AravindYELERY - BE-3 - 3 March 2020

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-1@Online 3 March 2020
Evaluating Business Ethics
 The normative ethical theory

 International perspectives on normative ethical
theory
 Utilitarianism, ethics of duty, and rights and
justice
 Understand and apply alternative ethical theory
 Pluralist business ethics evaluation
Aravind Yelery ( 葉文 ), PhD

aravind.y@phbs.pku.edu.cn
#609
PART I
Backgrounder
GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-2@Online

» Distinction between Moral, Ethics and Law » Essential New conceptual frame:
Ethics to Navigate Sustainability » What is a Corporation? Actors in ensuring
Ethical approaches to business » Corporate Social Responsibility (CSR) »
Stakeholder theory of the Firm » Corporate Citizenship
Key concepts
 Three bottom lines
 Sustainability
 Corporate Social responsibility
 Stakeholder theory
 Corporate citizenship
Skills
 CSR strategy
 Corporate citizenship analysis

> In Class two, we discussed business ethics in relations to the social role of the
corporation.
> Outlined the nature of corporations and argued that confining corporations to
their initial purpose of producing goods and services in a way that yields
maximal profit for the shareholder of the corporations is too limited.
> We subsequently analysed different perspectives on CSR, stakeholder theory,

and corporate accountability, and assessed their relevance in an international
context.
> Our argument is that the shifts and changes in the global economy in recent
years have brought to the surface the necessity for a new framing of business
ethics.

Application of
Ethics

Structure
PART I – Backgrounder
PART II – The role of ethical theory
PART III – Normative Ethical theories
PART IV – Other contending ethical theories
PART V – Limits of Western Modernist theories
PART VI – Alternative perspectives on Ethical theory
PART VII – Summary – Towards a pragmatic use of ethical theory

PART II
The role of ethical theory

Morality ----> Ethics
> In everyday lives, we constantly come > In a business context, however,

up against situations where values are in situations might become considerably
conflict and where we have to make a more complex
choice about what is right or wrong

Morality ----> Ethics ----> Business

> In a business context, there is often a need for these decisions to be based on a
systematic, rational, and widely understandable argument so that they can
be adequately defended, justified, and explained to relevant stakeholders
> Similarly, if we believe that what an organisation has done is wrong, we need
some concrete basis from which to argue our case. After all, at what point
can we say that a particular behaviour is more than just different from what
we would have done, but in some way actually wrong? This is the point where
normative ethical theories come into play
> Ethical theories are the rules and principles that determine right and wrong for a
given situation

The Role of Ethical Theory
> High-level account of how questions about morality should be addressed
> Similar to engineering models V=IR (a tool to solve many engineering models)
V=IR is not a law of nature
> In locating a place for ethical theory, Richard De George (1999) suggests that two
extreme positions can be imagined:
Ethical absolutism <> Ethical relativism

The Role of Ethical Theory - Ethical absolutism <> Ethical relativism
> Ethical absolutism: On the one side of the spectrum would be a position of ethical
absolutism, which claims that there are eternal, universally applicable moral principles.
According to this view, right and wrong are objective qualities that can be rationally
determined. Example- Nothing is relative; a crime is a crime, regardless of circumstances.
> Ethical relativism: The other extreme would be a position of relativism, which claims that
morality is context-dependent and subjective. Relativists tend to believe that there are no
universal right and wrongs that can be rationally determined—it simply depends on the
person making the decision and the culture in which they are located.
In its most well-known form, the notion of relativism occurs in international business issues,
where it is argued that a moral judgement about behaviour in another culture cannot be
made from outside because morality is culturally determined. Ethical relativism is different
from descriptive relativism: whilst the latter merely suggests that different cultures have
different ethics, the former proposes that both sets of beliefs can be equally right. Ethical
relativism then is still a normative theory (De George 1999).

Ethical absolutism VS Ethical relativism Vis-à-vis Business Ethics
> Most traditional Western modernist ethical theories tend to be absolutist in nature. They
seek to set out universal rules or principles that can be applied to any situation to provide the
answer as to what is right or wrong.
> Contemporary ethical theories provide us with some alternative perspectives on ethical
theory. They often tend towards a more relativistic position.
> However, in the course of this subject of BE, we want to show that for the practical
purposes of making effective decisions in business, both of these positions are not
particularly useful.

Ethical absolutism VS Ethical relativism Vis-à-vis Business Ethics = ?
> Our position therefore is one of ethical pluralism
> This occupies something of a middle ground between absolutism and relativism.
Pluralism accepts different moral convictions and backgrounds, while at the same time
suggesting that a consensus on basic principles and rules in a certain social context can,
and should, be reached.
> Ethical theories, as we shall show, can help to clarify different moral presuppositions of the
various parties involved in a decision—as one person may tend to think in terms of one
theory, whilst another might think in terms of a different theory.
** In making good business decisions, we need to understand this range of perspectives in

order to establish a consensus on the solution to ethical problems (Kaler 1999)
> ** Rather than establishing a single universal theory, we will present the different
theoretical frameworks as complementary resources or conceptual tools that help
us make a practical, structured, and systematic assessment of the right and wrong
in particular business decisions.
PART III
Normative Ethical theories

Normative Ethical theories
> The word ‘normative’ is an adjective which comes from the word ‘norm’,
which means a ‘standard’, or a ‘rule’, so moral norms are standards or
principles with which people are expected to comply
> Obviously, people have different ideas about what these standards are, so
the various normative theories of ethics therefore focus on what they
claim makes an action a moral action: on what things are good or bad, and
what kind of behaviour is right as opposed to wrong
> The three normative theories illustrate three different sets of ideas about
how we should live
> Deontology, teleology, and consequentialism

Normative Ethical theories – DEONTOLOGY – moral duties
> The word ‘deontological’ comes from the Greek deon, meaning
‘obligation’, ‘necessity’, ‘that which is binding’. Generally speaking, those
words translate as ‘duty’, so deontological theories tell you what your moral
duties are
As you might guess, once people start telling you what duties you have,
those duties form the basis of moral ‘rules’. Deontological hold that the
moral worth of an action lies in your conforming to duties and rules, as
opposed to considering the consequences of what you do

Normative Ethical theories – DEONTOLOGY – duty-earned rights
> Alongside obligations, duties and rules, deontological theories also

consider ‘rights’, because your obligation to follow rules and duties implies
that there is an intrinsic (built-in) value of doing so. If you follow the rule,
‘Do not murder’, then you implicitly have the right not to be murdered
Deontologists therefore live in a world of moral rules.

Apart from, ‘Do not murder’, some of the obvious ones are:
‘Do not steal’
‘Do not lie’
‘Do not break your promises’

Normative Ethical theories – CONSEQUENTIAL
> Consequentialist theories of ethics hold that the moral worth of an action
should be judged by its consequences.
> There are therefore situations where a consequentialist would be

prepared to lie if that was thought necessary to bring about the best
consequence(s).
> The best known consequentialist theory is Utilitarianism, which is an

example of ‘act-consequentialism’
> Utilitarianism combines consequentialism with the claim that the only
valuable consequence is pleasure, and the only disvaluable consequence is
pain

PART IV
Other contending ethical theories

Western modernist ethical theories
> In Western societies, beginning with the enlightenment in the 18th century, the
ethical theories traditionally regarded as appropriate for application to business
contexts
> 18th century is often referred to also as the age of ‘modernity’ as it modernized a
lot of traditional thinking dominated by religious approaches throughout the Middle
Ages
> These theories generally can be differentiated into two groups
I - Theories that base moral judgement on the outcomes of a certain action. If

these outcomes are desirable, then the action in question is morally right; if the
outcomes of the action are not desirable, the action is morally wrong
II - On the other hand, we have those theories that base the moral judgement on the
underlying principles of the decision-maker’s motivation. An action is right or
wrong, these theories suggest, not because we like the consequences they produce,
Two main families of Western modernist ethical theories and Business Ethics
Motivation/
Action Outcomes
Principles
Non-consequentialist ethics Consequentialist ethics

Ethics of duties Egoism
Ethics of rights and justice Utilitarianism

> Ethics of duties:

In business ethics, the most influential theory to come from the perspective of
ethics of duty derives from the work of the German philosopher Immanuel Kant
(1724-1804). Kant argued that morality and decisions about right and wrong were
not dependent on a particular situation, let alone on the consequences of one’s
action.
> Rights and Justice:

The notion of rights goes back to an entire philosophical school initially linked to
another modernist thinker, the British philosopher John Locke (1632-1714). He
conceptualized the notion of ‘natural rights’, or moral claims, that humans were
entitled to, and which should be respected and protected (at that time, primarily
by the state).

> Ethical Egoism:

Ethical egoism claims that I morally ought to perform some action if and only if,
and because, performing that action maximizes my self-interest.
> Utilitarianism:
Utilitarianism is a consequentialist moral theory focused on maximizing the overall
good; the good of others as well as the good of one’s self.

PART V
Limits of Western Modernist theories

Criticism and limits
> These major Western modernist ethical

theories, we could argue that they present a
quite comprehensive view of humans and
society, and based on various assumptions,
they come up with actionable principles to
answer ethical questions.
> However, WMETs have the big disadvantage

that their view of the world only presents one
aspect of human life, while reality normally
tends to be more complex than the simplified
view of these ethical theories.

> Too abstract Stark (1994) suggests that traditional ethical theories are too
theoretical and impractical for the pragmatic day-to-day concerns of managers. In
real life, managers are unlikely to apply abstract principles derived from long-dead
philosophers when dealing with the concrete problems of business. The business
context has its own values, structures, and practices that need to be taken into
account
> Too reductionist Kaler (1999) argues that each theory tends to focus on one
aspect of morality at the cost of all the rest of morality. Why choose consequences,
duties, or rights when all are important?
> Too objective and elitist Parker (1998) suggests that ethical theories attempt to
occupy a rarefied high ground, such that those specialist ethicists and philosophers
who know and understand the theories can pronounce on the right and wrong of
other people without any subjective experience of the situation they are faced with.
Just because Aravind Yelery knows the difference between utilitarianism and justice,
why should
GEN502-BUSINESS that 6-7/M-3/2019-2020/3-28@Online
ETHICS/Session mean that we can decide for you whether a product manager in
> Too impersonal By focusing on abstract principles, traditional ethical theories do

not take account of the personal bonds and relationships that shape our thoughts
and feelings about right and wrong (Gilligan 1982).
> Too rational and codified Ethical theories try and distil right and wrong down to
codified rational rules of behaviour. Bauman (1993) contends that this suppresses
our moral autonomy and denigrates the importance of our moral feelings and
emotions, all of which he claims are crucial for acting morally towards others.
Rorty (2006) suggests that what we need is better moral imagination and ethical
stories rather than moral reasoning.
> Too imperialist Why assume that ethical theories from the West are suitable for
business people everywhere else in the world? What about the ethical teachings of
classical Asian or traditional African philosophy, for instance—do these not also have
something useful to say about modern-day business ethics?

PART VI
Alternative perspectives on Ethical theory

Rise of Alternative perspectives on Ethical theory
> Clearly, then, there are certain problems associated with these Western
modernist theories. Many of these stem from their emphasis on the more absolutist
approach to ethical theory.
> As a result, there have been a number of more recent attempts to develop or
resurrect alternative ethical theories that emphasise greater flexibility, as well as
including consideration of decision-makers, their context, and their relations with
others, as opposed to just abstract universal principles. Although these are also
open to criticism, they help to enrich the choice of perspectives we could take on
ethical issues in business.
> Alternative, more contemporary perspectives on ethical theories are those that
have either been developed or brought to prominence in the business ethics field
over the past two decades or so.
> They offer an important alternative perspective that should not be ignored, and
which, ETHICS/Session
GEN502-BUSINESS we would6-7/M-3/2019-2020/3-31@Online
suspect, may become increasingly more influential in the business
Four main contemporary ethical theories:
• Ethical approaches based on character and integrity
• Ethical approaches based on relationships and responsibility.
• Ethical approaches based on procedures of norm generation.
• Ethical approaches based on empathy and moral impulse.

Ethical approaches based on character and integrity
> Up to now, we have chiefly looked at right and wrong according to the ethics of
particular actions. However, much attention in recent years has focused on
approaches that start from a different perspective: rather than checking every
single action according to its outcomes, or its underlying principles, these
approaches look to the character or integrity of the decision-maker (Nielsen 2006)
> Focusing on the integrity of individuals clearly has a strong resonance in a

business context, especially when considering the ethics of professionals such as
doctors, lawyers, and accountants who rely on their moral probity for maintaining
legitimacy and gaining clients.
> Attention to character as a foundation for business ethics has also arisen in non-
Western contexts, such as Africa, where it has been argued that its humanistic
approach is more easily acceptable in African culture than rules-based approaches
(Gichure
GEN502-BUSINESS 2006). 6-7/M-3/2019-2020/3-33@Online
ETHICS/Session
Ethical approaches based on character and integrity
‘Refinement of one’s character’ is central to Confucianism, with its emphasis on

cultivating virtues such as benevolence (ren), righteousness (yi), ritual propriety (li),
wisdom (zhi), trustworthiness (xin), and filial piety (xiao) (Woods and Lamond 2011).

Ethical approaches based on relationships and responsibility
> This eschewal of a principle-based approach to ethical problems has also been
taken up by other alternative frameworks, which focus not on character, but on
relationships. One notable example of this approach is feminist ethics, which starts
from the assumption that men and women have fairly different attitudes towards
organizing social life, with significant impact on the way ethical conflicts are
handled (Gilligan 1982).
> Similarly, there is a focus on relationships as the basis for ethical conduct in
Confucian approaches to business ethics (Romar 2004).
Social relationships and their harmony are of utmost importance in Confucius
Business Ethics.

Ethical approaches based on procedures of norm generation
> All the theoretical approaches we have discussed so far start from a certain
perspective on humans, on the values or goals governing their decisions, and a few
other assumptions that in essence are all normative in nature. By normative,
remember that we mean prescriptions of right and wrong action.
> By normative, remember that we mean prescriptions of right and wrong action.
Having said ‘normative’, however, we might step back for a minute and ask if this
starting point is, in fact, a very useful way to solve ethical conflicts in business.
> The most significant problems arise from the diverging normative perspectives
that the different people might bring to the table.

Ethical approaches based on empathy and moral impulse
> Often referred to as ‘postmodern business ethics’, this school of thought

fundamentally questions the link between rationality and morality that is
inherent in all the Western modernist ethical theories
> These traditional theories have their origins in modernism, which

emerged roughly during the eighteenth-century Enlightenment era.
‘Modern’ thinkers strove for a rational, scientific explanation of the world
and aimed at comprehensive, inclusive, theoretically coherent theories to
explain nature, man, and society.
> Postmodern thinkers contend that these comprehensive theories, these

‘grand narratives’ of society (Lyotard 1984), are too ambitious, optimistic,
and reductionist, ultimately failing to explain the complex reality of human
existence.
Ethical approaches based on empathy and moral impulse
> Zygmunt Bauman (1993), one of the best-known proponents of

postmodern ethics, argues that by codifying morality within specific rules
and codes of behaviour (as, for example, exemplified in bureaucratic
organizations), rational approaches deny the real source of morality, which
is rooted in a ‘moral impulse’ towards others. This is a subjective,
emotional conviction that humans have about right and wrong, based on
their experiences, sentiments, and instincts. Moral judgement, then, is a
gut feeling more than anything else, but this is inevitably nullified when
people enter organizations and become distanced from the people who are
actually going to experience the consequences of their decisions, such as
consumers, investors, suppliers , and others.

PART VII
Summary – Towards a pragmatic use of ethical

theory

Towards a pragmatic use of ethical theory
> The array of ethical theories discussed provides us with a rich source of
assistance in making morally informed decisions.
> However, the discussion brought to the surface quite a variety of different views
and normative implications depending on the theoretical approach that has been
chosen. As indicated earlier, one theory or one approach is insufficient to offer the
best or true view of a moral dilemma
> Traditionally, ethical theory is seen a kind of ‘lens’ through which to focus
ethical decision-making on a specific consideration, such as rights, duties,
discourse, or whatever.

Towards a pragmatic use of ethical theory – ‘Lens’ of Ethical Theory

Towards a pragmatic use of ethical theory
> Alternatively, the variety of approaches throw light on the problem from
different angles and thus work in a complementary rather than a mutually
excluding fashion. The figure elucidates this role of ethical theories by viewing an
ethical problem through the ‘prism’ of ethical theories.
> This acknowledges that real business decisions normally involve multiple
actors with a variety of ethical views and convictions that feed into the decision.
> Rather than looking only for universal principles to dogmatically apply to every
situation, we suggest a pragmatic approach that allows for all aspects to play a
role in the business ethics.

Towards a pragmatic use of ethical theory – ‘Prism’ of Ethical Theory

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GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-1@Online 3 March 2020

Evaluating Business Ethics

 The normative ethical theory

Aravind Yelery ( 葉文 ), PhD

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-2@Online

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-3@Online

> We subsequently analysed different perspectives on CSR, stakeholder theory,

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-4@Online

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-5@Online

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-6@Online

The role of ethical theory

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-7@Online

> In everyday lives, we constantly come > In a business context, however,

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-8@Online

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-9@Online

> High-level account of how questions about morality should be addressed

Ethical absolutism <> Ethical relativism

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-10@Online

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-11@Online

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-13@Online

> Our position therefore is one of ethical pluralism

** In making good business decisions, we need to understand this range of perspectives in

Normative Ethical theories

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-15@Online

> Deontology, teleology, and consequentialism

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-16@Online

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-17@Online

> Alongside obligations, duties and rules, deontological theories also

Deontologists therefore live in a world of moral rules.

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-18@Online

> There are therefore situations where a consequentialist would be

> The best known consequentialist theory is Utilitarianism, which is an

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-19@Online

Other contending ethical theories

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-21@Online

> These theories generally can be differentiated into two groups

I - Theories that base moral judgement on the outcomes of a certain action. If

Non-consequentialist ethics Consequentialist ethics

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-23@Online

> Ethics of duties:

> Rights and Justice:

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-24@Online

> Ethical Egoism:

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-25@Online

Limits of Western Modernist theories

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-26@Online

> These major Western modernist ethical

> However, WMETs have the big disadvantage

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-27@Online

> Too impersonal By focusing on abstract principles, traditional ethical theories do

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-29@Online

Alternative perspectives on Ethical theory

GEN502-BUSINESS ETHICS/Session 6-7/M-3/2019-2020/3-30@Online

Four main contemporary ethical theories:

• Ethical approaches based on character and integrity

• Ethical approaches based on relationships and responsibility.

• Ethical approaches based on procedures of norm generation.