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Chapter Three
Ethical Behavior –
Philosophers’s Contribution
B&D
 • The ideas, concepts, and principles that have been
developed in ethical behavior has been recognized as
important touchstones for the assessment of corporate
and personal activities
• Nowadays, the ethicality of strategies and actions of
corporations and individual cannot be left to chance
• Professionals need awareness of expected ethical
parameters and need to build these into cultures of their
organization

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 ▪ Ethics is a branch of philosophy that investigates normative
judgments about what behavior is right or what ought to be
done
▪ The need for ethics arises from desire to avoid real-life
problems. It does not address the issue of what you should
or should not believe (discuss in religion)
▪ Ethics deals with the principles that guide human behavior.
▪ It is the study of norms and values concerning ideas of right
and wrong, good and bad, as well as what we ought to do
and what we should eschew doing
▪ The theories and frameworks provide guidance to assist
decision makers in determining acceptable and
unacceptable business behavior and actions

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 ▪ Ethics :
1. General pattern or “way of life” (Christian & Buddhist)
2. A set of rules of conduct or “moral code” (Business)
3. Inquiry about ways of life and rule of conduct (Phylosophy)
▪ We will discuss no. 2 sense
▪ Morality and moral code contains four characteristics:
1. Belief about the nature of man
2. Belief about the ideals, about what is good or desirable or
worthy of pursuit for its own sake
3. Rules laying down what ought to be done and what ought
not to be done
4. Motives that incline us to choose the right or wrong course

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 ▪ No theory is complete, but they have common features,
especially a concern of what should or should not be done
▪ The real question is which of the views (theories) already
proposed is the best approximation overall (of what we should
do)
▪ Ethical dilemmas normally arise because there is no entirely right
option. Instead, they are compelling reason for each of the
alternatives, so it is up to the individual to decide which
alternative to choose.
▪ Ethical decision maker : is capable of taking a stand on an
important and difficult problem of human life and be able to
explain and justify his stance. He must be able to clearly
articulate and defend why he selected that course of action,
using ethical theories and reasons
▪ The Ethical Reasoning Process (Figure 3.1 pp. 129 BD)
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 Ethics and Business
▪ Archie Carroll : you can only talk meaningfully about business
ethics if the business is economically viable. If it is not
profitable, then it goes out of business and the question of
what is appropriate and inappropriate business behavior moot
(uncertain)
▪ Consequently, a primary (no. 1) goal of a for-profit firm is to
remain in business by providing goods and services that are
required by society in efficient and effective manner 
fundamental goal of business  Not the only goal and should
not be pursued at any cost
▪ Profit is a result of doing business WELL, but at minimum
should obey the laws and regulations (no. 2) provide the
base of acceptable business behavior

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 Ethics and Business
▪ Business has to be ethical (no. 3) and socially responsible
(no.4)
▪ Why business should be ethical :
1. Grounded on a views about religion, our relationship with
others and our perception of ourselves.
2. It has to do with our regard to other people  we are
social animal who live in society with other people
3. It enlightened self-interest  compelling view for many
business people. Related to human nature  self
interested  each of us is living in our unique individual
life. It is my life.
▪ However, there is a difference between self interest and
selfishness

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 Self-Interest & Economics
▪ Self-interest (not greed) moves the economy but
unbalanced greed has created vulnerabilities and has
proved to be a highly risky strategy
▪ Thomas Hobbes (1588 – 1679) : explain the concept of
self-interest, social harmony and economic cooperation
▪ Self interest motivates people to form peaceful civil society
by accepting rules that limit individual freedom
▪ Civil society can be seen as voluntary contract among
individual in which some individual freedoms and rights are
given up in exchange for peace and self- preservation. This
enlightened self-interest
▪ For Hobbes, self-interest leads to cooperation and the
formation civil society

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 Self-Interest & Economics
▪ Adam Smith (1723 -1790) : self-interest leads to economic
cooperation. Buyer and seller negotiate to pareto –
optimum equilibrium (natural price according to Smith)
▪ The invisible hand of the marketplace results in a Pareto-
optimum position where it is impossible to improve
anyone’s condition without worsening someone else. This
means that society as a whole is better off.
▪ Self – interested individual unintentionally increase the
wealth of nation.
▪ Smith is often mistakenly seen as the advocate of
unfettered capitalism. This is not the case. He dis advocate
minimal governmental interference in market place.
▪ So, selfishness, avarice and greed are not part of Smith
model
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 Self-Interest & Economics
▪ Smith : individuals do not act out of narrow selfishness,
rather out of sympathy, for both oneself and others. In
other words, ethical behavior is grounded on the
sentiment of sympathy, which in turn constraint unbridled
self-interest
▪ Key features of Smith Economic Theory :
1. The economy is a cooperative social activity
2. Markets are competitive but not adversarial (fair play,
honoring contract and mutual cooperation)
3. Ethics constraints economic opportunism
▪ Self-interest leads to economic cooperation  division of
labor, more and better products and services can be
produce in an efficient and effective manner
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 Ethics, Business & The Law
▪ See pp. 134 BD

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 Teleology : Utilitarianism &
Consequentialism
▪ John Locke (1632 – 1704), Jeremy Bentham (1748 –
1832), James Mill (1773 – 1836), John Stuart Mill (1806
– 1873)
▪ Examine ethics from teleological perspective (ethical
behavior in term of the results and consequences of
ethical decisions)
▪ Resonates with many result – oriented business people
because it focuses on the impact of decision making.
▪ It evaluates the decisions as good or bad, acceptable or
unacceptable in terms of the consequences of the
decision
▪ Ethical decisions are right or wrong as they lead to either
positive or negative results.
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 Teleology : Utilitarianism &
Consequentialism
▪ Ethically good decisions result in positive outcomes or
negative consequences. However, the consequences of
an ethical decision are not themselves ethical. The
consequences are simply what happens
▪ The ethicality of the decision maker and the decision are
determined on the basis pf the – non-ethical comparative
value of the actions or consequences
▪ Teleology articulates well by utilitarianism  actions are
right in proportion that they tend to promote happiness
(least amount of pain), wrong as they tend to produce
reverse of happiness
▪ Pleasure and pain could be qualitative and quantitative

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 Teleology : Utilitarianism &
Consequentialism
▪ When using utilitarianism, the decision maker must take a
broad perspective concerning who , in society, might be
affected by the decision
▪ The key aspect of utilitarianism are :
1. Ethicality is assessed on the basis of non ethical
consequences
2. Ethical decisions should be oriented toward increasing
happiness and/or reducing pain (physical or psychological)
3. Happiness and pain relate to all society, not just personal
happiness
4. The ethical decision maker must be impartial and not give
extra weight to personal feelings when calculating the
overall net probable consequences of decision

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 Act and Rule Utilitarianism
▪ Act utilitarianism = consequentialism  deems an action to
be ethically good or correct if it will probably produce a
greater balance of good over evil.
▪ Rule utilitarianism  we should follow the rule that will
probably produce a greater balance of good over evil for
the greatest number of person and avoid the rule that will
probably produce the reverse
▪ The presumption : it is possible to calculate the net
pleasure or pain associated with a decision

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 Means and Ends
▪ utilitarianism  promote the greatest amount of happiness
for the greatest number of person – does not implies the
ends justify the means.
▪ Contrary to Niccolo Machiavelli (1469 – 1527 ) : in action of
men, and especially the princess, from which there s no
appeal, the end justifies the means  it is a political theory,
not an ethical theory
▪ Mistake of this theory
▪ Example : actions of companies in producing toxic waste

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