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Evaluating Business Ethics:

Cotemporary Ethical Theories

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The role of ethical theoryTwo 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

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Traditional ethical theoriesMajor normative theories in business

ethicsEgoism Utilitarianism Ethics of

dutiesRights and justice

Contributors

Adam Smith Jeremy BenthamJohn Stuart Mill

Immanuel Kant John LockeJohn Rawls

Focus Individual desires or interests

Collective welfare Duties Rights

Rules Maximization of desires/self interest

Act/rule utilitarianism

Categorical imperative

Respect for human beings

Concept of human beings

Man as an actor with limited knowledge and objectives

Man is controlled by avoidance of pain and gain of pleasure (“hedonist”)

Man is a rational moral actor

Man is a being that is distinguished by dignity

Type Consequentialist Consequentialist Non-consequentialist

Non-consequentialist

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UtilitarianismAccording 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

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Utilitarianism (2)Example of a utilitarian

analysisAction 1: doing the deal Action 2: not doing the deal

Pleasure Pain Pleasure Pain

Product manager

Success; bonus Bad conscience

Good conscience Loss of a good deal

Thai Dealer Good deal Loss of a good dealSearch for a new customer in Europe

Parents Secure the family’s income

Limited prospects for children

Search for other sources of income

Children Feeling of being needed, being “grown up”; approval of parents;

Hard workNo chance of school education

No hard workTime to play and go to school

Potentially forced to do other, more painful work

Grandmother

Family is able to support her

Loss of economic support

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Limits of Utilitarianism

• Subjectivity– Led to refinement of theory

• Act utilitarianism• Rule utilitarianism

• Problems with quantification• Distribution of utility

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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.

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Ethics of duties‘Categorical Imperative’ (Kant)

– Maxim 1: ConsistencyAct 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.

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Problems with ethics of duties

–Undervaluing outcomes–Complexity–Misplaced optimism?

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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– Fair procedures (procedural justice)– Fair outcomes (distributive justice)

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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.

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Limits of traditional theories

• Too abstract • Too reductionist• Too objective and elitist• Too impersonal• Too rational and codified

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Contemporary ethical theories

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Virtue ethics• Virtue ethics contends 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

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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

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Feminist ethicsContrasting gender-based views of

business ethics

‘Ethics of rights’ (male approach)

‘Ethics of care’ (feminist ethics)

View of humans Autonomous, separate, independent Bearer of a function in the group

Interdependent actors within a social web

Moral goal Fairness and impartiality Maintenance of rules

Avoid harm Maintenance of relationships

Moral problem Conflict of rights between individuals

Conflict of responsibilities in network relationships

Values Rights, duties, fairness, due process, equal protection

Harmony, empathy, community, caring, responsiveness, integration

Focus Results Processes Driving social force

Competition, winning Cooperation, compromise

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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

– ‘ideal discourse’ criteria (Habermas 1983)

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Postmodern perspectives on business ethics

• Postmodern ethics is 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.

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Postmodern business ethics

• Postmodern business ethics emphasises (Gustafson, 2000:21)– Holistic approach– Examples rather than principles– ‘Think local, act local’– Preliminary character

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Summary

Towards a pragmatic use of ethical theory?

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The value of ethical theories in solving ethical dilemmas in

business

Ethicaldilemma in business„Prism“

ofethical theories

Variety of normative considerations in solving the ethical dilemma

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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

• Advocate position of pluralism– Middle ground between absolutism and

relativism

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Considerations in making ethical decisions: summary of key insights from

ethical theories

Continued…

Consideration Typical question you might ask yourself Theory One’s own interests

Is this really in my, or my organization’s, best long-term interests? Would it be acceptable and expected for me to think only of the consequences to myself in this situation?

Egoism

Social consequences

If I consider all of the possible consequences of my actions, for everyone that is affected, will we be better or worse off overall? How likely are these consequences and how significant are they?

Utilitarianism

Duties to others

Who do I have obligations to in this situation? What would happen if everybody acted in the same way as me? Am I treating people only to get what I want for myself (or my organization) or am I thinking also of

Ethics of duty

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Considerations in making ethical decisions: summary of key insights from

ethical theories (2)

Consideration Typical question you might ask yourself Theory Moral character

Am I acting with integrity here? What would a decent, honest person do in the same situation?

Virtue ethics

Care for others and relationships

How do (or would) the other affected parties feel in this situation? Can I avoid doing harm to others? Which solution is most likely to preserve healthy and harmonious relationships among those involved?

Feminist ethics

Process of resolving conflicts

What norms can we work out together to provide a mutually acceptable solution to this problem? How can we achieve a peaceful settlement of this conflict that avoids ‘railroading’ by the most powerful player?

Discourse ethics

Moral impulse and emotions

Am I just simply going along with the usual practice here, or slavishly following the

Postmodern ethics