Business Ethics in Action

Normative Ethical Theories

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Structure

• Outline the role of ‘normative’ ethical

theory
• Highlight international differences in
perspectives
• Provide a critical overview of traditional
ethical theories
• Explore contemporary ethical theories
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The Role of Ethical Theories

• Two extreme positions (De George 1999)

• Ethical absolutism claims there are eternal, universally
applicable moral principles
– Right and wrong are objective qualities, can be rationally determined
– Typically traditional ethical theories
• Ethical relativism claims morality is context-dependent and
subjective
– No universal right and wrongs that can be rationally determined;
depends on person making the decision & culture in which they are
located
– Typically contemporary ethical theories
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Theory
• Practice without theory is blind
• “The ideas of economists and political philosophers, both when
they are right and when they are wrong, are more powerful than
is commonly understood. Indeed the world is ruled by little else.
Practical men, who believe themselves to be quite exempt from
any intellectual influence, are usually the slaves of some defunct
economist. Madmen in authority, who hear voices in the air, are
distilling their frenzy from some academic scribbler of a few years
back”.
• J.M. Keynes General Theory (1936)

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Normative Ethical Theories
• Ethical theories are the rules and principles that
determine right and wrong for any given situation
Crane and Matten (2016)

• Normative ethical theories are those that propose to

prescribe the morally correct way of acting

• As opposed to descriptive ethical theories which seek to

describe how ethics decisions are actually made in
business
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North American and European
Origins
• Differences between Anglo-American and European approaches:
– Individual v. institutional morality
• US: a more individualistic perspective?
• Europe: wider economic and governing institutions
– Questioning v. accepting capitalism
• US tend to accept the capitalist framework (variants)
• Europe: can question the ethical basis of capitalism
– Justifying versus applying moral norms
• US tend to focus on application of morality
• Europe focus on justification and ethical legitimating of norms
• Asian perspectives tend to be based on religion (e.g. Islam,
Buddhism, Guanxi/Confucianism)

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Traditional Ethical Theories

• Generally offers rules or principles which one can apply

to any given situation
• Can be differentiated into two groups:

Motivation
/ Action Outcomes
Principles

Non-consequentialist Ethics
Consequentialist Ethics

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 Major Normative Theories

Egoism Utilitarianism Ethics of duties Rights & justice

Contributors Adam Smith Jeremy Bentham Immanuel Kant John Locke

John Stuart Mill John Rawls
Focus Individual desires or Collective welfare Duties Rights
interests
Rules Maximization of Act/rule Categorical Respect for human
desires/self interest utilitarianism imperative beings

Concept of Man as an actor Man is controlled by Man is a rational Man is a being that
human with limited avoidance of pain moral actor is distinguished by
beings knowledge and and gain of pleasure dignity
objectives (“hedonist”)
Type Consequentialist Consequentialist Non- Non-
consequentialist consequentialist

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 Egoism
• Theory of egoism - an action is morally right if the decision-
maker freely decides an action to pursue either their (short-
term) desires or their (long-term) interests.
– Adam Smith (1793): pursuit of individual interest morally
acceptable as invisible hand of market creates benefit for
all
– Relies on free competition and good information
– ‘Enlightened egoism’
– However, markets do not function perfectly
• Anti-globalisation movement
• Sustainability debate
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Utilitarianism

• An action is morally right if it results in the

greatest amount of good for the greatest number
of people
– Also called the ‘greatest happiness principle’
– ‘eudemonistic’ or ‘hedonistic’
– Comparable to cost-benefit analysis in
mainstream economics

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Issues with Utilitarianism
• Subjectivity: This has led to refinement of theory:
• Act utilitarianism
• Rule utilitarianism
• Difficult to quantify some things
• Distribution – the minority is neglected
• Utilitarianism is unworkable because we cannot
know the full results of any action, nor can we
accurately weigh the different kinds of good and evil
that result. The calculation is artificial and not
practical

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Act and Rule Utilitarianism
Act utilitarianism
– Looks to single actions and bases the moral
judgement on the amount of pleasure and the
amount of pain this single action causes.

Rule utilitarianism
– looks at classes of action and ask whether the
underlying principles of an action produce more
pleasure than pain for society in the long run.

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Case – Conjoined Twins
In 2001 conjoined twins Jodie and Mary were in a Manchester hospital,
the centre of a debate about whether they should be separated or not.
Jodie was a bright, alert baby. She had a functioning heart and lungs.
Her legs were set wide apart but could be rectified by surgery. The
probability was that separated from Mary, Jodie would be able to lead a
relatively normal life, probably walking unaided, probably attending
school and probably being able to have children. For Mary, things were
very different. Her face was deformed but more importantly she had no
effective heart or lung function. She lived only because of her physical
attachment to Jodie. For Jodie, separation
meant the expectation of a normal life; for Mary it meant death.

What are you views on the course of action? What theories would
justify such actions?

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Case – Conjoined Twins; Outcome
At first the debate seemed to be between a utilitarian view from the
medical staff and subsequent judicial process, who favoured
separation, and the view of the family Christian leaders, who favoured
no action, based on five key principles, including the sacredness of
human life, and the absence of a duty to preserve life if extraordinary
means have to be used.

The hospital took this to court, and it went to appeal. The judges at
appeal accepted the main principles but argued from them exactly the
opposite conclusion. The sacredness of human life, they argued,
required that the twin who had the chance to survive should be given
that chance. The weaker twin would be likely to die whatever decision
was taken. Hence, they knew that the twins should be separated.
Robinson and Dowson (2012)
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Ethics of Duties
‘Categorical Imperative’ (Kant)
• Maxim 1: Consistency
– An action can only be regarded as right if the rule guiding that
behaviour should be followed consistently by everyone in all cases.
• Maxim 2: Human Dignity
– Act so that you treat others ‘always as an end and never as a
means only’.

• Maxim 3: Universality
– The rules guiding our actions should be acceptable to every
rationale being, because they are rationally acceptable (Would
others agree? New York Times test; would you be happy to see your
decision reported in the press?)

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Issues with Ethics of Duties

• Influential in shaping stakeholder theory but…

• Undervaluing outcomes
• Complexity – difficult to apply abstract rules
• Misplaced optimism? Assumption of rational action.

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Ethics of Rights and Justice

Natural rights (Locke)

• Key basic, important, unalienable entitlements that should be
universally respected and protected.
– Based on consensus about nature of human dignity
– Strongly based in western enlightenment views
Justice
• The simultaneously fair treatment of individuals in a given
situation with the result that everybody gets what they
deserve
– Fair procedures (procedural justice)
– Fair outcomes (distributive justice)
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John Rawls Theory of Justice (1971)

Two criteria determine whether an action is ‘just’:

1. Each person has an equal right to the most extensive
total system of basic liberties compatible with a similar
system of liberty for all.
2. Social and economic inequalities are to be arranged so
that they are both:
a. to the greatest benefit of the least advantaged &;
b. attached to offices and positions open to all under
conditions of fair equality of opportunity.

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Limits of Traditional Theories
• Too abstract – too theoretical for practical use
• Too reductionist – focus on one aspect of morality
• Too objective and elitist – pronouncements on right or
wrong without any experience of actual situations
• Too impersonal – do not consider personal bonds &
relationships
• Too rational and codified – suppresses moral autonomy,
feelings and emotions
• Too western-centric – consider the western theories are
suitable for all (but see Sen, 2009)

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Ethical Theory

Alternative perspectives on ethical

theory

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Approaches based on Character
and Integrity
Virtue ethics
• Contends that morally correct actions are those
undertaken by actors with virtuous characters.
Therefore, the formation of a virtuous character is the
first step towards morally correct behaviour

Acquired traits
• Intellectual virtues
• Moral virtues
• Virtuous behaviour as part of the good life

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Virtue: Systems and
Organisations

• People are the centre of ethics, and the ethical analysis

of systems and organisations will always in the end
hinge on how people are affected.
• While systems and organisations are created by people,
each individual is born into an already existing society
that contains an economic, political, and social system,
and a variety of organisations, all of which affect the
individual.

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Approaches based on Empathy
and Moral Impulse
Postmodern ethics
• An approach that locates morality beyond the sphere of
rationality in an emotional ‘moral impulse’ towards
others. It encourages individual actors to question
everyday practices and rules, and to listen to and follow
their emotions, inner convictions and ‘gut feelings’ about
what they think is right and wrong in a particular incident
of decision-making.

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Postmodern Business Ethics

• Postmodern business ethics emphasises (Gustafson,

2000)
– Holistic approach
– Examples rather than principles
– ‘Think local, act local’
– Preliminary character

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Pluralism

Crane and Matten (2016) contend that for the practical

purpose of making effective decisions in business:
• No one theory or one approach has the best or true view
of a moral dilemma
• Suggest that all these theoretical approaches throw light
from different angles on one and same problem
• Complementary rather than mutually exclusive
Advocate position of pluralism
• Middle ground between absolutism and relativism

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Typical Perspective

Ethical
dilemma Single normative consideration
for solving the ethical dilemma

‘Lens’ of ethical theory

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Pluralistic Perspective, Crane &
Matten (2016:124)

Ethical
dilemma
“Prism” of ethical
theories

Variety of normative considerations in

solving the ethical dilemma

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 Summary
Consideration Typical question you might ask yourself Theory
One’s own interests Is this really in my, or my organization’s, best long-term interests? Would it be Egoism
acceptable and expected for me to think only of the consequences to myself in this
situation?
Social consequences If I consider all of the possible consequences of my actions, for everyone that is Utilitarianism
affected, will we be better or worse off overall? How likely are these
consequences and how significant are they?
Duties to others Who do I have obligations to in this situation? What would happen if everybody Ethics of duty
acted in the same way as me? Am I treating people only to get what I want for
myself (or my organization) or am I thinking also of what they might want too?
Entitlements of Whose rights do I need to consider here? Am I respecting fundamental human Ethics of rights
others rights and people’s need for dignity?
Fairness Am I treating everyone fairly here? Have processes been set up to allow everyone Theories of justice
an equal chance? Are there major disparities between the ‘winners’ and ‘losers’
that could be avoided?
Moral character Am I acting with integrity here? What would a decent, honest person do in the Virtue ethics
same situation?
Care for others and How do (or would) the other affected parties feel in this situation? Can I avoid Feminist ethics
relationships doing harm to others? Which solution is most likely to preserve healthy and
harmonious relationships among those involved?
Process of resolving What norms can we work out together to provide a mutually acceptable solution Discourse ethics
conflicts to this problem? How can we achieve a peaceful settlement of this conflict that
avoids ‘railroading’ by the most powerful player?
Moral impulse and Am I just simply going along with the usual practice here, or slavishly following Postmodern ethics
emotions the organization’s code, without questioning whether it really feels right to me?
How can I get closer to those likely to be affected by my decision?What do my
e motions or gut feelings tell me once I’m out of the office? 28
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 References
Crane, A. and Matten, D. (2016) Business Ethics. OUP: Oxford
DeGeorge, R. (2010) Business Ethics. Prentice Hall
Melé, D. (2009) Business Ethics in Action: Seeking Human
Excellence in Organizations. Palgrave Macmillan
Robinson, S. and Dowson, P. (2012) Business Ethics in Practice.
CIPD
Sandel M. (2010) Justice: What's the Right Thing to Do? 
Sandel M. (2013) What Money Can't Buy: The Moral Limits of
Markets, Penguin: Harmondsworth
Sen, A. (2009) The Idea of Justice, Penguin: Harmondsworth
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