This document discusses various ethical theories and concepts related to business ethics including: 1. It classifies ethical theories into teleological (consequential), deontological, virtue ethics, and care ethics. It provides details on utilitarianism, Kantian deontology, and virtue ethics. 2. It discusses concepts like ethical egoism, corporate social responsibility, and the relationship between business and religion. 3. It provides an overview of CSR and its importance for internal and external stakeholders as well as factors that can help or hinder ethical climate and practices in businesses.

1. Unit 2
Ethical Theories

2. Meaning of Ethical Theories
• Ethical principles to address various problems
• Foundations of ethical analysis
• Principles are directed towards common goals
• Answers ethical dilemma
• Ethical guidelines for decision making

3. Classifications
• Teleological - Consequential
• Deontological – Means and process
• Hybrid (Ethical Egoism) – Self centered
• Concept of virtue – only by virtue
• Concept of care – Normative theory

4. Teleological - Utilitarianism
• Greek – Telos – end or consequence
• Doctrine of final cause
• Utilitarianism – action should result in
greatest possible balance of good/evil
• Ability to predict consequences of action
• Greatest benefit to most people

5. Classical Utilitarianism
• Pleasure is the ultimate
• Conflict of pleasure and pain
• Cost – benefit analysis
Traditional Utilitarianism
Jeremy Bentham (1748-1832)
John Stuart Mill (1806-1873)

6. Jeremy Bentham
• It is a an instrument for social, economic,
political and legal change
• Philosophy of value judgment
Principles
• Sum up of all the values of all the pleasures
• Sum up of all the values of pain
• Find the balance
• Greatest good for greatest number of people
• He proposes 14 pleasures and 12 pains

7. Hedonistic Calculus/Felicific Calculus
• Hedonism
1. Intensity – how strong is the pleasure
2. Duration – how long will the pleasure last
3. Certainty or uncertainty – how likely n unlikely the
pleasure will occur
4. Remoteness or propinquity (closeness) – how soon the
pleasure will occur
5. Fecundity (productiveness) – the probability of action will
be followed by sensation of the same
6. Purity – the probability that will not be followed by
sensation of the opposite kind
7. Extent – how many people will be affected

8. Versions of Utilitarianism
• Act
• Rule
Problems
• Difficulties of measuring
• Benefits and costs are intractable to
measurement
• Cost and benefit can not be predicted
• Ambiguous terms – benefit and cost
• Assumptions of all goods are measurable.

9. Hybrid Theory
Ethical Egoism
• Normative position that a moral agent ought
to do what is in their own interest
• We ought to do in our self interest even
though we have conflict with others because
we value it most.
• Differ from psychological egoism – people can
only act in their self interest
• Differ from rational egoism – it is rational act
in one’s self interest

10. • Differ fro ethical humanity – moral agents have obligation
to help others
• Ethical consequentialism – objective focused
Proponents:
• Bernard d Mandeville – materialistic
• Karl Marx – egoism to collectivism, individual anarchism
• Max Stirner – The ego and Its Own (Book), egoist and
individual anarchist,
• Friedrich Nietzsche – egoism stimulates jealous
• Aristotle – duty to our self and to others
• Immanuel Kant – agreed with Aristotle and there duty to
our self is primary objective
• Ayn Rand – positive harmony of interest among free and
rational humans

11. Criticisms
• Nothing wrong with egoism and nothing
ethical about it
• Thomas Jefferson – relation should be on
moral basis, egoism is immoral
• No moral base for resolving the conflict
• It has paradox – egoism and ethics
• Rachel – it is no better than bigotry, rascim –
divides people

12. Deontology
• Greek ‘Deon’ – Duty
• Act on certain principles and rules regardless
of outcome
• Religious deontology – divine commandments
• Immanuel Kant – 1788
• Secular deontological moral theory
• Theory for human reasons
• Differ from utilitarianism

13. The theory of duty or
Kantian Theory
• Moral agent – individual
• Maxim – rule or principles
• Will – ability to decide or choose
• Some acts are always wrong even you get favorable
outcome
• Outcome judged independently
• Human inclination, emotions and emotional have no
role in moral action
• Motivation should based on obligation
• Moral worth of action decided by human will
• Moral laws consist of set of maxims
• We are bound by duty to act in accordance with
categorical imperatives or moral principles

14. Categorical imperatives
1. Moral proposition not to be tied to any
particular condition (identity of person,
physical details)
we should follow maxims (rules) and do
the duty which results in logical end
2. Every action should consider not only end
but also principle.
person should maintain moral duty to
attain an end which is equal for all

15. 3. People should treat others as end not as means.
We have duty to act with maxims that create coherent
or rational ends
W D Ross – Theory of duty
• Fidelity (loyalty)– tell truth or keep promise
• Reparation (Compensation)– compensate people for injury
• Gratitude – return the favors
• Justice – righteousness in our duty
• Beneficence (charity) – do what ever we can to improve
others
• Self improvement – improve our own condition in virtues
• Non Maleficence – avoid injury to others

16. Criticisms
• Factors to evaluate the moral action
• We can not ignore the income altogether
• Developing virtues are ignored
• We cant go against our inclinations

17. Virtue Ethics
Aristotle’s Nicomachien Ethics
• Ancient Greek
• Defines concept of virtue
• List of virtues
• Justification to virtues and vices
• Virtue is a character or trait that manifests
itself in habitual action.
• Virtues are excellence of human conduct.
• Qualities to lead a better life

18. • Virtue is a state of character different from
skill or feeling
• Virtues are means of happiness
List:
• Courage
• Benevolence
• Generosity
• Honesty
• Tolerance
• Self Control

19. • Virtue Ethics looks things in different
perspective
• Virtues are helpful to decide the goals
• Robert Solomon
“Creation of wealth is not the purpose”
Virtues for individual is achieving good life bot
for corporate good life possible for every one.

20. Criticisms:
• Conceptual principles – not guide
• Can not address ethical dilemmas
• Conflict of interest

21. Theory of care
• Against to universal theories
• Developed by feminists
• Opposed universal standards
• Universal standards are morally problematic and crate
blindness
Beliefs:
• All individuals are interdependent to achieve the goal
• Extra consideration for vulnerable people who are
affected by our choices
• Necessary to safeguard the interest of people who are
involved

22. • American ethicist and psychologist Carol
Gilligan promoted this theory
• Criticized the Mentor theory of Lawrence
Kohlberg
• Boys are more morally mature than girls –
Mentors theory of human maturity
• Gilligan – Men and women have tendencies to
view morality in different terms
• Women’s capacity of care is a human strength
• Concrete evaluation model for moral dilemma

23. Ethical Elements of Care
• Attentiveness – care requires recognition of
others
• Responsibility – responsibility to obligation
• Competence – competence to provide care
• Responsiveness – responsiveness of the
receiver

24. Consequentialism
• Right or wrong
• Consequence
• Deontology
• Judgment on consequence
Principles:
• Right or wrong depends on result of the act
• Provide more good conseqence
Choose act provides good consequence
ACT and Rule

25. • Flexible system
• Produce least harm
• Best result for individual
• Impractical
• Outcome and act
• Difficult to decide the consequence in future

26. Non – Consequentialism
• Right or wrong depends on intension
• Virtue ethics
• Rule oriented
• Concentrates more on character

27. Consequential v/s Non consequential
Consequential Non Consequential
Consequence Intension
Good or bad deeds Character
Theories with proper consequence Intrinsic to the action

28. Utilitarianism V/s Kantianism
Deontology Utilitarianism
Principle of action Outcome
Individuals valuable to themselves Sacrifice for the sake of others
Total amount of duty Total amount of happiness
Better for all irrelevant Better for all

29. Cognitivism
• Ethical sentences express proposition or
intension and can be proved as right or wrong
• Understanding the mind using quantitative,
positive and scientific method that describes the
moral functioning
• Moral Cognitivism:
• Ethical sentences express proposition
• Some such propositions are true
• Propositions are about the attitude of people.
• Moral Realism

30. Non Cognitivism
• Ethical sentences cannot be proved right or
wrong
• Do not express moral proposition
• Moral judgments and knowledge is not
possible

31. Corporate Social Responsibility
• Apartheid era – South Africa racial
discrimination
• Union carbide in Bhopal
• Mars, Cadbury, Hershey, ivory coast – child
labor
• Adidas – child labor - Pakistan

32. Meaning of CSR
• Ethical behavior of company towards society.
• Continuous commitment by business to
behave ethically and contribute to economic
development while improving the quality of
life of the workforce and their families as well
as local community and society at large.
• Companies voluntary contribution to a better
society and clear environment

33. Definition of CSR
United Nations Industrial Development
Organization
“CSR is a management is a management concept
whereby companies integrate social and
environmental concerns in their business and
interactions with their stake holders”

34. Need for CSR
• Responsive to the social problems of society
• Corporate image
• Social welfare
• Pollution and environmental laws
• IT exemption
• Market share
• Natural calamities
• Moral duty

35. Different Level of CSR
• Economic
• Legal
• Voluntary
• Ethical

36. Obstacles for CSR
• Insufficient knowledge about CSR
• Lack of consensus about general CSR practice
• Insufficient information about CSR education
in universities
• Lack of resources to administer CSR activities
• Lack coherent strategy for CSR

37. Arguments for or Need for CSR
• To protect environment
• Good image
• Concept of trusteeship
• Minimize government control
• Better utilization of resources
• Assist the government
• Accountability
• Growth
• Enactment of law
• Moral duty
• consumerism

38. Arguments against CSR
• Business is for profit
• Government responsibility
• Lack of social skill
• Overhead cost
• Charity
• Economic justification
• Legal restriction

39. CSR towards different stake holders
Internal Stake Holders:
• Responsibility to enterprise itself:
I. Profit for survival
II. Proper utilization of resources
III. Follow business law
IV. Create good image

40. • Towards consumer
I. As per the need
II. Monopolistic practice
III. Free and fair competition
IV. No adverse effects on consumers
V. Avoid artificial scarcity
VI. Reasonable price
VII. Relationship with consumers
VIII.Continues supply
IX. Rights of customers
X. R&D for innovation
XI. Information about packaging, ingredients
XII. Proper advertisements
XIII.Code of business

41. • Towards Employees:
I. Opportunity for meaningful work
II. Conditions
III. Recognition and honor
IV. Fair wages
V. Opportunity for development
VI. Employee code of conduct
VII. Job security
VIII.Impartial promotion and transfer
IX. Welfare facility
X. Allowances
XI. Grievance redress Cell
XII. Participative management

42. • Towards Shareholders:
I. ROI
II. Dividends
III. Disclosure
IV. Accurate information
V. Audited reports
VI. Decision making
VII.Financial stability
VIII.Raise public image
IX. Principal amount

43. • Towards Society:
I. Employment
II. Amenities for local community
III. Ecological balance
IV. Economic growth
V. Social audit
VI. Protection of local culture
VII.Welfare of local community
VIII.Rehabilitation of population

44. • Towards Government:
I. Pay taxes
II. Follow laws
III. Avoid unethical corrupt practices
IV. Avoid nexus with politics
V. Fair trade
VI. Social welfare
VII.Economic policies
VIII.Assist in promotion of export
IX. Disclosure

45. • Towards Global Business:
I. Needs of world wide consumers
II. Fair competition
III. Fair pricing
IV. Follow norms of organizations
V. Follow court of law

46. • Ethical climate:
Standards and behaviors in the work place as
well as with consumers.
Climate can be developed by following the
regular practice of ethical policies and decision
making.
Obstacles of ethical conduct:
• Conformity
• Evaluation and reward
• Job pressure and crisis

47. Factors of ethical climate:
• Goals and values
• Management example
• Measures and rewards
• Recruitment and promotion

48. Diagnostic model of Social
responsiveness
• Elizabeth Redman Model
1. Traditional conflict model
2. Added value model
3. Multiple goals model

49. Business and Religion
• Religion is a way of life in India
• Breaking ground ceremony
• Office prayers
• Ayudha pooje
• Lakshmi pooje