5. Managerial ethics

Questions for Discussion

  • 1. What is managerial ethics?
  • 2. What is unethical management based on?
  • 3. What are the main principles of ethical management?
  • 4. Can managers apply the same principles to all business situations?
  • 5. Are there any common-sense guidelines to help managers make their decisions?
  • 6. What are the reasons why managers may be involved in unethical behaviours?
  • 7. What is low environmental munificence? Why is it conductive to unethical behaviour?
  • 8. What helps managers to think about ethical implications of their managerial decisions?
  • 9. Can you give examples of business frauds?
  • 10. How do unethical companies cheat the unsuspecting victims?
  • 11. How can people be protected from thefts, robberies and company dishonesty?
  • 12. Are you an ethical manager?

Target Vocabulary

philanthropic contributions


community involvement team

hard-and-fast rules

environmental munificence

to discredit competitors

unethical/ immoral behaviour

to undermine rival companies

lack of concern about


to cut corners

commitment to

due process

to overstep the mark

Vocabulary Practice

Exercise 1. Use your target vocabulary to replace these explanations.


contributions to help the poor and those in need, especially by giving them money


groups of people who are involved in community voluntary work


being generous and considerate to the environment


the process which is suitable or right in the given circumstances


the rules that cannot be changed in any circumstances


to do something in the easiest, cheapest or quickest way, often by ignoring rules or leaving something out

Exercise 2. Complete these sentences using your target vocabulary in the appropriate form.

  • 1. There are no ... rules about it.
  • 2. She has been offered a $50 000 ... to drop the charges.
  • 3. This crisis has ... their position.
  • 4. The unethical behaviour led to his ... on allegations of conspiracy.
  • 5. It is easy to ... in an unethical company.
  • 6. Our competitors did their best to ... our product.

Tips for Topic Development

Text 1

Managerial ethics are standards of conduct or moral judgement used by managers of organizations in carrying out their business.

Moral management strives to follow ethical principles and does business within the ideals of fairness, justice, and due process. As a result, moral managers pursue business objectives that involve simultaneously making a profit and engaging in legal and ethical behaviours.

Though there are no hard-and-fast rules for every possible condition and situation, there are a few common sense guidelines that can be helpful in thinking about the ethical implications of managerial decisions and behaviours. They are: obey the law, tell the truth, stick to the golden rule “Do unto others as you would have them do unto you”, do not harm, practice participation not paternalism, always act when you have responsibility.

In contrast to moral management, unethical or immoral management not only lacks ethical principles but is actively opposed to ethical behaviour. It is characterized by exclusive concern for company gains, emphasis on profits and company success at virtually any price. It manifests itself in lack of concern about the desires of others to be treated fairly, it views laws as obstacles to be overcome, and it demonstrates a willingness ‘to cut corners’, (from Bartol К. M., Management, p. 134)

Agree or disagree with these statements.

  • 1. Moral management is a precondition of company excellence.
  • 2. Businesses must obey the law at all times.
  • 3. Every managerial decision has an ethical implication.
  • 4. Good decisions should be taken collectively.
  • 5. Companies that make an emphasis on profit are always unethical.
  • 6. Businesses have to cut corners to reach their goals.

Text 2

There are many factors that encourage unethical behaviour: environmental competitiveness, low environmental munificence, extreme dependency of one organization on another, pressure for higher performance, poor internal financial performance, labour dissatisfaction and even delegation of authority and encouragement of innovation.

Both profit and not-for-profit organizations may be engaged in unethical behaviours. In not-for-profit organizations unethical behaviour may be manifested in illegal payments to college athletes, and mispresentations of the amount of charitable contributions actually going to those being helped.

Unethical behaviour more often stems from the fact that organizations struggle for financial performance in an environment in which the opportunities for success are limited. For example, executives at the Beech-Nut Nutrition Corporation, the second-largest U.S. baby food manufacturer, ignored warnings from chemists that the apple concentrate that the company was buying at below-market prices was extensively altered. As a result they sold the completely synthetic juice, which had been labeled “ 100 percent fruit juice”.

Other instances of unethical behaviour include bribes, secretly speeding up the assembly line or releasing unsafe products, planting malicious rumours about rival companies in an effort to discredit and undermine them.

Such schemes when discovered lead to fines, indictments, firing executives.

On the other hand, ethical companies make philanthropic contributions, sponsor clinics for AID victims, establish community involvement teams to demonstrate their commitment to ethical principles. (based on Bartol K.M., Management, p. 136)

Say which of the statements below are true and which are false.

  • 1. Not-for-profit organizations can’t be called unethical.
  • 2. Unethical companies limit their opportunities for success.
  • 3. Managers of the Beech-Nut Nutrition Corporation overturned the accusations of chemists that they had produced completely synthetic juice.
  • 4. Spreading rumours about rival companies is the only way to outmaneuver them.
  • 5. Ethical companies donate to charities.
  • 6. Community involvement teams are based on ethical grounds.
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