This chapter discusses how organizational culture and relationships influence ethical decision making. It will examine how leadership, power, motivation, organizational structure, and groups shape corporate culture and the decisions made within. The chapter defines corporate culture and compliance-based versus values-based cultures. It also explores how leaders can influence culture through various power bases and how motivation and needs may impact ethical behavior. Finally, it addresses how individual actions can be controlled by group and cultural norms within an organization.

1. Organizational Factors: The
Role of Culture and
Relationships
C H A P T E R 7

2. Chapter Objectives
• To understand the concept of corporate culture
• To examine the influence of corporate culture on
business ethics
• To determine how leadership, power, and motivation
relate to ethical decision making in organizations
• To assess organizational structure and its
relationship to business ethics
• To explore how the work group influences ethical
decisions
• To discuss the relationship between individual and
group ethical decision making

3. Chapter Outline
• Defining Corporate Culture
• The Role of Corporate Culture in Ethical Decision
Making
• Leaders Influence Corporate Culture
• Motivating Ethical Behavior
• Organizational Structure and Business Ethics
• Group Dimensions of Corporate Structure and
Culture
• Variation in Employee Conduct
• Can People Control Their Own Actions
• Within a Corporate Culture?

4. Ethical Corporate Culture
• Corporate culture includes the behavioral patterns,
concepts, values, ceremonies, and formal procedure
that take place in the organization

5. Corporate Culture
• May be formal statements of values, beliefs, and
customs
• May be informal through direct or indirect comments
conveying management’s wishes
• Two dimensions
– Concern for people
– Concern for performance

6. Four Organizational Culture Types
• Apathetic
• Caring
• Exacting
• Integrative
A cultural audit is an assessment
of the organization’s values

7. Compliance Versus Value-Based
Culture
• Compliance-based cultures use their legal
departments to determine ethical risk
• Values-based cultures relies on an explicit mission
statement that defines the firm and stakeholder
relations

8. Differential Association
• The idea that people learn ethical/unethical behavior
while interacting with others

9. Whistle Blowing
• Exposing an employer’s wrongdoing to outsiders
(external to the company)

10. Leaders Can Influence Corporate
Culture
• Five Power Bases
– Reward power: Offering something desirable to
influence behavior
– Coercive power: Penalizing negative behavior
– Legitimate power: Titles and positions of authority
– Expert power: Knowledge based
– Referent power: Exists when goals or objectives
are similar

11. Motivation
• A force within the individual that focuses behavior
toward achieving a goal
• An individual’s hierarchy of needs may influence
motivation and ethical behavior
• Needs or goals may change over time

12. Organizational Structure and Business
Ethics
• In a centralized organization, decision-making
authority is concentrated in the hands of top-level
managers
• In a decentralized organization, decision-making
authority is delegated as far down the chain of
command as possible

13. Groups in Corporate Structure and
Culture
• Formal groups
• Informal groups
• Group norms

14. Can People Control Their Own Actions
Within a Corporate Culture?
• Organizational ethical decisions often made by
committees and formal and informal groups
• Many decisions are beyond the influence of
individuals
• Individuals entering the business will need several
years of experience to understand how to resolve
ethical issues