Ethics and the Future of Business
Articles
,Session 1: Morals & Ethics
Ethics and the Future of Business
Articles
,Evaluating Business Ethics: Normative
Ethical Theories
Crane et al. (2019)
Overview
This chapter explains how managers can evaluate whether a business decision is
ethically right or wrong. It introduces several normative ethical theories, which are
systematic approaches for deciding what people and organizations ought to do.
The central conclusion is that no individual theory can fully solve every business
dilemma. Because business decisions affect multiple stakeholders, cultures, interests,
and values, managers should use a pluralist approach: combining several ethical
perspectives to reach a more complete and responsible decision.
Normative vs. descriptive ethics
Normative ethics is concerned with what people should do. It provides rules,
principles, and moral standards for deciding whether actions are right or wrong.
Descriptive ethics, by contrast, examines what people or societies actually believe and
do. It describes moral beliefs and behaviour, but it does not determine whether these
beliefs are morally correct.
Approach Main question Purpose
Normative ethics “What should people do?” To prescribe morally right
behaviour
Descriptive ethics “What do people actually To describe ethical beliefs and
believe or do?” practices
The chapter therefore focuses primarily on normative ethics, because managers need
guidance when deciding how they ought to act in difficult situations.
Absolutism, relativism and pluralism
The chapter distinguishes three broad positions on morality:
Position Meaning Main idea
Ethical absolutism Universal moral principles There is one morally correct
apply everywhere answer, regardless of culture or
context
Ethical relativism Moral values depend on What is considered right may
culture, traditions, or differ between societies and
circumstance situations
, Ethical pluralism Different ethical values Several perspectives should be
and theories can make considered when analysing a
legitimate claims dilemma
Ethical pluralism does not mean that every moral view is equally valid. Instead, it
recognizes that ethical dilemmas often involve competing but legitimate values—for
example, profitability, fairness, individual rights, care for vulnerable people, and long-
term social consequences.
The authors favour pluralism because business decisions are rarely simple. A decision
may create economic benefits while also raising concerns about employee welfare,
human rights, environmental damage, or unequal power relations.
Main ethical theories
The chapter groups ethical theories into consequentialist theories, principle-based
theories, and alternative approaches that focus more strongly on character,
relationships, dialogue, and context.
Theory Main focus Key question for Important
managers thinkers
Ethical egoism Self-interest “Is this in my or my Hobbes, Rand
company’s long-term
interest?”
Utilitarianism Overall “Will this create the Bentham,
consequences greatest overall good for Stuart Mill
everyone affected?”
Kantian ethics / Duties and universal “Could everyone act Kant
ethics of duty rules according to this
principle?”
Human rights Dignity and “Whose fundamental Locke
entitlements rights must be
respected?”
Justice Fair procedures and “Are benefits, burdens, Rawls
outcomes and treatment distributed
fairly?”
Social contract Fair social “Would this business Hobbes,
theory arrangements practice be acceptable in Locke,
a fair society?” Rousseau,
Rawls
Virtue ethics Character and moral “What would an honest Aristotle,
excellence and virtuous manager MacIntyre
do?”
Ethic of care Relationships, “Who is vulnerable, and Gilligan, Held
needs, and what responsibilities do
vulnerability we have?”
, Discourse Inclusive and fair “Can affected Habermas
ethics dialogue stakeholders participate in
an open discussion?”
Postmodern Moral intuition, “What does my moral Bauman
ethics experience, and response tell me when I
context engage with those
affected?”
Consequentialist theories
Consequentialist theories judge an action by its outcomes. An action is morally right if
it produces good consequences and wrong if it produces harmful consequences.
Ethical egoism
Ethical egoism: people should pursue their own self-interest.
In a business setting, this may mean that a manager focuses on profitability, reputation,
career success, organizational survival, or long-term competitive advantage.
However, this approach has important limitations:
• It offers little guidance when the interests of different people or groups conflict.
• Pure self-interest can undermine trust, cooperation, and long-term relationships.
• Other stakeholders are mainly considered when doing so benefits the decision-
maker or company.
• It may justify harmful behaviour if that behaviour appears profitable in the short
term.
Ethical egoism should not be confused with psychological egoism. Psychological
egoism describes the belief that people are naturally motivated by self-interest, while
ethical egoism argues that they ought to pursue self-interest.
Utilitarianism
Utilitarianism: managers should choose the option that creates the greatest overall
good for the greatest number of people.
It considers everyone affected by a decision, rather than focusing only on the company
or decision-maker.
The theory has four main features:
• Consequentialism: morality depends on the results of an action.
• Hedonism: traditionally, good is associated with pleasure and the absence of
pain, although later versions include wider forms of welfare.
• Maximalism: the goal is to create the maximum possible net benefit.
, • Universalism: every affected person should be considered, not only
shareholders or direct customers.
Utilitarian reasoning is often used in business through cost-benefit analysis. For
example, a company may compare the financial, social, and environmental costs and
benefits of building a new factory, changing a supply chain, or introducing a sustainable
product.
However, utilitarianism also has weaknesses:
• It is difficult to measure and compare happiness, suffering, health, dignity, and
environmental harm.
• Managers may struggle to identify everyone affected by a decision.
• The theory can justify harm to a minority if this produces greater benefits for the
majority.
• It may overlook individual rights that should not be violated, even when doing so
would create a larger total benefit.
The chapter also distinguishes between
• act utilitarianism: which evaluates each individual action separately
• rule utilitarianism: which asks whether following a general rule would usually
produce the greatest good.
Principle-based theories
Principle-based, or deontological, theories argue that some actions are morally wrong
even if they lead to positive outcomes. They focus on duties, universal principles, rights,
and fairness.
Kantian ethics
Kantian ethics states that managers should do the right thing because it is their duty,
not simply because it creates beneficial results.
Kant’s central principle is the categorical imperative: act only according to principles
that you could consistently want everyone to follow. This is called the universalizability
test.
For example, a manager might ask: “Could I accept a world in which every company lied
to customers whenever doing so increased profits?” If the answer is no, then lying
cannot be morally justified.
Kant also argues that people should always be treated as ends in themselves, never
merely as means to an end. In business, this means that employees, consumers,
suppliers, and communities should not be treated only as tools for generating profit or
efficiency.
Articles
,Session 1: Morals & Ethics
Ethics and the Future of Business
Articles
,Evaluating Business Ethics: Normative
Ethical Theories
Crane et al. (2019)
Overview
This chapter explains how managers can evaluate whether a business decision is
ethically right or wrong. It introduces several normative ethical theories, which are
systematic approaches for deciding what people and organizations ought to do.
The central conclusion is that no individual theory can fully solve every business
dilemma. Because business decisions affect multiple stakeholders, cultures, interests,
and values, managers should use a pluralist approach: combining several ethical
perspectives to reach a more complete and responsible decision.
Normative vs. descriptive ethics
Normative ethics is concerned with what people should do. It provides rules,
principles, and moral standards for deciding whether actions are right or wrong.
Descriptive ethics, by contrast, examines what people or societies actually believe and
do. It describes moral beliefs and behaviour, but it does not determine whether these
beliefs are morally correct.
Approach Main question Purpose
Normative ethics “What should people do?” To prescribe morally right
behaviour
Descriptive ethics “What do people actually To describe ethical beliefs and
believe or do?” practices
The chapter therefore focuses primarily on normative ethics, because managers need
guidance when deciding how they ought to act in difficult situations.
Absolutism, relativism and pluralism
The chapter distinguishes three broad positions on morality:
Position Meaning Main idea
Ethical absolutism Universal moral principles There is one morally correct
apply everywhere answer, regardless of culture or
context
Ethical relativism Moral values depend on What is considered right may
culture, traditions, or differ between societies and
circumstance situations
, Ethical pluralism Different ethical values Several perspectives should be
and theories can make considered when analysing a
legitimate claims dilemma
Ethical pluralism does not mean that every moral view is equally valid. Instead, it
recognizes that ethical dilemmas often involve competing but legitimate values—for
example, profitability, fairness, individual rights, care for vulnerable people, and long-
term social consequences.
The authors favour pluralism because business decisions are rarely simple. A decision
may create economic benefits while also raising concerns about employee welfare,
human rights, environmental damage, or unequal power relations.
Main ethical theories
The chapter groups ethical theories into consequentialist theories, principle-based
theories, and alternative approaches that focus more strongly on character,
relationships, dialogue, and context.
Theory Main focus Key question for Important
managers thinkers
Ethical egoism Self-interest “Is this in my or my Hobbes, Rand
company’s long-term
interest?”
Utilitarianism Overall “Will this create the Bentham,
consequences greatest overall good for Stuart Mill
everyone affected?”
Kantian ethics / Duties and universal “Could everyone act Kant
ethics of duty rules according to this
principle?”
Human rights Dignity and “Whose fundamental Locke
entitlements rights must be
respected?”
Justice Fair procedures and “Are benefits, burdens, Rawls
outcomes and treatment distributed
fairly?”
Social contract Fair social “Would this business Hobbes,
theory arrangements practice be acceptable in Locke,
a fair society?” Rousseau,
Rawls
Virtue ethics Character and moral “What would an honest Aristotle,
excellence and virtuous manager MacIntyre
do?”
Ethic of care Relationships, “Who is vulnerable, and Gilligan, Held
needs, and what responsibilities do
vulnerability we have?”
, Discourse Inclusive and fair “Can affected Habermas
ethics dialogue stakeholders participate in
an open discussion?”
Postmodern Moral intuition, “What does my moral Bauman
ethics experience, and response tell me when I
context engage with those
affected?”
Consequentialist theories
Consequentialist theories judge an action by its outcomes. An action is morally right if
it produces good consequences and wrong if it produces harmful consequences.
Ethical egoism
Ethical egoism: people should pursue their own self-interest.
In a business setting, this may mean that a manager focuses on profitability, reputation,
career success, organizational survival, or long-term competitive advantage.
However, this approach has important limitations:
• It offers little guidance when the interests of different people or groups conflict.
• Pure self-interest can undermine trust, cooperation, and long-term relationships.
• Other stakeholders are mainly considered when doing so benefits the decision-
maker or company.
• It may justify harmful behaviour if that behaviour appears profitable in the short
term.
Ethical egoism should not be confused with psychological egoism. Psychological
egoism describes the belief that people are naturally motivated by self-interest, while
ethical egoism argues that they ought to pursue self-interest.
Utilitarianism
Utilitarianism: managers should choose the option that creates the greatest overall
good for the greatest number of people.
It considers everyone affected by a decision, rather than focusing only on the company
or decision-maker.
The theory has four main features:
• Consequentialism: morality depends on the results of an action.
• Hedonism: traditionally, good is associated with pleasure and the absence of
pain, although later versions include wider forms of welfare.
• Maximalism: the goal is to create the maximum possible net benefit.
, • Universalism: every affected person should be considered, not only
shareholders or direct customers.
Utilitarian reasoning is often used in business through cost-benefit analysis. For
example, a company may compare the financial, social, and environmental costs and
benefits of building a new factory, changing a supply chain, or introducing a sustainable
product.
However, utilitarianism also has weaknesses:
• It is difficult to measure and compare happiness, suffering, health, dignity, and
environmental harm.
• Managers may struggle to identify everyone affected by a decision.
• The theory can justify harm to a minority if this produces greater benefits for the
majority.
• It may overlook individual rights that should not be violated, even when doing so
would create a larger total benefit.
The chapter also distinguishes between
• act utilitarianism: which evaluates each individual action separately
• rule utilitarianism: which asks whether following a general rule would usually
produce the greatest good.
Principle-based theories
Principle-based, or deontological, theories argue that some actions are morally wrong
even if they lead to positive outcomes. They focus on duties, universal principles, rights,
and fairness.
Kantian ethics
Kantian ethics states that managers should do the right thing because it is their duty,
not simply because it creates beneficial results.
Kant’s central principle is the categorical imperative: act only according to principles
that you could consistently want everyone to follow. This is called the universalizability
test.
For example, a manager might ask: “Could I accept a world in which every company lied
to customers whenever doing so increased profits?” If the answer is no, then lying
cannot be morally justified.
Kant also argues that people should always be treated as ends in themselves, never
merely as means to an end. In business, this means that employees, consumers,
suppliers, and communities should not be treated only as tools for generating profit or
efficiency.
