A Critical Survey OF THE Different Normative Ethical Theories Commonly USED IN Business Decision Making PDF

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Module in Business Ethics MODULE 5 A CRITICAL SURVEY OF THE DIFFERENT NORMATIVE ETHICAL THEORIES COMMONLY USED IN BUSINESS DECISION MAKING

Introduction Ethics is not only concerned with the study of what is right or wrong on or human conduct. As s practical science, ethics also investigate how man ought to behave in a very specific and concrete situation by examining his conduct in the light of various norms that guide his moral judgment. The word ought that not only implies the moral obligation on the part of the actor or doer of such action. Objectives At the end of this chapter, the student are expected to; 1. Understand and evaluate critically the various ethical theories and principles as proposed by different philosophers. 2. Appreciate ethics as normative science. 3. Resolve moral issues and ethical dilemmas in business from the perspective of various ethical theories. 4. Develop the ability to identify and resolve moral issues in business. A. The Norms of Morality According to the Scholastic Philosophy and Traditional Ethics Morality consists of conformity and non-conformity of the human conduct with norms. In the light of Traditional Ethics, these norms are called the “dictates of reason”. Morality therefore, is defined as the quality of a thing manifesting its conformity and non-conformity with its norms or criteria. R. Gula, defined the norms of morality as, “the criteria of judgment about the sort of persons we ought to be and the sort of actions we ought to perform” These are standards that indicate the rightfulness or wrongfulness, the goodness or badness, the value or disvalue of a thing.

The Norms of Morality Conscience Traditional ethics considers conscience as the proximate norms of morality. It is defined as the practical judgment of reason deciding upon an individual act as good and to followed or as evil and therefore, to be avoided. Conscience is the nearest criterion in terms of criterion in terms of evaluating the human conduct. It tells us further that a thing is good and should be followed and some things are evil and thus, should be avoided.

Types of Conscience: 

Antecedent conscience is a judgment before an action is done. Its main functions are to command, to advice, to forbid, and to permit.

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Consequent conscience is a judgment after an act is done. It bears the following effects; inner peace and remorse.

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True conscience is a conscience in which judges things truly are. Knowledge and the sense of responsibility or one’s action help greatly in forming a correct conscience.

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Module in Business Ethics 

Erroneous conscience is also called false conscience. It judges things in a distorted manner since it considers bad acts as good and good acts as bad.

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Certain conscience is a subjective certainly of legality of particular actions to be done of to be omitted. This is the kind of conscience that moralists recommend to be always followed by man.

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Moralists recommend that this kind of conscience should not be followed unless the person has resolved the doubt.

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Scrupulous conscience is one which sees wrong where there is none. It is a conscience which is extremely austere; it is always scared to commit evil.

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Lax conscience is the opposite of scrupulous conscience. It is the kind of conscience which fails to see wrong where there is wrong. This conscience categorically needs a right education.

Natural Law Ethics considers this as remote norm of morality. It reflects what the thing is in accordance with its nature. According to Traditional Ethics, everything has been made with a specific nature and a purpose. St Thomas of Aquinas believes that the purpose is always good. A good act therefore, is what befits the nature of man; a bad act is one that does not befits man nature. An action, therefore, is good or bad depending on tis conformity to the act’s nature in relation to its purpose or end. Ethical Law Traditional Ethics considers eternal law or the divine law as the ultimate norm of morality. For St. Thomas Aquinas- “the divine wisdom directing all actions and movement.” For St. Augustine-“the divine reason or evil of God commanding the natural order of things be preserved and forbidding that it be disturbed. Eternal Law provides for the cosmic order where every creature stands different and independent from each other but not apart from the unified purpose of creation.

Business Application  

Ideally, the 3 norms of morality according to Traditional Ethics must be able to guide our business decision making process. However, these three criteria are not widely accepted by decision makers. Common sense directs that the ”dictates of reason” should be enough to guide our evaluation between the action that we perform and the norms that determine what is acceptable and what is not in our human behaviour.

B. Kantian Ethics (Immanuel Kant) Kant Moral Rationalism Kant believes that reason is autonomous. For him, reason is “the be all end all” of everything. Following this line of thinking, Kant maintained that all truths and all knowledge are derived from human reason. And therefore, all laws and all moral principles also came from moral reason. According to Kant, reasons commands and we must obey it without questioning. In effect, Kant is proposing an absolute morality, which for him requires absolute obedience. For Kant morality is;    

A priori (Not based and not derived from experience) It is universal (It applies to everybody) It is absolute (Moral laws are complete and fixed) Moral laws are immutable (Moral laws cannot be changed)

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Module in Business Ethics Kant Categorical Imperative Kant was probably best known for his theory about a single, general moral obligation that explains all other moral obligation we have. This is the concept of Categorical Imperative. Kant argues that since morality is a product of reason, the obedience to this command is true and binding because it is beyond experience. A categorical imperative generally speaking, is an unconditional obligation, or an obligation that we have regardless of our will or desires.

Moral duties can be derived from the categorical imperative which can be formulated in 3 ways.   

Formula of Universal Law Formula of Humanity Formula of Autonomy

This theory is saying that we have universal duties, despite one’s subjective imperatives that seek to fulfil one’s happiness instead of these duties. Business Application   

Kant introduces the importance of humanistic dimension into business decisions. Treat human beings not as means to an end, because human beings have ends in objectives. Kant stresses the importance of motives and of acting principles. Business decisions are based sometimes on personal convictions and principles regardless of the outcomes or results. Kant categorical imperatives gives us the firm rules to follow in moral decision making, rules that do not depend on circumstances or results and that do not permit individual exceptions. No matter what the consequences may be or who does it, some actions are always wrong.

C. Machiavellian Principle (Niccolo Machiavelli) “The end justifies the means” The principle is found in The Prince, refer to gaining and maintaining political power and in the process of creating a strong republic. In modern psychology, Machiavellianism is one of the dark triad personalities, characterize by a two-faced interpersonal style, a cynical disregard for morality, a lack of empathy, and focus on self-interest and personal gain. Business Application 

On Management. A management style where all employees are required to work very hard no matter what it takes just to achieve the bottom line could be a scenario of applying the Machiavellian principle. The employees sacrifice their time for family, relationship with others and with God to comply with the demands of the competitive work environment. Some may be required to leave their home to be assigned to a far destination accessible to demands of the job but not to the requirements of good family life. Indirectly, the means to achieve the goal of a corporation takes all measures, even changing the lifestyle of a person

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On the Individual. In meeting the demands of a job to make both ends meets or to provide for a comfortable life for the family, people tend to prioritize their time for work over time for family. Their intention is to give the best to the family in terms of material things but in the process, they sacrifice quality time for the family. In effect, the good objective of providing family becomes the excuse for neglecting other responsibilities. Even if they want to ensure a better life for their family by working hard, if home-life is overlooked, they may be no family to offer the fruits of working hard. The end does not justify the means.

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On Leadership. Sometimes an autocratic leadership style is necessary in running an organization. Although the democratic leadership style has its own benefits, it may not work in some instances, and in some organizations. At times, we need a strong autocratic leader to motivate a people, to attain the goal of the state or organization.

D. Utilitarianism The utilitarian ethics is considered the most important consequentialist theory, whose principle is best explained by the maxim “Do whatever produces the greatest good for the greatest number”. The theory also argues that what makes an act right is tis consequences and not the motive of the action. To a Utilitarian, the effects or consequences determine the goodness or badness of an action. In other words, an act is considered to be moral if it results good consequences, otherwise immoral. The two main proponents of the principle are Jeremy Bentham and John Stuart Mill. 

Jeremy Bentham

The term utility according to Bentham has two meanings. By utility, it means that properly in any objects which tends to produce benefit, advantage, pleasure, good, or happiness. The Utilitarian Principle according to Bentham can be coined in the phrase “The greatest good is the greatest pleasure of the greatest number”. This simply implies that an action is considered to be good if it gives the person the greatest pleasure or happiness to the majority of people affected by an action. An action is bad or evil if it does otherwise. 

John Stuart Mill

John Stuart Mill believes that human beings pursue happiness naturally and will avoid pain or suffering. He concluded that since man naturally seeks happiness and avoids pain, that what constitute good moral is happiness and pain constitutes moral evil. To the Utilitarian, happiness is not merely the happiness of one person but rather the happiness of the greater number of people. The amount of happiness becomes great if a greater number of people experience it. An act that can make many people happy is better than an act that gives happiness to only one or few persons. Mill’s utilitarian refers to the mental pleasures when it defines happiness as pleasures, Happiness pursues mental pleasures and this is what differentiate utilitarianism from hedonism, Human beings desire greater pleasure because man has faculties more elevated than those of animals. Business Application    

This principle can be used in Cost Benefit Analysis. The principle can also be used in the formulation of budgets. Utilitarianism as a guide in decision making can also be applied in the resolution of labour and management conflicts. Utilitarianism as an ethical principle can also be used in the calculation of opportunity costs.

E. Moral Positivism (Thomas Hobbes)

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Module in Business Ethics Thomas Hobbes believes that human beings are basically selfish creatures who would do anything to improve their position. According to Hobbes, people would act on their evil impulses if left alone. In addition, Hobbes felt that like people, nations are selfishly motivated. For him each country is in a constant battle for power and wealth.

According to Hobbes, governments are created to protect people from their own selfishness and evil. The best government is one that has a great power of leviathan, or sea monster. Hobbes believe in the rule of a king because he felt that a country needs an authority figure to provide direction and leadership. Because the people are only interested in promoting their own self-interests. Hobbes believe allowing democracy would never work. Consequently giving power to individual would create a dangerous situation that would start “a war of every man against every man” and make life “solitary, poor, brutish, and short.” Significance Hobbes moral positivism anticipates the chaotic outcome if laws are not abided. We all believe that the purpose of the government is to protect the right of the people, preserve justice and enforce the laws. Likewise, it is a must for every nation to have someone who would manage and administer them. Hence, the creation of laws and the obedience of tis subjects are important in the order and maintenance of peace in countries. Business Application    

Business must follow the laws of the state and government regulations. Business enterprises must create company policies to maintain discipline and other within the organization. Businessmen and managers must be law abiding citizens. Strong authority figure are sometimes necessary in organizations to dissuade people from doing evil things and prevent discord.

F. Divine Command Ethics This theory says that there is a divine being, who has set down a finite series of rules that adherents claim can provide guidance to most, if not all, moral decisions. An important example is the set of rules known as The Ten Commandments taken from the Judeo-Christian traditions. A variant of divine theory is a command theory based on non-divine, but morally exemplary individuals such as the Buddha which means “the enlightened.” In both cases of the Judeo-Christian religion and the Buddhist religion, the logic of teaching is the same. There are central moral injunctions that we are supposed to obey upon pain of the divine retribution in the Judeo-Christian tradition, or failure to achieve nirvana in the Buddhist tradition. Analysis of Divine Mandate Theory Divine Command Responses to Analysis Divine Commanded theories assume belief in either divine beings or exemplary individuals. This theory and belief can be questioned because not all people believe that God exists. For the true believer, it is simply a matter of seeing the light. Divine Command theories cannot cover all possible case of moral decision. This problem often leads to either fundamentalism, which every merely states that the extensions of the basic rules to other cases are unproblematic, or it leads to differences in interpretation of the basic rules and therefore differences in people’s moral laws. With enough study and faith, one can come to generally accepted interpretations that extend the reasoning behind the basic rules to fit all current situations. It is simply a matter of likening the text and admonitions to ourselves.

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Module in Business Ethics Command theory generally have no exception clause, either explicit or implicit. This is a problem for people living in morally complicated times. It is believed that the very need for exceptions to reveal the truth is a sign of decadent time, and perhaps a greater adherence to the rules will lead to a more morally sound society. Business Application  

For Christian believers, a good action is an action that conforms to the commandments of God as reflected in the Bible and the teachings of the church. For non-Christians, a good action conforms to the teachings of exemplary non-divine beings like the Buddha and Prophet Mohammad.

G.

Virtue Ethics: Socrates, Plato and Aristotle

1. Socrates Ethical Philosophy Socrates posited 3 special tenets in his moral philosophy;  Virtue is identical with knowledge  Vice is identical with ignorance  No one commits an evil act knowingly Socrates stand on the third tenet states that “no one commits an evil act knowingly and doing wrong arises out of ignorance.” The reason for this is that sometimes, a person may have knowledge but he deliberately commits an evil act to satisfy his hidden motive. Thus, a person should not use ignorance to excuse himself in doing evil. But on the other hand, Socrates stated that a person will commit only moral evil if he lacks moral knowledge. Business Application In business world, employees makes critical decisions that have impacts on operation of the company. The result might lead uncertainty. For example, when a private company is contemplating giving an increase in salaries to its employees. The moral issue here lies impact of the increase on the families of the employees rather than on the continued operation of the company due to diversion of funds. 2. Plato Knowing the forms for Plato, there are internal or universal principles and perfect ideas. Plato maintained that all things in the physical world are symbols of these perfect Forms in the World of Ideas. And since these Forms are symbol, the world is not a true reality. Plato also believe that People are intrinsically good. However, they make judgment through irrational part of the soul. This then results to a moral conflict. People do not choose an evil acts because they are acting due to ignorance. Will dominates Ideal Setting Appetite dominates Business Application Plato ethical theories can be applied in business. For example, in business decision making, an outcome is acceptable only if it is done in the light of reasonable process according to Plato’s concept of a virtuous act. For

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Module in Business Ethics Plato, the right action, and thus, a moral action is one that is guided by reason. In addition, Plato believes that a reasonable and a virtuous action is one that is not dominated by the evil or the appetite of the person. 3. Aristotle According to Aristotle, we must take the middle way or the mean between two extremes. Aristotle also rejected all forms of imbalance. We must not only develop our minds but also our body. Virtue comes from the ability to govern excessive or lack of feelings. Any extremes would lead to vice. Thus, virtue comes from the mean between these extremes. The Golden Mean Principle simply states that “to be happy one must live a life of moderation”. This means in everything that we do, we must avoid doing the extremes. Extreme Moderate Setting Extreme Business Application 

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The principle of Aristotle has many application in business decision. For example in production planning and inventory control- finished goods and raw materials must be carefully controlled so that the company will not occur too much cost. If there are too much finished goods and raw materials, inventory warehouse cost are high while lack of finished goods or raw materials would entail a high opportunity loss and delay in manufacturing. The Principle of Moderation can also be used in determining and planning for profit in business. Virtuous conduct is important in decision making but also in maintaining moral ascendancy and personal integrity. Success in business is not only measured in terms of profit but also by the company’s moral integrity and credibility.

H. Pragmatism of Peirce, James, and Dewey Pragmatism is a philosophy that attempts to clarify our ideas and to emphasize the practical usefulness of ideas and beliefs as the criteria for truth. Pragmatism is a philosophy th...