Ethics in Business Lec09

Business Ethics
Week 4 Lecture 1
Recap !!
 Ethics and business
 Moral reasoning & Dev. – personal values
 Who is responsible – the clash of values
 Can businesses be made ethical – what do the

theories say?
Plan for today !!!
Ethical principles in Business

What do we have here?
The three approaches:
 Utilitarianism
 Rights, duties and justice
 The ethics of care

Approach 1
Utilitarianism
Weighing the social costs and benefits
Utilitarianism
 Businesses seek to make a profit –
income exceeding costs
 The family budget example !!

Utilitarianism
 Calculating what we want , balancing our
wishes with our resources, and
comparing present versus long term
desires
 So what does utilitarianism say??

Utilitarianism
An ethical theory that holds that an action is

right if it produces or if it tends to produce
the greatest amount of good for the
greatest number of people affected by the
action. Otherwise the action is wrong.
Consider an example !!!
Example:
 An airplane manufacturer spent great deal of money
developing new airplane. The company badly needs
cash because it is financially overextended and facing
the danger of closing down the entire plant putting
thousands of workers out of jobs. The president of
company is trying to interest key governmental ministers.
One of key person is heavily in debt because of
gambling. He quietly contacts the minister and gives him
$ 1 million cash , who later awards the contract. The
president argues it is justifiable as it saved jobs and the
town, minister paid debts, foreign country got planes
they needed. The goods produced, he argues, is greater
than any harm done by payment to minister. Is he
correct?
Utilitarianism
 This theory does not force on us something
foreign to our ordinary rational way of acting.
 Its systemizes and makes explicit what its

defenders believe most of us do in our moral
thinking and much of our other thinking
 It is reasonable for rational beings to choose

actions that produce more good than less good
Consider another example !!!
Lying
Utilitarianism
 Businesses translate “good” in monetary
form so those actions which generate max
money are good
 The use of utility curves…
 Equated with efficiency- lowest input max

output
The problems
Problems
 Measuring utility e.g. person on same job
 Costs benefit analysis – suppose that installing

an expensive exhaust system would eliminate
harmful gases from factory increasing the life of
workers by 5 years. How the value of added
years can be justified against cost of system
 What is a cost and what is a benefit – funding a

club
 The non-economic goods – love, life, health

The Defenders
 Use of commonsense judgment where things

become incomparable
 Where quantitative data for comparing costs and

benefits is unavailable other quantitative
measures may be used like attitude surveys etc
Utilitarianism and Bribery
Negative consequences of bribery…
Now go back to example of plane manufacturer !!

- Should all company in financial difficulties be
allowed to bribe govt. officials?
Cutting off the investigation
of consequences
at the point most suitable
is what is done in practice
What about Justice and rights?
Consider an example …
Your uncle owns a big chemical factory which
does not have safety devices. Your uncle is
sick and doctors have said that he would die
in a year thus he is reluctant to have safety
measures. On his death you will inherit his
factory and you also intend to install safety
device ….
What would you do?
Would you murder your uncle?
One done one more to go …
Take a 5 minutes break
Approach 2
Moral Duty, Rights and Justice
How many times you have read or heard??
 Right to own the property….

 Right to work …
 Right to just and fair remuneration…
 Right to join unions
 So on…
The concept of right and correlative notion of
duty lie at the heart of much of our moral
discourse
Concept of Right …
 Right is an individual’s entitlement to something

 Derived from law – Legal rights e.g. freedom of
speech
 Derived from system of moral standards – Moral
rights e.g. not to be tortured
- considered as universal regardless of the
legal system they are under
Where they are used?
 Absence of prohibition
 Authorized empowered
 Existence of prohibitions or requirements

on others
 Tightly correlated with duties
 Provides individual with autonomy to

pursue their interests
 Basis for justifying one’s actions and for

invoking the protection of others
 Contrast to utilitarian approach

The Two Types
 Contractual right – the obligation

(marriage, work relations, doctors etc)
 Moral right – based on moral principles

The Kant’s approach to moral right
 Moral Principle (categorical imperative) : everyone
should be treated as a free person equal to everyone
else
 First formulation : Concept of Universalbility and

Reversibility
 Focus on the interior motivations not on consequences

of external actions
 Advancing own interests or pleasure , the action has no

moral worth. Actions which invoke sense of duty and
willingness to have every person act on e.g. breaking a
contract
The Kant’s approach to moral right
 Second formulation: A action is morally right for a

person if and only if that person does not only use
others merely as means for advancing his or her
own interests but also respects and develops their
capacity to choose freely for themselves
 Example: deceiving others to sign a contract

The Justice part
Kinds
 Distributive Justice: distributing society’s benefits

and burdens fairly
 Example: If Susan and Bill are working on the same

job and doing same work, they should be paid
equally. If time spent on the job is the basis for
payment and Susan spends more time though doing
same work. Should she be paid more??
Principles of Distribution
Fundamental: distribute benefits and burdens equally
to equals and unequally to unequals
Egalitarian: Distribute equally to everyone
Capitalistic: Distribute by contribution
Socialist: Distribute by need and ability
Libertarian: Distribute by free choices

Compensatory Justice:
Fairly restoring to a person what the person lost

when he was wronged by someone else
e.g. destroying someone’s property , held morally

responsible for paying damages
 What where damage cannot be measures? e.g.

loss of reputation
Retributive Justice
 Fairly blaming or punishing persons for wrong

doing
 The ignorance and inability , e.g. cotton mills
 The harshness of penalty should be same

 Enough evidence
Rawl’s Approach
First: Each person is to have equal rights to the most

extensive basic liberty compatible with similar
liberty for others
Second: Social and economic inequalities are to be

arranged so that they are both
a) Reasonably expected to be to everyone’s
advantage
b) Attached to positions and offices open to all
Rawl’s Approach
Criticism :
This approach does not comply with all the

questions of justice
e.g. discrimination

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Business Ethics

 Ethics and business

 Moral reasoning & Dev. – personal values

 Who is responsible – the clash of values

 Can businesses be made ethical – what do the

Ethical principles in Business

The three approaches:

 Rights, duties and justice

 The ethics of care

 The family budget example !!

 So what does utilitarianism say??

An ethical theory that holds that an action is

 Its systemizes and makes explicit what its

 It is reasonable for rational beings to choose

 The use of utility curves…

 Equated with efficiency- lowest input max

 Costs benefit analysis – suppose that installing

 What is a cost and what is a benefit – funding a

 The non-economic goods – love, life, health

 Use of commonsense judgment where things

 Where quantitative data for comparing costs and

Now go back to example of plane manufacturer !!

 Right to own the property….

 Right is an individual’s entitlement to something

 Existence of prohibitions or requirements

 Provides individual with autonomy to

 Basis for justifying one’s actions and for

 Contrast to utilitarian approach

 Contractual right – the obligation

 Moral right – based on moral principles

 First formulation : Concept of Universalbility and

 Focus on the interior motivations not on consequences

 Advancing own interests or pleasure , the action has no

 Second formulation: A action is morally right for a

 Example: deceiving others to sign a contract

 Distributive Justice: distributing society’s benefits

 Example: If Susan and Bill are working on the same

Egalitarian: Distribute equally to everyone

Capitalistic: Distribute by contribution

Socialist: Distribute by need and ability

Libertarian: Distribute by free choices

Fairly restoring to a person what the person lost

e.g. destroying someone’s property , held morally

 What where damage cannot be measures? e.g.

 Fairly blaming or punishing persons for wrong

 The ignorance and inability , e.g. cotton mills

 The harshness of penalty should be same

First: Each person is to have equal rights to the most

Second: Social and economic inequalities are to be

This approach does not comply with all the

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