Lecture Note On: Business Ethics & CSR

Chapter Three: Theory of Ethics

3.1. Introduction to Ethics
Ethics refers to standards of conduct that guide people’s decisions and behavior (e.g. not stealing from
others).
3.2. Theory of Ethics
What is a theory? Theory is a system of ideas intended to explain something. Ethical decisions are
usually viewed from a theoretical perspective. Ethical theories are based on ethical principles. They
each emphasize different aspects of an ethical dilemma and lead to the most ethically correct resolution
according to the guidelines within the ethical theory itself. People usually base their individual choice
of ethical theory upon their life experiences. There is no single view in general ethics of what makes
something right or wrong. People give reasons to explain their decisions and behaviors and expressed
in ethical criteria normally grounded in ethical theories. Ethical theories are statement of what moral
standing or responsibility people should ascribe to. Ethical theories are the rules and principles that
determine right and wrong for a given situation. Different ethical theories provide a unique perspective
in ethical analysis when a person is on the path of decision making. Ethical theories are attempts to
provide a clear account of what our ethical obligations are. Ethical theories provide a framework for
judging right or wrong decisions. There various ethical theories. Major ethical theories are the
following:
A. Teleology /Consequential/ theory of ethics
Consequentialism: is the ethical theory that judges the rightness or wrongness of actions based upon
the results of conduct. It is a theory which bases moral judgment of the outcomes of an action. It states
that the morality of an act/behavior is determined / judged by the consequence of the action. A
consequentialist view of ethics states that the goodness or badness of a proposed action is evident only
in the consequences of that action. Whether a lie is good or bad depends upon the consequences of that
particular lie at the time. The moral rightness of an action can be determined by its consequences. If the
consequences are good, the act is right; if the consequences are bad the act is wrong.
Utilitarianism
It focuses on a specific consequence: happiness. It is the belief that being ethical means to do the
greatest good for the greatest number of people. Utilitarianism is the philosophical approach which
says that the moral act is the one that creates the greatest happiness or good for the greatest number of
people. The belief that actions should be appraised in terms of their effect on happiness is utilitarianism.

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 Lecture Note On: Business Ethics & CSR

Utilitarianism is the consequential doctrine that asserts we should always act so as to produce the
greater ratio of good to evil for everyone and therefore emphasizes the best interests of everyone
concerned. In terms of organizational policies, utilitarianism holds that rules are ethical if they promote
behaviors that maximize the benefit for all members and other stakeholders, and are unethical if they do
not.

Utilitarianism is the idea that business conduct should take in to account the consequence that would
benefit the largest amount of people. It is founded on the ability to predict the consequences of an
action. To autilitarian, the choice that yields the greatest benefit to the most people is the choice that is
ethically correct.

Utilitarianism is an approach to establishing ethical standards based on the consequences of an action.

In an ethical dilemma, a person selects the action that brings about the greatest amount of good for the
greatest number of people.
B. Deontological theory of ethics (ethics of duty)
Deontologism: is the ethical theory that judges the morality of an action’s adherence to rules.
It is the theory that actions are not right or wrong based on their result but rather because they are
inherently good or evil. Deontology is one school of thought emphasises duties, things that must be
done irrespective of the consequences. This deontological point of view holds that goodness or badness
is evident only in the action itself: that, for example, lying is bad because it is bad in itself. Thus,
deontological approach to the study of ethics differs from teleological approaches in that it does not
focus solely on consequences when assessing the morality of actions. Instead, this approach places more
emphasis on the extent to which a person’s decisions and behaviors conform to existing standards of
morality such as rules and rights. Deontology deals with actions, which are inherently right or wrong,
without taking their consequences into account. In order to define the rightness or wrongness of a given
alternative of action, we do not have to know its probable outcomes. People have a duty to do the right
thing even if it produces a bad result. Some kinds of action are wrong or right in themselves, regardless
of the consequences.
It states that people should adhere to their obligations and duties when analyzing an ethical dilemma.
This means that a person will follow his or her obligations to another individual or society because
upholding one's duty is what is considered ethically correct.

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 Lecture Note On: Business Ethics & CSR

Deontological theory states ethical behavior should follow an established set of rules or principles in all
types of situations.
A person fulfills absolute moral duties regardless of whether good comes from the actions. A person
decides upon actions by asking if a particular action is morally right or wrong. The act of carrying out
that duty is important rather than the consequences of the act.
A deontological approach to moral behavior is one that believes that moral reasoning and action should
be guided by universal principles that hold irrespective of the context in which an ethical dilemma might
exist.
The deontological school of thought focuses on the preservation of individual rights and on the
intentions associated with a particular behavior, rather than on its consequences. Deontologists look for
conformity to moral principles to determine whether or not an action is ethical.

Both duties (deontological) and consequences (teleological) are plainly important in the way we deal
with ethical issues in everyday life. Unfortunately, however, they are very different ways of reasoning,
which can lead to contradictory outcomes in some cases. An exclusively duty-based view of ethics, for
example, must sooner or later run into problems such as absolutism, or the difficulty of deciding which
duty should take precedence over others in a particular situation. If for example, both lying and killing
are held to be inherently wrong, is it acceptable to lie in order to avoid a killing? And whatever answer
is given, how do we know?

C. Virtue theory of ethics

Virtue Ethics - is the ethical theory that good is what a person with a deep habit or character for
goodness. The virtue ethical theory judges/evaluates a person based on their character rather than
action. When rating an unusual behavior, it takes the person's morals, reputation & motivation into
account.
D. Theory Ethical Absolutism
It claims that there are absolute standards against which morality can be judged. Certain actions are
right or wrong irrespective of the context of the act. Noting is relative, for example a crime is a crime
regardless of circumstances. Therefore right and wrong are universal truth (ethical standards) are
applicable to everybody everywhere.
E. Theory of Ethical relativism

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 Lecture Note On: Business Ethics & CSR

It is the theory that holds that morality is relative to the norms of one’s culture. Whether action is right
or wrong depends on the moral norms the society in which it is practiced. There are no universal moral
standards; nothing is good or bad absolutely. Therefore the truth/moral principles vary from time to
time, place to place. It is the idea there is no universal or absolute set of ethical principle.

3.3. Ethical egoism and subjectivism

Ethical Egoism: the morality of selfishness
Egoism is a moral philosophy that holds that the best way for one to be morally good is to act in
accordance with one’s self-interest. It focuses on the consequences of behaviors on the self as opposed
to others. It is a moral act which promotes the individuals best long-term interests. In determining the
morality of an action, egoists use their best long-term advantage to measure the action’s goodness.
Egoism measures the morality of a behavior by the extent to which the behavior promotes one’s own
interests. Ethical Egoism is view that an act is morally right for me if it brings about the best
consequences for me. The moral principle of ethical egoism suggests that an act is ethical when it
promotes the individual's long-term interest.
Ethical subjectivism
Ethical subjectivism: view that an act is morally right or wrong FOR ME if I believe it is. It is the idea
that our moral opinions are based on our feelings and nothing more.

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