MBA – 4Business

Ethics Theories

Bhautik Sheth 2

Approaches it Moral Reasoning

• Many business ethicists seem to work from the assumption that individuals’ behavior is informed by deliberate moral decisions.

• Their efforts are therefore often directed at helping people make better moral decisions by teaching them appropriate reasoning skills.

• The distinction between theory and practice that is evident in many business ethicists’ understanding of morality has a long history. One can argue that it has its origins in the seventeenth century, when philosophers began to explore various forms of universalism and instrumentalism in moral theory.

Bhautik Sheth 3

Approaches it Moral Reasoning

• Some seventeenth-century moral philosophers came to see ethics less as a responsive sort of practical judgment, and more in terms of an effort to rationally formulate and objectively apply universal, principles.

• Others argued that ethical decisions had to be based on a rational, unbiased assessment of the anticipated effects of all available courses of action.

• In the process, ethics became a discipline devoted either to the objective formulation of universal truths of human utility.

Bhautik Sheth 4

Approaches it Moral Reasoning

• Most of the ethical approaches that have subsequently been developed by business ethicists correspond, in one way or another, to two basic points of departure.

• These may roughly be described as either non-consequentialist or consequentialist in orientation.

• A form of consequentialist reasoning, for example, characterizes utilitarianism.

• Deontology, on the other hand, is perhaps the most important non-consequentialist approach to ethics.

Bhautik Sheth 5

Approaches it Moral Reasoning

• Most of the ethical approaches that have subsequently been developed by business ethicists correspond, in one way or another, to two basic points of departure.

• These may roughly be described as either non-consequentialist or consequentialist (is the class of normative ethical theories holding that the consequences of one's conduct are the ultimate basis for any judgment about the rightness or wrongness of that conduct.) in orientation.

• A form of consequentialist reasoning, for example, characterizes utilitarianism.

• Deontology (the study of the nature of duty and obligation), on the other hand, is perhaps the most important non-consequentialist approach to ethics.

Bhautik Sheth 6

Approaches it Moral Reasoning

• Both consequentialist and non-consequentialist approaches to business ethics find their philosophical justification in a specific worldview and anthropology.

• They both proceed from the implicit general assumption that the world is governed by an orderly system of rules and principles.

• The prominent role that consequentialist and non-consequentialist moral theories have come to play in business ethics has serious implications for the discipline.

Bhautik Sheth 7

Approaches it Moral Reasoning

• Jones, Parker and ten Bos, point out that though many important twentieth-century philosophers have had a lot to say about ethics, business ethicists have generally ignored these insights.

• Most prominent business ethics texts still draw almost exclusively on Aristotelian virtue-ethics, utilitarianism and deontology.

Bhautik Sheth 8

Approaches to Moral Reasoning

• Jones et al. argue that business ethics texts treat Aristotelian, utilitarian and deontological ethical approaches in a way that creates the impression that some sort of common understanding of “ethics” exists.

• This is problematic, not only because of the various philosophical perspectives that are excluded from consideration, but also because there are significant differences among Aristotelian, utilitarian and deontological conceptions of ethics

Bhautik Sheth 9

Approaches to Moral Reasoning

• Jones et al. argue, that ethics should not be employed in an effort to reduce the uncertainty. Instead, ethics should encourage people to recognize the reassure nature of all ethical decisions.

• Many business ethicists are, for instance, committed to the idea of a “free,” or independent, moral agent, who makes decisions in an objective and impartial manner.

• Since moral imperatives have to be articulated in “objective” terms, their general or universal validity has to be established beyond doubt.

Bhautik Sheth 10

Approaches to Moral Reasoning

• Ethical imperatives are thus treated as if they were truths, the validity of which remains unaffected by the particularities of personal, interpersonal and contextual variables.

• From this perspective, it is possible to distinguish right from wrong “once and for all.”

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Utilitarianism

• The notion of “utility” or usefulness is central in the utilitarian approach to morality. The willingness of utilitarians to accept “whatever works best” generally serves them well in the business environment.

• Most business practitioners are already familiar and comfortable with the kind of cost–benefit analysis that utilitarians employ in their moral reasoning.

• The two most prominent historical exponents of utilitarianism are Jeremy Bentham and John Stuart Mill.

Bhautik Sheth 12

Utilitarianism

• Bentham’s approach is based on the general association of morality with those acts and practices that maximize the balance of pleasures over pains in any given situation.

• When confronted with a moral dilemma, moral agents have to determine what course of action is most likely to bring about the optimal outcome in these terms.

Bhautik Sheth 13

Utilitarianism

• Mill’s articulation of utilitarianism’s principles makes it clear, that there is much more to this approach than the simple pleasure – pain calculations that are often associated with it.

• Mill set about countering the charge that utilitarianism is “devoted to pleasure” in orientation by making a distinction between the different kinds of pleasures that people experience.

• Some pleasures, argued Mill, are qualitatively better than others. For instance, the pleasures associated with intellectual activities may be considered superior to those that are obtained from the consumption of food.

Bhautik Sheth 14

Utilitarianism

• Mill’s utilitarianism required a rational, objective measure to rank pains and pleasures.

• He therefore proposed that “competent judges” who had experience of various kinds of pleasures should establish a hierarchy of pleasures.

• What Mill did not adequately recognize or consider, though, is the fact that individuals’ consideration of pains and pleasures is likely to reflect their personal tastes, preferences and values.

Bhautik Sheth 15

Utilitarianism

• It is also unlikely that any mortal should have had experience of all possible pleasures.

• This means that there is simply no way that an “objective” criterion could be set up to establish what constitutes an optimum balance of pleasures over pains for everybody under all circumstances.

• Utilitarian reasoning allows business practitioners to justify rationally some of the harmful consequences of their actions by simply out-balancing it with other perceived benefits.

Bhautik Sheth 16

Utilitarianism

• Misrepresentation in financial reporting is a good example.

• Executives convince themselves and their colleagues that they are protecting the broader interest of employees and shareholders when they manipulate financial statements to create a false impression about an organization’s financial prospects. They argue that, as long as they later reconcile the reality of their organization’s assets with the promises in their public representations, no one needs to get hurt.

Bhautik Sheth 17

Utilitarianism

• With such argumentative footwork, lying becomes acceptable.

• Utilitarian calculations of this nature are often done at arm’s length, so to speak, from those who stand to be affected by them.

• The clinical procedures and formal logic of utilitarian calculations make it easy to forget that actual people stand to be affected in real ways by the decisions that are being considered.

Bhautik Sheth 18

Utilitarianism

• Within a utilitarian cost–benefit analysis, all pains and pleasures are made commensurable in order to be able to calculate the overall pleasures and pains brought about by particular decisions.

• Abstract reasoning aimed at aggregating pains and pleasures allows utilitarians to avoid the specific experiences of those individuals who may be affected by their decisions.

• Furthermore, it is often impossible to gauge the potential effects on others over time.

• As a result, utilitarian calculations can’t really accommodate unpredictable changes in context.

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Non-consequentialist approaches

• Non-consequentialist approaches to moral decision making are based on the belief that the morality of a particular course of action cannot be determined by its anticipated consequences.

• They encourage us instead to follow the directives of well-reasoned moral principles, irrespective of the consequences that doing so may have.

Bhautik Sheth 20

Non-consequentialist approaches

• In this, non-consequentialist approaches are of a distinctly foundationalist nature.

• Those who are of a non-consequentialist orientation insist that moral imperatives should be formulated in an objective, rational and impartial manner.

• This orientation towards the universal is shared by two of the most important non-consequentialist moral theories: deontology, which is closely associated with the work of Immanuel Kant, and the rights based approach of John Rawls.

Bhautik Sheth 21

Deontology

• Those business ethicists who employ a deontological approach in their work base their understanding of ethics on a selection of readings from the work of Immanuel Kant.

• Deontology rejects consequentialists’ careful consideration of the potential outcomes of their actions in their assessment of moral propriety.

• In the true spirit of the Enlightenment, Kant encouraged individuals to act autonomously and formulate their own moral directives by utilizing their capacity for reason.

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Deontology

• Kant’s deontological approach is typically described in terms of two basic moral maxims, which he believed to be of such a self evidently reasonable nature that it would secure the acquiescence of all reasonable individuals.