Chart of Theories

Ethical Theories

Consequentialist Non- Consequentialist

Ethical Egoism Utilitarianism Theology THE Golden Kantianism

Rule
Act

Rule

Consequentialist Theory

• Consequential

• The good or evil results of an action

– Egoism

• Self-interest is the proper goal (long term?)

– Utilitarian

• Greatest good for the greatest number

– Feminism (Individualism)

• Philosophy of caring

• Effect on the individuals

Ethical Egoism

• It is based on what is right, or what one ought to do , driven to act in accordance with one’s own self-
interest.

• Tells us what people should do.

• It advocates the long term self interest of the individual.

Act Utilitarianism

• An act is only morally right if and only if it maximises utility.

• Utlity – intrinsic goodness, satisfactions, preferences and desires.

• The ratio of benefit to harm calculated by taking everyone affected by the act into consideration is
greater than the ratio of benefit to harm resulting from any alternative act.

Rule Utilitarianism

• An act is right if and only if it is in conformity with a particular moral rule, and the rule is chosen
because, of all alternative rules, it maximises utility.

• i.e. “We must not hold a person accountable for a crime he has not committed”

NON CONSEQUENTIALIST THEORIES

• Deontological (Means Duty)

– Immanuel Kant and the Categorical Imperative

• Each person should act in a manner that his or her actions could become universal law

• Duty is more important than result

• Other Theories

– The Golden Rule

– Virtue Ethics

Kantianism • German Philosopher – Immanuel Kant (1724-1804).

• Developed a theory of duty

– intellectual justification for the golden rule.

• He believed in a science of morals is possible because humanity has the use of freedom and reason.

• When using people to accomplish your purposes, you have a duty to respect them as human beings
and to promote their ability to realise their desired potential or goals.

Theologism

• Asserts that an act is right if, more than any alternative open to the agent at the time, it is the most
consistent with what God wills, either directly or indirectly.

• Theologism provide us with a set of rules (e.g., the Ten Commandments) that express God’s will.
The Golden Rule

• The Golden Rule “Do unto others as you would have them do unto you” is a most widely accepted
moral principle.

• Confucianism “That which you do not want done to yourself, do not do to others” (Analects)

• Islam “No one is a believer unless he loves for his brother what he loves for himself (Traditions)

• Buddhism “Hurt not others with what pains yourself”

• In surveys of business people the Golden Rule is cited more often than any other principles the basis of
proper ethical behavior.

Virtue Ethics

• Dates back to Aristotle

• It stresses the kind of moral abilities that put us in a position to act morally, whether after weighty
deliberation or quick reaction.

• It views the character of the person performing the action and rejects applying the correct theory.

AN Overview OF Ethical Decision Making in Business

Ethics can be divided into Consequentialism and Non Consequentialism theories of ethics.

At the end of the day the business managers must make informed business decisions weighing up the
impact of self interest over the greater good for society.

Business Ethics can also be said to be the process of evaluating decisions, either pre or post, with
respect to the moral standards of a society’s culture. Or How are we to relate to each other in order to
ensure that our individual and collective well-being is enhanced?’

Business ethics are relevant both to the conduct of an individual within an organization and to the
conduct of the organization as a whole.

What is involved in correct moral reasoning/opinion

• Need to go outside, or beyond one’s self interest in reaching a decision.

• An ethical judgment is one that can be “universalised”.

• Ethical opinions are not subject to a ‘vote’.

• Moral opinions are centrally about evaluating behaviour and prescribing ways in which people should
behave.
• Requires one to think about consequences of one’s action.

ETHICS RELATED DECISION MAKING

According to Martin Cohen, Ethics is about choices which matter, and choices which matter are
dilemmas.

Ethical Dilemmas

An Ethical dilemma is a complex situation where ethical principles or values are in conflict. Ethical
dilemma is also a complex judgment on the balance between the economic performance and the social
performance of an organization.

An ethical dilemma exists when one is faced with having to make a choice among following alternatives:
- Significant value conflicts among differing interests,

- Real alternatives that are equally justifiable, and

- Significant consequences on "stakeholders" in the situation.

Examples:

• To whom do I have a duty—self, family, friends, workers, investors, consumers, future generation, and
so on?

• What is a fair or justice resolution—is fairness or justice based on everyone receiving equal shares, or
more to those who merit or have earned it.

There are situation when there is not simple choice between write or wrong. When faced with a difficult
ethical dilemma, we need ethical decision making ability for resolve it. It helps one determine the right
course of action or the right thing to do and also enables one to analyze whether another’s decisions or
actions are right or good.

CHARACTERISTICS OF DILEMMA

- It has extended consequences

- It has multiple alternatives

- It has mixed outcomes

- It has uncertain consequences

- It has personal implications

- It is easy to make when a person is not directly involved

- Hence EDM are not simple choice between right and wrong.
Paradigms of Dilemma

Four such dilemmas are so common to our experience that they stand as models, patterns, or
paradigms. They are:

1. Truth versus loyalty.

2. Individual versus community.

3. Short-term versus long-term.

4. Justice versus mercy.

Classical Approach Resolving Dilemma

Three approaches are facilitated

- End-based thinking (utilitarianism)

- Rule based thinking

- Care-based thinking (value to you or close relationships)

And Virtue ethics - instead upon execute as an alternative way - Here action is considered morally right
if in carrying out the action

Nine ways to Resolving Dilemma

Rushworth Kidder

1. Recognize as moral issue and define the problem accurately

2. Identify the affected by decision

3. Gather the facts how events happened

4. Test for right vs. Wrong issues

5. Test for right vs. right paradigm (true vs...

6. Apply for the resolution principle (end, rule, care)

7. Investigate if is any third way out of the situation

8. Make decision & take action

WHISTLE BLOWING

It is methods that can contribute to act of identification and disclosing wrong in an organization . Like
blowing a whistle to call attention to a thief or unethical practitioner . But it is questionable when
- Dissent / disagree - Must speak out against others in organization

- Breach of Loyalty - Perceived as one who violates confidentiality and loyalty

- Accusation - Singles out specific individuals as threats to organization or the public

- Care about whistle blowing

- Make sure situation involves an imminent threat to society or to the business

- Document all allegations

- Examine internal whistle blowing first

- Should you remain secret Ethics

• The General decision making structure is:

Individual or Company X has a Problem P.

The alternative solutions to P are S1….Sn. S1 is the best solution to P.

X should do S1

Ethical Decision Making Process

Definition of Ethical Decision Making:

Ethical decision making is a cognitive process that considers various ethical principles, rules, and virtues
or the maintenance of relationships to guide or judge individual or group decisions or intended actions.

In the context of decision making, your ethics are your personal standards of right and wrong. They are
your basis for making ethically sensitive decisions.

FRAMEWORK FOR UNDERSTANDING ETHICAL DECISION MAKING

Ethical Issue Intensity

Profession or
Individual Factors Business Ethics Ethical or Unethical
----- --- Behavior
Ethical Factors Evaluations and
Organizational Factors Intentions

Opportunity
Ethical Issue Intensity

Ethical issue intensity can be defined as the relevance or importance of an ethical issue in the eyes of
the individual, work group, and/or organization. Ethical issue intensity reflects the ethical sensitivity of
the individual or work group that faces the ethical decision making process.

Individual Factors

• Gender―women are generally “more ethical” than men.

• Education or work experience―the more education or work experience that one has, the better he or
she is at ethical decision making.

• Nationality―cultural appears to be significant in effect of ethical decision making.

• Age―the older you are, the more ethical you are.

• Locus of control― external control vs. Internal control. – external control, see themselves as going
with the flow because that’s all they can do. – internal control, believe that they control the events in
their lives by their own effort and skill

Organizational Factors

• The organization’s values often have greater influence on decisions than a person’s own values.

• The more ethical employees perceive an organization’s culture to be, the less likely they are to make
unethical decisions.

Opportunity

Opportunity describes the conditions in an organization that limit or permit ethical or unethical
behavior. Opportunity results from conditions that either provide rewards, whether internal or external,
or fail to erect barriers against unethical behavior.

Ethical Behavior
Ethical behavior goes beyond the legal requirements placed on a business, as it concerns discretionary
decisions and behavior; in other words, what a business chooses to do, rather than what is forced to do.

Effects of Ethical Behavior/ Unethical Behavior

Ethical Behavior

Increases Efficiency and Effectiveness of Production and Trade.

Increases Company Performance

Increases National Standard of Living, Wellbeing, and Prosperity.

Unethical Behavior

Reduces Efficiency and Effectiveness of Production and trade.

Reduces company Performance

Reduces National Standard of Living, Wellbeing, and Prosperity.

Ethical Decision-Making Process

1. Identify the Ethical Problem

The decision maker must be able to determine:

• if there is a possible violation of an important ethical principle, societal law, or organizational standard
or policy

• if there are potential consequences that should be sought or avoided that emanate from an action
being considered to resolve the problem.

2. Collect Relevant Information

• The decision maker should seek to gather as much information as possible about which rights are
being forsaken and to what degree.

• A consequential focus would prompt the decision maker to attempt to measure the type, degree, and
amount of harm being inflicted or that will be inflicted on others.

3. Evaluate the Information

• Once the information has been collected, the decision maker must apply some type of standard or
assessment criterion to evaluate the situation.

• The decision maker might use one of the predominant ethics theories—utilitarianism, rights, or justice.

4. Consider Alternatives

The decision maker needs to generate a set of possible action alternatives, such as:

• confronting another person’s actions,

• seeking a higher authority, or

• Stepping in and changing the direction of what is happening.

5. Make a Decision

• The decision maker should seek the action alternative that is supported by the evaluation criteria used
in Step 3.

• A decision maker selects a course of action that is supported by all the ethics theories or other
evaluation criteria used in the decision- making process.

6. Act or Implement

• The decision maker, if truly seeking to resolve the problem being considered, must take action.

• Once the action alternatives have been identified in Step 4 and the optimal response is selected in
Step 5, the action is taken in Step 6.

7. Review the Action

• Once the action has been taken and the results are known, the decision maker should review the
consequences of the action.

• If the optimal resolution to the problem is not achieved, the decision maker may need to modify the
actions being taken or return to the beginning of the decision-making process

RULES/APPROACHES FOR ETHICAL DECISION MAKING

1. Utilitarian Rule : An ethical decision should produce the greatest good for the greatest number of
people.

2. Moral Rights Rule : An ethical decision should maintain and protect the fundamental rights and
privileges of peoples.

3. Justice Rule : An ethical decision should distribute benefits and harm among people in a fair,
equitable, and impartial manner.

4. Practical rule: An ethical decision should be one that a manager has no hesitation about
communicating to people outside the company because the typical person in a society would think the
decision is acceptable.