Business Ethics, Utilitarianism - Essay Example

Business Ethics Introduction This paper discusses the ethical issues of utilitarianism, Kantian deontology, justice, rights and normative ethical relativism and how they relate to doing business. The paper discusses each of the terms and then applies them to a business case involving various automakers’ operations in China. Utilitarianism Utilitarianism states that people should maximise human welfare or wellbeing – that is utility. The aim of the utilitarian principle is to achieve maximum utility of resources by benefiting as many people as possible, without compromising the society (that is the affected people) or the environment (that is the area associated with industrial activities) (Mandal, 2010, Top of Form Bottom of Form p. 47). Utilitarian thinking encompasses a certain amount of calculation in that an individual tries to predict all of the possible good and bad corollaries arising from each action that could possibly be taken (Littleton & Engebretson, 2005, p. 80). Once the consequences are identified, the decision maker then weighs the outcomes and selects the action that would produce the best results and the least number of adverse outcomes for everyone involved. According to the utilitarian theory, the decision maker should be impartial and make decisions that are not based on personal interests. The problem surrounding this theory is that it might permit the interests of the majority group to countermand the interests of minority groups. Nonetheless, the positive aspect of the theory is that it promotes good for the benefit of the society (Littleton & Engebretson, 2005, p. 80). In spite of the benefits of utilitarianism, the principle should not be overstretched to exploit the community for maximum benefit; rather, the principle should retain the spirit of “net benefit” or “net cost” to the society. For instance, many business decisions like setting up industries are justified by looking at the short term benefits to the society such as creation of jobs, development of the locality and so forth. But if long term impacts such as pollution are taken into consideration then such decisions would not be justified. Looking at the “The Auto Companies in China” case, it is clear that the Chinese car market started to grow rapidly because of the increasing wealth in China, support from the government and the desire for the middle class to own cars. Automakers therefore ventured into the Chinese market to provide what the population wanted – and this is the main reason for going into business – to provide what the market wants and generate profit. The presence of automakers such as General Motors (GM), Toyota, Honda, BMW, Ford and Citroen means that the automotive industry would create a lot of job opportunities for the Chinese population. In addition, these firms would transfer the much needed technology for China to advance its auto industry. Furthermore, the fact that the Chinese middle cars needed cars implies that most people would buy cars whether they were manufactured in China or elsewhere. Therefore, based on a utilitarian perspective, to think that the presence of automakers in China would increase pollution from cars and increase oil demand by China is rather erroneous given that the population would still get cars from elsewhere and increase the demand for oil. Moreover, failure by car companies to help China expand its auto industry would have denied China the much needed job opportunities and as well as the prospect of technological advancement in car manufacturing. Kantian deontology Deontology is concerned with the moral rightness of intentions that drive and act rather than with the results of the act as is the case with utilitarianism (Bernat, 2008, p. 6; Littleton & Engebretson, 2005, p. 80). Emmanuel Kant who came up with the deontology theory criticised utilitarianism as providing a shaky and uncertain standard for action. Kant argued that utilitarianism failed to account for people’s complete set of moral intuitions (Bernat, 2008, p. 6). Kant suggested that if an act performed with an intention of helping another individual that would customarily be expected to help the person ends up – through an intended action of the actor – causing harm to the other individual, it should not be regraded immoral, as would be the case viewed from a purely utilitarian perspective. Kant was of the opinion that the actor’s intent to carry out his duty should outweigh the bad effects and thus make the action a moral act (Bernat, 2008, p. 6). That is, it is the intention behind any given action rather than the ramifications of the action that makes the action good. Burke and Friedman’s (2011, p. 89) view of Kantian deontology is that the theory asserts that the end result of an action is unimportant since human beings have responsibilities to one another as moral agents and these responsibilities take precedence over any outcomes. Turning to the case of “The Auto Companies in China”, it is apparent that the car companies ventured into the Chinese market to provide what was much needed by the market. On one hand, there was an increasing consumer segment that wanted cars and on another hand there was government support for the car industry probably because of the associated positive effects such as growth in employment and transfer of technology and knowledge into China. Thus, the automakers who ventured into China such as GM, Toyota, Honda, BMW, Ford and Citroen were intent on fulfilling what they were required to do. Nonetheless, the other impacts of venturing into China include a potential increase in pollution due to the high number of cars and the increase in oil demand that would instigate and increase in oil prices. This goes against the deontological view of the environment which asserts that the ethical distribution of the benefits and costs of industrialisation should never violate basic human rights such as access to clean water, nutritious food, healthcare, shelter, and intrahuman relationships (Chatterjee, 2012). Supporting an increase in the capacity of the auto industry does not directly violate these rights although it is associated with some negative effects such as increase in pollution. Yet pollution is just an effect emanating from fulfilling the market demands of the Chinese population. Therefore, again, from a deontological perspective, it was not wrong for car makers to help China expand its automotive industry. This is because cars makers do not intentionally want to increase pollution, and they do not necessarily aim to see increases in global oil prices. Justice In a business context, justice involves assessments of fairness or the disposition to deal with perceived injustices of others. In other words, justice involves fair treatment and due reward in keeping with ethical or legal standards (Ferrell, Fraedrich & Ferrell, 2011, p. 163). The justice view regards ethical behaviour as that which is unprejudiced and reasonable in treating people according to guiding standards and rules. There are many theories on justice, but this paper will dwell on those postulated by John Rawls and Robert Nozick. John Rawls’ two principles of justice The first principle states that each individual must be allowed the maximum of equal basic liberty that is attuned with a similar liberty for others. The second one is that inequalities in social primary goods can only be permitted if they are to benefit everyone and as long as each individual has a fair equality opportunity. The first principle denotes equality for all people and refers to rights such as political liberty, freedom of expression, freedom to own property as so on. The second principle regulates the distribution of economic and social advantages or inequalities. Such “goods” include rights and liberties, income and wealth, opportunities and powers, and so on. Robert Nozick’s libertarian theory This theory dwells on economic and social liberty and entitlement. Nozick proposes an entitlement theory of justice in which government action is justified if and only if it protects the rights of citizens. He points out that a theory of justice should affirm individual rights instead of creating problems of economic distribution in which governments redistribute the possessions obtained by people under a free market (Beauchamp & Childress, 2001, p. 232). Both Rawls’ and Nozick’s theories emphasise the need to empower people by allowing them freedom and enabling them to produce wealth on their own. As stated by Nozick, it is important for the government to ensure that individuals’ rights are protected so that the individuals can create wealth rather sit back and wait to redistribute the wealth obtained by others under a free market system. In reference to the “The Auto Companies in China” case, there is no doubt that the government welcomed automakers into China so that they could provide jobs and increase people’s incomes. As such, from a business justice point of view, car companies did not commit any wrong when they ventured into the Chinese market. Rights A right refers to something that one is entitled to if he or she wants it. Rights may be classified as positive rights or negative rights. Positive rights portray the vital interests that human beings have in receiving certain benefits; for instance the right to education or right to medical care. On the other hand, negative rights reflect the rights that human beings have in being free from external interference. But while people have such rights, the posses the right to do something only as long as their action does not interfere with the right of others to enjoy the same right. For instance, someone has the freedom of speech as long as the speech does not hinder others people’s right to speak or if the speech does not harm others. In “The Auto Companies in China”, automakers have a right to do business in China as long as they do not compromise the ability of the people in China to enjoy their other rights. As noted by Milton Friedman, businesses have to use their resources to engage in activities meant to increase its profits so long as they stay within the rules of the game, meaning that they engage in open and free competition without fraud (Dutta, 2010, p. 58). Hence there is nothing that vitiates right of car companies to operate in China as it is clear that they operate within the rules of business. Normative ethical relativism Ethical relativism is an ethical theory that proposes that wrong and right is instinctively determined by each culture. The normative ethical relativist suggests that a moral code is only valid relative to the culture in which it exists (Hinman, 2011, p. 32). For example, if a given community does not eat pork, then it would be wrong for someone in that community to eat pork, even though doing so is permissible in other communities. Turning to the “The Auto Companies in China” case, the question of whether it was wrong or right for the car makers to help China expand its automotive industry can only be answered by the Chinese community based on how they perceive the automakers’ business operations. If they deem that the operations are beneficial, then they will opine that the action was right; if they perceive the operation to be detrimental, then they will consider the automakers’ actions to be wrong. Conclusion In summation, utilitarianism, Kantian deontology, justice, rights and normative ethical relativism address various ethical issues relating to the conduct of business. As regards the question of whether car makers were wrong in their decision to support the expansion of the auto industry in China, there are various approaches of looking at the issue based on the theories discussed. According to utilitarianism, the decision was not wrong because the companies did not intend to do anything wrong other than doing business that could offer what consumers wanted. The same view applies for Kantian deontology since it is the purpose of an act that matters rather the end result of the act. The paper also shows that the car makers did violate any rights or justice principles as stipulated by Rawls and Nozick. With respect to normative ethical relativism, it is clear that the same question about the automakers can only be answered by the people of China based how they perceive the car makers’ operations. References Beauchamp, T. L. & Childress, J. F. (2001). Principles of biomedical ethics (5th ed.). Oxford: Oxford University Press. Bernat, J. L. (2008). Ethical issues in neurology (3rd ed.). Philadelphia: Lippincott Williams & Wilkins. Burke, R. E. & Friedman, L. H (2011). Essentials of Management and Leadership in Public Health. New York: Jones & Bartlett Publishers. Chatterjee, D. K. (ed.) (2012). Encyclopedia of global justice. New York: Springer. Dutta, B. (2010). Entrepreneurship Management (Text and Cases). New Delhi: Excel Books India. Ferrell, O. C., Fraedrich, J. & Ferrell, L. (2011). Business Ethics: Ethical Decision Making and Cases (8th ed.). New York: Cengage Learning. Hinman, L. M. (2011). Ethics: A Pluralistic Approach to Moral Theory (5th ed.). New York: Cengage Learning. Littleton, L. Y. & Engebretson, J. C. (2005). Maternity nursing care. New York: Cengage Learning. Mandal, S. K. (2010). Ethics in business & corporation governance. New Delhi: Tata McGraw-Hill Education. Read More

In addition, these firms would transfer the much needed technology for China to advance its auto industry. Furthermore, the fact that the Chinese middle cars needed cars implies that most people would buy cars whether they were manufactured in China or elsewhere. Therefore, based on a utilitarian perspective, to think that the presence of automakers in China would increase pollution from cars and increase oil demand by China is rather erroneous given that the population would still get cars from elsewhere and increase the demand for oil.

Moreover, failure by car companies to help China expand its auto industry would have denied China the much needed job opportunities and as well as the prospect of technological advancement in car manufacturing. Kantian deontology Deontology is concerned with the moral rightness of intentions that drive and act rather than with the results of the act as is the case with utilitarianism (Bernat, 2008, p. 6; Littleton & Engebretson, 2005, p. 80). Emmanuel Kant who came up with the deontology theory criticised utilitarianism as providing a shaky and uncertain standard for action.

Kant argued that utilitarianism failed to account for people’s complete set of moral intuitions (Bernat, 2008, p. 6). Kant suggested that if an act performed with an intention of helping another individual that would customarily be expected to help the person ends up – through an intended action of the actor – causing harm to the other individual, it should not be regraded immoral, as would be the case viewed from a purely utilitarian perspective. Kant was of the opinion that the actor’s intent to carry out his duty should outweigh the bad effects and thus make the action a moral act (Bernat, 2008, p. 6). That is, it is the intention behind any given action rather than the ramifications of the action that makes the action good.

Burke and Friedman’s (2011, p. 89) view of Kantian deontology is that the theory asserts that the end result of an action is unimportant since human beings have responsibilities to one another as moral agents and these responsibilities take precedence over any outcomes. Turning to the case of “The Auto Companies in China”, it is apparent that the car companies ventured into the Chinese market to provide what was much needed by the market. On one hand, there was an increasing consumer segment that wanted cars and on another hand there was government support for the car industry probably because of the associated positive effects such as growth in employment and transfer of technology and knowledge into China.

Thus, the automakers who ventured into China such as GM, Toyota, Honda, BMW, Ford and Citroen were intent on fulfilling what they were required to do. Nonetheless, the other impacts of venturing into China include a potential increase in pollution due to the high number of cars and the increase in oil demand that would instigate and increase in oil prices. This goes against the deontological view of the environment which asserts that the ethical distribution of the benefits and costs of industrialisation should never violate basic human rights such as access to clean water, nutritious food, healthcare, shelter, and intrahuman relationships (Chatterjee, 2012).

Supporting an increase in the capacity of the auto industry does not directly violate these rights although it is associated with some negative effects such as increase in pollution. Yet pollution is just an effect emanating from fulfilling the market demands of the Chinese population. Therefore, again, from a deontological perspective, it was not wrong for car makers to help China expand its automotive industry. This is because cars makers do not intentionally want to increase pollution, and they do not necessarily aim to see increases in global oil prices.

Justice In a business context, justice involves assessments of fairness or the disposition to deal with perceived injustices of others. In other words, justice involves fair treatment and due reward in keeping with ethical or legal standards (Ferrell, Fraedrich & Ferrell, 2011, p. 163).

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