Module 8 Ethical Principles in Business

Kingfisher
School of Business and Finance
Ethical Principles
in Business
Module 8
Daryl Ejeil F. Sinlao

darylejeilsinlao@gmail.com
©DarylEjeilSinlao 1
Learning Objectives
2.1 Examine the foundations of moral decision-making in business

2.2 Detail the concept of utilitarianism and how it is applied to business
decisions
2.3 Examine a rights-based approach to business ethics
2.4 Explain justice and fairness as key ethical principles
2.5 Analyze an ethic of care as applied to business decisions and
practices
2.7 Relate virtue ethics to moral decision-making in business
2.8 Differentiate unconscious and conscious moral decision-making
processes and implications
Five Questions to Moral Decision
 Does the decision maximize the good and

minimize the bad?
 Does the decision respect people’s rights?
 Is the decision just?
 Does the decision express caring?
 Does the decision flow from virtue and not from
vice?
Approaches to Moral Decision
Making
I. Utilitarianism: Weighing Social
Costs and Benefits
Utility – the result of combining the beneficial and costly
consequences of an action
The ethical action is the one that had the most beneficial
consequences for society or that at least minimized the
harmful consequences.
Mill: “Actions are right… they tend to promote happiness,

wrong as they tend to produce the reverse of happiness.”
I. Utilitarianism: Weighing Social
Costs and Benefits
Happiness – eudaemonia
The Summum Bonum – The End Goal of

Human Life
The Good Life

Utilitarianism: Weighing Social
Costs and Benefits
Significant features:
A. It attempts to provide ethical principle that serves as a
publicly acceptable basis for determining the best social
policies, as well as the ethically best courses of action.
B. An action is right from an ethical point of view, if and

only if, the net sum of utilities produced by that action is
greater than the net sum of utilities produced by any other
action the agent could have performed in its place.
Costs and Benefits
Key Takeaways:
1. Advocates policies that provide the greatest
benefits – “the greatest amount of good for the
greatest number of people”
2. Impartially considers everyone’s interests –
betterment of the society as a whole
3. Explains why some activities are right or wrong –
actions that foster happiness are right and actions
that causes unhappiness are wrong
Costs and Benefits
Criticisms:
1. Distasteful - I don’t like it or It doesn’t
suit my way of thinking
2. Impossibility – to apply because
happiness cannot be
quantified or measured
3. Impracticality – we cannot calculate all
the effects for all the
individuals
4. Insufficiency (of scope) – some values
can be conflicting
with other
values
Costs and Benefits
Utilitarian Problems with Rights and

Justice:
1. It does not take into account how
evenly utility is distributed among
members of a society.
2. It does not take into account the
negative impact on the rights of those
negatively impacted by its calculus.
Costs and Benefits
Act Utilitarianism Rule Utilitarianism
 Whenever we are deciding what  Stresses the importance of moral
to do, we should perform the rules
action that will create the a. Action is morally justified if it conforms
greatest net utility to a justified moral rule
 The end justifies the means b. Moral rule is justified if its inclusion
into our moral code would create more
utility that other rules (or no rule at all)
II. Rights and Duties
A right is an entitlement
 To act in a certain way.
 To have others act in a certain way towards the
right-holder
2 kinds of Right
A. Legal Rights – derived from the legal system of a

particular jurisdiction
B. Moral/Human Rights - universal, inalienable, indivisible,
interdependent
Rights and Duties
Moral Rights
 Can be violated even when “ no one is hurt”

 Are correlated with duties others have towards the right-
holder
 Provide individuals with autonomy and equality in the
free pursuit of their of interest
 Provide a basis for justifying one’s actions and for
invoking the protection or aid of others
 Focusing on securing the interests of individual 14
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Rights and Duties
Positive Rights Negative Rights
Rights and Duties
Contractual Rights
 Special rights
 Conferred only by parties involved
 Require publicly accepted rules
 Require (1) the parties know what they are agreeing to
(2) no misrepresentation
(3) no duress or coercion
(4) no agreement to an immoral act
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©DarylEjeilSinlao
Rights and Duties
Kant’s Categorical Imperative

 Golden rule
 Requires acting only on reasons we would be
willing to have anyone in a similar situation
act on
 Universalizability
 Reversibility
 Treat humans as ends not means to an end
Rights and Duties
Criticism
Nozick’s Claim about Rights and Freedom
Rights require freedom. Freedom must

be restricted for the fulfilment of other
rights (i.e. negative). Freedom is
unjustifiable.
III. Justice & Fairness
DISTRIBUTIVE RETRIBUTIVE COMPENSATORY
Concerns with the Refers to the just Concerns with the

fair distribution of imposition of just way of
society’s benefits punishments and compensating
and burdens penalties on those people for what
who do wrong they lost when
others wronged
them
Principles of Distributive Justice
Justice & Fairness
John Rawl’s Justice Principles
Principle of Equal Liberty (Freedom)
Principle of Difference (Concern for the

Disadvantaged)
Principle of Fair Equality of Opportunity
Justice & Fairness
Conditions of Just Punishment
1. Ignorance and Inability
2. Certitude
3. Consistency and Proportionate to the wrong
Justice & Fairness
Conditions of Just Compensation
1. The action that inflicted the injury was wrong

or negligent.
2. The person’s action was the real cause of the

injury.
3. The person inflicted the injury voluntarily.
IV. Ethics of Care
 Feminist ethics
 Partiality
 Importance of Relationships
 communitarian ethics
 Caring for those dependent on
and related to us
 Argues that since the self requires
caring relationships with others,
those relationships are valuable and
should be nurtured
V. Virtue Ethics
VIRTUE VICE
Are habits of dealing Are habits of regularly

with one’s emotions going to the
and actions in ways unreasonable extreme
that regularly strike of either excess or
the reasonable mean deficiency
between extremes of
excess and deficiency
V. Virtue Ethics
MORAL VIRTUE
Habituation Achievement
Aristotle’s Virtue Ethics
Aristotle’s Virtue Ethics
Virtue Ethics
THOMAS ALASDAIR EDMUND

AQUINAS MACINTYRE PINCOFFS
Virtues are means to Virtues are Virtues are
achieve not only dispositions that dispositions that
happiness in this life but
enable us to deal well enable us to deal well
happiness in the next life
that is through the union with all exigencies of with all exigencies of
with God practice human life
Roles of Psychology, Culture and
Social Institutions
Scott Reynolds’ X-System and C-System Processes
X-SYSTEM C-SYSTEM
unconscious conscious
Schema or Prototypes/Archetypes
Roles of Psychology, Culture and
Social Institutions
Moral Intuition
 our ability to understand something quickly, without the need for
conscious reasoning
 HARDWIRED
1. Action principle – harming others is worse than harming by omission

2. Intention principle – harming as a means to a goal is worse than harming
as a foreseen side effect
3. Contact principle – harming by physical contact is worse than harming
without physical contact 31
©DarylEjeilSinlao
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Kingfisher

School of Business and Finance

Daryl Ejeil F. Sinlao

2.1 Examine the foundations of moral decision-making in business

 Does the decision maximize the good and

Mill: “Actions are right… they tend to promote happiness,

The Summum Bonum – The End Goal of

The Good Life

B. An action is right from an ethical point of view, if and

Utilitarian Problems with Rights and

A. Legal Rights – derived from the legal system of a

 Can be violated even when “ no one is hurt”

Positive Rights Negative Rights

Kant’s Categorical Imperative

Rights require freedom. Freedom must

Concerns with the Refers to the just Concerns with the

Principle of Equal Liberty (Freedom)

Principle of Difference (Concern for the

Principle of Fair Equality of Opportunity

1. Ignorance and Inability

3. Consistency and Proportionate to the wrong

1. The action that inflicted the injury was wrong

2. The person’s action was the real cause of the

3. The person inflicted the injury voluntarily.

Are habits of dealing Are habits of regularly

THOMAS ALASDAIR EDMUND

Scott Reynolds’ X-System and C-System Processes

1. Action principle – harming others is worse than harming by omission

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