A Critical Survey of the Different Normative ethical Theories Commonly Used in

Business Decision Making

Objective:

• Understand the different normative ethical theories.

• Differentiate the consequentialist and non-consequentialist theory.

• Learn how to apply the normative ethical theories in business decision making.

Introduction:

• A Critical Survey of the Different Normative Ethical Theories Commonly Used in

Business Decision Making

• Ethical Theories

• Structure of Ethical Decision Making

• Consequentialist

• Non-consequentialist

• Types of Consequentialist Theory

• Types of Non-consequentialist Theory

• End Note
Ethical Theories

• That part of moral philosophy or ethics, concerned with criteria of what is morally

right and wrong. It includes the formulation of moral rules that have direct
implications for what human actions, institutions, and ways of life should be like.

STRUCTURE OF ETHICAL DECISION MAKING

A logical fire steps analytical structure (Kitson

and Campbell 1996) has been developed to help out the students how they should
make the decisions? Identification of the present situation is the basic foundry and most
crucial step. A manager must understand the very nature of the problem or
circumstances. Again ethical considerations are involved in alternations generated by
decision maker. Now evaluations and selection depend upon so many factors it involves
ethical reasoning of the decision maker which is explained in the next part.

Source: Business Ethics, Manisha Paliwal

Two Types of Normative Ethical Theories

• Consequentialist (Teleological)

• Non consequentialist (Deontological)

 A. Consequentialist

• Class of normative ethical theories holding that the consequences of one's

conduct are the ultimate basis for any judgment about the rightness or
wrongness of that conduct. Thus, from a consequentialist standpoint, a morally
right act (or omission from acting) is one that will produce a good outcome, or
consequence.

Source: https://ethicsunwrapped.utexas.edu/

 Consequentialism is an ethical theory that judges whether or not something is

right by what its consequences are. For instance, most people would agree that
lying is wrong. But if telling a lie would help save a person’s life,
consequentialism says it’s the right thing to do.

Types of Consequentialist

• Utilitarianism

• Egoism

• Eternal Law
1. Utilitarianism Theory

Source: https://ethicsunwrapped.utexas.edu/

 The moral theory that we should act in ways that produce the most pleasure or
happiness for the greatest number of people affected by our actions
 This ethical concept was developed by England’s “Jermy Bentham” and ‘John
Stuart Mill’ The goal of utilitarian is to provide greatest good for greatest number
which is guided by the value, “Utility”. Decisions are purely made on the basis of
their outcomes or consequences.
 decision makers choose utilitarian criteria which helps them to go for some
important decisions like termination, closing down plants, laying off large no. of
employees, raising prices in the best interest of the organization

2. Egoism Theory

 The view that morality coincides with the self-interest of an individual or an

organization.

 An action is morally right if it promotes one’s long-term interest. An action is

morally wrong if it undermines it.
3. Eternal Law Theory

• An ordinance of reason for the common good, made by him who has care of the
community, and promulgated." Law is an ordinance of reason because it must be
reasonable or based in reason and not merely in the will of the legislator.-
“Thomas Aquinas”

4. Hedonism
  Hedonism is a form of consequentialism that approves of actions that produce
pleasure and avoid pain

B. Non Consequentialist

• Immanuel Kant (1724–1804): A German philosopher with a nonconsequentialist

approach to ethics.

• A type of normative ethical theory that denies that the rightness or wrongness of
our conduct is determined solely by the goodness or badness of the
consequences of our acts or of the rules to which those acts conform.

• It teaches that some acts are right or wrong in themselves, whatever the
consequences, and people should act accordingly.

Types of Non Consequentialist

• Categorical Imperative

• Universalism

• Personal Liberty
1. Categorical Imperative Theory

• Moral law that is unconditional or absolute for all agents, the validity or claim of
which does not depend on any ulterior motive or end.

• Provide a formulation by which we can apply our human reason to determine the
right, the rational thing to do -- that is our duty. 

2. Universalism Theory

• It states that the moral worth of an action cannot be dependent upon the
outcome because those outcomes are so indefinite and uncertain, at the time the
decision to act is made.

• Refers to the notion that human rights are universal and should apply to every
human being. 

3. Personal Liberty Theory

• Proposed by Robert Nozick, a member of the Harvard faculty

• Rights theory is concerned with respecting and protecting individual liberties and
privileges such as the right to privacy, freedom of conscience, free speech, life
and safety and due process.