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● Ethical theories Ethical theories are the rules and principles that determine right and wrong for any given situation Crane and Matten (2010)

● Normative ethical theoriesNormative ethical theories are those that propose to prescribe (set down / fix) the morally correct way of acting

● As opposed to descriptive ethical theories descriptive ethical theories which seek to describe how ethics decisions are actually made in business

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Two extreme positions (De George 1999)

● ETHICAL ABSOLUTISM ETHICAL ABSOLUTISM claims there are eternal, universally applicable moral principles- Right and wrong are objective qualities, can be rationally determined- Typically traditional ethical theories

● ETHICAL RELATIVISM ETHICAL RELATIVISM claims morality is context-dependent and subjective- No universal right and wrongs that can be rationally determined; depends

on person making the decision & culture in which they are located- Typically contemporary ethical theories

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North American and European origins and differences:

●Differences between Anglo-American and Differences between Anglo-American and European approaches based on philosophical European approaches based on philosophical argumentsarguments- Individual versus institutional morality

US tend to individualistic perspective Europe towards wider economic and governing institutions

- Questioning versus accepting capitalism US tend to accept the capitalist framework Europe tend to question the ethical justification of capitalism

- Justifying versus applying moral norms US tend to focus on application of morality Europe focus on justification and ethical legitimating of norms

●In contrast, Asian perspectives tend to be In contrast, Asian perspectives tend to be based on religion based on religion (e.g. Islam, Buddhism)

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● Generally offer a certain rule or principle which one can apply to any given situation

● These theories generally can be differentiated into two groups

Source: Crane and Matten (2010)

Motivation/

PrinciplesAction Outcomes

Consequentialist EthicsNon-consequentialist Ethics

Consequentialist ethics and non- consequentialist theories in business ethics

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Source: Crane and Matten (2010)6

Consequentialist Group Non- Consequentialist Group

(definition) Theory of egoism Theory of egoism – an action is morally right if the

decision-maker freely decides an action to pursue either

their (short-term) desires or their (long-term) interests.

- Adam Smith (1793): pursuit of individual interest morally acceptable as invisible

hand of market creates benefit for all

- Relies on free competition and good information

- ‘Enlightened egoism’

- However, markets do not function perfectly

Anti-globalisation movement

Sustainability debate

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Two main consequentialist theories:

According to utilitarianism, an action is morally right if it results in the greatest amount of good for the greatest number of people affected by the action -  (Jeremy Bentham)

- Also called the ‘greatest happiness principle’- Based on cost-benefit analysis

Subjectivity◦ This has led to refinement of theory

Act utilitarianism Rule utilitarianism

Issues around quantification and distribution of utility

- (Read textbook pg 103)

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.

‘Categorical Imperative’ (Kant) (framework should be

applied to every moral issue regardless of who is involved, who profits and who is harmed by the principles once they have been applied in specific situations)

Maxim 1: ConsistencyConsistency- 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 DignityHuman 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: UniversalityUniversality- Act only so that the will through its maxims could regard itself at the same time as

universally lawgiving

Two main non-consequentialist theories:

Undervaluing outcomes Complexity Misplaced optimism?

Natural rights (human rights)

Are certain basic, important, unalienable

entitlements that should be respected and protected in every single action.- Based on consensus about nature of human dignity- Strongly based on western view of morality

Justice 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)

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; b. attached to offices and positions open to all

under conditions of fair equality of opportunity.

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

Virtue ethics Virtue ethics (Focuses on attitudes, dispositions, or character traits that enable us to be

and to act in ways that develop our human potential)

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 traitsAcquired traits Intellectual virtues Moral virtues

Feminist ethicsFeminist ethics An approach that prioritizes empathy, harmonious and

healthy social relationships, care for one another, and avoidance of harm above abstract principles

Key elementsKey elements Relationships

- Decisions taken in context of personal human interrelations

Responsibility- Active ‘taking’ of responsibility, rather than merely ‘having’ it

Experience- Learn and develop from experience

Discourse ethicsDiscourse 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

Key elementsKey elements Ultimate goal of ethical issues in business should

be the peaceful settlement of conflicts 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

Postmodern ethicsPostmodern ethics 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.

Postmodern business ethics Postmodern business ethics emphasises emphasises (Gustafson, 2000:21)

◦ Holistic approach◦ Examples rather than principles◦ ‘Think local, act local’◦ Preliminary character

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 what they might want too?

Ethics of duty

Entitlements of others

Whose rights do I need to consider here? Am I respecting fundamental human rights and people’s need for dignity?

Ethics of rights

Fairness Am I treating everyone fairly here? Have processes been set up to allow everyone an equal chance? Are there major disparities between the ‘winners’ and ‘losers’ that could be avoided?

Theories of justice

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 organization’s code, without questioning whether it really feels right to me? How can I get closer to those likely to be affected by my decision? What do my

emotions or gut feelings tell me once I’m out of the office?

Postmodern ethics