Republic of the Philippines

Laguna State Polytechnic University

Province of Laguna

A CRITICAL SURVEY OF THE DIFFERENT NORMATIVE ETHICAL THEORIES

COMMONLY USED IN BUSINESS DECISION MAKING

Introduction
Ethics, also called Moral Philosophy, concerned with what is morally good and bad and morally right and
wrong. Its subject consists of the fundamental issues of practical decision making and its major concerns
include the nature of ultimate value and the standards by which human actions can be judged right or
wrong. The word ought that not only implies the moral obligation on the part of the actor or doer of such
action.
A. The Norms of Morality According to Scholastic Philosophy and Traditional Ethics
The Norms of Morality
Conscience Traditional ethics considers conscience as the proximate norms of Morality. It is the
practical judgement of reason on the rightness or wrongness of a moral act to be done if its right or to
be avoided if wrong. It has primary and secondary moral principles in which it has to be acted upon,
which is to do good and avoid evil. It requires practical application, since morality is not only about
knowing the good and the bad but also to be better and to be responsive to the good.
Types of Conscience

 Antecedent Conscience – The judgement of a person deciding on a moral matter prior to acting
on it. The conscience either commands or forbids, counsels or permits, the performance of an act.
 Consequent Conscience - The judgment of the mind on the morality of an action already
performed. The conscience either approves what has been done, giving peace to the mind and
spiritual joy, or disapproves of what was done, thus causing remorse and a sense of guilt.
 True Conscience - The mind making a correct moral judgment on some action either to be
performed or already done. When the conscience is true, a person's subjective judgment
corresponds to the objective fact that a particular human act is morally good or morally wrong.
 Erroneous conscience – Judges incorrectly that what is good is evil and what is evil is good.
 Certain conscience – A state of mind when it has no prudent fear of being wrong about its
judgement on some moral issue and firmly decides that some action is right or wrong.
 Scrupulous conscience – Judges that there is sin when there really is no sin, or that judges that
something is a mortal sin when it is only a venial sin.
 Lax conscience – An erroneous conscience when the mind decides on insufficient grounds that a
sinful act is permissible or that something gravely wrong is not serious.

Natural Law
Natural law is a philosophical theory that states that humans have certain rights, moral values,
and responsibilities that are inherent in human nature. Natural law theory is based on the idea that natural
laws are universal concepts and are not based on any culture or customs. Still, it is a way society acts
naturally and inherently as human beings.
Ethical Law
Traditional Ethics considers eternal law or the divine law as the ultimate norm of Morality. For St.
Thomas Aquinas, ‘The divine wisdom directing all actions and movement’ For St. Augustine, ‘The divine
reason or evil of God commanding the natural order of things be preserved and forbidding that it be
disturbed. Eternal law provides for the cosmic order where every creature stands indifferent and
independent from each other but apart from the unified purpose of creation.
Business Application

 Ideally, the 3 norms of morality according to Traditional Ethics must be able to guide our
business decision making process. However, these three criteria are not widely accepted by
decision makers.
 Common sense directs that the “dictates of reason’ should be enough to guide our evaluation
between the action that we perform and the norms that determine what is acceptable and what is
not in our human behavior.

B. Ethics (Immanuel Kant)

Kant Moral Rationalism

According to Kant, the only thing that good in itself is the “good will.” The will is what drives our actions
and grounds the intention of our act. It is good when it acts from duty. To clarify, Kant thinks the good
will is the only thing that is intrinsically valuable. If we think about the other goods and things that we
value, such are not good without qualification.

Kant’s different types of imperatives in his distinction between a hypothetical and a categorical
imperative. An imperative is essentially a ought; something I ought to do. Hypothetical Imperatives are
the ought that to direct my actions provided I have certain goals or interests. In fact, these thoughts are
entirely dependent upon my goals or interests. Hypothetical Imperatives have nothing to do with morality.
However, Categorical Imperatives does not depend upon my desires or wants. These are necessary, and
always binding are the ought that determine what our moral duties are.
Moral duties can be derived from the categorical imperative which can be formulated in 3 ways

 Formula of Universal Law – states that we ought to act in a way such that a maximum, or
principle, of our act can be willed a Universal Law. If your maxim cannot be universalized then
that act is morally off limits.
 Formula of Humanity – states that we ought to treat humanity (self and others) as an end and
never as a mere means.
 Formula of Autonomy – states that we act on principles that could be accepted within a
community of other rational agents. The third formula “The kingdom of ends” moves us from the
individual level to the social event.
Business Application

 Introduces the importance of humanistic dimension into business decisions into business
decisions. Treat human beings not as means to an end, because human beings have ends in
objectives.
 Kant stresses the importance of motives and of acting principles. Business decisions are based
sometimes on personal convictions and principles regardless of the outcomes or results.
 The categorical imperatives gives us the firm rules to follow in moral decision making, rules that
do not depend on circumstances or results and that do not permit individual exemption. No matter
what the consequences may be or who does it, some actions are always wrong.

C. Machiavellian Principle (Niccolo Machiavelli)

Machiavelli is seen as a divisive and polarizing philosopher/writer. However, his ice-cool leadership
principles are still revered today. “Machiavellian” is a word we now associate for scheming, knife in the
back tactics that get people ahead in life. Others argue he is a realist. His thoughts around business and
the political maneuvers to secure power translate well into today’s intense climate of business
competition and leadership. For Machiavelli, people are compelled to obey purely in deference to the
superior power of the state. If I think that I should not obey a particular law, what eventually leads me to
submit to that law will be either a fear of the power of the state or the actual exercise of that power.

There are some interesting insights from The Prince:

1. “The first method for estimating the intelligence of a ruler is to look at the men he has around
him.”
2. “Never was anything great achieved without danger.”
3. “Whosoever desires constant success must change his conduct with the times.”
4. “A wise man ought always to follow the paths beaten by great men, and to imitate those who
have been supreme, so that if his ability does not equal theirs, at least it will savour of it.”
5. “Where the willingness is great, the difficulties cannot be great.”
6. “He who is the cause of another becoming powerful is ruined.”
7. “To exercise the intellect, the Prince should read histories, and study there the actions of
illustrious men.”
8. “The wise man does at once what the fool does finally.”
9. “Everyone sees what you appear to be, few really know what you are, and those few dare not
oppose themselves to the opinion of many, who have the majesty of the state to defend them; and
in the actions of all men, and especially of the princes, which it is not prudent to challenge, one
judges by the result.”
10. “A wise Prince ought to observe some such rules, and never in peaceful times stand idle, but
increase his resources with industry in such a way that they may be available to him in adversity.

Business Application
  On management, A management style where all the employees are required to work very hard no
matter what it takes just to achieve the bottom line could be a scenario of applying the
Machiavellian principle.
 On the individual, in meeting the demands of a job to make both ends meets or to provide for a
comfortable life for the family, people tend to prioritize their time to work over time for family.
 On leadership, Sometimes an autocratic leadership style is necessary in running an organization.
Although the democratic leadership style has its own benefits, it may not work in some instances,
and in some organizations. At times, we need a strong autocratic leader to motivate a people, to
attain a goal of the state or organization.

D. Utilitarianism
Utilitarian ethics is a normative ethical system that is primarily concerned with the consequences
of ethical decisions; therefore it can be described as a teleological theory or consequentialist theory,
which are essentially the same thing, both having a notion that the consequence of the act is the most
important determinant of the act being moral or not.
Two Types of Ethical Systems Teleology, (from Greek telos, “end,” and logos, “reason”),
explanation by reference to some purpose, end, goal, or function. Traditionally, it was also described as
final causality, in contrast with explanation solely in terms of efficient causes (the origin of a change or a
state of rest in something). Deontological ethics, in philosophy, ethical theories that place special
emphasis on the relationship between duty and the morality of human actions. The term deontology is
derived from the Greek Deon, “duty,” and logos, “science.”
Two Types of Utilitarianism
Act utilitarianism makes the most ethical actions possible for the benefit of the people. Rule
utilitarianism helps the largest number of people using the fairest methods possible.
Utilitarianism: Strength

 Strength: A possible answer for every situation, it is an absolute system.

 It is not just a system, but it gets at the substance of morality because it has a material core:
promoting human good and alleviating pain.
 It makes common sense.
Utilitarianism: Weakness

 How do you measure the term “greatest”?

 The greatest number of people over the greatest amount of happiness how to define?
 What about those who are not in the greatest amount?
 Is it total or general happiness
Can we know the consequences?

 We normally do not know the long term consequences of all of our actions.
 Consequences go on into the infinite future, so we really cannot know them.
 Calculation is impossible.
 Criticism of Utilitarianism Pojman presents five (the no-rest objection, the absurd implications
objection, the integrity objection, the justice objection, and the publicity objection) and discusses possible
utilitarian responses to each.

 The No Rest-Objection – we always have an infinite set of acts to choose

 The Absurd-Implication – that two acts are of equal value.
 The Integrity Objection – personal integrity can be violated because we choose something other
than our most central a deeply held principles.
 The Justice Objection – Some acts could be considered useful and still be against the justice
system.
 The Publicity Objection – Moral principles must be known to all, but utilitarian’s do not claim
everyone should act like a utilitarian.

Utilitarianism and Posterity

 Provides a very strong philosophical justification for the notion that we have obligations to future
generations.
 Supports the conviction that we ought not to end humanity.
 Morality is about promoting human happiness, so it does not matter if those humans do not exist
yet.

The two main proponents of the principle are:

Jeremy Bentham
Jeremy Bentham (1748-1832) developed the principles of utility by defining it as a measure of
maximizing pleasure while minimizing pain. Bentham wrote that everyone prefers pleasure over pain. It
is with this belief that utilitarian moral principles are founded (Sandel, 2010). In developing the theory of
utilitarianism, Bentham may have meant pleasure as in “happiness” and pain as in “sadness” ; however,
Bentham’s rendering of utilitarianism sounded hedonistic, as if sensuality was the measure Bentham
associated with pleasure (Hinman, 2013).
John Stuart Mill

John Stuart Mill reconsidered the principles of utilitarianism and suggested that pleasure should
not merely refer to sensual pleasure but also to mental pleasure, such as music, literature, and friendship.
Mill sought to make intellectual pleasures preferable to sensual ones.

Business Application

 This principle can be used in Cost Benefit Analysis

 The principle can also be used in the formulation of budgets
 Utilitarianism as a guide indecision making can also be applied in the resolution of labour and
management conflicts
 Utilitarianism as an ethical principle can also be used in the calculation of opportunity costs.

E. Moral Positivism (Thomas Hobbes)

Thomas Hobbes
Hobbes believed that humans were basically selfish creatures who would do anything to better
their position. Left to themselves, he thought, people would act on their evil impulses. According to
Hobbes, people therefore should not be trusted to make decisions on their own. In addition, Hobbes felt
that nations, like people, were selfishly motivated. To Hobbes, each country was in a constant battle for
power and wealth.
Governments were created, according to Hobbes, to protect people from their own selfishness and
evil. The best government was one that had the great power of a leviathan, or sea monster. Hobbes
believed in the rule of a king because he felt a country needed an authority figure to provide direction and
leadership. Because the people were only interested in promoting their own self- interests, Hobbes
believed democracy – allowing citizens to vote for government leaders – would never work.
Legal positivism is the legal philosophy which argues that any and all laws are nothing more and
nothing less than simply the expression of the will of whatever authority created them. Thus, no laws can
be regarded as expressions of higher morality or higher principles to which people can appeal when they
disagree with the laws. It is a view that law is a social construction. The creation of laws is simply an
exercise in brute force and an expression of power, not an attempt to realize any loftier moral or social
goals. Therefore, from a positivist perspective, it can be said that “legal rules or laws are valid not
because they are rooted in moral or natural law, but because they are enacted by legitimate authority and
are accepted by the society as such”.
Thomas Hobbes argued that “it is improbable for any statute to be unjust”. According to him,
“before the names of just and unjust can take place, there must be some coercive power to compel men
equally to the performance of their covenants … and such power there is none before the creation of the
commonwealth”. In this, he meant that “laws are the rules of just and unjust, nothing being reputed unjust
that is not contrary to some law. For Hobbes, the sovereign is not subject to laws for having the power to
make and repeal laws for having the power to make and repeal laws; he may, when he pleases, free
himself from their subjection.” Whether stressed is that “to the care of the sovereign belongs the making
of good laws.” Furthermore, he concludes that “all that is done by such power is warranted and owned by
every one of the people, and that which everyman will have so, no man can say is unjust.
Business Application

 Business must follow the laws of the state and government regulations.
 Business enterprises must create company policies to maintain discipline and other within the
organization.
 Businessmen and managers must be law abiding citizens.
 Strong authority figure are sometimes necessary in organizations to dissuade people from doing
well things and prevent discord.

F. Divine Command Ethics

One of the basic tenets for divine command theory is to use God as the source for all principles.
In this way, to rely upon divine command theory, a person must believe that there is a willful and rational
god that has provided the direction toward an ethical outcome. It is from God’s commands that actions
are determined to be right or wrong and, because of this, divine command theory provides an objective
assessment of what is ethical or moral.
According to Pollock (2007), there are four assumptions of divine command theory:
1. There is a god.
2. God commands and forbids certain acts.
3. An action is right if God commands it
4. People ascertain what God commands or forbids.
Divine command theory also provides an explanation of why ethics and morality are so
important. In religions, good acts are rewarded in the afterlife, while bad acts condemn the perpetrator to
an everlasting punishment. What essentially makes religion such an incredibly powerful ethical system is
that there is the spectre of a potentially eternal punishment in the afterlife (Pollock 2007).

Science has no evidence of the existence of God. Without a belief in the existence of God, divine
command theory loses its authority among a large portion of the population who base their lives on
science and empiricism.

Those who believe in God can interpret the commands in their own way, thereby creating
different interpretations to the solutions sought for ethical dilemmas; consequently, there can be
confusion about what exactly is God’s will.

Business Application

 For Christian believers, a good action is an action that conforms to the commandments of God as
reflected in the bible and the teaching of the truth.
 For Non-Christians, a good actions conforms to the teachings of exemplary non-divine beings
like the Buddha and Mohammad.

G. Virtue Ethics: Socrates, Plato & Aristotle

Socrates
Socrates equated knowledge with virtue, which ultimately leads to ethical conduct. He believed
that the only life worth living was one that was rigorously examined. He looked for principles and actions
that were worth living by, creating an ethical base upon which decisions should be made. Socrates firmly
believed that knowledge and understanding of virtue, or "the good," was sufficient for someone to be
happy. To him, knowledge of the good was almost akin to an enlightened state. He believed that no
person could willingly choose to do something harmful or negative if they were fully aware of the value
of life.
Socrates believed deeply that people should inquire and ask questions, even about - or perhaps
especially about - those things that everyone takes for granted. He did not believe that judging an action
based on life and death was virtuous. Instead, Socrates taught that decisions should be made based on
what was right or wrong, or good or bad, standards you can achieve through discussion and moral
guidance.
Virtue ethics says that the reasoning of what is moral is decided by the person instead of by rules
or consequences. You decide what’s moral and right, not by what will happen.
Socrates proposed 3 special tenets in his Moral Philosophy

 Virtue is identical with knowledge.

  Vice is identical with ignorance.
 No one commits an evil act knowingly.

Plato
Plato believed that the human soul is divided into three parts.

 Reason: our thinking ability to judge

 Spirit: our emotional ability to feel empathy
 Appetite: our desires
According to Plato, we should balance these three parts of our souls to make good decisions and moral
choices. Letting one take too much control of our minds is not good for us and leads to bad decisions

Aristotle
Aristotle Virtue Ethics is an agent-centered theory in virtue of a primary focus on people and their
characters rather than singular actions. For Aristotle, morality has more to do with the question “how
should I be?” rather than “what should I do?” If we answer the first question then, as we see, then the
second question may begin to take care of itself. When explaining and evaluating Aristotelian Virtue
Ethics you must keep in mind this focus on character rather than specific comments on the morality of
actions.
Aristotle’s virtue ethics is broken down into two categories:
a. Intellectual virtues (good habits of excellence of the mind) that can be taught through instruction.
b. Moral virtues (good habits of excellence of the soul: courage, temperance, liberality, honesty,
generosity, high-mindedness, tempered ambition, good temper, friendly civility, sincerity,
wittiness, modesty, righteous indignation) that are attained through practice and consistent right
actions for the right reasons, that result in habit over one’s lifetime.
These moral virtues are not inborn but acquired through practice.
Business Application

 In production planning and inventory control-finished goods and raw materials must be carefully
controlled so that the company will not occur too much cost. If there are too much finished goods
and raw materials, inventory warehouse cost are high while lack of finished goods and raw
materials would entail a high opportunity loss and delay in manufacturing.
 The principle of moderation can also be used in determining and planning for profit in business.
 Virtuous conduct is important in decision making but also in manufacturing moral ascendency
and personal integrity.
 Success in business is not only measured in terms of profit but also by the company’s moral
integrity and credibility.
H. Pragmatism of Pierce, James, and Dewey
Pragmatism
Pragmatism began in the United States in the 1870s. Its origins are often attributed to the philosophers
Charles Sanders Peirce, William James, and John Dewey. In 1878, Peirce described it in his pragmatic
maxim: "Consider the practical effects of the objects of your conception.
1. According to Charles Sanders Peirce;
Pragmatism is a principle of inquiry and an account of meaning first proposed by C. S. Peirce in the
1870s. The crux of Peirce's pragmatism is that for any statement to be meaningful, it must have practical
bearings. Peirce saw the pragmatic account of meaning as a method for clearing up metaphysics and
aiding scientific inquiry. This has led many to take Peirce’s early statement of pragmatism as a forerunner
of the verificationist account of meaning championed by logical positivists.

2. Pragmatism according to William James;

Is a philosophical approach that measures the truth of an idea by experimentation and by examining
its practical outcome? Pragmatists believe that truth can be modified; that human values are essential to
academic inquiry; that truth is not absolute; that meaning and action are intimately connected; and that
ideas are to be evaluated by whether they promote consistency and predictability. One of James's most
important contributions to the study of pragmatism is his concern with religion. According to James, truth
should be evaluated based on its impact on human behavior; therefore, one's religious faith can be
justified if it makes a positive difference in one's life.

3. John Dewey developed a pragmatic theory of inquiry to provide intelligent methods for social
progress. He believed that the logic and attitude of successful scientific inquiries, properly
conceived, could be fruitfully applied to morals and politics. Unfortunately, his project has been
poorly understood and his logic of inquiry neglected as a resource.

As a particular set of theories, Pragmatism maintains these following assumptions:

 Be valid, all theories must be put into practice.

 There must be a close connection between thinking and acting.
 Ideas to regard as true must be useful.
 For ideas to be significant, there must be a practical result.

Business Application

 Business plans remains to be plans unless they are executed and implemented.
 Pragmatism as a philosophy seems to imply that the right solution to any problem becomes the
practical solution and therefore the moral solution.
 In business decision making, the concept of cash value is always considered

References:
Social Responsibilities of Business and Business Ethics - Leverage Edu
Kantian Ethics (Overview) | Introduction to Philosophy (lumenlearning.com)
15-Lessons-from-Machiavelli1.pdf (blenheimpartners.com)
Utilitarianism Definition (investopedia.com)
philosophy of law - Thomas Hobbes | Britannica
2.7 Religion or Divine Command Theory – Ethics in Law Enforcement (opentextbc.ca)
2.1 The Concept of Ethical Business in Ancient Athens - Business Ethics | OpenStax
Pragmatism and moral progress: John Dewey’s theory of social inquiry - Kory Sorrell, 2013
(sagepub.com)

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY

A Critical Survey of the Different Normative Ethical Theories

Commonly used in Business Decision Making

Submitted by:
ALVAREZ, HAIDI
APOSTOL, ALEXANDRA JOY
DESINGANO, ALYZA MAE
GIBAS, MARJORIE
GIMAN, ANNA
IBASITAS, ALYSSA GLENDA
OLISA, CHRYSTINE ANDREI
PATOTOY, CZHARRISE ANNE
PUZON, SHERYL ANNE
TERIBLE, ALYANNA JOY

BSBA Major in

Marketing Management

Subm,itted to:

DR. JONATHAN F. BERNABE

MAY 2022