Principal Ethical Philosophies In Business Organizations

Discussion

Discuss about the Principal Ethical Philosophies.

The importance of ethics in business can never be overstated. There is no gain stating the fact that organizational success of a company is not merely determined by the financial statements. Rather, the organizational culture or the management philosophy plays an integral role in determining the long-term sustenance of a company. Hence, the moral vision of a company should always be taken into serious consideration. There are two principal ethical philosophies that are usually applied to the business organizations worldwide- Utilitarianism and Deontology (Carroll and Buchholtz 2014). However, the very philosophy underpinning the two theories are highly distinct and contradictory to each other. While on the one hand, Utilitarianism determines the goodness of an action, based on its ability to produce consequences for the greatest number of people, Deontology states that the moral goodness of an action is heavily dependent on its intrinsic value. In other words, even if the end result is not desirable, the action must be guided by a good motive, and the morality lies in the motive rather than the end result. Any business organization is guided by a set of ethical rules and principles that allow it to safeguard the company from various unethical principles (Bowie 2017). Hence, accordingly it is important to analyze the best ethical practice that the business organizations should adopt in today’s world.

Before analyzing which of the two ethical philosophies can help in enhancing the profitability of a company, it is important to develop an understanding of the two ethical theories in the first place. First of all, as far as Utilitarianism is concerned, the ethical theory was introduced by J. S Mill and others, who believed that the morality of an action is heavily reliant on its ability to maximize the overall utility, and promote maximum welfare (Valentinov 2017). The end should justify the means, and the means will barely matter in case of this ethical theory. Accordingly, as per Utilitarianism, even if a pharmaceutical company is well-aware of the fact, that its drug is producing considerable side-effects for a group of people, it will still continue with its production, as the major group of consumers will be able to cure disease without any side-effect. Thus, this particular theory takes up a consequentialist approach and intends to achieve maximum welfare. On the other hand, Deontologist view states that even if the ultimate end of an action is morally desirable, an action may still not be morally just. An action is ethically correct if the doer has a moral purpose behind it, and as such even if the outcome is not desirable, the action should be encouraged, on ground of morality (Vadastreanu et al. 2015). In this connection, it would be interesting to draw the example of a Marijuana drug seller Eddy Lepp, who produced a distinct drug made from Marijuana that had soothing effects on the nausea problems of the Cancer patients. However, the action was also breaking the law of North California, as marijuana was regarded as an addictive drug. Yet since the drug was introduced with the purpose of relieving the Cancer patients, the non-compliance of Lepp with the regulatory framework of the government of the country would be seen as a moral alternative (Swenson 2016). However, the question still remains that if an organization decides to adhere to moral values, which ethical philosophy should it choose.

Utilitarianism Ethical Approach

While discussing about the best moral course of action, it is important to consider the factors which would encourage an organization behave in a morally just way. First of all, once an organization decides to act morally, it can ensure easily value the priorities of the stakeholders- especially the consumers and the employees, which in turn would ensure greater goodwill and higher profitability. A morally strong decision helps an organization enhance its brand recognition, develop customer loyalty, increase employee engagement and ultimately improve its financial position. Considering this, it should be important to understand which of the two above discussed ethical approaches can best serve the needs of the business. The Utilitarianism approach is one where the business tends to be driven by the profit motive. Since the company would aim to achieve the best possible end, often organizations following this approach, would tend to focus on the long-term end, that is the annual profit, while overlooking the ethical questions in the process (Marques 2015). An organization dealing with cloth retail stores, may instantly decide to quit operating business via the physical stores, and quickly choose to move to the online stores. Now, as per the theory of Utilitarianism, this is highly desirable as it would help in ensuring customer convenience, as well as generating huge profit for the administrative and managerial employees, as well as offering high returns to the investors as well. However, the decision may not be ethically justified as it would eventually lead to the elimination of jobs, and would result in unemployment for a large number of people. However, since Utilitarianism would consider the end result, this decision would be morally permissible, as it would help in boosting the sales growth of the organization, assuring the existent stakeholders of maximum profit and return on investment. The company would tend to overlook the harm it does to a small set of people, by highlighting the good done to a larger number of people. However, despite the fact that it has helped in maximizing welfare for a large number of people the action cannot be considered to be a morally just. This is because a morally right action would never land, even a small number of people, in unemployment problem.

On the other hand, when a business organization intends to follow the Deontological approach, it will aim at ensuring overall well-being, without looking at the consequence. Accordingly, even if the end may not be as profitable as expected, its motive will remain morally justified. Once the very motive is true, it is easier for an organization to sustain itself in future (Sacco et al. 2017). For example, an organization may face intense competition from its rival brands, and hence in order to stay in the competition, it starts offering cheaper and yet low quality products to its consumers at cheaper rates. Initially, it might happen that larger number of customers is buying products from this company, simply owing to its low price strategy. However, since the quality itself is not good, the company will not be able to sustain its competitive position for a long period of time. This is exactly the reason why a good motive was essential here. In case, the organization had a good motive, it would have never be driven by the end result of making higher profit, and would have remained mindful of its own vision-to serve its customers better. As a result, the company would have been able to retain its goodwill as a producer of good quality products in the long run. As and when an organization decides to conduct business staying true to its motive, it can easily develop its business in future. However, when the business is driven by the consequentiality of the issue, it might overlook the ethical obligations it has towards its own stakeholders. This will tend to impede the long-term sustainability of the company (Murphy 2016). This is simply the reason why Deontology as an ethical approach is preferred by many.  Another example may be used to illustrate this point. Owing to the sudden increasing gas prices, the then president of Ford, Lee Iaccoca modeled the Ford Pinto, as he wished to rush it into production to compete with the Japanese manufacturers in producing fuel efficient smaller cars. Although during the testing phase, it was being observed that the positioning of the gas tank in the rump of the car left it vulnerable to collisions in rear-end of the car, the fact was dismissed by the company. The reason behind dismissing such an important fact was that the management authority of Ford was driven by a Utilitarianism ethical principle. It was being concluded that since the production of a fuel-efficient car was able to result in greater customer satisfaction, higher return on investments and increased financial revenue, the company could easily do away with its moral responsibility of ensuring consumer safety. While the motive of a car company should have been to ensure safe, high quality cars, Ford miserably failed to adopt a morally sound motive. Now, regardless of the morality question, the consequence of entirely dismissing the importance of working with a good motive, was too hard. In fact, over the following ten years, as many as sixty people were died in fiery accidents, and needless to state that the consumers became aware of the price they would have to pay if they continue buying this model. This undoubtedly ruined the reputation of the company as well. It is clearly evident that there lies a great danger in applying utilitarianism to business. An organization may be focused on the larger picture, and in the process overlook a crucial factor that can threaten the sustainability of the company in the long run (Gawronski and Beer 2016). On the other hand, Deontological approach is completely based on a set of moral values and ideas, and it is its strong adherence to the same, that will prevent the company from taking a step that will threaten its sustainability in future (Xu et al. 2016).

Deontological Approach

Conclusion:

A company driven by the deontological approach will tend to perform the right simply because it is the moral duty of any individual or entity to do the right thing, regardless of the fact whether the ends are favorable or unfavorable. Performing the moral duty is the most important thing as per this approach. Yet one of the drawbacks of this approach is that it tends to undermine the importance of outcome, which can however, threaten the revenue earning capacity of the company (Conway and Gawronski 2013). An organization in order to thrive in a highly competitive market must ensure that it is able to adopt competitive strategies that can help it gain a competitive edge over the other companies. Often companies require reducing the product prices so as to outrival the competition, and the low-price strategy can be profitable when the company does agree to compromise with the quality or quantity of the product (Tenenbaum 2016). Although compromising with safety, as in the case of Ford, is highly unacceptable, yet the company has to be discreet enough where it must adopt strategies that can enhance the profitability, regardless of the morality of the intent. In case an organization is too focused on well-being of each stakeholder, it might end up ruining its own chances of earning huge amount of revenue, which might be compliant with the ideal of a non-profit seeking company, but not a profit-seeking company. There can be no gain stating the fact that deontological approach is the most desirable approach that ensures the equal treatment of each stakeholder, and yet it should be remembered that at times, the approach can appear to be too impractical to be of any use to the managers. On the other hand, since utilitarianism focuses more on the consequence, it pays keen attention to the profitability it helps business managers to make discreet business decisions (Jackson and Smith 2016).

To conclude, the idea of business ethics is a new one, and any organization that intends to survive in a competitive market, must adopt an ethical approach to sustain for a long period of time. This, in fact, is precisely the reason more and more organizations are engaging themselves in corporate social responsibility acts. After critically analyzing as well as evaluating both the ethical approaches, it can be said that though both have its drawbacks and benefits, Deontology is far better an ethical theory when needs to be applied to any business practice. Despite its negligence of the end result, it should be remembered that if the business intent is good, an organization will be able to ensure profit in the long run, if not immediately. Deontology, unlike Utilitarianism, strives to enhance equality amongst employees and ensure overall satisfaction of all the stakeholders concerned. Utilitarianism can easily justify employee exploitation or customer deception as part of its strategy for doing good for the larger group, and hence cannot be deemed to be the better alternative.

References:

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Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.

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Marques, J., 2015. Universalism and Utilitarianism: An Evaluation of Two Popular Moral Theories in Business Decision Making. The Journal of Values-Based Leadership, 8(2), p.3.

Murphy, S.P., 2016. Contemporary Philosophical Faces of Deontology and Consequentialism–John Rawls and Peter Singer. In Responsibility in an Interconnected World (pp. 61-87). Springer International Publishing.

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Xu, Z.X. and Ma, H.K., 2016. How can a deontological decision lead to moral behavior? The moderating role of moral identity. Journal of Business Ethics, 137(3), pp.537-549.