Business Citizenship – Week 2 Study Notes: Ethics & the Organisation

Objectives of Week 2 – Ethics and the Organisation

• Clarify multi-level nature of business ethics
  • Societal/systemic level (not covered this semester)
  • Organisational level (Weeks 11–12)
  • Individual decision level (focus this week)
• Explain essential features of six major moral theories
• Explore practical problems when using each theory for guidance
• Examine how organisational forces shape individual ethical choices
• Practise applying theories to real business issues (e.g., "Taking ethics to the cleaners" case)

Three Nested Levels of Business Ethics

• Individual
  • Personal moral reasoning & character traits
  • How an individual recognises, judges & acts on an issue
• Organisational
  • Culture, norms, policies, group pressures
  • Weeks 11–12 will revisit structures for encouraging ethical behaviour
• Systemic / Societal
  • Allocation of goods, justice of markets, regulation, macro-ethics
  • Outside the scope of this lecture but acknowledged as crucial background

Map of Normative Ethical Theories

• Consequentialist
  • Ethical Egoism
  • Utilitarianism
• Deontological
  • Kantian Ethics
  • Moral Rights (Human Rights)
• Character / Virtue based
  • Virtue Ethics
• (Later slide mentions "Ethics of Care" although detail not given in transcript)

Consequentialist Approaches

• Core premise: “Ends justify the means.”
• Morally right action = action that produces best consequences
• Two main forms covered:
  1. Ethical Egoism (agent-focused)
  2. Utilitarianism (overall-focused)

1 Ethical Egoism

• Definition: Right action maximises one’s own long-term self-interest
• Two versions
  • Personal egoism – I should act in my interests
  • Impersonal egoism – Everyone should act in their own interests
• Moral obligation: if action X benefits me more than alternatives, I must do X
• Misconceptions clarified:
  • Not identical to hedonism; “interest” may include knowledge, power, self-actualisation
  • Can involve cooperation if cooperation furthers self-interest
  • Can require short-term sacrifice for long-term benefit
• Insights
  • Highlights self-knowledge & personal welfare as ethically relevant
  • Demonstrates compatibility between individualist motives & cooperative behaviour

Psychological Egoism (descriptive)

• States everyone always acts from self-interest (empirical claim)
• Often used to justify ethical egoism, but contested by altruistic counter-examples
• Tautology risk: if any behaviour can be re-interpreted as selfish, theory loses predictive power

Problems with Ethical Egoism

• Conflicts with intuition that morality entails some impartiality
• Essentially partial & biased – elevates one person’s welfare over all others
• Can legitimise clearly wrongful acts (e.g., racial discrimination) if advantageous to agent

2 Utilitarianism

• Principle of Utility: choose action that maximises overall net happiness/utility for all affected
• Happiness measured as pleasure vs pain (classical) or broader preference-satisfaction (modern)
• Agent’s obligation: perform the utility-maximising action; any other choice is unethical
• Forms:
  • Act utilitarianism (Bentham, Mill)
  • Rule utilitarianism – apply utility logic to rules rather than single acts

Classical Benthamite Model – Felicific (Hedonistic) Calculus

• Seven quantitative dimensions:
  1. Intensity
  2. Duration
  3. Certainty
  4. Remoteness (propinquity)
  5. Fecundity (follow-on pleasures)
  6. Purity (freedom from painful side-effects)
  7. Extent (# of people affected)
• Algorithm:
  1. Estimate pleasure/pain for each stakeholder under each option
  2. Sum to obtain \text{Net\ Utility} = \sum{i=1}^{n} (Pi - N_i)
  3. Compare alternatives; select highest net figure
• Short- & long-term, direct & knock-on effects must be included

Simplified Utilitarian Decision Steps

1. Identify all stakeholders
2. List potential positive & negative consequences for each
3. Quantify via Bentham’s dimensions (scale), compute totals
4. Choose option with greatest aggregate net benefit

Classroom Example – “Ethical Group Assignment”

Utility table ([–10, +10] scale):

=> Utilitarianism demands Option 1, irrespective of fairness or rule compliance, because 25>23>16.

Critiques of Utilitarianism

Measurement & epistemic issues:

• No agreed metric or commensurability of utility
• Prediction uncertainty – inability to foresee all outcomes
  Ethical objections:
• Can demand extreme sacrifice (ban holidays) if resources could create more utility elsewhere
• May justify heinous acts (torture, discrimination) if utility calculus positive (110 \times 1 - 100 = +10)
• Ignores distribution; massive inequality acceptable if sum is higher (200 - 90) > (91)

Business Appeal

• Mirrors cost–benefit analysis; money as proxy for utility
• Seems objective & impartial
• Useful for policy-making (operating hours, environmental regulation)

Deontological Approaches

• Focus on duty, intention & intrinsic rightness of actions, not outcomes
• Motto: “Let justice be done, though the world perish.”
• Two theories examined:
  1. Kantian Ethics (Categorical Imperative)
  2. Moral Rights

Kantian Ethics – Core Concepts

• Central figure: Immanuel Kant (18th c. Enlightenment)
• Moral worth resides in good will – acting because it is right
• Rationality alone suffices to derive moral law; no appeal to religion or consequence
• Repeated bad outcomes do not taint morality if intention/duty correct

The Categorical Imperative (CI)

• Moral rules must be categorical (universally binding) & imperative (commanding)
• Two studied formulations:
  1. Universal Acceptability: "Act only on that maxim which you can at the same time will to be universal law."
  2. Respect (Humanity as End): "Treat humanity, in yourself or others, always as an end and never merely as a means."

Applying Formulation 1 – Universalisation Test

1. State intended action as a maxim (rule)
   e.g., "One may breach contracts whenever inconvenient."
2. Ask: If universalised, would conception become self-contradictory? (Contradiction in conception)
   – Contracts lose meaning ⇒ contradiction
3. Ask: Could a rational agent will to live in such a world? (Contradiction in will)
   – Rational agents need reliable contracts ⇒ cannot will
   → Action unethical.

Applying Formulation 2 – Respect Test

• Never use people solely as tools; must respect autonomy
• Permissible to also gain benefit (selling goods, consensual relationships) if free choice preserved

Practical Steps in Kantian Analysis

1. Identify questionable act
2. Formulate maxim
3. Test for contradiction in conception & will
4. Test for respect of persons
5. If any test fails ⇒ unethical

Critiques of Kantian Ethics

• Rigidity: absolute bans (e.g., lying) even to save a life
• Motive restriction: compassion-based help deemed less moral than duty-based
• No mechanism for resolving duty conflicts (truth vs protecting life)

4 Moral Rights / Human Rights

• Extends Kant’s idea of inherent dignity into concrete entitlements
• Rights imply correlated duties
• Legal rights codified by law; moral rights exist irrespective of statute
• Characteristics: universal, equal, inalienable, natural
• 1948 UN Universal Declaration of Human Rights (UDHR) – e.g., Article 23 (work, pay, union)
• Constraint model: certain actions prohibited regardless of utility

Critiques of Rights Approach

• Disagreement on what counts as a right (e.g., right to life debates: abortion, capital punishment)
• Claim of being "self-evident" seen as question-begging / culturally variable
• Lacks conflict-resolution mechanism when rights clash

Virtue Ethics

• Emphasises character over rules or consequences
• Key Questions (Stewart):
  1. What is the good life for a human?
  2. What kind of person should I become?
  3. How do I achieve both?

Aristotelian Framework

1. Function, Goals & Good (telos)

   • Everything has a purpose; virtues = qualities enabling good performance (Greek arete)
   • Ask: "What excellences make a good student/manager/marketer?"

2. Eudaimonia (Flourishing)

   • Ultimate human goal ≠ pleasure/wealth/honour
   • Defined as living & functioning well in accordance with reason

3. Virtues (Excellences)

   • Two types:

     • Intellectual: Knowledge, Craft, Wisdom
     • Moral/Character: Courage, Justice, Temperance, Generosity, etc.

   • Doctrine of the Mean: virtue = mean between two vices (deficiency & excess)

     Area	Deficiency (Vice)	Virtue (Mean)	Excess (Vice)
     Fear	Cowardice	Courage	Foolhardiness
     Anger	Apathy	Patience	Short-tempered

4. Development – Practical Wisdom (phronêsis)

   • Virtues learned via habit & role-model observation, not merely instruction
   • Guidance hints:
     • Extreme often worse than opposite; aim for lesser evil
     • Counterbalance personal biases by aiming opposite
     • Beware pleasure/pain as poor guides long-term

Critiques of Virtue Ethics

• Provides no explicit decision rule; relies on cultivated judgment
• Offers little aid when virtues conflict (e.g., loyalty vs honesty)
• "Bad" actors (mafiosi) may display traditional virtues like courage

Pluralism – Combining Theories

• Because every theory has limits, ethicists advocate using multiple lenses:
  • Consequence analysis (utilitarian/egoist)
  • Duty & respect tests (Kant/rights)
  • Character reflection (virtue ethics, role models)
  • Ethics of care (not elaborated here)
• Helps expose blind spots, generate options & mitigation strategies

Organisational Factors Shaping Individual Ethics

"Bad apples & bad barrels" metaphor

• Unethical individuals can taint organisation
• Unethical cultures can corrupt individuals

Four Psycho-Social Forces

1. Organisational Norms
   • Shared expectations (explicit/implicit) about "how we do things"
   • Performance pressure; loyalty/team-player slogans
2. Conformity
   • Altering behaviour/beliefs to match group
   • Driven by desire to fit in, be liked, be correct, meet role expectations
3. Groupthink
   • Quest for consensus in cohesive groups suppresses dissent & critical appraisal
   • Illusion of invulnerability & moral superiority
4. Diffusion of Responsibility
   • Individuals relinquish personal moral agency to group
     \text{Responsibility}_{individual} \propto \frac{1}{\text{Group Size}}
   • More bystanders ⇒ less intervention (e-mail error, assignment cheating examples)
   • Lower-status employees often feel issues are "someone else’s job"

Additional Ethical Frameworks (Mentioned but Not Covered)

• Existential, Evolutionary, Feminist, Natural-law, Marxist, Post-modern ethics
• Resource: http://ethicsupdates.net/theories/index.shtml

Study & Application Tips

• Memorise core definitions & distinguishing features (egoism vs utilitarianism vs Kant etc.)
• Practise running the same case through multiple lenses – note differing prescriptions & tensions
• When analysing organisational scenarios, map:
  1. Individual character (virtues, egoism)
  2. Organisational context (norms, conformity)
  3. Systemic stakes (regulations, societal values)
• Keep Bentham’s seven dimensions handy for quantitative questions
• Use Kant’s two-step CI test as checklist for duties & respect
• Remember rights provide constraints, not utilities; flag any potential right infringement

Connections & Real-World Relevance

• Cost-benefit analyses in firms = utilitarian calculus
• Workplace codes of conduct draw on deontological duties & human-rights language
• Leadership development programmes reflect virtue-ethics focus on character
• Data-privacy debates illustrate need for pluralist analysis (utility of sharing vs rights vs care)

Ethical, Philosophical & Practical Implications

• Pure consequentialism may conflict with deeply held moral intuitions; raises debate over sacrificing minorities
• Kantian rigidity stimulates legal notions of inalienable rights but can produce dilemmas in emergencies
• Virtue ethics aligns with holistic professional development but lacks precise compliance guidance
• Organisational psychology shows even "good" people may act unethically under certain structures – designing ethical cultures is therefore critical