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Ethics involves evaluating and knowing "right from wrong" in a specific situation. There are two broad areas associated with the concept of managerial ethics: 1) managerial mischief, and 2) moral mazes. According to Madsen and Shafritz (1990) and McNamara, "managerial mischief" includes "illegal, unethical, or questionable practices of individual managers or organizations, as well as the causes of such behaviors and remedies to eradicate them" the "moral mazes of management" include the numerous ethical problems that managers must deal with on a daily basis, such as potential conflicts of interest, wrongful use of resources, mismanagement of contracts and agreements, and misuse of power and influence.
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