MODULE IN BUSSINESS ETHICS

PREPARED BY: LALAINE C. COCHON, MPA

LESSON 2. THE PHILOSOPHICAL BACKGROUND OF BUSINESS ETHICS

Objectives:

At the end of this chapter, the students are expected to;

1. Compare and contrast ethics and philosophy
2. Evaluate the nature of the human act from the ethical perspective
3. Analyze critically the various approaches of evaluating the morality of the human conduct
4. Understand man ‘s nature as a moral being.
5. Differentiate ethics from morality.

Introduction

Business Ethics as an applied branch of General Ethics must be studied from the perspective of
philosophy. This is because ethics is a part of philosophy, and t it is unthinkable to discuss ethical concepts and
moral principles without being philosophical. Secondly, the process of moral reasoning involves use of
metaphysical technologies and concepts that is best understood only in the light of philosophical abstractions.

A. Ethics and Philosophy

What is Philosophy?

Philosophy, etymologically, came from two Greek words “philos,” which means love, and “sophis,” which
means wisdom. Philosophy means “love of wisdom.” As a science, philosophy is interested with the meaning of
reality, including our human experiences. It is a science that seeks to explain the ultimate cause of everything by
the use of human reason alone. To philosophize means to wonder about life, to question reality and to find sense
in what we do as human beings.

Other definition of Philosophy;

1. Philosophy according to Plato, is the highest form of inquiry.

2. For William James, philosophy is a collective name for questions that have not been answered to the
satisfaction of the one asking question. Questions like; Who am I? How do live? Where am I going?
3. Philosophy is also defined as the science that studies the ultimate causes or explanation of things attained by
the use of human reason alone.

These different definitions of philosophy only affirm that it is a metaphysical science which basically deals
with abstractions. It is from this perspective that Business Ethics, as an applied branch of philosophy must be
discussed since it involves investigating the human values which are basically metaphysical in nature and which
are operative in fiduciary relationships both in business transactions and in the interactions of people in business
organizations and in the corporate world.

DEFINITION OF ETHICS

 Ethics is a practical science of the morality of human acts.

 Ethics is the study conduct from the standpoint of morality.
 Ethics is a practical science that guides us in our actions that we live rightly and well.
 Ethics is the science which lays down the principles of right living.

B. ETHICS AND MORALITY

The term ethics and morality are often used interchangeably. Indeed, these terms usually can mean the
same thing, and in casual conversation there is not a problem with switching between one and the other.
However, there is a distinction between them in philosophy.
Morality refers to the quality of goodness or badness in human act. Good is described as moral and bad
is described as immoral. It means conformity to the rules of the right conduct. It implies judgment and refers to
what we could call moral standards and moral conduct while ethics is used to refer to the formal study of those
standards and conduct. For this reason, Ethics is also often called “moral philosophy.”

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MODULE IN BUSSINESS ETHICS
PREPARED BY: LALAINE C. COCHON, MPA

Ethics, on the other hand, involves the study of those standards and judgment which people create.
Ethics assumes that the standards exist and seeks to describe them, to evaluate them, or to evaluate the
premises upon which those standards exist. Ethics, basically indicates the nature of moral principles, ethical
systems and moral norms that people use to justify their moral judgment.

A. ETHICS AS NORMATIVE SCIENCE

Ethics is a branch of philosophy and it is considered as a normative science because it is concerned with the
systematic study of norms of human conduct. Ethics is a normative science because it involves a systematic
search for moral principles and norms that are used to justify our moral judgments.

There are three categories of General Ethics;

1. Descriptive Ethics consists of studying and describing the morality of people, culture, or society. It also
makes comparisons and contrasts on the different values, principles, code of ethics, beliefs, and practices of
people. It does not prescribe or attempt to assess the moral soundness of any ethical system but only to
describe objectively the values and belief of people.

Examples:

a. Psychological Egoism
A concrete example of Descriptive Ethics is the study of human motivation. Is says nothing about
what is god or bad or right or wrong, rather it simply declares results based on various scientific studies.

b. Cultural Relativism

It does not prescribe how people should act, rather it describes how people, when grouped and
observed in their own cultural realities, actually differ in their behaviour. What is good or bad, moral or
immoral according to this theory is relative to the people’s own culture or sets of cultural beliefs and
practices.

2. Normative Ethics involves moral judgment based on ethical norm or theory. This consists both of the basic
moral principles and values and the particular moral rules that govern people’s behaviour, which is right or
moral and wrong is immoral.

The three tasks of Normative Ethics are the following;

 To form into a related whole the various norms, rules and values of a society’s morality.
 To find the basic principle from which the particular norm can be derived.
 To justify an ethical norm or moral principle.

3. Metaethics is a branch of Normative Ethics. In some other ways, both Normative and Descriptive Ethics
involve some mathematical activity. Metaethics is concerned with analysis of the meaning of words and logic
of moral reasoning. It analyses moral terms like, “good”, “bad”, “moral”, “immoral”, “moral obligation”, and
the like. Metaethics does not describe moral belief of people, does not evaluate the process of moral
reasoning but simply analyses the usage and meaning of words.

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MODULE IN BUSSINESS ETHICS
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B. DEONTOOGICAL VERSUS TELEOLOGICAL APPROACHES TO ETHICAL EVALATION OF THE

HUMAN CONDUCT

1. Deontological Ethics or non-consequentialist approach is a body of ethical theories that measures and
evaluates the nature of a moral act based on the validity of the motive of an act. This means that the motive
or intention is good, then regardless of the consequences, the whole action is good.

Examples:

 Kantianism is also known as the categorical imperative approach, the idea that one should always
base his action on maxims or rules that are believed to be universal. For Kant moral goodness or
badness of the act does not depend on the consequences of the act but on the motive or intention of
the actor, the motive is good if it is an expression of the person’s sense of duty.

 Divine Command Theory holds that the standard of right and wrong is the will or law of God. The
Christian Ethics is an example of an ethical system that uses deontological approach in evaluating the
morality of human conduct, the will of God is expressed in the Bible and in tradition of Roman
Catholic Church.

2. Teleological Ethics or consequentialist theory measures the morality of an action based on its consequences
and not in the motive or intention of the actor. If the consequences is good, regardless of the motive, then
act is always morally good.

Examples:

 Hedonism or the view that measures is the only good as an end.

 Utilitarianism is another example of a consequentialist theory. This school of thought, maintains that
the “greatest good is the greatest happiness or pleasure of the greatest number.” This means that if
the action can provide the greatest happiness to the greatest number of the people who are affected
by the action, the action s to be considered morally good.

Implications of the Deontological and Teleological Ethics to Decision Making

These two approaches to the ethical evaluation of the human conduct are also used by the managers in
the decision-making process. Some managers decide on the basis of their personal principles and convictions. In
this regard, managers are said to be biased towards deontological perspective because of their principle-oriented
decision-making process. On the other hand, some managers could be result-oriented in terms of decision
making. In this regard, they favor the perspective of Teleological Ethics because they focus on the consequence
or the result of the action regardless of the intention of the motive of the one performing the action.

F. THE “MORAL SENSE” IN US

One of the basic questions in ethics is to determine how people develop their fundamental concepts of good and
evil. Traditional ethics believes that man has a natural insight to morality, this being the gift the Creator who
gave man a “moral sense.”

1. The Synthesis of Man According to St. Thomas Aquinas

According to Aquinas, the moral sense in man is manifested and expressed in three ways;

 Man is able to distinguish or to know what is good or what is bad. Of all creatures, only man
has the capacity to know the difference between good and bad action.
 Man is always obligated to do good and to avoid evil. In any given circumstance, man is the
only creature who feels time primary duty to do what is good and to avoid what is evil.
 Man knows that he is accountable for his actions- good or bad. Of all creatures, only man
realize that the performance if an action entails reward and punishments. If he does an evil
action, he expects punishment.

2. Freud’s Theory of the Id, Ego, and the Superego

Freud believes that the human mind has three important components, that of the preconscious, conscious, and
unconscious. No other psychologist except Freud has studied the unconscious part of the human mind.

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MODULE IN BUSSINESS ETHICS
PREPARED BY: LALAINE C. COCHON, MPA

Freud founded the Psychoanalysis Theory where the approach is to understand human behaviour which views
men and women as constantly between internal unconscious forces and external social forces. The key points of
psychoanalytic theory are the following;

 Man must learn to control his inborn desires.

 Man must achieve fulfilment in ways that are harmonious with others.

Business Application

A businessman may be tempted to cheat to his customer in process of selling. He realizes however, that
to give in to this enticement could be a violation of Code of Ethics for Businessman and the other positive laws,
like Customer Act of the Philippines. He therefore discerns well and begins to rationalize that it is better not to
fool or cheat the customer. In this case, the perceived good action not fooling the customer is a decision made
by the ego as a result of its interaction with the enticement of the id and the pressure of the superego.

3. Kohlberg’s Theory of Moral Development

Kohlberg believe that the people progressed in their moral reasoning through a series of stage. His theory of
moral development was based on the earlier works of Swiss psychologist Jean Piaget. Kohlberg help to clarify
the general cognitive development approach of Piaget, through the analysis of changes in moral reasoning or
extending the approaches into a series of stage.

Kohlberg Classification of the Person’s Moral Development

LEVEL STAGE SOCIAL ORIENTATION

Pre-conventional 1 Obedience and Punishment
2 Individualism, Instrumentalism, and Exchange
Conventional 3 “Good Boy/Girl Image”
4 Law and Order
Post-conventional 5 Social Contact Rights
6 Principled Conscience
7 Transcendental Morality

1. Pre-conventional

This behaviour is generally found in young children and older children. There are two stages in this level; (1)
reaction to punishment, (2) desire for the right behaviour that will satisfy the person’s self-interest. Stage 1
explains the concept of being good by following commands and authority and avoiding being punished. Stage 2
is the stage of individual instrumental Purpose of Exchange.

Business and Organizational Application

Some individuals do the right thing only to avoid punishment or to obtain approval, an employee who thinks that
the only person not to steal money from the employer is the currently of getting and fired. The person at hi stage
has little sense of needs of the others. At second stage, the persons become aware that others have their needs
also and begins to defer to them to get what the individual wants.

2. Conventional

This level is generally found in an ideal civilized society, hence, the name “conventional.” The first stage of this
level (Stage 3) is the Stage of Mutual Interpersonal Expectations, Relationships and Conformity. This is
characterized by an attitude which seeks to do what will gain the approval of others, commonly referred to us as
“Putting oneself in the other person’s shoes.” Stage 3 is also known as the “good boy and good girl” orientation
stage. This implies that a good or bad behaviour of the person depends on his/her conformity or non-conformity
with the norms of his/her immediate community or environment. Stage 4 on the other hand is the stage of Social
System and Conscience Maintenance wherein one is oriented by the law and responding to the obligations of
duty. A person is considered a law-abiding citizen when he or she follows the law of society but will be
considered deviant when the same person violates the same law.

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MODULE IN BUSSINESS ETHICS
PREPARED BY: LALAINE C. COCHON, MPA

Business and Organizational Application

Stage 3 of the second level describes the right behaviour is one that conforms to conventional expectations, an
employee considers the importance of being loyal follower to avoid conflicts. Stage 4 on the other hand, explains
that the right behaviour consists of performance of duty, respect for authority and maintaining social order, an
employee address to organizational rules and policies and obeys order from the superior.

3. Post-Conventional

This third level of moral thinking is one that Kohlberg felt is not reached by majority of adults. Stage 5 is the
Stage of Prior Rights and Social Contract Utility. It is the stage of understanding of rights and values. It gives the
person a sense of democracy but relativity of rules. This means that people at this stage realize that there are
fundamental concepts of right and wrong but the application of which is confined to their own culture and
environment. Each person’s moral rights however, must be protected. The last stage (Stage 6) is the Stage of
Universal Principles. It is based on respect of universal principles and the demands of individual conscience. At
this stage Kohlberg believe that people do good and avoid evil because they are convinced that there are
universal ethical principles that govern and justify their actions.

Business and Organizational Application

Stage 5 maintains that the laws may be important and must be followed but they are not absolute, they can be
changed if necessary. Stage 6 maintains that people could act in accordance with their conscience and universal
ethical principles, the individual is likely to act in accordance with these principles rather than rules.

References

Business Ethics and Social Responsibility 2nd Edition by Fr. Froliano C. Roa,
https://prezi.com/_mvc-33lomgh/the-philosophical-background-of-business-ethics/
https://www.slideshare.net/NeilDagohoy/the-philosophical-background-of-business-ethics

Prepared by:

LALAINE CELSO-COCHON, MPA

Instructor I

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