BUSS 207 BUSINESS AND IT ETHICS

LECTURETWO:
2.1 Ethical Theories and Frameworks
In this lecture we shall discuss the branches of ethics and the history of business ethics. We shall
also examine different ethical theories and the frameworks they provide as well as the use of case
studies to relate to ethical theory.

2.2 Specific Objectives

At the end of the lecture you should be able to:
1. Outline the History of Business Ethics
2. Identify the branches of ethics
3. Describe ethical theories and frameworks
4. Apply ethical theories to a case study

2.3 Lecture One Outline

2.3.1 History of business ethics
2.3.2 Branches of ethics
2.3.3 Ethical Theories and frameworks
2.3.4 Case studies relating to ethical theory

2.3.1 History of business ethics

The long philosophical tradition of ethical thought contains the subfield of business ethics.
Business ethics divides between ethics practiced by people in business and business ethics as a
well-defined academic pursuit. As a discipline, business ethics bridges two divisions of study
since the theory and tools for resolving ethical problems come from philosophy, but the
problems for solving belong to the real economic world.
Business ethics has only existed as an academic field since the 1970s. The first full-scale
professional conference on academic business ethics occurred in1974 at the University of Kansas
from which a textbook was derived and courses began appearing soon after at some schools.
During the 1960s, corporations found themselves increasingly under attack over unethical
conduct. In response corporations especially in the US developed social responsibility
programmes which usually involved charitable donations and funding local community projects.
This practice was mostly adhoc and unorganised varying from industry to industry and company

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to company. Business schools in large universities began to incorporate „social responsibility‟

courses around this time but it was mostly focused on the law and management strategy.
Ethical issues were dealt with in social issues courses on the relevant ethical issues and business
ethics became a more institutionalised, organised and integral part of education in business.
Thereafter annual conferences, case books, journals and text books were more regular and
established.
By 1980 some form of a unified business ethics course was offered at many American colleges
and universities. Academic discussion of ethical issues in business was fostered by the
appearance of several specialized journals, and by the mid-1990s, the field had reached maturity.
A core set of ideas, approaches, and debates had been established as central to business ethics,
and professional societies and publications allowed for advanced research in and intellectual
growth of the field. The development of business ethics inside universities corresponded with
increasing public awareness of problems associated with modern economic activity, especially
on environmental and financial fronts. Today, many ethical issues in business can be categorized
in the context of their relation to conflicts of interest, fairness and honesty, communications, and
business associations.
The new aspect of business ethics differentiated it from social issues courses in three ways:
1. Business ethics provided an ethical framework for evaluating business and the corporate
world.
2. It allowed critical analysis of business and development of new and different methods. (This
also made business ethicists unpopular in certain circles.)
3. Business ethics fused personal and social responsibility together and gave it a theoretical
foundation.
In this way, business ethics had a somewhat broader remit than its predecessor (the social issues
course) and was a good deal more systematic and constructive. Business ethics also recognized
that the world of business raised new and unprecedented moral problems not covered by personal
systems of morality. Common-sense morality is sufficient to govern judgments about stealing
from your employer, cheating customers and tax fraud. It could not provide all the necessary
tools for evaluating moral justification of affirmative action, the right to strike and whistle-
blowing.

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2.3.2 Branches of ethics

Ethics itself is divided into three areas: normative ethics, meta-ethics, and applied ethics.

1. Normative ethics is the branch of ethics that tries to answer general questions about how
we should behave, how we ought to act. In other words, it attempts to discover general
rules or principles of moral behaviour

2. Meta-ethics is the area of ethics that tries to answer questions about the nature of
morality itself. It does not ask or make judgments about what types of action are moral
and immoral; rather, it asks questions

3. Applied ethics is the area of ethics that asks relatively concrete questions about the
morality of specific actions and policies. The majority of this course will focus on various
issues within three areas of applied ethics: legal ethics, medical ethics, and business
ethics.

2.3.3 Ethical Theories and frameworks

The field of business ethics tries to come up with solutions to handle problems that arise within
the business environment. Ethical theory tends to provide guidelines that justify an action to be
right or wrong when settling human conflicts. They arise in different context, so they address
different problems. While ethics is concern with the study of morality and the application of
reason to explain specific rules and principles that determine right and wrong for a specified
situation. The rules and principles used are referred to as ethical theories.
Ethical Theories provide a framework for
1. Getting at the underlying rationale of moral arguments,
2. Classifying and understanding various arguments, and
3. Most importantly, defending a conclusion about what is right or wrong

There are many ethical theories in general, let us shall examine five ethical theories: Deontology,
Utilitarian, Justice, Rights, and Virtues.

2.3.3.1 Deontology
The deontological class of ethical theories states that people should adhere to their obligations
and duties when engaged in decision making when ethics are in play. This means that a person
will follow his or her obligations to another individual or society because upholding one‟s duty is
what is considered ethically correct. For instance, a deontologist will always keep his promises

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to a friend and will follow the law. A person who adheres to deontological theory will produce
very consistent decisions since they will be based on the individual‟s set duties.
Deontology contains many positive attributes, but it also contains flaws. One flaw is that there is
no rationale or logical basis for deciding an individual‟s duties.
Deontological theories of ethics are different from utilitarian theories of ethics. According to
deontological theories; although the consequence of an act is good, some acts are always wrong.
In deontological theories actions are judged as ethical or unethical based on duty or the
intentions of an actor. The most important defender of deontological ethics is Immanuel
Kant.

Kant‟s ethical theory includes duty for the sake of duty without regard to human happiness.
According to Kant, every action has a maxim. Maxim means rule or principle. He says, “So act
that the maxim of your will could always hold at the same time as principle establishing
universal law” (Kant, 1956, p. 30). He tries to provide a universal law that is true under any
circumstances for everyone. It can be concluded that deontological ethics based on Kantian
ethics emphasizes a universal morality. The principle of deontological ethics can be summed up
by the phrase, “treat others as you would be treated”. According to Kantian ethics, if an action
passes the test of categorical imperative, the action is ethical.

2.3.3.2 Utilitarian.

Utilitarianism can be summed up by the phrase, “the greatest good for the greatest number”.
According to utilitarianism, actions should be evaluated by their consequences. Therefore, these
theories are also called consequentialism. The founder of classical utilitarianism is Jeremy
Bentham. Bentham‟s moral theory is based on his understanding of human nature.
Utilitarian ethical theories are based on one‟s ability to predict the consequences of an action. To
a utilitarian, the choice that yields the greatest benefit to the most people is the one that is
ethically correct. There are two types of utilitarianism, act utilitarianism and rule utilitarianism.
Act utilitarianism subscribes precisely to the definition of utilitarianism— a person performs the
acts that benefit the most people, regardless of personal feelings or the societal constraints such
as laws. Rule utilitarianism takes into account the law and is concerned with fairness. A rule

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utilitarian seeks to benefit the most people but through the fairest and most just means available.
Therefore, added benefits of rule utilitarianism are that it values justice and includes beneficence
at the same time.
Both act and rule utilitarianism have disadvantages. Although people can use their life
experiences to attempt to predict outcomes, no one can be certain that his/her predictions will be
accurate. Uncertainty can lead to unexpected results making the utilitarian decision maker appear
unethical as time passes, as the choice made did not benefit the most people as predicted.
Another assumption that a utilitarian decision maker must make concerns his/her ability to
compare the various types of consequences against each other on a similar scale. But, comparing
material gains, such as money, against intangible gains, such as happiness, is very difficult since
their qualities differ to such a large extent.
An act utilitarian decision maker is concerned with achieving the maximum good. Thus, one
individual‟s rights may be infringed upon in order to benefit a greater number of people. In other
words, act utilitarianism is not always concerned with justice, beneficence or autonomy for an
individual if oppressing the individual leads to the solution that benefits a majority of people.

2.3.3.3 Rights
In ethical theories based on rights, the rights established by a society are protected and given the
highest priority. Rights are considered to be ethically correct and valid since a large population
endorses them. Individuals may also bestow rights upon others if they have the ability and
resources to do so. For example, a person may say that her friend may borrow her laptop for the
afternoon. The friend who was given the ability to borrow the laptop now has a right to the
laptop in the afternoon.
A major complication of this theory on a larger scale is that one must decipher what the
characteristics of a right are in a society. The society has to determine what rights it wants to
uphold and give to its citizens. In order for a society to determine what rights it wants to enact, it
must decide what the society‟s goals and ethical priorities are. Therefore, in order for the rights
theory to be useful, it must be used in conjunction with another ethical theory that will
consistently explain the goals of the society

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2.3.3.4 Virtue
The virtue ethical theory judges a person by his/her character rather than by an action that may
deviate from his/her normal behaviour. It takes the person‟s morals, reputation, and motivation
into account when rating an unusual and irregular behaviour that is considered unethical. For
instance, if a person plagiarized a passage that was later detected by a peer, the peer who knows
the person well will understand the person‟s character and will judge the friend accordingly. If
the plagiarizer normally follows the rules and has good standing amongst his colleagues, the peer
who encounters the plagiarized passage may be able to judge his friend more leniently. Perhaps
the researcher had a late night and simply forgot to credit his or her source appropriately.
Conversely, a person who has a reputation for academic misconduct is more likely to be judged
harshly for plagiarizing because of his/her consistent past of unethical behaviour.
One weakness of virtue ethical theory is that it does not take into consideration a person‟s change
in moral character. For example, a scientist who may have made mistakes in the past may
honestly have the same late night story as the scientist in good standing. Neither of these
scientists intentionally plagiarized, but the act was still committed. On the other hand, a
researcher may have a sudden change from moral to immoral character may go unnoticed until a
significant amount of evidence mounts up against him/her.

2.3.3.5 Justice
Justice can be defined as the importance of getting fair treatments, equality and having rights
(Rawl, 1999). Rawl‟s theory of justice is called „Justice as Fairness‟. There are two main
principles in this theory. The first principle advocates that every individual should have equal
rights to a fair distribution of social goods such as education, food and housing (Rawl, 1999).
The second principle stresses if there is any existence of social and economic inequalities, they
should benefit members of society who are at the most disadvantage (Rawl, 1999). Therefore,
unlike Nozick‟s libertarianism, Rawl supports the redistribution of wealth and taxes to those who
are socially and economically disadvantage. He believes that this action is just and promotes
productive behaviour. Many people argue Rawl‟s theory of justice is too restrictive and pro-
communism. Justice as an ethical approach is where all humans are treated equally through
society, regardless of rank, position, class, creed, or race. This is also known as the fairness
approach in business ethics theories. If people are not treated fairly — such as one employee

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receiving higher compensation than another — a justifiable reason must exist, such as higher
technical skills or the exclusiveness of a job position

2.4 Activities

1. Identify at least five Case studies relating to ethical theories you have learnt

2.5 Self – Test Questions

1. Define the different types of ethical theories and how they can be used in business

2.6 Summary

 Business ethics has only existed as an academic field since the 1970s. The first full-scale
professional conference on academic business ethics occurred in1974 at the University of
Kansas from which a textbook was derived and courses began appearing soon after at some
schools. By 1980 some form of a unified business ethics course was offered at many
American colleges and universities. Today, many ethical issues in business can be
categorized in the context of their relation to conflicts of interest, fairness and honesty,
communications, and business associations.
 Ethical theory tends to provide guidelines that justify an action to be right or wrong when
settling human conflicts. They arise in different context, so they address different
problems. Classifying and understanding various argument. There are many ethical
theories including : Deontology, Utilitarian, Justice, Rights, and Virtues

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2.7 Suggestions for further reading

1. Velasquez, M. G. (2001). Business Ethics Concepts & Cases, Business Ethics, Anderson

2.8 References
1. Velasquez, M. G. (2001). Business Ethics Concepts & Cases, Business Ethics, Anderson
2. Ethical Theories by By Larry Chonko, Ph.D. The University of Texas at Arlington