Overview for referencing in written reports, essays and as.docx

Overview for referencing in written reports,
essays and assignments
College of Business
Dr Peter Chomley
The academic challenge: Understanding how
you communicate
The RMIT College of Business Guidelines are based on the
Style manual for
authors, editors and printers (2002), referred to here as Style
manual (2002)
which is published on behalf of the Commonwealth of Australia,
and is the
Commonwealth Government’s preferred style. The Style manual
(2002) can be
used to provide guidance on areas which are not covered in the
RMIT Business
document, but if there is any inconsistency you should follow
the RMIT

Business document.
RMIT University 2018 College of Business v.4 2010 2
What is referencing?
• Referencing means acknowledging someone else’s work or
ideas. It is
sometimes called ‘citing’ or ‘documenting’ another person’s
work.
• Referencing is a basic University requirement.
• It is mandatory for all students to cite or acknowledge
information that has
come from other sources.
• Without appropriate referencing students are in effect
‘stealing’ the work of
others - this is tantamount to academic fraud.
There are consequences if students fail to reference their
assignments. These
may include:
• Reduction in marks for assessment tasks.
• Failure in a course of study.
• Expulsion from a program.

Note: The Harvard system has many variations. You must use
this version
known as the AGPS style.
3RMIT University 2018
When do I reference?
You reference whenever you have used a piece of information
that comes from
• Text books
• Journals
• Published papers, (e.g. conference or working paper)
• Newspapers
• Websites
• TV/Radio interviews
• Personal communication
• Others
You must cite the origins of the information you are using,
whether you have
copied the words directly or whether you have paraphrased.

• If in doubt----REFERENCE!
Referencing
Whenever you rely on someone else’s work you must
acknowledge that by
providing details of the source.
In this system, each reference is indicated in two areas of your
work:
• in the text (in-text citation) by using the name of the author(s)
and the date of
publication of the work.
• In the reference list, where the full details of each reference,
including the title
and publishing details are given
In-text citations
There are two ways of referencing in-text:
• Paraphrasing - ideas of the author(s) are expressed in your
own words.
• Direct quotes

How to reference in-text
There are two options for in-text referencing
• Adding the citation at the end of the sentence.
• Using the author’s name as part of your sentence.
• When paraphrasing include the author’s name and date of
publication.
e.g.
– Lack of variability in a product is an important measure of its
quality
(Shannon 2003).
OR
– Shannon (2003) describes the role of statistics in minimising
product
variability.
General rules for reference in-text (1)
Where the name(s) of the authors are given:

• For books, journals, websites, conference papers and
newspapers, the
general rule is to use the family name and the date.
7
One author
Family name
Year of publication
Kumar (2007) argued that…
...(Kumar 2007).
Two or three authors
Family name
Year of publication
Brown and Lee (2008) offer the opinion that…
....(Brown & Lee 2008).
Four or more authors
The name of the first author followed by
‘et al.’
Year of publication
Note: Family names of all authors, and

initials, to be used in the reference list
Ng et al. (2004) stated that…
…(Ng et al. 2004).
RMIT University 2018
Where the name(s) of the authors are NOT given:
• For books, journals, websites, conference papers and
newspapers, the
general rule is to use the organisation name and the date.
8
Newspapers from a database or hard copy
Name of paper – in italics
Date
Page
Date viewed
Database if applicable
In-Text Reference
As stated in the Financial Review (1 August

2007, p. 62, viewed 27 August 2007, Factiva
Database)…..
…. (Financial Review, 1 August 2007, p. 62,
viewed 27 August 2007, Factiva Database).
Websites – corporations / institutions
An organisational publication with no
individual author e.g. a corporate website or
report, treat the company as the author
Name of authoring body, corporation /
institution
Year of publication
Telstra (2007) provided the latest….
...,(Telstra 2007).
Several items with same author and year):
9

If you are referring to more than
one work written by the same
author in the same year, the
letters a,b,c etc are added to the
date to indicate which one you
mean.
In the reference list the works
are listed alphabetically
according to the title. If the title
starts with ‘A’, ‘An’, or ‘The’, the
alphabetical order is determined
by the second word in the title
Hill, CWL 2004a, Global
business today, 3rd edn,
McGraw Hill / Irwin,
Boston.
Hill, CWL 2004b, Strategic
management theory: an

integrated approach, 6th
edn, Houghton Mifflin,
Boston.
Hill (2004a) suggests that...
Hill (2004b) suggests that...
...(Hill 2004b).
...(Hill 2004a).
Secondary citation (citation within a citation):
• A secondary citation is when you refer to the work of one
author cited by
another author.
• Primary sources are preferred.
10
If the original source is not
available you must include

the name of both writers for
in-text references.
Only the source you have
read appears in the reference
list.
Horton, S 2006, Access by
design: a guide to universal
usability for web designers,
New Riders, Berkeley,
California.
‘Form ever follows function’
(Sullivan, cited in Horton
2006, p. 1).
In 1896 Louis H. Sullivan
observed that ‘form ever
follows function’ (cited in
Horton 2006, p. 1).

How to use quotes (1)
Direct quotes
• Direct quotes show where another person's original thoughts,
words, ideas,
images etc have been used word-for-word in someone else's
work. Direct
quotes should be kept to a minimum.
Quotations are used to:
• acknowledge the source of your information, eg ideas, words,
thoughts, images
etc
• enable the reader independent access to your (re)sources.
Using the author’s name as part of your sentence.
e.g.
– Research shows the ‘Lack of variability in a product is an
important measure
of its quality’ (Shannon 2003, p. 147).
OR
– Shannon (2003) describes the ‘lack of variability in a product
is an important

measure of its quality’ (p. 147).
Direct quotes (short)
• Follow these steps to use direct quotes in your assignments.
• Copy the exact words from the original source.
• Use quotation marks ' ' at the beginning and end of the copied
text.
• Reference with appropriate author, year and page number
information.
Also:
McShane and Travaglione (2003) state ‘work motivation and
performance
increase when employees feel personally accountable for the
outcomes of
their efforts’ (p. 199).

Blockquotes (long direct quotes)
• For citations over 4 lines, blockquotes should be used. A
blockquote is
indented and written as a separate paragraph. It does not have
quotation
marks around it.
Reference lists (1)
A reference list:
• The publication details of every item cited / used in your
writing need to be
included in the reference list at the end of your paper. Any
websites used
must also be documented in full. This enables the reader to
locate the source
if they wish.
• Each reference list entry requires a specific format depending
on the
reference type i.e. whether it is a book, book chapter, journal
article, website,
etc.

• You must use a variety of sources in your written work e.g.
books, journals
and websites etc. This indicates that you have researched
widely.
Note: RMIT Business requires all students to use a reference
list in
assessment tasks unless otherwise instructed by your lecturers
Reference lists (2)
Order of entries:
Note: No full stops are used between an author’s initials, and no
comma is
used after the last author's initials. The dots following the
entries’ names
indicate the details of the reference that should follow.
15
Reference list order rules Reference list
The reference list is arranged first alphabetically
by author, and if the authors are the same then
by date.

A reference with multiple authors follows single
author entries beginning with the same author
name.
Where an item has no author it is listed by its
title.
Where several works have the same author and
year of publication, add the letters a, b, ... etc
according to the alphabetical order of the titles in
the reference list, ignoring the initial articles A,
An or The.
Jones, AB 2000, ...
Origin Energy 2005, …
Smith, AK 1990, ...
Smith, AK 1999, …
Smith, AK 2004, …
Stein, B 2003, …(single author entry)
Stein, B, Lee, HK, Yin, CX & Singh, GS 2000, … (plural and
alphabetical
author entry, that is, Lee comes before Reynolds in the English
alphabet.)
Stein, B & Reynolds, JS 1995, …
Stein, B & Reynolds, JS 2000, … (This reference is sorted by
its date, it
has the same authors as the reference before it but was written
at a later
date)…

Style manual for authors, editors and printers 2002, ...
Young, JC 1988a, Economic indicators …
Young, JC 1988b, A quick guide … (Economic comes before
quick in the
English alphabet)
Young, JC & Smith, AK 1988, …
Reference lists (3) - examples
Textbook
• Schermerhorn, J Davidson, P Factor, A Woods, P Simon A &
McBarron, E
2016, Management, Wiley, Milton, Qld.
Journal article
• Cole, B, & Salimath, M 2013, ‘Diversity identity management:
an organizational
perspective’. Journal of Business Ethics, vol. 116, no.1, pp.
151–161.
eBook
• Karlsen, F 2013, A world of excesses: online games and
excessive playing, Routledge,
Proquest Ebook Central.

Book Chapter
• Ahmadjian, C 2006, ‘Japanese business groups: continuity in
the face of change’, in S
Chang (ed.), Business groups in East Asia: financial crisis,
restructuring, and new
growth, 3rd edn, Oxford University Press, Oxford, pp. 22-51.
Website
• World Health Organization 2014, WHO recommendations for
routine immunization –
summary tables, World Health Organization, viewed 1 May
2014,
<http://www.who.int/immunization/policy/immunization_tables/
en/>
RMIT Resources
https://emedia.rmit.edu.au/dlsweb/bus/public/referencing/secon
dary_sources/s
econdary_sources.html
http://mams.rmit.edu.au/lp7zndovilp7.pdf
http://www1.rmit.edu.au/browse;ID=8rwjnkcmfoeez

http://www.lib.rmit.edu.au/easy-cite/
https://www.dlsweb.rmit.edu.au/lsu/content/1_studyskills/study
_tuts/studysmart/
referencing.html
https://www.dlsweb.rmit.edu.au/lsu/content/1_studyskills/study
_tuts/harvard_ll/
harvard.html
https://emedia.rmit.edu.au/dlsweb/bus/public/referencing/secon
dary_sources/secondary_sources.html
http://mams.rmit.edu.au/lp7zndovilp7.pdf
http://www1.rmit.edu.au/browse;ID=8rwjnkcmfoeez
http://www.lib.rmit.edu.au/easy-cite/
—
Lecture 2: Business Ethics – Normative Theory
Ethics & Governance
Dr Warren Staples
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To create Em dash above headline:
Same size and weight as the headline and set using a soft return.
PC: Em dash (—): Alt+Ctrl+ - (minus)
Mac: Em dash (—): Shift+Alt/Option+hyphen
1

Recap – Lecture 1
The course structure & assessment
Ethics & Morality
Ethics is important in Bus – cant be separated
Ethics & the Law
Management Morality
Corporate Governance
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Learning overview
Define moral philosophy, moral agency and moral responsibility
Discuss the three normative ethical theories/perspectives (moral
philosophy) – consequential/teleological and non-
consequential/deontological
Compare and contrast each of the normative ethical theories
‹#›
Moral Philosophy
Provides prescriptions i.e. tells us what we should/ought to do,
how we should live our life and resolve ethical dilemmas
Provides justifications that are applicable to all people (unlike
theological ethics) (Hartman & Desjardins, 2008)
Is primarily concerned with the individual person, not social

groups such as business organisations
‹#›
Moral Agency & Moral Responsibility (1)
An agent in ethical theory (De George, 1992):
is any entity that acts and is subject to ethical rules,
is a rational being, and
is not an agent for anyone or anything else (e.g. once an agent
accepts an ethical theory, he will be self-governing himself and
hence will act in his best interests and no one/anything will
influence his actions.)
A moral agent’s actions and acts can be evaluated in moral
terms.
‹#›
Moral Agency & Moral Responsibility (2)
The central concept of moral agency is moral responsibility i.e.
we can hold a moral agent morally accountable for his/her
behaviour/actions
A moral agent needs to be rational (know what is right and
wrong) and autonomous (have the right to choose an action)
Young children are not considered moral agents (the reason
advertising to children is unethical)
‹#›

Moral Responsibility (1)
Morally responsible when:-
knowingly & freely performed the act
knowingly & freely failed to prevent the act
NOT morally responsible if:-
did not possess all relevant information
were unable to prevent the act
Relativism – actions relative to culture
Just a corporate justification/excuse?
‹#›
Moral Responsibility (2)
Harming employees
James Hardie – asbestos (1930’s)
Environmental degradation
Union Carbide – Bophal
BHP – Ok Tedi mine
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Ethical principles in principal-agent relationships
An agent acts for/represents a principal
Agents are not ethically allowed to do what the principals are
not ethically allowed to do.

Agents cannot exonerate themselves for unethical actions.
Agents are responsible for the actions they perform, whether
they are under command or on behalf for another.
The principal is morally responsible for the actions of their
agents. Agency involves the delegation of authority but not the
complete delegation of responsibility.
‹#›
Virtue ethics
Virtue ethics
10
Moral philosophy: Three perspectives
RMIT University©2010
School of Management
10
Teleological
Utilitarianism
Consequence based
Deontological
Kantian ethics
Justice ethics
Non-consequential
Duty based
‹#›
10
Consequential (Teleology or End-based) vs. Non-consequential

(Deontology or Duty-based) Theories
Utilitarianism (1)
Utilitarianism: concerned with making decisions that promote
greatest overall amount of good in the world.
An ethical decision is one that maximises good consequences
over bad consequences for the greatest number of people.
Consequences include happiness (pleasure, health and
satisfaction) and pain (sadness, sickness and disappointment).
Best decision is one that yields greatest net benefit.
Utility concerns “greatest good for the greatest number”. The
emphasis is “majority”.
11
‹#›
Cost-benefit analysis fits with business decision making
Provides an objective and attractive way of resolving conflicts
of self-interest
Fits into people’s intuitive criteria for deciding moral problem
Making ethical decisions based on the greatest good for the
greatest number of people seems to have a logical basis
Utilitarianism (2)
Rule utilitarianism – Examine the consequences of having
everyone follow a particular rule and calculate the overall
utility of accepting and rejecting the rule. E.g. 1st class
passengers in airline, 1 child policy.
Act utilitarianism – Examine the consequences of each
individual act and calculate the utility each time the act is
performed. E.g. firing Gatsby in L1’s exercise because it is in

the best interests of Appleberg Electric company
12
Ferrell et al. (2005)
‹#›
Utilitarianism (3) - application
Define the problem
Identify the stakeholders that affected by the problem
List the alternative courses of action for resolving the problem
Identify and calculate the short- and long-term costs and
benefits for each alternative courses of action
Select the one course of action that yields the greatest sum of
benefits over costs for the greatest number of people.
13
‹#›
Utilitarianism (4) - limitations
Too much focus on ethical ends can lead to ignoring moral
consideration of the means.
The measurability of consequence: difficult to evaluate all
consequences. For example, those who are affected in the
future.
Stakeholder analysis: rights of some stakeholders are ignored
Fairness: e.g. workers who might be retrenched lack
representation or voice in the decision
14
‹#›

14
difficult to evaluate all consequences
rights of minorities may be sacrificed
too much focus on ethical ends can lead to ignoring moral
considerations of means
15
RMIT University©2010
15
Virtue ethics (1)
A moral virtue is an acquired disposition that is valued as a part
of an individual’s character (Ferrell et al. 2005)
Focuses on the integrity of the moral actor rather than the act
Teleological?
(Trevino & Nelson, 2006)
Strengths: Considers actor's character, motivations &
intentions.
Limitations: Character defined by one's community, May be
limited agreement about standards & Community views may be
questionable
‹#›
Virtue & Moral Agency
A good human being possesses two core virtues:
Integrity – to have educated oneself so that one is unable to be
one kind of person in one social context, while quite another in
other contexts.
Constancy – to pursue the same goods (=objective) through
extended periods of time.
16

(MacIntyre, 1999)
‹#›
17
17
Deontology - Duty based theories
The deontological (duty) theories view actions as either right or
wrong independent of their consequences.
The moral status of an act, is judged not by its consequences but
by the agent's intentions (Etzioni, 1996).
Morality involves a respect for each individual's rights by
performing one's corresponding duties (Singer, 1997).
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18
18
Kantianism (1)
decisions based upon abstract universal principles: honesty,
promise keeping, fairness, justice, respect.
focus on doing what is 'right' rather than doing what will
maximise societal welfare – what is good (as in utilitarianism)
Two formulations of the categorical imperative
“Always act in such a way that the maxim of your action can be
willed as a universal law of humanity.”
“Always treat humanity, whether in yourself or in other people,
as an end in itself and never as a mere means”
: ethics of respect

‹#›
18
Motive/intention of the act is important than outcome
If you feel comfortable allowing everyone in the world to see
you commit an act and if your rationale for acting in a
particular manner is suitable to become a universal guiding
principle, then committing that act is ethical
Emphasizes moral rights, e.g. treat everyone with respect.
Hence, slavery/child labour is wrong under Kantianism though
it may be fine under egoism/utility.
Comes up with “categorical imperative” = universal principles
such as honesty, integrity, dignity, kindness.
Kantianism (2)
Motive/intention of the act is important than outcome
If you feel comfortable allowing everyone in the world to see
you commit an act and if your rationale for acting in a
particular manner is suitable to become a universal guiding
principle, then committing that act is ethical
19
‹#›
Produces universal moral guidelines, e.g. honesty
Motive is always taken to be more important than outcome. At
times, this is debatable. E.g. bribery to get job done. But what if

everyone starts bribing to get job done?
(Hence, it is often argued that Kantianism should be considered
in conjunction with utilitarianism thinking)
Often involves emotions, which can be wrong at times
Difficult to determine which rule, principle, right to
follow/takes precedence. E.g. Kantianism may indicate that
free speech rights is “good”; but privacy of others is also
“good”.
20
Kantianism (3) - Advantages & Limitations
‹#›
Justice Ethics (1)
Justice – fair treatment and due reward in accordance with
ethical or legal standards
Managers adopting this theory will provide the same rate of pay
to workers who are similar in level of skills, responsibility
instead of gender, personality, favouritism
Protects the interests of stakeholders who may be under-
represented or lack power
The basic moral question is: How fair is an action?
21
‹#›
Justice Ethics (2)
Distributive – Based on evaluation of outcomes or results.
Benefits derived; equity in rewards
Procedural – Based on processes or activities that produce the
outcome or results. Decision-making process; level of access,

openness and participation
Interaction – Based on evaluation of one’s perception of
whether he/she is treated fairly. Communication process
22
‹#›
Justice Ethics (3) - application
Benefits and burdens are identified
Benefits and burdens are assigned to stakeholders
A judgement is made to determine whether the benefits and
burdens are distributed fairly
‹#›
Protects those who lack voice/influence
Benefits/burdens can be hard to define/quantify
The rights of some may have to be sacrificed in order to ensure
a more equitable distribution of benefits
Need to be highly trained (i.e. Judges etc.)
Comparing Utilitarianism with Justice Ethics
Similar in defining costs (burdens)/benefits
But, utility is based on net gain which may not consider the
issue of fairness
24
Justice Ethics (4) - limitations

‹#›
Confucian Ethics
Main principles:
Humanity to others and have esteem for yourself
Proper action and social harmony
Sense of right
Respect to/for elders
Emphasizes making profits with human virtue.
25
‹#›
Consequential vs. Non-Consequential
An issue of benefits vs. right
Most people in most situations tend to use both approaches
On the other hand, empirical evidence shows that managers
place a greater concern on utility (outcomes) than rights/justice
26
‹#›
Conclusions
Provide alternative perspectives not achievable from a single
theory
Likely to improve decision maker’s moral awareness and
understanding of the ethical issues involved in the dilemma
27

‹#›
28
Applying Theory
‹#›
Sam, a sales representative, is preparing a sales presentation for
his firm, Midwest Hardware, which manufactures nuts and
bolts. Sam hopes to obtain a large sales order from a
construction firm that is building a bridge across the Missis
river. The bolts produced by Midwest have a 3% defect rate,
which, although acceptable in the industry, makes it
unacceptable for certain projects, such as those subject to
sudden, severe stress. The new bridge is located near to the
centre of a great earthquake zone. If Sam wins the contract, he
will earn a commission of $25,000. But, if Sam tells the
construction firm about the defect rate, the construction firm
may award the job to a competitor whose bolts are more
reliable. Sam is thus in a dilemma on whether to report the
bolts’ 3% defect rate to the construction firm.
29
‹#›
1. Utilitarianism
Sam will conduct a cost-benefit analysis to determine which
alternative generate the most utility.
Building the bridge – improve roadways, transportation across
river; create hundred of new jobs; boost the local economy;
increase revenue for Midwest.
In contrast, bridge collapse kill or injure hundreds/thousands of

people.
But, bolts only 3% defect rate; earthquake may not occur; few
cars/people at time of disaster.
Building the bridge create greater utility than not building. Will
Sam report the defect rate? Yes – why?
30
‹#›
2. Virtue Ethics
Sam probably tell the construction firm about the defect rate
(honesty) – right thing to do because of the outcome of the
potential loss of lives with the bridge collapse.
This action will contribute the most positively to his
virtue/integrity as a decision maker
31
‹#›
3. Kantianism
Sam will be morally responsible to inform the construction firm
about the defect rate. The motive of moral action is more
important than the potential loss of commission.
32
‹#›
4. Justice
Sam will conduct a benefit-burden analysis for the various
stakeholders (Midwest, construction firm, local community,
government, competitor) and judge whether the benefits/burdens

are fairly distributed among the stakeholders.
It is unlikely that with the construction of the bridge will lead
to fairness. E.g. a better qualified competitor should be more
suitable for the job; Lives may be lost for those using the bridge
at the time of the disaster if Midwest’s bolts are used.
Sam will probably inform the construction firm on the bolts’
defect rate.
33
‹#›
Guidant Consultant
Identify the main ethical issues of the case and the affected
parties.
Identify the possible consequences of the executives’ actions.
Identify the executives’ obligations to the affected parties.
Do you think the executives of Guidant Corporation acted
ethically? (justify your opinion with ethical theories)
What do you think Dr Fogoros statement that the decision of the
Guidant executives ‘to withhold such data, while statistically
defensible, was questionable’?
Identify the roles Dr Fogoros adopts and the different positions
he takes.
Do you think he acted ethically? How can his actions be
justified?
Are there other cases like this?

‹#›
34
What is a moral agent, and when is an organisation morally
responsible?
What is the difference between consequence (teleological)
based and duty (deontological) based ethics?
What is the difference between utilitarianism, Kantianism and
virtue ethics?
Why might normative theory be useful in the workplace, and
how can we use normative theory to help us make better
decisions?
Review Questions
‹#›
35
References
De George, RT 1992, 'Agency theory and the ethics of agency',
in NE Bowie & ER Freeman (eds), Ethics and agency theory:

An introduction, 3 edn, Oxford University Press, New York, pp.
59-74.
Etzioni, A 1996, 'A moderate communitarian proposal', Political
Theory, v. 24, n. 2, pp. 155-71.
Ferrell, OC, Fraedrich, J & Ferrell, L 2005, Business ethics:
Ethical decision making and cases, Houghton Mifflin, Boston.
Hartman, LP & Desjardins, J 2008, Business ethics: Decision
making for personal integrity & social responsibility, McGraw-
Hill irwin, Boston.
MacIntyre, A 1999, 'Social structures and their threat to moral
agency', Philosophy, v. 74, pp. 311-29.
Singer, M 1997, Ethics and justice in organisations, Avebury,
Aldershot.
Trevino, LK, & Nelson, KA 2006, Managing business ethics:
Straight talk about how to do it right, 4 edn, John Wiley &
Sons, New York.
36
‹#›
Lecture 1:
Introduction to
Ethics & Governance
Dr Warren Staples
‹#›

Emergency procedure information – student statement
Before starting our session today, RMIT wishes to make you
aware of the emergency procedures that are in place for your
safety.
Please look around and familiarize yourself with the emergency
exits in this room and to this for each new venue in which you
attend classes. Evacuation plans are located in all corridors.
In the unlikely event of an evacuation, a “beep, beep” tone will
sound. On this alert signal you should prepare yourself to
evacuate the building.
If the “whoop, whoop” tone sounds, please evacuate in an
orderly fashion to the assembly area indicated on the evacuation
plans located in the foyer of this building. Do not use lifts when
evacuating the building.
Please also obey any instructions provided by fire wardens in
attendance, RMIT Security or emergency services. At the end of
the evacuation, you will be advised when it is safe to return to
the building.
RMIT thanks you for your cooperation.
‹#›
Mr Andrew Linden
Dr Joe Griffin
Dr Dau Youngsamart
Teaching team

Tutors Course coordinator:
Dr Warren Staples
‹#›
Overview
A brief introduction to the course, readings & assessments
Plagiarism – academic integrity
Ethics and morality
Ethics and the law
Ethics in the business and corporate governance
‹#›
Readings
There are essential readings on Blackboard
There is no prescribed textbook for this subject.
A lot of the material in the course has been developed from
these two texts:
Mallin, C A (2010) Corporate Governance, Oxford University
Press, UK.
Trevino, LK & Nelson, KA (2014) Managing Business Ethics:
Straight Talk about How to Do It Right (6th Edition), John

Wiley, USA.
‹#›
Assessment overview
Critical Literature Review (1000) word 20%
Due date: End of week 5 (23 August @ 9pm) eSubmission via
Canvas
Research Essay Board Report (2000 words) 40%
Due date: End of week 8 (4 October @ 9pm) eSubmission via
Canvas
Exam (2 hours) 40%
Scheduled during examination period
All assessment tasks must be submitted to pass & 50% must be
attained in order to pass
‹#›
Critical Literature Review 1000 words
Read the following papers which offer different explanations as
to why firms engage in corporate social responsibility (CSR):
Dimaggio, PJ & Powell, WW 1983, ‘The Iron Cage Revisited:
Institutional Isomorphism and Collective Rationality in
Organizational Fields’, American Sociological Review, Vol. 48,
No. 2, pp. 147-160.
Freeman, ER 2008, 'Managing for stakeholders', in T Donaldson

& P Werhane (eds), Ethical issues for Business, Pearson
Prentice Hall, Upper Saddle River, pp. 39-53.
Matten, D & Moon, J 2008,’ ‘Implicit and explicit’ CSR: A
conceptual framework for a comparative understanding of
corporate social responsibility’, Academy of Management
Review, 33(2), 404-424.
Mitchell, RK, Agle, BR & Wood, DJ 1997, ‘Toward a Theory of
Stakeholder Identification and Salience: Defining the Principle
of Who and What Really Counts’, Academy of Management
Review, 22: 853-886.
Suchman, MC 1995, ‘Managing legitimacy: Strategic and
institutional approaches’ , Academy of Management Review,
20(3), 571-610.
Compare and contrast these course readings and produce a 1000
word critical reflection on course literature about what
corporate social responsibility is, what it is not, and what drives
corporations to engage in CSR.
In this critical reflection you should provide a reasoned
explanation for choosing the perspective(s) that you believe
best explain why firms engage in CSR.
‹#›
Assessment criteria
Key issues relating to the question have been developed
Logical and convincing discussion - Original and clear
argument
Clear and comprehensive written style (spelling, grammar,
syntax etc.)
Appropriate Harvard style referencing (in text and list of
references)

‹#›
Research Essay Board Report 2000 words
You are required to choose one (1) of the following three
contemporary ethics issues (Topics 1, 2 or 3) for analysis and
produce a board briefing paper for tabling at the next meeting of
the company’s board of directors.
Board papers perform an important role
Often prepared by non-board members.
Papers cover a variety of functions, from providing general
information to a call for action.
Section 180 of the Australian Corporations Act 2001 outlines
that directors have a statutory duty of care to have read the
board papers to be able to contribute effectively to board
meetings.
You will argue either in the affirmative (for) or the negative
(against), providing a critical argument with evidence to support
your argument.
‹#›
Research essay (2000 word + or - 50 word)
Topic 1: Walmart has agreed to pay $US282 million (AUD $407
million) to settle US federal allegations of overseas corruption.
Once upon a time it was possible to get away with having

differing ethical stances in different jurisdictions. In a
globalised world is it ethical and still possible to practice
ethical relativism?
Topic 2: In June 2019 Collingwood footballer Jayden
Stephenson was caught betting on games in which he played in,
and as a result he was suspended by the league (AFL). On the
one hand the AFL have a wagering partner (sponsor) and
promote gambling directly and indirectly, but on the other they
punish players and club officials for being involved in betting
on games. Is the stance taken by the AFL of partnering with the
gambling industry an ethical one?
‹#›
Research essay (2000 word + or - 50 word)
Topic 3: Australian Rugby League player Israel Folau was
sacked by the Rugby Australia for breaching their code of
conduct. Until December 2017 same-sex marriage was illegal in
Australia. Whilst Folau’s views may not correspond with public
sentiment, is it nonetheless important that he has the right to
express himself, or was Rugby Australia right to dismiss Folau
for breaching his contract? (Answer with reference to course
literature, theory, concepts and research.)
‹#›
Board report (2000 word + or - 50 word)
Use at least 12 references:
Mostly academic journal articles
Other quality references

Electronic submission.
Turnitin
‹#›
Assessment criteria
Original and clear argument
Logical and convincing discussion
Ideas and assertions substantiated through use of high quality
reference material and key academic perspectives/views used to
develop arguments
Appropriate Harvard style referencing (in text and list of
references)
‹#›
Two hour examination covering the whole semester’s work
scheduled during the examination period at the end of the
semester. The examination will be have four questions.
All questions will require you to apply theories and concepts
from the course to cases studied during the semester. You need
to be familiar with each and every one of them
An essential preparation for the exam will require you to be
familiar with the Required Readings & the Weekly Case Study

& Review Questions.
Exam
‹#›
Draw on a case studied in the course to explain the ethical
decision making process including individual and situational
influences. How would you as a manager increase moral
awareness in the workplace (10 marks)
Example Exam Question
‹#›
‹#›
Exam – assessment criteria
Original and clear logical arguments and discussion
Ideas and assertions substantiated through use of high quality
reference material and key academic perspectives/views used to
develop arguments
Appropriate acknowledgement of theorists in the text of your
answers e.g. (Friedman) (Freeman) (Carroll) (Mallin)
Clear and comprehensive written style (spelling, grammar,
syntax etc.)

‹#›
Plagiarism
Plagiarism may occur in either oral or written presentations.
It is the presentation of the work, idea or creation of another
person, without appropriate referencing, as though it is one's
own. Plagiarism includes cutting and pasting text from
websites, and will be severely penalised. The use of another
person's work or ideas must be acknowledged. Failure to do so
may result in charges of academic misconduct which carry a
range of penalties including cancellation of results and
exclusion from your program.
Why is plagiarism an ethical issue?
‹#›
Expectation of RMIT students
Attend all lectures
Be an active participant
Your responsibility is to read, engage, think, write – prepare!
Lecturers’ role is to coach and guide you
Hopefully enjoy the course and learn along the way
You will get out of this what you put into it!
‹#›
Weekly format

Lecture
Tutorial
Readings – Theory/Concepts
Case Study with Questions
Review Questions
Consultation
‹#›
Course Outline
Ethics
CSR
Corporate Governance
Normative
Psychological
Introduction
Organisations
Applying
Debate
Boards & Remuneration
IIs & Codes
Ownership
Alternative CG
CG Theory
‹#›
‹#›

Join the Conversation:
#ethicsgov
@warrenstaples
‹#›
‹#›
Fake degree
Tom has done a sound job for over a year. Tom’s boss learns
that he got the job by claiming to have a university degree,
although in reality he never graduated
Should his boss dismiss her for submitting a fraudulent resume,
or overlook the fake claim since Tom has otherwise proved to
be conscientious and honourable, and since making an issue of
the degree might ruin Tom’s career?
‹#›
Roundabout pay rise
When Jo asks for a rise, her boss praises her work but says the
company’s rigid budget won’t allow any further merit raises for

the time being. Instead the boss suggests that the company
“won’t look too closely at your expense accounts for a while”
Should Jo take this as an authorisation to pad her expense
account on the grounds that she is simply getting the same
money he deserves through a different route, or should she
refuse this roundabout “raise”?
‹#›
Inflated salary
An employer finds that the candidate who is by far the best
qualified for a job really earned only $48,000 a year in their last
job, and not the $58,000 they claimed
Should the employer hire the candidate anyway, or should he
choose someone else even though that person will be
considerably less qualified?
What would you say if the real salary were $55,000 (only
$3,000 less than the amount claimed)?
‹#›
Ethics concerns itself with the study and identifications of the
behaviours, actions and standards that we as humans ought to
pursue to obtain a good life.
Ethics: is concerned with the assessment of moral standards;
notions of right and wrong, good and bad.

In general, ethics is concerned with what is right, fair, just or
good; about what we ought to do, not just what is the case or
what is most acceptable. This distinction between ‘ought’ and
‘is’ signals the need to distinguish ethical claims from factual
ones. Facts are descriptive and can be verified as to their
truthfulness or falsity.
‹#›
‹#›
Ethics & morality
Morality reflects a person’s or group’s standards of right and
wrong. Moral understanding is usually developed passively.
Ethics is the assessment of moral standards. Ethics is developed
actively – through the use of theories and experience.
‹#›
Nature of ethics
Focuses on theories of right & wrong
Concerned with what is right & wrong in:- Relationships,
actions, beliefs, attitudes
Process of applying Ethical theory to concrete situations
‹#›
Business ethics?

Business ethics: The principles, norms, and standards of
conduct governing an individual or group in work situations
(Trevino & Nelson 2006)
Ethics is directly concerned with human interaction and
behaviour. It therefore has relevance to the way people behave
in organisations.
Factors that influence business ethics include the stage of
development of a country, individual characteristics, issue
intensity, and
‹#›
Some questions to consider
What is moral awareness?
Do all decisions involve ethics?
Does every person have his/her own ethical values?
Am I being ethical if I do not do anything illegal?
Is ethics applicable in business?
Who is responsible for organisational decisions?
‹#›
Minimum conception of morality
Two criteria (Rachels, 1993):
Reason: a moral decision is based on reasons that are acceptable
to other rational persons
Impartiality: the interests of all those affected by a moral
decision are taken into account

‹#›
Relationship between ethics & the law
Law establishes minimum standards
Ethics extends beyond legal domain
Think of a business activity that may be legal but unethical
Think of a business activity that may be illegal but ethical
How should an organisation deal with an activity that is legal
but unethical?
Ethics
Law
‹#›
Carroll (2001): models of management morality
Immoral Management
devoid of ethical principles and active opposition to what is
ethical.
Moral Management
high standards of ethical behavior.
Amoral Management
Intentional - does not consider ethical factors
Unintentional - casual or careless about ethical considerations
in business
‹#›

Models of management morality – Carroll (2001
Amoral Management
Immoral Management
(bad/wrong)
Moral Management
(good/right)
‹#›
Ethical organisation
One whereby the organization culture promotes the appropriate
ethical behaviours among all
Surveys have consistently indicated that employees prefer to
work in an ethical organization
Unethical behaviours include bribery, theft, discrimination,
harassment, deception and endangerment
Responsibility for ensuring an organization has ethical
standards is a duty of management
‹#›
Governance & management
Governance – the work of the board of directors or other
governing body
Management – the work of the executive and management team
Source: Tricker (2009, p.36)

‹#›
The board and management
Outside, non-executive directors
Executive directors
Other managers not on the board
Source: Tricker (2009, p.36)
‹#›
Examples of unethical behaviour?
Discuss with the person next to you an example of unethical
business behaviour you are aware of.
What was the main ethical issue of the case?

‹#›
Conclusion
Morality – right and wrong
Ethics - applying moral standards
Human interaction creates ethical dilemmas
Cant separate business & ethics
Not all decisions involve ethics, but can be extended to
This subject will raise your moral awareness, develop your
skills to enable you to be ethical in the workplace
‹#›
‹#›
What are the ethical issues of this case?
What moral obligations do you have to Gatsby, yourself, your
boss, the workers and the firm?
Are any of these more important or pertinent than the others?
Would it be ethical to do as your boss suggests?
What would you do in this situation?
Not so great Gatsby
‹#›
‹#›
Review Questions
What are the differences between immoral and amoral

management (Carroll, 2001)?
What are the differences between intentional and unintentional
amoral management (Carroll, 2001)?
Why is ethics important in business?
How should an organisation deal with an activity that is legal
but unethical?
What is corporate governance and who are the main internal
actors involved in governance of a firm? What role(s) do they
play?
‹#›
‹#›
References
Carroll, AB 2001, 'Models of management morality for the new
millennium.' Business Ethics Quarterly, v. 11, n. 2, pp. 365-71.
Colley, JL, Doyle, JL, Wallace, S, & Logan, G 2005 What is
Corporate Governance?, McGraw-Hill Professional, USA.
De George, RT 1990, Business ethics, (3rd Ed.), Macmillan,
New York.
Jones, TM, & Ryan, VL 1997, 'The link between ethical
judgment and action in organizations: A moral approbation
approach', Organization Science, v. 8, n. 6, pp. 663-80.
Laverty, EB 1989, 'The ethical context of administrative
decisions: A framework for analysis', Public Administration
Quarterly, v. 13, n. 3, pp. 375-87.
Rachels, J 1993, The elements of moral philosophy, 2 edn,
McGraw-Hill, New York.

Shepard, JM, Goldsby, MG & Gerde, VW 1997, 'Teaching
business ethics through literature', Teaching Business Ethics, v.
1, pp. 33-51.
Solomon, R 1998, 'Morality: The basic rules', in L Pincus
Hartman (ed.), Perspectives in business ethics, Irwin McGraw-
Hill, Chicago, pp. 136-8.
Trevino, LK, & Nelson, KA 2006, Managing business ethics:
Straight talk about how to do it right, 4 edn, John Wiley, New
York.
Tricker, B 2009, Corporate Governance: Principles, Policies and
Practices, Oxford University Press, UK.
‹#›
‹#›
‹#›
Lecture 3:
Business Ethics – Psychological Theories
Dr Warren Staples
‹#›
Recap – Lecture 2

Moral agency
Moral responsibility
Principal-Agent relationships
Teleology & Deontology
Utilitarianism, Virtue ethics, Kantianism & Justice ethics
Guidant consultant
‹#›
Clivosaurus
Queensland Nickel (QNI)
Dispersed more than $170m from the company’s accounts.
Palmer (Smee 2019): “People all across Australia are having
trouble now with liquidators and receivers, businesses are
closing ... because of their unconscionable behaviour,” Palmer
huffed.
“So when that happens to someone like me, I’ve got a moral
responsibility not to give up. That’s what I’m doing. It is the
greater good.”
Linden – “More front than a mine Haulpak”
3rd week of case - Palmer settles
Shadow director case awaits? Instructing directors to move $
‹#›
Learning overview

Ethical decision making process
Cognitive Moral Reasoning/Development (CMR/CMD)
Moral intensity
Making decisions in business
‹#›
Ethical decision making 1
The developing consensus in business ethics is that ethical
decision making is affected by:
the person and personal variables (values, character,
personality, identity, CMD, etc.)
the situation and situational variables (organisational culture,
climate, industry etc.) and
the issue (moral intensity).
‹#›
Individual characteristics
Recognition/ Moral awareness
Moral judgement
Intent
Moral behaviour

Organisational characteristics
‹#›
Recognition/Moral awareness - Moral agent recognizes the
moral issue(s)
Judgement - Agent engages in some form of moral reasoning to
arrive at moral judgement
Intent - Moral agent establishes moral intent and decides to take
moral action
Behaviour - Agent translates intent to behaviour
Witness a colleague steal an office printer
‹#›
Moral awareness
the initial step in the ethical decision making process
the situation or issue is interpreted as a moral issue
leads to moral judgement
The person recognizes that a decision or action has
consequences for other human beings and he/she has some
choice in dealing with the issue (Jones 1991)

‹#›
Moral awareness at work
is more likely if an individual believes that co-workers will see
it as ethically problematic
is more likely if moral language is used to present the situation
to the decision maker
is more likely if the decision is seen as having the potential to
produce serious harm to others (magnitude of consequences)
‹#›
‹#›
Ethical decisions & behaviour
Moral judgement
Intent
Moral behaviour

‹#›
Individual influences on ethical decision making
Age and gender
National and cultural characteristics
Education and employment
Psychological factors:
Cognitive moral development (Kohlberg)
Locus of control
Personal values – (Chin, Hambrick & Treviño 2013)
Personal integrity
Moral imagination
(Crane & Matten, 2008)
‹#›
Cognitive moral development
Developmental psychologist Jean Piaget studied the moral
reasoning of Swiss children and suggested it went through
stages
American psychologist Lawrence Kohlberg extended Piaget’s
developmental approach to include adults and teenagers
The main criteria of Kohlberg’s model of cognitive moral
development reflect consciousness: babies are naturally selfish
(psychological egoism), children grow also to focus on their
family and friends, and adults naturally come to develop
broader perspectives

Kohlberg’s theory is widely employed in the study and practice
of business ethics
‹#›
Kohlberg’s stages of cognitive moral development (CMD)
‹#›
Kohlberg’s stage 1: punishment & obedience
The decision as to what behaviour is right is largely determined
by the rewards and punishments and favours associated with the
action.
This suggests people follow laws and rules automatically
because they do not want the negative consequences.
Conversely, they are likely to pursue wrong action if the
perceived risk of detection is low, and punishment from
wrongful behaviour is unlikely or insignificant.
‹#›
Stage 2: Fairness to oneself
Recognition of personal reward and satisfaction and a duty to

oneself develops. One make decisions not only on the basis of
specific rules/authority (Stage 1)
This concept is known as reciprocity. The “you scratch my back
and I’ll scratch yours” approach.
People engage in behaviour that they know will yield possible
favours in return, or feel obliged to repay a debt.
‹#›
Kohlberg’s stage 3: emphasizes others
What is morally right is that which either helps or is approved
by others close to you.
Important concepts : trust and loyalty.
People may do what is asked of them by a boss or managers
because they want to please them or because others whom we
respect say its important to follow the directions of our bosses.
Stage 3 differs from Stage 2 as one will consider others in one’s
motives in Stage 3.
‹#›
Kohlberg’s stage 4: one’s duty to society
Our perspective broadens to consider the wider societal group.
People tend to make decisions based on the agreed duties and
following rules which are designed to promote the common
good.

‹#›
Kohlberg’s stage 5: just rules determined by consensus
People still regard rules and laws (Stages 1-4) as important,
because they maintain social cohesion (known as the concept of
social contract). But, moral reasoning shifts from established
rules to reliance on personally held principles.
Stage 5 differs from Stage 4 people. The latter accepts laws
without questions or evaluation.
E.g. Complying with existing rules shareholders are given an
Annual Report (Stage 4). But, consensus/feedback/questioning
(Stage 5) argue that not all shareholders need the full annual
report. Hence, summary annual reports are given nowadays
(with requests for full report if necessary)
‹#›
Kohlberg’s stage 6: universal ethical principles
People have moved to a higher level in which the notion of
universal laws and principles are applied.
Justice and equality are examples of universal principles.
One will be more concerned with societal ethical issues and not
rely on business organization for ethical direction. E.g.
discontinue a product if death is caused. Company profits would
not be a justification for continued sales.

‹#›
CMD and moral philosophy
the consensus on moral development is generally contained in
three levels (Crittenden, 1993)
a pre-moral or proto-moral stage (Level 1)
a middle stage where morality is heteronomous (Level 2) and
a mature stage where morality is autonomous (Level 3).
The three levels correspond with the egoism, benevolence
(teleology) and principle (deontology) classes of ethical theory.
‹#›
Kohlberg’s CMD
Kohlberg (1976) claims that to act in a morally high way one
has to have a high stage of moral reasoning. He accepts however
that reasoning in a high level does not necessarily lead to
behaving in a moral way.
“One can, … reason in terms of such principles and not live up
to them” because a variety of factors determine whether a
person will act his or her stage of moral reasoning in a
particular situation
In business organisations people regress morally…
CMD explains little of the variance in moral behaviour in
business research (Jones and Ryan, 1998)
‹#›
Limitation of Kohlberg’s model

With time, education, and experience, one may change their
values and ethical behavior which is not true in reality. An
“adult’ does act like a “child” and vice versa. Stability in
human behaviour often may not exist
Different cultures might rank different stages differently –e.g.
Stage 3: Emphasizes others rather than themselves in Asian
context may be regarded as Stage 5: Just rules determined by
consensus in Western countries
Does not take into account the context of decision making. It
examines what a person thinks rather than how he or she thinks,
and how the moral action that follows the thought.
‹#›
Limitations of Kohlberg’s model
Kohlberg’s original research has limitations – data collected
only from US males.
Gilligan (1982) ‘care voice’ conducted other research and noted
that women rarely surpass Kohlberg’s stage 3:
Stage 1: Women tend to overemphasize interests of their selves
Stage 2: Women overemphasize others’ interests
Stage 3; Women weave their own interests together with those
of others
‹#›
Locus of control
Individual’s perception of how much control s/he exerts over
events in life.
High internal locus of control: perception that outcomes result

from own efforts
More likely to take responsibility for the consequences of
actions.
More likely to help another person, resist pressure to be
unethical.
High external locus of control: perception that outcomes result
from fate, luck, powerful others.
‹#›
Ethical decisions & behaviour
Moral judgement
Intent
Moral behaviour
‹#›

Situation influences on ethical decision making
Issue related:
Moral intensity
Moral framing
Context related:
Rewards
Authority
Bureaucracy
Work roles
Organisational culture
‹#›
Moral intensity – Jones (1991)
Strength/seriousness of the moral issue
affects the recognition of the moral issue, the making of moral
judgement, the establishment of moral intent and the
engagement in moral behaviour.
managers' ethical decision making is a function of the moral
intensity of the encountered dilemma.
focuses on the moral issue, not on the moral agent or the
organisational context.
‹#›
Components of moral intensity
Magnitude of consequences: the sum of the harms or benefits

done to victims or beneficiaries of the moral act in question.
Social consensus: the degree of social agreement that a
proposed act is evil or good.
Probability of effect: the act in question will actually take place
and the act in question will cause the harm or benefit predicted.
Temporal immediacy: the length of time between the present
and the onset of consequences of the moral act in question
Proximity: the feeling of nearness (social, cultural,
psychological, or physical) that the moral agent has for victims
or beneficiaries of the evil or beneficial act in question.
Concentration of effect: an inverse function of the number of
people affected by an act of a given magnitude.
‹#›
Moral certainty
Silo mentality, organisational structure and unethical culture
may reduce moral certainty
The lack of moral dialogue in organisations may reduce moral
certainty
Codes of ethics and ethics training in organisations may
increase moral certainty
(Jones and Ryan 1998)
‹#›
Fulfillment of roles – deindividuation process
Conflicting roles may lead to unethical behaviour
The Zimbardo prison experiment
People do what they are told- obedience to authority
The Milgram experiments
Obedience to authority at work

Diffusion of responsibility:
individuals encouraged to push responsibility up the
organisational hierarchy
diffusion of responsibility in groups
‹#›
Other influences on ethical decision making
Groupthink (Janis 1972)
When pressure for consensus prevents the group from making a
proper appraisal of alternative courses of action
Symptoms include: Illusion of invulnerability, belief in inherent
morality of the group, collective rationalization, out of group
stereotypes, self-censorship, illusion of unanimity, direct
pressure on dissenters
Scripts and Schemata (Gioia 1992)
‹#›
Ethical decision in business
Gather the facts
Define ethical issues (moral awareness)
Identify the affected parties (stakeholder analysis)
Identify the consequences (teleology)
Identify the obligations (deontology)
Consider your character and integrity (virtue ethics)
Think creatively about potential actions (moral imagination)
Check your gut feeling (hunch, intuition)
‹#›

Conclusions
Org v Individual characteristics
Morality develops passively, ethics actively
Decisions in Orgs – hierarchy & diffusion
Multiple perspectives – normative & psychological
‹#›
‹#›
The hiring decision
After reading the case write a list of issues that Pat should
consider.
Identify the ethical issues Pat is facing.
Identify the elements that are likely to affect Pat’s decision
(personal, organisational and issue related).
How would you describe the (moral) language used in the
dialogue between Pat and Taylor?
How would you rate the moral intensity (consider the
components of moral intensity) of the issue Pat is facing?
‹#›
Review questions:
1. Explain what Kohlberg meant by cognitive moral

development (CMD). What did Kohlberg mean by
“conventional”, “pre-conventional” and “post-conventional”
levels of CMD?
2. Describe the ethical decision making process.
3. What is moral awareness and why is it the most important
step in the ethical decision making process?
4. What is moral approbation and moral intensity?
‹#›
1. Kohlberg’s stages of cognitive moral development (CMD).
Level 1 – Preconventional (self-orientation) (ego)
Stage 1 – Avoiding punishment by not breaking rules
Stage 2 – Acting to receive rewards. Awareness of Other’s
needs, but not of right wrong as abstract consequences.
Level 2 – Conventional (Other orientation) Teological
Stage 3 – Acting “right” to be a “good” person, to be accepted
by family and friends
Stage 4 – Acting “right” to comply with the law.
Level 3 – Autonomous (Humankind orientation) Deontological
Stage 5 – Acting “right” to reach consensus by due process.
Aware of relativity of values, tolerates differing views.
Stage 6 – Acting “right” according to universal abstract
principles, able to defend those principles through reason.
Ethical Decision making – Recognition – Judgement - Intent –
Behaviour.
Moral approbation – the desire to be seen as moral by
themselves an others
Moral intensity - affects recognition of the moral issue –
magnitude, social consensus, probability of effect, temporal

immediacy, proximity, concentration of effect
Cognitive biases – consideration of consequences,
underestimation of risk, consequences over time (escalation),
illusion of superiority, groupthink, scripts
35
References
Crittenden, P 1990, Learning to be moral: Philosophical
thoughts about moral development, Humanities Press
International New Jersey.
Chin, M.K., Hambrick, D.C., and Trevino, L.K. (2013),
"Political ideologies of CEOs: Illustrative evidence of the
influence of executive values on corporate social
responsibility", Administrative Science Quarterly
Ferrell, OC, Fraedrich, J & Ferrell, L 2005, Business ethics:
Ethical decision making and cases, Houghton Mifflin, Boston.
Forsyth, DR 1992, 'Values, conceptions of science, and the
social psychological study of morality', in WM Kurtines,
Azmitia, M., & Gewirtz, J. L. (ed.), The role of values in
psychology and human development, John Wiley & Sons, New
York, pp. 239-55.
Gilligan, C 1982, In a different voice: Psychological theory and
women's development, Harvard University Press, Cambridge
MA.
Gioia, DA 1992, 'Pinto fires and personal ethics: A script
analysis of missed opportunities', Journal of Business Ethics,
vol. 11, pp. 379-89.
‹#›
‹#›
References

Janis, IL 1972, Victims of Groupthink, Houghton Mifflin,
Boston.
Jones, TM 1991, 'Ethical decision making by individuals in
organizations: An issue-contingent model', Academy of
Management Review, vol. 16, no. 2, pp. 366-95.
Jones, TM & Ryan, LV 1998, 'The effect of organizational
forces on individual morality: Judgment, moral approbation, and
behavior', Business Ethics Quarterly, vol. 8, no. 3, pp. 431-45.
Kohlberg, L 1976, 'Moral stages and moralization: The
cognitive-developmental approach', in T Lickona (ed.), Moral
development and behavior, Holt, Rinehart and Winston, New
York, pp. 31-53.
Trevino, LK, & Nelson, K. A. 2006, Managing business ethics:
Straight talk about how to do it right, 4 edn, John Wiley &
Sons, New York.
‹#›
‹#›
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Lecture 6:
Applying CSR
Dr Warren Staples
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1
Recap
Core characteristics of CSR
The cases For and Against CSR
(Friedman, Karnani) V (Carroll, Schwartz & Carroll, Smith,
Freeman)
Corporate Moral Responsibility

CSR and CG
‹#›
Overview
Terminology & Drivers
Applying Stakeholder theory
Identification & Salience
CSR in the marketplace, workplace, community & ecological
environment
CSR communication & reporting
‹#›
CSR by many names
Business Ethics
Sustainability/Sustainable Development/SDGs
Corporate citizenship
Community engagement/partnership/programs
Corporate community involvement
Creating Shared Value (CSV)
‹#›

What do firms do CSR? Levels of analysis
‹#›
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CSR drivers
Macro perspectives: Institutions (Peng et al 2008; Husted &
Allen 2010)
Meso level perspectives - Firm motivations, instrumental CSR
(reputation, profit, etc) – stakeholder salience – community
(Marquis)
Micro level perspectives: CEO Personal Values (Micro) - Chin,
Hambrick and Trevino (2013),
Dimaggio & Powell (1983) institutional isomorphism:
Normative (e.g Ethical)
Coercive (e.g Regulation)
Mimetic (e.g Competitors)
‹#›
Applying stakeholder management
“any group or individual who can affect or is affected by the
achievement of the organization’s purpose” (Freeman 2011)

‹#›
‹#›
Freeman (2011, p. 53) defines stakeholder as “any group or
individual who can affect or affected by the achievement of the
organization’s purpose”. Phillips (2003) named stakeholders as
“any individual or group that is the legitimate object of
managerial attention”.
Based on Freeman (2011), “stakeholder management” at least
should designed into three basic steps that are
“how to identify the stakeholders” by analysing the stakeholder
attributes such power, legitimacy, influence (Mitchell, Agle &
Wood 1997)
“how to threat the stakeholders” using ‘communications’ and
‘information’ (Smudde & Courtright 2011)
“how is the impacts of stakeholder management” has been
studied by Hillman and Keim (2001) to find the impact of
stakeholder management to shareholder value, while Romenti
(2010) see stakeholder management impacts on corporate
reputation.
2. Stakeholder Approach and Local Legitimacy
Local legitimacy is a general perception or assumption that the
actions of businesses are desirable, proper, or appropriate
within some socially constructed system of norms, values,
beliefs, and definitions (Suchman 1995).
‘Social Pressure’ from local government and NGO is derived
from the dissatisfied of local stakeholders with corporate
operation (Reimann 2012; Gifford and Kestler 2008).
‘social embeddedness’ is a foundation for company obtaining
local legitimacy by building relationship with local stakeholders
(Gifford & Kestler 2008; Gifford, Kestler & Anand 2010).

7
Identification of Stakeholder and Claims
Treatment of Stakeholders
Assessment
of the Impact
Stakeholder identification & salience
Mitchell, Agle & Wood (1997):
Identification of 1) Claimants 2) Influencers
Power, Legitimacy & Urgency
Who or What Really Counts – typology of 7
Dynamism in Stakeholder-Manager relations
‹#›
Power, dependence, and reciprocity in relationships
8
Stakeholder identification & salience
Power
Urgency

Legitimacy
4. Dominant
5. Dangerous
6. Dependent
7. Definitive
1. Dormant
2. Discretionary
3. Demanding
8. Non stakeholder
Source: Mitchell, Agle & Wood (1997)
Footnote:
Urgency? Neville et al. (2011)
Organization (Ali 2017)
‹#›
‹#›
CSR in the marketplace
Business case for CSR – does it pay off?
Marketplaces? Sourcing, buying, marketing, advertising, pricing
and selling of products and services
What markets? Consumers, financial (institutional), B2B,
Bottom of the Pyramid (BOP)
Crane, Matten & Spence (2014)

‹#›
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CSR in the workplace
Employee recruitment & retention tool (Turban & Greening
2000; Bhattacharya, Sen & Korschum 2008)
Regulated v Less regulated workplaces
In-house v Outsourced workplaces
Labour standards – SA 8000 decent work, ILO Global labour
Equality in the workplace
‹#›
‹#›
CSR in the community
Increasing interest in the impact of the community on business
(Marquis & Battilana 2009; Marquis, Glynn & Davis 2011)
Communities – generally high legitimacy, low power and low
urgency
Philanthropy (Carroll 1998)
Strategic philanthropy
Linking employee volunteering to HRD strategies
Linking charitable giving to marketing strategies through cause
related marketing and sponsorship
Establishing cross-sector partnerships with community groups

‹#›
CSR – a case study
Chinese firms in Australia – Huang & Staples (2014)
Interviews with 56 managers from Chinese firms, community
group leaders, government officials
Field visits & Review company annual reports and sustainability
reports.
15 large Chinese firms in Australia operating in four states:
VIC, WA, NSW, and TAS
Industries: Mining, agriculture, manufacturing, banking,
telecommunications, airlines, and trading.
‹#›
The next 9 slides are all from research undertaken by Charlie
Huang & I (Warren Staples) from the School of Management at
RMIT University
The research focuses on the community engagement practices of
Chinese firms in Australia.
13
Arts & culture
Donation and sponsorship of the arts, cultural events, and sports
Improving communities’ health and wellbeing

Huang & Staples (2014)
‹#›
Raising Brand awareness, sponsoring events that politicians
attend in order to build awareness and relationships
From left to right
Burnie Arts and Performing Centre – MMG
Sydney Chinese Festival – Bank of China
Melbourne Festival – China Southern Airline
Tyrannosaurus National Australia Museum - China Eastern
Disabled Art troupe – Sinosteel
Kulcha Multicultural Arts festival – CITIC pacific
14
Sport
‹#›
Sponsoring local sporting teams, professional sporting teams,
and major events – Melbourne Cup horse racing

From top left clockwise:
TCL – Box Hill Hawks,
Melbourne Cup Horse Racing
Huawei – Canberra Raiders strategically positioned outside of
Parliament – and a bizarre footballer getting a Huawei tattoo on
his thigh
MMG – Local football Rosebery Toorak FC – Regional
Tasmania
15
Health & wellbeing
‹#›
Mining company - Dental van in remote communities for people
who cannot afford the dentist
Huawei – tablet computers in hospitals
Chinese medicine in regional australia
Fruit in a local school
16
Education
Donations or sponsorship of educational programs in local
communities, including scholarship, apprenticeship, traineeship,
community programs, and after school activities at local schools

Infrastructure
Sporting facilities, solar panels, opportunity (thrift) shop
facilities,
‹#›
Indigenous art in regional school in very small town in Western
Australia
17
Targeted employment
Target recruitment practices towards specific groups of people
to address with social problems (local workers, unemployed
youth, indigenous).
Chinese firms have devoted resources to providing employment
opportunities, and pre-employment training to indigenous
Australians
‹#›
Entrepreneurship development
Engaged local communities to develop their entrepreneurial
capabilities (community farm)
Micro-finance (http://www.manyrivers.org.au/)
Supporting local entrepreneurs and social enterprises

(aquaponics, organic chickens, watermelons)
Donating resources to develop local industry incubators
(indigenous business farm, innovation park).
‹#›
‹#›
Diversification of local economies
Procurement of goods and services from local providers
Micro finance initiatives to support (Citic Pacific)
Support of social enterprises (Sinosteel through Pollinators
Geraldton)
19
Conclusions: benefits to the community
Infrastructure – social & physical community facility
development
Community development - building community capability and
resilience
Conclusions: benefits to chinese firms
Gaining legitimacy (license to operate), enhancing corporate
image, reputation and reducing operational costs
Building relationships with host-country governments and key
stakeholders
‹#›
CSR in the ecological environment

Using natural resources efficiently and minimizing waste
Pollution prevention
Establishing product stewardship
Innovating in products, processes & services
Managing climate change
Responding to natural disasters
Ensuring resource security and resource justice
‹#›
‹#›
CSR practice – strategy, structure & communication
Strategy (Hustead & Allen 2011)
Structure (Brammer & Millington 2003, 2005)
Internal functions: CSR/Community & External affairs, Central
admin
Communication
Targeted or Broader stakeholder communication - Community v
General Stakeholders
Engagement and dialogue – listening
Social issue identification – ability to identify issues of
relevance
CSR reporting – Global Reporting Initiative (GRI) - Rhetorical
strategies designed to be persuasive

‹#›
‹#›
Conclusions – thinking critically about CSR
CSR is a prominent contemporary phenomenon
Whilst debate exists as to the role of business, most businesses
embrace a range of CSR practices
It’s voluntary – an inherent weakness?
Is legislation needed to renew the social contract between
business & society? And make it more explicit?
Does that necessitate changes to the model of the Anglo-
American corporate governance? i.e unitary tier board
‹#›
‹#›
Review questions
What are some of the drivers of CSR behaviours in firms?
Describe Mitchell et al’s (1997) stakeholder salience typology
and explain how community stakeholders are normally
classified?
How is CSR relevant in the marketplace, workplace,
community and ecological environment?
What are some of the important elements of contemporary CSR
practice?

Is CSR because of its voluntary nature an inherently flawed?
‹#›
‹#›
Exercise: Orica – how not to 1
Describe the timeline of events and evaluate the main ethical
issues of the case (consider CSR in the, market, workplace,
community and ecological environment).
2. Identify the affected parties (Orica’s stakeholders) and
classify them as primary/secondary according to Freeman
(2008). Further classify them as claimants/influencers per
Mitchell, Agle & Wood (1997). Think about those affected
directly by the spill at Kooragang Island and broader
stakeholders.
‹#›
‹#›
Use Mitchell, Agle & Wood’s (1997) stakeholder salience
(Power, Urgency & Legitimacy) typology to analyse Orica’s
stakeholders according the seven types proposed (Definitive,
Dangerous, Dormant, Dominant, Discretionary, Dependent,
Demanding). Who or what really matters in this case?
Freeman’s stakeholder theory is concerned with notions of

justice ethics (distributive, procedural and interactional). Are
these elements of justice prevalent in Orica’s dealings with
stakeholders?
‹#›
‹#›
Consider impact of Orica’s history, culture, leadership as well
as external politics on this case. What factors do you feel have
contributed to Orica at Kooragang Island having been such a
repeat offender? What do you make of the conduct of CEO
Graeme Liebelt? How would you feel if you were an investor in
Orica?
‹#›
‹#›
References
Bhattacharya, CB, Sen, S; Korschun, D (2008) ‘Using corporate
social responsibility to win the war for talent’, MIT Sloan
Management Review, Vol.49(2), p.37(7).
Brammer, S & Millington, A (2003) ‘The Effect of Stakeholder
Preferences, Organizational Structure and Industry Type on
Corporate Community Involvement’, Journal of Business Ethics,

Vol.45(3), pp.213-226.
Brammer, S & Millington, A (2005) Corporate Reputation and
Philanthropy: An Empirical Analysis, Journal of Business
Ethics, Vol.61(1), pp.29-44.
Carroll, AB 1998, 'The Four Faces of Corporate Citizenship',
Business and Society Review, vol. 100, no. 1, pp. 1-7.
Chin, MK, Hambrick, DC, Treviño, LK (2013) ‘Political
Ideologies of CEOs: The Influence of Executives’ Values on
Corporate Social Responsibility.’ Administrative Science
Quarterly, 2013, Vol.58(2), pp.197-232.
Crane, A, Matten D & Spence, L (2014) Corporate Social
Responsibility: Readings and Cases in a Global Context (2nd
Edition), Routledge, New York, USA).
DiMaggio, P.J., & Powell, W.W. (1983). "The Iron Cage
Revisited: Institutional Isomorphism and Collective Rationality
in Organizational Fields." American Sociological Review,
48(2), 147-160.
Eweje, G (2006) The Role of MNEs in Community Development
Initiatives in Developing Countries: Corporate Social
Responsibility at Work in Nigeria and South Africa, Business
Society, 45: 93
Freeman, RE 2010, Strategic management : a stakeholder
approach, Cambridge University Press, UK.
‹#›
‹#›

References
Greening, DW, Turban, DB (2000) ‘Corporate social
performance as a competitive advantage in attracting a quality
workforce’, Business and Society, Vol.39(3), p.254(27)
Huang, X & Staples W (2014) Community engagement by
Chinese firms in Australia: Practices and benefits, Viewed at:
http://mams.rmit.edu.au/xnjztnvvfxek.pdf [Accessed 20
Janunary 2015]
Husted, B & Allen, DB (2006) Corporate Social Responsibility
in the Multinational Enterprise: Strategic and Institutional
Approaches, Journal of International Business Studies Vol. 37,
No. 6,
Husted, B, Allen, DB (2011) Corporate social strategy :
stakeholder engagement and competitive advantage,
Marquis, C, Davis, GF, & Glynn, MA (2013). "Golfing Alone?
Corporations, Elites and Nonprofit Growth in 100 American
Communities." Organization Science, 24(1): 39–57
Marquis, C & Battilana, J (2009) "Acting Globally but Thinking
Locally? The Enduring Influence of Local Communities on
Organizations." Research in Organizational Behavior, 29: 283–
302.
Mitchell, RK, Agle, BR, Wood, DJ. (1997) ‘Toward a Theory of
Stakeholder Identification and Salience: Defining the Principle
of Who and What Really Counts’, Academy of Management
Review, Vol.22(4), pp.853-886.
Neville, B, Bell, SJ & Whitwell GJ (2011) ‘Stakeholder
Salience Revisited: Refining, Redefining, and Refueling an
Underdeveloped Conceptual Tool’, Journal of Business Ethics
Peng, MW., Wang, DYL & Jiang Y (2008). An institution-based
view of international business strategy: A focus on emerging
economies. Journal of International Business Studies, 39 (5):
920-936.

‹#›
‹#›
The Effect of Organizational Forces on Individual Morality:
Judgment, Moral Approbation,
and Behavior
Author(s): Thomas M. Jones and Lori Verstegen Ryan
Source: Business Ethics Quarterly, Vol. 8, No. 3, Psychological
and Pedagogical Issues in
Business Ethics (Jul., 1998), pp. 431-445
Published by: Cambridge University Press
Stable URL: https://www.jstor.org/stable/3857430
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THE EFFECT OF ORGANIZATIONAL FORCES
ON INDIVIDUAL MORALITY:
JUDGMENT, MORAL APPROBATION, AND BEHAVIOR
Thomas M. Jones and Lon Verstegen Ryan
Abstract: To date, our understanding of ethical decision making
and
behavior in organizations has been concentrated in the area of
moral
judgment, largely because of the hundreds of studies done
involv-
ing cognitive moral development. This paper addresses the
problem
of our relative lack of understanding in other areas of human
moral-
ity by applying a recently developed construct moral appro-

bation-to illuminate the link between moral judgment and
moral
action. This recent work is extended here by exploring the
effect that
organizations have on ethical behavior in terms of the moral
appro-
bation construct.
nur understanding of ethical decision making and behavior in
organizations
tJhas been informed by two largely separate streams of
research. Formal
decision making models (e.g., Ferrell and Gresham, 1985; Hunt
and Vitell, 1986;
Trevino, 1986; Jones, 1991) have dealt with the micro
organizational aspects
of such decision making and have relied heavily on social
psychology, particu-
larly social cognition, for their theoretical foundations. The
other strain of
research on ethics in organizations deals with macro
organizational issues-
e.g., organizational cultures, leadership, and institutional
features such as
codes of ethics and has employed organization theory, in
various forms, in the
analysis (Victor and Cullen, 1988; Cohen, 1995). What has
been lacking thus
far is theory that specifically relates macro level phenomena to
micro level be-
havior. Put differently, we need theory that explains, in detail,

how an organi-
zation's moral signals are perceived and processed by
organization members,
along with how likely those signals are to affect members'
behavior. This paper
attempts to provide such theory, by way of application of
existing theory and
new theory development.
As Jones (1991) pointed out, most formal models of ethical
decision making
in organizations can be expressed in terms of some variant of
Rest's (1986)
sequential four component model. By way of review, Rest's
description of the
four steps is as follows:
(D1998. Business Ethics Quarterly, Volume 8, Issue 3. ISSN
1052-1SOX. pp. 43 1-445
2019 15:25:33 UTC
432 BUSINESS ETHICS QUARTERLY
1 ) Recognition-The moral agent must first recognize the moral
issue. An
agent who does not recognize the moral aspects of an issue will
certainly

rely on "non-moral" criteria in making a decision.
2) Judgment-The agent must then engage in some form of
moral reason-
ing to arrive at a moral judgment. Moral reasoning has been
described by
Kohlberg ( 1976), whose moral development hierarchy has been
widely used
in both theoretical and empirical work.
3) Intent The moral agent then must establish moral intent. In
so doings
he/she places moral concerns ahead of other concerns and
decides to take
moral action.
4) Behavior-At this stage, the agent actually translates intent
into moral
behavior. Helshe overcomes all impediments internal and
external, and
carries out his/her intended moral action.
In this paper, we assume that organizational forces have an
impact on each of
the four steps. After referencing some very recent research that
has been done

on Step 1 of this sequence, we argue that organizational factors
profoundly af-
fect the link between moral judgment (Step 2) and moral
behavior (Step 4) by
describing the postulated psychological mechanisms.
Considering that Rest's model has been in existence for 12
years, remark-
ably little research has been done on components other than
moral judgment
(Step 2). Part of this concentration can be explained by the fact
that Kohlberg
developed an instrument for measuring cognitive moral
development (CMD)
thus saving scholars (himself, in particular) the burden of
developing a new
instrument for each study. Rest ( 1979) accelerated the use of
CMD as a variable
in empirical studies of ethical behavior by developing the
Defining Issues Test
(DIT), a forced-choice psychometric instrument that replicates
Kohlberg's time
consuming instrument with reasonable accuracy, but is simple
and quick to ad-
minister. As a result, hundreds of studies have been undertaken

using cognitive
moral development as a variable.
Some of this research has attempted to link CMD to actual
moral behavior
(Blasi, 1980; Thoma and Rest, 1986; Waterman, 1988). The
theory (either ex-
plicit or implicit) behind this research stream is that people
who have greater
cognitive skills in the moral realm will have stronger, more
intrinsic spurs to
moral action. Since their reasoning is more autonomous, their
behavior ought to
be more autonomous as well, leading them to carry out their
moral judgments
with greater frequency than their less sophisticated
counterparts (with lower
CMD scores). The somewhat surprising and disheartening
conclusion that can
be drawn from this research is that the link beeween these two
variables is not
particularly strong; cognitive moral development explains
relatively little of the
variance in moral behavior. We are left with a relatively
modest level of under-

standing of moral behavior.
Perhaps in response to this gap in understanding, some recent
work has fo-
cused on the first element in Rest's model: recognition of the
moral issue. Studies
2019 15:25:33 UTC
THE EFFECT OF ORGANIZATIONAL FORCES 433
by Trevino and Weaver (1996), Butterfield, Trevino, and
Weaver (1996), and
Gautschi and Jones (1998) have examined various aspects of
moral awareness,
based on the sensible proposition that recognition of the moral
aspects of a de-
cision must occur before moral reasoning of any kind can take
place. Furthermore,
since the more advanced stages of Kohlberg's moral
development hierarchy
(Stages 3 through 6) are likely to lead to judgments that are
other than self-
interested, we might expect that recognition of moral issues

and the subsequent
engagement of moral decision making processesf as opposed to
non-moral pro-
cesses, will result in better behavior.
Moral Approbation
In a very recent paper, Jones and Ryan (1997) argue that a
construct called
moral approbation, the desire of moral agents to be seen as
moral by them-
selves or others, plays a critical role in moral decision making
and behavior.
The substantially condensed version of this argument that is
presented below
sets the stage for our explanation of how organizational factors
affect the moral-
ity of individual organization members.
The moral approbation construct has two facets a desired level
of moral
approbation and an anticipated level of moral approbation. The
desired level of
moral approbation is derived from Jones and Ryan's (1997)
contention that hu-
man beings have a motive to be moral. This motive to be moral

can come from
many sources, including philosophy (Aristotle,1934;Adam
Smith,1759tl982),
religion (Frankena, 1968), biology (Hoffman, 1976; Kagan,
1984), socializa-
tion (Epstein, 1973) including impression management
(Schlenker, 1980; Reis,
1981; Tetlock, 1985), and cognitive development (Epstein,
1973; Blasi, 1984).
This motive to be moral will vary, perhaps substantially,
among human beings,
but will be present to some degree in virtually all people.
According to the theory,
one manifestation of this motive to be moral is desired moral
approbation, a
desire for moral approval from the agent's referent group
(Hyman, 1942/1980;
Williams,1970). The identity of the referent group will also
vary from person to
person but will consist of those people to whom helshe looks
for moral example
or feedback. The referent group could be as narrowly deElned
as the person him/
herself or as broadly as an entire society, depending on the

agent's psychology.
Anticipated moral approbation is highly contextual and depends
on the level
of moral responsibility that the agent anticipates will be
attributed to him/her by
hislher referent group based on hislher planned behavior.
Because the moral
approbation construct is best illustrated in complex moral
decision making situ-
ations, Jones and Ryan (1997) use the example of an individual
in an organization
contemplating his/her response to potential wrongdoing on the
part of the orga-
nization to outline this part of their argument. In such
situations, moral
responsibility is based on four characteristics of the decision
making context:
1 ) severity of consequences (more severe consequences confer
greater moral
responsibility on the agent);
2019 15:25:33 UTC

BUSINESS ETHICS QUARTERLY 434
2) moral certainty (situations involving unambiguously wrong
behavior con-
fer greater moral responsibility on the agent);
3) degree of complicity (greater involvement in the wrongdoing
confers
greater moral responsibility on the agent); and
4) extent of pressure to behave unethically (greater
organizational pressure to
go along with the wrongdoing reduces the moral responsibility
on the agent).
The moral responsibility of an agent would then be a positive
function of sever-
ity of consequences, moral certainty, and degree of complicity,
mitigated by
pressure to behave unethically.
Having made a moral judgment (Step 2 of Rest's model), the
agent contem-
plates a course of action: moral intent (Step 3). At the same
time he/she estimates
the level of moral responsibility likely to be attributed to
him/her based on the
four factors described above. The agent then compares the level
of moral appro-
bation that he/she anticipates from his/her referent group based
on his/her planned
behavior and compares it to the level he/she requires (desired
moral approba-
tion). If the behavior meets the agent's threshold of desired
moral approbation,

he/she follows through with the planned behavior. If not,
he/she modifies his/
her planned behavior until it meets the threshold. This process
is graphically
depicted in Figure 1 (Source: Jones & Ryan, 1997).
Figure 1
The Moral Approbatlon Model
2019 15:25:33 UTC
Jones and Ryan's (1997) indirect argument for the moral
approbation construct
consists of a demonstration that human beings make
attributions of responsibility as
the model predicts, followed by a detailed case that actual
behavior varies along the
same lines. The former set of arguments explains why the
behavior documented in
the latter set of arguments occurs. In summary, the moral
approbation model repre-
sents an attempt to explain why the link between moral
judgment and moral behavior
is weaker than we might expect and one mechanism by which
organizational fac-
tors may play a signiElcant role in actual moral action.
Moral Approbation and Organizational Influences
on Moral Behavior

The moral approbation construct will be applied here in an
effort to explain
the impact of organizational factors on the moral decision
making and behav-
ior of individual members. From this perspective, the
organization affects
individuals in two distinct ways. First, the organization itself
may affect the
choice and composition of the referent group for many
members of the organi-
zation. Second, the organization may affect the level of
responsibility that the
individual attributes to him/herself through its effect on the
four elements of
moral responsibility.
Organizations and Referent Groups
As the above-summarized theory suggests, human beings seek
approval from
their referent groups. Individuals who are highly autonomous
in moral matters
(analogous to Stages 5 and 6 of Kohlberg's moral development
hierarchy) will
regard self approval as the ultimate standard for moral action.
Many individu-
als, however, will require the approval of a broader group,
including, for example,
family members, close friends, church leaders, and teachers.
Because organiza-
tions play a major role in the lives of many people, acting not
only as their
principal source of income but also as a place where much of
their time is spent
and many of their friendships are formed, it is highly probable

that organiza-
tions will also be crucial determinants of at least part of their
members' referent
groups. Some individuals in organizations may have a few
organization mem-
bers among their referent groups, while others may adopt the
organization
itself its values and its culture-as a referent group. While this
assertion re-
garding the link between referent group formation and
organizations may seem
intuitively obvious, a detailed, theory-based argument will aid
our understand-
ing of this phenomenon.
Theoretical support for organizational influences on referent
group choice can
be derived from Bandura's classic works on social learning
(1977; 1986). Bandura
(1977) argues that social learning takes place through two
primary mechanisms-
response consequences and modeling. Learning by response
consequences is what
might be called learning by direct experience. Individuals
respond to situational
2019 15:25:33 UTC
stimuli in various ways as they conduct their lives and receive
differential feed-

back- some positive, some negative to their responses. They
learn to behave so
as to avoid the negative consequences and promote the positive
consequences. In
organizations, individuals tend to engage in behaviors that
prompt organizational
rewards and eschew those that result in punishment.
This form of direct learning serves an informative function, a
motivational func-
tion, and a reinforcing function (Bandura, 1977). As
information, response
consequences cause the individual to create hypotheses about
which responses are
well suited to which situations. Bandura is clear in his rejection
of the view that
this process in merely mechanistic; cognition plays a role in
the interpretation not
only of the nature of the consequences but also of the
relationship between the
response and the consequences. Response consequences also
serve a motiva-
tional function. Because human beings ean anticipate events in
their lives, the

expected consequences of certain responses can motivate them
to behave in cer-
tain ways. A reinforcing function is also claimed for response
consequences.
Reinforcement makes the message as to the propriety of certain
behaviors clearer
and stronger. Organizations with consistent rewardlpunishment
frameworks will
reinforce certain behaviors through this mechanism.
As Bandura (1977) points out, learning would be both slow and
risky if indi-
viduals learned only by direct experience; their own
experiences would not be
extensive enough to allow learning at a significant pace and
their mistakes could
result in hazardous situations. Much social learning, therefore,
takes place
through modeling. Here the individual learns by observing the
behavior of oth-
ers and noting the consequences that ensue. The process is
largely informative
(as above), taking place through symbolic representations of
the observed be-
havior which inform the choice of responses thought to be

appropriate.
Modeling has four component processes-attentional, retention,
motor re-
production, and motivational. Attentional processes are
selective in nature, which
refers to the fact that people tend to model their behavior on
that which a) they
observe most frequently and b) seems to be most effectiveB
Not surprisinglys
many human beings model their behavior on that which is most
often exhibited
in the organizations where they work, and they are more likely
to model the
behavior that is rewarded by the organization.
Observation alone often is not enough to assure that individuals
will remem-
ber modeled behavior. Repeated exposure to behavior often
results in
representational systems image-based or verbal-that produce
retrievable
"memory codes" that guide behavior, thus serving as retention
systems for the
learned responses (Bandura, 1977: 26). Organizations are often
the source of

not only repeated exposure to certain types of behavior but also
the images and
verbal representations that simplify the development of such
memory codes.
Through motor reproduction processes, individuals "learn by
doing." They
develop and refine their responses along the lines of the
modeled behavior. Fi-
nally, observational learning also serves a motivational
function. Individuals
learn by observing behavior in others and favoring that which
has functional
2019 15:25:33 UTC
value i.e., that which has been rewarded. They are motivated to
model their
behavior on this favored behavior because they hope to secure
similar rewards.
In short, organizations may be an important factor in an
individual member's

choice of referent group. Some individuals, of course, will be
self-referent on
moral matters, depending on only their own moral standards for
moral approba-
tion. For many people, however, the referent group will include
family members,
close friends, church leaders, and/or teachers and some are
likely to include
other organization members, groups within the organization, or,
in the extreme
case, the organization itself as part of their source of moral
approbation.
The conclusion that organizations influence the choice of
referent group for
individual members should not be surprising. Many human
beings spend a great
deal of time in organizational settings and depend on
organizations for their
livelihood. Thus, through reward and punishment systems,
authority structures,
formal and informal rules, and organizational cultures,
organizations create the
environments though which individuals "enact" much of their
lives. Social

learning is the process through which the dimensions of that
enactment are
created. Thus do organizations enter the referent groups of at
least some of
their members.
Organizational Influences on Attributions of Moral
Responsibility
Organizational forces are also likely to influence attributions
of moral responsi-
bility, an important determinant of moral approbation. The
moral agent makes such
attributions based on the four factors included in the model:
severity of consequences,
moral certainty, degree of complicity, and extent of pressure to
behave unethically
(as represented in our example). This subsection describes the
effect of organ-
izational forces on these four components of moral
responsibility.
Severity of Consequences. At first glance, severity of
consequences would
seem to be set by the circumstances that define the immediate
situation and
hence immutable by organizational forces. Jones (1991) has
described magni-

tude of consequences, a related concept, as an element in the
determination of
issue contingency. However, the critical determinant in the
moral approbation
model is the moral agent's perception of severity of
consequences, a perception
that the organization may influence through such mechanisms
as schemata
and euphemism.
Gioia (1992) discusses the importance of schemata cognitive
frameworks
for making sense out of complex phenomena-on ethical
decision making in
organizations. By influencing an individual's choice of a
schema, the organiza-
tion can influence the range of choices the individual feels that
he/she has.
Viewing an issue with a moral component (such as the potential
recall of Ford
Pintos because they tended to burst into flame in certain types
of rear end colli-
sions-Gioia's situation) as an economic (cost-benefit) problem,
a legal problem,

or a customer complaint problem will dictate different solution
sets than will
viewing the same circumstances as threats to the lives and
health of dozens of
human beings. Thus does schema formation affect moral
decision making. More
2019 15:25:33 UTC
specifically, such schema use could affect an individual's
attributions regarding
severity of consequences. An economic problem involving cost
and benefits to
the company (e.g., costs of litigation, harm to reputation for
safety, costs of
fixing the automobile itself to reduce the risk) will often be
couched solely in
terms of a common metric money which substantially
attenuates the perceived
severity of consequences of the situation. Moral responsibility
and thus the
agent's attributed level of moral approbation will be reduced

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