CHAPTER 3: Normative Ethical

Theories in Business Decision-

Making
By: Lailanie S. Arciaga

Normative Ethics
- The study of Ethical Action
- Focuses on a general theory that tells people ought to act
- Tries to study standard of determining rightness and wrongness of
actions

3 Types of Normative Ethical Theories

● Virtue Ethics
- focuses on the moral character of the agent as depicting as
ideal of human character
● Deontology
- emphasizes the centrality of rules
● Consequentialism
- evaluates whether or not someone is right by what its
consequences are
 KOHLBERG’S STAGES OF MORAL DEVELOPMENT

Stages of Moral Development

● Level 1: Preconventional Morality
 Stage 1: Simple Obedience Orientation
Child’s desire to comply with the rules and keep away from
being punished.
Business: Reaction of employees when they initially join an
organization.
 Stage 2: Conformity to Group Behavior Orientation
A child begins paying attention to his own needs.
Business: Employees go up against the needs of their
employers when making decisions.
● Level 2: Conventional Morality
 Stage 3: Good Boy, Nice Girl Orientation
Children want the approval of others and act in ways to
prevent disapproval
Business: Managers must clearly express the significance
of ethical interaction with customers, supplies and other
outsiders.
 Stage 4: Law and Order Orientation
People are more concern with the norms and structure of
society as a whole

● Level 3: Postconventional Morality

 Stage 5: Social Contract Orientation
The world is observed to be holding diverse opinions, rights
and values.
Business: Employees may not follow HR policies
 Stage 6: Universal- Ethical Principal Orientation
People are skilled in seeing problems from the lenses of
each person implicated therein.

Machiavellian Principles
Entrepreneur or executive is an innovator who could create
new and better ways of producing and distributing products and
services
Rules suggested by Machiavelli
1. Better to be feared than loved if one cannot be both
2. Gradual reward and immediate punishment
3. The Lion and the Fox
4. Envy and Drive
5. The end justify the means
6. Cycle management forms
7. Promote criticism and frankness
8. Always make a choice
9. Don’t micromanage but center on one goal
10. Let passion be the business of one’s business
11. Capture the Zeitgeist
12. Make friends and avoid enemies
13. Be cautious of “Yes” people
14. Deal with business threats promptly
15. Learn from the greats

Utilitarianism of Jeremy Bentham

“ An action is right from an ethical point of view if and only if
the sum total of utilities produced by the act is greater than the sum
total of utilities produced by any other act the agent could perform in
its place”
4 Elements of Utilitarianism in Business
1. Consequentialism
2. Welfarism
3. Individualism
4. Aggregation

Types of Utilitarianism
1. Negative Utilitarianism
2. Act Utilitarianism
3. Rule Utilitarianism
4. Preference Utilitarianism

The Principles of Justice by John Rawls: Types of Justice

● Distributive Justice
- benefits and burdens are distributed among society’s members
in ways that are fair and just
● Retributive Justice
- punishments are fair and just
● Compensatory Justice
- people are fairly compensated for their injuries by those who
have injured them

Divine Command Ethics

Things are ethically good or bad or ethically obligatory<
acceptable for forbidden only because of gods will or commands.
Quality that By Default Guarantee His Word Is Good
1. Goodness
2. Immutability
3. Merciful
4. Omniscience
5. Holy
6. Love