1-1

CHAPTER 2
THE PHILOSOPHICAL
BACKGROUND OF
BUSINESS ETHICS
 1-2

INTRODUCTION
Business ethics as an applied branch of General Ethics
must be studied from the perspective of
philosophy. This is because ethics is part of
philosophy and it is unthinkable to discuss ethical
concepts and moral principles without being
philosophical. Secondly, the process of moral
reasoning involves the use of metaphysical
terminologies and concepts that is best understood
only in the light of philosophical abstractions.

McGraw-Hill/Irwin
Principles of Management © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
 1-3

WHAT IS PHILOSOPHY?
• It came from two Greek words
“philos,” which means love,
and “sophia,” which means
wisdom. Philosophy means
“love of wisdom.”
 1-4

As a Science
• Philosophy is interested with the
meaning of reality including our human
experiences. It is a science that seeks
to explain the ultimate cause of
everything by the use of human reason
alone. To philosophize means to
wonder about life, to question reality
and to find sense in what we do as
human beings.
 Other definitions of
1-5

philosophy
1. Philosophy, according to Plato, is the
highest form of inquiry.
2. For William James, philosophy is a
collective name for questions that have
not been answered to the satisfaction of
the one asking the question.
e.g. (Who am I? How do I live? Where
am I going?)
 1-6

3. For some, philosophy is the world

view of the person or the person’s
philosophic view of the universe or
reality in relation to the purpose of
actions and events.
(Peter Parker, a.k.a. Spiderman has
his own philosophy – “with great
power comes great responsibility.”)
 1-7

4. For others, philosophy is a

conceptual analysis or thinking
about thinking or simply reflecting
on the contents of our thoughts.
5. Still for others, philosophy is
primarily concerned with finding
the meaning and worth of
reality including our
human experiences.
 1-8

6. Philosophy is also
defined as the science
that studies the ultimate
causes or explanation of
things attained by the use
of human
resource alone.
 1-9

DIVISIONS OF PHILOSOPHY

1.Theoretical or Speculative
Philosophy- studies the truth
to be known.
e.g., God, immortality of the
soul, origin of the universe.
 1 - 10

DIVISIONS OF PHILOSOPHY
2. Practical Philosophy
- studies truths to be
acted upon.
e.g., ethics, axiology,
semantics.
 Under Theoretical or
1 - 11

Speculative Philosophy
a. COSMOLOGY – is a subject that
studies the origin and destiny of
the universe, evolution and the
ultimate fate of the entire
universe. The “universe” comes
from the Greek word “kosmos.”
 Under Theoretical or
1 - 12

Speculative Philosophy
b. ONTOLOGY – deals with the
nature of existence of things and
the status of reality. The word
“onta” is a Greek word which
means “being.” It is also referred
as the theory of being.
 1 - 13

Under Theoretical or
Speculative Philosophy
c. METAPHYSICS– came from the Greek
words – meta (beyond) and physikon
(nature).
As a branch of philosophy, metaphysics
studies the nature of the mind, the self and
consciousness. It also investigates the
nature of religion, existence of God, the
concepts of time, space, cause and chance.
 1 - 14

Under Theoretical or
Speculative Philosophy
d. PSYCHOLOGY – for the Greeks was basically a
study about the nature of the soul of the
person and other entities. It was the
philosopher Aristotle who coined the word
Psychology which came from the Greek words
– psyche meaning soul and logos meaning
science or study. Today, it is defined as a
science that studies human and animal
behavior.
 1 - 15

Under Theoretical or
Speculative Philosophy
e. Theodicy – is also known as Rational
Theology.
-came from the Greek words – theos
meaning God and dike meaning justice.
As a branch in philosophy, Theodicy
investigates the nature, being and the
attributes of God not based on the bible and
divine revelation but by logical abstractions
and reasoning.
 1 - 16

Under Theoretical or
Speculative Philosophy
f. EPISTEMOLOGY – comes from the
word episteme meaning
knowledge. It is a branch of
philosophy that addresses the
philosophical problems surrounding
the theory of knowledge.
 1 - 17

Epistemology
Is concerned with:
1.The definition of knowledge and related
concept.
2.Sources and criteria of knowledge.
3.Kinds of knowledge possible.
The degree of its veracity and the exact
relation between the one who knows
and the object known.
 1 - 18

UNDER PRACTICAL
PHILOSOPHY ARE:
a. SEMANTICS – came from the
Greek words sema meaning sign or
mark and semantikos meaning
significant. This practical branch of
philosophy studies the meaning of
words and its linguistic forms, their
functions and their relationship to
other words.
 UNDER PRACTICAL 1 - 19

PHILOSOPHY ARE:
b. AXIOLOGY – came from the Greek
words axios meaning worthy, and
logos, meaning discourse or study.
Axiology is thus the discourse or
study of the philosophy or system of
value judgments or worthiness. It
studies values, its origin, types and
characteristics.
 1 - 20

UNDER PRACTICAL
PHILOSOPHY ARE:
c. AESTHETICS – it is the branch of
philosophy that aims to establish the
general principles of art and beauty. It is
the study of beauty and art.
- came from the Greek word aisthetikos
which means one is perceptive of things
through his sensations, feelings and
intuitions.
 UNDER PRACTICAL 1 - 21

PHILOSOPHY ARE:
d.LOGIC - deals with the nature of
thinking and reasoning using empirical
support to establish the truth. It is
the study aimed at determining the
conditions under which one is justified
in passing from given statement,
called premises, to a conclusion that is
claimed to follow from them.
 REASONING
1 - 22

• DEDUCTIVE REASONING –reasoning

from universal truth to particular.
Ex. All men are mortal, I am a man, therefore I am mortal.
All living things need water to survive, frogs are living organisms, therefore, frog
needs water to survive.

• INDUCTIVE REASONING – reasoning

from particular to universal or general
principles.
Ex. All my brothers are athletic, therefore all boys are athletic.
 UNDER PRACTICAL
1 - 23

PHILOSOPHY ARE:
e. ETHICS - Comes from the Greek
word
ethos, meaning character or a
“characteristic way of acting” which
is proper to man as a rational being.
The goal of ethics as a science is to
investigate the nature of the human
act or human conduct.
 DISTINCTION BETWEEN
1 - 24

ETHICS AND MORALITY

• MORALITY – refers to the quality of
goodness or badness in a human
act. Good is described as moral
and bad as immoral. It means
conformity to the rules of right
conduct. It implies judgment and
refers to what we would call moral
standards and moral conduct.
 DISTINCTION BETWEEN
1 - 25

ETHICS AND MORALITY

• ETHICS – involves the study of those standards
and judgments which people create. Ethics
assumes that the standards exists and seeks
to describe them, to evaluate them, or to
evaluate the premises upon which those
standards exist. Ethics basically investigates
the nature of moral principles, ethical
systems and moral norms that people use to
justify their moral judgments.
• Morality is nothing else but a doing of ethics.
 1 - 26

Ethics as a Normative Science

• Ethics is a branch of Philosophy and is
considered a normative science because it is
concerned with the systematic study of the
norms of human conduct.
• It also involves a systematic search for moral
principles and norms that are used to justify
our moral judgments.
 1 - 27

Three Categories of General Ethics

1. Descriptive Ethics- consists of
studying and describing the morality
of people, culture or society. It also
makes comparisons and contrasts on
the different values, principles, code
of ethics, beliefs and practices of
people.
 1 - 28

Examples:
Psychological Egoism – a concrete
example of Descriptive Ethics is the
study of human motivation. It says
nothing about what is good or bad
or right or wrong, rather it simply
declares results based on various
scientific studies.
 1 - 29

Examples:
Cultural Relativism- does not prescribe how
people should act, rather it describes how
people, when grouped and observed in
their own cultural realities, actually differ
in their behavior.
What is good or bad, moral or immoral
according to this theory is relative to the
people’s own culture or sets of cultural
beliefs and practices.
 1 - 30

Three Categories of General Ethics

2. Normative Ethics – involves moral
judgment based on ethical norm or
theory. This consists both of the
basic moral principles and values and
the particular moral rules that govern
people’s behavior, which is right or
moral and wrong or immoral.
 1 - 31

Three Tasks of Normative Ethics:

a. To form into a related whole the various
norms, rules and values of a society’s
morality.
b. To find the basic principle from which
the particular norm can be derived.
c. To justify an ethical norm or moral
principle.
 1 - 32

Three Categories of General Ethics

3. Metaethics – is a branch of Normative Ethics.
It is concerned with analysis of the meaning of
words and the logic of moral reasoning.
e.g. It analyzes moral terms like good, bad, moral,
immoral, or moral obligation.
It does not describe moral beliefs of people, does
not evaluate the process of moral reasoning
but simply analyzes the usage and meaning of
words.
 1 - 33

The Problem of Ethical Relativism

and Situation Ethics
• Ethical Relativism – claims that when
any two cultures or any people hold
different moral values of an action, both
can be right. An action may be right for
one person or society and the same
action taken in the same way may be
wrong for another reason, and yet, both
persons are equally correct.
 APPROACHES TO
1 - 34

MORAL DIFFERENCES
a. There is No Moral Truth.
This philosophical perspective believes
that there is no ultimate right or wrong.
This view is called moral nihilism. Moral
Nihilism is akin to moral skepticism
which holds that we cannot know
whether or not there are moral truths.
 1 - 35

APPROACHES TO
MORAL DIFFERENCES
b. There is No Universal Moral Truth
Each culture has its own set of rules that are
valid for that culture, and we have no right to
interfere, just as they have no right to
interfere with our rules. This view is known as
ethical relativism. This ethical paradigm
maintains that there are moral truths that
exist but these truths are relative and
dependent on cultures and beliefs of people.
 1 - 36

APPROACHES TO
MORAL DIFFERENCES
c. Deep Down, We Can Find Basic Moral
Truths
This philosophical perspective believes
that despite differences, people of
different cultures can still agree on certain
moral basics. People find some common
ground on basic moral principles. This is
called soft universalism.
 APPROACHES TO 1 - 37

MORAL DIFFERENCES
d. There Is One Universal Moral Truth
This view is also known as hard
universalism or moral absolutism. This
moral paradigm maintains that there is
only one universal moral code that
everybody must follow. Because this
moral code is universal and objective,
moral problems and moral conflicts can
be solved through proper moral
reasoning.(declaration of Human Rights)
 1 - 38

ETHICAL RELATIVISM
Claims that when any two cultures or any
people hold different moral values of an
action, both can be right. An action may
be right for one person or society and
the same action take in the same way
may be wrong for another reason, and
yet, both persons are equally correct.
(Ethical relativism emphasizes the differences of moral beliefs and practices from the
point of view of culture, situational ethics (or moral subjectivism) emphasizes
moral differences based on personal beliefs and convictions.)
 1 - 39

DEONTOLOGICAL ETHICS
- Or non-consequentialist approach is a
body of ethical theories that measures
and evaluates the nature of a moral act
based on the validity of the motive of an
act. This means that if motive or
intention of the act is good, then
regardless of the consequences, the
whole action is good.
 1 - 40

Examples of Deontological Ethics:

1. Kantian Ethics or Kantianism – this is also
known as the categorical imperative
approach, the idea that one should always
base his actions on maxims or rules that are
believed to be universal. For Kant, the moral
goodness or badness of the act does not
depend on the consequences of the act but
on the motive or intention of the actor.
e.g. The motive is good if it is an expression of the person’s
sense of duty.
 1 - 41

Examples of Deontological Ethics:

2. Divine Command Theory – This ethical theory
holds that the standard or right or wrong is the
will or law of God. The Christian ethics is an
example of an ethical system that uses the
deontological approach in evaluating the
morality of human conduct.
e.g. the will of God is expressed in the Bible in the
traditions of the Roman Catholic Church. If an
act violates these sacred sources of morality,
then the act is unethical regardless of its
perceived or actual consequences.
 1 - 42

TELEOLOGICAL ETHICS
• The word teleology came from the Greek
word tele which means far or remote.
Teleological Ethics or the consequentialist
theory measures the morality of an action
based on its consequences and not on the
motive or intention of the actor.
• If the consequence of the act is good,
regardless of the motive, then act is always
morally good.
 1 - 43

Examples of Teleological Ethics:

1. Hedonism or the view that pleasure
(regardless whether the pleasure is
mental or physical, but mostly
sensual) is the only good as an end.
e.g. Drinking till the last drop, or
eating until you cannot swallow are
some examples of a good action
that should be pursued.
 1 - 44

Examples of Teleological Ethics:

2. Utilitarianism – This school of thought
maintains that “the greatest good is the
greatest happiness or pleasure of the
greatest number.” This means that if the
action can provide the greatest happiness
to the greatest number of people who are
affected by the action, then the action is
considered to be morally good.
e.g. For instance, if stealing will enable me to help many poor
people, then stealing becomes good.
 1 - 45

The “Moral Sense” in Us

 According to Aquinas, the moral
sense in man is manifested and
expressed in three different ways:
1. Man is able to distinguish or to know
what is good and what is bad.
2. Man is always obligated to do good
and avoid evil.
3. Man knows that he is accountable for
his actions – good or bad.
 Freud’s theory of Id, Ego and 1 - 46

Superego
 Id – is the irrational part in us or the
unconscious instincts. According to
Freud, we are born with the id which
is also known as the “pleasure
principle” in each of us. The id, being
irrational does not know the meaning
of postponement. When the id wants
something, it craves for instant
satisfaction.
 Freud’s theory of Id, Ego and 1 - 47

Superego
 Ego – is the rational self or the conscious self.
In Freud’s theory it is also known as the
“reality-principle.” It is part reason
(intellect) but also part willpower. The ego is
under constant pressure to fight off the
pleasure-seeking desires of the id and at the
same time, the ego is pressured by the
reality forces of the environment and the
moral dictates of one’s upbringing – the
superego.
 Freud’s theory of Id, Ego and 1 - 48

Superego
 Superego – For Freud, it basically
reflects social rules and values of the
society that govern our behavior. This
also includes the codes and rules that
we have been taught. The superego
has elements in common with both
reason and willpower. It also equates
with conscience.
 1 - 49

Kohlberg’s Classification of the

Person’s Moral Development
I. Pre-conventional - This behavior is
generally found in young children and
older children.
Two stages:
Stage 1. Reaction to punishment –
explains the concept of being good by
following commands and authority and
avoiding being punished.
 1 - 50

Stage 2. The desire for the right

behavior that will satisfy the person’s
self-interest – is a stage of Individual
Instrumental Purpose and Exchange.
This means fair deals for concrete
exchanges. This is characterized by a
view that right behavior means acting
in one’s own best interest. It also
promotes the “I’ll scratch your back
and you scratch by back” type of
mentality.
 1 - 51

Kohlberg’s Classification of the

Person’s Moral Development
II. Conventional – This level is generally found in
an ideal civilized society.
Two stages:
Stage 3. Stage of Mutual Interpersonal
Expectations, Relationships and Conformity.
This is characterized by an attitude which
seeks to do what will gain the approval of
others, commonly referred to as “Putting
oneself in the other person’s shoes. (also
known as good boy and good girl orientation stage).
 1 - 52

Stage 4. Stage of Social System and

Conscience Maintenance. - wherein
one is oriented to abiding by the law
and responding to the obligations of
duty. Individuals adopt social rules
without considering the underlying
ethical principles involved. It
emphasizes only obedience to the laws,
respect to authority and performing
one’s duties so that social order is
maintained.
 1 - 53

Kohlberg’s Classification of the

Person’s Moral Development
III. Post-Conventional – This third level of moral
thinking is one that Kohlberg felt is not reached by
the majority of adults.
Stage 5. Stage of Prior Rights and Social Contract
or Utility. It is the stage of understanding of rights
and values. This means that people at this stage
realize that there are fundamental concepts of
right and wrong but the application of which
confined to their own culture and environment.
 1 - 54
Stage 6. Stage of Universal Ethical
Principles. It is based on respect for
universal principles and the demands of
individual conscience. Action is controlled
by internalized ideals that demand pressure
to act accordingly regardless of the reaction
of others in the immediate environment. In
this stage, Kohlberg believed that people do
good and avoid evil because they are
convinced that there are universal ethical
principles that govern and justify their
actions.
 1 - 55

Stage 7. Transcendental Morality.

At this stage, Kohlberg believes that
people can transcend their concepts
of good and evil by integrating them
with their religious convictions.
Example:
Murder is evil because it is against the
divine law, e.g., The 10
Commandments.
 Two Ethical Systems 1 - 56

(R. Agapay, 1991)

1. Atheistic Ethics – assumes that only matter exists
and man is responsible only to himself since there
is no God who creates and rules the universe. It
propose the ff. principles:
 Man is the only reality
 Man is matter and does not have spiritual
dimension.
 Man is free and must exercise his freedom to
promote the welfare of society.
 Man is accountable only to the State.
 Two Ethical Systems 1 - 57

(R. Agapay, 1991)

2. Theistic Ethics – assumes that God is
the Supreme Lawgiver. Everything
must conform to God’s eternal plan
of creation. Man is accountable for
his actions and deserves either a
reward or punishment in this life or
in the next.
 1 - 58

It postulates the ff. truths:

 God is the Supreme Creator and
Lawgiver.
 Man is free and must use his freedom to
promote his personal and social
interests along with his fellowmen.
 Man has an immortal soul which cannot
die.
 Man is accountable for his actions, both
good and evil.
 1 - 59

Remember:

“Without moral perception,

man is only an animal.
Without morality, man as a
rational being is a failure.”
-Ramon B. Agapay