Ethical Theory and Application to Business and Professional Practice - Coursework Example

Ethical theory and application to business and professional practice Name of the Student Name of the University Ethical Theory and Application to Business and Professional Practice The term ‘ethics’ has been derived from the Greek word ‘ethos’ which originally meant customs, habitual conduct or usages (Melden, 2008). The word ethics has different definitions and may mean differently to different people. Ethics in the broadest sense provides the basic conditions for acceptance for any activity. Ethics in general is a type of moral philosophy and it must be defined based on the context in which it is used. Within the context of business practices ethics is the application of ethics values to business behaviour or business activities. It is basically what society believes is right or wrong with reference to a business activity or behaviour (Zarka, 2007). A more fuller but static definition of ethics is provided by Chryssides & Kaler (1993). They define ethics as “A common set of principles prescribing a behaviour code that explains what is good and right or bad and wrong; it may even outline moral duty and obligations.” (p. 51). Olley (2006), says that ethics within the business community is a complex issue not only because it deals with right and wrong but also because it must deal with determining the thin line between life and death, profit over public interest, employees or employee interests etc. This is because business is in essence a survival activity. The human and legal side of business must also be considered when dealing with the activity. Ethical theories emphasize different aspects of an ethical quandary and aid in arriving at the most ethically correct solution based on the guidelines given in the ethical theory itself. Utilitarianism is an ethical theory according to which the morality of an act is determined exclusively by its contribution to overall utility. The moral value of an act according to this theory depends on the relation it has to the maximization of the total average utility it can offer. The underlying belief in this theory is that one must do what produces the greatest overall good consequences for everyone. To a utilitarian the choice that brings about the greatest benefit to the most number of people is the choice that is ethically correct. In utilitarianism, the more the good resulting from an action, the more utility it has. The lesser the good, the less utility it possesses. One primary benefit of this theory is that one can compare similar predicted solutions or outcomes and use a point system to ascertain which solution offers the greatest benefit to the greatest number of people (Rainbow, 2002). This is done by examining the various courses of action open during an ethical dilemma, calculating the consequences attached to each course of action and deciding one the choice that produces the greatest overall good consequences for everyone concerned. The theory is consequentialist and computational. Ethical issues can be resolved objectively by computing the outcomes (Hinman, 1999). Furthermore the point system supplies a rationale as well as a logical argument for each course of action and allows one to utilize it based on a case by case context. Utilitarianism is said to deal with something that is indisputably important to human life, namely the promotion of happiness or in other words the satisfaction of human preferences (Scarre, 1996). When faced with two choices, one producing happiness and the other producing unhappiness, according to the theory of utilitarianism, the one producing the most happiness must be chosen. When choosing between two options, both of which produce happiness, the action giving the most amount of happiness must be chosen. This is because happiness is the only desirable thing as an end itself. Happiness is therefore the only good in itself and unhappiness is the ultimate evil (Chryssides & Kaler, 1993, p 92). However, utilitarianism is a theory that is very demanding for two major reasons. Firstly it expects people to set aside their own personal individual interest for the good of the whole. This most often results in the sacrifice of individual interests. Secondly, utilitarianism makes one take whichever course of action produces the most amount of good. As opposed to being a doctrine of moral minimum, utilitarianism most often asks one to do the maximum. Furthermore a utilitarian must make the assumption that he has the ability to compare the various actions and their consequences on a similar scale. This comparison is not possible when comparing tangible things like money with intangible things like happiness, since their basic qualities differ to a great extent. Another disadvantage of utilitarianism is the fact that it does not allow for the existence of supererogation or heroes. People are constantly expected and obligated to act in a particular way, in order to benefit the majority irrespective of the danger associated with the action. Moreover, a utilitarian who sacrifices something for the good of others is regarded as fulfilling a social obligation to the public as opposed to being hailed as a hero or being given credit for his action. There are two main types of utilitarianism, namely act utilitarianism and rule utilitarianism. Act utilitarianism is where a person performs an act which brings benefit to the greatest number of people irrespective of personal individual feelings or social constraints such as law. Rule utilitarianism on the other hand chooses the course of action that benefits most number of people and takes into account the law. It provides the fairest solution through the most just means available. A primary advantage of rule utilitarianism is that it values justice and incorporates beneficence at the same time. The form of utilitarianism observed in the case of Enron is act utilitarianism. According to Ms.Watkins, Enron was always under extreme pressure from Wall Street to achieve earning goals. Achieving earning goals benefit the organization and its people (Beenen & Pinto 2009). This extreme pressure may have induced them to embezzle money for the sole reason of benefiting the organization and in turn its people, although the action as such went against underlying accounting principles. It was done for the good of the organization and consequentially for its people irrespective of social pressures or accounting rules. This in essence is act utilitarianism. Utilitarianism however, does not relate to or provide for self-interest. On the contrary it sacrifices self-interest to produce the good for the greatest amount of people. Self-interest is always compromised in utilitarianism because its underlying principle is greatest good for the greatest number of people. Deontology is an ethical theory that embraces the idea that actions are inherently good or bad, regardless of their consequences. The word deontology is derived from the Greek words deon meaning duty and logos meaning study. In moral or ethical philosophy, it refers to the choices that are morally required, forbidden or permitted. Very simply put deontology is concerned with following rules. The main theme that governs this theory is that people have a duty to take actions that are inherently good. The ends or consequences of those actions are considered unimportant, with obligation or duty to take the right action being the top priority. According to deontology, people must hold fast to their obligations and duties when considering an ethical dilemma. This implies that a person will follow ones obligations to another person or society as a whole solely because doing one’s duty and meeting one’s obligations is what is considered ethically correct. While utilitarianism focuses on consequences of greater number of people irrespective of individual sacrifice, the theories of deontology state that individual persons have special status and because of that status one must respect them and this respect must not be violated irrespective of the consequences. Immanuel Kant is one of the most influential figures in the filed of philosophical deontology. According to Kant, human beings have special status because they possess intrinsic value. Intrinsic value is present if someone has goodness as part of his or her nature. Persons have intrinsic value because they are capable of making sound, independent decisions and judgments on how to act and live. Each person is expected to be a maker as well as the subject of moral laws. This faculty for autonomy makes us different from all other living beings (Furrow, 2005). Kant also argued that human beings must treat each other as the end and not as means. He adds that no end can be more worth than a person. For Kant its is the capability of human beings to act on a moral level, by transcending animal instincts and inclinations that makes them special, makes them moral and supplies them with rights and dignity. According to Kant’s deontology, if one was acting merely from inclination or instinct he or she is not considered to be acting morally. While Kant agrees that human beings also have inclinations, he also adds that they have two extra abilities. The first is to choose between alternate methods or means of achieving their goals and second, is the autonomy or freedom to set aside those inclinations and goals to act out of a higher moral motive. He says that being able to choose alternate means or setting them aside to achieve a higher moral end is what makes them special from other living creatures. In essence Kant says that when one does something to merely fulfill one’s desire he is not acting out of a moral motive. He says that it is the duty of everyone to act morally. For instance in business, if one did the right things in business just to benefit the business it may not be considered ethical or have a moral motive even though one may not be doing anything wrong (Duska, 2003). Kant expresses one’s duty in a categorical imperative. He gives two particularly important formulas of the categorical imperative. The first states that, “Always act in such a way that you can also will that the maxim of your action should become a universal law.” This one simply put illustrates the need for making moral principles universal. It implies that one must act and will the moral principle to be universal. The second formula states that, “Act so that you treat humanity, both in your own person and in that of another, always as an end and never merely as a means.” This point emphasizes that a radical distinction must be made between people and things and the necessary respect must be given to them. It states that fellow human beings must be seen as the end itself and not the means to achieve some other end (Kay, 1997). Deontology has several advantages. Firstly, it gives room for agents to have special concern for family, friends and projects as it contains no strong duty of beneficence. It is not overly demanding and is similar to the conventional notions of moral duties. Secondly, unlike utilitarianism, deontology gives space for supererogatory or heroism. Here a person who performs his or her duty or obligation despite the consequences is considered to have performed an act of supererogation. Lastly, deontology has the potential to explain the moral standing of a person and question those who breach his moral duty or obligation (Alexander & Moore, 2007). Despite these advantages, deontology also has disadvantages which often lead one to reject it as a moral theory. Firstly, the categorical imperative of deontology only gives rise to absolutes as opposed to utilitarianism which has proportionality. Here actions are either right or wrong with no room fro grey area and these rigid lines are drawn in unlikely places. Secondly, additional moral dilemmas are created when duties conflict and the theory provides no mechanism to solve these dilemmas. This theory does not provide for the comparison of all alternatives. From the case study it is clear that had Enron followed the theory of deontology, they may not have violated accounting principles and acted ethically wrong. According to Ms.Watkins, the CEO of Enron, Jeff Skilling told the court that he was innocent of charges and was often found to remark, “What do we have accounting rules in this country for, if they are not meant to be used? The rules may be complex, but if you comply with them, then that is all you need to worry about.” Had he taken on a different attitude and done what was morally right irrespective of the consequences, Enron may have survived. Instead of embezzling money due to extreme pressure, if Enron had dealt with the problem in the most morally right method, it would have escaped its demise. This proves that doing the right thing regardless of the consequences not only results in the right ethical action, but also saves people and organizations from sinking. Deontology does not provide for self-interest either. According to Kant acting out of one’s personal inclination is no considered ethical. Doing the morally right thing is considered to be an ethical action and this most often gives no room for self-interest. The Justice theory is based on the principle that ethical theories must prescribe and encourage actions that are fair to those involved. John Rawl, an American philosopher has made significant contribution to ethical theory through his work ‘A Theory of Justice’. His views on justice can be summed up through two principles. The first principle states that, “Each person is to have an equal right to the most extensive total system of equal basic liberties compatible with a similar system of liberty for all.” The Second principle states that, “Social and economic inequalities are to be arranged so that they are both to the greatest benefit of the least advantaged and attached to offices and positions open to all under conditions of fair and equal opportunity.” This implies that while Rawl admits that all individuals are not equal in knowledge and socioeconomic conditions, there are some who are behind a veil of ignorance, excluding them from others and making them the least advantaged members of the society. According to Rawl’s view, justice must provide due care for the least advantaged members of the society and it must ensure that the distribution of benefits among all members of the society does not depend on what one does but must be in such a manner that even the weakest person is benefited. Rawl says that this kind of a distribution is not only fair but also conforms to the norms of justice. Thus for Rawls justice is fairness and its primary objective is to determine appropriate principles that recognize liberty and equality (Arora & Awasthy, 1905). Robert Nozick another American philosopher also contributed towards the theory of justice, but his theory differs from Rawl’s theory in one main aspect. While Rawl’s theory suggests that justice is a pattern of social arrangements adjusting resources in a neutral and fair manner, Nozick’s theory suggest that individuals have rights and those rights must be respected at all costs in all circumstances. Nozick’s justice is concerned with respecting the basic rights which limit what may be done to someone without their consent. According to Nozick’s theory of justice, firstly, individuals have separate lives and rights and no person or group may do things to them against these rights. Secondly the fact that, individuals have separate lives implies that no one may be sacrificed for others. Thirdly, basic rights ensure individual enjoyment and places constraints on others from taking away the rights of a fellow human being. Lastly, justice in this context seeks to protect individual rights. Hence Nozick’s view of justice is about how distribution has come about and what one is entitled to receive. It is about the protection of an individual’s entitlements and rights. It should be noted however that Nozick’s theory is more of a theory of rights, especially a theory of property rights. The case study of Enron indicates a violation of the theory of justice. Misrepresentation of company debts and confusing of balance sheets were violating the rights and interests of the shareholders. Furthermore, firing Ms.Watkins was fired when she alerted the company to accounting irregularities. This was a violation of individual rights to suit a larger group of people. This clearly goes against the theory of justice. The levels of self interest vary between Rawl’s justice theory and Nozick’s justice theory. Rawl’s theory insists on equality and liberty irrespective of individual interest of preferences. Nozick’s theory of justice on the other hand focuses primarily on self-interest, giving much importance to individual rights and entitlement that they are supposed to receive. It supports a high degree of self interest while Rawl’s theory focuses on the greatest benefit to the least advantaged. Rights ethical theory protects and gives highest priority to the set of interests put forth by the society. According to this theory rights are considered to be morally and ethically correct as the majority of the population endorses them. In this theory individuals can grant rights to others if they have the ability and resources for the same. In general a right refers to a person’s entitlement to something. Moral rights or human rights refer to the moral; norms and principles that express that all human beings are allowed to do things they are entitled and have certain other things done for them (Velasquez, 2001). A moral right may also be a special interest any individual may have and one that must be protected for moral reasons (Crisp et al., 2005). The most vital moral rights are those that impose restrictions on others and thus enable individuals to choose freely when pursuing their interests. Moral rights are generally tightly correlated with duties as one an individual’s moral rights can be defined in terms of the moral duties other people owe to that individual. Secondly, moral rights theory provides freedom and equality for individuals to pursue their interests. Lastly, moral rights provide the basis for justifying a person’s actions and also provides for obtaining the aid of others. Because of the above characteristics, moral rights supply the bases for making morally right judgments. As opposed to utilitarianism, which expresses morality from society’s stand point, moral rights ethics theory expresses the requirements of morality from the point of view of an individual. Furthermore rights limit the validity of an appeal to social benefits and numbers. Rights can be positive, negative or contractual. Positive rights imply that certain agents have the positive duty of supplying the holder of rights whatever he or she needs to pursue has or her interests. Negative rights on the other hand define members wholly in terms of duties and prevent other people from interfering in the activities pursued by the rights holder. Contractual rights and duties refer to limited rights and duties arising from a contract between two persons. There are many bases on which one can claim moral rights, namely, natural law, common humanity, rationality and interests. According to natural law, rights are part of the laws of nature and apply to everyone equally and every person is subject to follow them and hence everyone can claim these rights. Common humanity refers to all those rights that a person possesses by virtue of being a human being. This is because human beings have no control over acting human and these rights apply to every human universally. Rationality refers to those rights that can be claimed by rational people, capable of independent thought and action. Hence babies, unconscious people, people who are mentally ill etc cannot claim these rights. Rationality alone governs the claim to these rights. In order to claim rights an individual must have interests. For an individual to have interests he or she must be capable of being benefited or harmed. Based on the interests and its capacity to benefit or harm the individual, a person can claim rights based on this criteria. This moral right is seen to be the most justifiable when compared to others as it is more inclusive. A major disadvantage of this right is that one must infer what the characteristics of a right are in a society. The society as a whole must ascertain which rights it wants to uphold and give to its people. For this the society must decide what its goals and ethical priorities are. This complication is seen as a major negative aspect of the rights ethics theory. A violation of these rights can be seen in Enron. Embezzling money, misappropriation of funds and going against widely accepted general accounting principles are all considered to be a violation of rights of the shareholders of the company and the general public, by the society. Hence this act by the higher officials of Enron, irrespective of the consequences is considered violation of rights according to the rights ethics theory. Rights ethics theory does not support self-interest as it takes into account what only the rights set forth by the society as a whole. Ethical Relativism assumes the view point that right or wrong is subjective. Relativism takes up the position which says that all points of view are valid and an individual determines what is true and relative for them. Ethical relativism assumes the position that there are no moral absolutes, that is no moral right or wrong (All About Philosophy, Online). In ethical relativism there are no moral universal codes or standards and each group or society is unique (Johnson, 2004). According to this theory morals evolve and change based on social norms over time. Furthermore, truth differs from individual to individual and different people believe different things. In ethical relativism, what is right for one person may not be right for another person and what is right for one culture may not apply to another culture. Right and wrong, truth and beliefs are said to be highly subjective. This theory supports the statement that no moral principles and values can hold good for all people, at all times and in all places. While conventional ethical relativism supports the view that truth and moral principles are relative to culture, subjective ethical relativism supports the view that truth or moral principles depend upon individuals and not society as a whole. Belief is subject to oneself and relates to individuals. One major drawback of this theory is that it implies that all one has to do is to convince a small group of people to engage in an activity seen as immoral by the society and this means that one has made a previously immoral activity, ethically right for oneself. This principle can be seen in the case of Enron. Jeff Skilling, CEO of Enron was seen to tell the judge that he had done nothing wrong. According to Ms.Watkins, rationalization of corruption was seen to a high extent at Enron. Additionally, not only did Jeff Skilling engage in corruption which is generally considered an immoral activity, he convinced his employees also to engage in the same through pressure and justified his actions. This is a typical example of ethical relativism. This theory supports self-interest to the highest degree as one can get away with an immoral action by saying that it was not wrong according to him. According to Ms.Watkins a 4P approach is required to prevent organizational corruption and unethical behaviour in business (Beenen & Pinto, 2009)Management students must be prepared for the ethical challenges they will face within an organization. This 4P approach will aid them. The first P is Perceive. Mindfulness and attentiveness are important aspects when dealing with ethical challenges. A manager must be able to perceive that corruption could occur by reading signs or cues. This will aid prevention. The second P is Probe. Once a person perceives that corruption is likely to occur he or she must probe to find out if corruption is actually occurring. Questions must be asked around and efforts must be taken to find out if corruption is occurring and where. The third P is Protest. Once it has been confirmed that corruption is taking place the personal and organizational costs of protesting must be dealt with. The cognitive and emotional aspects of the person involved must also be handled. The fourth P is Persist. Further corruption must be curtailed in this stage, as the person involved may quit the organization or engage in more corruption. Efforts must be taken to prevent this from happening. Thus for an organization to be successful and to prevent any kind of unethical practices, the above our P practice must be followed. Furthermore, one ethical theory or a combination of ethical theories must be used within the organization in order to prevent any loopholes which give room for corruption. A fair yet firm ethical theory approach must be followed in order to help the organization and its people face ethical challenges and resolve them easily. References Alexander, L & Moore, M (2007). Deontological Ethics. Stanford Encyclopedia of Philosophy. Retrieved August 27, 2009. http://plato.stanford.edu/entries/ethics-deontological/ All About Philosophy (2002-2009). Ethical Relativism. Philosophy. Retrieved August 27, 2009. http://www.allaboutphilosophy.org/ethical-relativism-faq.htm Arora, N D & Awasthy, S S (1905). Political Theory and Political Thought. Har-Anand Publications, 1905 Beenen, G. & Pinto, J. 2009. Resisting Organizational-Level Corruption: An interview with Sherron Watkins, Academy of management Learning & Education, Vol 8, No. 2, 275-289. Crisp J, Potter P A, Taylor C & Perry A G (2005). Potter & Perry's Fundamentals of Nursing. Elsevier Australia, 2005 Chryssides, G D and Kaler, J H (1993). An Introduction to Business Ethics. Cengage Learning EMEA, 1993. Duska, B S (2003). Accounting Ethics. Wiley-Blackwell, 2003. Furrow, D (2005). Ethics: Key concepts in philosophy. Continuum International Publishing Group, 2005. Hinman, L M (1999). A Pluralistic Approach to Moral Theory. Contemporary Moral Issues 2nd Edition. Prentice Hall. Johnson, C E (2004). Meeting the Ethical Challenges of Leadership: Casting Light Or Shadow. SAGE, 2004. p 298 Kay, C D (1997). Deontology. Wofford College. Retrieved August 27, 2009. http://webs.wofford.edu/kaycd/ethics/deon.htm Melden, A I (2008). Ethical Theories. READ BOOKS, 2008. Olley, J (2006). Ethics in Business. Business & Finance. Associated Content. Retrieved August 27, 2009. http://www.associatedcontent.com/article/92859/ethics_in_business_pg2.html?cat=3 Rainbow, C (2002). Descriptions of Ethical Theories and Principles. Department of Biology, Davidson College. Retrieved August 27, 2009. http://www.bio.davidson.edu/people/kabernd/Indep/carainbow/Theories.htm Scarre, G (1996). Utilitarianism: Problems of Philosophy. Routledge, 1996 Velasquez, M G(2001). Business Ethics Concepts and Cases. Business Ethics: Anderson University DBA. Retrieved August 27, 2009. http://karlknapp.com/resources/ethics/businessethics_summary.doc Zarka, H (2007). Ethical and Unethical Business Practices. Business & Finance. Associated Content. Retrieved August 27, 2009. http://www.associatedcontent.com/article/256353/ethical_and_unethical_business_practices.html?cat=3 Read More