CHAPTER 2: NORMATIVE ETHICAL

THEORIES IN BUSINESS DECISION-

MAKING

"Those ethical choices often are made every day at a time, minute by minute in ways that you may not even
relate to ethics, so l'm going to walk them thro1ugh the whole story from that perspective and hopefully they I’ll
be able to walk away with something good from it. - Jayson Blair

The learners shall be able to:

1. Explain the three types of normative ethical theories;
2. Discuss Kohlberg's viewpoint on the six stages of moral reasoning:
3. Elaborate the rules suggested by Machiavelli which could guide a leader;
4. Interpret the utilitarian principle of Bentham;
5. Evaluate the different categorical imperatives of Kant;
6. Support the two important principles about the justice of Rawls;
7. Appraise the legal positivism of Hobbes;
8. Assess the divine command theory; and
9. Defend the ethical egoism of Rand.

THE NATURE OF NORMATIVE ETHICS

 Normative ethics is the attempt to provide a general theory that would guide people on how they
ought to live and act.
 For human action, it is morally interesting to identify three elements that actually correspond to the
three types of normative theory.
 These three types of normative ethical theories are virtue, deontological, and consequentialist.
 Virtue Ethics

 This virtue theory focuses on the moral character or the agent as depicting an ideal of human
character.
 According to virtue theory, individuals should have certain character traits such as courage,
generosity, compassion, and other good characteristics that must be evident in their actions.

 Among the principles that virtue ethics teaches are:

1. If an action is being done by a virtuous person in the same situations, then it is right;

2. A person who takes action virtuously is a virtuous person;

3. Only when a person possesses and live the virtues that he acts virtuously; and

4. A virtue is a moral attribute that a person requires to live soundly.

 Deontology

 Based on this theory, there are specific types of acts that are intrinsically good or bad or good or bad by
nature. These particular acts should or should not be done without any regard to the consequences.
 Thus, the basic ethical task for persons is one of doing the right thing or more commonly avoiding doing
the wrong thing using a set of moral principles or moral rules.

Conscientiousness

 It is conscientiousness that makes a person abide by rules carefully despite several temptations not to
follow in some cases.
 Conscientiousness in itself is not significant but it is needed to make certain that people follow rules and
thus do things right. Basically, the Ten Commandments although in a religious context provide a model of
a set of rules of conduct that need to be followed.
Consequentialism

 Consequentialism is an ethical theory that evaluates whether or not something is right by what its
consequences are.
 For instance, most people would agree that lying is wrong. But if telling a lie may help protect
person's life,consequentialism says it is the right and best thing to do.

Utilitarianism and hedonism

Utilitarianism holds that people have to act always in the manner that produces the greatest
consequences means. All that is important for ethics is building the world into a better
place to live in.
Hedonism, on the other hand, is a philosophy of pleasure that says something is "good"
if the consequence produces pleasure or avoids pain. It means doing whatever brings the
greatest amount of pleasure regardless of any other effects.
 Two types of consequentialist theories
Act consequentialism
needs agents to carry out the particular action that in a particular situation is most possible to
maximize good consequences

Rule consequentialism
in contrast, obliges agents to pursue those moral rules the performance of which will maximize
good outcomes.

KOHLBERG'S STAGES OF MORAL DEVELOPMENT

Level 1-Preconventional Morality

The pre-conventional level of moral development addresses the initial reactions that children
are likely to have to their surroundings and relationships.

Stage 1: Simple Obedience Orientation

This Stage 1 focuses on the child's desire to comply with rules and keep away from being punished. For
example, an action is perceived as morally wrong because the performer is punished; the worse the punishment
for the act is, the more "bad” the act is perceived to be.
 Stage 2: Conformity to Group Behavior Orientation

In Stage 2 the definition of "right behavior" is any action that an individual performs for his own best
interest. Loyalty and respect are not yet given emphasis but more on the mentality of reciprocity.

Level 2-Conventional Morality

 Kohlberg says that as a person matures morally, he goes into the conventional stages of good
interpersonal relationships and a sense of maintaining social order.

Stage 3: Good Boy, Nice Girl Orientation

In stage 3, children want the approval of others and act in ways to prevent disapproval. In this stage, the
underlying assumption is that "right" and “wrong" can be determined by an action's contribution to or detraction
from social harmony.

Stage 4: Law-and-Order Orientation

In stage 4, the child blindly accepts rules and conventions because of their value in maintaining a
functioning society. Rules are seen as being very similar for everyone. Obeying rules by doing what one is
"supposed" to do is observed as worthy and significant.
Level 3-Postconventional Morality

Kohlberg's post-conventional morality is defined in terms of more abstract principles and values. It
involves an acknowledgment of the social contract and of universal ethical principles.

Stage 5: Social-Contract Orientation

In stage 5, the world is observed to be holding diverse opinions, rights, and values. Such viewpoint should
be commonly respected as unique to each person or community.

Stage 6: Universal-Ethical-Principal Orientation

The basis of moral reasoning in stage 6 is the combined use of universal ethical principles and rules.
Basically, these selected principles are not concrete but abstract such as equality, dignity, or respect.
THE MACHIAVELLIAN PRINCIPLES

Here are some of the rules suggested by Machiavelli which could guide a leader:

Better to be feared than loved if one cannot be both

The most popular and controversial question Niccolò Machiavelli had challenged and had been inflaming
intense disagreements among managers in the past and these days is “Is it fear or love that could inspire
subordinates and be useful to becoming a more effective leader"?

Ideally, the answer to this question is to combine fear and love. Love and fear are both powerful motivations.
Love creates a bond of obligation whereas fear basically promotes submission. Love is unpredictable, but the
fear of punishment is stable.

The lion and the fox

As a tough lion, he must be strong and honest to win respect. He is not afraid to use his force when the
time calls for it. As a witty fox, a leader must be able to show high-quality “make-believe" and puzzlement so
that he would be able to act with smartness, foresee and avoid of any traps set by opponents. He must know
how to use diplomacy, negotiation and political planning.
Envy and drive
Nature, people wanted to have more than what they have at present, although scared of losing what they
already own. Once they become dissatisfied, this feeling served as an incentive to propel them to change. Often,
a person becomes jealous of those people who have more than what he possesses.

The end justifies the means

Often Machiavelli is given the credit for a consequentialism quote that emphasized “a morally right act as
one that creates a positive outcome". Simply, sometimes, people ignore how the goal is attained which could be
sometimes immoral.

Cycle management forms

The idea of Machiavelli that forms of management are developing like clockwork is also applicable in
these modern days. The actions of people, companies and almost everything is just like a pendulum movement,
which first go up but afterwards could be overtaken by decline.

Promote criticism and frankness

Feedbacks are important sources of information coming from subordinates. Ignoring the importance of
feedbacks coming from employees is a big miscalculation. It is vital for managers to recognize their strengths
and more importantly their weaknesses.
Always make a choice
According to Machiavelli, the world in reality is cruel, because often in decision-making the choice is just
between two evils, rather than between two goods or between a good and an evil.

Don't micromanage, but center on one goal

Micromanaging is one of the most damaging habits an executive can have. It is the nuisance of many
possible successful businesses. It is demoralizing and counter-intuitive. Controlling all things just to ensure
everything goes to plan only generates more problems in the long run.

Let passion be the basis of one's business

In the book The Prince, one of the most important ideas is about “where the willingness isNgreat the
difficulties cannot be great". In the competitive world of business this is true in a lot of areas. The world in
reality is full of things that are not to everyone's favourites.

Capture the zeitgeist

A business enterprise should always stay strong and established despite fashion changes.

Based from the words of Machiavelli “he who directs his actions according to the spirit of the times will
become successful".

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Make friends and avoid enemies
The topic of making connections when in business was made very apparent by Machiavelli. Anyone in
business should avoid creating enemies. Employees need to have good relationship with senior figures.

Be cautious of "yes" people

According to Machiavelli, people who are always agreeable to anything and everything are not believable.
Most of the times, "yes" people only think of their own interests and seeking silently their own profits in
everything.

Learn from the greats

Most successful personalities in any field learn from greatest minds, philosophies, experiments, and ideas.
Getting life's lessons from great businessmen is a sign of strength.

UTILITARIANISM OF JEREMY BENTHAM

For Bentham: “An action is right from an ethical point of view if and only if the sum total of utilities
produced by that act is greater than the sum total of utilities produced by any other act the agent could have
performed in its place."
Four Elements of Utilitarianism in Business
The theory of utilitarianism can be applied in business in many ways. In order to apply this theory in
business, business people must first understand its four elements which are consequentialism, welfarism,
individualism and aggregation.

 Consequentialism means understanding the wrongness or rightness of actions is based on 'the

actions themselves. Businesses apply the idea of consequentialism in their operations, though it
challenges morality and ethics that are being practiced sometimes.
 Individualism, on the other hand, holds that each person, as a human being, wants to experience
happiness, thus, will employ actions that take advantage of utility. With this reality, businesses shall
act in ways that bring them happiness.
 Welfarism, the next element refers to understanding the wrongness or rightness of operations based
on how society's idea of welfare. Simply, actions are good when they provide the greatest benefit for
the majority of members of the society. In the area of business, the management may give wages and
benefits increases for the well-being and contentment of their employees.
 Aggregation is the outlook that the wrongness or rightness of actions relies on their talent to average
the benefits brought to all individuals. This element of utilitarianism suggests that the results of
action must bring happiness both to the individual and the community that surrounds him.

Types of Utilitarianism

1. Negative Utilitarianism
 This is probably the rarest form of utilitarianism. This form focuses on promoting the least suffering
for the least number of people. A good example of this type of utilitarianism is the very controversial
Responsible Parenthood and Reproductive Health Act of 2012 (Republic Act No. 10354).

2. Act Utilitarianism
 This is the simplest, most straightforward variation of the utility theory. Business owners who
employ this principle tend to judge the outcome of each action individually.

3. Rule Utilitarianism
 Rule utilitarianism makes an assessment of the utility of action without taking into consideration
individual acts. In other words, if the end result lies beyond expectations, everyone should respect
the rule set in place.

4. Preference Utilitarianism
 It is the variation that considers that the greatest good should also satisfy personal preferences.
Although, having a preference is unfair to some people. Hence, the more people get what they want,
the better.
 THANK YOU!
Members:
Gerald Recalde
Earl Joshua Victoria
Darwin Manaog
Kim Joyce Magpantay
Gjan Hutalla