ETHICAL DECISION-MAKING

DECISION-MAKING ON AN INTERNATIONAL CONTEXT

Programmed Decision: simple, routine matter for which a manager has an established decision rule.

Non-programmed: complex decision about an unexpected situation. Requires creative solution.

Decision-making Process

Source: http://tutor2u.net/business/marketing/buying_decision_process.asp

Models:

·      Rational: ideal, optimize outcome.

·      Bounded rationality: select the first alternative “good enough”

·      Garbage can: random, without system.

Mixed-motive situation: individual interest is in conflict with collective interest.

Ex: prisoner’s dilemma game. Unilateral or bilateral confession or non-confession?

Collectivism: social patter that consists of closely linked individuals who see themselves as parts of one or more collectives. Are more cooperative.

Individualism: individuals who view themselves as independents. No social influence.  

They distinguish between in-groups (common interests, long-term) and out-groups (disagreement).

ETHICAL BEHAVIOR AND INTERNATIONAL BUSINESS

Social responsibility: obligation of an organization to behave in ethical way in the social environment in which it operate.

In the global business environment there is a desire to balance global policies with specific norms of various cultural contexts. (Bartett and Ghoshal, 1998). Cultural differences affects individuals’ ethical reasoning.

Rest’s Model of Moral Action defines morality as an individual’s cognitive conception of what is good or right.

1.    Ethical reasoning process:

2.    Ethical sensitivity: identification of dilemma

3.    Prescriptive reasoning: evaluate ideal outcomes

4.    Deliberative reasoning: value assessment of his intention

5.    Ethical action

The understanding of considering the influence of culture in ethical reasoning is useful to transnational organizations in their development of values and standards, communication across cross-cultural context. Now a days there is a call for transnational organizations to create a global code of ethics that transcend the bounds of any culture but it is not a solution because processes and mechanisms will remain different.

What are the impacts of culture in terms of mixed-motive decision-making?

Individuals are located in two social patterns, collectivism and individualism. Cultures can be described like that as well. When a culture characterizes for being collectivism, they give priority to group goals, the alternatives chosen will be oriented to give the group benefits. They work better with others and they tend to be more cooperative than individualists. Individualists seek to fulfill their own interests within the decisions they made. When an organization faces individualism from the other party it becomes a challenge because is difficult to socially influence them and other challenge is that they present more cognitive dissonance because there inconsistencies between attitudes and behavior. If there is a difference of interests, there is going to be a difference of values as well. For example in the study of cooperation facing individualism a stranger can be seen as in-group in a foreigner land of both actors, while if they were located in one’s land the other will be seen as out-group. Culture affects individual decision-making through its influence on individual values and is a powerful predictor of cooperative behavior.

REFERENCES

1.    Ethical decision making in organizations. Sin Kit I. Class 2011

2.    Xiao-Ping Chen and Shu Li (2005) Cross-National Differences in Cooperative Decision-Making in Mixed-Motive Business Contexts: The Mediating Effect of Vertical and Horizontal Individualism. Journal of International Business Studies, Vol. 36, No. 6 (Nov, 2005), pp. 622-636

3.    Thorne, L & Bartholomew, S. (2002) The Socio-Cultural Embeddedness of Individuals’ Ethical Reasoning in Organizations (Cross-cultural Ethics) Journal of Business Ethics, Vol. 35, No. 1(Jan, 2002), pp. 1-142002), pp. 1-14

PERSONALITY, PERCEPTION, ATTRIBUTION, ATTITUDES AND VALUES

Personality: relatively stable set of characteristics that influence an individual’s behavior.

The integrative approach and the “Big Five” personality traits help to identify characteristics of personality

Perception: people attempt to understand and make sense of the information received from the environment. Is affected by internal and external factors.

The cross-cultural work environment has influence on perception and makes the task of working together, difficult; (Analoui, 1998; Analoui and Karami, 2002). Differing perceptions might provoke conflicts resulting in ineffective work relationships (Hofstede, 1991)

Attribution Theory (Heider, 1958): explains how individuals pinpoint the causes of their own behavior and that of others.

Internal: controllable

External: not controllable

Fundamental attribution error (Jones and Harris, 1967): overestimated perception might be wrong.

Actor-Observer effect (Storms, 1973; Baxter and Goldberg, 1988): other’s behavior caused by internal causes while own behavior by external ones.

Self-serving attribution (Zuckerman, 1979;Roesch and Amirkham, 1997): associate own success with internal factors and failure with external.

There is a causal relation between perception, behavior and organizational performance. Positive perception results in close human relationships and this results in good performance and is imperative for successful management. If there are cross-cultural projects, training should be included in order to remove misunderstandings.

ATTITUDE

“Psychological tendency expressed by evaluating an entity with some degree of favor or disfavor” (Harrison, D.A., Newman, D.A., Roth, P.L. 2006)

ABC MODEL

VALUES: enduring beliefs that a specific mode of conduct is personally or socially preferable to an opposite.

Not all the assets that a company has have the same strategic value. Intangible assets are more valuable like beliefs and values.

Capabilities are the routines of coordination of different resources. More original better competitive advantage (scarcity and value).

The main capabilities are:

Culture is conformed by the values and beliefs of the people within an organization.

Structure establishes the relationships in the organization.

Organizational learning: ability to adapt to changes and maintain competitive advantage. Innovation

Resources and capabilities determined the organizational personality and the way it performs.

To what do you attribute the success of JICA?

I believe JICA’s successful comes directly from the professionalism of its aid workers. They are perfectly chosen to do this work because they are volunteers and they have to pass threw different test that demonstrates their experience. They have had previous experience in the field they are committed in.  This organization is really well structured because they know that before starting a cross-cultural project is important to provide people with a prior formation and training on the other culture. JICA’s aid workers received a complete language program before leaving Japan to the other countries.

According to the study in September 2008, JICA’s aid workers’ have positive perception that causes positive behavior in local colleagues and result in higher organizational performance. Motivation and teamwork are important for Japanese organizations. For example, when Yasuko (aid worker here in Medellin) visited EAFIT, we can asked her the perceptions she had about Colombia before coming here and she only talked about Colombia’s good factors as the coffee, the emeralds, orchids and beautiful women, and she did it in a lovely way that demonstrate us that despite of the possible bad reputation the country has, people are also aware of the good things. Motivation and teamwork are important for Japanese organizations.

REFERENCES

1. Personality, Perception& Attribution; Attitudes& Values. Sin Kit I. Class 2011.
2. Takao Inamori, Farhad Analoui, “Beyond Pygmalion effect: the role of managerial perception”, Journal of Management Development, Vol. 29 Iss: 4, pp.306-321
3. Gregorio Martin-de-Castro, Jose Emilio Navas-Lopez, Pedro Lopez-Saez, Elsa Alama-Salazar, (2006) “Organizational Capital as Competitive Advantage of the firm”, Journal of intellectual Capital, Vol. 7 Iss:3, pp.324-337
4. Online. Available March 7, 2011 http://www.jica.go.jp/english/about/mission/index.html

MOTIVATION

A person is motivated when he or she wants to do something. Covers all the reasons of acting in a certain manner (Adair, 2006).

INTERNATIONAL THEORIES

Maslow’s Hierarchy of Needs (internal): when an inferior need is satisfied the next level becomes dominant. The highest level can never be satisfied, “man is a perpetually wanting animal” and unsatisfied needs are motivations.

Critics: people’s needs don’t advance in a progress towards the top of the pyramid, people’s priorities are different and people constantly come back to previously satisfied needs.

 Source: http://datadesign.wordpress.com/2011/01/14/maslows-pyramid/

Frederick Herzberg’s Two Factors theory (external):

·      Satisfaction: related to professional acknowledgement, promotions; the nature of work.

·      Dissatisfaction: company policy, management, salary; work conditions.

Critics: dichotomization and not individual differences

Theory X and Y (Douglas McGregor):

X: physiological and safety. Avoid work and responsibilities. Must be forced, threatened, controlled and penalized.

Y: social, esteem and self-actualization. Make physical and intellectual efforts at work. Motivated by the content itself.

The Expectancy (Porter and Lawer, 1968): certitude of their expectancies. Results of performance satisfy a need. Effort.

The Goal Setting (Lothan and Locke, 1979): motivation is higher when there are specific objectives established, accepted and offered a performance feedback.

The Equity theory: higher motivation when employees perceive fairness in their treatment in comparison to others.

Stacy Adam’s theory of inequity: people are motivated when they see themselves in risk, or in an “unfair” position.

The 50-50 (Adair, 2006): covers the internal and external perspective.

The European Employee Index: motivation is the result of factors related to the employees’ perception of job and work environment.

·      Reputation: the organization

·      Senior management: people in charge

·      Immediate superior

·      Cooperation: interaction

·      Daily work

·      Total remuneration: compensation

·      Development: acquisition of competences

All theories are not equally good and useful. Managers cannot assume they understand employees’ needs; they should analyze the variety of them.

In multicultural organizational contexts, what could be a good strategy to keep people motivated towards a common task?

Theories of motivation are culturally bound, and differences occur among nations. This is crucial to create a motivation strategy within an organization. As managers, is challenging in two aspects: the recognition of the cultural differences and recognition of individual needs. If a manager understands these circumstances, is going to be easier to maintain people motivated. Culture diversity might be seen from a positive perspective, and identify the opportunities it brings. The most important thing to keep motivation within an organization is to maintain the group needs satisfy. Group needs are:

·      Needs to accomplish

·      Common tasks

·      Need to maintain the cohesive social union

The last one refers to the sum of all the individual needs converging with each other. In this point is important to apply strategies to impulse the cross-cultural learning between the co-workers and at the same time tolerance will be incremented as a value of the organization. If the employees are motivated to learn from each other, there will be a feeling of belonging to the group. One example of motivation, if there are different languages, can be classes so they can learn other languages and the communication is going to improve. Another strategy can be implement a cultural lunch per week and people can show their food preferences. Conferences about the world as home for all can be influential too, employees can understand tasks as goals that improve the quality of life all over the world and not just the place they are located.

Managers need their employees to feel they are important as well as the others. One culture is not better than other, and all of them deserve respect and attention.

REFERENCES:

1. IMAGE: Maslow’s Pyramid. Online, available March 1, 2011. http://datadesign.wordpress.com/2011/01/14/maslows-pyramid/
2. Viorel, Lefter, ManolescuAurel, Marinas CristianVirgil, and PuiaRamona Stefania. 2009. "Employees Motivation Theories Developed at an International Level”. Annals of the University of Oradea, Economic Science Series18, no. 4: 324-328
3. Organizational Motivation. Sin Kit I. Class, 2011.
4. Mead, Richard. 2004. International Management: Cross-Cultural Dimensions. London: Blackwell Publishing. Chapter 1.

ORGANIZATIONAL BEHAVIOR & NATIONAL CULTURE

ORGANIZATIONAL BEHAVIOR:

Is the study of individual behavior and group dynamics in organizations.

Human behavior in organizations is complex.  Reflected in these metaphors:

• The clockwork: idealize it. Logical and rational. It leads to the formal organization, which is the official, legitimate and most visible.
• The snake pit: daily conflict, stress within the organizations. Informal, unofficial, less visible.  Discovered in Hawthorne studies (1920-1930)

Informal (performance) and formal (context) elements, together, form organizations.

Human Behavior has 2 perspectives:

·      Internal: psychological oriented. Thoughts, feelings, needs, experiences, values.

·      External: surrounding external events and environmental forces.

That is why Kurt Lewin said,  “behavior is a function of both the person and the environment”. (1936). Principles of Topological Psychology.

Organizations as OPEN SYSTEMS: interacting internal components (people, structure, technology, tasks), which interact with elements of the environment.

Source: Organizational Behavior. Sin Kit I. Class 2011-1

Change can create opportunities and risks.

•       Too much change, chaos.
•        Too little change, stagnation.

Driving forces and Challenges as well, for managers in changing times:

1.    Globalization.

2.    Workforce diversity

3.    Technological innovation

4.    Demand of ethical behavior at work 

To achieve success, it is necessary to:

• ·      Be Customer Focused! Exceed customer expectations in quality.

Total Quality Management (TQM):  total dedication to continuous improvement and to customers so that the customers’ needs are met and their expectations exceeded.

Six Sigma:  high-performance system to execute business strategy that is customer-driven emphasizes quantitative decision making, prioritizing on saving money.

Learning about organizational behavior includes 3 activities:

1.             Objective Knowledge: results from research and experiments.

2.             Skill development: master the abilities Essentials to successful functioning.

3.             Apply both in real World.

NATIONAL AND ORGANIZATIONAL CULTURE

The importance of culture in decision-making process depends on the circumstances and the interests of the person.

Factors that influence Decision Making

Internal:

• ·      CEO’s psychological make up
• ·      Organization strategy, history, culture
• ·      Resources (financial, plant, staff, technology)
• ·      Policies and systems

External:

• ·      Competitors
• ·      Suppliers
• ·      Customers
• ·      Market
• ·      Technology
• ·      Regional, national and international economies and politics.
• ·      Laws and regulations
• ·      Infrastructure (transport, power)
• ·      Trade unions
• ·      Ethics and religion
• ·      Green environment
• ·      Industry interests
• ·      National culture

Culture

Hofstede (1984) defines culture as:

… the collective programming of the

mind which distinguishes the members

of one human group from another…

Culture, in this sense, includes systems

of values; and values are among the

building blocks of culture (p.21).

Is particular to one group: different groups can respond differently to the same situation.

Is learned (passed from one generation to another). The learning is unconscious and in the early years so it is deep-rooted.

It has a system of values that includes beliefs and religion as well.

Characterizes the group and influences the behavior of its members but is not the only one, also by: genetic transmission, family, gender stereotypes, age. Managers should make a generalization of the analysis of these aspects to implement a cultural analysis.

It can be predictable but in unexpected situations, or abnormal psychological status it might have differences.

Cultural diversity brings opportunities (tolerance, cooperation, cross-cultural learning, creativity, innovation) and difficulties (time, costs, communication process, interpersonal conflicts)

Why is managing organizational behavior in changing times, challenging?

Change is challenging in basically two items:

1.    Adapting to change: in general, human behavior in times of change becomes reactive, rigid, and dominant. Individuals are members of organizations, as individuals’ behavior is being disrupted by a non expected situation, with the organizational behavior happens the same thing because one affects the natural rhythm of performance within the organization. When there are cultural differences is important to be tolerant and have the willingness of accept differences in the way of act, think and work.  Managers can’t generalize all the time because individuals have different values, beliefs and all of this influences the behavior of a person. Also, is important to be aware that the world is in constant evolution, and the market conditions can change abruptly. Managers should have plans B for the way the organization is going to face this new circumstances. EXAMPLE: Quality can’t be optimized because customer expectations are always changing, but the organization must continue pursuing this because it becomes a competitive advantage. Change must be seen as positive and if it’s a failure, learn from the mistakes.

2.    The amount of change applied: as I already mentioned, the World is in constant evolution, this is why continues change is required to have a good competitive position. As the document says, too many change leads to chaos, but too little is stagnation. In this globalized time, managers of organizations, might be willing to innovate, to adapt into new markets, to be responsive to ethnic, ethical, religious, gender, demographic and social differences.

REFERENCES:  

Mead, Richard. 2004. International Management: Cross-Cultural Dimensions. London: Blackwell Publishing. Chapter 1.

Nelson, Debra L. and Quick, James Campbell. 2010. Organizational Behavior –Science, the Real World, and You.  South-Western Cengage Learning, Mason, USA. Chapter 1 and 2

THE CORPORATION

Key concepts:

CAPITALISM: an economic, political and social system based on private ownership of property, business and industry, and directed towards making the greatest possible profits for successful organizations and people. Corporations grow in capitalist economies as they have their basis in private property, incomes, and reduction of costs.

PSYCOPATH:  this term is used for mental illness characterized by an abnormal lack of empathy with no moral conscience conduct and no guilt feeling. According to the Manual of Mental Disorders, corporations exhibit characteristics of psychopaths.

LEGAL INSTITUTION: corporations are legal institutions that can only consider the interests of their shareholders. As being legal, they are driven to care about the profit more than anything else. They became members of our society. Legal institutions have the capacity of borrow money, buy and sell properties, go to court, they are part of the social system.

EXTERNALITIES: make costs externally managed. According to Milton Friedman it is the effect of a transaction between two parties on a third party who is not involved in the transaction. In other words, let somebody else deal with the problems the corporation has. “Make other people pay the bills”

LIMITED LIABILITY: when an investment occurs, there are different degrees of responsibility taken by the investors. As “limited liability” is established, it means the investor does not have to suffer any consequence but the one of loosing the amount of money he or she has invested. Corporations give owners this “advantage”.

In this documentary, corporations are defined as legal entities and they meet the clinical definition of psychopathic behavior. Do you agree? Why or why not?

The documentary present proofs that some corporations don’t care about anything or anyone instead of their stockholders, they don’t care about the others, they believe in their permanent innocence, and they used externalities all the time. This brings awful consequences of the performance of corporations within a society. I believe documentaries like “The Corporation” are really important and useful because people need to know that things happened behind the curtain! With this kind of accusations, corporation managers can understand the need of changing to protect our home, the earth. Then they can contribute directly from their positions to improve the conditions of life of many people. When a corporation exhibits characteristics of a psychopath, I think this is misunderstood. The corporation itself is not the psychopath; the persons behind those harmful strategies are, so this is why I think managers play an important role in the process of changing.

I disagree in one specific point of the documentary; we can’t generalized when speaking of corporations. I perceived exaggeration from the documentary, because they used words like “monsters” including even the employees of and organization just for being part of it. I believe here in the world, we are more the good ones than the bad ones, and I believe in the existence of transparent institutions that make their things right so they don’t harm the society. Now-a-days their is an increment of environmental, poverty, work and life conditions, and dignity awareness.

·      Available 28 Feb 2011. Capitalism definition. http://dictionary.cambridge.org/dictionary/british/capitalism

·      Available 28 Feb 2011 FILM: http://www.thecorporation.com/