Normative Theory of Business Ethics

DEFINITION: The term “normative” reflects the ordinary view that some things are better than
others. It is the study of ethical actions. It is a branch of philosophical ethics that investigates the set
of questions that arise when considering how one ought to act, morally speaking.

Two Parts of Normative theory

 Consequentialist Theories by Henry Sidgwick

Those theories that determine the moral rightness or wrongness of action based on the
action’s consequences or results.

2 Types of Consequentialist

1. Egoism
2. Utilitarianism

 Non-consequentialist Theories

Those that determine the moral rightness and wrongness of an action based on the action’s
intrinsic features or characters.

This is also called Kantian Theory by German Philosopher, Immanuel Kant.

Utilitarianism

• is a philosophical view or theory about how we should evaluate a wide range of things that
involve choices that people face.

• The classical formulation of utilitarian moral theory is found in the writings of Jeremy
Bentham and John Stuart Mill.

Basic Moral principle

Principle of Utility or Greatest Happiness Principle

- Actions are right in proportion as they tend to promote Happiness, Wrong as they tend to
produce the reverse of happiness.

Types of Utilitarianism

There are basically two branches of utilitarianism. They both agree that the goal of ethics is to
maximize happiness. But they disagree on where that decision should be applied:
 Act Utilitarianism argues that we should always choose our actions based on what will
cause the greatest amount of happiness.
 Rule Utilitarianism argues that we should figure out what sort of behavior usually causes
happiness, and turn it into a set of rules.
Objection to Utilitarianism

Utilitarianism = Hedonism?

Objection: There is more to life than pleasure; knowledge, virtue and other

things are important too. Utilitarianism is a doctrine worthy only of swine.

Reply: Utilitarianism requires that we consider everyone’s pleasure, not just

our own. Also, says Mill, there is more to life than physical pleasure.

Pleasures of the “higher faculties” (including intellectual pleasures

inaccessible to lower animals) are of higher quality than physical pleasures

(and thus count for more).

Mill: "It is better to be a human being dissatisfied than a pig satisfied; better
to be Socrates dissatisfied than a fool satisfied. And if the fool, or the pig, are
of adifferent opinion, it is only because they only know their own side of the
question".

Is Utilitarianism too Demanding?

Objection: Utilitarianism implies that we should always act in order to

maximize happiness; this is too strict a requirement. It is asking too much of

people to be always motivated to promote the general happiness.

Mill’s Reply: “...no system of ethics requires that the sole motive of all we do

shall be a feeling of duty; on the contrary, ninety-nine hundredths of all our

actions are done from other motives, and rightly so...the motive has nothing to do with the morality
of the action...the great majority of good actions are

intended not for the benefit of the world, but for that of individuals, of which

the good of the world is made up.”

Not enough time?

Objection: In the real world, we don’t have the time to calculate the effects of

our actions on the general happiness. Therefore, utilitarianism is useless.

Mill’s Reply: “There has been ample time, namely, the whole past duration of

the human species. during all that time, mankind have been learning by

experience ...the effects of some actions on their happiness; and the beliefs

which have thus come down are the rules of morality...”

Predicting the Future

Objection: Utilitarianism requires that we know what the consequences of our

actions will be, but this is impossible. We can’t predict the future.

Reply: It’s true that we can’t predict the future with certainty. So, we should
perform the action that we have most reason to believe will bring about the
best consequences of the alternatives available.

Individual Rights

Objection: Just because something makes people happy doesn’t make it

right. Specifically, it is wrong to harm certain individuals in order to make

other people happy.

Example
1. The Trolley Problem
Imagine there is a trolley heading toward a group of 5 workers on the tracks. You are sitting in a
control center several miles away, and you have a button that can switch the trolley onto another
track where there’s only 1 worker. If you flip the switch, one person will die. If you do nothing, 5
people will die. Should you flip the switch?
In surveys, most people in America and Britain say yes. 1 death is better than 5 deaths, so if you
have to choose, you should try to minimize the loss of life by flipping the switch. This is an
example of utilitarian reasoning, and the survey results show that this school of thought is
popular in British and American culture. (In other cultures, people think about the problem
differently.)
 2. As an example, suppose that a business needs to increase its earnings-to expenses ratio.
There are various ways to accomplish this goal: (1) Lay off 15% of the employees, (2)
further optimize just-in-time manufacturing to reduce inventory costs by 40%, or (3)
expand marketing and sales efforts with the result of an 18% increase in revenues. You can
see that there is the potential for ethical questions around each of these three choices.
Attributes to consider include (a) cost and/or savings of the solution, (b) complexity of
implementation, (c) impact on corporate reputation, (d) impact on employee morale, (e)
impact on those who are laid off, and (f) impact on administrators’ responsibilities

Nicollo machiavelli
Author of The Prince, one of the first leadership advice books in the western world.
The father of modern political theory.
Machiavellianism
In psychology refers to a personality trait which sees a person so focused on their own interests
they will manipulate, deceive, and exploit others to achieve their goals.
Machiavellianism in the workplace is the employment of cunning and duplicity in a business setting.
The term Machiavellianism is from the book The Prince by Machiavelli which lays out advice to
rulers how to govern his or her subjects. Machiavellianism has been studied extensively over the
past 40 years as a personality characteristic that shares features
with manipulative leadershiptactics. The Machiavellian typically only manipulates on occasions
where it is necessary to achieve the required objectives.

Machiavellian principles
“In order to be successful, the prince must be a good liar and very cunning”
“In some cases it would be better to be cruel to keep the Unity, Order and Obedience of your
subject”
“In order to be successful, the prince must appear to be kind and religious but at the same time
know when it is necessary to be cruel”
“Since love and fear can hardly exist together, if we must choose between them, it is far safer to be
feared than loved”

The following are the guiding principles of Machiavellianism:

 Never show humility

 Arrogance is far more effective when dealing with others.
 Morality and ethics are for the weak: Powerful people feel free to lie, cheat and deceive others
when it suits them.
 It is much better to be feared than loved.

High Machiavellians may be expected to do the following:

 Neglect to share important information.

 Find subtle ways of making another person look bad to management.
 Fail to meet their obligations.
 Spread false rumors about another person.

Divine Command Ethics

Source: Business Ethics and Social Responsibility

By: Fr. Floriano C. Roa

Let’s extract!

Divine

In religion, divinity or godhead is the state of things that are believed to come from a supernatural
power or deity, such as a god, supreme beings, creator deity, or spirits, and are therefore regarded
as sacred and holy.

Command

A statement of what to do that must be obeyed by those concerned.

Ethics

The discipline dealing with what is good and bad and with moral duty and obligation.

Introduction

This theory indicates that there is a DIVINE BEING, who has set down a finite series of rules that
adherents claim can provide guidance to most, if not all, moral decisions.

Judeo-Christian Religion

God gave Moses the Ten Commandments on Mount Sinai to serve as principles of moral behavior
for the human race. The Ten Commandments of God are the foundation of the moral code and legal
system of justice for Christian civilization.

The Ten Commandments of God

1. I am the Lord your God: You shall not have strange Gods before me.
2. You shall not take the name of the Lord your God in vain.
3. Remember to keep holy the Lord’s Day.
4. Honor your father and mother.
 5. You shall not kill.
6. You shall not commit adultery.
7. You shall not steal.
8. You shall not bear false witness against your neighbor.
9. You shall not covet your neighbor’s wife.
10. You shall not covet your neighbor’s goods.

Divine command doesn’t mean that it will always come from a divine being.

A variant of divine command theory is a command theory based on a non-divine, but morally
exemplary, being or individual such as the Buddha which means “ the enlightened” in Buddhist
religion.

4 Noble Truths of Buddha

1. The truth of suffering (Dukkha)

2. The truth of the origin of suffering (Samudāya)
3. The truth of the cessation of suffering (Nirodha)
4. The truth of the path to the cessation of suffering (Magga)

Colloquial term
8 Fold Path

Generalization

Business Applications:

1. A good action (or an acceptable business decision) is an action that conforms to the
commandments of God as reflected in the Bible and the teachings of the church.
2. A good action (or an acceptable business decision) conforms to the teachings of exemplary
non-divine bein.gs like Buddha