(Source: Roa, Fr. Floriano C.

Business Ethics and Social Responsibility, Rex Book Store, Manila,

Philippines)

Ethical Theories commonly used in business and organizational decision-making:

1. Moral Rationalism (Immanuel Kant)

Kant believed that reason is autonomous. For him, reason is the be all and end all of everything. He
maintained that all truths and knowledge are derived from human reason. And therefore, all laws and
moral principles also came from human reason. According to Kant, reason commands and we must obey
it without questioning. In effect, Kant is proposing an absolute morality which for him requires absolute
obedience.

For Kant morality is:

a. A priori. (it is not based and not derived from experience)

b. It is universal. (it applies to everybody)
c. It is absolute. (Moral laws are complete and fixed.)
d. Moral laws are immutable. (Moral laws cannot be changed.)

Kant ‘s Categorical Imperative

Categorical Imperative is an unconditional obligation, or an obligation that we have regardless of our will
or desires. Moral duties can be derived from the categorical imperative which can be formulated in
three ways:

1. The formula of Universal Law. “Act only in accordance with that maxim through which you can
at the same time will that it becomes a universal law.”
2. The formula of Humanity. “Act that you use humanity, whether in your own person or in the
person of any other, always at the same time as an end, never merely as means.”
3. The formula of Autonomy is a synthesis of the previous two. It says that we should so act that
we may think of ourselves as legislating universal laws through our maxims. We may think of
ourselves as such autonomous legislators only insofar as we follow our law.

Business Applications:

1. Kant introduces the importance of humanistic dimension into business decisions. (Treat human
beings not as means to an end.)
2. Kant stresses the importance of motivation and acting on principles. (an action has moral worth
if it is done from a sense of duty)
3. Kant’s categorical imperative gives us firm rules to follow in moral decision-making, rules that do
not depend on circumstances or results and that do not permit individual exceptions. (No
matter what the consequences may be or who does it, some actions are always wrong.)

2. Niccolo Machiavelli’s Ethical philosophy

Machiavelli along with his principles will always be associates with the phrase, the end justifies the
means, also his views on cruelty, selfishness, and the bad side of human nature. In his novel “The
Prince”, many people have interpreted his concepts of a leader as a cruel, evil, and deceiving person.
However, reading his words again, one would note that he was not actually implying that leaders should
be evil, dishonest, and not even the words the end justifies the means were literally written in his work.
What Machiavelli was suggesting is that sometimes people to do something not necessarily good to
attain something good. His principles indicated that a leader should be prepared to do evil when
necessary to gain power. He mentioned ways on how to deal with a state that has rotten people. His
principles operated with the assumption that people are bad which, during his time, was true for the
state of Florence and for Italy in general. His principles reflected in “The Prince” were principles derived
from actual experiences. Throughout his life, he had observed how weak the state of Florence was, and
how the weaknesses of some leaders led to the state’s collapse. He wanted a leader to unite Italy,
which, during that time, was divided between disputing powers.

Machiavelli’s principle were based on his negative perceptions about human nature and the social
problems of his time. From these, he made very radical recommendations on how a leader should
govern effectively. In the same book, “The Prince”, Machiavelli indicated that men must govern in the
real world as they are, and not in some ideal world where men behave as they ought to -honest, loyal,
and fair. Basically, what Machiavelli is implying is that there is no problem with a good prince in a state
where all people are good and honest. However, since this is not the case at all times, Machiavelli
recommends his radical principle of governance “the end justifies the means”, which was necessary for
the survival of a government and a leader in his time. The principles in “the Prince” therefore, refer to
gaining and maintaining political power and in the process creating a strong republic. If his principles
were intended for the greater good, then they are neither immoral nor unethical. However, when the
same principles are to be used by people for personal gain, they become immoral and unethical.
Machiavelli has always favored a republic over a dictatorial form of government.

Business applications:

On Managerial

A management style where employees are required to work very hard no matter what it takes just to
achieve bottom line could be a scenario applying the Machiavellian principle. The employees sacrifice
their time for family, relationship with others, and with God to comply with the demands of the
competitive work environment. Some may be even required to leave their homes to be assigned to a far
destination accessible to the demands of the job but not to the requirements of a good family life.
Indirectly, the means to achieve the goal of a corporation takes all measures, even changing the lifestyle
of a person.

On the Individual

In meeting the demands of a job to make both ends meet or to provide for a comfortable life for the
family, people tend to prioritize their time for work over time for family. Their intention is to give the
best for the family in terms of material things but in the process, they sacrifice quality time for the
family. In effect, the good objective of providing for the family becomes the excuse for neglecting other
responsibilities

On Leadership

Sometimes an autocratic leadership style is necessary especially in running an organization. Although

the democratic style of leadership has its own benefits it may not work in some instances, and in some
organizations. At times, we need a strong autocratic leader to motivate people, to attain the goods of a
state or organization, as in the case of other countries.

3. Utilitarianism

The word utilitarian is derived from the Latin words utile bonum or utilis which means usefulness. The
utilitarian ethics is best explained by the maxim, “do whatever produces the greatest good for the
greatest number.” The theory also argues that what makes an act right is its consequences and not the
motive of the action. Utilitarianism is a theory very much similar with hedonism. It makes utility a norm
of morality. If an administers to the temporal welfare and happiness of man, then it is good. But if an act
obstructs or hinders happiness, otherwise it is bad. To a utilitarian, the effects or consequences
determine the goodness and badness of n action. In other words, an act is considered moral if it results
in good consequences, otherwise it is immoral. An act is good if and when it gives good results, if it
works, if it makes you successful, and if it makes you attain your purpose. Otherwise, it is bad.

Two proponents:

a. Jeremy Bentham

Ethical Philosophy

The term utility according to Bentham has two meanings. By utility, it means that property in
any object which tends to produce benefit, advantage, pleasure, good, and happiness. Utilitarian ethics
puts emphasis and significance on the consequences as a result of an act and completely disregards the
motive of an act. An action is considered right or wrong depending on the consequence.

Utilitarian principle disregards the importance of motive because motive is known only to the
person who has it. It would be difficult or impossible for others to praise or blame a moral agent of a
person’s action if motive alone will determine human act as good or bad, or right or wrong.

The Utilitarian Principle according to Bentham can be coined in the phrase, “the greatest good is
the greatest pleasure of the greatest number.”

John Stuart Mill

Ethical Philosophy

Mill believes that human beings pursue happiness naturally and will avoid pain or suffering. He
concluded that since man naturally seeks happiness and avoids pain, then what constitutes good moral
is happiness and pain constitute moral evil. Therefore, an act that promotes happiness is moral, and that
which cause pain is immoral.

To the utilitarians, happiness is not merely the happiness of one person but rather the
happiness of the greater umber of people. The amount of happiness becomes great if a greater number
of people experience it. An act that can make many people happy is better than act that gives happiness
to only one or few persons. Calculation of consequence as moral analysis is “act only if the action will
promote the greatest amount of happiness for the greatest number of persons”.
 For John Mill, happiness can be defined positively and negatively. Positive definition-happiness
is anything that is pleasurable to the greater number of people. Negative definition-happiness is the
absence of pain. The concepts of pleasure is moral, what causes pain is immoral.

Pleasure according to Mill has two forms;

a. Physical – the sensual indulgences to bodily gratification

b. Mental – the intellectual, spiritual and moral pleasures
Physical pleasure is the lower form of pleasure and is considered by Mill as animalistic or beastly
since it appeals to the lower faculties of man. Mental pleasure is superior and is generally more
difficult to achieve and pursuing them gives dignity to man.
Mill’s utilitarianism refers to the mental pleasures when it defines happiness as pleasure.
Happiness pursues mental pleasures and is what differentiates utilitarianism from hedonism.
Human beings desire greater pleasure because man has faculties more elevated tan those
animals.

Business applications:

a. This principle is issued in Cost-Benefit analysis. (More benefit. Less cost is a good action)
b. It is used in the formulation of budgets.
c. It is used in the resolution of Labor-Management conflicts.

4.Moral Positivism

Thomas Hobbes Ethical philosophy

Hobbes believes that human beings are basically selfish creatures who would do everything to
improve their position. According to Hobbes, people would act on their evil impulses if left alone for
themselves. Therefore, they should not be trusted to make decisions on their own. In addition, Hobbes
felt that like people, nations are selfishly motivated. For him, each country is in constant battle for
power and wealth.

In general, it is considered that the basis of all moral laws, is laws of the state. Therefore, it is
good when it is in accordance with the laws of the state, and evil, if it is forbidden by the state.
According to Hobbes, nature primitively is in state of universal war. Man is wolf unto his fellowmen,
(homo homini lupus). Hence, there is a need to check and control this evil tendency.

For Hobbes, governments are created to protect people form their own selfishness and evil. The
best government is one that has the great power of a leviathan, or sea monster. Hobbes believed in the
rule of a king because he felt that a country needs an authority figure to provide direction and
leadership. Because the people are only interested in promoting their own self-interests. Hobbes
believed democracy – allowing citizens to vote for government leaders – would never work. Hobbes
wrote, “All mankind is in perpetual and restless desire for power.. that stops only in death.”
Consequently, giving power to individual would create a dangerous situation that would start a “war of
very man against every man” and make life “solitary, poor, brutish, and short.

Business applications:
1. Businesses must follow laws and government regulations.
2. Business enterprises must create company policies to maintain discipline and order within the
organization.
3. Business organizations must promote the common good and interest of the majority.
4. Businessmen and managers must be law-abiding citizens.