Why This Matters
When you're facing a business ethics question on an exam—or a real dilemma in your career—you need more than gut instinct. You're being tested on your ability to systematically analyze ethical problems using recognized frameworks, not just identify what "feels right." These frameworks represent centuries of philosophical thought distilled into practical tools, and understanding when to apply which framework is what separates strong answers from weak ones.
The key insight here is that different frameworks prioritize different values: outcomes vs. duties, individual rights vs. collective welfare, universal principles vs. contextual relationships. Examiners want to see that you can identify the framework being applied, explain its logic, and critique its limitations. Don't just memorize definitions—know what each framework emphasizes and where it falls short.
Outcome-Focused Frameworks
These frameworks evaluate decisions based on their results. The ethical quality of an action depends on what it produces, not on the action itself.
Utilitarian Approach
- Maximizes overall welfare—decisions are ethical if they produce the greatest good for the greatest number of people affected
- Consequence-driven analysis requires calculating and comparing the benefits and harms across all stakeholders before acting
- Cost-benefit reasoning makes this framework popular in business, but it can justify harming minorities if the majority benefits
Ethical Egoism
- Self-interest as the guiding principle—argues that individuals should prioritize their own well-being in decision-making
- Rational self-interest differs from selfishness; proponents argue that pursuing personal goals ultimately benefits society through competition and innovation
- Conflicts with collective ethics make this framework controversial and rarely defensible as a standalone business approach
Compare: Utilitarianism vs. Ethical Egoism—both focus on outcomes, but utilitarianism considers everyone's welfare while egoism prioritizes the decision-maker's welfare. If an FRQ asks you to critique a self-serving business decision, contrast these two frameworks.
Duty and Principle-Based Frameworks
These frameworks focus on the inherent rightness of actions, regardless of outcomes. Some actions are simply right or wrong based on moral rules or duties.
Duty-Based Ethics (Deontology)
- Moral rules are absolute—actions are ethical if they follow established principles like honesty and promise-keeping, even when breaking them might produce better outcomes
- Intention matters more than results; a decision made from good moral duty is ethical even if it accidentally causes harm
- Kant's categorical imperative is the classic test: act only according to rules you could will to be universal laws for everyone
Rights-Based Approach
- Individual rights are inviolable—decisions must respect fundamental rights like privacy, autonomy, and dignity regardless of collective benefit
- Legal and moral rights both apply; legal rights are codified in law, while moral rights exist independently of legal recognition
- Limits utilitarian overreach by establishing boundaries that cannot be crossed even for majority benefit
Social Contract Theory
- Ethics emerge from implicit agreements—moral obligations arise from the mutual benefits of living cooperatively in society
- Reciprocal duties mean individuals gain rights by accepting responsibilities; breaking the social contract undermines trust and cooperation
- Foundational to business legitimacy—companies operate with society's permission and must honor that implicit agreement
Compare: Deontology vs. Rights-Based approaches—both reject pure outcome-thinking, but deontology focuses on the decision-maker's duties while rights-based ethics focuses on what others are owed. Use this distinction when analyzing whistleblowing scenarios.
Relationship and Community-Focused Frameworks
These frameworks emphasize connections between people and the welfare of groups rather than isolated individuals. Ethics is about how we treat each other in context.
Common Good Approach
- Community welfare takes priority—ethical decisions contribute to shared conditions that benefit everyone, like public health, education, and environmental quality
- Interconnected interests mean individual flourishing depends on collective well-being; you cannot truly thrive in a failing community
- Challenges pure individualism by asking what kind of society our decisions collectively create
Care-Based Ethics
- Relationships define moral obligations—ethical duties arise from our connections to specific people, not abstract principles applied to strangers
- Empathy and compassion are moral skills, not just feelings; this framework values attentiveness to others' needs and vulnerabilities
- Critiques traditional ethics for being too abstract and ignoring the moral significance of caregiving, nurturing, and maintaining relationships
Stakeholder Theory
- All affected parties matter—business decisions must consider employees, customers, suppliers, communities, and shareholders, not just owners
- Balances profit with responsibility by recognizing that long-term success depends on maintaining trust with multiple stakeholder groups
- Practical framework for CSR—provides concrete guidance for identifying whose interests to weigh in corporate decisions
Compare: Common Good vs. Stakeholder Theory—both consider collective welfare, but common good focuses on society-wide conditions while stakeholder theory identifies specific groups with legitimate claims. Stakeholder theory is more actionable for business analysis.
Character-Based Frameworks
This approach shifts focus from actions to the person making decisions. Ethics is about who you are, not just what you do.
Virtue Approach
- Moral character drives ethical behavior—decisions should reflect virtues like honesty, courage, compassion, and integrity that define a good person
- Asks "what would a person of good character do?" rather than calculating outcomes or consulting rules
- Develops through practice—virtues are habits built over time; ethical decision-making improves as character strengthens
Fairness or Justice Approach
- Equitable distribution is the standard—ethical decisions distribute benefits and burdens fairly, without favoritism or discrimination
- Impartiality requires consistency—similar cases must be treated similarly; arbitrary distinctions violate justice
- Addresses systemic inequality by asking whether decisions perpetuate or correct unfair advantages and disadvantages
Compare: Virtue Ethics vs. Justice Approach—virtue ethics asks "what kind of person should I be?" while justice asks "what distribution is fair?" Both matter for leadership ethics: you need good character and fair systems.
Structured Decision-Making Models
These practical frameworks provide step-by-step processes for working through ethical dilemmas. They organize your thinking rather than providing a single ethical principle.
The Potter Box Model
- Four-quadrant analysis—systematically work through Definition (facts), Values (what matters), Principles (ethical frameworks), and Loyalties (to whom you're obligated)
- Forces comprehensive thinking by requiring you to articulate each element before reaching a conclusion
- Originally developed for journalism ethics but widely applicable to any situation requiring stakeholder analysis and value clarification
PLUS Ethical Decision-Making Model
- Four-filter test—evaluate decisions against Policies (organizational rules), Legal standards, Universal principles, and Self (personal values)
- Alignment check ensures decisions don't violate any of the four dimensions; a "no" on any filter signals an ethical problem
- Practical for organizational contexts because it explicitly includes company policies and legal compliance alongside moral considerations
Blanchard and Peale's Three Questions
- Simple but powerful screening—ask "Is it legal? Is it balanced? How does it make me feel?" before proceeding with any decision
- Emotional check matters—the "how does it make me feel" question catches rationalizations that pass legal and fairness tests but still feel wrong
- Quick triage tool for initial assessment; complex dilemmas may require more sophisticated frameworks after this screening
The Seven-Step Path to Ethical Decisions
- Comprehensive process model—moves through problem identification, fact-gathering, stakeholder analysis, alternative generation, evaluation, decision, and reflection
- Built-in learning loop through the final reflection step; ethical decision-making improves when you review outcomes and adjust your approach
- Exam-ready structure for FRQ responses—this sequence provides a natural outline for analyzing case studies
Compare: Potter Box vs. PLUS Model—both are structured frameworks, but Potter Box emphasizes values and loyalties while PLUS emphasizes compliance and alignment. Potter Box is better for complex stakeholder conflicts; PLUS is better for organizational policy questions.
Foundational Philosophical Debates
Understanding these contrasting positions helps you evaluate when frameworks apply and when they conflict.
Moral Relativism vs. Moral Absolutism
- Relativism claims ethics are culturally constructed—what's right varies by society, time period, and context; no universal moral truths exist
- Absolutism asserts universal principles—some actions are right or wrong regardless of cultural beliefs or circumstances
- Critical for international business ethics—this debate shapes how companies navigate different cultural norms and whether they should impose or adapt their standards
Quick Reference Table
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| Outcome-focused ethics | Utilitarianism, Ethical Egoism |
| Duty/principle-based ethics | Deontology, Rights-Based Approach, Social Contract Theory |
| Relationship-focused ethics | Care-Based Ethics, Common Good Approach, Stakeholder Theory |
| Character-based ethics | Virtue Approach, Fairness/Justice Approach |
| Structured decision models | Potter Box, PLUS Model, Seven-Step Path, Blanchard-Peale Questions |
| Philosophical foundations | Moral Relativism vs. Absolutism |
| Individual rights emphasis | Rights-Based Approach, Deontology |
| Collective welfare emphasis | Utilitarianism, Common Good, Stakeholder Theory |
Self-Check Questions
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Which two frameworks both reject outcome-based reasoning but differ in whether they emphasize the decision-maker's duties or others' entitlements?
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A company decides to close a profitable factory because staying would require bribing local officials. Which framework best explains this decision—and which framework might have justified staying?
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Compare and contrast Stakeholder Theory and the Common Good Approach: what does each prioritize, and when would they lead to different conclusions?
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If an FRQ presents a case where following company policy would harm a vulnerable individual, which structured decision-making model explicitly creates tension between these considerations, and how would you work through it?
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A multinational corporation faces pressure to adopt local labor practices that violate its home-country standards. How does the Moral Relativism vs. Absolutism debate frame this dilemma, and which other frameworks would help resolve it?