ETHICAL THEORY PART 2 FOR BUSINESS ETHICS

•ETHICAL THOEIRES  2

Ø  NON CONSEQUENTIAL THEORY
( DEONOLOGICAL)

•     GENERAL NORMATIVE THEORY OF MORALITY THAT IS NOT CONSEQUENTIAL THAT DENIES THAT RIGHTNESS OR WRONGNESS OF OUR CONDUCT IS DETERMINED SOLELY BY THE GOODNESS OR BADNESS OF THE CONSEQUENCES OF OUR ACTS OR OF THE RULES TO WHICH THESE CONFORMS.

•     DEONTOLOGICAL IS DERIVED FROM THE GREEK WORD DEON WHICH MEANS DUTY. ACCORDING TO WHICH MORALITY OF AN ACTION SHOULD BE BASED ON WHETHER THE ACTION ITSELF IS RIGHT OR WRONG UNDER A SERIES OF RULES RATHER THAN BASES OF CONSEQUENCES OF THE ACTION.

•     FOR EXAMPLE IF WE TELL LIE IS WRONG MORALLY THOUGH IT BRINGS HAPPINESS TO SOME PEOPLE. STILL IT IS WRONG.

•     W.D ROSS THE 20 TH CENTURY BRITISH PHILOSOPHER HAS GIVEN THE FOLLOWING MORAL RULES:-

I.        DUTY OF FIDELITY:OBLIGATION TO KEEP PROMISES AND SPEAK THE TRUTH

II.        DUTY OF CAUSING NO HARM TO OTHERS

III.        DUTY OF GOODNESS WHICH IMPLIES TO DO WHATEVER WE CAN TO IMPROVE UPON THE CONDITION OF OTHERS

IV.        DUTY TO COMPENSATE FOR PEOPLE INJURY WHICH WE MAY HAVE INFLICTED ON THEM WRONGFULLY

V.        DUTY OF GRATITUDE TO RETURN FAVOR OTHER TO US

VI.        DUTY OF JUSTICE TO ENSURE GOODS ARE DISTRIBUTED ACCORDING TO PEOPLE’S MERITS

VII.        FAIRNESS IS MORE IMPORTANT THAN GOODNESS

Ø      EVALUATION

q  MERITS

a)    EASY DETERMINATION OF RIGHT OR WRONG ACTION ON THE BASIS OF DUTIES( SOME ARE CLEARLY GIVEN BY RELIGION)

b)    IRRELEVANT CONSEQUENCES

c)    PREDICTION OF BEHAVIOR IS EASY

d)    APPRECIATION OF GOOD MOTIVES DESPITE OF WHAT SO EVER OUTCOME IS

q  DEMERITS

1.     FAILS TO PROVIDE SPECIFIC AND ACCURATE CRITERIA TO JUDGE OUR MORAL OBLIGATION AND MORAL CONFLICT

2.     IGNORE THE CONSEQUENCES

3.     NOT EQUIPPED TO RESPECT DIVERSE BELIEF

Ø      COMPARISON

q  CONSEQUENTIAL THEORY

1.     EVALUATION OF ETHICAL CONTENT ON THE BASIS OF CONSEQUENCES

2.     HYPOTHETICAL

3.     END OR OUTCOME ORIENTED

4.     CONSIDERS RIGHTNESS OF RESULT

5.     MEASUREMENT OF ETHICAL VALUE IN TERMS OF GOODNESS

6.     ADVOCATES INDIVIDUALISTIC APPROACH

•     NON CONSEQUENTIAL THEORY

1.     ON THE BASIS OF DECISION MAKING PROCESS

2.     CATEGORICAL

3.     MEANS ORIENTED

4.     RIGHTNESS OF RULES

5.     IN TERMS OF METHOD APPLIED

6.     UNIVERALSALISM

Ø      OTHER NORMATIVE THEORIES

qSTOCK HOLDERS THEORY:-

•     ALSO KNOWN AS SHAREHOLDER THEORY ACCORDING TO WHICH CORPORATIONS’S MANAGERS HAVE DUTY TO MAXIMIZE THE SHAREHOLDER’S RETURNS.

•     FIRST INTRODUCED BY MILTON FRIEDMAN IN THE 1960

•     CORPORATION IS PRIMARILY RESPONSIBLE TO ITS STOCKHOLDER. MANAGERS ARE THE AGENT OF STOCKHOLDERS. THEIR SALARY IS APPROVED BY THE SHAREHOLDERS AND THEY SHOULD WORK ACCORDING TO THE DICTATES OF THE SHAREHOLDERS.

•     BUT IT WAS CRITICIZED ON OVER STRESSING OF SHAREHOLDER'S WEALTH MAXIMIZATION THEORY

•     NOT SUITABLE IN THE BUSINESS RUN BY FAMILY

q      STAKEHOLDER THEORY

•     BUSINESS MANAGERS HAVE AN ETHICAL DUTY TO BOTH THE CORPORATION’S STOCKHOLDERS AS WELL AS THOSE INDIVIDUALS OR GROUPS THAT CONTRIBUTE TO THE COMPANY’S PROFITS AND ACTIVITIES  AND THOSE WHO COULD BENEFIT FROM OR BE HARMED BY THE COMPANY.

•     A CORPORATION’S STAKEHOLDERS INCLUDE:

•     THESE ARE THE PRIMARY BECAUSE SURVIVAL OF THE FIRM DEPENDS UPON THEM:_

1.     STOCKHOLDERS

2.     EMPLOYEES

3.     SUPPLIERS

4.     CREDITORS

5.     CUSTOMERS

q      STAKEHOLDER THEORY

•     SECONDARY STAKEHOLDERS OF A FIRM:-

I.        CONSUMERS

II.        MEDIA

III.        JUDICIARY

IV.        GOVT

V.        TRADE UNIONS

VI.        SOCIETY

VII.        ASSOCIATION ( TRADE /CUSTOMERS)

VIII.        COMPETITORS

qCRITICISM

•     NOT PRACTICAL APPLICABLE

•     DIFFICULTY IN DEFINING THE CONCEPT

Ø  SOCIAL CONTRACT THEORY

•     IT PUTS AN IMPLICIT CONTRACT BETWEEN MEMBERS OF THE SOCIETY AND THE BUSINESS HOUSES THE RIGHT TO EXIST IN RETURN FOR CERTAIN SPECIFIED BENEFITS. SOCIAL CONTRACT REQUIRE:-

•               BENEFIT CONSUMERS

•               BENEFIT BY EMPLOYEES

•               MINIMIZE POLLUTION AND DEPLETION OF NATURAL RESOURCES

IT FOCUSED ON AL BUSINESS ARE ETHICALLY  DUTY BOUND TO ENHANCE THE WELFARE OF THE SOCIETY BY CATERING TO ITS NEEDS.

IT IS CRITICIZED ON THE BASIS THAT CONTRACT IS MORE OF FICTION THAN  A TRUE CONTRACT.

Ø  DESCRIPTIVE THEORY

•     ALSO KNOWN AS COMPARATIVE ETHICS

•     IT IS THE STUDY OF HOW PEOPLE DO BEHAVE AND HOW THEY THINK THEY SHOULD BEHAVE.

•     IT IS THE STUDY OF MORALITY AND MORAL ISSUES FROM A SCIENTIFIC POINT OF VIEW. BRANCH OF ETHICS THAT ATTEMPT TO DEVELOP CONCEPTUAL MODELS AND TEST THESE MODELS EMPIRICALLY IN ORDER TO ENHANCE OUR UNDERSTANDING OF ETHICS OR MORAL BEHAVIOR AND MORAL DECISION MAKING.

•     IT EXPLAINS AS TO HOW ETHICAL DECISIONS ARE ACTUALLY MADE IN BUSINESS AND WHAT IMPACTS THE PROCESS AND OUTCOME OF THOSE DECISIONS.

Ø  VIRTUE ETHICS THEORY

•     THAT EMPHASIZES AN INDIVIDUAL’S CHARACTER AS THE KEY ELEMENTS OF ETHICAL THINKING RATHER THAN RULES OR THEIR CONSEQUENCES.

•     THIS THEORY HOLDS THAT A PERSON OF VIRTUOUS CHARACTER WOULD NORMALLY ALWAYS MAKE RIGHT DECISION, NO NEED TO ASSESS THE RULES OR CONSEQUENCES.

•     ONE SHOULD DEVELOP GOOD CHARACTER TRAITS SUCH A HONESTY,KINDNESS ETC. MORAL CHARACTER RATHER THAN RIGHT ACTION IS FUNDAMENTAL IN THIS THEORY.