Ethics and the future of business
Session 1: Morals and ethics
Do we need ethics when we have the law
In society, morality is the foundation of the law. Law and ethics are partly overlapping.
Nonetheless:
- The law does not cover all ethical issues (e.g. cheating)
- Not all legal issues are ethical (e.g. driving on the wrong side of the road)
- Law and ethics can involve contradicitions (e.g.apartheid)
The road from unethical to illegal is short and slippery. Companies can operate in locations
lacking legal infrastructure.
Reading 1:
Business ethics: managing corporate citizenship and sustainability in the age of
globalization. Crane, A., Matten, D., Glozer, S. & Spence,L. 2019. Chapter 3(Pages 85 ‐135).
Compare and contrast the basic premises of each theory and think about how they can be used
together in a pluralistic way to support our decision‐making.
A multinational company could come across ethical problems when it comes to decision making.
For example because there are a variety of people involved who might have different views and
attitudes. In a business context there is often a need for decisions to be based on a
systematic rational and understandable argument, so that the decision can be
adequately defended, justified and explained to relevant stakeholders. →
The primary value of ethical theories lies in the fact that they help to rationalize, explain, and
understand the hunches or gut feelings we all have about what is right or wrong. Furthermore,
they make it possible to engage in a rational discourse between individuals whose moral values
are different from each other.
Normative ethical theories (how should you behave) : Rules, guidelines, principles and
approaches that determine right and wrong. By normative is meant, ethical theories that aim to
prescribe the morally correct way of acting; that is, how we ought to behave. Normative ethical
theories can be seen as a code of conduct that all rational beings would adhere to (also a
commitment to do no harm for example).
Descriptive morality: (how we actually behave) Can be seen as a code of conduct adopted by a
particular group or society (e.g. religion).
There are different ways to look at what is right and wrong:
1. Ethical absolutism: this claims that there are eternal, universally applicable moral
principles. According to this view, right and wrong are objective qualities that can be
rationally determined, irrespective of the circumstances.
, 2. Ethical relativism: This claims that morality is context-dependent and subjective.
Relativists tend to believe that there are no universal rights and wrongs that can be
rationally determined-it simply depends on the traditions, convictions, or practices of
those making the decision.
Ethical relativism occurs frequently in international business issues, where it is argued that a
moral judgment about behavior in another culture cannot be made from the outside because
morality is culturally determined.
*Descriptive relativism only suggests that different groups have different ethics whereas ethical
relativism (normative theory) proposes that both sets of beliefs can be equally right.
3. Ethical pluralism: A pluralist approach accepts that we ought to recognize that
incompatible values can be equally legitimate and tolerate them as such. Pluralism thus
differs between relativism and absolutism in that it neither puts all ethical perspectives on
an equal footing nor favors one approach over others. A critical point to this theory is that
it can be seen as overly tolerant.
The role of religion
Normative ethical theories and religious teaching about ethics have the same aim when
applied to business → how to decide what is the right thing to do when faced with
moral problems in commerce. Both are focused on ensuring that business is
responsible, avoids doing harm, and contributes to societal benefits.
Two main differences between the approaches:
1. Source of rules and principles:
Religions typically invoke a deity or an organized system of belief as to the source of determining
right and wrong. Faith is considered the critical requisite for acting ethically.
Philosophical theories, on the other hand, are based on the belief that human reason should drive
ethics. Thus according to philosophical perspectives, rationality is the critical requisite for acting
ethically.
2. Consequences of morality and immorality: In religious teaching, there is an important
element of spiritual consequence for the decision-maker. These consequences might
include salvation, enlightenment, reincarnation, or damnation.
Western modernist ethical theories
These theories are normative because they start with an assumption about the nature of the
world, and more specific assumptions about the nature of human beings. Consequently, the
degree to which we can accept the theory and the outcome of its application to particular
business situations depends chiefly on the degree to which we share their underlying
assumptions.
,The theories are divided into two groups:
1. Consequentialist theories
Are theories that base moral judgment on the outcomes of a certain action-they are goal
orientated. If these outcomes are desirable, then the action in question is morally right; if the
outcomes of the action are not desirable, the action is morally wrong. The moral judgment in
these theories is thus based on the intended outcomes, the aims, or the goals of a certain
action. Consequentialist ethics is often also referred to by the term teleological, based on the
Greek word for 'goal'.
- Ethical egoism: Ethics of self-interest
This theory focuses on the outcomes and self-interest of the individual decision-
maker. This theory suggests that an action is morally right if in a given situation all
decision-makers freely decide to pursue either their (short-term) desires or their (long-
term) interest. There are no moral obligations to others beyond things that serve their
own interest.
Thomas Hobbes ‘War against all’ if there are no rules to govern a population. Hobbes argued
that it was best for everyone-every individual's self-interest to be governed by some impartial
rules.
According to Ayn Rand, we are each responsible for our own happiness, self-
development, and self-perfection → virtue of selfishness
*It is important to distinguish egoism based on desire from selfishness. Whereas the egoist can
be moved by pity for others, the selfish person is insensitive to the other.
Problem with ethical egoism:
- An important criticism of egoism based on desire is that it renders patently different
approaches to life as being equivalent;
therefore, the life of the student who just gets drunk every night in the bar is as admirable
as the student who works hard for a first-class degree, providing both followed their
desire. The idea of interests based on the pursuit of one's long-term well-being enables
us to distinguish between those two examples. This shows a gap between desire (or
longing) and what is in one's ultimate interests.--> An egoism based on interests,
therefore, approaches the idea of objective value as in, that one way of acting is
objectively better or 'more ethical' than another.
, - Utilitarianism
‘The greatest happiness principle or the ultimate consequentialist principle. A theory
states that an action is morally right if it results in the greatest amount of good for the
greatest number of people affected by the action (The best consequence of the
action).
*, Unlike egoism, it does not only look at each individual involved, but it focuses on the
collective welfare that is produced by a certain decision.
Bentham ‘the utility of life’. Humans are viewed as hedonists, whose purpose
in life is to maximize pleasure and minimize pain. In this hedonistic rendition
of utilitarianism, utility is measured in terms of pleasure and pain → the
'hedonistic' view
Essential characteristics of utilitarianism
- Consequentialism: It is the measurement of the consequences of an action that
determines if it is ethically correct. Hence utilitarianism is a teleological theory.
