Groupthink mentality.
• Work groups: Used to subdivide duties within
specific functional areas of a company.
• Enables specialization.
• Ethical conflicts may arise because team
members come from different functional areas.
• Conflicts when members of different
organizational groups interact.
Informal Groups
• May generate disagreement and conflict, or
enhance morale and job satisfaction.
• Can help develop informal channels of
communication, sometimes called the
grapevine.
• The grapevine: Information passed along the
grapevine may relate to the job, the organization,
an ethical issue, or it may simply be gossip and
rumors.
• The grapevine
• Can act as an early warning system for employees.
• Can be an important source of information for individuals to assess ethical behavior within their organization.
• Corporate culture may provide a general understanding of rules, but informal groups make this come alive and provide direction for employees’ daily choices.
• Information passed along the grapevine is not always accurate, but managers who understand how the grapevine works can use it to reinforce acceptable values and beliefs.
Group Norms
• Help define acceptable and unacceptable behavior
within a group.
• Define the limit allowed on deviations from group
expectations.
• Provide explicit ethical directions.
• Can relate directly to managerial decisions.
• Have the power to enforce a strong degree of
conformity among group members.
• Can define the different roles for various positions
within the organization.
Variation in Employee Conduct: Bottom 10%
• Take advantage of situations to further their own
personal interests.
• More likely to manipulate, cheat, or act in a selfserving manner.
• May choose to take office supplies from work for
personal use if the only penalty they suffer is paying
for the supplies.
• The lower the risk of being caught, the higher the
likelihood that the 10 percent most likely to take
advantage of the company will be involved in
unethical activities.
Variation in Employee Conduct: Middle 40%
• Go along on most matters.
• Most concerned about the social implications of
their actions and want to fit into the organization.
• Easily influenced by what the people around
them are doing.
• May know using office supplies for personal use
is improper, yet they view it as acceptable
because their coworkers do so.
• Rationalize their actions by saying the use of
office supplies is a benefit of working at their
particular company and it must be acceptable
because the company does not enforce a policy
prohibiting the behavior.
• Rationalize that no one will get into trouble for
doing what everybody else is doing.
• Always try to follow company policies and rules.
• Have a strong grasp of acceptable behavior and
attempt to comply with codes of ethics, ethics
training, and other communications about
appropriate conduct.
• If a policy prohibiting taking office supplies from
work, these employees probably will observe it.
• Not likely to speak out about the 40 percent who
choose to go along with the work group
• Prefer to focus on their jobs and steer clear of
any organizational misconduct.
• If the company fails to communicate standards of
appropriate behavior, members of this group will
devise their own.
Variation in Employee Conduct: Top 10%
• Maintain formal ethical standards that focus on
rights, duties, and rules.
• Embrace values that assert certain inalienable
rights and actions, which they perceive to be
always ethically correct.
• Believe their values are right and superior to the
values of others or even to the company’s value
system.
• Have a tendency to report or speak out about
employee or firm misconduct even if the
company defines it as ethical.
• Members of this group will probably report
colleagues who take office supplies.
Flashcard from chapter 7
Sarbanes–Oxley 404
Definition:
Requires firms to adopt a set of values that forms a portion of the company’s culture
apathetic culture
Definition:
Shows minimal concern for either people or performance
caring culture
Definition:
Exhibits high concern for people but minimal concern for performance issues
exacting culture
Definition:
Shows little concern for people but a high concern for performance
integrative culture
Definition:
Combines a high concern for people and performance
cultural audit
Definition:
An assessment of an organization’s values
compliance culture
Definition:
Use a legalistic approach to ethics
values-based ethics culture
Definition:
Relies on an explicit mission statement that defines the core values of the firm and how customers and employees should be treated
Differential association
Definition:
The idea that people learn ethical or unethical behavior while interacting with others who are part of their role-sets or belong to other intimate personal groups
Whistle-blowing
Definition:
Exposing an employer’s wrongdoing to outsiders such as the media or government regulatory agencies
qui tam relator
Definition:
When an employee provides information to the government about a company’s wrongdoing under the Federal False Claims Act
Reward power
Definition:
A person’s ability to influence the behavior of others by offering them something desirable
Coercive power
Definition:
Penalizes actions or behavior
Legitimate power
Definition:
The belief that a certain person has the right to exert influence and certain others have an obligation to accept it
Expert power
Definition:
Derived from a person’s knowledge and usually stems from a superior’s credibility with subordinates
Referent power
Definition:
When one person perceives that his or her goals or objectives are similar to another’s
Motivation
Definition:
A force within the individual that focuses his or her behavior toward achieving a goal
Job performance
Definition:
A function of ability and motivation and can be represented by the equation (job performance = ability × motivation)
Relatedness needs
Definition:
Satisfied by social and interpersonal relationships
growth needs
Definition:
Satisfied by creative or productive activities
centralized organization
Definition:
Decision-making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels
decentralized organization
Definition:
Decision-making authority is delegated as far down the chain of command as possible
formal group
Definition:
An assembly of individuals with an organized structure that is explicitly accepted by the group
informal group
Definition:
Two or more individuals with a common interest but without an explicit organizational structure
Group norms
Definition:
Standards of behavior groups expect of their members
pre quiz from chapter 7
The MOST important attribute for effective leadership is \_\_\_\_\_. a. bringing out the best in others SL b. leading by example c. team meetings d. handling crises calmly e. admitting mistakes
What kind of power stems from a belief that a certain person has the right to exert power over others? a. referent power b. reward power c. expert power d. coercive power SL e. legitimate power
In which type of organization is decision making delegated as far down the chain of command as possible? a. flexible SL b. decentralized c. creative d. formalized e. centralized
A cultural audit _____.
a. is exclusively conducted externally
b. is an assessment of an organization’s accounting requirements
SL c. is an assessment of an organization’s values
d. is mandatory within U.S.-owned firms
e. is exclusively conducted internally
Which is NOT a characteristic of culture?
a. Culture is formed over a relatively long period of time.
b. Culture is shared among individuals belonging to a group or society.
c. Culture is relatively stable.
SL d. Culture can be changed easily and quickly.
e. Elements of culture are unwritten.
A compliance culture _____.
a. has a long-term focus on values
b. teaches employees to navigate ethical gray areas
c. revolves around the ethical culture concept
SL d. uses a legalistic approach to ethics
e. has a long-term focus on integrity
Which of the following utilizes a legalistic approach to ethics and uses laws and regulations to create its codes and requirements? a. exacting b. value-based ethics c. apathetic d. integrative SL e. compliance
A \_\_\_\_\_ organizational structure is best for organizations in which processes are routine and the division of labor is very well-defined. These organizations have a lot of formal rules, policies, and procedures. a. decentralized b. hierarchical c. flat SL d. centralized e. tall
A values-based ethics culture _____.
a. excludes Upper Management Board, but relies solely on the Board of Directors to add to general value statements by formulating specific value statements for its strategic business units (SBU)
b. is based solely on the Office of Best Practices to help employees identify and deal with ethical issues
SL c. relies upon an explicit mission statement that defines the core values of the firm
d. excludes the Board of Directors, but relies solely on Upper Management to add to general value statements by formulating specific value statements for its strategic business units (SBU)
e. is based solely on transparency to help employees identify and deal with ethical issues
Which of the following is NOT a characteristic of a centralized organization? a. many formal rules b. clear-cut division of labor c. low flexibility SL d. few and informal rules e. low problem recognition
Which of the following statements is FALSE concerning the concept of Differential Association?
a. People learn ethical or unethical behavior while interacting with others who are part of their role-sets.
SL b. Differential Association is not described in the decision-making framework of this book.
c. Associating with others who are unethical, combined with the opportunity to act unethically, is a major influence on ethical decision making,
d. The learning process is more likely to result in unethical behavior if the individual associates primarily with persons who behave unethically.
e. Differential association is the idea that people learn ethical or unethical behavior while interacting with others who are part of their role-sets or belong to other intimate personal groups.
What is the definition of corporate culture?
a. The way people speak, the types of food they eat, and other customs
SL b. The shared beliefs top managers in a company have about how they should manage themselves and other employees, and how they should conduct their business
c. The organizational relationships that influence the ethical decision-making process
d. Nationality or citizenship
e. Values, norms, artifacts, and rituals
What type of power is being used when one person perceives that his or her goals or objectives are similar to another's and the second person attempts to influence the first to take actions allowing both to achieve their objectives? SL a. referent b. legitimate c. expert d. corrosive e. reward
Unfortunately, in today’s competitive world, a company’s history and unwritten rules are not part of its corporate culture.
a. True
SL b. False
Corporate culture is exhibited through the behavioral patterns, concepts, documents such as codes of ethics, and rituals that emerge in an organization.
SL a. True
b. False
real quiz from chapter 7
QUESTION 1
Companies often execute cultural audits. The process can be used to measure
SL a.
an organization’s values.
b. unethical organizations. c. organizational structure. d. how cultured a firm's employees are. e. unethical employees.
1 points
QUESTION 2
An organization that delegates decision-making authority as far down the chain of command as possible and has relatively few formal rules is a. ethical. b. unethical. c. centralized. d. tall. SL e. decentralized. 1 points
QUESTION 3
Chapter 7 describes the term motivation as
a.
personal ambition without regard to the impact on others.
b. a desire to be finished with a project. c. the reason why high achieving employees strive for high job performance. d. individual goals.
SL e.
a force within the individual that focuses his or her behavior on achieving a goal.
1 points
QUESTION 4
When organizations work to create an ethical culture, there is a requirement of a(an) _______________ aspect, because each workplace has workers that will attept to take advantage of situations if the opportunity exists.
a. values-based b. statement of mission
SL c.
compliance
d. ethical e. punitive
1 points
QUESTION 5
The concept that individuals become more or less ethical while connecting and interacting with other people in their work and personal environments is known as
a. cognitive association. b. cognitive memory dissonance. c. group norms.
SL d.
differential association.
e. casual interaction.
1 points
QUESTION 6
_______ is legislation that requires organization’s managerial teams to measure success of the organization’s internal controls and undertake audits of the controls by an objective auditor, along with audits of the organization’s finances.
a. The Whistle-blower Protection Act b. Title VII of the Civil Rights Act c. The Dodd-Frank Act
SL d.
Sarbanes-Oxley 404
e. An ethics audit
1 points
QUESTION 7
Of the different types of power, one is most likely to sufficient for a short time but not long term.
SL a.
Coercive power
b. Legitimate power c. Reward power d. Expert power e. Referent power
1 points
QUESTION 8
One of our recent in-class cases highlighted this type of power. It’s is when the manager requires obedience and may mock or punsish employees who fail to meet expecations.
a. affiliative
SL b.
coercive
c. coaching d. pacesetting e. democratic
1 points
QUESTION 9
When a manufacturing crew leader orders a front-line employee to carry out a task that the employee perceives as unethical, yet the employee feels compelled to do it because of the crew leader’s position, the crew leader is exercising
a.
coercive power.
b. referent power. c. reward power.
SL d.
expert power.
e. legitimate power.
1 points
QUESTION 10
When an corporate culture is defined as apathetic, it is defined as
a.
high concern for people but minimal concern for performance.
b. little concern for people but a high concern for performance. c. high concern for people and performance.
SL d.
minimal concern for people and performance.
e. no concern for maintaining a cohesive organizational culture.
1 points
Chapter 10 notes from PPT
Global Culture, Values, and Practices
• National culture: Broader concept than organizational
culture. Includes everything—both tangible items, such as
artifacts, and intangible entities, such as concepts and
values.
• Cultural dimensions
• Individualism/collectivism: How self-oriented members of a culture are in their behavior. Individualist cultures place high value on individual achievement and self-interest.
• Power distance: The power inequality between superiors and subordinates.
• Uncertainty avoidance: How members of a society
respond to uncertainty or ambiguity
• Self-reference criterion (SRC): An unconscious
reference to one’s own cultural values,
experiences, and knowledge.
• Cultural relativism: Morality varies from one
culture to another and “right” and “wrong” are
defined differently.
• Global common values: Values shared across
most cultures.
• Desirable common values: Integrity, family and
community unity, equality, honesty, fidelity,
sharing, and unselfishness
• Undesirable common values: Ignorance, pride
and egoism, selfish desires, lust, greed, adultery,
theft, deceit, lying, murder, hypocrisy, slander, and
addiction
• Risk compartmentalization: When profit
centers within corporations are unaware of the
overall consequences of their actions on the firm
as a whole.
• Economic systems
• Adam Smith and laissez-faire
• John Maynard Keynes and the state
• Milton Friedman and capitalism
• Socialism: Economic theories advocating the
creation of a society when wealth and power are
shared and distributed evenly based on the
amount of work expended in production.
• Social democracy: Allows private ownership of
property and also features a large government
equipped to offer such services as education and
health care to its citizens.
• Rational economics: Based on the assumption
that people are predictable and will maximize the
utility of their choices relative to their needs and
wants.
• Behavioral economics: Assumes humans act
irrationally because of genetics, emotions,
learned behavior, and heuristics, or rules of
thumb.
Economic Concepts and the MNC
• Bimodal wealth distribution: Occurs when the
middle class shrinks, resulting in highly concentrated
wealth among the rich and increased numbers of
poor people with few resources.
• Multinational corporations (MNC): Public
companies that operate on a global scale without
significant ties to any one nation or region. Represent
the highest level of international business
commitment and are characterized by a global
strategy focusing on opportunities throughout the
world.
• MNC Issues
1. MNCs use labor-saving devices that increase
unemployment in countries where they manufacture.
2. Size and financial clout enable them to control money,
supplies, employment, and even the economic wellbeing of less-developed countries.
3. Size and power of MNCs create ethical issues
involving the exploitation of both natural and human
resources.
• MNC Issues
1. MNCs can borrow money from local capital
markets in much higher volume than smaller local
firms.
2. MNCs have been accused of failing to carry an
appropriate share of the cost of social development.
Global Cooperation to Support Responsible Business
• International Monetary Fund
• Makes short-term loans to member countries with
deficits.
• Provides foreign currencies for its members.
• Provides information about countries that might
default on their debts.
• Member states provide resources to fund the IMF
through a system of quotas proportional to the
size of their respective economies.
• United Nations Global Compact
• Promote worldwide peace, establish beneficial
relationships between countries, and support the
creation of better standards and human rights on a
global scale.
• Set of 10 principles that promote human rights,
sustainability, and the eradication of corruption.
• World Trade Organization
• Administers its own trade agreements, facilitates trade negotiations, settles trade disputes, and monitors the trade policies of member nations.
Global Ethics Issues • Corruption • Variations in international regulation • Supply chain issues involving human rights violations • Bribery • Antitrust activity: Vertical systems • Internet security and privacy • Human rights • Health care • Labor and right to work • Compensation: A living wage • Executive compensation • Consumerism: Made-to-break
TABLE 10-6: Current Global Issues Perceived by Upper Management Level
International Laws
• The U.S. Foreign Corrupt Practices Act (FCPA):
Prohibits American companies from making payments to
foreign officials for the purpose of obtaining or retaining
business.
• U.K. Anti-Bribery Act: Foreign companies with
operations in the United Kingdom, can be held liable for
bribery, no matter where the offense is committed or who in the company commits the act, even if the bribe itself has no connection with the United Kingdom.
• Law classifies bribes between private businesspeople as illegal.
Importance of Ethical Decision Making in Global Business
• Companies should:
• Incorporate global and domestic ethical issues in
their risk management strategies.
• Formulate their own global ethical codes.
• Appoint ethics officers or committees to oversee
and handle global compliance issues.
• Provide extensive training to its employees.
chapter 10 pre quiz
Which of the following is based on the assumption that people are predictable and will seek to maximize the utility of their choices relative to their needs and wants? a. communism b. free market economics SL c. rational economics d. behavioral economics e. socialism
Of the following statements, which is correct?
a. Dumping is still legal under many international laws, even though it substantially reduces competition.
b. When companies charge high prices for products sold in foreign markets while selling the same products in their home markets at low prices that do not cover all the costs of exporting the products, the practice is known as dumping.
c. Dumping encourages competition and benefits workers in home countries.
d. When companies charge low prices for products sold in their home markets while selling the same products in foreign markets at high prices, the practice is known as dumping.
SL e. When companies charge high prices for products sold in their home markets while selling the same products in foreign markets at low prices that do not cover all the costs of exporting the products, the practice is known as dumping.
The power inequality between superiors and subordinates is referred to as \_\_\_\_\_. a. cultural relativism b. individualism/collectivism SL c. power distance dimension d. uncertainty avoidance e. self-reference criterion
When various profit centers within corporations become unaware of the overall consequences of their actions on the firm as a whole it is called \_\_\_\_\_. a. packaging b. global common values SL c. risk compartmentalization d. the Sullivan Principles e. the framing effect
Which of the following provides legally binding ground rules for international commerce and trade policy? a. Securities and Exchange Commission SL b. World Trade Organization c. Council on Economic Priorities d. Federal Trade Commission e. Omnibus Trade Commission
Which organization was developed by the UN and asks businesses to adhere to human rights and labor standards defined in international treaties?
a. Amnesty International
SL b. Global Compact
c. World Trade Organization
d. Council on Economic Priorities Accreditation Agency
e. Fair Labor Association
How members of a society respond to uncertainty or ambiguity is referred to as \_\_\_\_\_. SL a. uncertainty avoidance b. Hofstede's cultural dimension c. individualism/collectivism d. self-reference criterion e. cultural relativism
When morality varies from one culture to another and that "right" and "wrong" are defined differently is referred to as \_\_\_\_\_. a. Hofstede's cultural dimension SL b. cultural relativism c. individualism/collectivism d. self-reference criterion e. uncertainty avoidance
The unconscious reference to one's own cultural values, experiences, and knowledge is called \_\_\_\_\_. a. power distance b. global common values SL c. the self-reference criterion d. uncertainty avoidance e. cultural relativism
As defined within the chapter, global common values _____.
a. have a subset of desirable common values such as integrity, family and egoism
b. are not all derived from the major religions of Hinduism, Buddhism, Confucianism, Judaism, Islam, and Christianity
c. have a subset of undesirable common values such as pride, fidelity, and egoism
SL d. are all derived from the major religions
e. are unrelated to most laws either directly or indirectly
Which of the following is the international coordinator of regulatory policy for the world and makes short-term loans to member countries with deficits and provides foreign currencies to its members? SL a. International Monetary Fund b. World Trade Organization c. World Bank d. United Nations e. Multinational corporation
Which is NOT a criticism of MNCs _____.
a. their size
b. exploitation of labor markets of host countries
c. unfair competition
SL d. exploitation of labor markets of home countries
e. their power
Companies such as Coca-Cola, Hewlett-Packard, and Walmart support a globally based resource system called __________, which tracks emerging issues and trends, provides information on corporate leadership and best practices, conducts educational workshops and training, and assists organizations in developing practical business ethics tools.
a. global common values
b. social democracy
SL c. business for social responsibility
d. global business
e. socialism
WalMart’s annual revenues are greater than the GDPs of most of the countries in the world.
SL a. True
b. False
Laissez-faire capitalism occurs when various profit centers within corporations are unaware of the consequences of their actions on the firm as a whole.
a. True
SL b. False
quiz
QUESTION 1
When products and goods from a multinational company are signifcantly higher in one country but sold cheaply in other countries, this practice is known as
a. price discrimination. b. skimming. c. price gouging.
SL d.
dumping.
e. loading.
1 points
QUESTION 2（错的）
The UN’s Declaration on Human Rights covers all of the following options except for _______________
a.
Mothers and children being entitled to a special level of care
b. The right to electricity and running water
SL c.
The right to a home adequate for health and well-being
d. Freedom of religion e. The right to work in favorable conditions
1 points
QUESTION 3
Choose the organization created in 1995 that oversees future trade negotiations, administers trade agreements, settles disputes in trading, and monitors countries’ policies of trade.
a. European Union b. North American Free Trade Act
SL c.
World Trade Organization
d. International Monetary Fund e. United Nations
1 points
QUESTION 4
The expansion of technology and disparate security laws between nations has brought a growing human rights concern in the area of __________________
a.
freedom of speech.
b. health care. c. religion.
SL d.
privacy.
e. a secure job.
1 points
QUESTION 5
Leaders in the International Monetary Fund undertake numerous roles including the promotion of ethical business conduct.
SL True
False
1 points
QUESTION 6
When a person’s decision-making process involves the unconscious reference to that person’s cultural values and unique experiences, this is known as the ___________________
a. cultural relativism philosophy. b. cultural reference criterion. c. consumerism movement. d. cultural-self criterion.
SL e.
self-reference criterion.
1 points
QUESTION 7
An issue discussed in Chapter 10 related to how individuals in a society relate to ambiguity is called ________________
a. rational economics b. power distance. c. cultural relativism.
SL d.
uncertainty avoidance.
e. collectivism.
1 points
QUESTION 8
In terms of economic philosophies, communisim is the same as socialism.
True
SL False
1 points
QUESTION 9
In some nations, providing health care to individuals is a basic human right. Choose the country below that considers health care to be a privilege and not a right.
SL a.
Germany
b. Canada c. Sweden
SL d.
The United States
e. France
1 points
QUESTION 10
The textbook refers to the phrase, ‘when in Rome, do as the Romans do. This idea that business people should adopt the practices of the country in which they’re doing business is a thought process and practice called:
a. dumping. b. the self-reference criterion. c. consumerism.
SL d.
cultural relativism.
e. country cultural values.
Chapter 11
flashcard
Leadership
Definition:
The ability or authority to guide and direct others toward a goal
normative myopia
Definition:
When managers overlook or stifle the importance of core values in their business decisions
Ethical business conflicts
Definition:
When there are two or more positions on a decision that conflicts with organizational goals
Leader–follower congruence
Definition:
When leaders and followers share the same vision, ethical expectations, and objectives for the company
emotional intelligence
Definition:
The ability to manage themselves and their relationships with others effectively, characterized by self-awareness, self-control, and relationship building
Transactional leaders
Definition:
Leaders who create employee satisfaction through negotiating, or “bartering,” for desired behaviors or levels of performance
Authentic leaders
Definition:
Leaders who are passionate about the company, live out corporate values daily in their behavior in the workplace, and form long-term relationships with employees and other stakeholders
Transformational leaders
Definition:
Leaders who strive to raise employees’ level of commitment and foster trust and motivation
PPT from Chapter 11
Ethical Leadership
• Leadership: Ability/authority to guide/direct others toward a goal. Ethical decisions are one dimension of leadership.
• Can create an ethical culture.
• Power to motivate/enforce norms, policies, and viewpoints.
• Influence corporate culture and ethical posture.
• Not simply allowing employees to follow their own moral codes.
• Assume responsibility to model ethical conduct for
employees.
TABLE 11-2: Seven Habits of Strong Ethical Leaders
- Ethical leaders have strong personal character.
- Ethical leaders have a passion to do right.
- Ethical leaders are proactive.
- Ethical leaders consider all stakeholders’ interests.
- Ethical leaders are role models for the organization’s values.
- Ethical leaders are transparent and actively involved in decision making.
- Ethical leaders take a holistic view of the firm’s ethical culture.
Normative Myopia
• Normative myopia: Occurs when leaders
overlook/stifle important core values in decisions.
1. Believe normative values do not apply to
managerial decisions.
2. Facts/values can be separated in decision
making.
3. Normative values are outside the realm of
business.
• Result: Ethical blindness/propensity to
rationalize an unethical action/turn a blind eye.
Benefits of Ethical Leadership
• Direct positive impact on corporate culture.
• Can lead to higher employee satisfaction and employee commitment.
• Can create strong relationships with external stakeholders.
• Strong impact on long-term market firm valuation (positive association between ethical commitment of employees and a firm’s valuation on the stock market).
• More likely to see government fines reduced if misconduct occurs.
• Can create significant competitive advantages/value for company.
Ethical Leadership and Organizational Culture
• Integrity-Based Approach
• Leaders take responsibility for the firm’s ethical
culture and hold employees accountable.
• Usually have chief officers, human resource
managers, and board member committees
involved with ethics and compliance.
• Approach empowers employees.
• Can help the firm understand where questionable
practices are occurring and where possible new
ethical issues are arising.
• Remember:
• Business is not static; it is dynamic.
• Ethical leaders use an integrity/compliance
combination.
Leader Types
• Unethical leader
• Usually egocentric.
• Searches for legal loopholes.
• Perceive ethics codes, compliance regulations,
and industry standards as optional.
• Justification for breaking laws: Serves a greater
good; risk of getting caught is low.
• Apathetic leader
• Cares little for ethics.
• Views ethics as relative/optional in a business
context.
• Often display no passion for firm/mission of the
organization.
• Employees don’t see sacrifices in them that other
managers or leaders display.
• Ethical leader
• Includes ethics at every operational level.
• Addresses issues as soon as they appear.
• Tries to create participative organizational
cultures.
• Views employee collaboration as an important
resource.
• Psychopathic leader/corporate psychopath: Research suggests 1% could qualify. • Superficial charm. • No conscience. • Grandiose self-worth. • Little/no empathy. • Enjoy flouting rules.
- Psychopathic leader/corporate psychopath
- Companies with this leader have:
- Heightened level of conflict.
- Lower employee commitment.
- Higher organizational constraints.
- Heavier workloads.
- Poor levels of training.
- Lower job satisfaction.
- Increased employee absenteeism
Conflict Management Styles
competing: high assertiveness, low cooperativeness
avoiding: low assertiveness, low cooperativeness
accommodating: low assertiveness, high cooperativeness
collaborating: high assertiveness, high cooperativeness
compromising: median assertiveness, median cooperativeness
Ethical Leadership Communication
four categories of communication:
interpersonal communication
small group communication
listening
nonverbal communication
Transparency: Develops a culture where ethics is
frequently discussed.
Reporting: Two-way process—both employee and
leader feel a responsibility to report to one’s
subordinates.
TABLE 11-4: How to Avoid Groupthink
1. Understand groupthink and how it can occur.
2. Allow open and honest discussions that encourage critiques, questioning, and
criticism.
3. Criticism should be welcomed and not minimized or dismissed.
4. Create group tension by assigning a “devil’s advocate” or having half the team on the
“pro” side and half on the “con” side to adequately evaluate decisions.
5. On important matters, bring in the appropriate subject matter experts (internally or
externally).
6. Document the situation, options, recommendations, and implementation time table,
needed support, and budget.
7. Have another team review your output.
Leader-Follower Relationships
• Leader-follower congruence: Leaders and
followers share same vision, ethical
expectations, and objectives for the company.
• Leader-exchange theory: Leaders form unique
relationships with followers through social
interactions.
• Power differences
• Workplace politics
• Feedback: Positive/negative via formal/informal
methods.
Leadership Styles
• Transactional leaders: Attempt to create
employee satisfaction through negotiating, or
“bartering,” for desired behaviors or levels of
performance.
• Transformational leaders: Strive to raise
employees’ level of commitment and foster trust
and motivation.
*Both can positively influence the corporate culture.
• Authentic leaders: Passionate about company,
live out corporate values daily, form long-term
relationships with employees and other
stakeholders.
The RADAR Model Recognize Avoid Discover Answer Recover
pre-quiz
The ability or authority to guide and direct others toward a goal is called \_\_\_\_\_. a. management SL b. leadership c. governance d. supervision e. control
When managers overlook or stifle the importance of core values in their business decisions it is referred to in the chapter as \_\_\_\_\_. a. positive dysfunction b. positive myopia c. cross cultural dysfunction d. unethical conflict SL e. normative myopia
Ethical leaders need both knowledge and \_\_\_\_\_\_\_\_\_\_\_ to make the right decisions. a. passion b. vision c. courage SL d. experience e. culture
An integrity-based approach _____.
SL a. usually have chief officers, human resource managers, and board member committees involved with the ethics and compliance program
b. does not empower employees but helps them integrate ethical values and principles established by the firm
c. views ethics as a deterrent to implementing core values
d. helps very little concerning where questionable practices are occurring and where possible new ethical issues are arising
e. usually has a leader allows others to take responsibility for the firm’s ethical culture
With regards to benefits of ethical leadership, which statement is incorrect?
a. Ethical leaders communicate and monitor an organization’s values, ensuring that employees are familiar with the company’s purpose and beliefs.
b. Ethical leaders provide cultural motivations for ethical behavior, such as reward systems for ethical conduct and support for ethical decision making.
c. Ethical leaders encourage employees to act in an ethical manner in their day-to-day work environment.
SL d. Working for a company with ethical leaders can raise costs for the firm as well as serve to decrease employee productivity.
e. Ethical leadership can lead to higher employee satisfaction and commitment.
Ethical leaders generally adopt one of two approaches to leadership: a \_\_\_\_\_\_\_\_\_-based approach or a(n) \_\_\_\_\_\_\_\_-based approach. a. submission; honesty b. obedience; reliability c. certainty; risk d. leader; follower SL e. compliance; integrity
Conflict management styles include all of the following EXCEPT \_\_\_\_\_. a. competing SL b. guarding c. avoiding d. accommodating e. collaborating
This type of leader is characterized as having superficial charm, no conscience, grandiose self-worth, little or no empathy, and enjoyment in flouting the rules. a. ethical b. eclectic c. apathetic SL d. psychopathic e. isomorphic
Which of the following is not a category of communication? a. small group communication b. nonverbal communication SL c. coercive communication d. listening e. interpersonal communication
\_\_\_\_\_\_\_\_\_\_\_\_\_ occurs when the leaders and followers share the same vision, ethical expectations, and objectives for the company. SL a. Leader-follower congruence b. Authentic leadership c. Interpersonal communication d. Successful leadership e. Ethical conflict
With regards to leadership styles that influence ethical decisions, the challenge for leaders is _______________________, which is essential if organizational leaders are to steer their companies toward success.
a. to communicate goals effectively
b. to make profits
c. to increase productivity
d. to motivate organizational members
SL e. to gain trust and commitment of organizational members
Which type of leader inspires employees to follow a vision, facilitates change, and creates a strongly positive performance climate? This type of leader is considered to be the most effective. a. The coaching leader b. The pacesetting leader SL c. The authoritative leader d. The coercive leader e. The democratic leader
All of the following represent steps in the RADAR model EXCEPT \_\_\_\_\_. a. discover b. answer SL c. realize d. avoid e. recover
Ethical leadership is possible without effective communication.
a. True
SL b. False
Organizational culture emerges whether or not there is effective leadership.
SL a. True
b. False
quiz from chapter 11
When an organization’s employees are invited to discuss concerns and ethical issues, this is part of a ____________ culture.
a. shareholders b. consumers
SL c.
values
d. stakeholders e. profits
When one employee takes credit for the work of another, engages in gossip or favoratism, this is part of __________
SL a.
ethical conflict
b. groupthink c. organizational politics d. political skills e. competitiveness
Which of the steps in the RADAR model addresses fixing weaknesses in an ethics program and creating new methods for discovering unethical behaviors?
a. Recognize b. Answer c. Detect d. Avoid
SL e.
Recovery
Of the five steps in the RADAR model, many leaders are hesitant to execute this step because of the potential to uncover unethical conduct that would be bad for the organization.
a. Avoid b. Recognize
SL c.
Detect
d. Recover e. Answer
Ethical leaders and employees rely on feedback in the workplace. Choose the option related to feedback that is NOT true.
a. Negative feedback is important to inform employees of weaknesses and provide constructive ways for improving them.
SL b.
Most companies recognize the need for organizational leaders to provide feedback to employees.
c. Feedback can occur through informal methods like a simple conversation or through more formal systems such as employee performance evaluations. d. Employee feedback can be generated in many different ways, including interviews, anonymous surveys, ethical audits, and websites. e. Most companies recognize the need for organizational leaders to get feedback from their employees.
Apathetic leaders are not necessarily unethical.
SL True
False
The \_\_\_\_\_ leader can create a negative climate because of the high standards that he or she sets. This style works best for attaining quick results from highly motivated individuals who value achievement and take initiative. a. coaching b. authoritative c. affiliative SL d. pacesetting e. democratic
As discussed in class and in the textbook, ______________ describes leaders who often create relationships with employees through social interactions.
SL a.
Leader-exchange theory
b. Conflict management c. Emotional intelligence theory d. Normative myopia e. Leader-follower congruence
When managers or leaders have a _______________conflict management style, they express an intention of meeting stakeholder needs as well as adhereing to the firm’s principles and values.
a. avoiding
SL b.
collaborating
c. compromising d. accommodating e. competing
When a leader is known for enhancing employee satisfaction through negotiating or bartering, this person is likely a transformational leader.
True
SL False
