Crane and Matten

Business Ethics (3rd Edition)

Chapter 3
Evaluating Business Ethics:
Normative Ethical Theories
Lecture 3
Overview
Locate the role of ethical theory
Highlight international differences in
perspectives
Provide critical overview of traditional ethical
theories
Explore contemporary ethical theories
What are normative ethical theories?
Ethical theories are the rules and principles
that determine right and wrong for any given
situation Crane and Matten (2010)

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
The role of ethical theory
The role of ethical theory
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
Normative ethical theories
North American and European origins and
differences
Differences between Anglo-American and
European approaches based on philosophical
arguments
Individual versus institutional morality
US tend to individualistic perspective
Europe towards wider economic and governing institutions
Questioning versus accepting capitalism
US tend to accept the capitalist framework
Europe tend to question the ethical justification of capitalism
Justifying versus applying moral norms
US tend to focus on application of morality
Europe focus on justification and ethical legitimation of norms
In contrast, Asian perspectives tend to be
based on religion (e.g. Islam, Buddhism)
Western modernist ethical theories
Traditional ethical theories
Generally offer a certain rule or principle which
one can apply to any given situation
These theories generally can be differentiated
into two groups
Source: Crane and Matten (2010)

Motivation/
Principles


Action


Outcomes
Consequentialist Ethics
Non-consequentialist Ethics
Major normative theories
Source: Crane and Matten (2010)
Non-consequentialist Non-consequentialist Consequentialist Consequentialist
Type
Man is a being that is
distinguished by dignity
Man is a rational
moral actor
Man is controlled by
avoidance of pain and
gain of pleasure
(hedonist)
Man as an actor with
limited knowledge and
objectives
Concept of
human
beings
Respect for human
beings
Categorical imperative Act/rule utilitarianism Maximization of
desires/self interest
Rules
Rights Duties Collective welfare Individual desires or
interests
Focus
John Locke
John Rawls
Immanuel Kant Jeremy Bentham
John Stuart Mill
Adam Smith
Contributors
Egoism Utilitarianism Ethics of duties Rights & justice
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
Utilitarianism
According to utilitarianism, an action is
morally right if it results in the greatest amount
of good for the greatest number of people
affected by the action

Also called the greatest happiness principle
Based on cost-benefit analysis
Problems with Utilitarianism
Subjectivity
This has led to refinement of theory
Act utilitarianism
Rule utilitarianism
Issues around quantification and distribution of
utility
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.
Ethics of duties
Categorical Imperative (Kant)
Maxim 1: Consistency
Act only according to that maxim by which you can at the same
time will that it should become a universal law.

Maxim 2: Human Dignity
Act so that you treat humanity, whether in your own person or in
that of another, always as an end and never as a means only.

Maxim 3: Universality
Act only so that the will through its maxims could regard itself at the
same time as universally lawgiving (would others agree? Would you
be happy to see your decision reported in the press?)
Problems with ethics of duties
Undervaluing outcomes
Complexity
Misplaced optimism?
Ethics of rights and justice
Natural rights
Certain basic, important, unalienable entitlements that
should be respected and protected in every single
action.
Based on consensus about nature of human dignity
Strongly based in western view of morality
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)
John Rawlss
Theory of Justice
1. Each person is to have 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.
Limits of traditional theories
Too abstract
Too reductionist
Too objective and elitist
Too impersonal
Too rational and codified
Too imperialist
21
22
Alternative perspectives on ethical
theory
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
Approaches based on ethics and responsibility
Feminist ethics
An approach that prioritizes empathy, harmonious and
healthy social relationships, care for one another, and
avoidance of harm above abstract principles
Key elements
Relationships
Decisions taken in context of personal human interrelations
Responsibility
Active taking of responsibility, rather than merely having it
Experience
Learn and develop from experience
Discourse ethics
Aims to solve ethical conflicts by providing a process
of norm generation through rational reflection on the
real-life experiences of all relevant participants
Key elements
Ultimate goal of ethical issues in business should be
the peaceful settlement of conflicts
Different parties in a conflict should sit together and
engage in a discourse about the settlement of the
conflict, and ultimately provide a situation that is
acceptable to all
ideal discourse criteria
Approaches based on procedures of norm
generation
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.
Approaches based on empathy and moral impulse
Postmodern business ethics
Postmodern business ethics emphasises
(Gustafson, 2000:21)
Holistic approach
Examples rather than principles
Think local, act local
Preliminary character
Summary
Towards a pragmatic use of ethical
theory
Typical Perspective
Single normative consideration
for solving the ethical dilemma
Ethical
Dilemma
Lens of ethical theory
Pluralistic Perspective

Variety of normative considerations in
solving the ethical dilemma
Prism of
ethical theories
Ethical
dilemma










Pluralism?
Crane and Matten (2010) argue that for the
practical purpose of making effective decisions
in business:
Not suggest one theory or one approach as 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
Considerations in making ethical decisions: summary of key insights
from ethical theories
Consideration Typical question you might ask yourself Theory
Ones own interests Is this really in my, or my organizations, best long-term interests? Would it be
acceptable and expected for me to think only of the consequences to myself in this
situation?
Egoism
Social consequences If I consider all of the possible consequences of my actions, for everyone that is
affected, will we be better or worse off overall? How likely are these
consequences and how significant are they?
Utilitarianism
Duties to others Who do I have obligations to in this situation? What would happen if everybody
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?
Ethics of duty
Entitlements of
others
Whose rights do I need to consider here? Am I respecting fundamental human
rights and peoples need for dignity?
Ethics of rights
Fairness Am I treating everyone fairly here? Have processes been set up to allow everyone
an equal chance? Are there major disparities between the winners and losers
that could be avoided?
Theories of justice
Moral character Am I acting with integrity here? What would a decent, honest person do in the
same situation?
Virtue ethics
Care for others and
relationships
How do (or would) the other affected parties feel in this situation? Can I avoid
doing harm to others? Which solution is most likely to preserve healthy and
harmonious relationships among those involved?
Feminist ethics
Process of resolving
conflicts
What norms can we work out together to provide a mutually acceptable solution
to this problem? How can we achieve a peaceful settlement of this conflict that
avoids railroading by the most powerful player?
Discourse ethics
Moral impulse and
emotions
Am I just simply going along with the usual practice here, or slavishly following
the organizations 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
emotions or gut feelings tell me once Im out of the office?
Postmodern ethics