Ethical Theories and Business Practices

A comprehensive set of flashcards covering key ethical theories and concepts relevant to business practices.

Deontology

Ethical theory focused on duties and rights, emphasizing actions based on moral principles rather than outcomes.

Consequentialism

Ethical theory suggesting that the morality of an action is determined by its outcomes; good actions yield good results.

Virtue Ethics

Ethical framework that prioritizes the development of good character traits and moral virtues rather than just rules.

Paternalism

The practice of restricting individuals' choices for their own good, particularly applicable to vulnerable populations.

Brand as Promise

Concept that brands create ethical expectations for consumers, and breaking these promises leads to moral outrage.

Corporate Bicameralism

Governance model proposing shared control between capital owners and workers to enhance democracy in firms.

Special Vulnerability

A condition where certain consumers are at higher risk of exploitation, necessitating greater ethical protections.

Market Failures Approach

Perspective arguing that businesses should act ethically even in imperfect market conditions that allow for exploitation.

Freedom of Expression

Fundamental principle supporting the protection of speech, vital for fostering innovation and ethical discourse.

Commodification

The process of treating valuable items, including human beings, solely as commodities, risking ethical degradation.

Henry Hansmann — "A Theory of Enterprise Ownership"

• Main Point: Ownership structures are based on minimizing agency costs — the problems that arise when owners and stakeholders have conflicting interests.Firms should be owned by the group that can most efficiently control the firm and bear risks at the lowest cost.

• Key Concept: Different ownership models (like worker cooperatives or customer-owned firms) emerge depending on who can manage these agency problems best.

• Big Theme Connection: Governance structures and ethical firm design, choosing ownership based on efficiency and fairness, not just profit.

Justia — "Business Ownership Structures"

• Main Point: Outlines different types of business ownership (sole proprietorship, partnership, LLC, corporation) and explains their legal structures, liabilities, and tax responsibilities.

• Key Concept: Each structure reflects different trade-offs between control, liability, taxation, and governance.

• Big Theme Connection: Corporate responsibility — the legal form of a business shapes its ethical obligations, risks, and ability to serve multiple stakeholders.

 Isabelle Ferreras — "Those Who Work Are Labor Investors"

• Main Point: Workers are not just "employees" — they are investors of labor and should have governance rights alongside capital investors. She calls for bicapitalism: shared governance between labor and capital.

• Key Concept: Labor deserves a formal role in corporate decision-making because they risk and contribute just like shareholders.

• Big Theme Connection: Democratizing firms, economic justice, and rethinking corporate governance around fairness, not just money.

Deloitte — "Developing an Effective Governance Operating Model"

• Main Point: Companies need structured governance frameworks (clear roles, responsibilities, communication systems) to manage risk, ethical conduct, and decision-making effectively.

• Key Concept: Good governance = clear accountability, transparency, and risk oversight to prevent breakdowns and scandals.

• Big Theme Connection: Corporate ethics and regulation — how structure supports ethical behavior and stakeholder trust.

Max Bazerman and Ann Tenbrunsel — "Ethical Breakdowns"

• Main Point: Most unethical behavior happens not because people intend to be bad, but because of bounded ethicality — unconscious biases, pressures, and blind spots.

• Key Concept: Organizations must recognize systemic causes of unethical behavior and design structures to prevent ethical fading.

• Big Theme Connection:Moral psychology in business — ethics needs active management, not just good intentions.

 Vik Bhargava and Suneal Bedi — "Brand as Promise"

• Main Point: Brands create ethical obligations — when companies make promises through branding (like sustainability, fairness), they owe it to consumers to live up to those promises.

• Key Concept: Broken brand promises = ethical breaches, not just marketing failures.

• Big Theme Connection: Trust, responsibility, and stakeholder relations — branding is not just image; it’s a moral commitment.