Ethical Decision Making and Ethical Leadership

C H A P T E R 5

Ethical Decision Making for Business 8e Fraedrich/ Ferrell/Ferrell

CHAPTER 5

Chapter Objectives

• To provide a comprehensive framework for ethical decision making in business

• To examine the intensity of ethical issues as an important element influencing the ethical decision making process

• To introduce individual factors that may influence ethical decision making in business

• To introduce organizational factors that may influence ethical decision making in business

Chapter Objectives (cont.)

• To explore the role of opportunity in ethical decision making in business

• To explain how knowledge about the ethical decision making framework can be used to improve ethical leadership

• To provide leadership styles and habits that promote an ethical culture

Chapter Outline

• A Framework for Ethical Decision Making in Business• Using the Ethical Decision Making• Framework to Improve Ethical Decisions• The Role of Leadership in a Corporate Culture• Leadership Styles Influence Ethical Decisions• Habits of Strong Ethical Leaders

The Ethical Decision Making Process

• In business, people make decisions differently than at home

• The ethical decision making process in business includes ethical issue intensity, individual factors, and organizational factors, such as corporate culture and opportunity

Framework for Understanding the Ethical Decision Making Process in Business

• Ethical-Issue Intensity• Individual Factors• Organizational Factors• Opportunity• Business Ethics Evaluations and Intentions

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

• Ethical decision making in business does not rely strictly on the personal values and morals of individuals

Leadership in Corporate Culture

• Leadership: The ability or authority to guide and direct others toward achievement of a goal

• Leadership styles influence organizational behavior

Leadership Styles

• Coercive leaders• Authoritative leaders• Affiliative leaders• Democratic leaders• Pacesetting leaders• Coaching leaders

Types of Leaders

• Transactional leaders

• Transformational leaders

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 Stakeholders’ Interests• Ethical Leaders Are Role Models for the

Organization’s Values• Ethical Leaders Are Transparent and Actively

Involved in Organizational Decision Making• Ethical Leaders Are Competent Managers Who Take

a Holistic View of the Firm’s Ethical Culture