B.

Muchenje UZ

BUSINESS ETHICS &

CORPORATE GOVERNANCE
BS425

PREPARED BY:
MRS B. MUCHENJE
(bzmuchenje@gmail.com,0772815871)
Faculty of Business Management Sciences
& Economics, TLH Department
Office G10
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2. THE ORIGINS OF ETHICS

Ethics and morality
 Ethics is often restricted to the rules and norms
of specific kinds of conduct or the codes of
conduct for specialized groups.
 Moralities are specific to societies and exist at
certain times and places.
 It includes a complex vocabulary and pattern of
reasoning that permit the members of the society
to engage in moral discourse for the purpose of
evaluating the actions of individuals and the
practices of the society.

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WHO DETERMINES WHAT IS GOOD?

i) Society (i.e. ruling class, elite people)
ii) Individuals (i.e. feelings and attitudes)
iii) Natural law (i.e. law of equity)
All the above foundations of ethics lead to theories
of ethics.
Theories of ethics offer a comprehensive survey
of the major schools of thought and figures in
moral philosophy from Socrates to the present
day.

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ETHICAL THEORIES
 The theories represent the grand ideas on which
principles are based.
 Ethical theories provide framework to get at
underlying rationale, classify and understand
arguments, defend conclusions about right and
wrong.

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CONTINUED:

Ethical theory is necessary when reasonable

people disagree about controversial issues in
business.
Such controversial issues are difficult precisely
because they are not easily settled by our
ordinary moral beliefs and the simple rules and
principles of morality.

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CONTINUED:
 If such situations are met, people need to go
beyond our conflicting positions and seek
common ground in ethical theory that will
give out the best reasons available.
 Ethical theories represent the best efforts of
philosophers over the ages to understand
morality.
 Some familiarity with these theories will
greatly improve the moral compass that we
use to navigate the treacherous ethical
terrain of the business world.

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CONTINUED:
 However, the differences between theories should not
lead us to despair of resolving ethical issues or to
conclude that one resolution is as good as another.
Nor should we be discouraged by the fact that agreement
on complex ethical issues is seldom achieved.
 The best we can do is to analyse the issues as fully as
possible which means getting the facts straight and
achieving definitional clarity and then develop the
strongest and most complete arguments we can for what
we consider to be the correct conclusions.

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ETHICS THEORISTS
Ethical theories are usually broken down into four
general subject areas that are:
i) Meta ethics, Meta-ethics: What does "right" even
mean?
ii) Normative Ethics,
iii) Applied ethics and
iv) Descriptive ethics.
The most popular ethical theorists are:
Kant (Deontology), Aristotle (Virtue), Mill
(Consequentialism).

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1. META-ETHICS
WHAT DOES "RIGHT" EVEN MEAN?
This studies the meaning of moral language and the
metaphysics of moral facts. It investigates where our
ethical principles come from and what they mean e.g. Are
they social inventions? Do they involve more than our
individual emotions?
 Meta-ethics answers issues of universal truth, the will of
God, the role of reason in ethical judgements and the
meaning of ethical terms.

 Theories that fall under Meta-ethics include:

 i) Subjectivism
This says that, all moral beliefs are based on personal
feelings.
This theory states that, “man is the centre of all things”. An
individual is the final authority to the rule.
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RESPECT FOR AUTONOMY

This principle supports the Subjectivism theory and
states that an ethical theory should allow people to reign
over themselves and to be able to make decisions that
apply to their lives.
This means that people should have control over their
lives as much as possible because they are the only
people who completely understand their chosen type of
lifestyle.
Each man deserves respect because only him has had
those exact life experiences and understands his
emotions, motivations and body in such an intimate
manner.
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CONTINUED:
ii) Emotivism
 This is the variation of subjectivism. It hinges on
the principle that what we like is expressed
emotionally and not considered either true or false
e.g. a statement, “I will kill you”, does not mean
that killing is good.
 This theory suggests that, moral judgements are
not testable facts but are feelings.

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CONTINUED:
iii) Cultural Relativism
This theory states that, ethical principles are not
universal, but rather, are determined by culture.
Paul Taylor believes that all moral norms are
relative to particular cultures hence moral conduct
depends on time and place.
What is right or wrong depends on one’s
background.

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CONTINUED:
iv) Supernaturalism
This theory maintains that, “good or right is what
God wills us to do.
The will of God is objective because it comes
from a source outside ourselves.
Supernaturalists believe that there are closer ties
between ethics and religion.

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CONTINUED:
v) The Golden Rule
“Do unto others as you would like them to do unto
you”, (Mathew 7v12).
The Golden Rule is about our behaviour, not the
other person’s.
Morality is about how we choose to behave in all
situations than merely reacting to another individual’s
behaviour.

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2. NORMATIVE ETHICS
(PRESCRIPTIVE) ETHICS: HOW SHOULD PEOPLE ACT?

These take on a more practical task which is

to arrive at moral standards that regulate
right or wrong conduct i.e. articulating good
habits that we should follow, the duties that
we should do, the consequences of our
behaviour on others. Normative ethics
inquires “what are the principles we ought to
live by? What should they be?
 Theories that fall under Normative ethics
include:

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CONTINUED:
i) Utilitarianism
John Stuart Mill built on the work of Jeremy Betham to develop
utilitarianism. This is the most famous normative ethical principle
in Western philosophy.
The utilitarian ethical theory is founded on the ability to predict
the consequences of an action. To a utilitarian, the choice that
yields the greatest benefit to the most people is the choice that is
ethically correct.
The general idea behind this theory is that, right or good actions
are those that result in happiness. Happiness is the greatest
pleasure and absence of pain.

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Utilitarianism has two variations:
a) Act utilitarianism, where a person performs the
acts that benefit the most people, regardless of
personal feelings or the societal constraints such as
laws.
Act utilitarianism requires that every time we act we
ought to calculate and determine which among all
the options open to us would promote the greatest
net utility for all.
The smallest things we do can have enormous
consequences later. We should always mind our
actions.

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B) RULE UTILITARIANISM
Rule utilitarianism, however, takes into account the law and is
concerned with fairness.
A rule utilitarian seeks to benefit the most people but through
the fairest and most just means available.
This rule values justice and includes beneficence at the same
time.
This requires that every time we act, we obey the set rules
that, taken together, promote the greatest utility for all.
However, some rules do conflict and inhibit their usefulness.

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CONTINUED:

ii) Social Contract Theory

According to this theory, good or right is solely determined by
the rules we need to make and follow in order for us to live
together peacefully.
Hobbes, (1651), theorised that the absence of a social
contract would result in the state of nature which he
described as “lonely, violent chaos”.
We don’t live for ourselves but for the society that regulates
our personal behaviour.
What does the society expect us to do?

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CONTINUED:
iii) Categorical Imperative
Immanuel Kant (1724-1804) believed that moral laws are
absolute and do not change according to the situation.
Kant, (1785) devised the formula that states that, there is
only one law of morality and it is that we should act in
ways that we would want our acts to become laws for
everyone else’s behaviour.
This is a deontological theory that is best exemplified by
the concept that “the means justify the end”.
The act itself is prime and carries the moral weight.
"Do what is right, though the world should perish."
Precedence sets the laws for the future.

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IV) JUSTICE THEORY

The justice ethical principle states that ethical theories

should prescribe actions that are fair to those involved.
This means that ethical decisions should be consistent
with the ethical theory unless qualifying circumstances that
can be justified exist in the case.
This also means that cases with extenuating
circumstances must contain a significant and vital
difference from similar cases that justify the inconsistent
decision.
An ethical decision that contains justice within it has a
consistent logical basis that supports the decision.

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CONTINUED:
v) Virtue Theory (Aristotle)
This focuses on the nature of the acting person. This actor
should base his actions on the right virtues.
Aristotle believes that every moral virtue is positioned
somewhere between two extremes i.e. the good and the bad.
So, the central theme in virtue ethics is shaping people into
morally good and responsible creatures.
A virtue is a character trait that results in habitual good
behaviour rather than a principle of action.
Virtue theory requires that character traits considered virtuous
be identified, defined and justified.
However, character do change with circumstances over time.

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3. APPLIED ETHICS
HOW DO WE TAKE MORAL KNOWLEDGE
AND PUT IT INTO PRACTICE?
It involves examining specific controversial
issues such as abortion, infanticide, animal
rights, environmental concerns,
homosexuality, nuclear war, etc.

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I) RIGHTS THEORY
A right is a claim, something that a person is entitled to and
deserves by virtue of being a human.
In the rights ethical theory, the rights set forth by a society
are protected and given the highest priority.
In order for a society to determine what rights it wants to
enact, it must decide what the society's goals and ethical
priorities are.
Rights are considered to be ethically correct and valid since
a large or ruling population endorses them.
However, rights are prone to abuse by people.

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II) CASUISTICAL THEORY

The casuist ethical theory is one that compares a
current ethical dilemma with examples of similar
ethical dilemmas and their outcomes.
This allows one to determine the severity of the
situation and to create the best possible solution
according to others' experiences.
The assumption will be that, circumstances of the
previous example and the results may be similar to
the current situation hence the same treatment may
be given of which it may not be true.

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III) DUE CARE THEORY

According to the principle of the Due Care, manufacturers
have the moral obligation to protect consumers against all
risks manufacturers can anticipate.
Because manufacturers are in a more advantaged position,
they have a duty to take special care to ensure that the
products they offer do not harm the consumers' interests.
The doctrine of caveat emptor (let the buyer take care) is
here replaced with a weak version of the doctrine of caveat
vendor, (let the seller take care).
It puts manufacturer in paternalistic position of deciding how
much risk is best for consumers.

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4. DESCRIPTIVE ETHICS
WHAT DO PEOPLE THINK IS RIGHT?

Descriptive ethics: Is also known as comparative ethics

and is prescriptive.
It is the study of people's beliefs about morality.

 Descriptive ethics is a form of empirical research into

the attitudes of individuals or groups of people.
 The descriptive ethics aim to uncover people's beliefs
about such things as values, which actions are right
and wrong, and which characteristics of moral agents
are virtuous.

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CONTINUED
Descriptive ethics is a value-free approach to ethics, which
defines it as a social science rather than a humanity.
Its examination of ethics doesn't start with a preconceived
theory, but rather investigates observations of actual choices
made by moral agents in practice.
Some philosophers rely on descriptive ethics and choices
made and unchallenged by a society or culture to derive
categories, which typically vary by context.
This can lead to situational ethics and situated ethics.

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CONTINUED:
Descriptive decision theory is concerned with characterising and
explaining regularities in the choices that people are disposed to
make.
NB. The theories under this category are varied and range from
those that were done before to what we are currently doing which
will become future moral principles and standards of behaviour.
Effectively there are no specified theories but yiu can be an author
of these.

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REVISION QUESTIONS
1. Compare and contrast the above ethical categories and
the theories that fall under them.
2. How do ethical theories apply in business and society?
3. What are the advantages and disadvantages of ethical
theories?
4. Come up with your own theories that fit into the
descriptive category.

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