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Terms in this set (74)

• Normative approaches: How organizational decision makers should approach an issue
➢ Different from a descriptive approach that examines how organizational decision makers approach ethical decision making
• Concepts like fairness and justice are highly important in a normative structure
• Most organizations develop a set of core values to provide enduring beliefs about appropriate conduct
➢ Core values are central to an organization and provide direction for action
• By incorporating stakeholder objectives into corporate core values, companies begin to view stakeholders as significant
• Institutions are important in establishing a foundation for normative values
• Organizations face certain normative pressures from different institutions to act a certain way
➢ Internally and/or externally
➢ Sort institutions into three categories: Political, economic, and social
• Political influences can take place within the organization
• An ethical organization has policies and rules in place to determine appropriate behavior
• Often the compliance component of the firm's organizational culture
➢ Failure to abide by these rules results in disciplinary action
• Normative business ethics takes into account the political realities outside the legal realm in the form of industry standards
• Legal issues such as price fixing, antitrust issues, and consumer protection are important in maintaining a fair and equitable marketplace
➢ These issues must be major considerations for business when making ethical decisions
• Competition affects how a company operates as well as the risks employees take for the good of the firm
• Amount of competition in an industry can be determined/described according to...
➢ Barriers to entry into the industry
➢ Available substitutes for the products produced by the industry rivals
➢ Power of the industry rivals over their customers
➢ Power of the industry rivals' suppliers over the industry rivals

• Social institutions include religion, education, and individuals such as the family unit
• There are laws meant to ensure an organization acts fairly, but there are no laws saying people should do to others as they would prefer to have done to them
➢ Many cultures adopt this rule that has been institutionalized into businesses with standards on competing fairly, being transparent with consumers, and treating employees with respect
• Industry shared values promote organizational effectiveness when linked to goals
• Can also hinder effectiveness if more efficient means of organization and structure are avoided in exchange for stability
➢ Risk that organizations might sacrifice new ideas or methodologies in order to be more acceptable
➢ Can limit innovativeness and productivity
• Important that organization does not stray too far from industry norms and values
• When values from political, economic, and social institutions are embedded into the organizational culture to provide incentives for appropriate behavior, firms tend to act more socially responsible
• If incentives do not align with institutional normative values or if they contradict these values, then misconduct is likely