CHAPTER5

Ethical Decision
Making and Ethical
Leadership
Framework for Understanding the Ethical
Decision Making Process in Business
 Ethical Issue Intensity

Ethical issue intensity

the perceived relevance or importance of an
ethical issue to the individual, work group, and/or
organization
Reflects the ethical sensitivity of the individual or
work group
Triggers the ethical decision process
Moral Intensity
relates to a persons perception of social
pressure
 Individual Factors
Peoples own values and principles of right or
wrong
Research: women are generally more ethical than
males (gender)
Education, Nationality, and Age are other
individual factors
Locus of control
relates to individual differences in relation to a generalized
belief about how one is affected by internal versus external
events or reinforcements
Can be external or internal
 Organizational Factors
Corporate culture
a set of values, norms, and artifacts
that members (employees) of an
organization share
Those who have influence in a
work group (e.g. managers,
coworkers, subordinates) are referred
to as significant others
Obedience to authority helps to
explain why many employees simply
follow the directives of a superior
Source: Digital Vision
 Opportunity

Describes the conditions in an

organization that limit/permit
ethical/unethical behavior
Relates to individuals immediate
job context
Where they work, with whom they work,
and the nature of the work
Opportunities for misconduct can be
reduced by establishing formal
codes, policies, and enforced rules
Source: Triangle Images
 Using the Framework to Improve
Ethical Decisions
It is impossible to objectively determine right
and wrong
Having a thorough knowledge about how ethical
decisions are made will not solve ethical problems
Business ethics involves value judgments and
collective agreement about acceptable patterns
of behavior
Organizations take on a culture of their own,
which have a significant influence on business
ethics
 Leadership in Corporate Culture
Leadership
The ability or authority to guide
and direct others toward
achievement of a goal
Leaders are key to
influencing an
organizations corporate
culture and ethics
Leadership styles influence
organizational behavior

Source: Jack Hollingsworth/Corbis

The Managerial Role in Developing
Ethics Program Leadership
 Leadership Styles

Coercive leaders
Authoritative leaders
Affiliative leaders
Democratic leaders
Pacesetting leaders
Coaching leaders
 Types of Leaders

Transactional leaders
create employee satisfaction through bartering for
desired behaviors/performance
Transformational leaders
raise employees commitment and foster trust
and motivation
Transformational ethical leadership is best suited
for organizations with high ethical commitment
among employees and strong stakeholder
support for an ethical culture
Habits of Strong Ethical Leaders