What are the ethical theories in business?

Defining ethical models is easier than actually putting them into action. This lesson explores the practical ways businesses have demonstrated their commitment to ethical behavior in the real world.

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Business Ethics

A 2015 study surveyed more than 300 companies in an effort to characterize how companies created and applied ethical policies. The result indicated that many businesses had ethics policies, but the application and enforcement was minimal or non-existent. Let’s survey some examples of business ethics and how they are put into practice by organizations in the real world.

Examples

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Deontological Ethics

Immanuel Kant’s deontological ethics, sometimes referred to as the ethics of duty, is the theory that actions are not right or wrong based on their result but rather because they are inherently good or evil. The computer component manufacturer Intel provides an example of deontological ethics in business through an unusual human resources practice that allows some employees to rotate through up to five of the company’s departments every 16 to 24 months. This program is provided for the sole purpose of being good to employees and a sincere desire on the part of the company to see its workers happy. The company received no direct benefit from the program.

Utilitarianism

Jeremy Bentham’s utilitarianism has its foundations in the belief that being ethical means to do the greatest good for the greatest number of people. Several years ago, a pharmaceutical company released the drug Accutane as a means for treating severe acne in young men. The drug was very effective, but it was also known to cause life-threatening birth defects if pregnant women were exposed to the drug.

The ethical principle of utilitarianism states that is ethically acceptable to release a drug like Accutane with appropriate warning. The number of young men who will experience relief from the skin condition will outweigh the few cases in which an individual will fail to adhere to the warning. All pharmaceuticals have side effects, but utilitarianism provides moral permission for their distribution anyway because the sum of their contributions are argued to be far greater than the negative outcomes they cause.

Morality

Morality ethics describe the conditions and actions that people perceive as being good or bad because of their own internal values. In the last few years, the pharmaceutical company Pfizer has taken a moral position that their corporate mission is life rather than death. Although lethal injection is a legal form of judicial homicide in numerous states, Pfizer has taken the position that selling drugs for executions violates their corporate values. Pfizer’s decision to refuse the sale of drugs for lethal injection is an example of moral ethics because this business decision is the result of the personal value of Pfizer’s leaders.