Ethics and the Future of Business
Lecture 1
Crane
Ethics in a business context
→ we all have prior beliefs that tell us what is right or wrong
→ ethical decisions in business are more complicated
→ multinational corporations can also face ethical dilemmas for example when creating a
subsidiary in a developing country (e.g. the local authorities want bribes, workplace
discrimination might be more common than in the home country and labour standards might
be lower)
→ many people might be involved who have different views which could create an additional
problem
→ in a business context, the ethical decisions must also be explained to the stakeholders and
therefore should be based on rational knowledge
Normative ethical theories
normative = morally correct way of acting (how we ought to behave)
it is the counterpart to descriptive ethical theories
→ definition: rules, guidelines, principles and approaches that determine right and wrong
normative ethical theory: Is a code of conduct that all rational beings would adhere to
descriptive ethical theory: code of conduct adopted by a particular group of society
(guidelines of religion,...) → descriptive ethical theories also have a normative component
→ this refers to what people think is right
Ethical absolutism
→ there are eternal, universally applicable moral principles and right and wrong are seen as
objective qualities. These qualities can be rationally determined, irrespective of the
circumstances.
Ethical relativism
→ this view claims that morality is dependent on the context and also subjective, rather than
objective. Relativists believe that there are no universal rights to what is right or wrong. It
depends on the traditions, convictions or practices of those making the decision and therefore
a moral judgement made in a certain culture cannot be made outside of that culture because
morality is culturally determined. Ethical relativism is, however, not the same as descriptive
relativism. The latter only suggests that different groups of people have different ethics and
the former proposes that both sets of beliefs can be equally right. Ethical relativism can still
be part of a normative theory.
1
,Most Western modernist ethical theories are absolutist and therefore rely on universal rules.
Contemporary ethical theories provide us with some lternative perspectives on ethical theory.
They are often more relativistic. However, both types of positions have limitations.
Ethical pluralism
This is an alternative approach to absolutism and relativism. It means that we have to
recognize that incompatible values can be equally legitimate and tolerate them as such. It
neither puts all ethical perspectives on equal footing but it also does not favour approaches
over others. But it is overly tolerant and conflicts may arise. On the other hand, it is being
said that plrualism allows an important openness and sensitivitiy to new realities.
Confucian ethics
focuses on the structure of human relationships
Virtue ethics, like Confucian ethics another form of virtue ethics, has as a fundamental
assumption that humans are not born moral, but instead are socialized into morality.
Normative ethical theories and religion
→ religions usually have an organized system of belief (Qu’ran…) which determines what is
right or wrong. Faith is considered a requisite for acting ethically.
Western modernist theories
the theories in Western societies are usually based on philosophical thinking
→ it usually refers to modernized thinking during the time of Enlightenment
→ they usually include rules that can be applied in any kind of situation, they are absolutist
and normative
→ however, these type of theories usually provide us with an unequivocal solution to ethical
problems
→ there are consequentialist and principle-based theories
2
,Consequentialist theories
● Ethical egoism → focusing on the outcomes and self-interest for the individual
decision-maker
→ some, however to do not see ethical egoism as a moral theory
“A theory that suggests that an action is morally right if in a given situation all
decision-makers freely decide to pursue either their (short-term) desires or their
(long-term) interests”
→ Thomas Hobbes, Rand
→ the term enlightened egoism comes up quite often in business ethics:
→ egoism is not the same as selfishness
● Utilitarianism → focusing on the wider social outcomes within a community
→ “ greatest happiness principle”
“A theory which states that an action ·is morally right if it results in the greatest
amount of good for the greatest amount of people affected by the action.”
→ Bentham, he sees utility as the ultimate goal in life
In this case, humans are seen as hedonists who want to maximize pleasure and minimize pain
We can assign a certain utility to each action and based on the amount of utility it can be
decided whether this action is morally correct. One can argue that utilitarianism is close to a
cost-benfit-analysis.
The approach of utilitarianism is helpful when there are proposed initiatives because it can be
determined if the project is beneficial to society as a whole. For example, mining projects are
very controversial. On the one hand, they provide stakeholders with financial benefits and
consumers with the availability of resources. On the other hand, they place a burden on the
local environment and the local community. Therefore, the pleasure and pain of all people
involved must be analysed and eventually this will lead to the overall utility of the project,
which is followed by action one (continuing the project) or action two (stopping it).
3
, Characteristics of Utilitarianism
● consequentialism
● hedonism
● maximization
● universalism
Some core problems with utilitarianism
1. Subjectivity: assessing pleasure and pain can be very subjective. Some people argue
that animals should be included in the analysis the same way as humans. It has to be
decided who will be incorporated in the decision and then also what the consequence
will be for them, which is often a very subjective issue.
2. Equal weighting: It is sometimes difficult to assign cost, benefits and monetary
values to every situation. For example, in the example with the mining project, it is
difficult to evaluate the effect on children.
4
Lecture 1
Crane
Ethics in a business context
→ we all have prior beliefs that tell us what is right or wrong
→ ethical decisions in business are more complicated
→ multinational corporations can also face ethical dilemmas for example when creating a
subsidiary in a developing country (e.g. the local authorities want bribes, workplace
discrimination might be more common than in the home country and labour standards might
be lower)
→ many people might be involved who have different views which could create an additional
problem
→ in a business context, the ethical decisions must also be explained to the stakeholders and
therefore should be based on rational knowledge
Normative ethical theories
normative = morally correct way of acting (how we ought to behave)
it is the counterpart to descriptive ethical theories
→ definition: rules, guidelines, principles and approaches that determine right and wrong
normative ethical theory: Is a code of conduct that all rational beings would adhere to
descriptive ethical theory: code of conduct adopted by a particular group of society
(guidelines of religion,...) → descriptive ethical theories also have a normative component
→ this refers to what people think is right
Ethical absolutism
→ there are eternal, universally applicable moral principles and right and wrong are seen as
objective qualities. These qualities can be rationally determined, irrespective of the
circumstances.
Ethical relativism
→ this view claims that morality is dependent on the context and also subjective, rather than
objective. Relativists believe that there are no universal rights to what is right or wrong. It
depends on the traditions, convictions or practices of those making the decision and therefore
a moral judgement made in a certain culture cannot be made outside of that culture because
morality is culturally determined. Ethical relativism is, however, not the same as descriptive
relativism. The latter only suggests that different groups of people have different ethics and
the former proposes that both sets of beliefs can be equally right. Ethical relativism can still
be part of a normative theory.
1
,Most Western modernist ethical theories are absolutist and therefore rely on universal rules.
Contemporary ethical theories provide us with some lternative perspectives on ethical theory.
They are often more relativistic. However, both types of positions have limitations.
Ethical pluralism
This is an alternative approach to absolutism and relativism. It means that we have to
recognize that incompatible values can be equally legitimate and tolerate them as such. It
neither puts all ethical perspectives on equal footing but it also does not favour approaches
over others. But it is overly tolerant and conflicts may arise. On the other hand, it is being
said that plrualism allows an important openness and sensitivitiy to new realities.
Confucian ethics
focuses on the structure of human relationships
Virtue ethics, like Confucian ethics another form of virtue ethics, has as a fundamental
assumption that humans are not born moral, but instead are socialized into morality.
Normative ethical theories and religion
→ religions usually have an organized system of belief (Qu’ran…) which determines what is
right or wrong. Faith is considered a requisite for acting ethically.
Western modernist theories
the theories in Western societies are usually based on philosophical thinking
→ it usually refers to modernized thinking during the time of Enlightenment
→ they usually include rules that can be applied in any kind of situation, they are absolutist
and normative
→ however, these type of theories usually provide us with an unequivocal solution to ethical
problems
→ there are consequentialist and principle-based theories
2
,Consequentialist theories
● Ethical egoism → focusing on the outcomes and self-interest for the individual
decision-maker
→ some, however to do not see ethical egoism as a moral theory
“A theory that suggests that an action is morally right if in a given situation all
decision-makers freely decide to pursue either their (short-term) desires or their
(long-term) interests”
→ Thomas Hobbes, Rand
→ the term enlightened egoism comes up quite often in business ethics:
→ egoism is not the same as selfishness
● Utilitarianism → focusing on the wider social outcomes within a community
→ “ greatest happiness principle”
“A theory which states that an action ·is morally right if it results in the greatest
amount of good for the greatest amount of people affected by the action.”
→ Bentham, he sees utility as the ultimate goal in life
In this case, humans are seen as hedonists who want to maximize pleasure and minimize pain
We can assign a certain utility to each action and based on the amount of utility it can be
decided whether this action is morally correct. One can argue that utilitarianism is close to a
cost-benfit-analysis.
The approach of utilitarianism is helpful when there are proposed initiatives because it can be
determined if the project is beneficial to society as a whole. For example, mining projects are
very controversial. On the one hand, they provide stakeholders with financial benefits and
consumers with the availability of resources. On the other hand, they place a burden on the
local environment and the local community. Therefore, the pleasure and pain of all people
involved must be analysed and eventually this will lead to the overall utility of the project,
which is followed by action one (continuing the project) or action two (stopping it).
3
, Characteristics of Utilitarianism
● consequentialism
● hedonism
● maximization
● universalism
Some core problems with utilitarianism
1. Subjectivity: assessing pleasure and pain can be very subjective. Some people argue
that animals should be included in the analysis the same way as humans. It has to be
decided who will be incorporated in the decision and then also what the consequence
will be for them, which is often a very subjective issue.
2. Equal weighting: It is sometimes difficult to assign cost, benefits and monetary
values to every situation. For example, in the example with the mining project, it is
difficult to evaluate the effect on children.
4
