This document discusses normative ethical theories and approaches to evaluating business ethics. It begins by defining normative ethical theories as those that propose how to act morally. It then contrasts absolutism, which sees objective moral principles, with relativism, which sees morality as subjective and context-dependent. The document outlines traditional normative theories like egoism, utilitarianism, and ethics of duties. It also discusses newer approaches based on virtue, care ethics, discourse ethics, and postmodern ethics. It concludes that for practical decision making, a pluralistic approach is best, considering insights from multiple ethical perspectives.

1. Evaluating Business Ethics
Normative, Traditional and
Contemporary Ethical Theories

2. What are normative ethical theories?
• Ethical theories are the rules and principles
that determine right and wrong for any given
situation Crane and Matten (2010)
• Normative ethical theories are those that
propose to prescribe the morally correct way of
acting

3. The role of ethical theory
• Two extreme positions (De George 1999)
• Ethical absolutism claims there are eternal,
universally applicable moral principles
– Right and wrong are objective qualities, can be
rationally determined
– Typically traditional ethical theories
• Ethical relativism claims morality is context-dependent
and subjective
– No universal right and wrongs that can be rationally
determined; depends on person making the decision
& culture in which they are located
– Typically contemporary ethical theories

4. North American and European
origins and differences
• Differences between Anglo-American and
European approaches based on philosophical
arguments
– Individual versus institutional morality
• US tend to individualistic perspective
• Europe towards wider economic and governing institutions
– Questioning versus accepting capitalism
• US tend to accept the capitalist framework
• Europe tend to question the ethical justification of capitalism
– Justifying versus applying moral norms
• US tend to focus on application of morality
• Europe focus on justification and ethical legitimation of norms
• In contrast, Asian perspectives tend to be
based on religion (e.g. Islam, Buddhism)

5. Traditional ethical theories
• Generally offer a certain rule or principle
which one can apply to any given situation
• These theories generally can be differentiated
into two groups
Source: Crane and Matten (2010)
Motivation
/
Principles
Action Outcomes
Consequentialist Ethics
Non-consequentialist Ethics

6. Major normative theories
Egoism Utilitarianism Ethics of duties Rights & justice
Man is a being that is
distinguished by
dignity
Man is a rational
moral actor
Type Consequentialist Consequentialist Non-consequentialist Non-consequentialist
Source: Crane and Matten (2010)
Man is controlled by
avoidance of pain and
gain of pleasure
(“hedonist”)
Man as an actor with
limited knowledge and
objectives
Concept of
human
beings
Respect for human
beings
Categorical
imperative
Maximization of Act/rule utilitarianism
desires/self interest
Rules
Individual desires or Collective welfare Duties Rights
interests
Focus
John Locke
John Rawls
Jeremy Bentham Immanuel Kant
John Stuart Mill
Contributors Adam Smith

7. Egoism
• Theory of egoism - an action is morally right
if the decision-maker freely decides an action
to pursue either their (short-term) desires or
their (long-term) interests.
– Adam Smith (1793): pursuit of individual interest
morally acceptable as invisible hand of market
creates benefit for all
– Relies on free competition and good information
– ‘Enlightened egoism’
– However, markets do not function perfectly
• Anti-globalisation movement
• Sustainability debate

8. Utilitarianism
• According to utilitarianism, an action is
morally right if it results in the greatest
amount of good for the greatest number of
people affected by the action
– Also called the ‘greatest happiness principle’
– Based on cost-benefit analysis

9. Problems with Utilitarianism
• Subjectivity
– This has led to refinement of theory
• Act utilitarianism
• Rule utilitarianism
• Issues around quantification and distribution
of utility

10. Act- and Rule-Utilitarianism
Act utilitarianism
– Looks to single actions and bases the moral
judgement on the amount of pleasure and the
amount of pain this single action causes.
Rule utilitarianism
– looks at classes of action and ask whether the
underlying principles of an action produce more
pleasure than pain for society in the long run.

11. Ethics of duties
‘Categorical Imperative’ (Kant)
• Maxim 1: Consistency
– Act only according to that maxim by which you can at the same
time will that it should become a universal law.
Maxim 2: Human Dignity
– Act so that you treat humanity, whether in your own person or in
that of another, always as an end and never as a means only.
• Maxim 3: Universality
– Act only so that the will through its maxims could regard itself at
the same time as universally lawgiving (would others agree?
Would you be happy to see your decision reported in the press?)

12. Problems with ethics of duties
• Undervaluing outcomes
• Complexity
• Misplaced optimism?

13. Ethics of rights and justice
Natural rights
• Certain basic, important, unalienable entitlements
that should be respected and protected in every
single action.
– Based on consensus about nature of human dignity
– Strongly based in western view of morality
Justice
• The simultaneously fair treatment of individuals in a
given situation with the result that everybody gets
what they deserve
– Fair procedures (procedural justice)
– Fair outcomes (distributive justice)

14. John Rawls’s
‘Theory of Justice’
1. Each person is to have an equal right to the
most extensive total system of basic
liberties compatible with a similar system of
liberty for all.
2. Social and economic inequalities are to be
arranged so that they are both:
a. to the greatest benefit of the least advantaged;
b. attached to offices and positions open to all under
conditions of fair equality of opportunity.

15. Limits of traditional theories
• Too abstract
• Too reductionist
• Too objective and elitist
• Too impersonal
• Too rational and codified
• Too imperialist

16. Alternative perspectives on ethical
theory

17. Approaches based on character and
integrity
Virtue ethics
• Contends that morally correct actions are those
undertaken by actors with virtuous characters.
Therefore, the formation of a virtuous character is the
first step towards morally correct behaviour
Acquired traits
• Intellectual virtues
• Moral virtues

18. Approaches based on ethics and
responsibility
Feminist ethics
• An approach that prioritizes empathy, harmonious
and healthy social relationships, care for one another,
and avoidance of harm above abstract principles
Key elements
• Relationships
– Decisions taken in context of personal human interrelations
• Responsibility
– Active ‘taking’ of responsibility, rather than merely ‘having’ it
• Experience
– Learn and develop from experience

19. Approaches based on procedures of
norm generation
Discourse ethics
• Aims to solve ethical conflicts by providing a process
of norm generation through rational reflection on the
real-life experiences of all relevant participants
Key elements
• Ultimate goal of ethical issues in business should be
the peaceful settlement of conflicts
• Different parties in a conflict should sit together and
engage in a discourse about the settlement of the
conflict, and ultimately provide a situation that is
acceptable to all
• ‘ideal discourse’ criteria

20. Approaches based on empathy and
moral impulse
Postmodern ethics
• 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 to listen to and
follow their emotions, inner convictions and ‘gut
feelings’ about what they think is right and wrong in a
particular incident of decision-making.

21. Postmodern business ethics
• Postmodern business ethics emphasises
(Gustafson, 2000:21)
– Holistic approach
– Examples rather than principles
– ‘Think local, act local’
– Preliminary character

22. Typical Perspective
Single normative consideration
for solving the ethical dilemma
Ethical
Dilemma
‘Lens’ of ethical theory

23. Pluralistic Perspective

24. Pluralism?
Crane and Matten (2010) argue that for the
practical purpose of making effective
decisions in business:
• Not suggest one theory or one approach as the best
or true view of a moral dilemma
• Suggest that all these theoretical approaches throw
light from different angles on one and same problem
• Complementary rather than mutually exclusive
Advocate position of pluralism
• Middle ground between absolutism and relativism

25. Considerations in making ethical decisions: summary of key
insights from ethical theories
Consideration Typical question you might ask yourself Theory
One’s own interests Is this really in my, or my organization’s, best long-term interests? Would it be
acceptable and expected for me to think only of the consequences to myself in this
situation?
Egoism
Social consequences If I consider all of the possible consequences of my actions, for everyone that is
affected, will we be better or worse off overall? How likely are these
consequences and how significant are they?
Utilitarianism
Duties to others Who do I have obligations to in this situation? What would happen if everybody
acted in the same way as me? Am I treating people only to get what I want for
myself (or my organization) or am I thinking also of what they might want too?
Ethics of duty
Entitlements of
others
Whose rights do I need to consider here? Am I respecting fundamental human
rights and people’s need for dignity?
Ethics of rights
Fairness Am I treating everyone fairly here? Have processes been set up to allow everyone
an equal chance? Are there major disparities between the ‘winners’ and ‘losers’
that could be avoided?
Theories of justice
Moral character Am I acting with integrity here? What would a decent, honest person do in the
same situation?
Virtue ethics
Care for others and
relationships
How do (or would) the other affected parties feel in this situation? Can I avoid
doing harm to others? Which solution is most likely to preserve healthy and
harmonious relationships among those involved?
Feminist ethics
Process of resolving
conflicts
What norms can we work out together to provide a mutually acceptable solution
to this problem? How can we achieve a peaceful settlement of this conflict that
avoids ‘railroading’ by the most powerful player?
Discourse ethics
Moral impulse and
emotions
Am I just simply going along with the usual practice here, or slavishly following
the organization’s code, without questioning whether it really feels right to me?
How can I get closer to those likely to be affected by my decision?W hat do my
emotions or gut feelings tell me once I’m out of the office?
Postmodern ethics