How Moral Philosophies Relate to Business Ethics

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  • 0:01 Moral Relativism vs.…
  • 2:05 Utilitarianism
  • 3:09 Deontology
  • 4:06 Ethical Nihilism
  • 5:17 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley

Shawn has a masters of public administration, JD, and a BA in political science.

Much of business ethics finds its foundation in various moral philosophies. In this lesson, you'll learn about some of the important moral philosophies that have influenced ethics in business.

Moral Relativism vs. Absolutism

If you are like most people, you expect businesses to behave in a reasonably ethical way. But that's the easy part. The real trick is figuring out what type of behavior is ethical, and that's where different philosophies of morals come into play. So, let's take a quick look at certain moral philosophies that can guide ethical business behavior. We'll start with a key division in ethics and morality - the concepts of absolutism and relativism - and we'll use an example to illustrate it.

Let's say Dillon works at a fast food restaurant, and his employer has a strict policy of throwing away all unused food at the end of the day. His employer views giving away the unused food as theft. Since the employer owns the food, it has a right to decide how it is used or not used. Now, suppose a homeless family is outside the restaurant panhandling while Dillon is disposing of the unused food. Dillon thinks about giving the family some of the unused food he is going to throw away.

If Dillon believes in moral absolutism, he believes there are universal and absolute moral rules that must be followed without exception. Since giving the unused food to the family would be a kind of theft, at least in the eyes of his employer, Dillon would be ethically prohibited from giving the family the food because doing so would violate the moral rule against stealing.

On the other hand, if Dillon follows moral relativism, he believes that proper moral conduct is relevant to the culture and even particular circumstances at hand. While Dillon may believe that giving the unused food to his friends after work is morally unacceptable as theft, he may believe giving the unused food to the homeless family is morally acceptable. In fact, Dillon may believe refusing to give the unused food to the homeless family is an immoral act given the situation. Thus, according to moral relativism, the same act may be moral or immoral depending upon the circumstances.

As we continue our discussion, keep in mind that some of the theories we discuss may adhere to a type of moral absolutism and some to moral relativism.


Another major moral philosophy that you may find helpful in determining ethical business practice is utilitarianism. In its simplest formulation, utilitarianism basically says that an act is morally correct if it leads to a net level of happiness rather than a net level of unhappiness. Let's look at a quick example.

Let's say you are the CEO of a major drug company. The FDA has just approved one of your experimental drugs for the market. The drug will successfully treat a painful and terminal illness 55% of the time with only minor side effects, fail to cure the illness 45% of the time with only minor side effects, fail to cure the illness and cause serious and painful side effects 4% of the time and cause a painful death 1% of the time. Since the drug will create more good, or happiness, than bad, it is ethically permissible to sell the drug according to utilitarianism.

You might have guessed that utilitarianism is more closely aligned with moral relativism than moral absolutism.


Another theory that helps sort out ethical issues facing businesses is deontology. In a nutshell, deontological theory holds that there are certain moral rules, also called moral duties, that must be followed. An action is moral if it complies with the duty. On the other hand, if you violate the duty, you commit an immoral act. For example, it's generally accepted that one has a moral duty to keep their promises. Thus, under a theory of deontology, a business breaching a contract would be an immoral act. This is because a contract is a promise and you have a moral duty to keep your promises.

You should note an important difference between utilitarianism and deontology. The consequences of an act define whether the act is moral or immoral under utilitarianism. On the other hand, deontology defines an act as moral or immoral based upon whether the duty was violated regardless of the consequences flowing from the act.

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