Theories of Corporate Ethics - Essay Example

Case Study: Ethics number: Introduction Corporate ethics is one of the major issues of any business operations. Often managers or board of directors are faced with ethical dilemma where they have to choose between what is morally right and what their duty dictates. Although, the objective of an organization is to generate revenue and take care of the interests of the shareholders, but while doing so the managers often forget about their moral obligations to the society (Goodstein 25-40). The organizational duties often lead to myopic vision, where the firm tends to focus only on the short term goals and in order to achieve them they ignore the moral responsibilities. This paper is focused on the ethical issues faced by a supplier company who has come across an ethical dilemma between choosing the interest of the company and the moral responsibilities. Utilitarian Ethical Problems Bentham proposed the utilitarian theory which suggests that the right course of action is the one that offers a predominance of ‘pleasure’ over ‘pain’ (Bentham 5-14). This theory has been evolved over time and as described by Goodstein it is based on an economic analysis firmly rooted on ethical grounds (Goodstein 25-40). Thus an action is judged by the end results, i.e. if the end results have the maximum utility with minimum overall negative effects then that course of action is considered to be ethically right. Bentham defined the “happiness” factor as the overall utility of an action. He classified fourteen pleasures and twelve pains, in order to measure the “happiness” factor or the utility of a particular action (Bentham 5-14). The transistor manufacturing company mentioned in the given case study has faced a major ethical issue. In the light of utilitarian theory, it can be described as a dilemma between two courses of actions, one that will look after the shareholders’ interests and the other that takes care of the society as a whole. The transistor company can reduce their losses by ceasing the business contract with a pacemaker company, which as a result will improve their financial condition and business reputation. However, stopping the supply of transistors will also stop the production of pacemakers, thereby affecting a large number of patients. Thus the supplier company is in an ethical dilemma between a morally right actions and organizational objectives. Bentham’s Perspective Jeremy Bentham following his utilitarian theory would make suggestions based on the utility levels of both possible actions. According to him, the ‘pleasure’ should be measured in a societal context (Stanford Encyclopedia of Philosophy, “The History of Utilitarianism”). Therefore an action resulting to higher levels of individual utility may not be an ethical activity, if it causes ‘pain’ for the entire society as a whole. Thus continuing to supply transistors to the pacemaker company would yield a greater utility to the society, so Bentham would suggest that the supplier company should continue to provide transistors to the pacemaker company, thereby yielding utility for the society (Santa Clara University, “The Case of the Sole Remaining Supplier”). Utility Test of Ethics Step 1: Identifying different course of action The case studies offers two possible course of action, a) cease the business contract with the pacemaker company and stop providing them with transistors, and b) continue to provide transistors to the pacemaker company, so that more pacemakers could be made. Step 2: Calculating benefits and harm Foreseeable benefits and harm from the first course of action Benefits: a) Reduction of loss making. b) Increase of reputation. c) No liabilities. Harm: a) thousands of patients may die because of lack of pacemaker in the market. Foreseeable benefits and harm from the second course of action Benefits: a) Thousands of lives can be saved if pacemakers are available in the market. Harm: a) Loss making for the company. b) Decrease of shareholder’s interests. Step 3: Based on the above mentioned benefits and harms of the two possible courses of action, the second one provides higher utility. Continuing to supply transistors will allow the pacemaker company to carry on with the manufacturing of pacemakers, thereby helping thousands of patients to continue with their lives. The measurement of utility based on the social benefit clearly suggest that supplying transistors will provide a high level of ‘pleasure’ to thousands of people, which outweigh the organizational benefits reaped from the alternate course of action (Santa Clara University, “Calculating Consequences: The Utilitarian Approach to Ethics”). Result The second course of action which is to continue to supply transistors is considered to be the ‘right’ sense of judgment based on the utility test. Common Good Test The test for common good assesses the predominant choices made by a society or group which leads to common benefits. The theory suggests that a society often chooses to make modest sacrifices which leads to a common good, or on the other hand it can choose to selfishly look after individual interests without caring for the long term over benefit of the society (Santa Clara University. “The Common Good”). Justification of the common good test Every course of action needs to have a common utility for the society. This is important because in order to be able to sustain in a society the individuals need to take care of the common welfare apart from individual interests. This common good is measured in terms of long term positive effects on the society and the number of lives it is improving. Step 1: Common Good Involved: Improving the lives of several patients suffering from heart disease and increasing their life expectancies. This as a result also improves the corporate image of the supplier company. Steps 2: Identifying Obligations: The obligation that prevents the common good is the supplier company’s short term loss making and overlooking the shareholder’s interests. Furthermore, the company wanted to avoid taking any liabilities for the failure of the pacemaker devices. Steps 3: Proposed Action: The proposed action suggests that the company should continue to supply transistors to the pacemaker company. This as a result conflicts with the identified obligations. This conflict is the primary cause of the ethical dilemma faced by the firm. Result: Based on the outweighing of the common good yielded from the proposed action over the identified obligations, it can be stated that the decision of supplying transistors is the ethically ‘right’ thing to do. Comparison between the two tests The two tests performed to find out which of the actions can be considered to be ethically correct are namely the Utility test and the Common good test. Although these two tests pointed at the same results, but the approach has been different. The utility test approached the judgment based on the pout weighing of ‘pleasure’ over ‘pain’. The definition of pleasure and pain has been defined in terms of the utility and damage caused by the proposed course of action. High pleasure level suggests that the overall utility is higher than the overall harm caused by the proposed action (Mill, 123-189). The decision of providing the pacemaker company with transistors produced higher utility for the society by saving thousands of lives of patients suffering from heart disease. On the other hand the Common good test made the judgment based on the common benefit of the society. Between these two results the most informative result has been given by the utility test. The utility test has pointed out all the possible courses of actions mentioned in the case study that could have been implemented to solve the ethical dilemma. The utility test approached the decision making process in a deductive manner, by justifying the outweighing of the utility over the damage caused by the proposed action. The test has pointed out all the benefits and harm of both the possible actions, thereby making it easier to make the judgment. However, the common good test has approached the decision making process based on the common welfare of the society only. Thus the utility test provides better result than the common good test. Works Cited Bentham, Jeremy. An Introduction to the Principles of Morals and Legislation., Oxford: Clarendon Press, 1789. Print Goodstein, Eban. Ethics and Economics: Economics and the Environment. New Jersey: Wiley. 2011. Print Mill, John Stuart. Utilitarianism. London: Longmans, Green, and Co.1879. Print Santa Clara University. “Calculating Consequences: The Utilitarian Approach to Ethics”. Markkula Center for Applied Ethics. 2014. Web. 31 Jan 2015. Santa Clara University. “The Case of the Sole Remaining Supplier”. Markkula Center for Applied Ethics. 2014. Web. 31 Jan 2015. Santa Clara University. “The Common Good”. Markkula Center for Applied Ethics. 2014. Web. 31 Jan 2015. Stanford Encyclopedia of Philosophy. “The History of Utilitarianism”. The Metaphysics Research Lab. 2014. 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