MGT363 EXAM REVIEW: CHAPTERS 9, 10, 11, 12
Chapter 9 – Organizational Culture and Ethical Value
• Social capital – the quality of interactions among people and whether they share
a common perspective. A high degree of social capital means relationships are
based on trust, mutual understandings, and shared norms.
• Culture is the set of values, norms, guiding beliefs, and understandings that is
shared by members of an organization and is taught to new members. This can
be seen by underlying values, assumptions, beliefs, attitudes, feelings as well as
symbols, behaviour, clothing and the physical setting.
o Internal integration: Members develop a collective identity and learns how
to work together effectively.
o External adaptation: How the organization meets goals and deals with
outsiders. It can help the organization respond to competitors.
• Rites and ceremonies – special occasions that reinforce specific values and
create a bond among people for sharing an important understanding.
o Passage – introduction and employee training
o Enhancement – annual employee award night
o Renewal – new development activities
o Integration – office holiday party
• Stories – narratives based on true events that are shared with employees and
are told to all staff to inform them about the values of an organization.
• Heroes – company models who serve as influence for serving cultural norms
• Legends – events are historic and are embellished with fictional details.
• Myths – consistent with values of the organization but not supported by facts.
• Language – organizations use a specific saying, slogan, metaphor, or other form
of language to convey special meaning to employees and customers.
1. Adaptability culture – characterized by strategic focus on the external
environment through flexibility and change to meet customer needs.
2. Mission culture – characterized a clear vision of the organization’s purpose and
on the achievement of goals, such as sales growth, profitability, or market share.
3. Clan culture – a primary focus on the involvement and participation of the
organization’s members and on rapidly changing external environment.
4. Bureaucratic culture – has an internal focus and a consistency orientation for a
stable environment. This organization supports a methodical approach.
• Culture strength – the degree of agreement among members of an organization
about the importance of specific values.
• Subcultures – reflect the common problems, goals, and experiences that
members of a team or department. MGT363 EXAM REVIEW: CHAPTERS 9, 10, 11, 12
• Culture can play an important role in creating an organizational climate that
enables learning and innovative response to challenges, and competitive threats.
o Whole is more important and boundaries between parts are minimized
o Equality and trust are primary values.
o The culture encourages risk taking, change, and improvement.
• Ethics – the code of moral principles and values that governs the behaviours of a
person or group with respect to what is right or wrong.
• Rule of law – a set of principles and regulations that describe how people are
required to act, generally accepted in society, and are enforceable in the courts.
• Managerial ethics – principles that guide the decisions of managers about
whether they are right or wrong.
• Social responsibility – extension of management’s obligation to make choices
and take action so that the organization contributes to the welfare and interest of
stakeholders, employees, customers, the community, and the broader society.
• Ethical dilemma – arises in a situation in which values are in conflict.
• Values-based leadership – relationship between a leader that is based on
shared, strongly internalized values advocated and acted upon by the leader.
• Ethics committee – group of executives who oversee company ethics.
• Chief ethics officer – executive who oversees all aspects of ethics, including
establishing ethical standards, supervising the investigation of ethical problems,
and advising managers of ethical corporate decisions
• Ethics hotlines – employees can use to seek guidance/ report weird behaviour.
• Whistle-blowing – an employee reporting illegal, immoral, or illegitimate practices
on the part of the organization.
• Code of ethics - a formal statement of the company’s values concerning ethics
and social responsibility; it clarifies to employees what the company stands for.
• Social audit - measures and reports the ethical, social, and environ- mental
impact of a company’s operations.
Chapter 10 – Innovation and Change
Forces driving the need for organizational change:
• Global changes, competition, new markets, expansion
• More threats
• More opportunities
• Large developments/improvements in an organization
Incremental changes - represents a series of continual progressions that maintain the
organization’s general equilibrium and often only reflect part of an organization
Radical changes - breaks the frame of reference for the organization, often
transforming an entire entity within an organization dramatically MGT363 EXAM REVIEW: CHAPTERS 9, 10, 11, 12
Product and service changes - changing outputs of products such as improving existing
products or entirely new product lines. New products and services are designed to
increase the market share or to develop new markets, customers, or clients.
Strategy and structure changes - pertain to the administrative domain in an
organization. The administrative domain involves the supervision and management of
the organization. These changes include changes in structure, management, policies,
rewards, labour relations, coordination devices, information and control systems, and
accounting and budgeting systems.
Culture changes - changes in the values, attitudes, expectations, beliefs, abilities, and
behaviour of employees.
Technology changes - changes in an organization’s production process, including its
knowledge and skill base, that enable distinctive competence. These changes are
designed to make production more efficient or to produce greater volume.
Organizational change - considered the adoption of a new idea or behaviour by an
Organizational innovation - the adoption of an idea or behaviour that is new to the
organization’s industry, market, or general environment.
Organic structure - Consists of decentralization meaning authority to control tasks is
delegated, Employees work together and coordinate tasks, much verbal
communication, task forces and teams are primary integrating mechanisms
Mechanistic structure - Consists of centralization meaning decision-making is kept as
high as possible, employees work separately and specialize in one task, much written
communication, hierarchy of authority is well defined
Ambidextrous approach—to incorporate structures and management processes that are
appropriate to both the creation and the implementation of innovation.
Techniques for Encouraging Technology Change
• Switching structures - an organization creates an organic structure when such a
structure is needed for the initiation of new ideas. MGT363 EXAM REVIEW: CHAPTERS 9, 10, 11, 12
• Creative departments - staff departments, such as research and development,
engineering, design, and systems analysis, create changes for adoption in other
• Idea incubator - provides a safe harbour where ideas from employees in an
organization can be developed without interference from bureaucracy/politics.
• Venture teams are a technique used to give free rein to creativity, they often are
given a separate location and facilities so they are not constrained by organizational
• Skunkworks - a separate, small, informal, highly autonomous, and often
secretive group that focuses on breakthrough ideas for the business.
• New-venture fund - provides financial resources for employees to develop
new ideas, products, or businesses.
• Corporate entrepreneurship - to facilitate idea champions facilitate idea champions,
going by a variety of names, including advocate, intrapreneur, or change agent.
• Technical/product champion - the person who generates or adopts and
develops an idea for a technological innovation
• Management champion - acts as a supporter and sponsor to shield and
promote an idea within the organization.
Horizontal Coordination - The company’s department interacts with the environment
concerning two main factors which are the technical developments and the customer’s
needs. Technical, marketing, and production teams share ideas and information. They
all coordinate and collaborate with each other, so the decision to launch a new product
is ultimately a joint decision among all three departments. Horizontal coordination, using
mechanisms such as cross-functional teams, increases the information for new product
Time-based competition - delivering products and services faster than competitors,
giving companies a competitive edge.
Dual-core approach - change compares administrative and technical changes such as
the design and structure of the organization itself, including restructuring, downsizing,
teams, control systems, information systems, and departmental grouping.
Forces for Culture Change
• Re-engineering and horizontal organizing
• Learning organization
• Organization development - Focuses on the human and social aspects of the
organization as a way to improve the organization’s ability to solve problems.
• Large group intervention approach - Brings together participants from all parts of the
organization, including key stakeholders from outside the organization as well—in an
off-site setting to discuss problems or opportunities and plan for change. MGT363 EXAM REVIEW: CHAPTERS 9, 10, 11, 12
• Team building - Promotes the idea that people who work together can work as a
team. A work team can be brought together to discuss conflicts, goals & decision-
• Interdepartmental activities - Representatives from different departments are brought
together in a mutual location to expose conflicts, diagnose the cause and plan
Barriers to Change
• Excessive focus on costs.
• Failure to perceive benefits.
• Lack of coordination and cooperation.
• Uncertainty avoidance.
• Fear of loss.
Experience Change Model
Kotter’s Seven Steps for Implementing Change
• Establish a sense of urgency for change
• Establish a coalition to guide the change
• Create a vision and strategy for change.
• Find an idea that fits the need.
• Develop plans to overcome resistance to change.
• Create change teams.
• Foster idea champions.
Chapter 11 – Decision-Making Processes
• Organizational decision making - defined as the process of identifying and solving
• Problem identification stage - Information about environmental and
organizational conditions is monitored to determine if performance is
• Problem solution stage - When alternative courses of action are considered
and one alternative is selected and implemented.
Programmed decisions - Repetitive and well defined, and procedures exist for resolving
the problem. They are well structured because criteria of performance are normally
clear and good information is available. MGT363 EXAM REVIEW: CHAPTERS 9, 10, 11, 12
Non-programmed decisions - are ill structured, and poorly defined, and no procedure
exists for solving the problem. They are used when