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Evaluating Business

Ethics:
Cotemporary Ethical Theories

2 H i g h e r E d u c a t i o n
The role of ethical theory
 Two extreme positions (De George 1999)

 Ethical absolutism – claims there are eternal,


universally applicable moral principles.
– Right and wrong are objective qualities that can
be rationally determined
– Traditional ethical theories

 Ethical relativism – claims morality is


context dependent and subjective
– There are no universal right and wrongs that can
be rationally determined
– Contemporary ethical theories

• 2 H i g h e r E d u c a t i o n
Traditional ethical theories
Major normative theories in business
ethics
Egoism Utilitarianism Ethics of duties Rights and
justice

Contributors Adam Smith Jeremy Bentham Immanuel Kant John Locke


John Stuart Mill John Rawls

Focus Individual desires Collective welfare Duties Rights


or interests

Rules Maximization of Act/rule Categorical Respect for human


desires/self utilitarianism imperative beings
interest

Concept of Man as an actor with Man is controlled by Man is a rational Man is a being that
human beings limited knowledge avoidance of pain moral actor is distinguished by
and objectives and gain of pleasure dignity
(“hedonist”)

Type Consequentialist Consequentialist Non- Non-consequentialist


consequentialist

Source: Crane and Matten (2004) Figure 3.2, page 80


2 H i g h e r E d u c a t i o n
Utilitarianism
 According to utilitarianism, an
action is morally right if it results in
the greatest amount of good for
the greatest amount of people
affected by the action

– ‘greatest happiness principle’


– Cost-benefit analysis

2 H i g h e r E d u c a t i o n
Utilitarianism (2)
Example of a utilitarian
analysis
Action 1 : doing the deal Action 2 : not doing the deal

Pleasure Pain Pleasure Pain

Product Success; bonus Bad conscience Good conscience Loss of a good deal
manager

Thai Dealer Good deal Loss of a good deal


Search for a new
customer in Europe

Parents Secure the family’s Limited Search for other


income prospects for sources of income
children
Children Feeling of being Hard work No hard work Potentially forced
needed, being “grown No chance of Time to play and go to do other, more
up”; school education to school painful work
approval of parents;

Grandmother Family is able to Loss of economic


support her support

2 H i g h e r E d u c a t i o n
Limits of Utilitarianism

 Subjectivity
– Led to refinement of theory
 Act utilitarianism
 Rule utilitarianism
 Problems with quantification
 Distribution of utility

2 H i g h e r E d u c a t i o n
Act- and Rule-
Utilitarianism
Act utilitarianism looks to single
actions and bases the moral
judgement on the amount of
pleasure and the amount of pain this
single action causes.
Rule utilitarianism looks at

classes of action and ask whether


the underlying principles of an
action produce more pleasure than
pain for society in the long run.
 2 H i g h e r E d u c a t i o n
Ethics of duties
 ‘Categorical Imperative’ (Kant)
– Maxim 1: Consistency
Act only according to that maxim by which
you can at the same time will that it should
become a universal law.
– Maxim 2: Human Dignity
Act so that you treat humanity, whether in
your own person or in that of another,
always as an end and never as a means
only.
– Maxim 3: Universality
Act only so that the will through its maxims
could regard itself at the same time as
universally lawgiving.2 H i g h e r E d u c a t i o n

Problems with ethics of
duties


– Undervaluing outcomes
– Complexity
– Misplaced optimism?

2 H i g h e r E d u c a t i o n
Ethics of rights and justice
 Natural rights are certain basic,
important, inalienable entitlements that
should be respected and protected in
every single action.
– Strongly based in western view of
morality

 Justice can be defined as the


simultaneously fair treatment of
individuals in a given situation with the
result that everybody gets what they
deserve 2 Higher Education
– Fair procedures (procedural justice)
John Rawls’
‘Theory of Justice’
1.Each person is to have an equal right to
the most extensive total system of
basic liberties compatible with a
similar system of liberty for all.
2.Social and economic inequalities are to
be arranged so that they are both:
a.to the greatest benefit of the least
advantaged; and
b.attached to offices and positions open
to all under conditions of fair
equality of opportunity.
2 H i g h e r E d u c a t i o n
Limits of traditional
theories
 Too abstract
 Too reductionist
 Too objective and elitist
 Too impersonal
 Too rational and codified

2 H i g h e r E d u c a t i o n
Contemporary ethical
theories

2 H i g h e r E d u c a t i o n
Virtue ethics
 Virtue ethicscontends that morally
correct actions are those undertaken
by actors with virtuous characters.
Therefore, the formation of a virtuous
character is the first step towards
morally correct behaviour

 Acquired traits
– Intellectual virtues
– Moral virtues
2 H i g h e r E d u c a t i o n
Feminist ethics
 Feminist ethics is an approach
that prioritizes empathy,
harmonious and healthy social
relationships, care for one
another, and avoidance of harm
above abstract principles

2 H i g h e r E d u c a t i o n
Feminist ethics
Contrasting gender-based views of
business ethics

View of human 2 H i g h e r E d u c a t i o n
Discourse ethics
– Discourse ethics aims to solve ethical
conflicts by providing a process of norm
generation through rational reflection on
the real-life experiences of all relevant
participants
 Ultimate goal of ethical issues in
business should be the peaceful
settlement of conflicts (Steinmann
and Löhr, 1994)
 Different parties in a conflict should sit
together and engage in a discourse
about the settlement of the conflict,
and ultimately provide a situation
that is acceptable to all
2 H i g h e r E d u c a t i o n
– ‘ideal discourse’ criteria (Habermas
Postmodern perspectives on
business ethics
 Postmodern ethicsis an approach that
locates morality beyond the sphere of
rationality in an emotional ‘moral
impulse’ towards others. It
encourages individual actors to
question everyday practices and
rules, and to listen to and follow their
emotions, inner convictions and ‘gut
feelings’ about what they think is right
and wrong in a particular incident of
decision-making.
2 Higher Education
Postmodern business
ethics
 Postmodern business ethics
emphasises (Gustafson, 2000:21)
– Holistic approach
– Examples rather than principles
– ‘Think local, act local’
– Preliminary character

2 H i g h e r E d u c a t i o n
Summary

Towards a pragmatic use of


ethical theory?

2 H i g h e r E d u c a t i o n
The value of ethical theories in
solving ethical dilemmas in
business

Ethi Variety
dilemmcal
businea in „Prism“ of norma
tive
ss conside
of rat
ethical the in solvin ions
ories g
the ethic
al
dilemma

2 H i g h e r E d u c a t i o n
Pluralism?
 Crane and Matten (2004) argue that for the
practical purpose of making effective
decisions in business:
– Not suggest one theory or one approach
as the best or true view of a moral
dilemma
– Suggest that all these theoretical
approaches throw light from different
angles on one and same problem
 Complementary rather than mutually
exclusive

2
 Advocate position of pluralism
H i g h e r E d u c a t i o n
Considerations in making ethical
decisions: summary of key insights from
ethical theories

Consideratio
One’s own
interests 2 H i g h e r
Continued…
E d u c a t i o n
Considerations in making ethical
decisions: summary of key insights from
ethical theories (2)

Consideratio
Moral
character 2 H i g h e r E d u c a t i o n

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