Theories of Business ethics

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Importance of Ethics in Business

Ethical Theories Ethics is the field of enquiry. Morality is the object of that enquiry, the code or code of behavior acceptable within a particular group at a particular time. Metaethics can be defined as the study of origin and meaning of ethical concepts Metaethcis deals with > Metaphysical issues, question existence of moral values in humans or their human conventions > Psychological issues question the psychological basis of moral actions > Linguistic issues deals with meaning of key moral terms we use Normative ethics is that branch of ethics that guides human conduct which must be > Prescriptive > Universal > Overriding > Public > Practical 3-2 Applied Ethics DEALS WITH CONTROVERSIAL MORAL ISSUES

There are three set of normative ethics, each with own set of moral principles Utilitarianism :Teleological Ethical Theory is also called Consequentialist Theory
Teleological theories hold that *an action is considered morally correct if the consequences of that action are more favorable than unfavorable. Draw back - GOOD, BAD, RIGHT & WRONG Three definitions of good gives a different consequentialist moral theory > Egoism *only to the individual performing the action > Utilitarianism * to everyone > Altruism *to everyone except the individual Universalism: Deontological Ethical Theory > Duties to God, including honoring him and praying to him > Duties to oneself includes preserving ones life and sharing happiness > Duties to others, including family duties, social duties and political duties. Virtue may be defined as any disposition of character one desires for self and also for others. Virtue ethics emphasizes character development rather than articulation of abstract moral principles that guide actions

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Universalism or Utilitarianism cannot be used to judge all moral actions under all circumstances. Hence two modern ethical systems have been developed, based more upon values than principles. 1) Distributive justice (John Rawls) is explicitly based upon the primacy of single value: Justice. Theory of Justice attempts to solve the problem of distributive justice by utilizing the device of the social contract. 2) Personal library is an ethical systems proposed by Robert Nozick is based upon a single value, Liberty. Liberty is thought to be the first requirement of society

Lockes Theory of Rights Rights can be defined as something to

which one has a just claim: as a A - Power or privilege to which one is justly entitled B i) the interest that one has a piece of property often used as plural ii) plural: the property interest possessed under law or custom and agreement in an intangible thing especially of a literary and artistic nature iii) something one may claim as due.
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 Around 375 BC Plato wrote Republic who discussed in detail ethics Kautiliyas Arthashasthra or the science of economics written around 2300 years ago deal with various aspects of revenue, moral and immoral acts. Kautiliya deals in depth about morality.
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Ethics Theories
Concept of virtue
ARISTOTLE

Deontologist or Deontological Theory Related to the process of the decision(Duty)

Teleological Theory
related to consequences (by end results)
Utilitarianism

Hybrid

N. Machiavelli

Vedantic Ethics

Kantianism

Karl Marx Distributive justice

Ten commandments

Sun Tsu

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Classification of Ethical Theories

Teleological Theory : determines the ethics of an act
by looking into the probable outcome or consequences of the decision (the ends) Righteousness of the actions is determined by the good consequences they produce. Deontological Theory: Determines the ethics of an act by looking at the process of the decision(the means) Hybrid Theory: deals with ethical egoism. Is an enlightened self-interest considers the long range perspective of others or humanity as a whole even though he may not individually and personally benefit from the decision. He identifies the greatest good. Concept of Virtue: Does not appeal to the consequences
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Virtue Ethics by Aristotle

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Seven Absolute Moral Rules by W.D.Ross

Fidelity: To keep promises and to tell truth Repatriation: To compensate people for injury, wrongly fully inflicted on them.
Gratitude: To return favour that others do for us. Justice: To ensure that goods are distributed according to people, merits and demerits Beneficence: To do whatever we can improve the condition of others. Self-Improvement: To improve our condition with respect of virtue and intelligence. Non- Malificence: or non-violence. To avoid injury to others. 3-11

Teleological Theory
The word Telos refers to ends It is based on the end results of the consequences The teleological morality is based on the measuring the outcome of the consequences of the decisions taken While taking such decisions there are impacts on various stakeholders and happiness of one may result in unhappiness to many. The question here is how to measure this happiness, who should be the beneficiary and what are the measurement yardstick. 3-12

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Approaches under Teleological Theory

Utilitarianism Theory propounded by John Stuart Mill. Seeks for utility or good of the greatest number
Is liberal and helps in resolving the differences of opinion. It describes much of the process of decision making of managers According to the concept some section of the individuals may suffer great harm while others receive benefits

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 Utilitarianism is a powerful and widely accepted ethical theory that has specific relevance to problems in business. It fits easily with the concept of value in economics and use of cost benefit analysis in business. The creators of Traditional utilitarianism were Jeremy Bentham ( 1748-1832) John Stuart Mill(1806 -1973) Bentham sought an objective basis for making value judgement that would provide a common and publicly acceptable norms for determining social policy and social legislation. 3-17

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 Both Bentham and Mill assured that the amount of pain produced by an action can be subtracted from the amount of pleasure to yield the net amount of pleasure just as an accountant subtracts the debt from the assets to get the net worth

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