Organizational Behavior Improving Performance and Commitment in The Workplace 3Rd Edition Colquitt Solutions Manual Full Chapter PDF

Organizational Behavior Improving
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Workplace 3rd Edition Colquitt
Solutions Manual
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Chapter 07 - Trust, Justice, and Ethics
Instructor’s Manual:
ch. 7: Trust,
Justice, and
Ethics
7-1
CHAPTER OVERVIEW
This chapter covers the topics of trust, justice, and ethics. Trust, or the
willingness to be vulnerable to an authority based on positive expectations
about the authority’s actions and intentions, is discussed from the
perspective of personality, cognition, and affect. Four different types of
justice, or the perceived fairness of actions, are discussed – distributive
justice, procedural justice, interpersonal justice, and informational justice.
Finally, ethical decision making is explained in terms of moral awareness,
moral judgment, and moral intent. The chapter concludes by showing how
ethical organizations emphasize corporate social responsibility to help
their employees meet the economic, legal, ethical, and citizenship
expectations of society.
LEARNING GOALS
After reading this chapter, you should be able to answer the following
questions:
7.1 What is trust, and how does it relate to justice and ethics?
7.2 In what three sources can trust be rooted?
7.3 What dimensions can be used to describe the trustworthiness of an
authority?
7.4 What dimensions can be used to describe the fairness of an
authority’s decision making?
7.5 What is the four-component model of ethical decision making?
7.6 How does trust affect job performance and organizational
commitment?
7.7 What steps can organizations take to become more trustworthy?
CHAPTER OUTLINE
I. Trust, Justice, and Ethics
A. Reputation - the prominence of a brand in the minds of the public

and the perceived quality of its goods and services. It depends
largely on trust.
B. Trust – the willingness to be vulnerable to an authority based on

positive expectations about the authority’s actions and intentions
1. Authorities can be either person-based or organization based
2. Trust is often dependent on two related concepts:
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a. Justice – the perceived fairness of an authority’s decision

making
b. Ethics – the degree to which the behaviors of an authority

are in accordance with generally accepted moral norms
II. Why Are Some Authorities More Trusted Than Others?
A. Trust
1. Three types of trust
a. Disposition-Based
i. Some people have personality traits that include a

general propensity to trust others
OB Assessments: Trust Propensity. This brief

assessment helps students to determine their inherent
levels of trust. Use a show of hands to see how many
students fell above and below the average level, and see
if students will volunteer any extremely high or low
scores. When discussing the results of the assessment,
ask students to vote on which is more damaging: being
too trusting or being too suspicious. Ask students to
describe the consequences of being too trusting (most
will note that you can be taken advantage of or you could
delegate to ineffective people). Also ask students to
describe the consequences of being too suspicious
(many will note the strain that would be brought on by
monitoring, checking up, and not delegating, or the harm
to interpersonal relationships when someone fails to
trust).
ii. Trust propensity is a product of both genetics and early

childhood experiences
iii. Trust propensity is also influenced by experiences in later

life and national culture
Try This! Ask students if they have any experiences in

countries from Figure 7-2 that are especially high or low
on trust propensity. Do they have experiences that are
consistent with the rankings in the figure? Do they have
experiences that are inconsistent with those rankings?
How would those trust propensity levels manifest
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themselves in national norms, routines, practices, and

laws?
b. Cognition-based Trust
i. Cognition-based trust is based on what we know about

an authority – our understanding of that authority’s “track
record”
ii. Track records are gauged on three dimensions:
a.) Ability – the skills and abilities that enable an authority

to be successful in a given area
b.) Benevolence – the belief that the authority wants to
do good for the trustor, apart from any selfish or profit-
centered motives
c.) Integrity – the perception that the authority adheres to
a set of values and principles that the trustor finds
acceptable
OB on Screen: Slumdog Millionaire. The clip

referenced in the book begins around the 1:27:29 mark
of the film, continuing until about the 1:35:16 mark. If you
obtain the DVD of the film from either Netflix, Best Buy,
or Amazon, it is Chapter 23 of that DVD (note that the
film can typically be obtained through iTunes as well).
The clip depicts Jamal Malik’s dilemma as the host of
the game show apparently sneaks him the answer to the
next question. The clip provides a dramatic
demonstration of the definition as trust, as Jamal must
decide whether to accept vulnerability to the host by
saying that answer, with a chance at a million dollars on
the line. Poll the class to see how many would have
gone with the answer that the host provided. Then ask
them which trustworthiness dimension would have been
most relevant to their trust levels. They will probably
draw most on integrity, given that the host himself has
broken the rules of the show by sharing an answer.
However, they may also realize that the host lacks
benevolence, as he doesn’t want Jamal’s fame to
surpass his own. Please email Jason Colquitt
(colq@uga.edu) if you have any questions about using
OB on Screen in your teaching.
Try This! Use the Slumdog Millionaire clip for a different

chapter. As Jamal decides whether to trust the host, he
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may be considering social identity theory issues from

Chapter 8 on Learning and Decision Making (because
the host grew up in the slums, just like Jamal). The
host’s surprise at Jamal’s performance on the game is
also indicative of stereotypes. Finally, Jamal’s desire to
continue playing the game, instead of walking away with
the money’s he’s already earned, is indicative of
escalation of commitment. The behavior of both men
also serves as a good example of emotional intelligence
from Chapter 10 on Ability (especially in terms of other
awareness, emotion regulation, and use of emotions).
Finally, the host’s behavior in the restroom provides a
good example of ingratiation from Chapter 13 on
Leadership: Power and Negotiation.
Bonus OB on Screen (from 1st ed): Pirates of the

Caribbean: The Curse of the Black Pearl. The clip
referenced in the book begins around the 8:51 mark of
the film, continuing until about the 16:05 mark. If you
obtain the DVD of the film from either Netflix, Best Buy,
or Amazon, it is Chapter 2 of that DVD (note that the film
can typically be obtained through iTunes as well). The
clip depicts Captain Jack Sparrow. Jack’s behavior
during the clip reveals that he’s not particularly
trustworthy, which isn’t surprising for a pirate. The key
issue for class discussion is “why aren’t pirates
trustworthy?” The answer lies in a combination of poor
integrity (pirates lie and steal a lot) and low benevolence
(pirates are motivated purely by profit-centered motives).
In Jack’s case, he demonstrates more benevolence than
most pirates, as shown by his rescue of Elizabeth—the
drowning woman. Still, that benevolence isn’t quite
enough to offset all the lies Jack tells throughout the film.
c. Affect-based Trust
i. Affect-based trust is emotional – it is based on the

feelings we have for people, not rational evaluations of
their trustworthiness
a.) May act as a supplement to other types of trust – is

built up over time
B. Justice
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1. Distributive Justice – perceptions of fairness related to whether

or not outcomes have been allocated in accordance with
accepted norms
a. Most common norm in business settings is equity – more

outcomes should be given to people who contribute more
inputs
2. Procedural Justice – perceptions of fairness related to whether

or not the rules of fair process have been followed
a. Rules of Fair Process
i. Voice – do employees have a chance to express their

opinions?
ii. Correctability – can employees request an appeal when a
procedure seems to have worked ineffectively?
iii. Consistency – are procedures consistent across people
and time?
iv. Bias suppression – are procedures neutral and
unbiased?
v. Representativeness – do procedures consider the needs
of all groups?
vi. Accuracy – are procedures based on accurate
information?
Try This! Take some decision making procedure that a

number of students will be familiar with. It could be the
procedure used to elect U.S. Presidents, the procedure used
to crown a college football champion, the procedure used to
decide which students are eligible for tickets to university
sporting events--anything with which most students would be
familiar. Then ask the students to analyze the fairness of the
procedure using the procedural justice rules in Table 7-2.
How is the process fair, or how is the process unfair?
b. Research shows that procedural justice is a stronger driver

of reactions to authorities than distributive justice
3. Interpersonal Justice - perceptions of fairness related to whether

or not authorities treat people with fairness when implementing
rules
a. Rules for Fair Treatment
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i. Respect rule – are people treated in a dignified and

sincere manner?
ii. Propriety rule – do authorities refrain from making
improper or offensive remarks?
b. Abusive Supervision - behaviors that are extremely unfair

from an interpersonal justice perspective, with sustained
displays of hostile verbal and nonverbal behavior (excluding
physical contact)
4. Informational Justice - perceptions of fairness related to whether

or not the communications provided to employees during
organizational decision making are fair
a. Rules for Fair Communication
i. Justification rule – have authorities explained the

decision-making procedures and outcomes in a
comprehensive and reasonable manner?
ii. Truthfulness rule – have authorities been honest and
candid in their communications?
b. Informational justice can have a large impact on an

organization’s bottom line. In one research study, a
company offered two different explanations for a pay cut at
two different plants. In the plant with a short, impersonal
explanation for the pay cut, employee theft was five percent
higher than it was at the plant where employees were given
a longer, more sincere explanation for the pay cut.
5. Summary
a. When authorities adhere to the justice rules in Table 7.2,

they are more likely to be seen as trustworthy
C. Ethics
1. Research on ethics seeks to explain why people behave in a

manner consistent with generally accepted norms of morality,
and why they sometimes violate those norms
2. 76% of employees have observed illegal or unethical conduct

on the job within the past 12 months, and that figure may be
higher in some countries.
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OB Internationally. This table shows that different countries

have very different baseline levels of unethical actions. If you
have international students, try to start a conversation with the
class about specific behaviors that might be considered ethical
in one country and unethical in another. What is it that makes a
behavior ethical or unethical? Do students believe that having a
code of conduct, such as the one discussed in the box, will be
enough to significantly alter employee behaviors in other
countries/cultures? Why or why not?
3. Four Component Model of Ethical Decision Making
Asset Gallery (Ethics & Social Responsibility/Hot Seat):

Ethics: Let’s Make a Fourth Quarter Deal. This Hot Seat
feature shows a manager of a struggling department as he is
confronted with the opportunity to make a career-saving, but
likely unethical, business deal. The conversation reveals a
number of issues that impact moral decision making, including
issues of moral awareness, moral judgment, and moral intent.
a. Moral Awareness – Occurs when an authority recognizes

that a moral issue exists in a situation or that an ethical
standard or principle is relevant to the circumstance
i. Moral awareness depends on:
a.) Moral intensity, or the degree to which the issue has

moral urgency
i.) Moral intensity is driven by two general factors

(see Table 7-4)
a. Potential for harm

b. Social pressure
b.) Moral attentiveness, or the degree to which people

chronically perceive and consider issues of morality
b. Moral Judgment – Occurs when an authority accurately

identifies the morally “right” course of action
i. Moral judgment depends on:
a.) Stage of cognitive moral development
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i.) preconventional - right and wrong is based on

consequences of actions for the individual
ii.) conventional - right and wrong is based on the
expectations of family and society
iii.) principled/postconventional - right and wrong is
referenced to a set of defined, established moral
principles (see Table 7-6). Some principles are
consequentialist, meaning the morality of the acts
depends on their goals, aims, or outcomes. Other
principles are non-consequentalist, emphasizing
instead formal codes or standards.
c. Moral Intent – reflects the authority’s degree of commitment

to a moral action
i. Driven by moral identity – the degree to which people

see themselves as a “moral person”
Try This! Describe a scenario for your students that could be

used as an example for the parts of the four-component model.
For example: assume a student “heard through the grapevine”
that other students had obtained an advanced copy of the final
exam in the class. Should the student report this to the
professor? Based on Table 7-4, how morally intense is this
issue, and why? Based on Table 7-6, which course of action is
most morally right, and why?
D. Summary: Why Are Some Authorities More Trusted Than Others?

(Review Figure 7-8)
III. How Important Is Trust?
A. Trust has a moderate positive effect on performance, because it

influences an employee’s ability to focus and because it fosters the
development of a social (rather than merely economic) exchange
relationship.
B. Trust has a strong positive effect on commitment, because trust

increases the likelihood that an emotional bond will develop
between employer and employee
i. Driven by moral identity – the degree to which people

see themselves as a “moral person”
OB at the Bookstore: The Speed of Trust. The author

notes that decreased trust leads to decreased speed and
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increased cost in organizations, termed the “distrust tax”.

The author contrasts this with the “trust dividend”, where
high trust amplifies the gains derived from employee
skills and efforts. Ask students to describe experiences in
jobs or other class projects where they’ve grappled with
the distrust tax, or benefitted from the trust dividend.
Which types of experiences are easier to recall?
IV. Application: Corporate Social Responsibility
A. The idea of corporate social responsibility acknowledges that

organizations must take the economic, legal, ethical, and
citizenship expectations of society into account when conducting
their business
Asset Gallery (Trust, Justice, Ethics/OB Video DVD): Good

Deeds. This News Hour video clip explores exactly how firms can
“do well by doing good.” It explores whether a reputation for ethics
can enable employers to recruit better employees and appeal to a
more devoted and enthusiastic customer base (that is willing to pay
higher prices). The clip discusses a number of different firms that
engage in a number of different kinds of ethical actions.
DISCUSSION QUESTIONS
7.1 Which would be more damaging in organizational life--being too

trusting or not being trusting enough? Why do you feel that way?
This discussion could parallel the discussion of the OB Assessment

on trust propensity. When one is too trusting, one risks being taken
advantage of, or entrusting important tasks to people who are not
competent enough to do them. That tendency could be damaging
at times, certainly. However, not being trusting enough could create
more daily wear-and-tear on an employee. Being suspicious
requires monitoring and the creation of backup plans, both of which
distract from task effort. Moreover, trusting others is an empowering
experience that can build bonds between coworkers. Being
suspicious too often could harm such relationships.
7.2 Consider the three dimensions of trustworthiness (ability,

benevolence, and integrity). Which of those dimensions would be
most important when deciding whether to trust your boss? What
about when deciding whether to trust a friend? If your two answers
differ, why do they?
Benevolence may be most important when deciding to trust a friend,

whereas ability and integrity may be most important when deciding
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whether or not to trust a boss. Friendships develop over time and

are more emotion-based, whereas a professional relationship with
a boss depends on respect for the boss’s skills, and the hope that
the boss will keep his promises.
7.3 Putting yourself in the shoes of a manager, which of the four justice
dimensions (distributive, procedural, interpersonal, informational)
would you find it most difficult to maximize? Which would be the
easiest to maximize?
Distributive justice is often the most difficult to maximize, just

because managers may not have the discretion to allocate rewards
according to a strict equity principle. Procedural justice can also be
difficult to maximize as making decisions in a consistent, accurate,
and unbiased work requires conscientious effort on the part of
managers. In contrast, interpersonal and informational justice only
require a commitment to engage in respectful and candid
communication.
7.4 Which component of ethical decision making do you believe best

explains student cheating: moral awareness, moral judgment, or
moral intent? Why do you feel that way?
Reactions to this question could vary. Most will probably view it as

an issue of moral intent, as students might understand that
cheating is wrong but still do it due to GPA pressures or a pressure
to keep up with one’s classmates. However, some practices, such
as secretly collaborating on papers and sharing take-home
assignments could be becoming murkier in a moral judgment sense
(given the rise of collaborative, open-source resources such as
Wikipedia).
7.5 Assume you were applying for a job at a company known for its
corporate social responsibility. How important would that be to you
when deciding whether to accept a job offer?
Student answer to this question will vary depending on their moral

attentiveness or their moral identity.
CASE: WHOLE FOODS
Questions:
7.1 If you lived near a Whole Foods, and were looking for a summer or
entry-level job, how would you view the company’s “conscious
capitalism” philosophy? Would it affect your decision about
shopping there, or applying for a job? In what way?
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Answers to this question will vary across students. Some will view
the philosophy in very favorable terms and will note that it would
indeed affect their shopping and application intentions. For others, it
will be a less critical issue, affecting something like shopping only if
price and cost issues were satisfactory.
7.2 Can you think of other companies that would be good examples of
“conscious capitalism”? Do they perform well in their industries, and
do you think that philosophy is part of the reason why?
Many students will be able to name Ben and Jerry’s, as their

“conscious capitalism” efforts are well chronicled. Particularly given
that example, most students will see some association between a
conscious capitalism philosophy and profitability. Some students
may wonder about the causality of the association however,
speculating that good performance allows a firm to become more
socially responsible.
7.3 Is conscious capitalism more practical in some industries than

others? If so, where is it easiest and where is it most difficult?
Flowing out of the discussion of the prior question, students may

speculate that conscious capitalism is more feasible in industries
that allow for more profitability (e.g., tech industries). They may also
link its feasibility to the political climate of the state(s) in which the
company does most of its business.
BONUS CASE: NIKE (from 2nd ed)
The columns of running shoes stretch 8 feet high and 20 feet wide. How
do you decide which ones to try on? Price? Color? Nike hopes you narrow
down your choices by focusing on brand. The shoe giant, headquartered
in Beaverton, Oregon, has been a dominant force in the shoe and athletic
apparel markets for decades. Scores of weekend warriors have looked to
the Nike Air—that lightweight air pocket in the heels of many Nike shoes—
to give them that extra step or that added bit of comfort. In the 1990s,
however, many of those same weekend warriors were confronted with the
reality of how those shoes were made. That’s when disclosures of
sweatshop conditions and labor abuses sparked protests outside Nike
stores and boycotts on many college campuses. In 1998, founder and
then-CEO Phil Knight was forced to admit that the “Nike product has
become synonymous with slave wages, forced overtime, and arbitrary
abuse.”
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Nike has worked hard to rebuild trust in its brand over the past decade.
Nike became the first company in the industry to post the names and
locations of its 700 factories—most located in China, Vietnam, Indonesia,
and Thailand—on the Web (see www.nikeresponsibility.com). It created a
code of conduct that sets standards for wages, the number of hours in a
standard workweek, and the rules for overtime pay. It also paid a network
of auditors to perform inspections of factories, giving each a grade
between A and D. Unfortunately, it’s not clear that those efforts are paying
off. A recent analysis of the inspection data by a professor at MIT noted
that despite “significant efforts and investments by Nike … workplace
conditions in almost 80% of its suppliers have either remained the same or
worsened over time.” Almost one-third of the factories in one audit earned
D grades because of multiple violations, including failing to pay the
minimum wage and forcing employees to work more than 14 days in a
row.
Why has it been so difficult for Nike to improve the working conditions in
its factories? One reason is that government regulations are weak in
emerging economies, placing more pressure on companies to police their
factories. And many of the facilities compete for Nike’s business, whereas
higher employee salaries make their pricing less competitive. Those
factories often find themselves working under tight deadlines, with power
outages or design adjustments triggering work shift abuses. Other
factories have learned to fool the audits by keeping fake records,
distributing scripts for employees to read if they’re questioned, or shifting
work to secret subcontractors that violate standards. And dropping a
troubled facility can raise its own ethical issues, as it results in the loss of
jobs that may be vital to that local economy. For its part, Nike has reacted
to the limitations of its auditing strategy by helping convert factories to
more modern manufacturing techniques and seeking to limit its own last-
minute design adjustments. Those sorts of steps will reduce the pressures
on the facilities, eliminating some of the need for overtime and excessively
long work schedules. Nike’s current CEO, Mark Parker, summarizes this
state of affairs by noting, “I’m proud of what we’ve accomplished, but
we’re still not where we need to be. This is a never-ending challenge.”
Hannah Jones serves as Nike’s vice president of corporate social

responsibility, overseeing a 135-person team and reporting directly to
CEO Mark Parker. Jones’s team is charged with weaving issues of
corporate social responsibility throughout Nike’s operations. That mission
includes auditing and managing Nike’s factories around the world.
However, it also includes issues of environmental sustainability. In 1992, a
German magazine pointed out that the signature Nike Air pocket included
more than just air—it also contained sulfur hexafluoride, or SF6—a potent
greenhouse gas more commonly linked to older refrigerators and air
conditioners. SF6 breaks up slowly in the atmosphere, which means that
7-13
even very small amounts have a significant environmental impact.

Estimates suggest that at the peak of SF6 production in 1997, Nike Air
footwear carried a greenhouse effect equivalent to the tailpipes of 1 million
automobiles.
It took Nike almost 14 years to devise a new air pocket that was as light,
durable, and shock-absorbing as the SF6 version. The breakthrough
wound up utilizing nitrogen, held in by a redesigned sole that includes 65
wafer-thin layers of plastic film. The new approach, which debuted with
Nike’s Air Max 360, allows the air pocket to stretch throughout the sole,
giving even more comfort at even less weight. The company has also
devised a program that calculates an environmental impact rating for each
shoe, based on use of toxic adhesives, curbing of waste, and use of
recycled materials. Even the Air Jordan—arguably Nike’s flagship shoe—
was designed with environmental impact in mind, such that the shoe’s
sole consists of ground-up bits of old Nike sneakers. You won’t see these
issues discussed in television or print ads for Nike shoes however. Unlike
Wal-Mart or General Electric, which aggressively trumpet their “green”
initiatives, Nike prefers to deemphasize sustainability in its marketing
efforts. One independent branding consultant explains that strategy by
noting, “Nike has always been about winning. How is sustainability
relevant to its brand?”
Sources: Holmes, S. “Nike Goes for the Green.” BusinessWeek,

September 25, 2006, pp. 106–-108.Levenson, E. “Citizen Nike.” Fortune,
November 24, 2008, pp. 165–-170. Roberts, D.; and P. Engardio.
“Secrets, Lies, and Sweatshops.” BusinessWeek, November 27, 2006, pp.
50–-58.
Questions:
7.1 Do you agree with Nike’s decision to downplay “green” issues when
marketing their shoes? Why or why not?
On the one hand, it is difficult to argue with such decisions given

Nike’s generally accepted marketing success. The brand is built on
performance, and there is a risk that “recycled materials” convey
some decrement in quality or performance. It is also possible that
issues of sustainability are less politically favored for some of Nike’s
core customers. On the other hand, one would think that Nike might
have lost some customers due to its ethics controversies--
customers that could potentially be won back if issues of ethics
were emphasized in marketing. One compromise might be to use a
small, targeted marketing campaign (perhaps print-based) on one
exceptionally sustainable shoe, to see what comes of that sort of
effort.
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7.2 Assuming price and quality are both acceptable, to what degree do
you consider the ethical reputation of a company when buying a
product or service?
Answers to this question will vary across students, and also

according to the economy. It is easier to consider ethical reputation
when price is constant, and more difficult when price is significantly
(or even marginally) higher.
7.3 Does it seem like Nike is doing enough to build and maintain the
trust in its brand? If not, what else would you like to see the
company pursue?
On the one hand, it certainly seems clear that they are doing more
than they used to, and that they are doing as much (or more) than
their peers. On the other hand, the MIT report is sobering. The
company should likely continue its more proactive approach that
goes beyond mere monitoring and sanctioning. Better equipment
and more reliable work flows are the kinds of strategies that, if
continued, could effect for significant change. Beyond that, it seems
like Nike could do more marketing of the steps it’s doing to be more
ethical. Currently, a number of people may just assume that the
problems that occurred before are just as bad now.
BUSINESSWEEK CASE: SPOTIFY’S EK WINS OVER MUSIC PIRATES

WITH LABELS’ APPROVAL
by Brendan Greeley, Bloomberg BusinessWeek, July 18-24, 2011, pp. 58-

65.
http://www.bloomberg.com/news/2011-07-14/spotify-wins-over-music-pirates-with-labels-
approval-correct-.html
“You have to find another job.”
Per Sundin’s concerned mother was on the phone. It was the summer of
2006, and both Sundins were watching a debate between Sweden’s two
major party candidates for prime minister.
Earlier that year, police in Stockholm had confiscated servers and

questioned the founders of The Pirate Bay, a file sharing site that had
been ignoring increasingly piqued letters from the American entertainment
industry.
Media piracy had become a campaign issue in Sweden, which according

to Harvard University’s Berkman Center for Internet & Society is second
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only to Japan in speed, price and availability of broadband access. The

moderator asked the candidates how they felt about file sharing. Both
agreed that piracy was too easy, and that it didn’t make sense to
criminalize an entire generation of music lovers, Bloomberg Businessweek
reports in its July 18 issue.
It had been a bad couple of years for Sundin, who runs Universal Music
Group in Sweden. Revenue consistently fell 10 percent a year. He was
firing employees. He asked friends whether they or their children
downloaded; no one had a problem with taking music for personal use.
“But that,” he would say, “is what we do!”
“We thought you’d always need a CD,” he says. Sundin, to be sure, fought
to punish music piracy; he’s almost sheepish about that now. “We went
through an evolution,” he says. “The consumers went through a
revolution.”
Worldwide revenue for the recording industry peaked in 1999 at

$27 billion, according to the International Federation of the Phonographic
Industry. By 2008 it had plummeted to $14 billion.
Spotify Is Born
That year, Universal Music, EMI Group Ltd., Sony Music Entertainment,
Warner Music Group and Merlin, which represents independent labels,
each agreed to an experiment: They would give their entire catalogs to a
Swedish startup run by Daniel Ek, who was then 25 years old and had no
experience in the music industry.
That company, Spotify Ltd., entered seven European markets and began
giving out invites to listen to 13 million songs, on demand, for free. “We
had to try everything,” Sundin says.
At the time, the industry was pressing European countries to write laws in
line with a European Union directive to stiffen civil enforcement of
intellectual-property rights. Record labels had to win not only in court but
also among the public.
Sundin saw a demo of Spotify and laid out the case to his bosses in
London. “To get legislators on our side,” he explained, “we need services
for the kids.”
“This can’t be true,” he says he thought after the demo. “It can’t be this
good.”
Daniel Ek
7-16
Spotify’s Ek is 28 now, just old enough to have seen a slide projector and
just young enough that he feels he needs to explain how a slide projector
works. He is tall and akimbo- limbed, built like someone who spent his
youth in front of a computer. Today’s polo shirt, worn above creatively
stressed jeans, is green. Tomorrow’s will be red. A felt hat with ear flaps
sits on his desk, a gift from a friend. He wore it once, he says, in an
internal meeting. To show he meant business.
While a glass-enclosed corner has been allotted to Ek, he instead sits in

an open-plan cluster with Spotify’s chief technology officer, general
manager for Europe, vice president for growth, and chief product officer,
an arrangement he adopted from Facebook Inc. He says “Mark”
sometimes, as in “Zuckerberg,” then blushes at the informality, and he’s
quick to point out that they aren’t particularly close.
Convenience Versus Piracy
Ek doesn’t invest in other companies, doesn’t like to go to conferences

and until now has avoided profiles. Startup stories need megalomaniacs,
and he’s wary of being trapped in that role. He isn’t shy or insecure; he’s
Swedish. The entire country treats its accomplishments the way people
who went to Harvard University talk about college: faintly embarrassed
that you might see their pride.
Ek likes to say that to succeed, any music service needs to be more

convenient than piracy. Spotify is. You open an account. You download a
program. And you can listen to any one of 15 million tracks, the result of
two years of negotiations with the world’s music conglomerates that
began, says Ek, rubbing the wisp and stubble that covers his head, back
when he had hair.
Spotify is slick, intuitive, and fast; it can instantly serve “Graceland” to a

phone resting in your shirt pocket on a highway in North Carolina at 1 a.m.
In Europe, if you want to listen longer than 10 hours a month, avoid ads,
or move offline with a music player, you pay a subscription fee that comes
to about $15 a month. According to the company, 1.5 million Europeans
already do.
Spotify Comes to U.S.
Spotify, serving just seven countries, has become the second-biggest

digital retailer in Europe after Apple Inc. (AAPL)’s iTunes, according to the
IFPI. It arrives in America today, after more than a year of negotiations
with record companies. The streaming service will be available by
7-17
invitation and through subscription. People familiar with both companies

say a Spotify music sharing function on Facebook is in the works.
Spotify plans to repeat its European compromise between cool and

revenues. To seed the market, Spotify will invite a beta crowd to stream
for free, unlimited and with advertisements, for six months. Everyone else
can listen up to 10 hours per month free of charge, after which Spotify will
offer two tiers: $5 a month to listen without ads on your desktop, $10 to go
mobile.
In an e-mail, Irving Azoff, executive chairman of Beverly Hills, California-

based Live Nation Entertainment Inc. (LYV), the world’s largest
entertainment company, writes: “Spotify is going to be a great resource for
artists and the music industry.” Azoff also manages Christina Aguilera. “It’s
refreshing,” he writes, “to finally see emerging companies get a chance to
change a broken playing field.”
Spotify’s Financing
According to filings obtained by ComputerSweden, a Stockholm-based

magazine about the IT industry, Spotify was created with 12 million euros
($17 million) in venture capital from Creandum and from Northzone, both
based in Stockholm. After the European introduction in 2009, Wellington
Partners, a venture fund, contributed 7 million euros, and Li Ka-shing, the
Hong Kong magnate and world’s 11th-richest man, kicked in 20 million
euros. Based on Wellington’s stake, the round left Spotify with a valuation
of 170 million euros.
After the round closed, Ek received an unsolicited e-mail from Sean

Parker, the co-founder of music service Napster Inc., telling him what was
wrong with his service. The two began a correspondence.
“For the first time,” says Ek, “someone had thought about this more than I
have.”
Access to Capital
Parker introduced him to Peter Thiel, the co-founder of PayPal Inc., and to
money from Thiel’s Founders Fund. This June, Spotify confirmed for
Bloomberg Businessweek that it had taken on capital from Accel Partners,
DST Global Solutions Ltd., and Kleiner Perkins Caufield & Byers. At
Davos this year, British Prime Minister David Cameron, describing how big
ideas flourish in free societies, offered two examples: Facebook and
Spotify.
7-18
Rich men and prime ministers have been wrong before. Spotify plays
music from a large catalog on demand; in this respect, it’s no different
from the Rhapsody music service or the relaunched Napster, two
companies that have failed to generate the same excitement. ITunes
organizes what you already own and lets you buy more. Cloud services
from Apple, Google Inc. (GOOG), and Amazon.com Inc. (AMZN) make it
easier to take what you own with you.
If Spotify is special, it’s because Ek is obsessed. He wants to reduce

continually the time between click and sound, to erase the distinctions
between what everyone else is doing.
Local Cache
Technically, Spotify combines a local cache, peer-to-peer sharing, and

traditional streaming; all consumers notice is that it happens immediately,
that it feels like you’ve got it all on your hard drive.
Small improvements in convenience can make a huge difference online.

The market for podcasts didn’t take off until Apple started accepting them
in iTunes. Facebook Inc. did what blogs were already doing -- just cleaner,
faster, and with less setup time. On a bus in Stockholm, Alexander and
Stephanie, both teenagers, stop kissing long enough to answer a
question: How do they listen to music? They share a Spotify account; she
listens on a Sony Ericsson handset, he on an iPhone.
“It’s easier,” says Alexander, “it doesn’t take any time. There are no files,
but it feels like I own it.”
ABBA Room
Ek’s 300-person company shows all the signs of a third round of funding.
In Stockholm, Spotify has abandoned its place above a coffee shop for
three floors of a gray modernist cube on the Birger Jarlsgatan, some of the
city’s most expensive retail property. Glass-lined conference rooms have
been named for Swedish musicians: ABBA, of course; and Petter, one of
the first Swedish-language rap artists. Bean bags and a “Beatles: Rock
Band” kit rest unloved in a corner. (Two twentysomethings, at least, are
playing foosball.)
Spotify is growing, fast; Ek wandered into the canteen one afternoon to

discover that he had hired his own brother.
Spotify is entering a market that’s overdue for a change. According to

IFPI, America’s labels haven’t seen more than 2 percent growth in digital
revenue since 2008. And digital provides a much greater percentage of
7-19
revenue in the U.S. than in European markets, in most cases by a factor

of two. The company points to a Billboard analysis of the same IFPI data
that shows that digital revenue in the European countries with Spotify last
year was more than three times that in countries without, a trend that
began after the service was introduced. But differences in the way
Americans and Europeans pay for music online point to a cultural hurdle.
Digital Sales
In 2010, close to 80 percent of the labels’ $2 billion in digital revenue in

the U.S. came from the sale of tracks and albums, or, more simply put,
iTunes. This is the same basic transaction as with an Edison cylinder:
Give us your money once and you may have our sound forever.
In Sweden, album and track sales together provide only 20 percent of the
country’s $38 million in digital revenue; 60 percent comes from streaming.
Privately, industry executives say the streaming is all Spotify. You can buy
albums for keeps from within the service. Even so, paid downloads
increased 28 percent in Sweden the year Spotify was introduced.
The revenue isn’t catching up to on-demand streams. In Stockholm, no

one brings a laptop or a hard drive to a party anymore. They just log in to
Spotify. Americans own their music; Swedes rent it. For 100 years, the
recording industry has traded one durable good for another, and the need
to store it all has defined habits, courting, and home design. In Sweden,
this era is slipping away.
Spotify Playlists
If Spotify gets what it wants, your records will no longer define you. Your
playlists will. To know whether Spotify will make it in America, you need
only ask yourself: Do you still need your collection?
Ek, naturally, holds that you do not. “Spotify has 13 million songs,” he
says. Nod. “By any measurement, that’s huge.” Nod. “The problem is that
this doesn’t mean anything to you. You were saying, mmm hmm, like
there’s nothing amazing about it, and I agree.”
“But if I told you that we have your library, with all the songs you love, that
you put effort into, your playlists, your honeymoon playlists, your friend’s
wedding playlist, or 20, 30 years from now, this is my Sweden playlist from
when I visited this wacky Daniel character.”
“The promise is this,” he continues. “Once you’ve invested in building that

library, that’s value.”
7-20
It’s also, he says, what people ultimately are prepared to pay for. Spotify
has allowed other companies to build tools to import playlists, including
from iTunes, and export them as well. To create the universal playlist
standard, Spotify has to overcome a problem: Any single song by the
same artist can have more than one product number
Keeping Track of Tracks
Ek offers the example of The Police’s “Roxanne,” which can show up on a

greatest hits album, a movie soundtrack, a remaster, and the original
album, “Outlandos D’Amour.” Ek wants every song to have a universal
resource indicator, or URI, a way for any site or app to call up a unique
item on the Internet. “The URI,” he says, “becomes the new MP3. Or the
URL. I haven’t made up my mind yet.”
Ek always thought he’d be a musician. He grew up in Ragsved, a cluster

of three-story row houses on a hill 20 miles south of Stockholm. He
drummed with knitting needles on a lampshade at two. He cried when Kurt
Cobain died. When he was five, his mother and stepfather bought him a
Commodore Vic 20, which was soon replaced by a Commodore 64. If you
were born after the Baby Boom and mess with computers, the C 64
carries the fetish value of a first-press of “Sgt. Pepper’s Lonely Hearts
Club Band.” One C 64 now sits in the Spotify office in Stockholm, awaiting
assembly.
Networking at 10
By the time Ek was 10, in 1993, his stepfather had retrained as an

electrical engineer, and the two strung a local network at home with
coaxial cable. Ek used the Internet, he says, to cheat on games while
playing against friends in other rooms of the house.
When Ek was 14 he taught himself HTML, began undercutting design

firms to build websites for local companies, hired his friends to code for
him, then hired them to do his homework, too. He kept the servers in his
closet and would hang up wet clothes to dry in the heat they gave off. Ek
estimates he was making about $5,000 a month.
Web Hosting Business
Ek studied computer science at the Royal Institute of Technology in

Stockholm until he found that he disliked math. He sold his Web hosting
business in 2002 and started new companies until he ran out of money. In
2005, Index Ventures, a venture capitalist, approached him with a Finnish
website run by a woman who drew paper dolls. She was unemployed and
had attracted so many viewers she couldn’t pay her bandwidth bills. He
7-21
came on as CTO, hired engineers from his failed ventures, took the site to
10 million users, and left. Now called Stardoll, it attracts an audience of
100 million girls who assemble virtual outfits.
In 2006, Ek became CEO of uTorrent, now the most popular client for
BitTorrent Inc., which has the standard protocol for sharing files. UTorrent
and BitTorrent are perfectly legal; the files shared through them aren’t
always. Ludvig Strigeus, who created uTorrent, served as chief architect
of the Spotify beta. Around the same time, Ek shared an idea with Martin
Lorenzton, who had bought one of Ek’s companies for 1 million euros.
Ek’s idea: Anyone should be able, legally, to listen instantly to any song at
any time. Lorenzton suggested the two men start a company. According to
the filing obtained by ComputerSweden, they retain a controlling interest in
Spotify.
‘Not Possible’
Ek reached out to a contact in the music industry and asked what he

would need to do to make his idea legal. (That Spotify asked first was an
important selling point for the labels, which had grown tired of the beg-
forgiveness approach.) “What you’re asking for,” his contact said, “is not
possible.” Will it take three weeks? “It will take six months.” It took two
years.
Ek can code, but it’s not his passion. His central skill lies in talking other
people into doing what he needs them to. His stepfather, he says, pulled
cable for Spotify’s first office. Daniel Ek is a Tom Sawyer: He finds fences
that need painting, and he gets the world to pick up a brush.
Per Sundin, for one, is painting furiously. “I used to wake up and go

straight to the charts,” he says. “Now I go to Spotify analytics.”
Major Labels Stakes
Spotify pays labels an undisclosed percentage on every stream, and each

of the four major labels has purchased a share in the company; according
to the ComputerSweden filing, the stakes are between 2 percent and
6 percent each. Merlin, which handles transactions for smaller labels,
owns 1 percent.
In addition to subscription and ad revenue and a share of the growth, the

recording industry gets something from Spotify it craves: data.
Without Spotify, labels know only when an album is sold. If a CD is ripped

for a friend or borrowed for a party, they know nothing. Spotify gives them
7-22
a record, by location, age and gender, of every single time a track is

played. Jay-Z used to think he was big in London, based on U.K. album
sales; it turns out he’s big in Manchester.
Spotify has discovered that radio plays -- on real, terrestrial,

electromagnetic spectrum -- still drive interest in artists, as do Sweden’s
summer talk shows. Sundin has a Spotify chart tracking Rihanna and Lady
Gaga over seven weeks. Both show a bump on Friday and a spike on
Saturday. They are weekend artists. Spotify knows when your party plays
Gaga.
“We know now,” says Sundin, “that the ROI on TV commercials doesn’t
work.”
Outreach to 15- to 30-year-old female bloggers does. Hits and stars are
still important, he says. For albums -- both CDs and MP3s -- revenue
spikes with the release, then trails off, then disappears.
Spotify Ratchets Sales
On Spotify, whenever an artist appears on a talk show or releases a

single, plays of her entire catalog increase on Spotify, then plateau at a
higher level. Albums follow a bell curve. Spotify is a ratchet, a step
function. “LOP,” Sundin says, “life of product, it used to be six months.
Now it’s 10 years.”
Spotify provides much more revenue for Universal in Sweden than iTunes,
and the kroner per stream is following a linear path upward. In a meeting
set up by Spotify, Mark Dennis, Sundin’s counterpart at Sony, explains the
same ratchet effect.
Dennis says the industry has had a hard time understanding that, as
streaming takes hold, the way it makes money will change. Labels get an
immediate payout when an album is purchased by stores. Spotify provides
only slow growth. “It’s hard for people to grasp,” Dennis says. “Would you
rather have a million dollars now or over time?”
‘It Was Working’
Like Sundin, Dennis says he trusted his business to Spotify because “it
was working.” This alone was significant; Dennis had seen his share of
streaming ventures. He, too, pleaded with his bosses in London for a
Spotify license.
7-23
“This is where we’re headed,” he told them. “It’s just such a seamless
experience, a gateway into a legal environment. If the service is good
enough, they’ll pay.”
Spotify does something strange to music executives: It makes them

preach like the converted. “You show Spotify to anyone,” says Dennis,
“they become a believer.”
While Sweden’s independent labels never needed to be converted, they

are now more guarded about Spotify.
“I was downloading myself to start with, of course,” says Magnus Bjerkert,

head of Adrian Recordings. “I wasn’t ever mad. The listeners were there.”
Smaller companies found themselves at odds with the Big Four. In 2007,
Bjerkert’s label released work from the band Familjen on The Pirate Bay;
that year Familjen won a Swedish Grammy. People in the recording
industry told Bjerkert he was cheating.
Not Black and White
“Sundin was like, we need to find and sue everyone who’s downloading,”
Bjerkert says of the Universal executive. “We were saying maybe it’s not
so black and white. Now he kind of agrees that he was wrong.”
Bjerkert’s artists begged him to get on Spotify, and it’s now such an
essential part of his work that he finds it difficult to communicate with
countries that don’t have it; he can’t just send them a link.
From his perspective, though, Spotify has maintained the traditional power
relationships between large and small labels. And it lacks transparency.
He and several other independent labels suspect that their payouts per
stream are lower than for the Big Four; if true, this would put them at a
disadvantage when signing new artists.
Independent Labels
When asked about this discrepancy, Spotify doesn’t deny it. Instead it
points out independent labels are a “crucial” part of its service and that it
has them paid millions of euros. Martin Thörnkvist, of the label Songs I
Wish I Had Written, suggests that the major labels’ back catalogs lend
bargaining power.
“There’s the long tail of more obscure music,” he says, “but Elton John’s
getting paid for ‘Yellow Brick Road,’ too.” Spotify works only with a
complete catalog.
7-24
The major labels have a bigger piece of pie to offer. Daniel Ek hasn’t
changed absolutely everything.
Malmo lies on Sweden’s West Coast, by train six hours of gently stunning
farmland away from Stockholm. Malmo is also home of Peter Sunde, a co-
founder of The Pirate Bay. He is currently appealing a judgment of about
$3.5 million, after a trial in which Per Sundin, head of Universal, served as
a witness for the prosecution. Sunde suggests a meeting at a vegan
restaurant. The chef, a friend, has a tattoo of the logo of the Commodore
64 on his forearm.
Pirate Bay
The Pirate Bay started as one of many file sharing sites, then
distinguished itself mostly by ignoring threatening cease- and-desist letters
from the American entertainment industry. As other sites around the world
buckled, traffic increased.
Each time a new site shut down, The Pirate Bay would see a spike in
downloads for Swedish language courses; meant at first for a domestic
audience, it was originally run in Swedish. The 2006 raid on its servers
only provided a blast of public relations; the site was back up in days, and
traffic increased a hundredfold. The trial made the founders into folk
heroes.
“People were getting tattoos of pirate ships,” says Sunde. “We were
getting one or two e-mails a week with photos - - ‘Look, I have a tattoo,
can I get a T-shirt?’ People were buying me drinks. And I don’t drink.”
Pirates and Laws
Leif Dahlberg, who teaches communications at the Royal Institute of

Technology, wrote a paper this year for the journal Law and Literature
looking at how pirates, real and metaphorical, shape laws. The Greek
origin of the word “pirate,” he writes, means both a sea pirate and “one
who attempts.” Pirates patrol fluid spaces, where there are no laws; the
Romans turned the Mediterranean Sea into Mare Nostrum, Our Sea, by
ridding it of pirates. A nation establishes rule, laws are codified, and
disputes become legal, not political.
The distinction between what is public and private property on the Internet
is still fluid and undefined, according to Dalhberg. It is both legal and
political. The Pirate Bay turned a legal process into a political movement;
by refusing to give in, it created space for public opinion to change, for
laws to bend. Per Sundin was open to Spotify only because an entire
7-25
country came to believe that downloading was just. He knew, and argued
to his bosses, that he had been forced into a compromise; he couldn’t
plead for stricter laws unless he gave something in return. Mark Dennis at
Sony spoke of bringing people “back into legality.”
Pay for Convenience
An entire generation had rejected the idea of ownership; Sony needed

them to pay for something. If not files, maybe they would pay for
convenience. Without The Pirate Bay, there is no Spotify.
“I want to replicate my first experience with piracy,” says Daniel Ek. His
time on Napster has informed many of the decisions he’s made with
Spotify.
As a teenager, Ek would find someone on Napster with similar taste and

copy an entire library. He discovered Ella Fitzgerald. “The world,” he says,
“opened up.” Sharing playlists is still the only real social function within
Spotify.
“Napster, as a service, worked for the consumer,” he says. “What

eventually killed it was that it didn’t work for the people participating with
the content. The challenge here is about solving both of those things.”
200 Milliseconds
Spotify owes a more direct technical debt to file sharing: The very
technology that makes it so fast is borrowed from techniques honed while
sharing pirated files. Both Ek and, later, two of his engineers say that once
you click a button, anything that happens within 200 milliseconds seems
directly under your control. To beat 200 milliseconds, Spotify runs not as a
Web service but as an application on your computer. (According to Ek, the
local application allows the company to supply labels with more granular
data than other streaming services as well.)
Songs you listen to often on Spotify sit, encrypted, on your hard drive. The
application looks first for these; if it doesn’t find them, it pulls down 15
seconds of the song from the closest server while it looks for copies of the
rest of the song on the hard drives of other users near you. This is file
sharing. It increases speed and lowers the demand on central servers by
spreading it among several connections. Spotify and The Pirate Bay don’t
just share a country; they share an operating system.
In the late 1980s, Paul Goldstein was consulting for the Recording
Industry Association of America when an executive began to wax about a
“celestial jukebox”: a satellite in low- earth orbit, packed with every version
7-26
of every song ever performed, ready to drop at the hour of need to the
ears bent skyward of anyone who asked. This, all for a very real nickel.
‘Celestial Jukebox’
Goldstein included it in the title of a book about copyright in 1994. It’s such
a pleasant idea that it’s since been attributed to several people, among
them Edgar Bronfman Jr., now head of Warner Music Group, and David
Bowie.
Goldstein can’t remember who said it. He has since asked around, and no
one can tell him who thought of it first. The celestial jukebox sprang,
evidently, from the fondest, innermost wish of the recording industry.
In 2005, Siva Vaidhyanathan declared that the celestial jukebox had

arisen. Vaidhyanathan, a well-respected specialist on Internet law who
now teaches at the University of Virginia, said that counter to Goldstein’s
book, listeners would not have to cede control entirely to the record labels.
The Internet, he said, is the celestial jukebox. If he was right, Spotify has a
problem: Something free is a perennial threat to something paid for.
Online Theft
Yet theft, in life and online, carries a time cost. It takes time to learn how to
use file sharing programs such as BitTorrent. Search results are
inconsistent. The sites that quasi-legally share music files regularly
disappear. These costs may seem minor, particularly for the young, for
whom time is a currency freely given, but time costs increase with age.
And even the young are sensitive to them.
For Universal in Sweden, Bon Jovi’s “Greatest Hits” sold 25 physical or

digital albums for every album-length play on Spotify. For Lady Gaga’s
latest recording, that ratio drops to three sales for every Spotify play. For
Taio Cruz, the Bon Jovi ratio has inverted: there are 4.5 Spotify album
plays for every album sold. (“I showed this to the manager of Taio,” says
Sundin. “He loved this.”)
Taio Cruz
If you don’t know who Taio Cruz is, that’s precisely the point: It’s the kids,
formerly the most likely to steal, who are most likely to use Spotify. It
brought them in from the cold.
Easy, legal, and comprehensive: Each of these would be impossible

without the labels’ cooperation. They dreamed up the celestial jukebox,
7-27
and it has now ascended to the heavens over Sweden because they
allowed it to. The Internet can make music available; only the labels can
make availability convenient.
Tucked in this year’s Recording Industry in Numbers from IFPI is a hopeful

full-page diagram labeled “The Evolution of Music Services.” Step One:
“Online Downloading, your music library on your computer.” Step Two:
“Online Streaming, from ownership to access.”
Ek says that when he began shopping the Spotify beta around to labels,
he needed to fill it with something, so the staff pooled its pirated music to
fill the database. “We’re Swedish,” he says, “so we’d already taken it.”
Hearing this anecdote, Sundin winces, places his hands over his ears, and
looks at his desk. “I don’t want to know this,” he says.
Flatbed Trucks
Stockholm in June smells like a bar. For two weeks graduating high school
students charter fleets of flatbed trucks, load them up with sound systems,
potted trees, pallets of beer, and their half-naked selves. The trucks drive
around the city, and the grads lip-synch and fling booze at anyone who
stands too close. They sing and drink to fend off age and winter, and the
rest of Stockholm ignores them.
Gathered in front of a metro station on the Birger Jarlsgatan are Alex, 18,
and five of his friends. They are wet from the ride. Do they use Spotify?
“Of course,” they say. Exclusively? Of course. “Well,” says Alex, “we use
Spotify to find music. Then we go download it somewhere else for free.”
When Ek hears this story, he smiles. “Yeah,” he says, “that happens too.”
Ek has time. The kids will pay, someday.
Questions:
7.1 Is downloading music for free off the internet “unethical” or

“immoral”? How many students currently do it, or have done it
within the past several months?
On the one hand, the act is illegal, and is unethical from all of the
nonconsequentialist perspectives in Table 7-6. On the other hand,
many students will point to a low level of moral intensity for the
action, for all of the reasons in Table 7-4. Of course, the intensity is
higher when one considers a generation of illegal music
downloaders rather than a single person finding one song. How
7-28
students feel and act toward this issue will therefore depend on
factors like their own moral attentiveness and moral identity.
7.2 The article notes that Americans tend to “own” their music (either
with physical CD’s or songs bought through iTunes) whereas
Swedes tend to “rent” it (using Spotify). What trust dynamics can
explain that difference?
It is interesting to note that Sweden is higher in trust propensity

than the United States, based on Figure 7-2. It may be that they
trust companies and services more than Americans, who want their
music on their hard drives. The operative trustworthiness issue
seems to orbit ability. For a service like Spotify to work, it has to
have a good solid connection always, and it has to have the song
you’re looking for always. Those are challenging standards,
technologically. Sweden’s more advanced broadband infrastructure
may therefore explain much of that difference as well.
EXERCISE: UNETHICAL BEHAVIOR
Instructions:
Have students read the scenario in step 7.1. It’s important that they not
skip ahead and read 7.3, so impress upon them to just do step 7.1. Once
they’ve read the scenario, put the students in groups and have them come
to consensus on three ideas for reducing employee theft at The Grocery
Cart. Have them write the behaviors on the board, making sure to leave a
bit of space for additional writing later.
Sample Ideas:
Here’s an example of the kinds of ideas students might come up with for
reducing employee theft.
• Install cameras in stockroom

• Post warnings about the consequences of being caught stealing
• Offer store-level incentives for theft reduction
Next Steps:
Now have students read the continuation of the scenario in 7.3. In the
context of Figure 7-6, this added information paints the situation at The
Grocery Cart as a case of a “bad barrel”, not just some “bad apples.” Theft
seems to be a reaction to distributive and interpersonal injustices, much
like the study described in Figure 7-5. It also seems to be fostered by a
culture of poor ethics, with managers themselves committing or
7-29
sanctioning unethical actions. Some groups will have focused on Drew in

their original ideas. Those groups may or may not add any additional
ideas to what they’ve written on the board. Other groups won’t have
focused on Drew, however, so they’ll add some ideas to their original
three. Those ideas could include:
• Fire Drew
• Ensure that the pay levels for Grocery Cart employees are
competitive
Questions:
If you examine the ideas that the groups wrote on the board, you’ll
typically see that the ideas are geared toward moral intent. The
employees at the grocery cart are not sufficiently motivated to do the right
thing. It’s not clear that theft will be punished, and there’s no clear
incentive to help keep other employees in line. In fact, the employees
actually seem to be incented to do the wrong thing, as they may be
underpaid, they are the victim of disrespectful communication, and they
are able to model their boss doing it. Given that, ideas that focus on
increasing moral intent (cameras, warnings, incentives, better treatment of
employees) will be quite common. One way to structure class discussion
is to challenge students to come up with ideas that address the moral
awareness or moral judgment portions of Figure 7-6. For moral
awareness, The Grocery Cart could hold a training session on the bottom-
line costs of employee theft, to make the issue have more moral intensity.
They could also prioritize moral attentiveness in their hiring process, either
through interviews or personality testing (see the discussion of integrity
testing in Chapter 9). For moral judgment, The Grocery Cart could gear a
training session toward moral development, getting the employees to view
theft from a more sophisticated set of moral principles (e.g., ethics of
duties, ethics of rights, virtue ethics).
OMITTED TOPICS
The field of organizational behavior is extremely broad and different

textbooks focus on different aspects of the field. A brief outline of topics
that are not covered in this text, but which the professor might want to
include in his or her lecture, is included below. In cases where these
topics are covered in other chapters in the book, we note those chapters.
In cases where they are omitted entirely, we provide some references for
further reading.
• Equity Theory – The dominant theory for explaining how individuals

form perceptions of distributive justice. The theory argues that
individuals compare their ratios of outcomes to inputs to those of a
7-30
• comparison other, feeling “equity distress” whenever those ratios

are imbalanced. This theory is covered in our discussion of
motivation in Chapter 6.
• Psychological Contract – An employee’s belief about what he/she

owes the company and what the company owes him/her.
Differences in psychological contracts are very similar to
differences in exchange relationships (as in the discussion of social
vs. economic exchanges). Psychological contracts are covered in
our discussion of commitment trends in Chapter 3.
7-31
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Organizational Behavior Improving Performance and Commitment in The Workplace 3Rd Edition Colquitt Solutions Manual Full Chapter PDF

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Organizational Behavior Improving

Performance and Commitment in the

I. Trust, Justice, and Ethics

A. Reputation - the prominence of a brand in the minds of the public

B. Trust – the willingness to be vulnerable to an authority based on

1. Authorities can be either person-based or organization based

2. Trust is often dependent on two related concepts:

a. Justice – the perceived fairness of an authority’s decision

b. Ethics – the degree to which the behaviors of an authority

II. Why Are Some Authorities More Trusted Than Others?

1. Three types of trust

i. Some people have personality traits that include a

OB Assessments: Trust Propensity. This brief

ii. Trust propensity is a product of both genetics and early

iii. Trust propensity is also influenced by experiences in later

Try This! Ask students if they have any experiences in

themselves in national norms, routines, practices, and

i. Cognition-based trust is based on what we know about

ii. Track records are gauged on three dimensions:

a.) Ability – the skills and abilities that enable an authority

OB on Screen: Slumdog Millionaire. The clip

Try This! Use the Slumdog Millionaire clip for a different

may be considering social identity theory issues from

Bonus OB on Screen (from 1st ed): Pirates of the

i. Affect-based trust is emotional – it is based on the

a.) May act as a supplement to other types of trust – is

1. Distributive Justice – perceptions of fairness related to whether

a. Most common norm in business settings is equity – more

2. Procedural Justice – perceptions of fairness related to whether

a. Rules of Fair Process

i. Voice – do employees have a chance to express their

Try This! Take some decision making procedure that a

b. Research shows that procedural justice is a stronger driver

3. Interpersonal Justice - perceptions of fairness related to whether

a. Rules for Fair Treatment

i. Respect rule – are people treated in a dignified and

b. Abusive Supervision - behaviors that are extremely unfair

4. Informational Justice - perceptions of fairness related to whether

a. Rules for Fair Communication

i. Justification rule – have authorities explained the

b. Informational justice can have a large impact on an

a. When authorities adhere to the justice rules in Table 7.2,

1. Research on ethics seeks to explain why people behave in a

2. 76% of employees have observed illegal or unethical conduct

OB Internationally. This table shows that different countries

3. Four Component Model of Ethical Decision Making

Asset Gallery (Ethics & Social Responsibility/Hot Seat):

a. Moral Awareness – Occurs when an authority recognizes

i. Moral awareness depends on:

a.) Moral intensity, or the degree to which the issue has

i.) Moral intensity is driven by two general factors

a. Potential for harm

b.) Moral attentiveness, or the degree to which people

b. Moral Judgment – Occurs when an authority accurately

i. Moral judgment depends on:

a.) Stage of cognitive moral development

i.) preconventional - right and wrong is based on