W2 Ethics and the Organisation – Study Notes

Objectives

Highlight the multi-level issue involved in business ethics
Explain the essential features of each of several moral theories
Explore the problems associated with using them as a guide for moral actions
Outline how organisational forces can affect individual ethical decision making
Learn how to apply these theories to ethical issues in business

Three levels of business ethics

Societal/systemic context
Organizational context
Individual decision
The individual level: how individuals make ethical choices, and the characteristics of an ethical individual
The organisational level: how ethics is affected by the business context, how businesses can address ethical issues (Weeks 11-12)
The systemic level: how economic systems can be structured in an ethical way, how goods in society ought to be distributed (not covered)

Normative ethical theories

Ethical egoism
Utilitarianism
Kantian ethics (deontological)
Virtue ethics
Moral rights
Approaches to ethical decision making:
- Consequentialist: focus on the consequences of an action
- Deontological: focus on rational duties that may restrict our actions
- Character (Virtue) based: focus on the agent and the development of character

Consequentialist ethics

Consequentialist (teleological) theories judge the ethical course of action by its consequences
You determine what you are morally obliged to do by predicting possible consequences; good consequences = right, bad consequences = wrong
Ends justify the means
Two moral theories considered here: Ethical egoism and Utilitarianism

1. Ethical egoism

The right action maximises the individual's own long-term self-interest
Two types: personal egoism (act in your own interests) and impersonal egoism (everyone should act in their own interests)
Action chosen by predicting consequences for the individual only
If an action yields more positive consequences for the agent than alternatives, it is the morally right choice
Morally obligatory to take this action

Misconceptions about ethical egoism

Not equivalent to hedonism; ‘good’ can be self-interest other than pleasure (e.g., knowledge, power, self-actualisation)
Does not mean never considering others; cooperation can be in self-interest
Does not always mean the easy option; sacrifices can yield long-term wellbeing

Insights from ethical egoism

It foregrounds that we matter and should consider our own wellbeing
We are often best positioned to know what is good for us
Acting in self-interest can be compatible with cooperation if it furthers one’s own interests

Psychological egoism (related descriptive theory)

Descriptive claim that people always act in their own self-interest; not normative
Ethical egoism is sometimes justified by this view, but there are examples of sacrifices for others, raising questions about predictive power
Example: Person A risks life for praise vs. Person B avoids risk for self-preservation; both outcomes challenge predictive value if psychological egoism is assumed

Problems with ethical egoism

Conflicts with core morality: morality often considers others beyond self
Partial and biased: subjective; resembles ethical relativism
Can ignore outright wrongs (e.g., discrimination) if in self-interest

Utilitarianism

Ethical action maximises overall good for those affected
Predict and analyse happiness (utility) across all affected individuals
The action with the highest net positive utility is morally right
Agent is morally obliged to take this action; other actions are morally wrong

What matters under utilitarianism

Consequences only are morally relevant
Personal happiness is considered but not given special weight; include all affected
Versions differ in what counts as “the good”:
- Classical/utilitarian: overall happiness (pleasure over pain)
- Rule utilitarianism: apply rules/principles universally
- Describing “preferences/desires” vs. “happiness” as the good to maximise
The core classical logic applies across derivatives

Utilitarianism – classical approach

Attributed to Jeremy Bentham and John Stuart Mill (19th century)
Used to critique social policy (e.g., disenfranchisement of women)
Bentham’s felicific calculus (hedonistic calculus) dimensions:
ext{1) Intensity, 2) Duration, 3) Certainty, 4) Remoteness, 5) Fecundity, 6) Purity, 7) Extent}
Goals: estimate changes in pleasure/pain for each affected, sum to net utility, compare alternatives, and adopt the action with greatest net utility

Felicific calculation: process and observations

Steps:
- Estimate increases/decreases in happiness for each affected individual
- Add up to get net utility per option
- Repeat for each proposed action
- Choose the action with greatest overall happiness
Observations:
- Include changes in both pleasure and pain for individuals and groups
- The number/proportion of people is relevant only insofar as it contributes to net utility (extent)
- All individuals’ happiness is treated equally (no special weight)
- Include short-term and long-term effects (duration)
- Include knock-on effects (fecundity and purity)
Example: Ethical group assignment scenario (three others A, B, C) with three options:
- You: 5, 5, 3; A: 6, 6, 5; B: 7, 7, 4; C: 7, 4, 4
- Totals: 25, 22, 16; Conclusion: morally required to do the assignment yourself (option 1) since it yields the greatest net happiness

Critiques of utilitarianism

Difficult to measure and compare ‘good’ across people; no consensus on what counts as good
Uncertainty in predicting consequences; not all consequences are knowable
Could justify actions usually deemed unethical (e.g., torture of one to benefit many)
Distribution of happiness is not considered; a morally preferable outcome might still be unfair

Utilitarianism in business

Appealing for its simplicity: happiness can be quantified in monetary terms for cost-benefit analyses
Provides a seemingly objective framework that does not favour any single party
Useful for policy decisions where total happiness is maximised

Kantian ethics – deontological approaches

Focus on the act itself and duty rather than consequences
The good will and moral duty are central; intentions matter
Actions have moral worth when motivated by duty, regardless of outcomes
Two people can perform the same action differently morally depending on motivation
The guiding statement: “Let justice be done, though the world perish.”

The Categorical Imperative (two key formulations)

Formulation 1 (Universal Acceptability): Act only according to the maxim whereby you can at the same time will that it should become a universal law.
Formulation 2 (Respect): Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means.
In practice, you turn the act into a maxim and test it against universality and respect

How Kantian analysis works (two tests)

Step 1: Isolate the morally questionable act
Step 2: Generalise the action into a maxim
Step 3: Test the maxim against Formulation 1 (universality): Is there a contradiction in conception?
Step 4: Is there a contradiction in will?
Step 5: Test the maxim against Formulation 2 (respect)
If the maxim fails any test, it is unethical

Summary and critiques

Kant’s approach aims for universality and respect in all actions
The two formulations are seen as versions of the same underlying principle
Critiques: often inflexible; duty can override compassionate motives; difficult to resolve conflicting duties; lacks guidance for dilemmas where duties conflict

Moral rights (Human Rights)

Rights imply duties: a right grants entitlements, and others have a duty to provide
Rights supported by law become legal rights
Moral rights are not necessarily legal rights; some rights apply regardless of law
Core features of human rights:
- Universal: apply to everyone, everywhere
- Equal: no one has more rights than another
- Inalienable: cannot be transferred or given up
- Natural: not dependent on institutions
1948 Universal Declaration of Human Rights: Article 23 includes rights to work, equal pay for equal work, just remuneration, and freedom to form and join trade unions
Constraints:
- Rights set constraints on actions regardless of consequences
- Not all rights are universally accepted or easily interpretable; conflicts between rights can arise

Critiques of Moral Rights

Disagreements about what constitutes a Right and its scope
Rights are sometimes seen as self-evident; what is self-evident varies across time and culture
No clear mechanism to resolve conflicts between rights

Virtue ethics (agent-centred ethics)

Shifts focus from actions or rules to the agent and character
Three central questions (Stewart, p.57):
- What is the good life for me as a human being?
- What kind of person should I want to become?
- How do I achieve both of these goals?

Aristotle’s virtue ethics

Four elements:
1) Function, goals, and the good
2) Flourishing
3) Virtues (or excellences)
4) Developing the virtues

1) Function, goals, and the good

Everything (including humans) has a function; performing this function well requires virtues (arete)
Example: a golf club’s function is to hit golf balls; good golf clubs have proper size, weight, balance, and materials
Apply this idea to humans: what excellences are needed to be a good student, manager, accountant, etc.

2) Flourishing (eudaimonia)

Humans’ ultimate goal is eudaimonia (flourishing, happiness, contentment)
Achieved by living in accordance with virtues; virtuous activity leads to an ethical person

3) The virtues (excellences)

Two classes of virtues:
- Intellectual virtues: Knowledge, Craftsmanship, Wisdom
- Moral (character) virtues: Courage, Justice, Self-mastery, Generosity
Doctrine of the mean: each virtue is a mean between two vices (excess and deficiency)
Example: Fear → cowardice (deficiency) vs. courage (mean) vs. foolhardiness (excess)
Justice is both an individual virtue and a societal virtue; relates to following law and fairness (distributive justice)
A table summarizes several areas with their vices/means: e.g., Fear (Deficiency: Cowardice; Mean: Courage; Excess: Foolhardiness); Physical desires (Insensibility; Self-Mastery; Self-indulgence); Anger (Apathy; Patience; Short-tempered); Spending money (Stinginess; Generosity; Wastefulness); Pride (Lack of ambition; Wholesome Ambition; Over-Ambitious)

4) Developing the virtues

Intellectual virtues are learned through education and training
Moral virtues are dispositions acquired by repeated practice (habits) over a lifetime (hexis)
Influences on virtue development: family, friends, school, religion; role models and mentors

Practical wisdom (phronêsis)

Virtue ethics emphasizes practical wisdom to determine how to act in real situations
Guidance strategies include:
- Aim for the least worse alternative when extremes are present
- Consider one’s own tendencies and counterbalance with opposite extremes
- Be cautious about following what gives pleasure or avoids pain as long-term indicators
A virtuous person uses practical wisdom to exercise virtues in actions (e.g., “the right amount, at the right time, to the right person, for the right motive, and in the right way”)

Summary of Aristotle’s approach

Determine what an ethical person would do in a situation
Consider function/goals and flourishing
Identify relevant virtues and aim for the golden mean via practical wisdom
Reflect on how to develop these virtues

Critiques of Aristotle

Lacks concrete action guidelines; depends on individual and context
Difficulties when virtues conflict (e.g., loyalty vs. generosity)
Some virtues could be harmful in certain contexts (e.g., courage in mafia activity) and require nuanced judgment

Pluralism in normative ethics

No single theory fully captures ethics in business
A pluralist framework uses multiple theories to analyze dilemmas
Benefits:
- Articulate ethical dilemmas clearly
- Identify blind spots in our judgments
- Generate alternative courses of action
- Highlight negatives and plan mitigations

Pluralist framework example: data sharing

Evaluate stakeholder effects and total utility; consider intentions and rationality; respect rights; think about what an ethical person (role model) would do
Recognize that consequences are not the only factor; rights and duties also matter

Other ethical theories (beyond the six main theories)

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

The personal and organisational influence interact

Apples and barrels metaphor:
- Bad apples (unethical individuals) can ruin a barrel (organization)
- A bad barrel can produce more bad apples (unethical individuals)
- In a good barrel, unethical individuals have less scope to be unethical

Moral principles and organisational context

Organisational forces can affect ethical behavior on several levels
Four key psycho/social forces:
- Organisational norms
- Conformity
- Groupthink
- Diffusion of responsibility

Organisational norms

Norms are acceptable standards of behavior shared by members that express what ought and ought not to do under certain circumstances (Robbins & Judge, 2017: 186)
Can be explicit or implicit, overt or subtle, conscious or unconscious
When joining an organization, individuals may conform to norms even if they personally disagree
Common pressures include “performance is what really counts” and “be loyal and show you are a team player” (Shaw et al. 2016:29)

Conformity

Conformity: altering behavior/beliefs to match the group
Forces include direct pressure, social incentives, role expectations, and a desire to fit in/to be right
Organizations exert pressure to conform to norms and goals, potentially violating personal ethics

Groupthink

A form of conformity focused on consensus in decision-making within highly cohesive groups
Group pressures can deter critical evaluation of dissenting views
Members may feel invincible and morally right, while proposing flawed actions
Symptoms: self-censorship, rationalization of alternatives

Diffusion of responsibility

Individuals give up moral authority to the group and feel less responsible for ethically questionable actions
Examples: erroneous mass emails left uncorrected; widespread cheating in a course
The likelihood of intervention decreases as group size increases; lower-status individuals are more likely to disengage

Reading and additional resources

Reading: Chapter 2: Normative theories of ethics, Shaw & Barry, Moral Issues in Business, 11th edition, pp.56-85
Available through QUT readings

Appendix: other notes

The slide deck references “QUT – the university – I for the real world – Taking ethics to the cleaners” and repeats core ideas
Page references throughout the notes correspond to the slide pages in the transcript