Chapter Two

Ethics concepts and Theories

 Ethics concepts and Theories

• Understanding ethics concepts and theories are

the key ingredient to know business ethics and
social responsibility.
Two fundamental
types of ethical
theories

Consequentiality/
teleological Deontological
 Ethics theories
• Consequentiality theories- a view that whether or not an action is good or
bad depends solely on what effects that action has on the world.
– “The greatest amount of good for the greatest amount of people”
– Telos means aim/purpose in Greek.

• Deontological theories- are those based on the notion of choosing one’s

actions according to standards of duty or obligation that refers not to
consequences but to the nature of actions and the motives that are held by
those performing them.

• Is a the normative ethical position that judges the morality of

an action based on rules.
– Deon means that which is necessary or binding/duty
 2.1. Teleological/consequentialism
theories
• Hold that an action is right if a person doing it brings about the best
attainable consequence in the situation.
• It’s the goodness and badness of the consequence of actions.
– The Greatest Happiness Principle−“actions are right in proportion as they tend
to promote happiness, wrong as they tend to produce the reverse of happiness”
Jonh Stuart Mill

– Among other things, this ignores the motivation/intention behind the

action and the nature of the action itself.
• The most common form of consequentialism is Utilitarianism
– Utilitarianism combines consequentialism with the claim that the only valuable
consequence is pleasure, and the only disvaluable consequence is pain.
• Model- Value of Action= Pleasure – Pains
 Three parts of utilitarian theories
A principle of A decision
Theory of value universal/utility procedure
• Hedonism- equates good • an act is right if it
with pleasure, bad/evil
brings about the • The third part of
with pain
• Eudamonism- equates
greatest increase in utilitarian theories
good with happiness, bad the world of has to do with how
or evil with unhappiness consequential good the judgment is
• Agathism- views good as of all the alternative made that a
an indefinable, intrinsic actions available, or particular act is of
features of various states the least increase in relative maximum
• Agapeism- equates good evil consequences of utility or relative
with love, bad with hate all the alternatives. minimum disutility.
• Values of pluralism-
holds that there are many
good i.e. pleasure and
happiness, knowledge,
f/ship, love
 Decision procedures cont’d

• Utilitarian theories divide into two types over decision procedures:

• An Act utilitarian theory holds that the utilitarian principle of

utility is to be applied to particular situations.

– This theory is also called situation ethics

• A Rule utilitarian theory hold that experience may be most reliably

and usefully condensed into general rules, and that a better long-
run result will be achieved by following rules than by situational
calculations.
 2.2. Deontological theories
• Deontological ethics is often seen as the opposite of
consequentialist ethics.
• Where the consequentialist is concerned with the outcome of the
action, the deontologist is concerned with the nature of the action
itself (more specifically, the rule/law/reason/maxim for which an
action was taken).
• For the deontologist, some actions like murder are just inherently
wrong, no matter the ultimate result.
• By far the most famous deontologist was Immanuel Kant (1724-
1804).
 2.2. Deontological theories
• It hold that an action is morally right if it is required by
duty, or permitted by duty and not in conflict with any
other action required by another duty.
• Deontologists are frequently also absolutists, but some
deontologists do hold that what is morally right in a given
situation may differ from what is morally right in any other
given situation.
• There are similar differences between act and rule
deontologists as between act and rule utilitarian.
 Deontological theories
• Act deontologists hold that every judgment of moral obligation is
completely particular (e.g., “In this situation I ought to tell the
truth”) and that general maxims or rules (e.g., one ought always to
tell the truth”) are unavailable, useless, or at best inductive
generalizations from particular experiences.
• Some act deontologists are intuitionists
• Some act deontologists are existentialists- hold that decision rather
than intuitions, is central
• Some act deontologists are religious- source of duty is divine will
e.g. Biblical story of Abraham and Isaac. First God order Abraham
order to sacrifice his son, and was stopped by an other order.
• Rule deontologists hold that there is a non-teleological
standard of duty consisting in one or more rules; one’s duty
in any situation consists in acting so as not to violate any of
those rules.
• Usually the rule deontologist has in mind a set of rather
specific rules, such as the Biblical 10 Commandments.

**** Reading assignment ******

Immanuel Kant’s rational rule deontology
 Immanuel Kant’s rational rule deontology

• Kant's theory is an example of a deontological moral

theory–according to these theories, the rightness or
wrongness of actions does not depend on their
consequences but on whether they fulfill our duty.
• Kant believed that there was a supreme principle
of morality, and he referred to it as The Categorical
Imperative.
• Hypothetical and categorical imperative.
• Hypothetical imperative is conditional- it says ‘if you
want to get X, then You should do Y’
• A categorical imperative is unconditional- it says ‘you
should do Y’
 2.3. Virtue ethics theory
• The basis of virtue ethics is the idea of eudaimonia, which means ‘the good life’ or ‘life lived well’
or ‘happiness’

• This theory is normally associated with the Greek philosophers Aristotle and Plato.

• Aristotle distinguishes things that are valuable in themselves, things that are valuable for some
purpose, and things that are both.

• Ultimately, there is only one thing which is purely valuable in itself- Happiness- and all other things
are desirable because the lead to living well/happiness.

• There are different virtues for teachers, for soldiers, for knives, for clocks etc.

• Virtue ethics theory posits that what one needs to do to make ethical decisions is to cultivate virtuous
character traits since virtuous people are more inclined to both be ethical and to make ethical
decisions.

• This theory defines virtues as fixed traits or habits to do what is morally commendable.

• Aristotle’s list of virtues included courage, self-discipline and honesty.

 Criticisms of the virtue ethics
– It is not practical in a society like ours in which
wealth and success are so highly valued.
– It is not useful for evaluating the desirability of
actions (i.e. are they right or wrong).
– The fact that a virtuous person chooses a certain
course of action does not guarantee that the action
is ethical since even saints are fallible.
 Ethical relativism
Ethical relativism is the theory that holds that morality is relative to the
norms of one's culture.

• That is, whether an action is right or wrong depends on the moral norms of
the society in which it is practiced. The same action may be morally right
in one society but be morally wrong in another.
– For the ethical relativist, there are no universal moral standards.

– Most ethicists reject the theory of ethical relativism

– Perhaps the strongest argument against ethical relativism comes from those
who assert that universal moral standards can exist even if some moral
practices and beliefs vary among cultures.
 2.4. RIGHTS THEORY

• Encompasses a variety of ethical philosophies holding

that certain human rights are fundamental and must
be respected by other humans
• Focus is on each individual member of society and
his/her rights
• Each of us faces a moral obligation not to harm the
fundamental rights of others
 Modern Rights Theories

• Propose mixed deontological theories b/c strict

Kantianism’s duties are absolute and sometimes create
inappropriate results. (One can NEVER lie or kill even
though in some circumstances -- such as self-defense -- it
may be acceptable to do so.)
• Abide by a moral rule unless a more important rule
conflicts with it. (In other words, doesn’t compromise a
person’s right unless a greater right take priority over it.)
For example, members of society have a right NOT to be
lied to. However, if you could save someone’s life by
telling a falsehood, such as NOT telling a criminal the
true location of a witness who will testify against him, you
would be compelled under the modern theory to save the
witness’ life by NOT telling the truth.)
 2.5. JUSTICE THEORY

• John Rawls, published A Theory of Justice, in

1971.

• Argued it was right for gov’ts to redistribute

wealth in order to help the poor and
disadvantaged.
 Justice Approach

• The justice approach holds that moral decisions

must be based on standards of equity, fairness,
and impartiality.
• Three types of justice are of concern to managers:
– Distributive justice,
– Procedural justice, and
– Compensatory justice.
 Justice approach cont’d

• Distributive justice requires that different treatment of people not

be based on arbitrary characteristics.

• Procedural justice requires that rules be administered fairly. Rules

should be clearly stated and be consistently and impartially
enforced.

• Compensatory justice argues that individuals should be

compensated for the cost of their injuries by the responsible party.
 2.6. PROFIT MAXIMIZATION

• Maximize the business’ long-run profits within the limits of

the law
• Based on the Laisse Faire Theory of Capitalism first
expressed by Adam Smith in the 18th century
• Argues total social welfare is optimized if humans are
permitted to work toward their own selfish goals
• The role of gov’ts and the law is limited solely to ensuring
the workings of a free market (by NOT interfering
w/economic liberty, eliminating collusion among
competitors, & promoting accurate information in the
marketplace
– Strength: Allocation of society’s resources to those
units that are most efficient increases overall
productivity and maximizes total social utility.
 Criticisms:

• Doesn’t concern itself with HOW wealth is allocated in

society. (For example, in the USA, 90% of our wealth is
held by 10% of the population).
• Market imperfections and a person’s station at birth
interfere with his ability to compete.
• The ability of laws and market forces to control
corporate behavior is limited
 2-2. Principles and consequences in
ethics
• Ethical Principles
– Beneficence

– Least Harm

– Respect for Autonomy

– Justice
 Principles of admirable business ethics

• Be trustful
• Keep an open mind
• Meet obligations
• Have clear documents
• Become community involved
• Maintain accounting control
• Be respectful
 Principles for Managing Ethics in the Public Service

• Ethical standards for public service should be clear.

• Ethical standards should be reflected in the legal

framework.

• Ethical guidance should be available to public servants.

• Public servants should know their rights and

obligations when exposing wrongdoing.

• Political commitment to ethics should reinforce the

ethical conduct of public servants.
 Principles for Managing Ethics in the
Public Service
• The decision -making process should be transparent and open to scrutiny.

• There should be clear guidelines for interaction between the public and private
sectors.

• Managers should demonstrate and promote ethical conduct.

• Management policies, procedures and practices should promote ethical conduct

• Public service conditions and management of human resources should promote

ethical conduct.

• Adequate accountability mechanisms should be in place within the public service.

• Appropriate procedures and sanctions should exist to deal with misconduct.

 COMPLIANCE AND INTEGRITY
What are compliance-based ethics codes?
• Are codes that emphasize preventing unlawful behavior by
increasing control and by penalizing wrongdoers.
• They are based on avoiding legal punishment.
• A group that operates using a compliance-based ethics code is
avoiding breaking a rule or law, and sees anything that has not been
defined by a rule or law as right when there simply may have been
no reason yet to create the rule or law.

What are integrity-based ethics codes?

• A group that operates using an integrity-based ethics code
encourages people to think for themselves, and work towards a set
of principles by using what they think is right or wrong.