An Overview of Ethics (Excerpts from Velasquez, Business Ethics Concepts &
Cases & Hosmer, The Ethics of Management)
Analysis of Ethical Problems in Management
Utilitarianism
The utilitarian principle holds that: “An action is right from an ethical point of view if and only
if the sum total of utilities produced by that act is greater than the sum total of utilities produced
by any other act the agent could have performed in its place.” (Jeremy Bentham, 1748-1832).
This view holds that profit maximization leads automatically from the satisfaction of individual
consumer wants to the generation of maximum social benefits. Profit maximization is the only
moral standard needed for management.
Three steps are performed:
1.
Determine what alternative actions or policies are available.
2.
For each alternative action, estimate the direct and indirect benefits and costs that the
action would produce for each and every person affected by the action in the
foreseeable future.
3.
The alternative that produces the greatest sum total of utility must be chosen as the
ethically appropriate course of action.
Rights and Duties
In general, a right is an individual’s entitlement to something. If it derives from a legal system, it
is a legal right. Legal rights are limited to the particular jurisdiction within which the legal
system is in force. Moral rights or human rights are based on moral norms and principles that
specify that all human beings are permitted or empowered to do something or are entitled to have
something done for them.
Contractual rights and duties (sometimes called special rights and duties or special obligations)
are the limited rights and correlative duties that arise when one person enters an agreement with
another person.
Kant’s Categorical Imperative
Kant’s first formulation of the categorical imperative is as says an action is morally right for a
person in a certain situation if, and only if, the person’s reason for carrying out the action is a
reason that he or she would be willing to have every person act on, in any similar situation.
The second formulation Kant gives of the categorical imperative says never treat people only as
means, but always also as ends. “An action is morally right for a person if, and only if, in
performing the action, the person does not use others merely as a means for advancing his or her
own interests, but also both respects and develops their capacity to choose freely for themselves.
Justice and Fairness
Distributive justice is concerned with the fair distribution of society’s benefits and burdens.
Egalitarian justice holds that there are no relevant differences among people that can
justify unequal treatment. Every person should be given exactly equal shares of a
society’s or a group’s benefits and burdens.
Capitalist justice is based on effort. Benefits should be distributed according to the value
of the contribution the individual makes to a society, a task, a group, or an exchange
(based on work effort).
Socialist justice is based on ability and need. First proposed by Louis Blanc (1870-1924),
“From each according to his ability, to each according to his needs.”
Justice as fairness (Rawls) says that the distribution of benefits and burdens in a society is just if
and only if:
A.
Each person has an equal right to the most extensive basic liberties compatible with
similar liberties for all, and
B.
Social and economic inequalities are arranged so that they are both:
1. To the greatest benefit of the least advantaged persons
2. Attached to offices and positions open to all under conditions of fair equality of
opportunity
Retributive Justice
Retributive justice refers to the just imposition of punishments and penalties on those who do
wrong. Major conditions under which a person could not be held responsible include ignorance
and inability. Punishments must be consistent and proportioned to the wrong.
Compensatory Justice
Compensatory justice concerns the best way of compensating people for what they lost when
they were wronged by others. Traditional moralists have argued that a person has a moral
obligation to compensate an injured party only if three conditions are present:
1.
The action that inflicted the injury was wrong or negligent.
2.
The person’s action was the real cause of the injury.
3.
The person inflicted the injury voluntarily.
An Ethic of Care
An ethic of care emphasizes two moral demands:

We each exist in a web of relationships and should preserve and nurture those concrete
and valuable relationships we have with specific persons.

We each should exercise special care for those with whom we are concretely related by
attending to their particular needs, values, desires, and concrete well-being as seen from
their own personal perspective, and by responding positively to these needs, values,
desires, and concrete well-being, particularly of those who are vulnerable and dependant
on our care.
Virtue Theory & Ethical Relativism
Virtue theory argues that the aim of the moral life is to develop those general dispositions we
call the moral virtues, and to exercise and exhibit them in the many situations that human life
sets before us.
Ethical relativism questions if there are objective universal principles upon which one can
construct an ethical system of belief that is applicable to all groups in all cultures at all times?
Fortunately there is one principle that does seem to exist across all groups, cultures, and times
and that does form part of every ethical system; that is the belief that members of a group do bear
some form of responsibility for the well-being of other members of that group.
A Moral Reasoning Framework (Velesquez)
This suggests that moral reasoning should incorporate all four kinds of moral considerations,
although only one or the other may turn out to be relevant or decisive in a particular situation.
One simple strategy for ensuring that all four kinds of considerations are incorporated into one’s
moral reasoning is to inquire systematically into the utility, rights, justice and caring involved in
a given moral judgment. Ask a series of questions about an action that one is considering:
1.
Does the action, as far as possible, maximize social benefits and minimize social
injuries?
2.
Is the action consistent with the moral rights of those whom it will affect?
3.
Will the action lead to a just distribution of benefits and burdens?
4.
Does the action exhibit appropriate care for the well-being of those who are closely
related to or dependent on oneself?
Manager's Decision Checklist (Hosmer)
1. What are the best economic alternatives?
2. What are the legal alternatives?
3. Does a given decision result in greater benefits than damages for society as a whole, not
just for our organization as part of that society?
4. Is the decision self-serving, or would we be willing to have everyone else take the same
action when faced with the same circumstances?
5. We understand the need for social cooperation; will our decision increase or decrease the
willingness of others to contribute?
6. We recognize the importance of personal freedom; will our decision increase or decrease
the libery of others to act?
7. Lastly, we know that the universe is large and infinite, while we are small and our lives
are short; is our personal improvement that important, measured against the immensity of
that other scale?