Written report of all the different ethical

theories commonly used in business decision

making.

Good Governance & Social Responsibilities

Name: NOVELYN S. CENA

Section: BSBA FM-3B
Content

The Different Normative Ethical Theories Commonly Used in Business Decision Making

A. Utilitarianism

B. The Principles of Rights and Virtous: The Kantian Ethics

C. John Rawl’s Principles of Justice

D. The Moral Positivism of Hobbes

E. Divine Command of Ethics

F. Ethical Egoism
A. Utilitarianism

What is the Utilitarianism?

An ethical philosophy in which the happiness of greatest number of people in the society is

considered the greatest good.

- Business Dictionary

According to this philosophy, an action is normally right if its consequences lead to happiness

(absence of pain), and wrong if it ends in unhappiness(pain).

The Basic Idea of Utilitarianism

The Greatest Happiness Principle:

“Actions are right in proportion as they tend to promote happiness, wrong as they tend to produce

the reverse of happiness.”

- John Stuart Mill

Background of Utilitarianism

English philosophers John Stuart Mill (1806-1873) and Jeremy Bentham (1748-1832) were the

leading proponents of what is now called “classic utilitarianism”.

Utilitarianism is a form of Consequentialism

Consequentialism - the right action is understood entirely in terms of the consequences produced.

- whether an action is morally right or wrong depends entirely on its

consequences. An action is right if it brings about the best outcome of the

choices available. Otherwise it is wrong.

Types of Utilitarianism

Act of Utilitarianism - belief that an action becomes morally right when it produces the greatest

good for the greatest number of people.

Rule Utilitarianism - belief that the moral correctness of an action depends on the correctness of

the rules that allows it to achieve the greatest good.

Applying Utilitarianism in Business

 Welfarism- is the understanding that the wrongness or rightness of operations depends on

society’s conceptions of welfare or well being.

 Individualism- holds that every individual, as it is human nature, pursues happiness, thus,

will engage in actions that maximize utility.

 Aggregation- which is the notion that the wrongness or rightness of actions depends on their

ability to average the benefits brought to all individuals.

B. The Principles of Rights and Virtous : The Kantian Ethics

Immanuel Kant (1724-1804)- German philosopher

Kant’s system of ethics

 Known as as Deontology, in which duty, obligation, and good will are of the highest

importance.

Kantian Ethics- the morality of an action is determined based on the reasons for our actions.

Kant’s Metaphysics of Morals

Two distinct parts:

 Doctrine of Rights

Kant’s definition of Right - “the sum of the conditions under which the choice of one

can be united with the choice of another in accordance with a universal law of freedom.”

 Doctrine of Virtue

Kant’s difinition of Virtue- “the moral strength of human being’s will in fulfilling his

duty.
Categorical Imperative

- Command you must follow regardless of your desires. Moral obligations are derived from

pure reason.

Two types:

Hypothetical Imperative- something you must do in order to achieve something else.

Categorical Imperative- something you must always do, no matter what situation is.

The Universalizibility Principles

“Act according to that maxim whereby you can at the same time will that it should become a

universal law.”

- Immanuel Kant

Example:

According to Kant, if A is trying to murder B and A asks you where B is, it would be wrong for

you to lie to A, even if lying would save B’s life (Kant).

The Formula of Humanity

“Act so that treat humanity, whether in your own person or in the person of another, always as an

end and never simply as a mere means.”

- Immanuel Kant

 Mere means- use it only for your own benefit, with no thought to the interest or benefit

on the things you’re using.

C. JOHN RAWL’S PRINCIPLES OF JUSTICE

According to Ralw’s all citizens in this situation will agree on two principles:

The first principle: The principle of equal liberty

“Each person must extensive total system of equal basic liberty for all.”, consistent with a single

system for all. The basic liberties may be restricted in the name of freedom.

Freedom is in a lieable, and here is revealed Rawls liberal and close to the enlightenment.

The second principle: The principle of inequality

It states that the inequalities (economic and social) are justified only if attached to positions, job

available to all under conditions of equal opportunity impartial (principle of equal opportunities).

These principles are hierarchical: the principle of liberty has priority over the other and the

principle of equal opportunity has priority over difference principle. Society is not equlitarian but

it is an equitable society where the position giving the greatest benefits obtained by some also

benefit left behind.

For example: If some are rich enough to acquire works of art, however they place them in.

Museums where the poorest can admired theme.

D. THE MORAL POSITIVISM OF HOBBES

Thomas Hobbes (1588-1679) developed the social contract theory of political institutions,

employing commitment to some form of psychological egoism. Hobbes rejected medieval

scholastic philosophy, preferring th new modern ways of thinking on the rise in England and

Europe. He studies different forms of government. He believed that an absolute monarchy was

best Hobbes wants us to consider the relations that emerge among human beings in light of our

common human nature, prior to there being any society a government.

In doing this, he hopes to show;

 Why we need government?

 The character that government must have.

 What our duties are to our governments?

Ethical Philosophy

Hobbes believes that human being are selfish creature. If men are naturally in a state of war,

why do the always carry arm sand why do they have keys to lock their door?

The basis of all moral laws, is Law of the State:

 GOD

 EVIL

 Governments are created to protect people from their own selfishness and evil.

 Hoobes wrote “All mankind is in a perpectual and restless desire for power that stop only

death.

“War of every man against every man and make life solitary, poor, nasty,

brutish and short.”

Business Application

 Business must follow laws and government regulation. Business enterprises must create

company policies to maintain discipline and order within the organization.

E. THE DIVINE COMMAND ETHICS

Business leaders, along with society in general, rely on ethical frameworks to guide daily

decision-making processes and logically confirm gut feelings. Prominent ethical frameworks such

as deontology, utilitarianism and virtue ethics are popular tools employed in this process.

However, various alternative ethical frameworks are also commonly used to determine the

morality of contemplated actions. The Divine Command Theory (the “DCT”) is such an

alternative ethical framework based on a belief in God and an acceptance that the morality of

actions stems directly from God’s commands. According to the DCT, an action is morally

acceptable if God commanded such action or if a divine command motivates someone to take a

morally appropriate action.

As commonly formulated, the DCT can be divided into three ethical sub-frameworks:

 Religious Communities

 Command as Motivation and;

 Created Morality

All three alternatives are found throughout the Judeo-Christian tradition and certain other theistic

religious traditions. The DCT has faced prominent criticisms since its inception beginning with a

dilemma posed by Socrates during a heated discussion with an early adherent of the DCT. Over

time, many DCT theorists responded to these objections by positing philosophical and religious

counter-arguments and defending the DCT while others modified the DCT into various iterations

addressing such objections while at the same time faithfully retaining the core idea that God’s

commands dictate and/or motivate morality.

A major criticism of this modified theory relates to the believer’s concept of the supremacy

of God and the corresponding requirement to obey God in accordance with this supremacy. For

instance, when a person believes that an apparently abhorrent command would not come from a

loving God, that person is allowed to freely disregard the command. This decision would be

considered ethical under the modified theory even though the actor is purposefully disobeying the
commands of the supreme authority. The Divine Command Theory is as old as God’s first

commandment. The theory has gone through various iterations culminating in three

commonly-known sub-frameworks. Today, the DCT is viewed as a substantive ethical framework

whose merits and flaws continue to be debated in the public square with input coming from

various arenas – including philosophy, religion and even the business community. These debates

continue to focus on the objections created by the Euthyphro Dilemma and the DCT continues to

be modified into new versions with the continuity of a consistent focus on God’s commands as

defining or at least motivating appropriate moral conduct.

Divine command ethics in business

The Divine Command Theory is such an alternative ethical framework based on a belief in

God and an acceptance that the morality of actions stems directly from God's commands.

Divine command theory and business ethics rules and guidance are similar such as being truthful

to get a better reward now if a business is truthful with its employees and customers as a reward

they will get higher sales, brand loyalty and customer satisfaction same thing is suggested by divine

Command theory. It is very important to synergize any business with Divine Command theory to

run a business efficiently and that also helps to remove small hassles in the businesses. It helps in

setting up the environment of an organization if used properly.

F. ETHICAL EGOISM

Ethical egoism is a normative ethical position which holds that moral agents ought to act in

their own self-interest. It is concerned with how people ought to behave. In this respect, ethical

egoism is quite different from psychological egoism, the theory that all our actions are ultimately

self-interested. Psychological egoism is a purely descriptive theory that purports to describe a

basic fact about human nature. Everyone pursuing his own self-interest is the best way to promote

the general good.

This argument was made famous by Bernard Mandeville (1670-1733) in his poem "The

Fable of the Bees" and by Adam Smith (1723-1790) in his pioneering work on economics, "The

Wealth of Nations." In a famous passage, Smith wrote that when individuals single-mindedly

pursue “the gratification of their own vain and insatiable desires” they unintentionally, as if “led

by an invisible hand,” benefit society as a whole. This happy result comes about because people

generally are the best judges of what is in their own interest, and they are much more motivated

to work hard to benefit themselves than to achieve any other goal. An obvious objection to this

argument, though, is that ​ it doesn’t really support ethical egoism. It assumes that what really

matters is the well-being of society as a whole, the general good. It then claims that the best way

to achieve this end is for everyone to look out for themselves. But if it could be proved that this

attitude did not, in fact, promote the general good, then those who advance this argument would

presumably stop advocating egoism.

Egoism application in Business

The immediate attraction of ethical egoism within the field of business ethics seems to be

that ethical egoism focuses on what is in the company's best interest.

For example: Pinky believes that Tasha should promote her own interest in accordance with
ethical egoism.

 Pinky might believe this, but she isn't going to tell Tasha.
 She looks to her own interest first.
 List of References

www.businessdictionary.com/definition/utilitarianism.html

https://www.csus.edu/indiv/g/gaskilld/ethics/utilitarianism%20notes.htm

https://www.academicwritersbureau.com/samples/219-applying-utilitarianism-in-business

Immanuel Kant (1724-1804)

Thomas Hobbes (1588-1679)

Divine Command Theory by Corey Ciocchetti :: SSRN

poseidon01.ssrn.com