Sources of Ethical Standards in Business

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  • 0:00 Ethics
  • 1:10 Consequentialist Theories
  • 2:52 Non-Consequentialist Theories
  • 4:28 Agent-Centered Theories
  • 5:38 Putting It All Together
  • 5:53 Lesson Summary
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Lesson Transcript
Instructor: Rachel Shipley

Rachel has worked with several businesses developing policies on customer experience and administration.

In this lesson, we'll examine how philosophers and ethicists have helped us develop ethical standards, and we'll also discuss some of the critical questions on which ethics are based.


Have you ever witnessed a colleague being terminated for unethical behavior and said to yourself, 'I would never do that, how did they not know that what they did was unethical?' In fact, it may be easier than you think to fall into unethical situations. Ethics are defined as moral principles that govern a person's or group's behavior. What is ethical to some people may not be seen as ethical to others. So how do you decide what is or isn't moral for a general group of persons?

According to philosophers and ethicists, ethics aren't based on feelings, religion, law, accepted social practice, or on science. But if they aren't based on any of these, then what are they based on? Well, luckily philosophers and ethicists have given us a lot to help answer this question and while ethics can be broadly interpreted, there are three general categories of theories into which we can break down approaches to ethics that have similar traits: consequentialist, non-consequentialist, and agent-centered theories. Let's discuss each of these theories and the corresponding ethical approaches in turn.

Consequentialist Theories

Consequentialist theories typically focus on ethical consequences from specific actions and include at least three distinct approaches: utilitarian, egoistic, and common good approaches.

The utilitarian approach takes an individual's actions and then categorizes them as right or wrong based on the amount of pleasure or pain that those actions produce in society as a whole. Let's say that a pharmaceutical company is rolling out a new drug that the government has approved. It has known side effects, but is released anyhow because the disease that the drug successfully treats is more damaging than the side effects. This shows how the utilitarian approach often reflects the mentality that 'the end justifies the means.'

The egoistic approach, also known as the self-interest approach, uses the same calculations as the utilitarian approach to reveal the results of the greatest amount of good, but it treats the good of society as only a byproduct of following individual self-interest. As an example, let's look at Bernie Madoff, who stole from the pockets of even those who were closest to him as he perpetrated investment and other financial frauds. If you were to evaluate Mr. Madoff using the egoistic approach, your ethical considerations would revolve around asking if his actions benefited himself directly and society indirectly.

The common good approach is guided by the general will of the people, meaning the good of the group itself is the focal point. In business this could be exemplified by providing affordable health care to all employees. While it may be less expensive for some employees if the company structures their insurance in certain ways, that might not cover everyone's needs, and thus isn't for the good of the whole group.

Non-Consequentialist Theories

Non-consequentialist theories focus on the intentions of the individual making ethical decisions about specific actions. At least three specific approaches fall under this category: the duty-based, the rights, and the fairness/justice approaches.

When customer service managers are given the authority to determine when to make exceptions to a store's merchandise return policy and they choose to follow the letter of the law and make very few exceptions outside of the written policy, they're considered followers of the duty-based approach to ethics. They have the ability to make decisions based on what they believe to be right, but their duty to the policy runs deeper than what their heart is saying.

The rights approach is largely based on duty-based ethics, but directly states that the best ethical action is one that'll preserve the rights of the people who are affected by that action. This approach is motivated by the belief that all humans are given dignity, and treating people humanely is a requirement. Some people now argue that this approach should also be extended to animals and certain non-humans, such as robots.

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