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A Summary of Normative Ethical Theories and Itsapplication in Business

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Stages of Moral Develop-ment

Lawrence Kohlberg

It is a six-stage model of the way morality develops in modern individuals.

It is categorized into three levels.

Preconventional –it addresses the earliest reactions that children are likely to have to their surroundings and relationships.

  1. Punishment and Obedience
  2. Instrumental Exchange

Conventional – it normally occurs in the teenage years when the person will start to develop more intense relationships with others that go beyond self-service.

  1. Interpersonal Conformity
  2. Law and Order

Postconventional – the highest stage of moral development that involves regard for the welfare of other people.

  1. Social Contract
  2. Universal Ethical Principles

The Kohlberg moral development theory has a positive effect on educational matters, especially the education of young adults and their sense of intellectual and moral development.

It insinuates that people can place their own moral principles above the laws of the society they live in and the established laws of that country. In his Heinz steals the drug example, “yes or no” is not of interest in this question but a matter of reasoning.

It has a cultural bias problem, i.e., the consideration of a set of cultural norms in one society without adequate consideration of how (or even if) the same norms can effectively be applied to a different culture.

The stages of moral development presented here is close to reality because I associate myself and those I know with these. I don’t see any harm in applying these because he just explained what his theories are.

It is helpful for developing human-resources policies and understanding younger employees’ behavior and decision-making.

Punishment and Obedience- some employees may work best in a strict structure motivated by the fear of humiliation and consequence.

Instrumental Exchange-the stage where the employee starts rudimentarily looking out for his own need. The managers must see that the compensation and conditions of employment as just and fair.

Interpersonal Conformity- stage that emphasizes that action can contribute or destruct social harmony. Ethical interactions with the customers, suppliers and other outsiders must be clearly communicated.

 Law and Order- here, managers align their business’ objectives with societal norms. The objectives must be lawful and beneficial to the business and community.

Social Contract- the stage when morality begins to supersede societal norms for the protection of individual

rights. At this stage, civil disobedience of an employee can be seen as a statement about the fairness of HR policies. When employees act out, it can be wise to listen and address their concerns.

Universal Ethical Principles- this stage is achieved when people learn to see moral dilemmas through the perspective of everyone involved in a situation. In the business setting, they are likely to be the employees with a long history in the company who have risen to management positions and are keen to secure a sense of rights and responsibilities among their subordinates.

The Machia-vellian Princi-ple

Niccolo Machia-velli

Machiavellian principles were based on his negative perceptions about human nature and the social problems of his time. From these, he made very radical recommendations on how a leader should govern effectively. He was suggesting that sometimes people have to do something not necessarily good to attain something good. For him, a leader should be prepared to do evil when necessary to gain power.

Sometimes, strictness is used as a tool to achieve order.

Attaining power is done even at the expense of other people.

It doesn’t care if many will be harmed in his pursuance of power.

There are instances when this principle is really applicable. If the society is really chaotic, assuming that all calm actions are undertaken first, then an iron fist must be really applied to pacify things. But, if it is done for self-interest, it is not acceptable.

The firm’s objective must be achieved by all means. The business’ motive for profit and prestige is greater than the hours extended by the employees just to achieve the results.

The Utilita-rianism

Jeremy Bentham

John Stuart Mill

In this principle, any action is permissible given that it increases pleasure for the greatest number of people. It is the result (greatest good) not the motive which makes an act ethical.

It provides an easy to use cost-benefit way of working out what is right and wrong.

The purpose of greater good seems logical, practical and realistic.

There is no common definition of “good.”

In reality, it’s not always possible to calculate utility when large amount of data are required.

It makes morality relative. What is useful to one may be painful or harmful to another.

It has a bias on the majority. Although the majority could be correct, sometimes by virtue of their number, the minority could also be right.

The overall concept of utilitarianism is beneficial. It is really adapted by the businesses in its planning and decision making. However, if the majority decides for something that might harm the minority, then this concept should not be used.

The main application of Utilitarianism to business is the Cost-Benefit Analysis in any decision-making processes. It is a technique that is used to determine options that provide the best approach for the adoption and practice in terms of benefits in labor, time and cost savings etc.

It is also used in the formulation of budgets.

It is also used in the resolution of Labor-Management conflicts.

The Princi-ple of Right and Virtues: The Kantian Ethics

Imma-nuel Kant

For Kant, morality is not based or not derived from experience rather it is universal and absolute. “We must do good, because we must, it is our duty to obey without questioning.” Duty, therefore, is the test and the mainspring of all morally good acts.

It preserves the dignity of individuals and provides a critique to utilitarianism.

Because of the differences in the attitudes of the people, one’s kindness may be rewarded with bad things instead of good.

In my view, this principle is universally acceptable. You do good because you want to do it and not because you are after the rewards or benefits. But in reality, I think only few people has still this motive.

His Categorical Imperative contributes to the company’s firm rules to follow in moral decision making, rules that do not depend on circumstances and results that do not permit individual exceptions. No matter what the consequences may be or who does it, some actions are always wrong like misstating F/S on purpose.

It stresses the importance of motivation and principles among the workers.

It also introduces the importance of humanistic dimension into business decision. Managers must decide with a motive to protect (and not exploit) its employees.

Princi-ples of Justice

John Rawls

Rawls theory of justice revolves around the adaptation of two fundamental principles of justice which would, in turn, guarantee a just and morally acceptable society. The first principle guarantees the right of each person to have the most extensive basic liberty compatible with the liberty of others. The second principle states that social and economic positions are to be a) to everyone’s advantage and b) open to all.

It promotes fairness and justice in all levels of society.

Its application in the real world is impossible to achieve given his proposition about the original position.

Honestly, his concept of original position is still vague to me. It is really impossible to apply his theories although his assertion for justice and fairness can never be questioned.

Businesses must adhere with the concept of fair trade practices. It should not make any actions that will be unjust to his suppliers, customers and stakeholders.

The Moral Positi-vism of Hobbes

Thomas Hobbes

According to Hobbes, governments are created to protect people from their own selfishness and evil. The best government is one that has the great power of a leviathan or sea monster. He believes in a rule of a king because he felt that a country needs an authority figure to provide leadership and direction.

It makes people to have high respect for the law.

It anticipates the chaotic outcome if laws are not followed.

Only the law is considered right.

Government is established to direct its people. This theory is rational as it just wants the people to be law-abiding. However if some laws are found to be abusive, or it is exploited in favor only of the ruler, then this principle should be viewed differently.

All businesses must be lawful. It should be registered and it must comply with all the requirements set by the law.

The Divine Com-mand Ethics


Divine Command Theory includes the claim that morality is ultimately based on the commands or character of God, and that the morally right action is the one that God commands or requires.

With such a belief, we have the hope that we will be able to live moral lives.

A view of ethics that is grounded in God. On theism, we are held accountable for our actions by God. Those who do evil will be punished, and those who live morally upstanding lives will be vindicated and even rewarded.

There are some situations where the beliefs of religions differ.  

It doesn’t cover all areas of moral decision.

This is relative because numerous beliefs are present in our society. Most of them may be teaching the same principles but there will be some that contradicts. If that happens, who is considered as right? No one can decide for it. But this theory provides a great deal of the sense of accountabili-ty to God which is good if the assumption is all religion is made to advance the best interests of men.

It applies in making business decisions which follows the morals in conformity with the commandments of God and teachings of the church.

Ethical Egoism

Ayn Rand

It is a theory which says that the promotion of one’s own good is in accordance with morality. It is the view that one ought to do what is in man’s self-interest, if necessary to the exclusion of what is in other people’s interests.

It boosts self-esteem and promotes high respect for one’s self.

It justifies selfishness as natural and moral.

It doesn’t stress the reality that individuals should co-exist.

My view here is balanced. It is really important to gain self-importance but not in a way conceited.

The ethical egoism is most reflected in the very reason of establishing a business: to earn a profit. The Board of Directors always put the interest of their business ahead.

In periods of work crises, ethical egoism can be seen as a positive approach when the persons involved take the responsibility and the consequences of their wrongdoings.



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