CHAPTER 3: Philosophical Ethics and Business

Ethical Frameworks: Consequences, Principles, Character

People encounter moral issues each day that may be in the form of the daily
newspaper, workplace memos, household chores, and even on the evening news.
Issues such as the justice of foreign policy, the morality of medical technologies that can
extend lives, the rights of the homeless, the fairness of teachers to the different
students. It is often disconcerting to deal with these moral issues on a daily basis.
Questions such as “How should one think through an ethical issue?” and “What
questions should be asked and what factors should be considered?”

There are different moral approaches that make it easier to resolve conflicts in decision-
making namely consequences, principles, and character. Moral dilemmas emerge when
individuals or groups need to pick between contending values, choosing one value over
another. Even intelligent and good-hearted people can wrestle with competing values
and hold differing opinions about which values should abound.

The challenge of resolving moral predicaments is intensified by the problem that people
have different approaches to moral decision-making. There is a tendency to forget that
ethical theories are thoughts of and elaborations on the experience of people seeking to
live morally. People who have never come across the different ethical theories however
function unconsciously out of one or more of those theories when making moral
decisions in one’s personal and professional lives.

There are three clearly different approaches in which people make moral decisions.
Almost everyone uses all of these ways. People make use of the varied approaches in
different roles, in different situations, and in different times in life. Yet it is done so
unreflectively and nearly always unconsciously, not due to any adherence to
corresponding ethical theories. Some make use of one way chiefly; others vary their
approach according to an array of factors. Most likely irreconcilable conflicts happen
when two or more parties argue or negotiate their positions from different moral
approaches. Usually, resolution or consensus may occur only when the different parties
use the same approach.

Consequence Approach
In the consequence approach, those who make decisions weigh several probable
results and arrive at the decision likely to produce the best result. The focus here is on
the outcomes of attempting to follow certain principles. People using this approach often
ask such questions as “What’s the bottom line?” “What effect will this have?” “What
good will this bring about?” and “Will this help in the long run?”

A balance in the use and misuse of the consequence approach to moral decision-
making should be observed because people who appear unconcerned about results
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may be accused of being naïve while people who always use this approach may be
perceived as cold and uncaring.

Principle Approach
This approach is the most familiar since most ethics education is based on principles.
Business ethics is generally expressed in terms of principles, including those restricting
fraud, misrepresentation, and false billing. A principle is a common normative standard
of conduct, holding that a specific decision or action is good or true or right for all every
time and everywhere. Familiar examples of principles are The Ten Commandments and
the Golden Rule. An individual who uses the principle approach believes that an action
or decision is right or wrong regardless of the consequences.

There will be no parameters limiting what a person will or will not do if principles did not
exist and for this reason, the principle approach is essential. Conversely, a person who
always makes use of the principle approach will likely be considered dogmatic and hard
to get along with.

Character Approach
This approach analyzes a person’s or group’s intentions, inclinations, and motives and
then creates a moral judgment of the person’s or group’s character. People who apply
the character approach frequently make use of the words “good” or “bad,” instead of
“right” or “wrong.” The judgment concerned addresses neither the morality nor the
consequences of an act but the character of the person performing the act.

When the character approach is used frequently, people can take advantage of one’s
strong sense of personal responsibility. On the other hand, people may find it difficult to
understand one’s identity and what one stands for if the approach is not applied.

Utilitarianism: Making Decisions Based on Ethical Consequences

Utilitarianism was developed by Jeremy Bentham and John Stuart Mill in the 19th
century to help lawmakers decide which laws were morally best. Bentham and Mill
proposed that ethical actions are actions that present the greatest balance of good over
evil.

Utilitarianism poses a relatively simple mode for determining the morally right course of
action for any specific situation one may be in. To study an issue using the utilitarian
approach, first, recognize the different courses of action available. Second, ask who will
be affected by each action and what gains or harms will be assumed from each. And
lastly, the action chosen should be the one to present the greatest benefits and the least
harm. The ethical deed is the one that generates the greatest good for the greatest
number.
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Utilitarianism can be applied to either particular actions (act utilitarianism) or general

rules (rule utilitarianism).

Act utilitarianism generally asks the question "What effect will this act have in this
situation on the general balance of good over evil?" The principle of utility is used
directly to each alternative act in a situation of choice. The right act is then determined
as the one which produces the best results or the least amount of bad results. In the
act utilitarian’s perspective, the principle of utility—do whatever will produce the best
overall results—should be applied on a case by case basis. If lying would present the
best consequences in a particular situation, one ought to lie.

Act utilitarianism is usually deemed as the most natural interpretation of the utilitarian
ideal. If one’s aim is always to generate the best results, it seems reasonable to think
that in each case of determining what is the right thing to do, one should consider the
feasible options (what actions could be performed), predict the outcomes, and accept
the action that will produce the most good.

Rule utilitarianism mainly poses the question "What effect would everyone's doing this
action have on the general balance of good over evil?" Rule utilitarians have a two part
perspective that emphasizes the importance of moral rules. First, a specific action is
morally justified if it conforms to a justified moral rule. Second, a moral rule is justified if
its inclusion into the moral code would create more utility than other possible rules (or
no rule at all). According to this viewpoint, people should judge the morality of individual
actions by reference to general moral rules, and people should judge particular moral
rules by determining whether their acceptance into the moral code would produce more
well-being than other possible rules.

Unlike act utilitarians who try to maximize overall utility by applying the utilitarian
principle to individual acts, rule utilitarians maintain that one can maximize utility only by
setting up a moral code that consist of rules. The correct moral rules are those whose
inclusion in the moral code will produce better results than other possible rules. Once it
is determined what these rules are, one can then assess individual actions by observing
if they conform to these rules. So, the principle of utility is used to judge rules and is not
applied to individual actions. Once the rules are defined, compliance with these rules
provides the standard for evaluating individual actions.

The discussion between act utilitarianism and rule utilitarianism focuses on many
important issues about how people should make moral judgments. Act utilitarianism
emphasizes the specific situations and the many individual features of the
circumstances that offer moral problems, and it presents a simple method for
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addressing these individual cases. Rule utilitarianism emphasizes the repetitive features
of life and the ways in which related needs and problems arise again and again. From
this viewpoint, rules are needed that deal with types of actions: killing, stealing, lying,
cheating, punishing people for crimes, helping people in need, etc. Both of these
outlooks, however, agree that the primary determinant of what is right or wrong is the
relationship between what one does or what form the moral code takes and what is the
impact of one’s moral perspective on the level of people’s well-being.

A strong allure of the utilitarian approach is its cost-benefit aspect. Business managers
frequently weigh the pros and cons of different economic and managerial actions. They
appreciate the fact that most utilitarians acknowledge that not everyone will benefit from
a particular action. Therefore, the stress in utilitarianism is on the net utility of the set of
outcomes resulting from a decision being considered.

Business executives also understand that their business decisions must usually be
placed in the context of a win-lose situation. That is, the consequences of a business
action are often multiple. For example, in mature markets, the only way to gain market
share is when at least one competitor loses share. Or increasing long term shareholder
value may need sacrificing short-term profits in favor of reinvestment in the business, its
products and services.

Another reason managers approve of the utilitarian thinking is due to its flexibility in
response to differing situations. Utilitarianism accommodates complicated situations
more easily than other, more absolute, philosophical approaches. The factors included
in a utilitarian structure can be conveniently different from the short term to the long
term or from financial to non-financial criteria. While opposing stakeholder claims can be
recognized, managers typically weigh business owner or shareholder goals associated
with corporate profitability as more important than the goals of other groups such as
employees or the community.

An Ethics of Principles and Rights

Making good ethical decisions demands a trained sensitivity to ethical issues and a
practiced manner for surveying the ethical aspects of a decision and weighing the
considerations that should impact one’s choice of a course of action. Having a method
for ethical decision-making is very important. Making decisions based on the
consequences should surely be a part of accountable ethical decision-making but this
approach must be complemented with the acknowledgment that some decisions should
be based on principle, not consequences. In simpler words, the ends do not always
justify the means. How does one know what principles should be followed and how
does one decide when a principle should outdo beneficial consequences? Principle-
based, ethical frameworks resolve the details of these questions.
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In this framework, the focus is on the duties and obligations that one has in a given
situation, and consider what ethical obligations one has and what things one should
never do. Ethical conduct is characterized by doing one’s duties and doing the right
thing, and the goal is performing the correct action.

This framework has the favor of developing a system of rules that has constant
expectations of all people. If an action is ethically correct or if a duty is required, it would
apply to every person in a given situation. This equity and fairness encourages treating
everyone with equal dignity and respect.

In addition, this framework gives focus on obeying moral rules or duty despite of
outcome, so it allows for the probability that one might have acted ethically, even if there
is a bad result. Given this, this framework works best in circumstances where there is a
sense of obligation or in those in which one needs to scrutinize why duty or obligation
commands or prohibits specific courses of action.

As like the other frameworks, this framework also has its limitations. First, it can seem
cold and impersonal since it may call for actions which are known to produce harm,
though they are strictly in keeping with a particular moral rule. Also, it does not present
a way to conclude which duty one should follow if one is presented with a situation in
which two or more duties oppose. It can also be rigid in applying the notion of duty to
everyone regardless of personal situation.

Rights define what people can expect as their due, so far as it is under the control of
people or human society. There is always a duty connected with a right, though in many
cases the duty on other people is that they do not interfere with or prevent others
claiming their rights. Any right an individual has depends on other people completing
their duties towards that individual. So it follows that if people neglect their duties, then
other people’s rights may be neglected.

Virtue Ethics: Making Decisions Based on Integrity and Character

Decisions about right and wrong pervade everyday life. Ethics should concern all levels
of life: acting properly as individuals, creating responsible organizations and
governments, and making our society as a whole more ethical. The virtue framework
addresses the elements of individual character and disposition which deepen one’s
humanity and engender one’s relationships with others. These are the qualities which
allow people to act in accordance with their higher selves. Different cultures may value
particular virtues more than others but in most cases virtues refer to traits such as
honesty, kindness, patience, civility, compassion, diligence, self-reliance, loyalty,
CHAPTER 3: Philosophical Ethics and Business
fairness, courage, tolerance, conscientiousness, generosity, temperance, self-control,
prudence, etc.

In the virtue framework, one tries to identify the character traits, either positive or
negative, that might motivate people in a given situation. People are concerned with
what kind of person one should be and what one’s actions reveal about one’s character.
People describe ethical behavior as whatever a virtuous person would do in the
situation, and one seeks to develop similar virtues.

Clearly, this framework is favorable in situations that ask what sort of person one should
be. It enables a wide range of behaviors to be considered as ethical, as there might be
various types of good character and many paths to developing it. As a consequence, it
takes into account all parts of human experience and their role in ethical deliberation, as
it believes that all of one’s experiences, emotions, and thoughts can influence the
development of one’s character.

Even though this framework considers a variety of human experience, it also makes it
more challenging to resolve discords, as there can often be more disagreement about
virtuous traits than ethical actions. In addition, because the framework focuses on
character, it is not specifically good at assisting someone to decide what actions to take
in a given situation or ascertain the rules that would guide one’s actions. Also, since it
stresses the importance of role models and education to ethical behavior, it can
sometimes merely reinforce current cultural norms as the standard of ethical behavior.

This framework maintains the moral rightness or wrongness of actions. An action can
be construed as right or wrong separately from any consequences of the action. It is not
the consequences that make an action right or wrong, but the principle or inclination on
which the action is based.

A Decision-making Model for Business Ethics Revisited

This chapter has provided a detailed introductory analysis of an ethical framework.
Understanding the philosophical basis of ethics allows a person to become more aware
of ethical issues, to identify the impact of your decisions better, and to hopefully make
better informed and more plausible decisions. Also, the theories allow a person to better
and more articulately provide an explanation as to why one has made or wish to make a
certain decision.

These ethical theories provide vital ways to develop the decision-making model
introduced in the last chapter. Here, a more detailed account of the decision-making
model is given. The aim of this decision-making process is to help make ethically
responsible business decisions. To summarize, here is a review of that decision-making
CHAPTER 3: Philosophical Ethics and Business
process taken from Business Ethics: Decision-making for Personal Integrity & Social
Responsibility (3rd ed.).1

1. Identify the ethical issues involved. What is the ethical dimension? What is the
ethical issue? Often we do not even notice the ethical dilemma. Avoid normative
myopia.

2. Determine the facts. Gather all of the relevant facts. It is critical at this stage that
we do not unintentionally bias our later decision by gathering only those facts in support
of one particular outcome.

3. Identify stakeholders. Who will be affected by this decision? What are their
relationships, to me, and what is their power over my decision or results? Who has a
stake in the outcome? Do not limit your inquiry only to those stakeholders to whom you
believe you owe a duty; sometimes a duty arises as a result of the impact. For instance,
you might not necessarily first consider your competitors as stakeholders; however,
once you understand the impact of your decision on those competitors, an ethical duty
may arise.

4. Consider the available alternatives. Exercise “moral imagination.” Are there

creative ways to resolve conflicts? Explore not only the obvious choices, but also those
that are less obvious and that require some creative thinking or moral imagination to
create.

5. Consider how a decision affects stakeholders. Take the point of view of other
people involved. How is each stakeholder affected by my decision? Compare and weigh
the alternatives: ethical theories and traditions can help here.

a. Consequences
i. beneficial and harmful consequences
b. Duties, rights, principles
i. What does the law say?
ii. Are there professional duties involved?
iii.Which principles are most obligatory?
iv.Are people being treated fairly, with respect for their autonomy and
equality?
c. Implications for personal integrity and character
i. What type of person am I becoming through this decision?

1
1. Hartman, Laura P., Des Jardins, Joseph, & MacDonald, Chris. Business Ethics: Decision-making
for Personal Integrity & Social Responsibility (3rd ed.). McGraw-Hill, Irwin.
CHAPTER 3: Philosophical Ethics and Business
ii. What are my own principles and purposes?
iii.Can I live with public disclosure of this decision?

6. Guidance. Can you discuss the case with relevant others; can you gather
additional opinions or perspectives? Are there any guidelines, codes, or other external
sources that might shed light on the dilemma?

7. Assessment. Have you built in mechanisms for assessment of your decision and
possible modifications? Are they necessary? Make sure that you learn from each
decision and move forward with that increased knowledge; you may face similar
decisions in the future or find it necessary to make changes to your current situation.