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Business Ethics. Utilitarianism and Kantianism

Utilitarianism, as a theory, determines the moral/ ethical soundness of an act or lack thereof, on the basis of related consequences. In the strictest sense of utilitarian thought, an act is moral if it results to the greatest good of the greatest number of people (Melden, 2008, 56). It has a similar perspective to the consequential theory, in that they both judge an act on the basis of the good that comes out of it. For instance, it would be morally right if a bus driver overran a child crossing the road if avoiding him would have endangered the lives of several passengers. In the corporate world, utilitarianism comes into play when managers make economically sound decisions, but in the process overlook or ignore some moral considerations. An example is when a bribe is given to clinch a lucrative contract. Bribery is wrong, but the action is justified since the company makes a profit from the contract and at the same time, creates employment opportunities in terms of the manpower that will be hired.

However, some extreme interpretations of utilitarianism border absurdity, thus sparking the argument on how good a result should be to justify action. For instance, we know that the war against terrorism portends the greatest good to all mankind. Thus, an arms manufacturer finds justification in supplying governments with weapons to protect the majority by killing minority terrorists but nonetheless minting profits in the process. Utilitarianism, therefore, fails when it values profits regardless of the means, and favors the majority at the expense of the minority. Take for example a manager at Lexington, whose company has been contracted by the US government to supply ammunition to be used in the infamous war against terrorism. Good business manners determine that he grabs the deal in the best interests of the shareholder. On the same breadth, his conscience is pricked by the knowledge that his actions, i.e. accepting the contract, would aid in the termination of human life. By rule utilitarianism, this is disrespect of human life and other people’s rights (Chryssides and Kaler, 2009 p 135). How many innocent Afghan children are going to die as ‘collateral damage’ in the process? If hauling a few missiles in a crowded place would eliminate Taliban fugitives, why not sell them to our good government fighting the bad boys? But is it morally right? And there lies the dilemma of utilitarian principles (Frederick 2002, p 27).

The Kantian ethics posit that an act is morally provided it is informed by reason and noble motive (Kant, 2001 p 138). It departs from the utilitarian paradigm by emphasizing the act itself rather than the consequences (Cory 2004, p 17). It appeals to the human capacity to make rational decisions, which reflect universally acceptable rationales. In this case, none of the above actions would qualify as moral. By reason, you should not kill knowingly even if the worth of the kid’s life pales against sixty adult passengers, or the extinction of a few al Qaeda radicals will make the world a safe place to live. The other tenet of Kantian thought is that emotions and passion are not grounds for doing a moral act. Accordingly, it is not moral to donate to the Red Cross because you were moved by TV pictures of emaciated and starving children in Darfur. But it would be right if giving out is a humanly act that by reason, all people of means should pursue. So weeping at funerals out of emotion is not morally right after all, right?

In matters business-wise, Kantianism is reflected in the wider aspect of corporate responsibility, where companies donate to charities in times of humanitarian crisis (Bowie 1999, p 124). Why did organizations contribute to the Haitian cause? Was it because of the moving sights of starving victims or purely on principle? But perhaps more apt is the application of the shareholder model of business management that significantly appeals to reason and respectively, finds justification in Kantianism. According to the theory, the role of corporations is to maximize profits for investors at whatever costs. Accordingly, managers should make decisions that direct all the company’s efforts to the realization of profits regardless of the means or consequences (Fredrick 2002, p 16). Let’s take the issue of industrial pollution and environmental conservation. It is widely accepted that treating industrial pollutants before discharging them into the environment helps to reduce environmental pollution and by extension, the risks associated with global warming. However, the treatment of discharges translates into higher operating expenses that eat into the company’s profits. So what would a manager do when faced with this dilemma? Kantianism determines that skipping the process is justified by good reason: addressing the shareholder’s interests of maximizing profits. At the same time, it is reasonably sound to argue that reducing profits to save the environment is equally a good cause. Thus, Kantianism’s major shortcoming is its weakness of interpretation, which makes it difficult to determine the more reasonable reason when you have two options.

The theories of utilitarianism and Kantianism play a central role in the decisions making processes that have a bearing on business ethics. Advertising decisions are one area of business marketing that reflects business practices versus ethical considerations. Advertisement as a business promotion strategy aims to persuade, woo and convince consumers to purchase the advertised product (Jones and Parker 2005, p 165). However, the law determines that the consumer should not be misled through misinformation or exaggerations. Thus, a claim on a drug seal-like ‘Cures Ulcers Immediately’ should be true and probable. At the same time, the law cushions the advertiser if sufficient information has been provided to help the consumer make an informed decision. However, “Lose Weight for 20 Dollars” on a diet product does not hold the manufacturer liable if the desired results are not realized. It remains that the principle of interpretation applies, and the manufacturer did not specifically state how many pounds of weight to lost within a given period of time. Other additional information like ‘terms and conditions’ apply to protect the company from legal liability. Regardless, even when the law protects a company against misinformation, utilitarianism will guide a company’s decisions in protecting consumer rights.

In workplaces, the theoretical approaches define how individuals interpret their actions, especially in relation to personal use of company property (Rendtorff 2005, p 91). Consider a situation where Lonnie, a management trainee, discovers that her supervisor Mark has pirated the company’s auditing software for personal use. He is working part-time for other firms, which is affecting his present job since he leaves early and reports late. He justifies his actions that the management has let him down by denying him a partnership, despite his seventeen years of service. He is faced with extra bills in school fees for his son and medical expenses which he could have afforded if he became a partner. Lonnie dreads to report the matter for fear of negative reports from her boss. Neither could she quit her job as it will be hard to get another equally paying job. There is also her husband’s business and so she can’t move to another town in search of a job. Finally, Mark confronts her with a sense of guilt by pointing out that she too had been stealing from the company by using the company phone for personal calls and computers to copy documents for her church. So she lets the matter rest as a compromise.

Lonnie is confronted with three ethical issues: using the company phone and computer for matters unrelated to her job and most importantly, withholding information about Jack’s conduct. In so doing, she becomes an accomplice in his crime and an unreliable employee. The church, on its part, has illegally benefited from the company’s resources without the latter’s knowledge. This will tarnish its image and put it in conflict with the company.

Lastly, the company’s management has reneged on its agreement to offer Jack a partnership at the end of the ten-year period. This is a breach of trust between the employer and employee, which undermines a company’s reputation. It has a negative financial impact on Jack, who will not be able to pay for his son’s university education and personal medical bills.

From a utilitarianism perspective, some of the involved stakeholders’ actions could be justified as sound. It holds that an action is good if it achieves desirable and profitable results for the greatest number of people. Its advantages in this regard are the utilization of resources to benefit more people. Mark is operating on this line since the pirated software will enable him to start his own company and generate more income to take care of his son’s education and medical bills. By keeping the software secret, it is not helping many people as it would if it is put into wider use, just as Mark is doing. Technically, no loss is incurred by the company by the piracy. Similarly, leaving early has the advantage of serving many clients and therefore, utilizing time for the common good of his part-time employers and his family. Despite the fact that he is using pirated software, his clients receive cheap services which reduces their operating expenses.

Lonnie’s actions are also good despite failing on her responsibility to report matters that affect the company. She has saved on her expenses by using the company’s phone. She has also contributed to society by helping the church using the company’s computer. By letting her do the job, the church had saved money that could be used in other projects. By withholding information, she has protected her job, and so will be able to help her husband in paying their mortgage bills. Additionally, reporting the matter could possibly see jack lose his job, which could have devastating financial consequences on him. His son will not go to university and he won’t pay his medical bills. By seeking the common good, the positive side of it is that the company retains its two employees and a possible conflict is avoided if the matter was reported. It is a cognitive shortcut (Bazerma, 2005, p 3) that people use to avoid conflicts.

A utilitarian approach by the management could have avoided the actions Mark. If the management had cared for the greatest good, it could not have denied Mark a partnership. By acting otherwise, they have jeopardized his efforts to educate his son and meet other pressing needs. In addition, they have caused him to adopt unconventional means to compensate for his loss. Consequently, he is less committed to his job; he has lost his loyalty and cost the company commitment of services by one of its longest-serving and reliable employees.

Nonetheless, a utilitarian approach is equally damaging to involved parties. By seeking the greatest benefit, Mark violates his responsibility to guard company secrets. By coming to work late and leaving earlier affects the company for denying its value for the wages it pays. In this light, utilitarianism has the shortcomings of overlooking the long-term consequences of management decisions. The pursuit of the common good can compromise other ethical aspects such as responsibility, loyalty, and integrity. The clients that Mark serves have acted unethically by utilizing another company’s resources and employees. Similarly, Mark has breached his agreement to keep the company’s secrets from outsiders. As a senior employee, he displayed irresponsibility by leaving work at will to pursue personal interests. For these reasons, utilitarianism promotes a tendency for individuals to renege on agreements, which can hurt the other party.

Kantianism appeals to the use of reason to make decisions. The dilemma, however, is that it is not established yet whether good reasoning gives rise to a sense of ethics, or it is ethics that informs good reasoning. For instance, why do you thank the Human Resource Manager after signing your appointment letter? Is it because you feel somebody has done you a favor, or because it is simply a matter of courtesy? But then, how honestly will you thank the secretary who tells you “Sorry sir, your application was not successful?” Thank you indeed!

And now closer to the issue at hand, late last year, we decided with a couple of friends to let September 11 just pass without our knowledge. In that case, a sober mind was our last concern: so on 10th at midnight, we sought refuge in a club. At dawn when we were leaving, we bumped into a coursemate staggering down the staircase. We offered a lift and drove her home. Two months later, she sent an invitation to a party for an association she chairs. She stated: “I think I still owe you guys for that lift. I’ll be honored to have you at my club’s bash. Please purpose to be there. Once again, thanks a lot.” Well, we attended, but it never occurred to any of us that it had any ethical implications.

Now that I think about it, I’m tempted to question the basis of her decision to pick on us. It was not that she was dying to have her best friends, right? That we were acquainted is obvious, that we would feature in her “mind’s list’ of possible invitees is probable: but that she would actually invite us; ridiculous! Yet she did. It means then that some other factors, most likely of personal concern informed her show of ‘friendship’. Why do I now question it? Because by this invitation, somebody else more deserving, was excluded. In light of Kantianism, her decision is not a reflection of rationality that would be acceptable to everybody, anywhere, anytime. She did what other members would have opposed.

So much of the detour: back to our question. I was a leader of a team that awarded a lucrative deal to a contractor firm. A promotion followed for the team members and we decided to have a celebratory luncheon. Then an executive of the beneficiary company felt generous enough to reward our good job with an unlimited indulgence of our appetites. He had dropped a message that in fact, he had left his credit card with the owner of the restaurant and that we should feel free in having a great time with him. To this, we could have either agreed and compromise our integrity, or turn the offer down and offend our host and by extension, undermine future relations between the two organizations. To make an ethical decision then called for a critical analysis of the situation in the context of Kantian thought.

The theory of Kantianism stipulates that society desires the best for all members. By individual decisions, other people outside one’s immediate circumstances are affected, either negatively or positively. It is at this point that Immanuel Kant appeals to our reasoning capacity to make positive judgments in terms of their implications. On the whole, our decisions should be acceptable within the wider spectrum of society.

The executive’s show of generosity is subject to many Kantian interpretations. It could be an indirect way of giving something small for awarding his company the contract. This is so especially if the contract was subjected to competitive bidding. If such be the case, then the offer is unacceptable on grounds of integrity on our part and the organization we represented. Not to offend him, regardless, a gentle refusal to the effect that we’d already lunched and we were grateful anyway could have settled it down. It then occurs to me that were it not for the decision to celebrate our promotion, we wouldn’t be in a hotel and a fictitious excuse would have been a very tempting escape route; which amounts to lying.

Perhaps the executive comes from a culture where dishing out goodies in this manner is the standard way of saying thank you, and therefore he does not see any harm in his act. However, culture is too narrow a concept to encompass the principles of Kantian thinking (Kor and Mahoney 2001, p 235). What we aspire for are those general qualities of corporate management that reflect the values and norms of conduct and behavior informed by rational reasoning. It would be inappropriate therefore to accept the offer on these grounds, for only in total disregard of other people’s rationale will such a decision be justified. Nevertheless, the insight provided by Kantianism is determining whether the efforts of my staff in awarding the contract involved some sort of underground lobbying and canvassing before the vote. Thus, the theory provides a rational basis for judging and evaluating situations before taking an action (Fernando 2005, p 34).

On the other hand, you realize we will be in the mess already if we smoothed the way before the deal. Of what consequence then will a decision either way be? By Kantian thought, good reason will determine that a wrong has already been committed, and there is nothing subsequent good conduct can reverse. In this sense, this theory in relation to business conduct is limited in that it justifies further wrong doing on ‘reasons’ of previous actions. For, indeed, it wouldn’t make any ethical sense to seal a dubious deal and then refuse a disguised kickback in the pretense of ethics. If reason justifies a wrong, then Kantianism fails in providing alternative avenues that are acceptable despite the fact that they defy logic.

Good logic could cast doubt on the executive’s decision of leaving his card with a restaurant owner. It reveals the unethical nature of the whole arrangement. Apparently, has already informed somebody that some top bigwigs of a certain organization helped his company grab a contract worth a staggering value, and in reciprocation, would like to make them stagger with delicacies. Does that say anything about our organization? A lot: that the way to its boardroom is via the stomachs of its management (Janes 2009, p 134). That is not a virtue worth being proud of, east of all an ethical one. On this score then, Kantianism helps business managers in making informed decisions in relation to dealings and associations with business partners.

The second point is the question of having a great time on his account. Whose money is the accountant being extravagant with? It doesn’t seem quite probable that an employee would put his wallet at the service of his employer to massage the appetites of people with high connections. I notice that our friend was not a general manager, let alone a public relations officer. It is unclear in what capacity he played the role of fostering inter-organizational relations (Wernerfelt 1984, p 173). It reveals a lot that his position affords him the capacity to do what he is attempting to do; sprinkle a few coins here and there to influence decisions. In the corporate world, this would be a very unethical trend to promote for institutional managers. It is incompatible with business practices anywhere in the world. Besides, it projects a company’s image and character as corrupt. Once again, Kantianism provides a rationale for avoiding unethical relations between corporate players by acting in ways that agree with the principles of business ethics (Rendtorff 2009, p 119).

So what if the whole process was transparent and the executive’s intentions are noble? Well, I worked with ‘a staff’, meaning a number of company employees. It does not therefore justify just the four of us to take the credit. At the same time, it won’t be acceptable to demand a package for the entire organization. The former shows selfishness and the latter greed and ingratitude. And yet, we can’t turn the offer down outright without offending our benefactor, since the services have already been paid for. It is at this point that reason alone, i.e. giving a logical excuse for acting either way will not serve the involved parties’ best interests. However, it should be emphasized that the purpose of business ethics is to promote acceptable corporate practices (Machan and Chesher 2002, p 188). If doing the right thing is the criterion of conduct, then reason alone is not sufficient in informing decisions since some acceptable actions are somewhat irrational. In this case, turning the offer down is the most ethical thing to do. But then, its logic may be lost to our benefactor since people do not always share rationales. One of Kantianism’s limitations, it turns out, is its inability to solve dilemma situations. Nonetheless, a utilitarian approach will solve such a situation since it avoids selfish interests. Accordingly, a consideration of the greatest numb of people will suggest that the gift be dedicated to a charity project.

In conclusion, I take Kantian ethics to be more suitable in determining human conduct. The emphasis on reason subjects all actions to rational scrutiny before they are acted out (Machan and Chesher 2002, p 41). Rationality determines what would be acceptable universally, i.e. what anybody else of sound mind would have preferred, implying doing what is best for all people. It at once embraces the positive elements of utilitarianism, while at the same time judging actions within the wider scheme of things. As Emmanuel Kant once said, “We have to rely on ourselves: we become our own author….our own authority, and we have to use and appeal to our capacity to reason and think” (Kant 2001 p 139).


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