ETHICAL THEORIES

These are divided into two;

1 Traditional theories(normative)
2 contemporary theories (pragmatic)
Traditional theories
a)Consequentialist (teleological)
-Egoism theory
-Utilitarianism theory
b)Non consequentialist (deontological)
-Kantian theory
-Ethics of right and justice
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2 Contemporary theories
-Virtue/ virtuous ethics
-Feminist ethics
-Discourse ethics
-Postmodern

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Presentation lay out
• Utilitarianism
• Duty ethics
• Virtue ethics
• There are several ethical theories, representing relatively different
moral principles/moral judgment that individuals can apply to
reason out come of their decisions and actions within
organizations. If these outcomes are desirable then the actions in
question is morally right and vice versa.
• The moral judgment in these consquentialist theories is thus based
on the intended outcomes, the aims or the goals of certain actions.

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 Consequentialist theories

• Consequentialist theories are also called the

teleological theories. Teleology is a Greek word for
goal.
• Consequentialist theories these hold that the moral
worth of an action or practice is determined solely
by the consequence of the action or practice that
stems from rightness or wrongness of actions.
• So what makes an action right or wrong is the good
or evil that is produced by the act, not the act in its
self.
• These Consequentialist theories include Egoism
theory and utilitarianism theory.
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• Egoism is one of the oldest philosophical ideas, and it was already well
known and discussed by ancient Greek philosopher such as Plato. In the
last three centuries, it has been quite influential in modern economics,
particularly in relation to Adam Smith’s (1723-1790) ideas about the
design of liberalist economics.
• Egoism theory-Egoism can be defined as follows
• Ethical egoism is the normative theory whereby people ought to act
exclusively in their self-interest
• Thus, the moral principle of ethical egoism suggests that an act is ethical
when it promotes the individual's long-term interest.
• Note that it is possible for people to help others, follow the rules of
society, and even grant gifts if they believe that those actions are in their
own best interest.
• The justification for egoism lies in the underlying concept of man as man
has only limited insights into the consequences of his actions, the only
suitable strategy to achieve a good life is to pursue his own desires or
interest.
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• Adam smith (1793) argued that in the economic system

this pursuit of individual self-interest was acceptable
because it produced a morally desirable outcome for
society through out the invisible hand of market place
thus a moral outcome as the end product of the system
is based on free competition and good information. For
example if the producer makes and sells shoddy or
faulty products then the consumer may suffer in the
short term as a result of lack of fitness of the product
that they have bought, however in the long run the
consumer provided that consumers know about
alternative choices the producer’s trade will suffer as
consumers turn to other products.
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• Hence the producer will avoid producing shoddy

goods for their self-interest, thus producing a
situation that is benefial to all. Because of his aim
to produce a wider social benefits some have
linked Smith’s theory of egoism practice for
utilitarian results (Beauchamp and Bowie,1997).
• Self interest/business benefit is a drive to
capitalism
• Improves quality
• Personal wellbeing /welfare

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Criticism of Egoism theory

• The selfish person is insensitive to the rights and interests of others
• With in moral philosophy an important criticism of egoism based on
the desire is that it renders patently different approaches to life as
being equivalent ,thus in this view the life of a student who gets
drunk every night in the students union is as admirable as the
student who works hard for a first class degree if both followed
their desires.
• The idea of interests based on pursuit of ones long term wellbeing
enables one to distinguish between the life of a hard drinking
student and that of hard working student that create a gap
between desires and interest as one can say that it is not the
interest of drinking to give into immediate desires.
• Business is meant to satisfy both the buyer and seller disregards
objective of globalization ,all business benefit
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1.Utilitarianism
• The philosophy of utilitarianism has been linked to
the names of the British philosopher and
economists Jeremy Bentham (1748-1832) and John
Stuart Mill (1806-1873) and has been influential in
modern economics in general. The basic principles
of utilitarianism could be explained as follows:
• Utilitarianism as a consequentialist theory has its
application to business decision holds that whether
an action is right or wrong depends on the good
(pleasure) or bad (pain) consequences produced
for every one affected by the action.
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• Utilitarian theory is thus a universal or comprehensive and

considers the consequences of all the parties affected by
the act.
• According to the utilitarianism, an action is morally right if
its results in the greatest amount of good for the greatest
amount of people affected by the action. This principle is
also called the “greatest happiness principle”
• Jeremy Bentham and John Stuart Mill explains the idea that
the moral worth of an action is determined solely by its
utility in providing happiness or pleasure as summed
among all conscious beings. In other words John Stuart Mill
expanded Jeremy Bentham concept of utility to include not
only the quantity, but quality of pleasure, while focusing on
rules,
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instead of individual moral actions. 10
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• The underlying idea is the notion of utility (satisfaction),

which Bentham sees as the ultimate goal of life.
• In this pleasure-seeking interpretation of utilitarianism,
utility is measured in terms of pleasure and pain.
• Other interpretations of utility look at happiness and
unhappiness.
Steps of Making a Utilitarian decision:
• Determining the alternative actions that are available in any
specific decision situation
• Establishing the costs and benefits that a given action would
produce for each and every person affected by the action.
• Choosing the alternative that produces the greatest sum of
utility or the least amount of disutility
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Strength of Utilitarian theory

• It promotes actions that bring pleasure to the
society and minimize those that bring pain
• It helps in cost benefit analysis in starting business
• it emphasizes pre- business start-up evaluation
• It impacts on entrepreneurs and business
• It helps in investment analysis
• Economic value –utility
• Business continuity
• It promotes fairness
• Promotes good image
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Weakness/Criticism of the theory

• Utilitarianism favors majority interest at the expense of
minority or self needs, distribution of utility.
• Utilitarianism is associated with subjectivity like on how
utility is distributed. Different people have different
interpretation of what is good or bad
• Problem of quantification as it’s quit difficult to assign costs
and benefits to every situation. In modern settings, costs
and benefits are pegged to the price based as opposed to
numerical scale proposed by the scholars Jeremy Bentham.
• Difficult to value feelings
• valuation of pain and loss can not be exact

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• Utilitarianism is criticized for looking only at the results of actions

not the desires or intentions that motivate them.
• Many Utilitarians view morality as a personal guide rather than a
means to judge the actions of other people or actions already
performed.
• Act and rule Utilitarianism differ in how they treat human rights
themselves. Under the Rule utilitarianism a human right can
easily be considered a moral rule.
• Utilitarianism is not proven either by science or by logic to be the
correct ethical theory.
• Bentham’s view (or similar views) of utility is criticized on grounds
that different things make different people happy, and that what
promotes happiness changes over time. In addition that that
happiness couldn't be the rational aim of human life, because it is
unattainable and that people can exist without happiness.
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 Non -cosquentialist

2.Deontology (Duty ethics/theory of duty/Ethics of duties/Non

-cosquentialist) by Kant Immanuel (Kantian Theory)
• The non-cosquentialist ethical theories are under two
dimensions and are the extension of traditionally applied
theories to business ethics and they are Ethics of duties and
ethics of rights and justice
• Its main contributor, the German philosopher Immanuel Kant
(1724-1804), thought that morality and the decision about
right and wrong action was not dependent on a particular
situation.
• Immanuel Kant who argued that the highest good was the
good will, and morally right actions are those carried out with
a sense of duty. Thus, it is the intention behind an action
rather than its consequences that make that action good.
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• That human are rational actors who could decide these

principles for them selves. Hence Humans could therefore
also be regarded as independent moral actors who make
their own rational decisions regarding right and wrong.
• Kant subsequently developed a theoretical framework
through which these principles could be derived called the
categorical imperative, by this he meant that this theoretical
framework should be applied to every moral issue regardless
of who is involved, who profit, and who is harmed by the
principles once they have been applied in specific situation.
• That every person should act on those principles that he or
she would prescribe as universal laws applied to every one.
• Assumes that what is right for one person is right for all
persons.
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• Or it refers to acting responsibly and responsively

towards others ,attending to others wellbeing and
not harming others.
• It is also about passing the criteria of maxims;
universal law, treating humans as ends not as
means and universally law giving .

• The categorical imperative consists of three parts

which Kant puts forward as follows,

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• Maxim 1: Act only according to that maxim/proverb

by which you can, at the same time will that it
should become a universal law. (Is the principle
based on good will?) i.e Maxim 1 checks if the
actions could be performed by every one and
reflect the aspect of consistency ,as in an action can
be right if every one follow the same underlying
principle. e.g murder is an immoral act because if
allowed every body to murder then there would be
no possibility of human life on earth, lying is
immoral because if every body is allowed to lie then
the entire notion of truth would be impossible.
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• Maxim 2: Act so that you treat humanity whether in

your own person or in that of another, always as an
end and never as means only. (Does it treat people
as ends in themselves not means?) This maxim
focus on Kants view that human deserves respect
as autonomous, rational actor and that this human
dignity should never be ignored. we all use people
as means as soon as we employ them or pay
them to provide us with goods or services. However
this does not mean to treat them as means to
achieve what we want and just forget their needs
and goals in life and their expectations to make
their own choices.
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• Maxim3: Act only so that the will trough its maxim

could regard itself at the same time as universally law
giving. (Can it be willed universally without
contradiction?) Maxim 3 scrutinizes the elements of
universality .I might come to conclusion that certain
people could be followed consistently by every
human being,I could also come to conclusion that in
following that principle I respect human diginity and
not just use people as means only.But then Kant
wants us to check if the principles of our actions
would be acceptable for every human being,this test
there fore tries to overcome specifically the risk of
subjectivity inherent to the utilitarian analysis.
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• It follows that people in business relationships

should not be used, coerced, or deceived, and that
business organizations and practices should be
arranged so that they contribute to development of
human rational and moral capacities.
• Its relevancy could be seen in rights, justice, truth
telling and virtue ethics in business
• Comparing intended practice to the community
values
• Not exploiting humanity
• Consideration of personal impact and feeling in
quality standards
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• Helps in comparing intended practice to the

community values
• Good relations with stakeholders
• Respect of employee dignity
• Helps manager to reason in the context of
universality
• Emphasizes acting according to generally
acceptable norms and values of the society
• Helps to avoid exploitation of employees
• Emphasis on the duty to treat employees equally
and fairly
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Problem/criticism of the theory

• Under valuing outcomes, obviously one of these problems is that
there is rather little consideration of the outcome of ones action in
the ethics of duty Since it gives you no real way of assessing these
outcomes.
• Complexity, While the idea of ethics of duty is quite simple basically
is this action right, and is it my duty to do it, specific formulation
such as Kant’s categorical imperative can be quit complicated to
apply. His principles based way of evaluating a decision requires a
certain amount of abstraction and it’s this level of intellectual
scrutiny that one can not take for granted in each and every case.
• Optimism, Kant’s theory is quit optimistic, his view of man as a
rational actor who acts consequently according to self-imposed
duties seems more of an ideal than a reality with regard to business
actor.
• Assumes all business actors as rational
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Ethics of Right and Justice

• Among the most important rights conceived by Locke and
subsequent rights theorists were right to life, freedom, and
property. These have since been extended to include rights to
freedom of speech, conscience, consent, privacy and the
entitlement to a fair legal process among others.
• To day the basic human rights would include a life to life,
liberty, justice, education, fair trial, fair wages, freedom of
belief, association, and expression etc. It’s this background
that makes the notion of human rights one of the most
common and important theoretical approaches to business
ethics on a practical level. Corporation especially
multinationals are increasingly judged with regard to their
attitude to human rights and how far they respect and protect
them.
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Justice theory
• This theory states that each person is to have an
equal right to the most extensive total system of
equal basic liberties.
• The theory of justice requires decision makers to
be guided by equity, fairness, and impartiality.
There fore justice can be defined as the
simultaneously fair treatment of individuals in a
given situation with the result that every body
gets what they deserve.

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 Contemporary ethical theories
• These could be referred to as the modern theories that guide
modern business transactions and have developed over the
past decade or so. They include Virtue ethics, feminist ethics,
Discourse and Postmodern ethics as discussed bellow
3.Virtue/Virtuous ethics
• Virtuous ethics as a line of thought looks at character of the
decision maker to ascertain whether the actions engaged in is
right or wrong. This approach is different from the traditional
rule- based theories that are mentioned earlier. According to
the Virtue ethics “good actions come from good people” and
the reverse is true for bad actions.
• Virtue ethics contends that morally correct actions are those
undertaken by the actors with virtuous characters and the
formation of a virtuous character is the first step towards
morally
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• Virtues are acquired human qualities, the excellence of

characters which enable a person to achieve a good life
according to Aristotle. or
• They can be defined as simply behaviors or attitudes that
show high moral standards.
• Virtues are a set of acquired traits of character that enable a
person to lead a good life. They are learned over time as we
relate with people in business and society that habitually
practice them. Virtues can be differentiated into:
• Intellectual virtues- (wisdom) being the most prominent one
• Moral virtues which comprise a long list of possible
characteristics such as honesty, courage, friendship,mercy,
loyalty, modesty patience among others.
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• The relevancy of virtue ethics for business ethics is that it reminds

us that right or wrong can not be simply resolved by applying
specific rule or principle, but what we need to cultivate our
knowledge and judgment on ethical matters overtime through
experience and participation. thus guiding on good business
behaviour
• Also it’s relevant since character is good for business progress,
commitment, integrity, team work, job reference, maintaining
good work human relations, an ethically good worker brings
networks which can be exploited by business etc
• Virtue ethics in a business context suggests that the solution to
many of the problems faced by managers are located in the
culture and tradition of their relevant community of practice as
managers determine what virtuous product manager would do
from his or her professional code of conduct, from virtuous role
model
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• Economic success is just one part of good business life

with satisfaction of employees, good relation among all
members of the company and harmonious relations with
all stakeholders being equally important.
Feminist ethics
• Feminist approaches to business ethics 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.
• While the male approaches would focus on “fair results,
feminist perspectives stress social processes and
particularly aim at the achievement of harmony, empathy,
and integration with regard to ethical issues. The main goal
is to avoid harm and maintain healthy relationship.
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The ethics of care

• This is a normative ethical theory that is a theory about
what makes actions right or wrong. While consequentialist
and deontological ethical theories emphasize universal
standards and impartiality, ethics of care emphasize the
importance of relationships.
• The moral theory known as the ethics of care implies that
there is moral significance in the fundamental elements of
relationship and dependencies in human life.
Discourse ethics
• Steinmann and Lohr (1994) as the main proponents of a
discourse approach to business ethics argue that ethical
reflection has to start from real-life experience rather than
belief
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systems which could be too diverse. 30
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• They contend that the ultimate goal of ethical issues in business should
be peaceful settlement of conflicts such as as impartiality, non-
persuasiveness, non-coercion and expertise of the participants. This
would particularly include the injunction that those who are more
powerful in a certain situation refrain from imposing their values on
others and using their power to solve the ethical conflict according to
their own belief system. Thus this approach is about norm generating.
• Discourse ethics aim to solve ethical conflicts by providing a process of
norm generation through rational reflection on the real life experience
of all relevant parties.
Postmodern ethics
• Postmodern ethics is an approach that locates morality beyond the
sphere of rationality in an emotional moral impulse towards others. It
encourages individual actors to question everyday practices and rules,
and listen to and follow their emotions, inner convictions, and gut
feelings about what they think is right and wrong in a particular
situation.
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THANKS FOR LISTENING

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