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Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 1
Business Ethics and Organization Social Responsibility (MGT 422)
Due Date: 14/01/2023 @ 23:59
Course Name: Business ethics and
organization social responsibility
Course Code: MGT 422
Student’s Name:
Semester: Second
CRN:
Student’s ID Number:
Academic Year:2022-23
For Instructor’s Use only
Instructor’s Name: Dr. Shahid Alam
Students’ Grade: Marks Obtained/Out of 15
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.
Learning Outcomes:
No
CLO-4
CLO-6
Course Learning Outcomes (CLOs)
Illustrate the role of social responsibility in the functional areas and strategic
processes of business and a comprehensive framework for analyzing and resolving
ethical issues and dilemmas in an organization.
Write coherent project about a case study or actual research about ethics
The content is available for free download in knowledge resource from the SEU
homepage:
Read chapter 16 “Ethics in Management: Ethical Leadership and Culture” page
299-309 Source Title: Handbook of Research on Sustainable Supply Chain Management for the Global Economy
Copyright: © 2020 |Pages: 11
ISBN13: 9781799846017|ISBN10: 1799846016|EISBN13: 9781799846024 DOI: 10.4018/978-1-7998-4601-7.ch016
available in SDL and answer the following questions:
1. Write a summary on the different perspective the author speaks about
management of ethics mentioned in the article with references. (500 words-5
Marks)
2. Discuss Kohlberg’s moral motives of management as explained by the
article with proper references. (500 words-5 Marks)
3. Elaborate how the author connects leadership and culture with management
of ethics with proper references. (500 words-5 Marks)
299
Chapter 16
Ethics in Management:
Ethical Leadership and Culture
Yasemin Sar?c? Aytan
https://orcid.org/0000-0002-3026-5398
Istanbul Esenyurt University, Turkey
?lknur Sayan
https://orcid.org/0000-0002-7133-5858
Istanbul Kent University, Turkey
ABSTRACT
Recently, ethics is one of the fundamental issues that companies had to pay attention to because of global
economic crises, corporate scandals, and rising importance of environmental concerns. Furthermore,
scarcity of resources forced companies to think about sustainability within ethical issues. Devastating
effects of the problems that companies dealing with have some consequences at the last instance.
Ethics in management is becoming an ascending subject with all stakeholders, from a single customer
to governmental practices. In this chapter, ethics in management will be discussed with its theoretical
development, relation with organizational culture, and leadership.
ETHICS AND ETHICAL MANAGEMENT
Ethics
Ethics is the search for the general character that makes right acts right (Ross, 1930). It is the study of
what is good or right for human beings (Hoffman and Moore, 1984). Ethics, has been defined by DeGeorge as ‘a systematic attempt through the use of reason to make sense of our individual and social
moral experience in such a way as to determine the rules which ought to govern human conduct and
the values worth pursuing in life’ (1982). Singer (1994) writes on ‘what is ethics?’ that it stands for
systematic studying of reasoning about how we ought to act. Ethics can be seen as a guide to action
DOI: 10.4018/978-1-7998-4601-7.ch016
Copyright © 2020, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
?
Ethics in Management
while asking the question ‘what shall we do?’ Ethics is the evaluative study of what actors ought to do,
rather than the descriptive study of what they have done, or are doing (Baylis, Smith,& Owens, 2008).
Since the beginning of the human race, doing the right thing for the sake of community is the matter of ethics. It is a timeless phenomenon. On the other side, there are no written rules, obligations or
enforcements for ethical applications. Ethics could not be measured as concrete scientific experiments
done under stable conditions.
Furthermore, every ethical belief contains a subject and a predicate. A subject is defined as what
the belief is concerning while a predicate is what is said about the subject. Actions or practices such as
capital punishment, adultery, lying could be count as regular subjects. “Wrong, unfair, bad, good” are
examples of ethical predicates. Hence, for the person who believes that assisted suicide is wrong, “assisted suicide” is the subject of the belief and “wrong” is the ethical predicate. The subject of an ethical
belief is usually an action or practice, but sometimes is a system or institution. Intentional actions we
designate as “ethical” or “unethical” are usually actions that benefit or harm other people or ourselves
in some serious ways (Duska, R., Duska, B., Ragatz, 2011).
To comprehend ethics more obviously Hosmer (1994) summarized general ethical principles under
10 groups:
Self- interest (ethical egoism): The first principle can be expressed as never take any action that
is not in the long-term self-interests of yourself and/or of the organization to which you belong.
2. Personal virtues (Aristotle): Second principle defined as never take any action which is not honest,
open and truthful, and which you would not be proud to see reported widely in national newspapers
and on network news programs.
3. Religious injunctions (St. Augustine and St. Thomas Aquinas): Third one never take any action
that is not kind and compassionate, and that does not build a sense of community, a sense of all of
us working together for a commonly accepted goal.
4. Government requirements (Hobbes and Locke): The principle, then, can be expressed as never
take any action that violates the law, for the law represents the minimal moral standards of our
society.
5. Utilitarian benefits (Bentham and Mill): explained as never take any action that does not result
in greater good than harm for the society of which you are a part.
6. Universal Rules (Kant): never take any action that you would not be willing to see others, faced
with the same or a closely similar situation, also be free or even encouraged to take.
7. Individual rights (Jefferson and King): summarized as never take any action that abridges the
agreed-upon and accepted rights of others.
8. Economic efficiency (Smith, Friedman and Blinder): always act to maximize profits subject to
legal and market constraints, for maximum profits are evidence of the most efficient production.
9. Distributive justice (Rawls): defined as never take any action in which the least among us are
harmed in some way.
10. Contributive liberty (Nozick): last grouping expressed as never take any action that will interfere
with the right of all of us for our self-development and self-fulfillment to the limit of our abilities.
1.
Also Klikauer (2010) classified ethics under three aspects. Table 1 shows us this grouping:
300
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Ethics in Management
Table 1. ­
Traditional Ethics
Sittlichkeit(Morality)
Communicative Ethics
Core Ethical Question:
What shall I do and How shall I live?
Core Ethical Question:
How shall we live ethically in society
Core Ethical Question:
How can we communicate ethically?
Meta-Ethical Perspective:
Philosophy about ethics and moral
behaviour
Meta-Ethical Perspective:
Philosophy about socially constructed
ethics and moral behavior (Hegel)
Meta-Ethical Perspective:
Ethics of communicatively established
dialogue (Habermas)
Normative Viewpoint:
Norms, values, rules, standards and
principles that guide actions
Normative Viewpoint:
Ethical institutions organized and run by
morally conscious actors (Mündigkeitresposibility)
Normative Viewpoint:
Ethical communication organized by
participants in discourse ethics
Form of Ethics:
Universalism, Moral Relativism,
Irrationalism, Act and Rule Utilitarianism,
Greek and Modern Virtue Ethics, Social
Contract Theory, Kant’s Universalism and
Morality, Nihilism and Egoism
Form of Ethics:
End of master-slave relationship, serving a
purpose- having a purpose end of alienation
and deception, Mündigkeit, autonomy,
self-reflection, self-determination, selfactualization, social development of ethical
standarts and moral institutions
Form of Ethics:
Overcoming distorted communication, end
of colonization and manipulation of speech,
symmetrical relations, domination-free
dialogue, establishing ideal speech and
communicative action, moral dialoguemoral action
In Table 1. we can see the developmental stages of ethics under four aspects as core ethical question,
meta-ethical perspective, normative viewpoint and form of ethics according to Klikauer. The core difference between a) and b) is that the latter is no longer based on formulas, categorical imperatives, rules,
principles, etc. that are developed by a philosopher. Instead, those to whom ethics is applied become the
very foundation of ethics which moves ethics from being constructed by an individual philosopher or a
small group of philosophers towards socially constructed ethics developed by society. To achieve this,
human beings are no longer seen as atomized individuals but as moral actors inside an ethical society
engaged in ethical life. This is what Hegel calls Sittlichkeit. At the next stage (b®c) the need for communication becomes highly relevant. Moral actors need to communicate when creating their own ethical
rules, principles, and codes of conduct. This needs to happen under ethical principles that are developed
inside a particular framework called communicative ethics. Transition from (a) to (b), and eventually to
(c) is established with this logic (Klikauer, 2010).
Lawrence Kohlberg, mostly known for his cognitive moral theory, defined Virtue as a unique, regardless of climate or culture, and always the same ideal form. The name of this ideal form is justice. According to him, virtue is not only the “good”, it is also the knowledge of the “good”. Therefore, “good”
could be taught (Kohlberg, 1970). So ethics became the issue of education as well as other disciplines.
Kolhberg’s contributions to managerial ethics later will be discussed.
Ethics in Management
‘Management of ethics or ethics of management’ is the basic question behind the studies conducted
in that area. Management and ethics follow two different sets of epistemological – knowledge creating
– philosophical questions. Ethical knowledge is predominantly concerned with human subjects, while
managerial knowledge is dealing with objects, facts and figures, and numbers directed towards profitmaking. Management ethics is not viewed as a philosophical study of morals but a study of management
morality. Consequently, it has been degraded from being a philosophy to being merely knowledge in the
service of power. Only when something – marketing, sales, operations, HRM, and even ethics – adds
301
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Ethics in Management
to shareholder value, it is of value to management. As a result, management allocates and transforms
human and material resources into profit-making operations (Magretta 2002).
The core of management’s own existence is represented as follows:
•
•
•
•
•
•
•
what is profitable?
what is relevant to improve shareholder values?
how can my company be profitable?
do I have the right cost-benefit strategy?
do I allocate labour and capital in the best way?
am I efficient in what I do?; and later maybe
why should I act ethically?
Moral issues such as every human being think about how to live a good life are simply no issues
for management. However, rapid changes in the technology, information channels forced companies to
re-think about what is right to do or what is best for all? Scandals, harmful products, environmental pollution give the deserved position to ethics. Nowadays, organizations respect ethics for the best practices
of strategic management.
Kohlberg, after WW2, try to answer the question “how could a developed nation be so evil?” Nazi
Holocaust was the worst example of systematic managerial applications. As a result, he established a
seven step general and managerial orientations (Klikauer, 2010).
In Table 2 Kohlberg numbered seven stage for general ethical orientation form the infant period to
the more complex one as respecting the cosmos as an integral whole. Furthermore, Table 3 explains
stages of moral motives of management.
Table 2. Kohlberg’s Seven Stages of Morality: General Moral Orientations
Stage
General Orientation
0
Impulsive and amoral
1
Obedience and avoidance of punishment
2
Personal benefits and rewards and getting a good deal for oneself
3
Conforming to social expectations and gaining approval
4
Protecting law and order; maintaining existing systems of official arrangements; and supporting existing structures
unquestioned as a given
5
Promoting justice and welfare within a wider community, as defined in open and reasonable debate
6
Defending everyone’s right to justice; supporting and promoting universal welfare; and the universal application of ethical
actions
7
Respecting the cosmos as an integral whole; an openness that extends well beyond humanity
In Table 3, Kohlberg examine moral motives of management in seven stages excluding infant stage.
Rationally, stage 0, unconscious stage do not need to self orientation of morality. At stage 1, fear and
obedience appears and developed itself through stage 7, respecting, preserving and supporting all universal values of the cosmos with its environmental harmonies. Social responsibility projects of today’s
organizations may probably are the result of stage 7 (Klikauer, 2010).
302
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Ethics in Management
Table 3. Kohlberg’s Seven Stages of Morality: Management’s Moral Orientations
Stage
Moral Motives of Management
0
None (unconscious stage or babies and newborns), pre-ethics
1
People act irrational to the threat of punishment through management
Guiding principle are fear of those in managerial authority
2
Management gets selfish pleasure and gains are for managers
Calculating managerial risks and payoffs of management actions
3
Avoiding disapproval by other managers and top-management
Waiting to be praised, liked admired, rather than shamed
4
Performing managerial and formal duties and responsibilities
Meeting company standards as set by management
Working for the best interest of the company
5
Following principles that serve the best interest of the great majority
Striving for reasonable, just and purposeful managerial action
6
Applying well- thought principles to management and the company
Share information in an open debate beyond corporate boundaries
Act non-defensive with other managers and employees
7
Respecting, preserving, and supporting all intrinsic values of the cosmos with its wider environmental harmonies
(animals and plants)
According to Hosmer (1994), ethics should be considered at the beginning of the strategic planning
beside analytical aspects. Freeman and Gilbert (1988), took a major step in that direction that “if corporate strategy did not recognize the individual values and goals (or ‘projects’) of the members, both
internal and external to the firm, then those members could not be expected to cooperate to achieve
organizational goals”. Ethical analysis, in the view of the authors, is the only means available to resolve
conflicts in values, goals, and ‘projects,’ and consequently essential in the processes of corporate strategy.
Today, ethical principles reflect the expectations of an organization’s customers and the public. The
changing and developing socio-cultural structure increased social sensitivity. Due to the awareness of
societies and changing social needs, the importance given to ethical values has increased. The fact that
the leaders act in accordance with ethical values and principles is considered as an important success
criterion and the discussions have been raised in this issue (Sayan, 2018, & Akkucuk, 2015).
Ethical Leadership and Culture
Leaders are expected to have some qualifications according to organization needs. Unavoidable of these
qualifications are the provision of justice in organizational environment and commitment to moral values.
Disagreements in human relations, developments in social and economic life change the perspective of
leadership and bring new tasks and responsibilities to leaders. As a result of these new responsibilities,
some ethical principles are expected to be implemented by the leaders in the organizational environment. Above all, it is expected that moral values will be taken into account at the level of individuals,
groups and organizations. In this respect, the leader should adopt different approaches to both internal
and external organizations dealing with ethics and justice (Aytan, 2018).
Five principles form the basis for the development of ethical leadership: These basic principles are
respect, service, justice, honesty and social structure (Northouse, 2016).
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Ethics in Management
•
•
•
•
•
Serving Others: Serving leaders care about the well-being of their followers. In organizations,
activities such as service principle, guidance and empowerment behaviors, team building and citizenship behaviors have gained importance. Servant leaders have a social responsibility and strive
to eliminate inequalities and social injustices. Leaders who implement the service principle act in
a way that benefits others (Northouse, 2016).
Respect for others: Leaders who respect others feel that they are valuable and establish close relationships with individuals. Respect for the existence and personality of individuals means that a
leader is close and empathetic to his followers. When a leader respects his followers, his followers
can feel competent in their work. In short, leaders who respect other people have a positive impact
on their followers (Northouse, 2016).
Acting Fairly: The fair decisions taken by ethical leaders are assessed by their followers. Ethical
leaders treat their followers equally. Justice is the lack of special treatment of leaders in their
decision-making except in special circumstances. When people are treated differently, their justification should be clear and reasonable and should be based on moral values (Sayan, 2018).
Honesty: Being honest is not just about telling the truth. It has nothing to do with being open to
others and telling the truth as completely and completely as possible. Sometimes there are times
when saying the full truth can be destructive or inefficient. The challenge for the leaders is to
create a balance between being open and sincere, while in a particular situation they need to be
outspoken. Most of the time, there are organizational restrictions that prevent leaders from disclosing information to their followers. It is important for the leaders to be authentic, but it is also
important that they are sensitive to the attitudes and feelings of others. To be honest to the leaders
in the organization means “don’t promise anything you can’t do, don’t make false statements, don’t
avoid accountability”(Sayan, 2018).
Community Creation: An ethical leader deals with the common interest in the broadest sense.
Leaders should take into account the goals of both themselves and their followers when working
towards the objectives that are appropriate for both. According to Burns, leadership as a result of
leader-follower relationship, based on personal relations. Leaders must participate in the aims and
objectives of the community (Sayan, 2018).
Ethical leaders determine clear ethical standards and follow the implementation of these standards.
They use reward and punishment methods when necessary. Ethical leaders are honest and reliable. In
addition, they take fair and principled decisions and act ethically in personal and professional lives n
people. Researchers describe this aspect of the leader as a moral and ethical aspect. Ethical leaders apply
what they say and are proactive role models in ethical behavior (Brown & Treviño, 2016).
Ethical leader’s behavior and attitudes can be attributed to ethical principles and ethical values ??are
placed in organizational culture and rewarded by employees who exhibit ethical behaviors. This creates
a positive outlook on ethical principles and trust among the employees.
According to Association of Professionals in Business Managements Best Practices (2008), Vallabhaneni mentions that, The Chief Ethics Officer is a key person for creating an ethical culture and has
the following roles and responsibilities:
•
•
304
Promote a positive ethical climate in the organization through his leadership skills.
Develop an ethics manual describing company policy, codes of conduct, and expected behavior;
reporting of ethical violations; and referencing to all the applicable laws and regulations.
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Ethics in Management
•
•
•
•
•
•
Annually require each and every employee in the organization to sign a corporate ethics document
that lays out the organization’s requirements concerning employee ethics and stipulates that the
signer has received, read, and understood the document and agrees to abide by its requirements.
Conduct training classes for managers and nonmanagers in ethical principles, with attention to
actions and consequences.
Work with the internal audit department in developing audit plans and identifying areas of audit
that address ethical violations
Work with the legal department in pursuing cases that violated ethical principles either inside the
company (e.g., employees and management) or outside (e.g., customers, suppliers, vendors, and
contractors).
Conduct ethics audits, special management reviews, and self-assessment reviews periodically and
proactively to ensure continuous improvement in ethical matters.
Analyze outside-in views (i.e., views of stakeholders about company management) and insideout views (i.e., views of company management about stakeholders) to identify disconnections
between these views and to integrate them in a coherent manner.
Ethics and Organizational Culture
Nelson and Trevino (2011), define ethical behavior in business as “consistent with the principles, norms,
and standards of business practice that have been agreed upon by society”. Ethics become significantly
important for the management issues in every aspect of social life. Public organizations, non- governmental organizations, business& industrial organizations, religious organizations, basically every unit
in social life concern about ethics to compete with rivals. Without ethics, trust and commitment may
not be assured among the shareholders and stakeholders of the organization.
Culture defines the identity of individuals in a society; composed of norms, customs, artistic compositions of music, literature, art and have similarities in form, style or subject matters (Baylis, Smith,
Owens, 2008). Organizational culture is a certain value system that distinguishes the business from
other enterprises by the norms and standards created on this subject consisting of common assumptions,
thoughts, opinions and value judgments of all individuals in the enterprise. It creates a high identity for
the members of the organization and creates a responsibility for the employees to achieve the objectives
of the business (Greenberg, 2002).
Organizational culture is a mosaic in which basic approaches and opinions such as behaviors, beliefs
and values shared by members of the organization are discussed (Vries. M., Miller.D., 1988).
There some basic factors that define organizational culture, the importance and weight given to these
factors determine the organizational culture of the enterprise and differentiate it from other enterprises
(Ülgen,H., Mirze, K., 2013):
•
•
•
•
Hypercritical: while some businesses carry out their activities, they organize everything in the
finest detail and perform it in accordance with the rules and procedures.
Aggressive: some businesses are characterized by their fighter and aggressive behavior in business life.
Balanced: oppose to the aggressive ones, some enterprises tend to keep its position.
Result Oriented: one of the most valuable elements is how and in what way to achieve target
results.
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Ethics in Management
•
•
•
People Oriented: is the culture of human-oriented enterprises that takes care of the welfare and
comfort of employees, believes in values.
Team Oriented: Businesses that focus on team-based work, give a premium to cooperation and
togetherness, are companies with a team culture.
Risk Management: In some businesses, the dominant idea is innovation and risk overload, while
in others there is a traditional culture and risk aversion seen as organizational culture.
An organization’s beliefs and values affect the behavior of its members. It is important to create an
organizational culture on ethical codes which accepted within the organization to reach success in any
environment of management.
The Hofstede’s Cultural Dimensions Theory, developed by Geert Hofstede, is a framework used
to understand the differences in culture across countries and to discern the ways that business is done
across different cultures. In other words, the framework is used to distinguish between different national
cultures, the dimensions of culture, and their impact on a business setting.
1.
2.
3.
4.
5.
Individualism–collectivism: Describes the relationships individuals have in each culture. In individualistic societies, individuals look after themselves and their immediate family only whereas
in collectivistic cultures, individuals belong to groups that look after them in exchange for loyalty.
Personal goals are important for individualistic cultures while ‘we’ is important in collectivist ones.
Uncertainty Avoidance: Refers to “The extent to which people feel threatened by uncertainty
and ambiguity and try to avoid these situations” (Hofstede, 1991: 113). This dimension deals with
the need for well-defined rules for prescribed behavior. Strict rules are needed for high fears of
uncertainty; on the other hand lax rules are important for highly risk taker societies.
Power Distance: Dimension reflects the consequences of power inequality and authority relations
in society. It influences hierarchy and dependence relationships in the family and organizational
contexts. High power distance societies need bureaucratic organizations while less power distance
societies have flat, decentralized structures.
Masculinity–femininity: Dominant values in masculine countries are achievement and success and
in feminine countries are caring for others and quality of life. Distinct gender roles, are important
for masculine cultures while fluid gender roles.
Long-term Orientation: “stands for the fostering of virtues oriented towards future rewards, in
particular perseverance and thrift” (Hofstede, 2001: 359). A late addition to the initial four (Bond,
1987), this dimension represents a range of Confucian like values and was termed Confucian
Dynamism. Hofstede (1991) later proposed the long-versus short-term designation as more appropriate for this dimension (Soares, A.M., Farhangmehr, M., Shoham, A. 2007)
Organizations have taken many different approaches to implementing an ethics strategy. According
to objectives of the organizations most common ethics strategy could be summarized as follows (Vallabhaneni, 2008):
•
•
306
To avoid any behavior, legal, or otherwise, that violates company policy and negatively affects its
interests
To satisfy the concerns of company stakeholders and thereby capture the benefits that derives
from a reputation for ethical behavior
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Ethics in Management
•
To create a culture in which each employee and manager pursues a set of ethical and social values
to which the company is firmly committed.
Successful corporate ethics could be developed in three stages (2008):
Stage 1: Managing for Compliance. Organizations see the tremendous damage that can be done to
corporate reputation and momentum by incidents of illegal or blatantly unethical behavior. To prevent
such occurrences, the organization establishes a program t

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