1. Crane and Matten Business Ethics (3rd Edition)
Chapter 3

2. Evaluating Business Ethics: Normative Ethical Theories
Lecture 3

3. Overview Locate the role of ethical theory
Highlight international differences in perspectives
Provide critical overview of traditional ethical theories
Explore contemporary ethical theories

4. What are normative ethical theories?
Ethical theories are the rules and principles that determine right and wrong for any given situation Crane and Matten (2010)
Normative ethical theories are those that propose to prescribe the morally correct way of acting
As opposed to descriptive ethical theories which seek to describe how ethics decisions are actually made in business

5. The role of ethical theory

6. The role of ethical theory
Two extreme positions (De George 1999)
Ethical absolutism claims there are eternal, universally applicable moral principles
Right and wrong are objective qualities, can be rationally determined
Typically traditional ethical theories
Ethical relativism claims morality is context-dependent and subjective
No universal right and wrongs that can be rationally determined; depends on person making the decision & culture in which they are located
Typically contemporary ethical theories

7. Normative ethical theories

8. North American and European origins and differences
Differences between Anglo-American and European approaches based on philosophical arguments
Individual versus institutional morality
US tend to individualistic perspective
Europe towards wider economic and governing institutions
Questioning versus accepting capitalism
US tend to accept the capitalist framework
Europe tend to question the ethical justification of capitalism
Justifying versus applying moral norms
US tend to focus on application of morality
Europe focus on justification and ethical legitimation of norms
In contrast, Asian perspectives tend to be based on religion (e.g. Islam, Buddhism)

9. Western modernist ethical theories

10. Traditional ethical theories
Generally offer a certain rule or principle which one can apply to any given situation
These theories generally can be differentiated into two groups
Motivation/
Principles
Action
Outcomes
Consequentialist Ethics
Non-consequentialist Ethics
Source: Crane and Matten (2010)

11. Major normative theories
Non-consequentialist
Consequentialist
Type
Man is a being that is distinguished by dignity
Man is a rational moral actor
Man is controlled by avoidance of pain and gain of pleasure (“hedonist”)
Man as an actor with limited knowledge and objectives
Concept of human beings
Respect for human beings
Categorical imperative
Act/rule utilitarianism
Maximization of desires/self interest
Rules
Rights
Duties
Collective welfare
Individual desires or interests
Focus
John Locke John Rawls
Immanuel Kant
Jeremy Bentham John Stuart Mill
Adam Smith
Contributors
Egoism
Utilitarianism
Ethics of duties
Rights & justice
Source: Crane and Matten (2010)

12. Egoism
Theory of egoism - an action is morally right if the decision-maker freely decides an action to pursue either their (short-term) desires or their (long-term) interests.
Adam Smith (1793): pursuit of individual interest morally acceptable as invisible hand of market creates benefit for all
Relies on free competition and good information
‘Enlightened egoism’
However, markets do not function perfectly
Anti-globalisation movement
Sustainability debate

13. Utilitarianism
According to utilitarianism, an action is morally right if it results in the greatest amount of good for the greatest number of people affected by the action
Also called the ‘greatest happiness principle’
Based on cost-benefit analysis

14. Problems with Utilitarianism
Subjectivity
This has led to refinement of theory
Act utilitarianism
Rule utilitarianism
Issues around quantification and distribution of utility

15. Act- and Rule-Utilitarianism
Act utilitarianism
Looks to single actions and bases the moral judgement on the amount of pleasure and the amount of pain this single action causes.
Rule utilitarianism
looks at classes of action and ask whether the underlying principles of an action produce more pleasure than pain for society in the long run.

16. Ethics of duties ‘Categorical Imperative’ (Kant) Maxim 1: Consistency
Act only according to that maxim by which you can at the same time will that it should become a universal law.
Maxim 2: Human Dignity
Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only.
Maxim 3: Universality
Act only so that the will through its maxims could regard itself at the same time as universally lawgiving (would others agree? Would you be happy to see your decision reported in the press?)

17. Problems with ethics of duties
Undervaluing outcomes
Complexity
Misplaced optimism?

18. Ethics of rights and justice
Natural rights
Certain basic, important, unalienable entitlements that should be respected and protected in every single action.
Based on consensus about nature of human dignity
Strongly based in western view of morality
Justice
The simultaneously fair treatment of individuals in a given situation with the result that everybody gets what they deserve
Fair procedures (procedural justice)
Fair outcomes (distributive justice)

19. John Rawls’s ‘Theory of Justice’
Each person is to have an equal right to the most extensive total system of basic liberties compatible with a similar system of liberty for all.
Social and economic inequalities are to be arranged so that they are both:
to the greatest benefit of the least advantaged;
attached to offices and positions open to all under conditions of fair equality of opportunity.

20. Limits of traditional theories
Too abstract
Too reductionist
Too objective and elitist
Too impersonal
Too rational and codified
Too imperialist

21. Alternative perspectives on ethical theory

22. Approaches based on character and integrity
Virtue ethics
Contends that morally correct actions are those undertaken by actors with virtuous characters. Therefore, the formation of a virtuous character is the first step towards morally correct behaviour
Acquired traits
Intellectual virtues
Moral virtues

23. Approaches based on ethics and responsibility
Feminist ethics
An approach that prioritizes empathy, harmonious and healthy social relationships, care for one another, and avoidance of harm above abstract principles
Key elements
Relationships
Decisions taken in context of personal human interrelations
Responsibility
Active ‘taking’ of responsibility, rather than merely ‘having’ it
Experience
Learn and develop from experience

24. Approaches based on procedures of norm generation
Discourse ethics
Aims to solve ethical conflicts by providing a process of norm generation through rational reflection on the real-life experiences of all relevant participants
Key elements
Ultimate goal of ethical issues in business should be the peaceful settlement of conflicts
Different parties in a conflict should sit together and engage in a discourse about the settlement of the conflict, and ultimately provide a situation that is acceptable to all
‘ideal discourse’ criteria

25. Approaches based on empathy and moral impulse
Postmodern ethics
An approach that locates morality beyond the sphere of rationality in an emotional ‘moral impulse’ towards others. It encourages individual actors to question everyday practices and rules, and to listen to and follow their emotions, inner convictions and ‘gut feelings’ about what they think is right and wrong in a particular incident of decision-making.

26. Postmodern business ethics
Postmodern business ethics emphasises (Gustafson, 2000:21)
Holistic approach
Examples rather than principles
‘Think local, act local’
Preliminary character

27. Towards a pragmatic use of ethical theory
Summary
Towards a pragmatic use of ethical theory

28. Typical Perspective Ethical Dilemma Single normative consideration
for solving the ethical dilemma
Ethical Dilemma
‘Lens’ of ethical theory

29. Pluralistic Perspective

30. Pluralism?
Crane and Matten (2010) argue that for the practical purpose of making effective decisions in business:
Not suggest one theory or one approach as the best or true view of a moral dilemma
Suggest that all these theoretical approaches throw light from different angles on one and same problem
Complementary rather than mutually exclusive
Advocate position of pluralism
Middle ground between absolutism and relativism

31. Considerations in making ethical decisions: summary of key insights from ethical theories
Typical question you might ask yourself
Theory
One’s own interests
Is this really in my, or my organization’s, best long -
term interests? Would it be
acceptable and expected for me to think only of the consequences to myself in this
situation ?
Egoism
Social consequences
If I consider all of the possible consequences of my actions, for everyone that is
affected, will we be better or worse off overall? How likely are these
consequences and how significant are they?
Utilitarianism
Duties to oth
ers
Who do I have obligations to in this situation? What would happen if everybody
acted in the same way as me? Am I treating people only to get what I want for
myself (or my organization) or am I thinking also of what they might want too?
Ethics of duty
Entitlements of
others
Whose rights do I need to consider here? Am I respecting fundamental human
rights and people’s need for dignity?
Ethics of rights
Fairness
Am I treating everyone fairly here? Have processes been set up to allow everyone
an equal ch
ance? Are there major disparities between the ‘winners’ and ‘losers’
that could be avoided?
Theories of justice
Moral character
Am I acting with integrity here? What would a decent, honest person do in the
same situation?
Virtue ethics
Care for others a nd
relationships
How do (or would) the other affected parties feel in this situation? Can I avoid
doing harm to others? Which solution is most likely to preserve healthy and
harmonious relationships among those involved?
Feminist ethics
Process of resol
ving
conflicts
What norms can we work out together to provide a mutually acceptable solution
to this problem? How can we achieve a peaceful settlement of this conflict that
avoids ‘railroading’ by the most powerful player?
Discourse ethics
Moral impulse a
emotions
Am I just simply going along with the usual practice here, or slavishly following
the organization’s code, without questioning whether it really feels right to me?
How can I get closer to those likely to be affected by my decision?
What do my e
motions or gut feelings tell me once I’m out of the office?
Postmodern ethics