Ethical Theory and Business, 6th Edition

Tom L. Beauchamp & Norman E. Bowie

Chapter One Ethical Theory and Business Practice

Prentice Hall, 2001

Objectives
After studying this chapter the student should be able to:
Distinguish between morality and ethical theory. Distinguish between morality and prudence. Distinguish between morality and law. Explain the three approaches to the study of morality. Describe the moral theory of relativism.

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Objectives
Discuss the egoism moral theory. Explore some of the problems of the egoism theory. Interpret the different types of utilitarian theory. Discuss some of the problems of the utilitarian theory. Apply Kantian ethics using different scenarios.

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Objectives
Explain the principles behind the common morality theories. Explore the concept of rights theories. Distinguish between virtue ethics, and feminist theories and the ethics of care.

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Overview
Morality Approaches to the Study of Morality Relativism Egoism Utilitarian Theories Kantian Ethics Common Morality Theories
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Overview
Rights Theories Virtue Ethics Feminist Theories and the Ethics of Care Analysis of Cases

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Morality

Principles or rules of moral conduct that people use to decide what is right or wrong.

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Morality v. Ethical Theory

Morality is concerned with the social practices defining right and wrong. Ethical theory and moral philosophies provide guidelines for justification of right or wrong actions when settling human conflict. No one moral philosophy is accepted by everyone!

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ETHICS AND MORALITY

The Law of Business must consider ethics and morality.
Ethics: guiding philosophy of a group, societal values concerning right and wrong. Morals: principles of right and wrong measured by an individuals conscience. Ethics vary from society to society whereas individual morals remain fairly constant.

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Morality v. Prudence
Rules of prudence promote self-interest, doing what is prudent for oneself. Rules of morality promote the interest of other people. Morality and prudence should generally work hand-in-hand if a business is to succeed.

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Law

Public's agency for translating morality into explicit social guidelines and practices and for stipulating punishments for offenses.

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Morality v. Law
Statutory law v. case law
Statutory laws are federal / state statutes and their accompanying administrative regulations. Case laws are judge-made laws that establish influential precedents that provide material for reflection on both legal and moral questions.

Morality and ethics begin where the law is unclear or not defined!
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Rule of Conscience
Consciences:
Vary from person to person and time to time. Are altered by circumstance, religious belief, life experiences, and training. Are not consistent from day to day.

Moral justification must then be based on a source external to conscience itself.

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Approaches to the Study of Morality

Descriptive approach - provides a factual description and explanation of moral behavior and beliefs, as performed by anthropologists, sociologists, and historians.
Referred to as the scientific study of ethics.

Conceptual approach - analyzes meanings of central terms in ethics such as right, obligation, justice, good, virtue, and responsibility.
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Approaches to the Study of Morality

Prescriptive approach - attempts to formulate and defend basic moral norms or standards by determining what ought to be done versus what is being done.
Referred to as normative ethics.

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ETHICAL THEORIES
Consequential and Non-consequential Principles.
Consequential: evaluate action by examining the consequences produced by the action. Non-consequential: focus of the concept of duty rather than what is right or wrong.

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ETHICAL THEORIES
Consequential Ethics.
Egoism: rightness determined by consequences the act produces for person performing the action. Holds one will act in a manner which produces greatest balance of good over bad for oneself. Utilitarianism: rightness determined by consequences the act produces for ones group. Holds one should act in such a manner which will, over time, produce most good over bad for ones group. Feminism: emphasizes attention be paid to the effect of decisions on individuals. Focuses on character traits.

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ETHICAL THEORIES
Non-Consequential Ethical Theories.
Kant and the Categorical Imperative: suggests certain universal moral truths every person must follow in order to act morally and ethically. Imperative that one follow certain perfect truths. Rawls and the Veil of Ignorance: theory suggesting that rules of ethical behavior be created by persons who ignore their own characteristics and circumstances including gender, race, ethnicity, and/or religion.

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ETHICAL THEORIES
Other Theories:
Relativism: states that two people or two societies may hold opposed ethical views to one another, and yet both may be correct. The Golden Rule: advises each person to do onto others as you would have others do unto you.

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Relativism

An ethical theory that claims right and wrong is subjectively determined by each culture.

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Relativism
What is good is socially accepted and what is bad is socially unacceptable in a given culture. There is no such thing as universal truth in ethics, there are only the various cultural codes and nothing more. An argument against relativism:
There are some basic moral principles that all societies will have in common, because those rules are necessary for society to exist.
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Methods to Easing Moral Disagreements

Obtaining objective information Definitional clarity Example-counterexample Analysis of arguments and positions

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Egoism

A moral theory that contends all choices either involve or should involve selfpromotion as their sole objective.

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Psychological Egoism
Everyone is always motivated to act in his or her own perceived self-interest. A main argument against psychological egoism is that there may be no purely altruistic moral motivation to help other people unless there is personal gain.

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Ethical Egoism
The only valid standard of conduct is the obligation to promote one's own well being above everyone else's. Ethical egoists believe that people should not be their brothers keeper, because people do not completely understand the true needs of others. Its every man for himself in this world!
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Utilitarian Theories

Moral theories that assert an actions rightness is determined by the actual or probable consequences that the action will have for the greatest number of people affected by that action.

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Utilitarian Theories
Utilitarian theories hold that the moral worth of actions or practices are determined solely by their consequences. An action or practice is right if it leads to the best possible balance of good consequences over bad consequences for all the parties affected.

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Utilitarian Theories
Act utilitarianism
Argues that in all situations the utility of an action is based on an act that leads to the greatest good for the greatest number. Treats rules as useful guidelines to help determine ethical behavior. Will break a moral rule if breaking the rule leads to the greatest good for the greatest number.

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Utilitarian Theories
Rule utilitarianism
The morality of an action should be evaluated on the basis of principles or rules designed to promote the greatest utility for the greatest number. Rule utilitarians hold that rules have a central position in morality that cannot be compromised by the demands of particular situations.

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Utilitarian Theories
Utilitarian decision-making relies on tools such as cost-benefit analysis and risk assessment to determine the greatest utility. Main argument against utilitarianism is questioning whether units of happiness or some other utilitarian value can be measured and compared in order to determine the best action among alternatives.
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Kantian Ethics

A moral theory that holds you should follow only those rules which you would will to be universal laws for everyone, including yourself.

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Kantian Ethics
Categorical imperative principle states "I ought never to act except in such a way that I can also will that my maxim should become universal law."
The principle is categorical because it admits of no exceptions and is absolutely binding, and is imperative because it gives instruction on how one must act.

Respect-for-persons principle states persons should never be used as a means to an end.

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Kantian Ethics
Kant believed that morality should follow absolute rules that admit no exceptions, which has been a major argument against this theory. Another argument against Kantian theories is that they are narrow and inadequate to handle various problems in the moral life.

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Common Morality Theories

A moral theory based on the concept there is a common morality that all people share by virtue of communal life.

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Common Morality Theories

The greatest obligation in any given circumstance must be found based on the greatest balance of right over wrong in that particular context. Obligations and rights are not inflexible standards, but rather strong prima facie moral demands that may be overridden in circumstances of competition with equal or stronger moral claims.
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Rights Theories
A moral theory based on the concept that all people have human rights that form the justifying basis of obligations because they best express the purpose of morality, which is the securing of liberties or other benefits for a right-holder.

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Rights Theories
Human rights are held independent of membership in a state or other social organization. Human rights evolved from the notion of natural rights.
Natural rights are rights that belong to all persons purely by virtue of their being human.

Negative rights pertain to the obligations on the part of other people to refrain from interfering with our freedom of action.
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Rights Theories
Positive rights impose obligations on people to provide other people with goods or services. A primary problem with this theory is that there is no hierarchy for rights claims:
How does someone determine which right takes precedence or has more value over other rights?

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Virtue Ethics
This moral theory suggests that morality is comprised of virtue, which has to do with a person's character and the types of actions that emanate from that character.

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Virtue Ethics
Some typical virtuous traits in the business arena would be integrity, honesty, truthfulness, courage, loyalty, courteousness, and conscientiousness. Virtuous traits are acquired and developed throughout our life experiences. A primary problem with this theory is that people have varying definitions of what traits are considered virtuous.
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Feminist Theories and the Ethics of Care

This moral theory focuses on a set of character traits that are deeply valued in close personal relationships.

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Feminist Theories and the Ethics of Care

Typical traits would include sympathy, compassion, fidelity, love, friendship, and the like. This theory grew out of two feminist presuppositions:
The subordination of women is as wrong as it is common. The experiences of women are worthy of respect and should be taken seriously.
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Feminist Theories and the Ethics of Care

An argument against this theory is that the focus is on how power is used to oppress women only, whereas traditional ethics is based on the assumption that its values and rules apply to all rational persons equally.

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Analysis of Cases
The case method in law is used to show examples of established precedents of evidence and justification. The case method in business is used to present managerial situations so managers will know how to think when confronted with a dilemma.

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Analysis of Cases
The casuistical method for case analysis in ethics is used to show conclusions on ethical matters, then to compare and contrast the central features of the morally clear and settled cases with the features of unsettled cases.

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GAME THEORY OF BUSINESS ETHICS

Business is an Amoral Institution: originally held business to be amoral meaning they could not act morally or immorally as they were not natural persons. The Game Theory: operating a business is like playing a game. No longer practical as government now establish the rules (legal regulations) for business.

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SOCIAL CONTRACT THEORY

Holds that businesses owe duties to society as society allows business to exist. Social Contract Theory considers:
The Changing Social Environment. Problems with Business Ethics: no fixed guidelines to follow and no formal code of ethics that a business should follow.
The Human Factor. The Legal Aspect.

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MULTINATIONAL ETHICS
Global Competition and Marketing Opportunities.
Demand business consider social values in other countries where firms do business.

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RECOMMENDATION FOR BUSINESS

Create framework for business ethics:
Adopt synthesis approach to resolve ethical issues. Consider public image and consequences of actions. Adapt ethical standards as rapid change is constant in business. Work with government rather than against Will not be easy but alternative is increased regulation and public mistrust.

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