CHAPTER 2:

DEVELOPING
ETHICAL
HABITS
Virtue Theory

Virtue theory asserts that there is no common

agreement in contemporary society on basic
moral principles because we have lost a sense of
a common cultural tradition from which moral
values spring.

• Virtue theory prioritizes moral development

over rigid moral rules.
• Society lacks common moral principles due to
lost cultural tradition.
• Diverse premises lead to moral disagreements.
• Emotivism: Feelings over rational arguments
drive moral decisions.
• That's why Alasdair MacIntyre labels prevalent
moral views as "emotivism."
Aristotle's Influence on Virtue Theory

• Aristotle's Legacy: Source of moral views defended by MacIntyre.

• Aristotle sees Aristotelian moral tradition as a strong foundation for ethics.
• As he puts it, "The Aristotelian moral tradition is the best example we possess of a
tradition whose adherents are rationally entitled to a high measure of confidence in
its epistemological and moral resources. "

• Aristotle suggests studying heroic lives to develop virtues.

• Virtues manifest in society with honesty, fidelity, honor, and generosity as
exemplars. Stories of heroic actions communicate virtues, per Aristotle.
• History and literature serve as cultural memory, guiding behavior.
• Moral values in business conveyed through stories of leaders upholding ideals.
• "Corporate culture" shaped by founders and executives, discussed in business
journals.
 Challenges and Limitations of
Virtue Theory

Multicultural Challenge Limitations

• Common cultural ideals easier for • Difficult to apply to novel
shared values. situations
• Complexities arise in multicultural, • Lack of guidance in cross-
globalized society. cultural situations
Virtue as Excellence
• "Business Virtue":
⚬ Key term for Aristotle is "virtue."
⚬ "Business virtue" relates to excellence and quality.
⚬ Business leaders emphasize excellence and quality similar to virtue.
⚬ "Virtue" translates imperfectly from Greek "arete." Arete means both moral virtue
and broader excellence.

⚬ Aristotle suggests seeking excellence in all activities, including business.

⚬ Virtue provides an ethical lens for discussing business ethics.
⚬ Offers an alternative to prolonged moral debates and disagreements.

• MacIntyre's Perspective:
⚬ Alasdair MacIntyre argues for a return to virtue ethics..
⚬ MacIntyre proposes virtue as a solution, in line with Aristotelian emphasis.
⚬ Part of society's loss is understanding essential human purpose.
⚬ Virtue ethics offers a path to rediscovering this purpose.
INTELLECTUAL AND MORAL VIRTUES

Aristotle identifies two types of virtue: intellectual and moral.

• Intellectual Virtues:
⚬ Learned through training (e.g., computer skills,
calculus).
⚬ Skills for specific tasks or knowledge.
⚬ Called "intellectual" virtues.
• Moral Virtues:
⚬ Developed through habitual behavior.
⚬ Acquired by engaging in moral activities.
⚬ Called "moral" virtues.
Moral Disposition and Virtue:
Being moral isn't occasional good deeds. Moral person develops
consistent moral disposition through right habits. Middle Honest

• Virtue-focused society conveys values through heroic stories.

• Goal: Develop character traits akin to cultural heroes' qualities.
Straight Sincere
• Pop Culture Impact:
⚬ Modern culture narratives via media influence attitudes.
⚬ Stories shape youth more than formal ethics education.
The Meaning of Justice
• Business Relevance:
⚬ Societal portrayal affects business perceptions.
⚬ Negative portrayal influences youth view on ethics in
business.
• Corporate Culture Influence:
⚬ Within companies, stories shape employee conduct.
⚬ Culture with predatory practices sends the message to
prioritize company interest over ethics.
Intrinsic and Instrumental Goods
• Aristotle's ethics distinguishes between intrinsic and instrumental goods.
• Intrinsic Good: Valued for its own sake (e.g., health).
• Instrumental Good: Contributes to well-being (e.g., exercise for health).
• Example of Health:
⚬ Health is intrinsic good, valued for itself.
⚬ Activities like exercise are instrumental goods, promoting health.
• An instrumental good in one context can become intrinsic in another. Example: Jogging
for pleasure makes it an intrinsic good.
• Aristotle emphasizes happiness as the chief intrinsic good. Various activities contribute
to happiness, which is the ultimate goal. Aristotle contrasts long-term behaviors with
short-term rewards. In contrast to immediate rewards, Aristotle values long-term
outcomes.

Business Applications

• Business's intrinsic goal is long-term profitability.

• Emphasis on sustained success aligns with
Aristotle's approach.
 Business and profits
Modern view shows that Profit contributes to job creation,
economic growth, innovation.

Increase Debate: Profit vs. Social Responsibility:

sensitivity • Economist Milton Friedman: Business's sole
responsibility is profit for shareholders.
• Critique: Businesses have broader commitments
beyond profit for overall success.
Positive Believe in
mindset and yourself and
attitude co-workers Beyond Profit: Factors for Success:
• Importance of product quality, employee treatment,
customer satisfaction.
• Example: Ben & Jerry's - Integrating social goals for
success.
Successful companies focus on values: economic health,
customer service, meaningful impact.
Profit is vital, but not the sole reason for existence.
Broader values linked to better financial performance.
The Individual and the Organization
• Aristotle's emphasis on the importance of friendship
for the achievement of happiness.
• There is a business correlate here: although it does
not seem appropriate to speak of a business having
friends, it can have loyal customers, faithful
stockholders, and dedi?cated workers.

Communitarian vs. Individualistic Capitalism:

• Two forms of capitalism: communitarian and
individualistic.
• Communitarian values in Japan and Germany
vs. individualistic values in the US and UK.
Contrasting Values:
• Individualistic values: entrepreneur, wage
differentials, profit maximization, takeovers.
• Communitarian values: teamwork, social
responsibility, loyalty, industry strategies.
The Individual and the Organization (cont'd)
• In Aristotle's ethics and communitarian capitalism, individuals find meaning in larger entities.
• Loyalty to business and workers crucial; contrasts with shareholder-focused capitalism.
• Communitarian approach fosters group solidarity, commitment to firm goals.
• People-centric approach challenges extreme individualism; examples of "familial relations" in
American companies
 The Role of Moderation
Aristotle defines virtue: "Virtue, then, is a state of character concerned with choice, lying in a
mean, i.e., the mean relative to us, this being determined by a rational principle, and by that
principle by which the man of practical wisdom would determine it. "

Goodpaster and Matthews' response: Corporations can pursue profit without sacrificing moral
responsibility by balancing survival, stability, growth, and moral responsibility.

Moderation and Enlightened Self-Interest:

• Reinforcing the emphasis on enlightened self-interest.
• Highlighting that achieving other goals leads to happiness and profit.
• Testimonies from business leaders supporting this perspective.

Example from Ford Motor Company:

• Central objective: earning return on investment, but shifting focus to customer
service.
• Acknowledging importance of costs and quality, with customer satisfaction as core.
Moral Development

KOHLBERG'S MORAL LEVELS

• Kohlberg's research describes stages of individual moral
development.
• Three main stages: Preconventional, Conventional,
Postconventional.
• Each stage subdivided into two levels, resulting in six
possible stages.
 Preconventional Level: Punishment and Reward:
• First level: Preconventional; centered on
punishment and reward.
• Moral judgments based on consequences to
Preconventional self.
Level: Punishment Conventional Level: Seeking Approval and
and Reward Authority:
• Second level: Conventional; seeking approval,
submitting to authority.
• Morality based on societal norms and others'
opinions.
Postconventional Postconventional Level: General Welfare and
Conventional
Level: General Universal Principles:
Level: Seeking
Welfare and • Third level: Postconventional; highest stage of
Approval and
Universal moral development.
Authority
Principles
• Focus on general welfare, acting by universal
moral principles.
Implications and Interactions: Company's Moral Stages:
• Higher levels involve universal • Applying Kohlberg's stages
moral principles, more to corporate behavior.
advanced. • Corporate culture's role in
• Interactions between influencing business
individuals at different stages practices.
can lead to conflicts. • Link to exploring corporate
• Supervisor-employee scenarios culture's impact in later
with differing orientations. chapter.
Thank You