Tuguegarao Archdiocesan Schools System

LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

NAME OF TEACHER: AMY LIBERTY P. CASIBANG, LPT / 0915-953-8600

MODULE NUMBER: 5 (1 WEEK)
MODULE TITLE: Unit 2: Foundations of the Principles of Business Ethics

Lesson 2.1 Classical Philosophies in Business Ethics

Learning Objectives
At the end of this lesson, you should be able to do the following:
● Describe the nature of philosophy and its effects on business ethics.
● Identify some classical philosophies and its relevance to business.
● Differentiate classical philosophies from one another.
● Explain the modern adoption of classical philosophies in business ethics.

In life, you will experience different kinds of problems. You will face these challenges and make resolutions according
to your views, beliefs, and past experience. Did you know that even the things you consider as problems are also based
on your philosophy? For instance, if you hold a personal philosophy that every human being is equal, you will see
inequality in society as a pressing issue that needs to be addressed. However, your view may not be the same with
someone who believes that people naturally hold different positions and levels in society.

In a business environment, the people involved in business transactions have different sets of principles, morals, and
values that affect their decisions and conduct. Philosophy drives the motivation of owners when setting up and managing
their companies. Problems in business are understood and resolved according to the philosophy of the people running
the business. In summary, the ethical standards in business transactions are guided by philosophy.

For instance, if the philosophy of the owner of a business is self-centered, you can expect that there will be problems in
implementing the ethical standards. On the other hand, if the owner believes that every human being is essential, it could
translate into company culture and policies.

The Nature and Branches of Philosophy

Philosophy came from the Greek words philia, which means love, and sophia, which means wisdom. Thus, philosophy
is the love of wisdom or the love of knowledge. As a field of study, the New Oxford American Dictionary defines
philosophy as the “study of the fundamental principle of life that talks about the nature of knowledge, reality, and
existence.” From these definitions, you can deduce that philosophy seeks to comprehensively explain the nature,
meaning, and existence of things. Thus, as a personal guide, it directs your view in understanding your problems and
determining the purpose of your existence. When applied to business, a business philosophy defines how one views the
nature and purpose of business, the problems and challenges it faces, and the solution to those problems.
There are three major branches of philosophy: metaphysics, epistemology, and axiology. You can differentiate each one
according to their specific subject of study.

 Metaphysics
Metaphysics came from the Greek word meta, which means beyond or after, and physics, which means nature.
Metaphysics is the study of being merely concerned about reality and existence. This branch of philosophy deals with
how the existence of everything on Earth started. It has two main categories: ontology, which deals with the nature of
existence and reality, and cosmology, which deals with the origin and general structure of the universe.

 Epistemology
Epistemology came from the Greek word episteme, which means knowledge. This second branch of philosophy
commonly refers to the nature, origin and scope of knowledge. The main focus of epistemology is logic. Logic came

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
from the Greek word logos, which is sometimes translated as reason or discourse. Epistemology when applied is about
proper utilization of knowledge in making decisions and choices with appropriate reasoning skills.

 Axiology
Axiology is the branch of philosophy that explores the nature of values. Sometimes your personal philosophy is guided
by the values that you learned from your parents, personal experiences and other people. Axiology is commonly
subdivided into ethics and aesthetics. Ethics is a study of human conduct and moral values; it differentiates what is right
and wrong. Aesthetics values the beauty of life, aesthetic judgment and aesthetic experiences (commonly associated
with different arts like music, literature, fine art, dance, etc.)

Classical Philosophers and Business Ethics

Everything has a foundation that holds its existence. This foundation is like a backbone that makes a thing stronger over
time.
Philosophy itself has its foundations that form the basis for its development. Many contemporary philosophies branched
out and developed from theories proposed by classical philosophers. To understand different philosophies and how these
apply to business ethics, you must first examine their foundations.

 Socrates
Socrates (470-399 BC) was the founder of Western philosophy. He was specifically interested in epistemology and
ethics. He was also famous for his Socratic Intellectualism or Ethical Intellectualism, Socratic Method, The Socratic
Paradox, and Socratic Questioning. According to the Roman orator Cicero, Socrates was not the first philosopher of all
time, but he was the first to use the term “philosophy.”
Socratic philosophy is practical. It encourages individuals to define their purpose and explore it through open-minded
questioning. “All philosophy begins with wonder”, Socrates said. Thus, the Socratic method constantly questions even
the things that you hold true.

Figure 1. Socrates believed in constant wonder, questioning, and innovative thinking.

When applied to business, Socratic philosophy believes that every quality business proposal starts with playful minds.
Intuition, when combined with enough resources, gives way to creative ideas that would come into reality. Thus,
business organizations should give way to wonder. Innovative thinking and “thinking outside the box” are essential
business values. Socratic philosophy would entail that businesses should not be afraid of seeking possibilities in every
situation. Instead, they should take advantage of these and expect good things to come.

 Plato
Plato (428/427-348/347 BC) from Athens was a student of Socrates and the former teacher of Aristotle. In philosophy,
he was interested in metaphysics, ethics, epistemology, aesthetics and cosmology. He was famous for the philosophy of
idealism, platonic philosophy, innatism, and theory of forms or ideas. Plato is considered as the “Father of Idealism”.

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
Idealism is the oldest philosophy of Western culture. It refers to the beauty of mind and ideas, where reason is given
utmost value. In philosophy, idealism is any of the various systems of ideas in which knowledge is dependent on the
activity of mind and where reality only exists in ideas. Plato’s Theory of Forms or Theory of Ideas is based on what
is real and what is not. Every form has an ideal image or manifestation that exists only in people’s minds. Plato teaches
people to learn about their imperfections. He advocates that people need to work on their flaws to gradually meet what
is ideal.

Figure 2. Plato believed in a perfect ideal that every person should strive to achieve.

When applied to business, Plato’s philosophy holds that businesses should set the ideal and strive to achieve it. During
planning, goals are set in its most ideal term, and the objective of the organization is to achieve those goals. In
management, leaders should think about future problems and work on appropriate solutions through forecasting.
Business success is measured by how much the ideals had been achieved.

 Aristotle
Aristotle (384-322 BC) was the founder of the Lyceum, the Peripatetic school of philosophy, and the Aristotelian
tradition. He was interested in metaphysics, logic, ethics, and aesthetics. He was famous for Aritotelian philosophy,
which is about realism, syllogism, theory of the soul, and virtue ethics. Aristotle is considered as the “Father of Realism”.
Realism is an antithesis of idealism. Aristotle said that “the universe exists whether the mind perceives it or not.” Realism
is about the perception of the existence of an object based on one’s senses. Everything you perceive through your senses
is real in nature and a true entity of the world.

According to Aristotle, each person has to strive to achieve virtue. Virtue is achieved when one excels and reaches their
full potential as a person who is a member of a larger community. For Aristotle, what is good for an individual is defined
by the larger community; there should be no dichotomy between self-interest and greater good.

Figure 3. Aristotle believed that a person’s character and virtue leads to greater good.

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
Aristotelian philosophy provides that businesses should create an environment where individuals realize their full
potential and encourage them to act with integrity and in virtuous ways. This character of individuals leads to actions
that contribute to the greater good.

 Confucius
Confucius (551-479 BC) was a Chinese philosopher. His teachings and philosophies are the bases of East Asian culture,
society, and education. He was interested in ethics, political philosophy, and social philosophy. He was famous for
Confucianism and the Golden Rule.
Confucianism points out the importance of attaining personal fulfillment through right actions. The center of one’s lives
is the need for supreme moral and ethical conduct and loyalty to others. Confucius' most famous quotation and
considered as the Golden Rule states that, “Do not do unto others what you would not want others to do unto you.” This
quotation is related to “good karma and bad karma.”

Figure 4. Confucius taught good things will come when you do good things.

In a general sense, businesses that do good things, will receive good things. Otherwise, if they do bad things, they will
experience bad karma as consequences of their bad actions. This belief is the basis of several ethical principles, values,
morals, and standards. A Confucian society believes that to lower the cost of doing the business, a business should
practice loyalty, reciprocal obligations, and honesty.

 Pythagoras
Pythagoras (570-495 BC) was a Greek philosopher and the founder of Pythagoreanism. He is also one of the leading
proponents of Western philosophy alongside Socrates. He was interested in ethics, mathematics, metaphysics, and
politics. Pythagoras was known for the Pythagorean theorem, communalism, metempsychosis, musica universalis, and
proportions.
Pythagoras believed that mathematics is the basis of everything. Every concept on Earth is about numbers, lines, shapes,
surface area, and variables. Business transactions such as financial reporting, accounting, capitalization, stocks, and
taxations involve numerical computations and data interpretations which are all part of Pythagorean philosophy.
Patterns for demand and supply are also connected to his principle of proportionality and mathematical equations. Thus,
mathematics can show the problems as well as the solutions in business.

Figure 5. Pythagoras believed that problems and solutions are in the numbers.

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
CLOSER LOOK

The Holiday Season

Mr. Reyes is the only supplier of ham in their community. The holiday season has already started, and ham is
one of the most favorite foods during holiday celebrations. Since Mr. Reyes is the only one who sells ham, he
is planning to increase the price of ham by up to 20%. But his wife, Mrs. Reyes told him not to increase the
price too high because the majority of their customers who are locals would not be able to afford it anymore.

Mr. Reyes eventually decided to keep the prices of goods low. His character is virtuous and he chose to be
happy in seeing that the many customers were able to buy his product and enjoy the holidays.

Contemporary Philosophies in Business Ethics

Classical philosophies are still relevant today. These are the foundations of many theoretical assumptions and ideologies
of the modern world. But as in a clock, time is moving. Some of these philosophies were modified and developed to
adapt to the changing world. Classical philosophies gave birth to contemporary philosophies.

In a rapidly changing world, people are becoming more modern and technologically dependent. Thus, the people’s point
of view must be at pace with these changes and advancements.

Business is also modernized, and its operations are now using advanced technology and contemporary strategies that
continue to address the needs and wants of the society. Contemporary business ethics needs contemporary philosophies
to maintain quality operations in the business world.

 Utilitarianism
The first contemporary philosophy is utilitarianism by Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873).
Utilitarianism is an ethical system usually used in decision making. This philosophy prioritizes decisions that create the
greatest amount of good for a greater number of people. It is one of the philosophies that justify military actions and
war.
Modern businesses use utilitarianism in giving moral judgments which includes solving ethical conflicts within the
management. Utilitarian philosophy expects the management to make the fairest decisions that will benefit the majority.
Utilitarianism accepts that decisions may bring forth disadvantages to certain individuals or groups, but these decisions
are justified when the good effects outweighed the bad effects. It balances good and happiness with evil, harmful and
bad actions in business operations.

 Deontology
Immanuel Kant (1724-1804) proposed the philosophy of deontology, from the Greek word deon which means duty,
obligation, or command. Deontology is also an ethical system that identifies one’s duty and acts according to one’s
obligations. In deontology, it is one’s obligation to be moral and ethical throughout his or her life.

Deontology in business provides that morality should be judged based on a set of rules such as a code of conduct. Ethical
conduct is the adherence of a company to their set values. Deontology is fundamentally at odds with utilitarianism.
Deontology provides that a business entity should do what is ethically and morally right even though it does not
maximize the utility of things.
Although duties and obligations are given utmost importance, these would sometimes entail consequences. For example,
it is your duty in your workplace to always be truthful, even if it could lead you to be in conflict with your co-workers.

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 Tuguegarao Archdiocesan Schools System
LYCEUM OF TUAO
Centro 02, Tuao, Cagayan, 3528
Email address: lyceumoftuao1965@yahoo.com.ph
CLOSER LOOK

Weighing the Good and Bad

A chemical manufacturing company plans to relocate its factories in an underdeveloped country. The said
country does not have the knowledge, technology, and resources to manage production waste. It could
potentially pollute the environment of the community. However, the relocation would create massive jobs, raise
the community's income, and assist the transfer of knowledge and technology.

During the discussion, utilitarian executives argue that creating jobs and upliftment of livelihood would be far
more beneficial than the environmental effects, which the company could manage and mitigate. They propose
that the relocation be done immediately. Meanwhile, executives who uphold deontological principles maintain
that harming the environment in any way is fundamentally and morally wrong. They recommend that waste
management and disposal be required before any relocation or operation starts.