Crane and Matten

Crane and Matten

Business Ethics (4th edition)

Chapter 3

© Andrew Crane and Dirk Matten, 2016. All rights reserved.

 Overview

• Locate the role of ethical theory

• Highlight international differences in
perspectives
• Provide critical overview of traditional ethical
theories
• Explore contemporary ethical theories

Crane & Matten: Business Ethics, 4th edition

 What are normative ethical theories?

• Ethical theories are the rules and principles

that determine right and wrong for any given
situation Crane and Matten (2010)

• Normative ethical theories are those that

propose to prescribe the morally correct way of
acting

• As opposed to descriptive ethical theories

which seek to describe how ethics decisions are
actually made in business

Crane & Matten: Business Ethics, 4th edition

 The role of ethical theory

Crane & Matten: Business Ethics, 4th edition

 The role of ethical theory

• Two extreme positions (De George 1999)

• Ethical absolutism claims there are eternal,
universally applicable moral principles
– Right and wrong are objective qualities, can be
rationally determined
– Typically traditional ethical theories
• Ethical relativism claims morality is context-
dependent and subjective
– No universal right and wrongs that can be rationally
determined; depends on person making the decision &
culture in which they are located
– Typically contemporary ethical theories

Crane & Matten: Business Ethics, 4th edition

 Normative ethical theories

Crane & Matten: Business Ethics, 4th edition

 North American and European
origins and differences
• Differences between Anglo-American and
European approaches based on philosophical
arguments
– Individual versus institutional morality
• US tend to individualistic perspective
• Europe towards wider economic and governing institutions
– Questioning versus accepting capitalism
• US tend to accept the capitalist framework
• Europe tend to question the ethical justification of capitalism
– Justifying versus applying moral norms
• US tend to focus on application of morality
• Europe focus on justification and ethical legitimation of norms
• In contrast, Asian perspectives tend to be
based on religion (e.g. Islam, Buddhism)

Crane & Matten: Business Ethics, 4th edition

 Normative Ethical Theories and
Religion
• Religious and philosophical theories tend to
have the same aim: to inform us about the
right things to do.
• Two main differences:
– Sources of rules & principles.
• Religions typically invoke deities or organized systems of
belief as the origins of norms. Philosophy typically stems
from belief in human reason to derive norms.
– Consequences of morality (or immorality)
• Philosophy typically sees consequences as a matter of
creating tangible social benefits or harms for others.
Religions also point to spiritual consequences, including
enlightment, reincarnation, damnation, and salvation.

Crane & Matten: Business Ethics, 4th edition

Crane and Matten

Western modernist ethical

theories

© Andrew Crane and Dirk Matten, 2016. All rights reserved.

 Traditional ethical theories

• Generally offer a certain rule or principle

which one can apply to any given situation
• These theories generally can be differentiated
into two groups

Motivation
/ Action Outcomes
Principles

Non-consequentialist Ethics
Consequentialist Ethics

Source: Crane and Matten (2010)

Crane & Matten: Business Ethics, 4th edition

 Major normative theories

Egoism Utilitarianism Ethics of duties Rights & justice

Contributor Adam Smith Jeremy Bentham Immanuel Kant John Locke

s John Stuart Mill John Rawls
Focus Individual desires or Collective welfare Duties Rights
interests
Rules Maximization of Act/rule Categorical Respect for human
desires/self interest utilitarianism imperative beings

Concept of Man as an actor Man is controlled by Man is a rational Man is a being that
human with limited avoidance of pain moral actor is distinguished by
beings knowledge and and gain of pleasure dignity
objectives (“hedonist”)
Type Consequentialist Consequentialist Non- Non-
consequentialist consequentialist

Source: Crane and Matten (2010)

Crane & Matten: Business Ethics, 4th edition

 Egoism

• Theory of egoism - an action is morally right

if the decision-maker freely decides an action
to pursue either their (short-term) desires or
their (long-term) interests.
– Adam Smith (1793): pursuit of individual interest
morally acceptable as invisible hand of market
creates benefit for all
– Relies on free competition and good information
– ‘Enlightened egoism’
– However, markets do not function perfectly
• Anti-globalisation movement
• Sustainability debate

Crane & Matten: Business Ethics, 4th edition

 Utilitarianism

• According to utilitarianism, an action is

morally right if it results in the greatest
amount of good for the greatest number of
people affected by the action

– Also called the ‘greatest happiness principle’

– Based on cost-benefit analysis

Crane & Matten: Business Ethics, 4th edition

 Problems with Utilitarianism

• Subjectivity
– This has led to refinement of theory
• Act utilitarianism
• Rule utilitarianism
• Issues around quantification and distribution
of utility

Crane & Matten: Business Ethics, 4th edition

 Act- and Rule-Utilitarianism

Act utilitarianism
– Looks to single actions and bases the moral
judgement on the amount of pleasure and the
amount of pain this single action causes.

Rule utilitarianism
– looks at classes of action and ask whether the
underlying principles of an action produce more
pleasure than pain for society in the long run.

Crane & Matten: Business Ethics, 4th edition

 Ethics of duties

‘Categorical Imperative’ (Kant)

• Maxim 1: Consistency
– Act only according to that maxim by which you can at the same
time will that it should become a universal law.

Maxim 2: Human Dignity

– Act so that you treat humanity, whether in your own person or in
that of another, always as an end and never as a means only.

• Maxim 3: Universality
– Act only so that the will through its maxims could regard itself at
the same time as universally lawgiving (would others agree?
Would you be happy to see your decision reported in the press?)

Crane & Matten: Business Ethics, 4th edition

 Problems with ethics of duties

• Undervaluing outcomes
• Complexity
• Misplaced optimism?

Crane & Matten: Business Ethics, 4th edition

 Ethics of rights and justice

Human rights
• Basic, inalienable entitlements that are inherent to all
human beings, without exception.
– Based on consensus about nature of human dignity.
– Increasingly important: enshrined in principles of UN Global
Compact and the “Ruggie Principles”.
Justice
• The simultaneously fair treatment of individuals in a
given situation with the result that everybody gets
what they deserve
– Fair procedures (procedural justice)
– Fair outcomes (distributive justice)

Crane & Matten: Business Ethics, 4th edition

 John Rawls’s
‘Theory of Justice’
1. Each person is to have an equal right to the
most extensive total system of basic
liberties compatible with a similar system of
liberty for all.
2. Social and economic inequalities are to be
arranged so that they are both:
a. to the greatest benefit of the least advantaged;
b. attached to offices and positions open to all under
conditions of fair equality of opportunity.

Crane & Matten: Business Ethics, 4th edition

 Limits of traditional theories

• Too abstract
• Too reductionist
• Too objective and elitist
• Too impersonal
• Too rational and codified
• Too imperialist

Crane & Matten: Business Ethics, 4th edition

 Alternative perspectives on ethical
theory

Crane & Matten: Business Ethics, 4th edition

 Approaches based on character and
integrity
Virtue ethics
• Contends that morally correct actions are those
undertaken by actors with virtuous characters.
Therefore, the formation of a virtuous character is the
first step towards morally correct behaviour
Acquired traits
• Intellectual virtues
• Moral virtues

Crane & Matten: Business Ethics, 4th edition

 Approaches based on ethics and
responsibility
Feminist ethics
• An approach that prioritizes empathy, harmonious
and healthy social relationships, care for one another,
and avoidance of harm above abstract principles
Key elements
• Relationships
– Decisions taken in context of personal human interrelations
• Responsibility
– Active ‘taking’ of responsibility, rather than merely ‘having’ it
• Experience
– Learn and develop from experience

Crane & Matten: Business Ethics, 4th edition

 Approaches based on procedures of
norm generation
Discourse ethics
• Aims to solve ethical conflicts by providing a process
of norm generation through rational reflection on the
real-life experiences of all relevant participants
Key elements
• Ultimate goal of ethical issues in business should be
the peaceful settlement of conflicts
• Different parties in a conflict should sit together and
engage in a discourse about the settlement of the
conflict, and ultimately provide a situation that is
acceptable to all
• ‘ideal discourse’ criteria

Crane & Matten: Business Ethics, 4th edition

 Approaches based on empathy and
moral impulse
Postmodern ethics
• An approach that locates morality beyond the sphere
of rationality in an emotional ‘moral impulse’ towards
others. It encourages individual actors to question
everyday practices and rules, and to listen to and
follow their emotions, inner convictions and ‘gut
feelings’ about what they think is right and wrong in a
particular incident of decision-making.

Crane & Matten: Business Ethics, 4th edition

 Postmodern business ethics

• Postmodern business ethics emphasises

(Gustafson, 2000:21)
– Holistic approach
– Examples rather than principles
– ‘Think local, act local’
– Preliminary character

Crane & Matten: Business Ethics, 4th edition

 Summary

Towards a pragmatic use of ethical

theory

Crane & Matten: Business Ethics, 4th edition

 Typical Perspective

Ethical
Dilemma Single normative consideration
for solving the ethical dilemma

‘Lens’ of ethical theory

Crane & Matten: Business Ethics, 4th edition

 Pluralistic Perspective

Crane & Matten: Business Ethics, 4th edition

 Pluralism?

Crane and Matten (2010) argue that for the

practical purpose of making effective decisions
in business:
• Not suggest one theory or one approach as the best or
true view of a moral dilemma
• Suggest that all these theoretical approaches throw
light from different angles on one and same problem
• Complementary rather than mutually exclusive
Advocate position of pluralism
• Middle ground between absolutism and relativism

Crane & Matten: Business Ethics, 4th edition

 Considerations in making ethical decisions: summary of
key insights from ethical theories

Consideration Typical question you might ask yourself Theory

One’s own interestsIs this really in my, or my organization’s, best long term
- interests? Would it be Egoism
acceptable and expected for me to think only of the consequences to myself in this
situation?
Social consequences If I consider all of the possible consequences of my actions, for everyone that isUtilitarianism
affected, will we be better or worse off overall? How likely are these
consequences and how significant are they?
Duties to others Who do I have obligations to in this situation? What would happen if everybody Ethics of duty
acted in the same way as me? Am I treating people only to get what I want for
myself (or my organization) or am I thinking also of what they might want too?
Entitlements of Whose rights do I need to consider here? Am I respecting fundamental humanEthics of rights
others rights and people’s need for dignity?
Fairness Am I treating everyone fairly here? Have processes been set up to allow everyone Theories of justice
an equalance?
ch Are there major disparities between the ‘winners’ and ‘losers’
that could be avoided?
Moral character Am I acting with integrity here? What would a decent, honest person do in the Virtue ethics
same situation?
Care for others nad How do (or would) the other affected parties feel in this situation? Can I avoid Feminist ethics
relationships doing harm to others? Which solution is most likely to preserve healthy and
harmonious relationships among those involved?
Process of resol vingWhat norms can we work out together to provide a mutually acceptable solution Discourse ethics
conflicts to this problem? How can we achieve a peaceful settlement of this conflict that
avoids ‘railroading’ by the most powerful player?
Moral impulse and Am I just simply going along with the usual practice here, or slavishly following Postmodern ethics
emotions the organization’s code, without questioning whether it really feels right to me?
How can I get closer to those likely to be affected by my decision?
What do my
motions
e or gut feelings tell me once I’m out of the office?

Crane & Matten: Business Ethics, 4th edition