Canadian Business and Society:
Ethics & Responsibilities
Chapter
Five
Ethics of Business:
The Theoretical Basis
Copyright © 2008 McGraw-Hill
Ryerson Ltd.
1
Chapter Outline
 Business
Ethics: Key Terms
 Ethical Implications in Business
 Influences on Ethical Behaviour
 Theoretical Basis for Ethical Conduct
 Moral Reasoning Process
 Kohlberg’s Stages of Moral
Development
Chapter 5
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Business Ethics
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Ethics of business: rules, standards, codes, or
principles that provide guidelines for morally
right behaviour and truthfulness in specific
situations.
Value judgments: subjective evaluations of what
is considered important.
Moral standards: the means by which
individuals judge their actions and the actions of
others.
Chapter 5
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Types of Ethical Assessment
Amoral
 Awareness of Implications
 Individual and Societal Influences
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Value judgments
 Moral standards
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Systematic Analysis
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Influences on Ethical Behaviour
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Individual morals
National and ethnic cultures
Government legislation and regulation
The legal system
Religion
Colleagues or peers
Education
Media
Corporate mission, vision and values statements
Union Contracts
Competitive behavour
Activist or advocacy groups
Business or industry organizations
Professional associations
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Self-Interest (Ethical Egoism)

Individuals or corporations set their own
standards for judging the ethical
implications of their actions; only the
individual’s values and standards are the
basis for actions.
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Egoism (Self-interest)
Self-interest not necessarily the same as:
selfishness, greed, disregard for the rights
and interests of others, hedonism, or
materialism.
 Not “eat, drink and be merry”
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That’s not in your best interest
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Egoism (Self-interest)
Look out for # 1
 No moral obligation to help others
 Moral obligation is to do the best you can
do for yourself
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Can involve helping others as long as it
furthers your own interests
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Egoism (Self-interest)
Self-interest to some degree is always
present
 Short-term vs. Long-term
 Negative light
 Enlightened egoist
 Scale
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Chapter 5
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Personal Virtues Ethic
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An individual’s or corporation’s behaviour
is based upon being a good person or
corporate citizen with traits such as
courage, honesty, wisdom, temperance,
and generosity.
Chapter 5
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Personal Virtues Ethic
Honor, pride, and self-worth
 Not about kindness or compassion
 Not about rights or benefits
 All about the character of actions
 Ask, how would I feel if my actions
were explained on television?
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Ethics of Caring
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Gives attention to specific individuals or
stakeholders harmed or disadvantaged
and their particular circumstances.
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Ethics of Caring
Responsibility to reduce harm or suffering
of others
 Golden rule: Do unto others as you would
want done to you.
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Ethics of Caring
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Upside for business:
Flexible
 Quick response
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Downside for business:
Miss the big picture
 Subjective criteria
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Chapter 5
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Government Requirements Ethic
The acceptance of a code of laws as the
governing rules of society or as a contract
with society that determines what is
considered right or appropriate behaviour.
 The law represents the minimal moral
standard.
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Government Requirements Ethic
Legal system and a code of laws
 Government enforces obedience to
provide fair competition and peace
 “It’s legal so it’s okay”
 Do laws cover everything?
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Utilitarian Ethic
Focuses on the distribution of benefits
and harms to all stakeholders with the
view to maximizing benefits.
 “The greatest good for the greatest
number.”
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Utilitarian Ethic
Cost-Benefit analysis
 Good means happiness or pleasure
 Anything has the potential of being
morally right
 Take the long-term into account
 Can we predict the future?
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Universal Rules Ethic
Ensures that managers or corporations
have the same moral obligations in
morally similar situations.
 Treat people as means in themselves
(i.e., with respect) and never as a means
to one’s own ends.
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Universal Rules Ethic
Goal: eliminate self-interest
 Create rules and morals that are fair to
everyone
 Only act if you are willing for it to become
a universal law
 Drawback: no exceptions
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Individual Rights Ethic
Relies on a list of agreed upon rights for
everyone that will be upheld by everyone
and that becomes the basis for deciding
what is right, just, or fair.
 Examples: Rights to safety, information,
privacy, property.
 “Universal Declaration of Human Rights”
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Economic Efficiency Ethic
Judges the moral implications of a
decision by its economic consequences
and provides the moral justification for a
market system.
 Adam Smith: By focusing on efficient
operations, profits are maximized, and
society ultimately benefits.
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Economic Efficiency Ethic
Market and legal constraints
 No wasted resources
 Environmental sustainability
 Economic efficiency
 Competitive effectiveness
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Ethics of Justice
Considers that moral decisions are based
on the primacy of a single value: justice.
 Social contract
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Ethics of Justice
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Different types of justice:
Procedural justice
 Corrective justice
 Retributive justice
 Distributive justice
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Ethics of Justice
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Benefits:
Logical and impartial process
 Equal rights
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Drawbacks:
Who has moral authority?
 Stakeholder may be overlooked
 Impersonal, inflexible, cold and uncaring
 Markets are unjust
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Chapter 5
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