Theories for Business Ethics Making

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All organizations, businesses, and individuals, regardless of size, geographic location, or social status manage a wide variety of ethical issues on daily basis. For centuries, societies and individuals have struggled to interpret what is the right way to behave and act upon in different circumstances. Analyzing the decision-making process and the circumstantial factors helps in understanding philosophical theories and influences like the consequentalist theories, deontological, and other models. In early human societies, right and wrong were often interpreted in accordance to religious doctrines. Socrates laid the foundations of philosophy as we know it in the 4th century B.C, by raising the question what is justice? Socrates teaching put in question what was then defined and expected of people. Twenty-five centuries later, with more universities around the world than Socrates, Plato, and Aristotle would have ever imagined to be possible, we are still struggling to define the ethical standards. Very often, the laws try to establish what is often perceived as a moral agreement of people, at least on key issues to a certain degree, such as what we consider fraud, theft, murder, and our basic rights. In addition to the laws, there are several principles that managers unconsciously take into consideration when facing ethical dilemmas: utilitarian, virtue, and cultural relativism.

Consequentialist Theories

Consequentalist as a general term pay particular attention on the implications of the results of the decision (teleological) (Trevino and Nelson, 2011) and supports that an action is morally right if it results in the greatest amount of good for the greatest amount of people affected by the action (utilitarianism) (Crane and Matten, 2016) In the business world, legal requirements take priority when it comes to assessing a business decision. After the legal requirements are sorted out, there is often more than one path that management can follow for a particular issue, whether it is regarding an acquisition, sale of a business, environmental issue, employee relations, or compliance with tax and financial regulations. As a principle, businesses look for ways to minimize cost, mitigate risk and legal exposure when it comes to decision making. Management seeks the options where the benefits outweighs the cost. The real dilemma is the interpretation as to what is the right thing to do for all stakeholders. The main focus of the business are the shareholders, and in harsh reality the persons involved in the decision making are more concerned as to how a decision will impact their careers.

Virtue, Discource and Postmodern Ethics

Another ethical approaches that have emerged and developed in recent years are worth mentioning as alternative prospects are that based on character and integrity (virtue ethics), on relationships an responsibility (feminist ethics), on procedures of norm generation (discourse ethics) and on empathy and moral impulse (postmodern ethics) (Crane and Matten, 2016).Virtue ethics concentrate more in the integrity of the moral individual who aims to be a good person and create with other similar people an enterprise in which the moral conquest will prevail (Trevino and Nelson, 2011). Business do not necessarily have in mind Aristotle's Virtue Ethics; however, managers subconsciously make an assessment of what they perceive to be the right thing to do for situations that they can see themselves in, such as massive layoffs, performance plans, and severance packages. Feministic supports that  healthy social relationships and avoidance of harm above abstract moral principles(Crane and Matten, 2016). Discource mainly intends to solve ethical conflicts and postmodern identifies ethics beyond the sphere of reasonability in an emotional moral impetus to others (Crane and Matten , 2016).

Cultural Relativism

Laws are different in different societies based on the environment and conditions; approaches that are reflected in the Cultural Relativism theory. Some of the challenges that multinationals face in the 21st century is how to keep the balance between compliance with laws in all countries, being sensitive to all cultures, and yet ensure that work practices at all locations are not in conflict with certain principles regardless of what the general perception may be at certain locations. New technologies and cultural differences create new ethical issues (Velasquez, 2014). According to Trevino and Nelson, the common ethical problems are human resource issues, conflicts of interest, customer confidence issues, and use of corporate resources. J.W. Weiss separates ethical and moral issues into five categories: (1) individual, (2) organizational, (3) association, (4) societal, and (5) international. From his point of view, the changes in workforce create challenges, such as: age discrimination, sexual harassment, health care provisions, educational challenges (imparities), and shifting pattern towards a new work life model. As a result of such changes in the work environment, managers take on the difficult task in making decisions where they face dilemmas between concurrent existence of conflicting values. If unresolved or managed poorly, such issues may hurt the company's image and reputation. Manuel G. Velasquez defines ethics as an examination of moral standards of a person or a society in order to evaluate their logic and their impact on one's life. On the other hand, business ethics is a specialized study of what is right and wrong which focuses on business institutions and activities as applied to the social system and organizations through which modern societies produce goods and they also distribute services to the activities of people working in their organizations (Velasquez, 2014). Finally, the term moral dilemma identifies a situation in which two or more values collide ( Trevino and Nelson, 2011).

Non-Consequentialist Theories

Then another theory that have been traditionally applied to business ethics are non-consequentialist (Crane and Matten, 2016) which are divided in ethics of duty and ethics of right and justice. The first one is based on what is correct accordance to the principles of morality and has the roots from the Greek word deon that means duty (Trevino and Nelson, 2011).On the other hand the second type concentrate more on the rights as the Greek Natural rights derivering from the the natural law rather than the principles and duties (Trevino and Nelson, 2011). Nevertheless in order to define which rule is appropriate for someone to follow, it is enough to refer either to the biblical tradition with the Golden Rule or to the German philosopher according to which if the logic of your action can turn into a global law that everyone will follow, then it is the right one (Trevino and Nelson, 2011).

However, there are some core problems that are identified in the above-mentioned theories. For instance in ethics of duty, Kant's theory is presented enough optimistic due to his opinion of man as a rational actor who acts consequently according to self-imposed duties seems more of an ideal than a reality with regard to business actors (Crane and Matten, 2016). Furthermore undervaluing outcomes and complexity are considered as problems as well, due to the results of one's actions are estimated very little and Kant's categorical imperative can be quite complicates to apply (Crane and Matten, 2016). As concerns utilitarianism the main problems are a) subjectivity, b) problems of quantification, c) distribution of utility (Crane and Matten, 2016). In ethical decision-making process as Trevino and Nelson states the first step is ethical awareness which defines to be able to understand that it is an ethical issue and can think of it morally, in ethical terms. Having identify the issue as ethical the next step towards is ethical judgment and the last one is ethical action.

Trevino and Nelson also mention eight steps which can help in ethical decision making in business: 1) Gather the facts, 2) Define the Ethical Issues, 3) Identify the affected parties, 4) Identify the consequences, 5) Identify the Obligations, 6) Consider your character and integrity,7) Think creatively about potential actions,8) Check your gut. In the process of good ethical judgment it is possible to be mentioned some obstacles. Thinking about fact gathering might be confusing as the individual could not see the right one (Trevino and Nelson, 2011). Thinking about consequences the person might take into account a reduced number of consequences or for the self versus consequences for others (Trevino and Nelson, 2011). Additionally due to people having the illusion of control they undervalue risks (consequences as risk) and since decisions usually come from a variety of choices which are included by a grand decision people fail to think about consequences (consequences over time) (Trevino and Nelson, 2011).

Another barrier is the conviction of people that are the most moral and legitimate so thinking about integrity is incomplete. Thinking about your gut as a counseling may also be wrong because moral psychology come up with the conclusion that moral judgment is more incentive and automatic (Trevino and Nelson, 2011). Ethical decision-making models generally distinguish factors influencing decisions in two categories, the individual and the situational (Google Books, 2018). The first ones includes factors by birth experience, socialization and attitudes like age and gender, national and cultural characteristics, education and employment, cognitive moral development, locus of control, personal values, personal integrity and moral imagination.

On the other hand situational are considered factors such as moral intensity, moral framings, rewards, authority, bureaucracy, work rules, organizational culture and national and cultural context (Crane and Matten, 2016).


It is obvious that theories may be helpful to managers, however they are elliptical as they are more theoretical and not practical in the efficient operation of enterprises. In addition there is a limitation on the choice of ethics, they are impersonal (Gilligan, 1982) as they are based on abstract principles, are very reasonable and encoded. Finally they are  too imperialist since they consider Western theories to be the most appropriate (Crane and Matten, 2016).


  1. Dirk Matten, Andrew Crane, 2016. Business Ethics, 4th ed. Oxford.
  2. Joseph W. Weiss, 2003. Business Ethics: A stakeholder and Issues Management Approach, 3rd ed. Canada.
  3. Katherine A. Nelson, Linda K. Trevino, 2011. Managing Business Ethics: Straight Talk About How To Do It Right, 5th ed.
  4. Wiley. Manuel G. Velasquez, 2014. Pearson New International Edition Business Ethics Concepts and Cases, 7th ed. Google Books. (2018).


  1. Classics from the Journal of Business Ethics. [online] Available at: [Accessed 4 Nov. 2018]. Google Books. (2018).
  2. Business Ethics. [online] Available at: [Accessed 4 Nov. 2018].
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Theories For Business Ethics Making. (2019, Jul 11). Retrieved July 13, 2024 , from

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