ETHICAL PRINCIPLES IN BUSINESS

Tri Darma Rosmala Sari, S.E. M.S.Ak.

Learning Outcome
1. Utilitarian approach to moral evaluation
2. Concept of a Right in Business
3. Definition of Justice
4. Concept of ethic of care
Definition of Utilitarianism
Utilitarianism (consequentialism) is a
general term for any view that holds that
actions and policies should be evaluated on
the basis of the benefits and costs they will
impose on society.
Utilitarianism
The benefits of an action may include any desirable
goods (pleasure, health, satisfactions, knowledge,
happiness) produced by the action and costs ma
include any of its undesirable evils(pain, sickness,
death, dissatisfaction, ignorance, unhappiness).
Three moral thing considerations to follow:
1. Determine what alternative actions are
available.
2. Estimate the direct and indirect costs and
benefits the action would produce foa all
involved in the foreseeable.
3. Choose the alternative that produce the greatest
sum of utility.
Measurement Problem
Utilitarian measurement implies that all goods can
be traded for equivalents of each other. However
not everything has monetary equivalent. Critics
have argued that there are some none-economic
goods-such as life, love, freedom, equality, health,
beauty, whose value is such that no quantity of any
economic good is equal in value of the none-
economic good.
Two widely used common-sense criteria

a.Distinction
between b. Distinction
instrumental goods between needs and
and intrinsic goods wants
The major difficulty with
utilitarianism is that it is unable to
deal with two kinds of moral
issues(Rights and Justice).
In response to the critics and justice,
utilitarian have proposed an important
and influential alternative version of
utilitarianism called rule-utilitarianism.
Rule-utilitarianism.

According to the rule-utilitarian, when trying to

determine whether a particular action is ethical
one is never supposed to ask whether that
particular action will produce the greatest amount
of utility. Instead, one is supposed to ask whether
the action is required by the correct moral rules
that everyone should follow.
Rights and Duties
Definition of Right
A right is an individual’s entitlement to something.
A person has a right when that person is entitled to
act in a certain way or is entitled have others act in
a certain way toward him or her.
Such right are called moral rights or human rights
and they are based on moral norms and principles
that specify that all human beings are permitted or
empowered to do something or are entitled to have
something done for them.
Moral right VS Utilitarianism
Moral rights express the requirements of morality
from the point of view of the individual, whereas
utilitarianism expresses the requirements of
morality from the point of view of society as a
whole.
Negative and Positive Rights
Negative rights : duties others have to not interfere
in certain activities of the person who hold a given
right. (ex: right to privacy)
Positive rights : duties of other agents to provide
the holder of the right with whatever he or she
needs to freely pursue his or interest.(ex: right to
education, right to medical care)
Contractual Rights and Duties
Contractual rights and duties are the limited and
correlative duties that arise when one person
enters an agreement with another person. This
rights are closely connected to business.
4 ethical rules governing contracts
1. Both parties to a contract must have full
knowledge of the nature of the agreement.
2. Neither party must intentionally misrepresent
the facts.
3. Neither party must be forced to enter a contract
4. The contract must not bind the parties to an
immoral act.
A basis for Moral Rights: Kant
( Categorical imperative)
Moral Rights according Kant requires that
everyone be treated as a free and equal person.

Kant provides at least two ways of formulating of

Moral Rights.
1. It states: “ I ought never to act except in a such
a way that I can also will that my maxim
should become a universal law.”
2. “ act in such a way that you simply treat
humanity, whether in your own person or in
the person of any other, never simply as
means, but always at the same time as an end”.
Justice and Fairness
Justice used to evaluate not only the actions of
individuals but also social, legal, political and
economic practices and institutions.
Justice generally has a more restricted meaning
that is closer to “fair”
Types of justice
1. Distributive justice: concerned with the fair
distribution of society’s benefits and burdens.
2. Retributive justice: refers to just the imposition
of punishments and penalties on those who do
wrong.
3. Compensatory justice: concerns the just way of
compensating people for what they lost when
they wronged by others.
Principles of Distributive Justice
Egalitarian: distribute equally to everyone
Capitalist: distribute by contributions
Socialist: distribute by need and ability
Libertarian: distribute by free choices
Rawls: distribute by equal liberty, equal
opportunity, and needs of disadvantaged.
The ethics of Care
Ethic of care is an ethic that emphasis that we have
an obligation to exercise special care toward the
people with whom we valuable close relationships.