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THEORIES IN BUSINESS ETHICS

INTRODUCTION

Business ethics can be both a normative( relating to or deriving from a standard or norm) and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken.

DIFFERENT TYPES OF THEORIES.


1)

Deontological Theory - family of ethical theories encompassing moral rules - nonconsequentialist approach when the consequences of an action are not taken into account for the decision.
The word "deontological" comes from the Greek word 'deon or duty. According to some deontological approaches, some moral principles are binding, regardless of the consequences.

2) Teleological Ethics - Concept of goodness over and above the concepts of rightness and obligation or duty / the concepts of rightness and obligation are defined in terms of goodness.

Utilitarianism - teleological approach the greatest


happiness for the greatest number (What decision would bring the greatest happiness for the greatest number)

Utilitarianism - takes its cue from teleological theories and hence according to utilitarianism, our obligation or duty, in any situation, is to perform the action that will result in the greatest possible balance of good over evil.

Utilitarianism is committed to the maximization of the good and minimization of harm and evil. Society ought to produce the greatest balance of positive value or minimum balance of negative value for all affected Ex: Cost and benefit analysis Risk assessment

PROBLEMS WITH UTILITARIANISM

1.

Not always possible to calculate utility or to analyze massive amounts of information Ignores distribution of good is it uniformly distributed or favours specific groups? No common definition of what is good?

2.

3.

4.

Assumes that all can be measured in a common numerical scale

MAJOR ISSUES WITH UTILITARIANISM

Action that produces the greatest balance of value for the greatest number of people. What about the minority?

Ex: What if society decides that it is in the best interest of the public to deny health insurance to those testing positive for AIDS?

KANTIAN ETHICS

Consequences are regarded as morally irrelevant.

What matters is respect for the human being.

People must NOT be treated exclusively as a means to


an end.

This theory is developed by Immanual Kant.

HOW DOES IT WORK?

For an action to be moral

1. It has to be universal something that is moral for one person has to be moral for everyone. For example: Dishonesty cannot be justified as a valid moral principle. 2. Respect for rational beings people should be treated with dignity; and not as means to ends.

3. Autonomy (Independence) action has to respect peoples freedom to choose; people are to treat each other fairly and equally.

WEAKNESSES
1.

Does not lend itself to precise method for decision making

2.

Difficult to think of all humanity each time a decision has to be made

3.

Places greater emphasis on the welfare of every


person, but does not really draw a line

4.

Hard to resolve conflicts when criteria has to treat everyone equally decisions typically involve conflicts of interests

Egalitarianism (RAWLS s THEORY)


Holds that there are no relevant difference among people that can justify unequal treatment. Every person must be given exactly equal share of societys or groups benefits and burdens.

Can two persons be equal?


John Rawls : Each person is to have equal right to the most extensive social system of basic liberties compatible with similar system of liberty for all.

VIRTUE ETHICS THEORIES


* Habitual development of sound character traits

determines the ethical value of persons.

* For the virtue ethicist, building character is what life is all about.

* Character-the pattern of intentions, inclinations and virtues

that make a person/organization act ethically


Will find persons with strong and weak characters.

Persons

with

strong

character-possesses

consciously cultivated ,intellectual, moral, emotional

& social virtues to achieve self-discipline to do the


right thing.

Persons with weak character-do wrong things or

what is truly harmful to them & make excuses for their


irresponsible choices in life.

1.Individual character 2.Work character 3.Professional character

Individual Character-holds that identification & responsible development of human traits of nobility (like courage, justice, gratitude, self-discipline, reliability, caring, simplicity etc) determine the value of all human ethical interactions.

Eg: A person retaining his/her dignity & prospects for happiness by living a virtuous life even after losing all his wealth, health & even the loved ones for no fault of him

Work

Character-holds
honesty,

that

identification

&

development of noble traits at work like competence, creativity, fairness, co-worker

appreciation, loyalty, shared work pride, tolerance,


empathy etc) determine the ethical quality of work life.

Eg: a manager has to serve as a role-model for many

of the traits

when facing global competition with a

need to higher productivity & effective team work.

Professional Character ethics-expertise, collegiality (


sharing responsibility), trust, truthfulness, autonomy, impartiality, independence of judgment, loyalty etc

determine the ethical quality of individuals in associational


communities (workplace or a social service).

SOCIAL CONTRACT THEORIES


An action is right if it conforms to the terms agreed upon, conditions or rules for social well-being, negotiated by competent parties. This theory follows a deontological approach. Example: The relationship that exists between the govt. and the citizens of a country-by the citizens agreeing to put some of their rights to a common ruler (the govt.) and rulers agreeing to protect the interests of the citizens in turn. Even while no formal agreement exists, it can be considered to be a social contract

SYSTEM DEVELOPMENT ETHICS THEORY


According to these, the nature and extent of the supportive framework for continuous improvement of ethical conduct determines the ethical values of actions.

Eg: Managers create a culture supportive of ethical conduct & implement systems towards achieving this (like JW & Narayana Murthy) System Development Ethics Theory may target
a.

b.
c.

Personal improvement ethics Organizational ethics Extra-organizational ethics

1.

Personal Improvement Ethics by promoting personal responsibility for continuous learning, moral excellence directed at companies goals.

2.

Organizational Ethics - by promoting formal & informal


processes like systemic justice, caring, innovation in ethical work cultures etc. (Eg: GE & Infosys)

3.

Extra - Organizational Ethics- by promoting collaborative partnerships ,diversity, social resp. like ecological

concerns, social & philanthropic concerns etc (Eg


Infosys Foundation, GE)

Ethics

is not about the way things

are.It is about the way things


OUGHT TO BE..