ETHICS FOUNDATIONS

Lecture Note by Dr. Nitish Singh (For internal educational use only)

It is important to understand the concept of ethical reasoning, or how we as individuals decide what is

right and what is wrong. Legal and ethics compliance professionals in the business world can probably

benefit from stepping back from the day-to-day challenges of compliance, and consider what motivates

people to make decisions, and whether such an understanding can help as a company defines its culture

and embraces compliance.

Companies set the tone for their employees. As an illustration, St. Louis University has a mission

statement which is rooted in ethics.

Ad Majorem De Gloriam: "For the greater glory of God."

Motto of the Society of Jesus

The Mission of St Louis University is: “Which is the pursuit of truth for the greater glory of God and for

the service of humanity”. These words imply that individuals should be driven by a moral sense of what

is right or wrong as well as being should conscious of magnifying the glory of the Divine. The

University’s Jesuit Mission incorporates the idea of “Stewardship” which is integral to the subject of

“ethics” in the context of business.

Ethics: The consensually

accepted standards of

behavior for an occupation,

trade, or profession

Before elaborating on the process of ethical reasoning, it is important to understandthe basis of and

underlying concepts behind ethical reasoning. An extended discussion on various ethical concepts and

philosophies is beyond the scope of this introductory document. But for the sake of convenience and

clarity, moral philosophies can be broadly categorized under two major dimensions of “Idealism versus

Relativism”.

Idealism

Idealism implies that there are a set of morals or ethics that are universal and that everybody is capable

of following them. Idealists are concerned about welfare of others via application of a set of moral

principles, rules and laws (Forysth, 1992). An extreme position on the dimension of idealism is the belief

in cultural imperialism.

Cultural imperialism in a sense implies that one set of national or cultural codes of conduct, or one set

of moral principles is superior to all other. History is testament to how cultural imperialism was followed

Morality: The precepts of

personal behavior based on

religious or philosophical

grounds. Morality thus relates to

rules of moral conduct.

by the ancient Roman Empire and then later by the British Empire. But in fact, one culture’s highest

moral principle may mean nothing to another culture’s moral sensibilities. Let’s look at the role of

women in the workplace in Saudi Arabia vs. the United States. In Saudi Arabia, women face

discrimination in workplace, while in US national context, it is unlawful to have discrimination based on

the sex of the employee. Does this mean that the U.S. moral principles of gender/sexual equality in the

workplace are superior when compared to the Saudi Arabian culture?

Another problem with the concept of idealism is that it is an evolving concept, changingover time. At

one time, slavery was considered part of the U.S. culture and acceptable, but today, slavery is not only

illegal – as the Constitution and laws clearly provide– but slavery is also considered also inhumane and

immoral. Similarly, several cultures and religions consider same sex marriages or adoptions as taboo and

even immoral, while other cultures and nation states are more open to permitting individuals the

freedom to marry or adopt, as a same sex couple.

Idealism also poses problems of conceptualization and execution. In terms of conceptualization, a

universal value has to be of the same value or worth, and be acceptable to all at every time and every

situation. Gandhi said that non-violence is a universal value.

People have reason to value this moral value of non-violence, but on the other hand, think how/where

your juicy steak comes from. In practice, the universal set of moral principles that idealists espouse are

open to interpretation, and can be interpreted differently in different cultures and even in different

situations (McFarlin/Sweeney, 2006).

Getting an agreement by all national states on a set of core moral principles has been a challenge for

centuries. Are there any universal values acceptable to all humans? This lecture note is not meant to

espouse one philosophy over another, but instead this note is meant to reinforce to participants that it

clearly is not easy to establish universally accepted “rights and wrongs”, in

life or in a business.

Sir Isaiah Berlin, a political philosopher, expressed his opinion on the

universal values by saying that universal values are shared by a majority of

human beings, in the vast majority of situations, in almost all times,

whether consciously and explicitly or as expressed in their behavior.

Now think about some values that might fit this category!

Isaiah Berlin (1909–97) was a British philosopher, Historian of ideas, political

theorist, educator and essayist.

For much of his life he was renowned for his

conversational brilliance, his defense of liberalism,

his attacks on political extremism and intellectual

fanaticism. (Stanford Encyclopedia of Philosophy)

Relativism

“When in Rome, do as the Romans do.”

Do you think there is no absolute Truth?

Do you think ethical/moral and unethical/immoral are relative terms?

If you answer “yes”, then there might be a relativistic tilt in your thinking. Based on the relativistic point

of view there is no absolute right or wrong. Aligned to this view is the idea of Cultural Relativism,

wherein the morals and ethics are not universal but culturally determined. Donaldson (1989, pg 14)

defines cultural relativism as, “moral concepts, in so far as they possess objectivity, gain legitimacy only

through habits and attitudes of a given culture.”

Should we adopt the position of seeing moral issues, in cross cultural context, not as right or wrong but

just seen as different—and thus signal our cultural tolerance? Donaldson (1989) argues that cultural

relativism bears little resemblance to cultural tolerance. This is because tolerance itself is a moral value

and a true relativist could not endorse tolerance over intolerance. Another argument proposed by

Donaldson is that cultural relativism takes the form of “reduction ad absurdum” because no person can

really live with the severe consequences of cultural relativism. For most people, the buck stops

somewhere. If cultural relativism was to be taken at face value and followed to the word, then it would

be impossible to criticize what goes on morally and ethically in different cultures at different times

(Mitchell, 2003). Would you look at the following issues (which nation states perpetuate/d) with the lens

of cultural relativism: -

The holocaust and the Nazi occupation

The Rwandan Genocide

South Africa’s Apartheid policy

China’s poor record on human rights like –Freedom of Speech.

In business, several companies justify their acts using the lens of cultural relativism. For example, Google

justifies its compliance with China’s Golden Shield project aimed at censorship of free speech and

surveillance of its people. Companies like Google and others have justified their presence in China, as

they are doing more right than wrong by promoting western products and ideas. Another form of

relativistic reasoning used by companies like Google is, “When in Rome, do as the Romans do,” so

Google argues that in China it is just following the local laws.

To conclude, arguing against or for either Idealism or Relativism is a thought provoking exercise, but

what should international business managers do when confronted with ethical issues in a cross-cultural

context?

While the following discussion does not provide one right answer, it at least provides insights into how

ethical reasoning works. Such understanding may help you frame a more educated response to complex

cross-cultural ethical dilemmas.

Ethical Reasoning

The three broad categories of ethical reasoning are based on Teleological ethical

systems/Consequentialism, Deontological ethical systems, and Virtue ethics.

Teleology/Consequentialism:

According to Consequentialism, an act is judged as moral only based on the consequences of that act.

Utilitarianism is a Consequentialist paradigm that proposes that an act is moral only if it produces the

maximum good. Jeremy Bentham, an English philosopher, is widely associated with Utility

Consequentialism. According to Bentham, a moral act should be judged based on the “greatest

happiness principle,” referred to as the principle of Utility. Some criticisms of such ethical reasoning are

that it does not account for justice, it fails to answer as to how to determine the greatest good, and

finally it remains an exercise of costs and benefits of an action (Getz, 1990). We have seen what happens

when a company like Ford does a cost and benefit analysis (Ford pinto case) and determines the action

based on greatest good (of who?).

Thus an alternative teleological approach is Distributive Justice, or theory of Justice proposed by John

Rawls (1971). The foundation of this approach is to answer the question: when creating a ‘just’ society

what principles of justice would an individual agree upon if he/she was behind a veil of ignorance or did

not know anything of his or her position/status in society? Thus without having any foreknowledge of

our social standing (rich or poor), what rules of society or social contract will we implement? This Rawls

contends will help create a cooperative system in which society will ensure liberty and happiness for all.

Besides the Justice theory and Utilitarianism, another consequentialist theory is Ethical Egoism. Under

‘ethical egoism’ an action is considered right if it produces results in individual’s best interest. Thus

under this perspective, an action may be considered moral if it maximizes self interest. “But just imagine

if everyone acted in their own self interest?”

Deontology:

The deontology based ethical reasoning is grounded in rules and principles that can help guide actions.

Thus deontology provides a normative setup to help guide which choices are morally right and wrong.

However common criticism of deontology is its lack of concern for the consequences of actions (Getz,

1990). Thus, a person may morally abide by the norm that killing another human being is morally

impermissible act—but if this ethical reasoning leads the person to not defend him/herself against a

violent criminal, in fear of inflicting death on the perpetuator of the violent crime—then there may be

harm done. This approach is best captured in the work of Immanuel Kant (1724-1804) who proposed

that our acts should be guided by a set of universal laws which could be applied in every situation and

every action.

Virtue Ethics:

The idea of virtue ethics can be traced back to the works of Plato and Aristotle. This approach differs

from teleological and deontological approaches as it does not deal with rules or actions guiding ethical

decisions, but with the character traits and virtues that help our ethical decisions. Thus Virtue ethics

deals with describing and understanding the virtuous character traits that drive ethical decisions of a

moral agent.

Figure 1 Classification of Ethical Theories (Adapted from: http://www.trinity.edu/cbrown/intro/ethical_theories.html)

What Kind of an Ethical Person Are You?

High Relativism Low

High

Idealism

Low

Situationists

Absolutists

Subjectivists

Exceptionists

In the real world, not all human beings can be clearly defined as being relativist/idealist or following

consequentialism/deontology based ethical reasoning. There exist several combinations and shades of

gray in people’s ethical reasoning. Forsyth (1992) has proposed taxonomy of personal moral

philosophies, which assumes that individuals can range from high to low on relativism versus idealism.

His taxonomy proposes four distinct moral philosophies namely: Situationists, Absolutist, Subjectivist,

and Exceptionists.

Situationism:

Individuals under this category are high on both relativism and idealism. By being on a high relativistic

continuum, they tend to avoid the idea of universal morals or ethics. On the other hand being high on

idealism they still hope that the results of an action produce maximum good.

Subjectivism:

Individuals in this category are seen as high on relativism and thus they do not prescribe to a universal

code of ethics or morals. Their subjectivism and low idealism makes them see each outcome in light of

their self-interest.

Absolutism:

Individuals in this category tend to have high idealism and low relativism. Thus they tend to believe and

abide by a general set of moral principles (High idealism) and at the same time assess that their actions

produce the maximum good (low relativism).

Exceptionism:

Individuals in this category see the utility of having some moral absolutes but they are also practical in

sense that they believe that not all good intended or moral based actions produce the results for

maximum good. Thus they are more concerned about balancing the positive and negative consequences

of an action. If they realize that following a moral principle in a certain situation will do more harm than

good, then in those situations they make moral exceptions.

References

Donaldson, Thomas (1989). The Ethics of International Business.Oxford University Press. Donaldson, Thomas. & Preston, L. 1995. The stakeholder theory of the modern corporation: Concepts, evidence and implications. Academy of Management Review 20, 65-91 Davids, Meryl (1999), “Global Standards, Local Problems,” The Journal of Business Strategy, Jan/Feb vol 20.Pg 38-43. Forsyth, Donelson R (1992), “Judging the morality of business practice: The influence of personal philosophies,” Journal of Business Ethics, vol. 11, pg 461-470.; Getz, Kathleen A (1990), “International Code of Conduct: An Analysis of Ethical Reasoning,” Journal of Business Ethics, 9, pg 567-577. Lambsdorff John A (2007) The big picture: measuring corruption and benchmarking progress in the fight against. Corruption. Corruption Perceptions Index 2007, Published by Transparency International M. Friedman (1962). Capitalism and Freedom. Chicago: University of Chicago Press. McFarlin, Dean B, Paul D. Sweeney (2006) International Management. Houghton Mifflin. Mitchell, Charles (2003) A Short Course in International Business Ethics. World Trade Press. Payne, Dinah, Cecily Raiborn, JornAskvik (1997), “A Global Code of Business Ethics,” Journal of Business Ethics, 16, Pg 1727-1735. Peng, Mike W (2006) Global Strategy.South-Western Thomson. Schmidt, David (2008), “The moral Imagination of Entrepreneurs,“ www.inc.com/resources/leadership/articles/20080101/dschmidt.html Shirley van Buiren, and members of TI Germany’s Corporate Accountability Working Group, in collaboration with the TI Secretariat’s Policy and Research Department. (2008) Using the OECD Guidelines to Tackle Corporate Corruption, Published by Transparency International