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Lesson 4:

THEORIES OF BUSINESS ETHICS

Two types of theories

1. Teleological theories
TELOS means end- End alone is important Not bothered about the means

Merits
a) Based on ordinary moral reasoning b) Justifying unethical means like lying, breaking a promise and stealing c) Farming a policy Policy of bank recovery of loans

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Demerits
a) Ignores means b) Ignores welfare state

2. Deontological theories
DEON means duty- Equal importance to means -Means should justify the ends

Merits
1) Moral theory 2) Motivates people in the right direction 3) Value based society

Demerits
1. Difficult to follow 2. Mostly theoretical

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1. Virtue ethics by Aristotle

Good virtues - courage, self control, generosity, high mindedness, truthfulness and modesty. Essentials of good manager. Idea of professional ethics Code of conduct for all employees

Aristotle advocated three types of justice

a) Distributive justice - Distribuction of benefits b) Compensatory justice Compensation for wrongs done to them c) Retributive justice Punishment for wrong doers According to Aristotle knowledge cannot be separated from action.

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Ethics is not an exact science

Application of Virtue Ethics 1) 2) 3) 4) 5) 6) 7) Trust : Confidence among the stakeholders Self control: Long term results Empathy: Understanding others Fairness: Equitable treatment Learning : Knowledge for decisions Gratitude : A sign of maturity, civility and decency Moral leadership : Attainment of peace of mind,
contented heart and happiness

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Merits
1. Universal values 2. Convergence of values Most suitable to globalisation times

Demerits
1. Fall in values in societies 2. Conflict between individual ethics and social ethics 3. Human problems are not taken into account

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2. Ideas of Confucius
Chinese Philosopher a) Do not wish for quick results Look for long term results. b) Wealth and rank should be obtained in a proper way c) We have to learn good things from the others and examine our own flaws in our character.

3. One minute moralist theory

(Robert Solomon)

Only two questions

a) Does ethics in business lead to profits? b) Is good ethics good for business?

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Immanuel Kants Categorical Imperative

Immanuel Kant was a well disciplined Prussian scholar- Deep analysis and thinkingBook called Foundation of Metaphysics of

Morals Reason should bring moral obligations

Categorical imperatives refer to dos and donts in business and life.

Three fundamental criteria of categorical imperative

1) Universal application 2) Human respect 3) Publicity for good things

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5. Utilitarian ethics of John Stuart Mill a) Consequentialism: Business should produce good
results

b) Hedonism: Business should bring pleasure to

buyers, employees and all the stakeholders c) Maximalism: Business should bring maximum benefits to all d) Universalism: Application to the entire universe

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Few Teleological Theories 1) Conventional ethics of Albert Z. Carr:

Bluffing is necessary in business . Private ethics and ethics in public life. Competition leads to chaos

2) End justifies means theory of Machiavelli:

Defense minister of Italy - Wrote a book called Prince-

3) Might equals right approach of Karl Marx:

Exploitation of labour Class struggle RevolutionEstablishment of socialism.