Chapter Three

Ethical Principles, Quick

Tests, And Decision-
Making Guidelines
Copyright © 2003 by South-
Western, a division of Thomson
Learning 1
 Chapter Topics
1. Decision criteria for ethical reasoning
2. Ethical relativism: A self-interest approach
3. Utilitarianism: A consequentialist (results-based)
approach
4. Universalism: A deontological (duty-based)
approach
5. Rights: An entitlement-based approach
6. Justice: Procedures, compensation, retribution
7. Immoral, amoral, and moral management
8. Four social responsibility roles
9. Individual ethical decision-making styles
10. Quick ethical tests
11. Concluding comments
Copyright © 2003 by South-Western, a division of Thomson
Learning 2
 Decision Criteria for Ethical
Reasoning
 A first step in addressing ethical dilemmas is to
identify the problem and related issues.
 Laura Nash developed twelve questions to ask
yourself during the decision-making period to help
clarify ethical problems.
 These twelve questions can help individuals:
 Openly discuss the responsibilities necessary to solve ethical
problems
 Facilitate group discussions
 Build cohesiveness and consensus
 Serve as an information source
 Uncover ethical inconsistencies
 Help a CEO see how managers think
 Increase the nature and range of choices
Copyright © 2003 by South-Western, a division of Thomson
Learning 3
 Decision Criteria for Ethical
Reasoning
 The following three criteria can be used in
ethical reasoning:
 Moral reasoning must be logical
 Factual evidence cited to support a person’s
judgment should be accurate, relevant, and
complete
 Ethical standards used should be consistent
 A simple but powerful question can be used
throughout your decision-making process in
solving ethical dilemmas:
 What is my motivation for choosing a course
of by
Copyright © 2003 action?
South-Western, a division of Thomson
Learning 4
 Decision Criteria for Ethical
Reasoning
 A major aim of ethical reasoning is to gain a
clearer and sharper logical focus on problems to
facilitate acting in morally responsible ways.
 Two conditions that eliminate a person’s moral
responsibility for causing harm are:
 Ignorance
 Inability
 Mitigating circumstances that excuse or lessen a
person’s moral responsibility include:
 A low level of or lack of seriousness to cause harm
 Uncertainty about knowledge of wrongdoing
 The degree to which a harmful injury was caused
or averted
Copyright © 2003 by South-Western, a division of Thomson
Learning 5
 Ethical Relativism:
A Self-Interest Approach
 Ethical relativism holds that no universal
standards or rules can be used to guide or
evaluate the morality of an act.
 This view argues that people set their
own moral standards for judging their
actions.
 This is also referred to as naïve
relativism.
 The logic of ethical relativism extends to
culture.
Copyright © 2003 by South-Western, a division of Thomson
Learning 6
 Ethical Relativism:
A Self-Interest Approach
 Benefits include:
 Ability to recognize the distinction
between individual and social values,
customs, and moral standards
 Problems include:
 Imply an underlying laziness
 Contradicts everyday experience
 Relativists can become absolutists
 Relativism and stakeholder analysis.

Copyright © 2003 by South-Western, a division of Thomson

Learning 7
 Utilitarianism: A
Consequentialist (Results-
Based) Approach
 The basic view holds that an action is
judged as right, good, or wrong on the
basis of its consequences.
 The moral authority that drives
utilitarianism is the calculated
consequences or results of an action,
regardless of other principles that
determine the means or motivations
for taking the action.
 Utilitarianism includes other tenets.
Copyright © 2003 by South-Western, a division of Thomson
Learning 8
 Utilitarianism: A
Consequentialist (Results-
Based) Approach
 Problems with utilitarianism include:
 No agreement exists about the definition
of the “good” to be maximized
 No agreement exists about who decides
 How are the costs and benefits of
nonmonetary stakes measured?
 Does not consider the individual
 Principles of rights and justice are ignored
 Utilitarianism and stakeholder
analysis.
Copyright © 2003 by South-Western, a division of Thomson
Learning 9
Universalism: A Deontological
(Duty-Based) Approach
 This view is also referred to as
deontological ethics or
nonconsequentialist ethics and holds that
the means justify the ends of an action,
not the consequences.
 Kant’s principle of the categorical
imperative places the moral authority for
taking action on an individual’s duty
toward other individuals and humanity.
 The categorical imperative consists of
Copyrighttwo
© 2003 parts.
by South-Western, a division of Thomson
Learning 10
Universalism: A Deontological
(Duty-Based) Approach
 The major weaknesses of universalism
and Kant’s categorical imperative
include:
 Principles are imprecise and lack
practical utility
 Hard to resolve conflicts of interest
 Does not allow for prioritizing one’s
duties
 Universalism and stakeholder analysis.
Copyright © 2003 by South-Western, a division of Thomson
Learning 11
 Rights: An Entitlement-
Based Approach
 Moral rights are based on legal rights and
the principle of duty.
 Rights can override utilitarian principles.
 The limitations of rights include:
 Can be used to disguise and manipulate
selfish, unjust political interests and claims
 Protection of rights can be at the expense of
others
 Limits of rights come into question
 Rights and stakeholder analysis.
Copyright © 2003 by South-Western, a division of Thomson
Learning 12
 Justice: Procedures,
Compensation, Retribution
 The principle of justice deals with
fairness and equality.
 Two recognized principles of fairness that
represent the principle of justice include:
 Equal rights compatible with similar liberties
for others
 Social and economic inequality arrangement
 Four types of justice include:
 Compensatory
 Retributive
 Distributive
 Procedural
Copyright © 2003 by South-Western, a division of Thomson
Learning 13
 Justice: Procedures,
Compensation, Retribution
 Problems using the principle of justice
include:
 Who decides who is right and who is wrong?
 Who has moral authority to punish?
 Can opportunities and burdens be fairly
distributed?
 Justice, rights, and power are really
intertwined.
 Two steps in transforming justice:
 Be aware of your rights and power
 Establish legitimate power for obtaining rights
 Justice and stakeholder analysis.
Copyright © 2003 by South-Western, a division of Thomson
Learning 14
Immoral, Amoral, Or Moral
Management
 Immoral management means intentionally
going against ethical principles of justice and
of fair and equitable treatment of other
stakeholders.
 Amoral management happens when others
are treated negligently without concern for
the consequences of actions or policies.
 Moral management places value on
equitable, fair, and just concern of others
involved.

Copyright © 2003 by South-Western, a division of Thomson

Learning 15
 Four Social
Responsibility Roles
 Figure 3.3 illustrates four ethical
interpretations of the social roles and
modes of decision-making.
 The four social responsibility modes
reflect business roles toward
stockholders and stakeholders.
 Two social responsibility orientations
of businesses and managers toward
society include:
 Stockholder model
 Stakeholder model
Copyright © 2003 by South-Western, a division of Thomson
Learning 16
 Individual Ethical
Decision-Making Styles
 Stanley Krolick developed a survey
that interprets individual primary and
secondary ethical decision-making
styles, that include:
 Individualism
 Altruism
 Pragmatism
 Idealism

Copyright © 2003 by South-Western, a division of Thomson

Learning 17
 Quick Ethical Tests
 The Center for Business Ethics at
Bentley College suggests six questions
to be asked before making a decision.
 Classical ethical tests:
 The Golden Rule
 The Intuition Ethic
 The Means-End Ethic
 Test of Common Sense
 Test of One’s Best Self
 Test of Ventilation
 Test of Purified Idea
Copyright © 2003 by South-Western, a division of Thomson
Learning 18