Core Concepts of Ethics: Moral Reasoning, Levels, and Corporate Law

Posted on Sep 30, 2025 in Philosophy and ethics

Fundamentals of Ethics and Moral Reasoning

Ethics is a branch of philosophy. It studies what is right or wrong, good or bad behavior, and moral duty.

Ethical evaluation involves:

  • Evaluating actions to see if they are good or bad.
  • Defining what we should do (moral obligations).
  • Judging only free and voluntary actions ethically. (If someone is forced, or it’s an accident, the action is neither moral nor immoral.)

Example: If a company makes a mistake because of a software bug, it is not unethical if they didn’t know. But if they cheat customers on purpose, that is an ethical issue.

Ethics vs. Law

  1. Law: Created by governments, and you can be punished if you break it.
  2. Ethics: More about inner values and self-responsibility. No one forces you, but it still matters.

Example: A company pays workers the legal minimum wage, but it is not enough to live on. It is legal, but is it ethical?

Moral Values

Values are the principles or rules we believe are important in life. They guide how we behave and how we make decisions. They are shaped by: culture, religion, philosophy, family, and society.

Example: A nurse follows a professional value (help the patient) but also a personal moral value (show compassion).

Ethical Reasoning

Ethical Reasoning is the process of deciding what is right or wrong in a situation. It is based on moral principles and aims to improve the well-being of others and society.

Purpose of Ethical Reasoning:

  1. To identify actions that help others.
  2. To recognize actions that harm others.

Approaches to Ethical Reasoning (ER)

  1. Bottom-up: You react based on personal feelings or intuition. You judge each situation individually, without applying large universal rules. It is useful when situations are new or emotionally strong.

    Example: You see a worker being treated unfairly. You feel it is wrong, so you act based on that personal judgment.

  2. Top-Down: You apply universal moral principles to specific cases.

    Example: A company considers lying to a client. You say: “No, honesty is a universal value, so lying is wrong.” The decision is made by applying the principle.

Reflective Equilibrium

This approach mixes two things:

  1. What you feel is right (your opinions or judgments).
  2. What general moral rules say (your principles).

Scope and Development of Ethics

Levels of Ethics

  1. Micro (Individual Ethics): “What do I do as a person?” It is about personal ethics: your behavior, your values. Includes how you treat others in everyday life (honesty, fairness, responsibility) and professional behavior—like how a manager treats their team.

    Example: An employee sees something unethical at work. Should they speak up? That is a micro-level decision.

  2. Meso (Organizational Ethics): “How does the company or organization act?” Focuses on ethics inside organizations (companies, schools, NGOs). Looks at how the organization treats employees, customers, stakeholders, and the community.

    Example: A company that uses child labor is violating ethics at the meso level. Another example is implementing Corporate Social Responsibility (CSR).

  3. Macro (Systemic / Social Ethics): “How do laws, governments, or industries impact society?” This is about big systems: government policies, laws, and industry standards. It asks: Are these systems fair and just? Do they protect human rights, the environment, etc.?

    Example: A government law that allows companies to pollute rivers affects all of society—that is a macro-level issue.

Levels of Moral Development (Kohlberg’s Stages)

  1. Preconventional:
    1. Stage 1: Reaction to punishment: “I won’t steal because I’ll get in trouble.”
    2. Stage 2: Seeking rewards: “I’ll help you if I get something back.”
  2. Conventional:
    1. Stage 3: “Good boy/good girl” morality: “I’ll behave so others like me.”
    2. Stage 4: Law and order: Rules must be followed to maintain order.
  3. Postconventional:
    1. Stage 5: Social contract: Laws are important, but they should be fair. If not, we can change them.
    2. Stage 6: Universal ethical principles: I follow my values even if I break the law (e.g., human rights, justice).

Philosophical Approaches to Ethics

Doctrinal Approaches

  1. Epicureanism: The goal is pleasure, but not excessive partying; it is about peace of mind and avoiding pain. Focus on moderation, tranquility, and friendship. Avoid stress, fear, and useless desires.

    Example: Choose the simple job if it brings calm and health, even if it pays less.

  2. Utilitarianism: Maximize happiness for the most people.

    Example: During a pandemic, if there is only one medicine for many sick people, treat the ones most likely to survive.

Ethics in Organizations and Corporate Responsibility

The Importance of Organizational Ethics

We discuss ethics in organizations because the world is global, and our decisions affect more people. Companies have power and influence, so they must act responsibly.

Value Creation for Stakeholders

Businesses create value for stakeholders, such as employees, clients, and shareholders.

Ethical Dilemmas and Issues

An Ethical Dilemma is a situation where two moral principles are in conflict. You must choose between A or B, but neither feels completely right.

Example: You discover a company that is polluting.

  • A: If you stay silent, you protect your job.
  • B: If you speak up, you might get fired.

The dilemma is between loyalty and honesty.

Ethical Issue Intensity

The intensity of an ethical issue refers to how seriously the decision-maker views it. It is subjective and depends on values, beliefs, and context (personal or organizational).

Types of ethical issues:

  1. Sexual Harassment (often shown as the largest, very serious and common).
  2. Bribery, Conflicts of Interest, Insider Trading (serious but may vary in intensity or frequency depending on the company or culture).

Legal Duties of Corporations

Corporations have their own legal responsibilities as entities.

Why it is important: If we do not understand these duties, we might act illegally or unethically, even without meaning to.

Piercing the Corporate Veil

  1. Normally: Shareholders are not personally responsible for the corporation’s debts or actions.
  2. Exception: If a company is used to commit fraud or injustice, courts can “pierce the corporate veil” and hold individuals personally responsible.

Parties Owing Duties to a Corporation

  1. Directors & Officers
  2. Shareholders
  3. Employees