Ethical theories can be classified into the following types:

  1. Consequential Theories: Consequential theories of ethics emphasize the consequences or results of behaviour. John Stuart Mill's Utilitarianism, a well-known consequential theory suggests that right and wrong is determined by the consequences of the action. "Good" is the ultimate moral value, and we should maximize the most good for the greatest number of people. But do good ethics makes for good business? Right actions do not always produce good consequences, and good consequences do not always follow from right actions.
  2. Using the "greatest number" criterion can we imply that minorities be excluded. Should an issue that may be important for a minority but unimportant for the majority is ignored? These are but a few of the dilemmas raided by utilitarianism.

  3. Rule-based Theories: In contrast, rule-based theories of ethics emphasize the character of the act itself, not its effects, in arriving at universal moral rights and wrongs. Moral rights, the basis for legal rights, are associated with such theories.
  4. Companies and business enterprises are more prone to subscribe to consequential ethics than rule-based ethics, in part due to the persuasive arguments of the Scottish political economist Adam Smith. He believed that the self-interest of human beings is God's providence, not the government's. Smith set forth a doctrine of natural liberty, presenting the classical argument for open market competition and free trade. Within this framework, people should be allowed to pursue what is in their economic self-interest, and the natural efficiency of the market place would serve the well being of society.

    However, Immanuel, Kant argued that individuals should be treated with respect and dignity, and that they should not be used as a means to an end. He argued that we should put over selves in the other person's position and asks if we would make the same decision if we were in the other person's situation.

  5. Cultural Theories: The theory emphasises respect for different cultural values.
  6. Cultural relativism contends that there are no universal ethical principles and that people should not impose universal ethical principles and that people should not impose their own ethical standards on others. Local standards should be the guides for ethical behaviour. This theory operates under the old adage "when in Rome do as the Romans do". Strict adherence to cultural relativism can lead individuals to deny their accountability for their own decisions and to avoid difficult ethical dilemmas.

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Principles of Management and Organisational Behaviour Topics