What’s Ethical and What’s Not? A Guide to Ethical Theories

Ethics is the study of what is right and wrong. It examines the principles and values that guide human behavior. In essence, ethics is concerned with the standards that dictate how people should act in various situations. It promotes fairness, respect, integrity, and responsibility.

There are many different theories of ethics. To begin with, ethics emerge from two primary philosophies, “deontology” and “teleology.” Deontology is derived from the Greek word “deont,” meaning binding, and teleology from “telos,” meaning end.

How Are Deontology and Teleology Philosophies Different from Each Other?

Deontological ethics imply that the moral value of the decision is more important than the consequences achieved from that decision. On the other hand, teleological ethics means that the selection or decision depends on the value of the consequences associated with each choice.

Ethics are absolute in the former philosophy and subjective in the latter. In deontology, ethical choices are the only way to live. But, in teleology, one evaluates the choices, weighs the outcomes, and makes a decision that suits most stakeholders because the ends justify the means.

For example, from a deontological perspective, the believer of a religion must follow all the rituals or apply all the learning prescribed by that religion without questioning the externalities, results, or outcomes. However, from a teleological perspective, one may choose secularism and make decisions in a way that benefits the maximum number of people.

An Example of Deontology vs. Teleology in Action

In business ethics, let’s assume a construction company evaluates a proposal to set up a hospital by demolishing a religious place. Suppose the company follows a deontological philosophy, and its code of ethics considers demolishing religious buildings or structures unethical. In that case, the company will not consider accepting the proposal, irrespective of the costs and benefits associated with this proposition.

However, suppose the company follows a teleological philosophy. In that case, the management will evaluate the costs and benefits associated with all the options, and the final decision shall be the one that benefits the maximum number of stakeholders.

Duty Ethics and Utilitarianism

From the above philosophies, two major theories of ethics emerge: duty ethics and utilitarianism. Duty Ethics, emerging from deontology, comprises the body of knowledge led by philosophers like Immanuel Kant. According to this theory, ethical choices are duties. One must fulfill these obligations irrespective of the consequences while living in a society.

For example, one must vote in a democracy regardless of one’s liking or disliking of contemporary politics or eat vegetarian food if prescribed by one’s religion. A business must contribute to community development initiatives through Corporate Social Responsibility (CSR) programs because the business considers it to be its duty to give back to the community and not because it shall create a positive brand image or because it is a legal obligation.

Utilitarianism, on the other hand, emerges from teleology. In utilitarianism, the right, ethical option is the action that creates the greatest good or utility for the most significant number of people. Good refers to utility, value, benefit, happiness, or any positive outcome. According to this theory, decision-making involves listing all options and evaluating the benefits of each option. The option that creates the maximum net positive benefit for maximum stakeholders is to be selected.

An Example of Utilitarianism in Ethical Decision-Making

Let us consider the example of a business organization with the option to decide whether or not it should shift to a more environmentally friendly technology. One option is to continue with the existing technology. This is currently beneficial in terms of cost but can lead to higher costs in the long run. Expected changes in competitors' moves and government policies indicate that the company will eventually have to shift to this technology.

If it does so under pressure later, it will lose out on reputation, economies of scale, and first-mover advantage. Considering a holistic appraisal of the situation, the company will benefit from shifting to the new technology in the long run. It will reduce costs and generate brand equity and government support. Thus, using the utilitarianism concept, investing in new technology will be the better option.

The theory implies that one must consider the net positive benefit created for the firm in the long run. However, assessing outcomes takes time and may involve subjectivity. Further, while considering all the stakeholders, this approach may not favor minority or vulnerable and marginalized stakeholders.

Virtue Ethics

Apart from these theories, one should also be aware of virtue ethics and ethics of care. Virtue ethics explain that one must choose virtue over anything; neither duties nor outcomes affect ethical choices, but what matters is the intention and effort to lead a virtuous life. One selects an option because this is the person one wants to be, regardless of whether it is one’s duty or leads to beneficial outcomes.

For example, a teacher who tries to be empathetic to the students has chosen to be so because the person feels this is how one wants to be; it has nothing to do with expectations of society or the benefits of her empathy for students. In a business context, a firm may operate in a geographical location where business owners present gifts to politicians. They may not be paying them money, but offering gifts in kind. In such cases, the business owner may not agree to this culture because they want to be an entrepreneur who builds their venture without engaging in any form of corruption. They do not agree to present gifts because they believe it is equally unethical.

Care Ethics

Care ethics are based on compassion, empathy, and similar values. They are different from other theories of ethics. Usually, rational humans are expected to rely on reason, rationale, or logic while explaining ethical choices. In duty ethics, the purpose is fulfilling obligations. In utilitarianism, value maximization is the goal. Character building and leading a virtuous life are the outcomes of virtue ethics. But, one may make exceptional decisions in care ethics because the situation demands human values, emotions, nurturing, and a caring attitude.

For example, one may choose to provide benefits to a minority group because they come from an economically disadvantaged section of society and need support to be at par with financially advantaged groups. In a business scenario, one may make exceptions in lending procedures if one feels the client needs support in a difficult time. However, if the organization relies on care ethics to make decisions, the associated risks are favoritism, nepotism, and undue advantage.

In navigating today’s complex business landscape, ethical theories provide valuable guidance. They help business leaders make responsible decisions that balance profit with principles. By understanding frameworks like deontology, teleology, and utilitarianism, companies can clarify their values, anticipate stakeholder expectations, and make decisions that serve both immediate goals and long-term integrity.

Ultimately, these ethical theories remind us that business is not just about financial success but also about positively impacting society and building trust. Embracing ethical thinking in every decision empowers businesses to grow sustainably and fosters a culture of accountability and respect for all stakeholders.

For those looking to get an in-depth understanding of such topics, read Business Ethics Essentials You Always Wanted To Know. It is an easy-to-understand guide to all the essential business ethics concepts, including complex ethical frameworks, tests for ethical decision-making, and future trends in business ethics. This book is a part of Vibrant Publishers’ Self-Learning Management Series and is suitable for entrepreneurs, leaders, and professionals.

This blog is written using excerpts from “Business Ethics Essentials You Always Wanted To Know” by Dr. Ritika Mahajan.

Business Ethics Essentials You Always Wanted To Know - A roadmap to making integrity a core business asset.

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