THE BEHVAIOURAL

CONTEXT
Chapter 5

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

Learning objectives

Identify and explain the differences in terms of

ethical decision making in different
organizational forms, including SMEs, familyowned
businesses, not-for-profit organizations and partnerships.

Evaluate how ethics and responsibility in

business are affected by organizational
structures and cultures.

Analyse the different factors that can influence

the ways that individuals conceptualize ethics
and make ethical choices.

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

TOPICS
The behaviours complex affecting ethical decision making
Ownership and management
Organizational structures
Group factors affecting ethical decision making
Individual factors affecting ethical decision making

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

THE BEVHAVIOURAL COMPLEX AFFECTING

ETHICAL DECISION MAKING
Ethical decision making is affected by both individual and
collective factors:

Individual factors
Motives
Knowledge
Values
Beliefs

Collective factors
Ownership
Formal structure
Group norms
Organizational culture
Power relationships

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

THE BEVHAVIOURAL COMPLEX AFFECTING

ETHICAL DECISION MAKING

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

OWNERSHIP AND MANAGEMENT

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

OWNERSHIP AND MANAGEMENT

Less than 50 employees. Micro-businesses employ less than

25 employees.

Aiming at stable and reasonable returns.

Lower profits, small resource base, small range of customers,

tactical planning, short lines of communication, quick decision
making.

Small business often reflect key values of the owner/manager.

Balance between the risks of limited governance and the

relative case with which smaller firms can operate ethically.
o

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

OWNERSHIP AND MANAGEMENT

65-80 % of all businesses world wide are family owned.

Interconnected stakeholder; power is exercised intimately;

growth related to the needs of the family; greater sense of loyalty.
o

Long-term sustainability is key, rather than profitability.

Managers may have their decision(s) overruled by the family.

Employees often treated with a positive degree of paternalism.

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

OWNERSHIP AND MANAGEMENT

For-profit organisations, ranging from just two individuals to global

players with thousands of employees and dozens partners.

Partners are often without limits on liabilities.

Many partnerships can be found in the professional service field.

E.g. law or accounting.

Often governed by codes of conduct or codes of professional

practice

Internal safeguards practices to ensure ethical behaviour.

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

OWNERSHIP AND MANAGEMENT

Independent and self-governing entities.

Generally governed by a board of trustees.

Trustee boards are often self-perpetuating entities. New

appointments made on recommendation rather than an objective
evaluation.
o

Recent changes to appoint new trustees based on objective

procedures designed to indentify expertise.
o

Some external audit checks, but less developed than in the private
sector.

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

OWNERSHIP AND MANAGEMENT

The state is often the biggest economy player in a country.

Ethical issues include corruption, inequity of public service

deliveries, misuse power and the law.
o

Officials may be tempted by bribery.

Politicians often fail to focus on what is good for the country, but
rather focus on issues that are good for their public image certainly
pre-election period.

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

ORGANIZATIONAL STRUCTURE
The hierarchy of authority.
The hierarchy of responsibility.
The logical division of operations into functions.
The hierarchy of status.
The hierarchy of capability.
The hierarchy of pay levels.
The standard career track for most professional workers.

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

ORGANIZATIONAL STRUCTURE
Important issues in organizational structure and ethics:

How does structure disengage employees from their moral

instincts?

A complex structure may be blurring the responsibility of the

organisation, with no employees considering ethics or taking
responsibility.

How does structure facilitates/hinders ethical and responsible

behaviour?

The wider the span of control of the manager the less they can
keep detailed view of the employees.

Outsourcing practices may also be blurring the boundaries of

the

organisations responsibilities

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

GROUP FACTORS AFFECTING ETHICAL

DECISION MAKING
Organizational culture = the way we do things around here
Culture can vary considerably, with difference degrees of: Power distance;
Individuality/collectivism; Uncertainty avoidance; Masculinity/femininity; Longterm/short-term orientation.

Ethical decision making and

sense of responsibility

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

GROUP FACTORS AFFECTING ETHICAL

DECISION MAKING
ETHICS IN PRACTICE:

Motorola encourage direct reporting of ethical issues via

its Ethical line - a phone line that can be used
anonymously, where employees or others can report areas of
concern.

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

INDIVIDUAL FACTOR AFFECTING ETHICAL

DECISIONS

VALUES AND
ETHICAL
IDEOLOGIES

PERCEPTION AND
COGNITION

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

INDIVIDUAL FACTOR AFFECTING ETHICAL

DECISIONS
Values are close to our sense of identity
so much that they can be difficult to
clearly analyse

VALUES AND
ETHICAL
IDEOLOGIES

Ethical ideologies describe the way in which we hold

values:

Absolutist little relativism but a lot of idealism

Exceptionist little idealism or relativism

Situationist a lot of both relativism and idealism

Subjectivist a lot of relativism, little idealism

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

INDIVIDUAL FACTOR AFFECTING ETHICAL

DECISIONS
Perception of risk associated
with unethical behaviour.
Organizations can reduce unethical
behaviour through monitoring and
appropriate punishment

Moral imaginations refers to

the ability to think of different
ways to resolve a situation
without acting unethically.

PERCEPTION AND
COGNITION

Organizations can reduce unethical

behaviour by encouraging a culture that
develop greater imagination in
organisational members

For use with Business Ethics and Corporate Social Responsibility

by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning

The behavioural context

SUMMARY

Organizational structure rarely creates ethical risk of itself,

but tends to exaggerate ones that are already evident.

SMEs, and family businesses, often operate to different owner-strategies. These

tend to manage ethics in a more intimate and potentially more personally focused
manner.

Not-for-profit organizations ten t o have potential weakness in their governance.

Organizational culture, group norms, and organizational power can all crate

pressure towards group conformity in ethical choice.

Individual conceive values in distinct ways, which render ethical discussion and

debate more problematic than is generally realized.

For use with Business Ethics and Corporate Social Responsibility
by Paul Griseri and Nina Seppala
1408007436 2010 Cengage Learning