Ethical Decision Making

In Europe, a woman was near death from a special kind of cancer.

There was one drug that the doctors thought might save her. It was
a form of radium that a druggist in the same town had recently
discovered. The drug was expensive to make, but the druggist was
charging ten times what the drug cost him to make. He paid $400
for the radium and charged $4,000 for a small dose of the drug.
The sick woman's husband, Heinz, went to everyone he knew to
borrow the money and tried every legal means, but he could only
get together about $2,000, which is half of what it cost. He told the
druggist that his wife was dying, and asked him to sell it cheaper
or let him pay later. But the druggist said, "No, I discovered the
drug and I'm going to make money from if." So, having tried every
legal means, Heinz gets desperate and considers breaking into the
man's store to steal the drug for his wife
Ethical Dilemma
Ethical Dilemma
 Five Sources of Ethical Standards

1. The Utilitarian Approach

Some ethicists emphasize that the ethical action is the one that
provides the most good or does the least harm, or, to put it
another way, produces the greatest balance of good over harm.
The ethical corporate action, then, is the one that produces the
greatest good and does the least harm for all who are affected-
customers, employees, shareholders, the community, and the
environment. Ethical warfare balances the good achieved in
ending terrorism with the harm done to all parties through
death, injuries, and destruction. The utilitarian approach deals
with consequences; it tries both to increase the good done and
to reduce the harm done.
 Five Sources of Ethical Standards
2. The Rights Approach

Other philosophers and ethicists suggest that the ethical action is

the one that best protects and respects the moral rights of those
affected. This approach starts from the belief that humans have a
dignity based on their human nature per se or on their ability to
choose freely what they do with their lives. On the basis of such
dignity, they have a right to be treated as ends and not merely as
means to other ends. The list of moral rights -including the rights
to make one's own choices about what kind of life to lead, to be
told the truth, not to be injured, to a degree of privacy, and so on-is
widely debated; some now argue that non-humans have rights, too.
Also, it is often said that rights imply duties-in particular, the duty
to respect others' rights.
 Five Sources of Ethical Standards

3. The Fairness or Justice Approach

Aristotle and other Greek philosophers have contributed the

idea that all equals should be treated equally. Today we use
this idea to say that ethical actions treat all human beings
equally-or if unequally, then fairly based on some standard that
is defensible. We pay people more based on their harder work
or the greater amount that they contribute to an organization,
and say that is fair. But there is a debate over CEO salaries that
are hundreds of times larger than the pay of others; many ask
whether the huge disparity is based on a defensible standard or
whether it is the result of an imbalance of power and hence is
unfair.
 Five Sources of Ethical Standards
4. The Common Good Approach

The Greek philosophers have also contributed the notion that

life in community is a good in itself and our actions should
contribute to that life. This approach suggests that the
interlocking relationships of society are the basis of ethical
reasoning and that respect and compassion for all others-
especially the vulnerable-are requirements of such reasoning.
This approach also calls attention to the common conditions
that are important to the welfare of everyone. This may be a
system of laws, effective police and fire departments, health
care, a public educational system, or even public recreational
areas.
 Five Sources of Ethical Standards

5. The Virtue Approach

A very ancient approach to ethics is that ethical actions ought

to be consistent with certain ideal virtues that provide for the
full development of our humanity. These virtues are
dispositions and habits that enable us to act according to the
highest potential of our character and on behalf of values like
truth and beauty. Honesty, courage, compassion, generosity,
tolerance, love, fidelity, integrity, fairness, self-control, and
prudence are all examples of virtues. Virtue ethics asks of any
action, "What kind of person will I become if I do this?" or "Is
this action consistent with my acting at my best?"
Ethical Decision Making
Ethical Decision Making
Framework for understanding Ethical
Decision Making
Some Theories of Ethics
 Kohlbergs Theory or Model
Level 1 Pre-conventional level. (stage 1 + stage 2)
Level 2 Conventional level. (stage 3 + stage 4).
Level 3 Post Conventional level or, Principled level (Stage 5 + stage 6)

Stage 6 Follows self chosen universal Stage 1 Obey rule to avoid

ethical principles in the event punishment
of conflicts. Principles
override law. Stage 2 Follow
Rules only if it is in
Stage 5 Current laws
Own interest. Let
and values are relative.
Others do the same.
Laws and duty are
Confirm to secure
obeyed on rational
rewards.
calculations to serve the
greatest number.
Stage 3 Conform to
meet the expectations
Stage 4 Doing right in ones
of others. Please others.
duty. Obey the law. Uphold the
Adhere to stereotypical
social contract and orders.
images.
 Golden Rule Model
One should treat other people in the same way that
he or she would want to be treated.
The ethics of reciprocity should not be confused with
revenge or penalizing justice.
One has the freedom of doing anything as long as those
activities do not harm anyone.
Different people have different ideologies, beliefs and
may belong to different cultural heritage. This difference
is the reason behind the difference in his behavior
towards various situations.
 The Kantian Model
Every person has certain basic rights in a moral
universe. So an action is morally correct if it minimizes
the aggregate violation of the rights of all stakeholders.
The Kantian model is useful to managerial decision
making and readily leads itself to internal audit review.
Kant did not believe that any outcome is good from its
origin. Good is not always intrinsic. He did not believe in
any good character traits like ingenuity, intelligence,
courage etc. He used the term good as good will.
If the actions are predetermined then they cannot be
said as free and moral. He believed that to act morally,
freedom is required.
 The Kantian Model
There are 2 concepts of duty:
1. Duty is just following orders imposed by somebody.
2. Duty is internal and cannot be imposed on oneself.
He considered inclination to constitute motivation,
whereas others believe that it was physical world that
acted motivation. Sometimes mans mind is overclouded
by sorrows due to the lack of sympathy from others but
still has the power to help those in distress.
Kant also introduces maxims like:
1. Never lie to your colleagues.
2. Never act in a manner that would make your family or
organization ashamed of you.
3. Always work hard to be the best performer.
 Teleological Theories
Teleological Theories hold that the rightness of actions is
determined solely by the amount of good consequences
they produce. Actions are justified on teleological theories
by virtue of the end they achieve rather than some feature of
the actions themselves. Thus, the concept of goodness is
fundamental in teleological theories and the concept of
rightness and obligation or duty are defined in terms of
goodness. Whatever makes human beings generally better
off or provides some benefit is good and whatever makes
them worse or harm them is evil.
Although much of our ordinary moral reasoning is
teleological, some of it is decidedly non teleological in
character. Generally, we have obligations to keep our
promises, even when more good might be achieved by
breaking them.
 Deontological Theories

Deontologist Theories in contrast to teleological theories

deny that consequences are relevant to determining
what we ought to do. Deontologist typically hold that
certain actions are right not because of some benefits to
ourselves or others but because of the nature of these
actions or rules from which they follow. Hence bribery is
wrong by its very nature regardless of the
consequences. Deontology means Duty . Obligation or
duty is the fundamental moral category in deontological
theories and goodness and other concepts are to be
defined in terms of obligation of duty.
 Deontological Theories
The seven rules presented by W. D. Ross, a 20th. Century
British philosopher are as follows:
1. Duties of fidelity: To keep promises and to tell the truth.
2. Duties of reparation : To compensate people for injury that
we have wrongfully inflicted upon them.
3. Duties of gratitude: To return favours that others do for us.
4. Duties of justice: To ensure that goods are distributed
according to peoples merit.
5. Duties of beneficence: To do whatever we can to improve
the condition of others.
6. Duties of self improvement : To improve our own
conditions.
7. Duties of non-malfeasance: To avoid injury to others.
 Deontological Theories
Deontologists generally hold that the rightness of actions
depends wholly or in part in the motives from which they
are performed and not on consequences. Two people
who give large amounts to charity one out of genuine
concern to alleviate suffering and the other to impress
friends and associates produce the same amount of
Good, yet we evaluate the two actions differently.
One strength of deontological theories such as Rosss is
that they make sense of cases in which consequences
seem to be irrelevant. Especially in justifying the
obligations that arise from relations, such as contracts
and roles. Thus a manufacturer has an obligation to
honour a warranty on a defective product even if the cost
of doing so exceeds the benefit of satisfying a customer.
 Immanuel Kant's theory of ethics
Immanuel Kant's theory of ethics is considered
deontological for several different reasons. First, Kant
argues that to act in the morally right way, people must
act according to duty (deontology). Second, Kant argued
that it was not the consequences of actions that make
them right or wrong but the motives of the person who
carries out the action.
Kant's argument that to act in the morally right way, one
must act from duty, begins with an argument that the
highest good must be both good in itself, and good
without qualification. Something is 'good in itself' when it
is intrinsically good, and 'good without qualification' when
the addition of that thing never makes a situation
ethically worse.
 Immanuel Kant's theory of ethics
Kant then argues that those things that are usually
thought to be good, such as intelligence, perseverance
and pleasure, fail to be either intrinsically good or good
without qualification. Pleasure, for example, appears not
be good without qualification, because when people take
pleasure in watching someone suffering, this seems to
make the situation ethically worse. He concludes that
there is only one thing that is truly good:
Nothing in the worldindeed nothing even beyond the
worldcan possibly be conceived which could be called
good without qualification except a good will.
 Immanuel Kant's theory of ethics
Kant then argues that the consequences of an act of
willing cannot be used to determine that the person has
a good will; good consequences could arise by accident
from an action that was motivated by a desire to cause
harm to an innocent person, and bad consequences
could arise from an action that was well-motivated.
Instead, he claims, a person has a good will when he or
she 'acts out of respect for the moral law'. People 'act out
of respect for the moral law' when they act in some way
because they have a duty to do so. So, the only thing
that is truly good in itself is a good will, and a good will is
only good when the willer chooses to do something
because it is that person's duty. Thus, according to Kant,
goodness depends on rightness.
 Immanuel Kant's theory of ethics

Kant's three significant formulations of the categorical

imperative are:
Act only according to that maxim by which you can also
will that it would become a universal law.
Act in such a way that you always treat humanity,
whether in your own person or in the person of any
other, never simply as a means, but always at the same
time as an end.
Act as though you were, through your maxims, a law-
making member of a kingdom of ends.
Social Responsibility of Business

Submitted by :-
Pranita Jain
iitm
 SOCIAL RESPONSIBILITY OF
BUSINESS
Social responsibility is the obligation of the
decision makers to take decisions which
protect and improve the welfare of the
society as a whole along with their own
interests.
Social responsibility means the intelligent
& objective concern for the welfare of
society and leads in the direction of human
welfare.
SOCIAL RESPONSIBILITY OF BUSINESS

Employees

Government Shareholder

Business

Nature
Customers &
Itself
RESPONSIBILITY TOWARDS CUSTOMERS
True and fair
information through
advertisements.
Regular supply of
good.
Charge reasonable
prices.
Avoid black
marketing.
 RESPONSIBILITY TOWARDS
SHAREHOLDER

A fair return on investment.

Provide full & accurate
information regarding
business.
Safety of investment.

Improving the public image

of company.
 RESPONSIBILITY TOWARDS EMPLOYEE

Fairwages and salaries.

Good & safe working
conditions.
Opportunities for
education training &
promotion.
Workers participation in
decision making.
 RESPONSIBILITY TOWARDS
GOVERNMENT

To abide by the laws

of the land.
To pay taxes honestly.

To avoid corrupting.

To encourage fair
trade.
To avoid monopoly.
 RESPONSIBILITY TOWARDS
ITSELF
To create more
employment.
Optimum utilization of
resources.
Development and
Expansion of business.
 RESPONSIBILITY TOWARDS
BACKWARD REGIONS

To contribute to the
economic
development of
backward regions
and weaker
sections of society.