Ethical theories
Ethical Theories are attempts to provide a clear, unified account of what our ethical obligations are. They are
attempts, in other words, to tell a single “story” about what we are obligated to do, without referring directly to
specific examples. It is common in discussions of business ethics to appeal to one or more ethical theories in an
attempt to clarify what it is right or wrong to do in particular situations.
Why study ethical theories
The study of ethics helps a person to look at his own life critically and to evaluate his actions/choices/decisions.
It assists a person in knowing what he/she really is and what is best for him/her and what he/she has to do in
order to attain it. Study of moral philosophy can help us to think better about morality.
Ethics and morals relate to “right” and “wrong” conduct. While they are sometimes used interchangeably, they
are different: ethics refer to rules provided by an external source, e.g., codes of conduct in workplaces or
principles in religions. Morals refer to an individual's own principles regarding right and wrong.
1. Utilitarianism, which says that the right thing to do in any situation is whatever will “do the most good”
(that is, produce the best outcomes) taking into consideration the interests of all concerned parties; an ethical
theory that determines right from wrong by focusing on outcomes. It is a form of consequentialism.
Utilitarianism holds that the most ethical choice is the one that will produce the greatest good for the greatest
number.
When individuals are deciding what to do for
themselves alone, they consider only their own
utility. For example, if you are choosing ice cream
for yourself, the utilitarian view is that you should
choose the flavor that will give you the most
pleasure. Utilitarianism is a species
of consequentialism, the general doctrine
in ethics that actions (or types of action) should be
evaluated on the basis of their consequences.
The 3 Generally Accepted Principles of Utilitarianism State That
• Pleasure, or happiness, is the only thing that has intrinsic value. To say that something has intrinsic
value means that it is simply good in itself. Intrinsic value contrasts with instrumental value. Something has
instrumental value when it is a means to some end.
• Actions are right if they promote happiness, and wrong if they promote unhappiness.
This principle is quite controversial, since it involves that the moral quality of an action is decided by the size
of its consequences. So long as an action produces maximum benefits for the greatest number of people,
utilitarianism does not care whether the results are driven by immoral motives. However, this principle can be
refuted since most people would agree that the moral quality of an action depends on the motive or intention
behind it.
• Everyone's happiness counts equally. Although this axiom may seem quite obvious, this principle of
equality was radical and progressive in Bentham's time. By then, it was commonly accepted that some lives
and some people's happiness were simply more important and valuable than others. Betham's principle of
equality makes the government responsible for creating policies that would benefit all equally, not just the
elite.
▪ Kantianism (or Deontology more generally), which says that—as a matter of respect—there are certain
absolute (or nearly absolute) rules that must be followed (for example, the rule that we must respect people’s
privacy, or respect other people’s right to make decisions about their own lives);
Kantianism is defined as a branch of philosophy that follows the works of Immanuel Kant who believed that
rational beings have dignity and should be respected. the core idea is that human beings are not mere
objects—they are persons who are worthy of respect, and who must be treated as such. Kantian
Ethics eradicates bias. Therefore moral decision making cannot be influenced by factors such as family and
friends and everyone is treated equally.
2. Social Contract Theory (or “contractarianism”), which says that, in order to figure out what ethical
rules to follow, we ought to imagine what rules rational beings would agree to in an “ideal” decision-making
context; Social contract theory says that people live together in society in accordance with an agreement
that establishes moral and political rules of behavior. Some people believe that if we live according to a
social contract, we can live morally by our own choice and not because a divine being requires it.
People had to willingly do things like pay taxes and serve in the military, but in return, the government had to
listen to their desires and provide for their needs.
3. Virtue Theory, Virtue Theory is an ethical framework that says that we ought to focus not on what
rules to follow, but on what kinds of people (or organizations) we should be, and what kinds of ethical
exemplars we ought to imitate. Virtue ethics can remind us of the importance of role models. If you want
someone to learn ethics, show them an ethical person .The four virtues named here, prudence, justice,
fortitude and temperance, are said to 'turn around the whole of a virtuous life'. In Plato's philosophy, virtue is
nearly synonymous with knowledge rather than moral habit
Prudence - the ability to govern and discipline oneself by the use of reason.
Justice - philosophical idea that people are to be treated impartially, fairly, properly, and reasonably by the law
and by arbiters of the law, that laws are to ensure that no harm befalls another, and that, where harm is alleged,
a remedial action is taken .
Fortitude - strength of mind that enables a person to encounter danger or bear pain or adversity with courage
Temperance- is the tendency to behave in an uncontrolled, bad-tempered, or unreasonable way
4. Feminist Ethics, which is a complex set of interrelated perspectives that emphasize interpersonal
concerns such as caring, interdependence, and the ethical requirements of particular relationships. Such
concerns are traditionally identified with women, but Feminist Ethics should not be thought of as a theory
only for women. An approach to ethics that builds on the belief that traditionally ethical theorizing has
undervalued and/or underappreciated women's moral experience, which is largely male-dominated, and it
therefore chooses to reimagine ethics through a holistic feminist approach to transform it.
Ethical Theories in Business
Business ethics are often discussed today, especially in light of corporate scandals. Often, that discussion
focuses on professional conduct or illegal practices. Ethics touch many elements of business. These days,
many consumers select products based on ethical considerations. Buyers trust that the companies with which
they conduct business are responsible and moral.
Consumer safety is a major factor in considering ethical theories in business. This includes product safety and
liability, advertising practices and sales or pricing tactics. Unethical business practices have the potential to
seriously harm consumers. For example, fake pharmaceuticals that are not tested for quality are not only
unethical, they pose a serious threat to public safety.
There are many established laws across the world to protect consumers from fraud and other injury.
Unfortunately, innocent consumers are often targeted for fraud by unethical businesses.
It is not only highly visible leaders that are expected to behave according to high ethical standards. Many
professionals are bound to ethical codes because of the nature of their work. Professionals working in
medicine, law, accounting and financial advising, for example, are all subject to strict ethical conduct. These
professions usually deal with very sensitive or privileged information.
DTI Issues Guidance on Eight (8) Basic Consumer Rights
1. The Right to Basic Needs
This refers to the right to have access to basic, essential goods and services such as adequate food, clothing, shelter, health
care, education, public utilities, water and sanitation.
2. The Right to Safety
This is the right to be protected against products, production processes and services that are hazardous to health or life
3. The Right to Information
This refers to the right to be given the facts needed to make an informed choice, and to be protected against dishonest or
misleading advertising and labelling.
4. The Right to Choose
This refers to the right to be able to select from a range of products and services, offered at competitive prices with an
assurance of satisfactory quality
5. The Right to Representation
This is the right to have consumer interests represented in the making and execution of government policy, and in the
development of products and services.
6.The Right to Redress
This means that consumers have the right to receive a fair settlement of just claims, including compensation for
misrepresentation, shoddy goods or unsatisfactory services
7. The Right to Consumer Education
This refers to the right to acquire knowledge and skills needed to make informed, confident choices about goods and
services, while being aware of basic consumer rights and responsibilities and how to act on them
8. The Right to a Healthy Environment
This is the right to live and work in an environment that is non-threatening to the well-being of present and future
generations.
As far as practicable, the Eight (8) Basic Consumer Rights should be referred to or invoked in all matters related to
consumer protection, including but not limited to settlements, decisions, resolutions in mediation or adjudication of
consumer complaints.
Malpractice in these professions can result in being forced out of the profession. A lawyer that knowingly
misrepresents a client can be disbarred from practicing law.
Labor laws have not always existed as we know them today. Everything from child labor to the number of
hours spent working per day required considerable ethical consideration. Discrimination in hiring and firing
spurs major ethical debate today. Some people believe that hiring for “cultural fit” is a form of
discrimination, while others find nothing wrong with hiring very similar employees.
Whistleblowing is defined as exposing information about unethical or unsafe conditions within an
organization. Individuals who “blow the whistle” must carefully consider the implications and possible
retaliation. It can be easy to ignore unethical behavior in the workplace, but some ethical theorists believe that
employees must whistle blow when they encounter unethical behavior.
The grossly unethical practices at Enron were exposed through whistleblowing. One employee whistleblower
is all it took to bring down the world’s sixth-largest energy company.
Enron case
Enron was an energy-trading and utility company based in Houston, Texas, that perpetrated one of the biggest
accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the
company's revenues and, for a time, making it the seventh-largest corporation in the United States. Once the
fraud came to light, the company quickly unraveled, and it filed for Chapter 11 bankruptcy in December 2001.
Enron provided a variety of energy and utility services around the world.
Enron went to great lengths to enhance its financial statements, hide its fraudulent activity, and report complex
organizational structures to both confuse investors and conceal facts. The causes of the Enron scandal include
but are not limited to the factors below. Enron inaccurately depicted many contracts or relationships with
customers. By collaborating with external parties such its auditing firm, it was able to record transactions
incorrectly, not only not in accordance with GAAP but also not in accord with agreed to contracts.
For example, Enron recorded one-time sales as recurring revenue. In addition, the company would
intentionally maintain an expired deal or contract through a specific time period to avoid having to record a
write-off during a given period.
The ultimate downfall of Enron was the result of overall poor corporate leadership and corporate governance.
Former Vice President of Corporate Development Sherron Watkins is noted for speaking out about various
financial treatments as they were occurring. However, top management and executives intentionally
disregarded and ignored concerns. This tone from the top set the precedent across accounting, finance, sales,
and operations.
Bankruptcy is a legal proceeding initiated when a person or business is unable to repay outstanding debts
or obligations.
Chapter 7 Bankruptcy Also known as liquidation or straight bankruptcy, Chapter 7 is the most common type
of bankruptcy for individuals. A court-appointed trustee oversees the liquidation (sale) of your assets (anything
you own that has value) to pay off your creditors (the people you owe money to). Any remaining unsecured
debt (like credit cards or medical bills) is typically erased.
Chapter 13 bankruptcy basically reorganizes it. The court approves a monthly payment plan so you can pay
back a portion of your unsecured debt and all of your secured debt over a period of three to five years. The
monthly payment amounts depend on your income and the amount of debt you have. But the court also gets to
put you on a strict budget and check all your spending
Chapter 11 bankruptcy is used to reorganize a business or corporation. Businesses come up with a plan for
how they’ll continue operating the company while paying off their debt, and both the court and the creditors
must approve this plan.
Chapter 12 Bankruptcy -This is a repayment plan that allows family farmers and fisherman to avoid having to
sell all their stuff or foreclose on their property.
Can you declare bankruptcy in Philippines?
No. There is no terminology as bankruptcy in Philippine laws. The Philippines does not have a legal
proceeding on bankruptcy, but the closest is insolvency under Republic Act (RA) 10142 or the Financial
Rehabilitation and Insolvency Act (FRIA) of 2010, which took effect on July 18, 2010.
