Ethics and the Future of Business
Lecture 1: Morals & Ethics
12 September 2022 | Arno Kourula
Table of Contents
1. Introduction to Business Ethics
2. Normative Theories of Ethics
Ethics, Responsibility and Sustainability at ABS
Mission of ABS: “Open mindedness, independence, critical thinking, balancing our entrepreneurial
attitude with corporate engagement and social responsibility”.
Values of ABS: Excellence; Critical and independent thinking; Social engagement; An entrepreneurial
and creative attitude.
1. Introduction to Business Ethics
Morality, Ethics, and Ethical theory
- Morality: Humans’ ability to distinguish between right and wrong.
- Ethics is the systematic study of morality.
o Systematically analyzing what is right and wrong
o Ethics is cumulative. New information is not the best. Ancient thinking is still
extremely valuable.
- Ethical theories are principles and rules that determine right and wrong in different
situations.
- Normative ethics: The study of how we ought to behave.
o Key questions: Principles and outcomes.
Ethics
There is an on-going discussion about morality with a very long history.
Ethics typically examines right and wrong from the perspective of a human being
(anthropocentric), instead of, for instance, nature.
- Key questions include:
o What kind of moral principles should guide our actions?
o What kind of aims should we have?
- Ethics is not just theorization of morals, but the aim is also to affect practice.
- Ethical theories can give contradictory solutions to the same problem.
Business ethics: The study of business situations, activities, and decisions where issues of right and
wrong are addressed.
1
,Ethics and the Future of Business
Do We Need Ethics if We Have Law?
In society, morality is the foundation of the law.
Law and ethics are partly overlapping. Nonetheless:
1. The law does not cover all ethical issues (e.g., cheating on your partner).
2. Not all legal issues are ethical (e.g., driving on the right side of the road).
3. Law and ethics can involve contradictions (e.g., Apartheid).
- The road from unethical to illegal is short and slippery.
- Companies can operate in locations with lacking legal infrastructure.
- Expectations from stakeholders can be much higher than what law tells businesses to do.
Moral Orientations
There are many moral principles. In general, there is not one best moral principle. A combination of
principles would be preferred.
- Follow the moral guidance of your religion.
- Follow your conscience.
- Aim at your own benefit.
- Do your duty.
- Respect yourself and others.
- Do not violate human rights.
- Support the common good.
- Act with fairness and justice.
- Be a good person.
Moral Machine
The Moral Machine was an experiment to gather human perspective on moral decisions by AI in self-
driving cars. Differences between religions, geographic locations, demographics, etc. were taken
from the experiment.
- There were quite some differences between the cultural clusters (see below).
2
,Ethics and the Future of Business
2. The Normative Ethical Theories
Principles vs. Outcomes
1. Egoism
Usually, egoism is not considered as an ethical theory, although this view is very influential in
economics.
- An action is morally right if the decision-maker freely decides in order to pursue either their
(short-term) desires or their (long-term) interests.
o Authors: Thomas Hobbes (1588-1679), Adam Smith (1723-1790), popularized by Ayn
Rand (1905-1982).
- The influence of egoism is related to the perception of ideal markets and Adam Smith’s
”invisible hand”:
o Adam Smith: Egoism is how we should model our economy, as everyone is self-
interested.
Problems with Ethical Egoism
- Ethical egoism is inconsistent as it ”condones blatant immoral wrongs, since 'anything goes’
(e.g., violence against the vulnerable, theft, even murder-as long as the egoist's needs are
served” (Crane et al., 2019)
o Thus, a moral view based on short-term satisfaction of needs is contradictory with
our moral principles.
Enlightened egoism: Focuses on meeting long-term human interests and applies some moral
principles.
3
, Ethics and the Future of Business
- Enlightened egoism does not take a stance on the nature of the interests and desires of
individuals, which can still lead to problems due to conflicting interests.
- Although taking care of your needs and interests is morally important, the theory needs to
be complemented by more developed ethical theories.
Application to Self-Driving Cars
What would an ethical egoist do?
- If an ethical egoist is buying a car, she/he would protect the people inside the car.
- If an ethical egoist is manufacturing the car, she/he would likely aim to serve egoist
customers to sell more cars.
2. Utilitarianism
Utilitarianism (a.k.a. the greatest good principle): An act is morally right if it results in the greatest
amount of good to the greatest amount of people affected by the action.
- Important authors: Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873).
Utilitarianism is very influential in normative economics, which is related to the egoistic view of
humans in economics.
- Egoism in economics tends to function within a utilitarian societal moral theory.
Act utilitarianism: Whether a single act is right or wrong depends on the amount of common good it
produces.
Rule utilitarianism: Focuses on creating rules that produce the most common good.
In practice, utilitarianism becomes an analysis of advantages and disadvantages, a
cost/benefit analysis.
Problems with Utilitarianism
- A utilitarian good is subjective, context-dependent, and difficult to compare between
people.
- Utilitarianism runs into difficulties in questions related to the just distribution of wealth.
- Utilitarianism can be contradictory with the idea of respecting basic rights.
- Maximizing is, generally speaking, not the best approach to addressing all values.
- Utilitarianism does not include the idea of reciprocity.
Application to Self-Driving Car
What would a utilitarian do?
- According to act utilitarianism, you should conduct a cost/benefit analysis of what causes
the most benefit or least harm.
- According to rule utilitarianism, self-driving vehicles should minimize casualties.
3. Ethics of duties
Central concepts to moral philosophy are duty, consistency, dignity, and universality.
- Duties do not mean mechanistically following rules, but they involve human’s ability to
develop moral law and moral rules.
- Most famous author: Immanuel Kant (1724-1804).
- Kant’s deontological theory develops principles or categorical imperatives to guide our
actions.
4
Lecture 1: Morals & Ethics
12 September 2022 | Arno Kourula
Table of Contents
1. Introduction to Business Ethics
2. Normative Theories of Ethics
Ethics, Responsibility and Sustainability at ABS
Mission of ABS: “Open mindedness, independence, critical thinking, balancing our entrepreneurial
attitude with corporate engagement and social responsibility”.
Values of ABS: Excellence; Critical and independent thinking; Social engagement; An entrepreneurial
and creative attitude.
1. Introduction to Business Ethics
Morality, Ethics, and Ethical theory
- Morality: Humans’ ability to distinguish between right and wrong.
- Ethics is the systematic study of morality.
o Systematically analyzing what is right and wrong
o Ethics is cumulative. New information is not the best. Ancient thinking is still
extremely valuable.
- Ethical theories are principles and rules that determine right and wrong in different
situations.
- Normative ethics: The study of how we ought to behave.
o Key questions: Principles and outcomes.
Ethics
There is an on-going discussion about morality with a very long history.
Ethics typically examines right and wrong from the perspective of a human being
(anthropocentric), instead of, for instance, nature.
- Key questions include:
o What kind of moral principles should guide our actions?
o What kind of aims should we have?
- Ethics is not just theorization of morals, but the aim is also to affect practice.
- Ethical theories can give contradictory solutions to the same problem.
Business ethics: The study of business situations, activities, and decisions where issues of right and
wrong are addressed.
1
,Ethics and the Future of Business
Do We Need Ethics if We Have Law?
In society, morality is the foundation of the law.
Law and ethics are partly overlapping. Nonetheless:
1. The law does not cover all ethical issues (e.g., cheating on your partner).
2. Not all legal issues are ethical (e.g., driving on the right side of the road).
3. Law and ethics can involve contradictions (e.g., Apartheid).
- The road from unethical to illegal is short and slippery.
- Companies can operate in locations with lacking legal infrastructure.
- Expectations from stakeholders can be much higher than what law tells businesses to do.
Moral Orientations
There are many moral principles. In general, there is not one best moral principle. A combination of
principles would be preferred.
- Follow the moral guidance of your religion.
- Follow your conscience.
- Aim at your own benefit.
- Do your duty.
- Respect yourself and others.
- Do not violate human rights.
- Support the common good.
- Act with fairness and justice.
- Be a good person.
Moral Machine
The Moral Machine was an experiment to gather human perspective on moral decisions by AI in self-
driving cars. Differences between religions, geographic locations, demographics, etc. were taken
from the experiment.
- There were quite some differences between the cultural clusters (see below).
2
,Ethics and the Future of Business
2. The Normative Ethical Theories
Principles vs. Outcomes
1. Egoism
Usually, egoism is not considered as an ethical theory, although this view is very influential in
economics.
- An action is morally right if the decision-maker freely decides in order to pursue either their
(short-term) desires or their (long-term) interests.
o Authors: Thomas Hobbes (1588-1679), Adam Smith (1723-1790), popularized by Ayn
Rand (1905-1982).
- The influence of egoism is related to the perception of ideal markets and Adam Smith’s
”invisible hand”:
o Adam Smith: Egoism is how we should model our economy, as everyone is self-
interested.
Problems with Ethical Egoism
- Ethical egoism is inconsistent as it ”condones blatant immoral wrongs, since 'anything goes’
(e.g., violence against the vulnerable, theft, even murder-as long as the egoist's needs are
served” (Crane et al., 2019)
o Thus, a moral view based on short-term satisfaction of needs is contradictory with
our moral principles.
Enlightened egoism: Focuses on meeting long-term human interests and applies some moral
principles.
3
, Ethics and the Future of Business
- Enlightened egoism does not take a stance on the nature of the interests and desires of
individuals, which can still lead to problems due to conflicting interests.
- Although taking care of your needs and interests is morally important, the theory needs to
be complemented by more developed ethical theories.
Application to Self-Driving Cars
What would an ethical egoist do?
- If an ethical egoist is buying a car, she/he would protect the people inside the car.
- If an ethical egoist is manufacturing the car, she/he would likely aim to serve egoist
customers to sell more cars.
2. Utilitarianism
Utilitarianism (a.k.a. the greatest good principle): An act is morally right if it results in the greatest
amount of good to the greatest amount of people affected by the action.
- Important authors: Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873).
Utilitarianism is very influential in normative economics, which is related to the egoistic view of
humans in economics.
- Egoism in economics tends to function within a utilitarian societal moral theory.
Act utilitarianism: Whether a single act is right or wrong depends on the amount of common good it
produces.
Rule utilitarianism: Focuses on creating rules that produce the most common good.
In practice, utilitarianism becomes an analysis of advantages and disadvantages, a
cost/benefit analysis.
Problems with Utilitarianism
- A utilitarian good is subjective, context-dependent, and difficult to compare between
people.
- Utilitarianism runs into difficulties in questions related to the just distribution of wealth.
- Utilitarianism can be contradictory with the idea of respecting basic rights.
- Maximizing is, generally speaking, not the best approach to addressing all values.
- Utilitarianism does not include the idea of reciprocity.
Application to Self-Driving Car
What would a utilitarian do?
- According to act utilitarianism, you should conduct a cost/benefit analysis of what causes
the most benefit or least harm.
- According to rule utilitarianism, self-driving vehicles should minimize casualties.
3. Ethics of duties
Central concepts to moral philosophy are duty, consistency, dignity, and universality.
- Duties do not mean mechanistically following rules, but they involve human’s ability to
develop moral law and moral rules.
- Most famous author: Immanuel Kant (1724-1804).
- Kant’s deontological theory develops principles or categorical imperatives to guide our
actions.
4
