Ethical Theories and Practices

Key Ethical Theories

  • Altruism

    • Definition: Self-defeating; minimizes the individual's value.
    • Key Idea: Focuses on self-sacrifice rather than living a full life.

  • Utilitarianism

    • Definition: Advocates that the most ethical choice yields the greatest good for the greatest number.

  • 1st Categorical Imperative (Kantian Ethics)

    • Definition: "Act only according to that maxim which you can at the same time will to become a universal law."
    • Key Idea: Individuals should act on principles that could be universalized.

  • 2nd Categorical Imperative

    • Definition:
    • "So act to treat humanity, whether in your own person or in that of any other, in every case as an end and never as merely a means."
    • Key Idea: Emphasizes respect for individuals as ends in themselves.

  • Hypothetical Imperative

    • Definition: The binding force of the "ought" depends on having the relevant desire.

  • Psychological Egoism

    • Definition: Descriptive theory claiming that people primarily act out of selfish reasons.

  • Teleological Theories

    • Definition: Argue the end justifies the means (good vs bad).

  • Deontological Theories

    • Definition: Assert there are actions that are inherently right or wrong, regardless of consequences.

Globalization and Ethical Frameworks

  • Globalization

    • Definition: The process of businesses developing international influence or operating on a global scale.

  • Conventional Approach

    • Definition: Compares decisions or practices with societal norms of acceptability.

  • Principles Approach

    • Definition: Normative ethics considering general guidelines for ethical decision-making.

  • Ethical Tests Approach

    • Definition: Practical approach to ethical decision-making.

Justice and Consumer Rights

  • Distributive Justice

    • Definition: Fair allocation of resources (perks and burdens).

  • Retributive Justice

    • Definition: "An eye for an eye"—the idea of proportional response to wrongdoing.

  • Consumer's Magna Carta

    • Definition: Four basic consumer rights:
    1. The right to safety.
    2. The right to be informed.
    3. The right to choose.
    4. The right to be heard.

Managerial and Corporate Ethics

  • Managerial Ethics

    • Definition: Decision-making that has ethical implications or consequences, often involving conflicts of interest.

  • Multinational Corporation (MNC)

    • Definition: A company operating bases in multiple countries beyond its home country.

  • Developed Countries

    • Key Idea: Focus on cross-border investments and the challenges faced by MNCs (e.g., USA, Germany, Japan).

  • Developing Countries

    • Key Idea: Interactions between multinational enterprises and emerging economies (e.g., Nepal, Romania).

  • Emerging Economies

    • Definition: Countries with high growth rates and increasing GDP (e.g., China, Russia).

Key Concepts in Ethics and Business

  • Legitimacy

    • Definition: Perceived validity or appropriateness of a stakeholder’s claim.

  • Information Asymmetries

    • Definition: Firms have more knowledge about their products/services than consumers.

  • Self-Regulation

    • Key Idea: Firms monitor their own conduct rather than relying solely on external regulations.

  • Triple Bottom Line

    • Definition: Businesses should focus on three spheres of sustainability:
    1. Profit (economic).
    2. People (social).
    3. Planet (environmental).

  • Ethical Imperialism

    • Definition: The belief that companies should adhere to their home country's ethical standards while operating abroad.

  • Federal Trade Commission (FTC)

    • Role: Monitors employer use of consumer reports and reports on consumer complaints annually.