E

Student answers may vary. A key situational determinant of ethical behavior is the moral intensity of the issue. Moral intensity refers to the saliency and strength of the issue, and for a leader it is determined by six factors: (1) the degree of consequences for others; (2) the probability that those consequences will occur; (3) whether the consequences will occur in the short-term or distant future; (4) the closeness (physical, social, cultural, and psychological) of the affected parties to the leader; (5) the extent to which the consequences are limited to only a few versus many individuals; and (6) the amount of agreement among others as to what the leader should do. Moral intensity has been shown to reduce a person's willingness to engage in questionable accounting practices, to increase the willingness to engage in whistleblowing behaviors, and to increase the amount of emotional exhaustion experienced after making the decision.

Environmental complexity refers to the magnitude of the problems and opportunities in the organization's environment, as evidenced by three main factors: the degree of richness, the degree of interdependence, and the degree of uncertainty stemming from both the general and the specific environments. The component factors of environmental complexity are described as follows: Environmental richness refers to the extent to which the economy is growing, individuals are improving their education, and those on whom the organization relies are prospering. Environmental interdependence reflects the firm's connection to external individuals, groups, and organizations. Degree of uncertainty reflects the uncertainty and volatility associated with the general and specific environments in which the firm operates.

C

A

E