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J Bus Ethics (2012) 107:4964 DOI 10.1007/s10551-012-1299-1
Leader Ethical Decision-Making in Organizations: Strategies for Sensemaking
Chase E. Thiel Zhanna Bagdasarov
Lauren Harkrider James F. Johnson
Michael D. Mumford
Published online: 4 April 2012 Springer Science+Business Media B.V. 2012
Abstract Organizational leaders face environmental challenges and pressures that put them under ethical risk. Navigating this ethical risk is demanding given the dynamics of contemporary organizations. Traditional models of ethical decision-making (EDM) are an inadequate framework for understanding how leaders respond to ethical dilemmas under conditions of uncertainty and equivocality. Sensemaking models more accurately illustrate leader EDM and account for individual, social, and environmental constraints. Using the sensemaking approach as a foundation, previous EDM models are revised and extended to comprise a conceptual model of leader EDM. Moreover, the underlying factors in the model are highlightedconstraints and strategies. Four trainable, compensatory strategies (emotion regulation, self-reection, forecasting, and information integration) are proposed and described that aid leaders in navigating ethical dilemmas in organizations. Empirical examinations demonstrate that tactical application of the strategies may aid leaders in making sense of complex and ambiguous ethical dilemmas and promote ethical behavior. Compensatory tactics such as these should be central to organizational ethics initiatives at the leader level.
Keywords Cognitive strategies Ethical behavior
Ethical decision-making Leadership Sensemaking
Corporate and nancial misconduct amidst the recent world nancial crises, such as the predatory subprime lending practices of Ameriquest, Goldman Sachs, and IndyMac Bank, have left few wondering whether ethics in leadership should be of greater focus moving forward (Muolo and Padilla 2010; Paletta and Enrich 2008). Government and public ofcials including the Securities and Exchange Commission and The United States Senate have questioned organizational leaders over their dubious and, seemingly, misguided decision-making (Pulliam et al. 2010; Securities and Exchange Commission 2010). They wonder how such gross misconduct could occur even when organizational policies and guidelines exist to safeguard against unethical practices. Is it because todays leaders have less integrity and are prone to behave unethically? Under the rationalist or moral reasoning approach to leader ethical decision-making (EDM) such a conclusion might be accepted. EDM theories grounded in moral reasoning arguments posit that leaders rst recognize ethical problems and then apply their moral code or principles to ethical situations (e.g., Jones 1991; Kohlberg 1981,...