Business Ethics MGT610
Moral reasoning itself has two essential components: an understanding of what reasonable
moral standards require, and evidence or information concerning whether a particular policy,
person, institution, or behavior has the features of these moral standards. People often fail to
make their moral standards explicit when they make a moral judgment, mainly because they
assume them to be obvious. This assumption is not always true, however; often we must retrace
a person's moral reasoning to deduce what their moral standards are. Of course, it is not always
easy to separate factual information from moral standards.
Moral reasoning refers to the reasoning process by which human behaviors, institutions, or
policies are judged to be in accordance with or in violation of moral standards. Moral reasoning
always involves two essential components: (a) an understanding of what reasonable moral
standards require, prohibit, value, or condemn; and (b) evidence or information that shows that
a particular person, policy, institution, or behavior has the kinds of features that these moral
standards require, prohibit, value, or condemn.
To evaluate the adequacy of moral reasoning, ethicists employ three main criteria:
1. Moral reasoning must be logical.
2. Factual evidence must be accurate, relevant, and complete.
3. Moral standards must be consistent.
Consistency refers not only to the fact that one's standards must be able to coexist with each
other, but also to the requirement that one must be willing to accept the consequences of
applying one's moral standards consistently to others in similar circumstances. The consistency
requirement is, in fact, the basis of an important critical method in ethics: the use of
counterexamples and hypothetical examples.
This consistency requirement can be phrased as follows:
If I judge that a certain person is morally justified (or unjustified) in doing A in
circumstance C, then I must accept that it is morally justified (or unjustified) for any other
(a) To perform any act relevantly similar to A
(b) In any circumstances relevantly similar to C.
Arguments For and Against Business Ethics
Some people object to the entire notion that ethical standards should be brought into business
organizations. They make three general objections.
First, they argue that the pursuit of profit in perfectly competitive free markets will, by itself,
ensure that the members of a society are served in the most socially beneficial ways. Of course,
the assumption that industrial markets are perfectly competitive is highly suspect. Even more,
there are several ways of increasing profits that will actually harm society. Producing what the
buying public wants may not be the same as producing what the entirety of society needs. The
argument is essentially making a normative judgment on the basis of some assumed but
unproved moral standards ("people should do whatever will benefit those who participate in
markets"). Thus, although the argument tries to show that ethics does not matter, it can do this
Business Ethics MGT610
only by assuming an unproved moral standard that at least appears mistaken.
Second, they claim that employees, as "loyal agents," are obligated to serve their employers
single-mindedly, in whatever ways will advance the employer's self-interest.
As a loyal agent of his or her employer, the manager has a duty to serve his or her
employer as the employer would want to be served (if the employer had the agent's
expertise). An employer would want to be served in whatever ways will advance
his or her self-interests.
Therefore, as a loyal agent of his or her employer, the manager has a duty to serve
his or her employer in whatever ways will advance the employer's self-interests.
But this argument itself rests on an unproven moral standard that the employee has a duty to
serve his or her employer and there is no reason to assume that this standard is acceptable. An
agent's duties are defined by what is called the law of agency, (i.e., the law that specifies the
duties of persons [agents] who agree to act on behalf of another party and who are authorized
by the agreement so to act). Also, agreements to serve another do not automatically justify
doing wrong on another's behalf.
Third, they say that obeying the law is sufficient for businesses and that business ethics is,
essentially, nothing more than obeying the law. However, the law and morality do not always
coincide (again, slavery and Nazi Germany are relevant examples). Some laws have nothing to
do with morality because they do not involve serious matters. These include parking laws, dress
codes, and other laws covering similar matters. Other laws may even violate our moral
standards so that they are actually contrary to morality.
Thus, none of the arguments for keeping ethics out of business seems forceful. In contrast,
there are fairly strong arguments for bringing ethics into business.
One argument points out that since ethics should govern all human activity, there is no reason
to exempt business activity from ethical scrutiny. Business is a cooperative activity whose very
existence requires ethical behavior. Another more developed argument points out that no
activity, business included, could be carried out in an ethical vacuum.
One interesting argument actually claims that ethical considerations are consistent with
business activities such as the pursuit of profit. Indeed, the argument claims that ethical
companies are more profitable than other companies. The data is mixed on this question, but
even though it cannot demonstrate that ethical behavior is always more profitable, it does
clearly show that it is not a drag on profits.
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