3. Normative Ethical Theories and Moral Reasoning

Introduction and Context

Corporate governance is not only a system of controls, reporting relationships, and legal duties. It is also a system for deciding what an organization ought to do when interests conflict, information is incomplete, and lawful action may nevertheless be morally questionable. Boards, executives, professionals, and institutional investors regularly confront choices involving privacy, worker safety, environmental harm, executive compensation, tax planning, artificial intelligence, corruption, and the distribution of corporate benefits and burdens. Such choices cannot be resolved adequately by asking only, “Is it legal?”

Normative ethics provides systematic ways of answering a deeper question: what makes an action, policy, or institution morally justified? Ethical theories do not function as mechanical decision procedures. Rather, they provide concepts, standards, and forms of reasoning through which decision-makers can identify morally relevant facts, challenge self-serving assumptions, compare alternatives, and justify decisions to affected stakeholders.

This chapter examines consequentialism, deontology, virtue ethics, theories of justice, rights-based ethics, care ethics, social-contract theory, and moral pluralism. It then connects these theories with moral agency, responsibility, conflicts of interest, and practical ethical decision-making. The central argument is that responsible governance requires both principled judgment and institutional design. Good intentions are insufficient where incentives, authority structures, and information systems systematically encourage misconduct.

Learning Objectives

By the end of this chapter, the reader should be able to:

1. Explain the central claims and assumptions of major normative ethical theories.

2. Distinguish theories that emphasize consequences, duties, character, rights, relationships, justice, and social agreement.

3. Apply multiple ethical perspectives to complex corporate decisions.

4. Evaluate moral agency, individual and organizational responsibility, and conflicts of interest.

5. Use a structured moral-reasoning process in governance and managerial contexts.

6. Critically assess the strengths, limitations, and tensions among ethical theories.

7. Recommend ethically defensible responses to emerging issues involving data, technology, sustainability, and corporate power.

From Compliance to Moral Reasoning

Compliance establishes minimum standards through law, regulation, contracts, and organizational rules. Ethics asks whether conduct is right, fair, responsible, and worthy of trust, including in situations where rules are absent or ambiguous. A firm may comply with disclosure requirements while presenting information in a deliberately confusing manner. A company may legally classify workers as contractors while transferring substantial risks to people with little bargaining power. A board may follow formal approval procedures while ignoring a director’s personal relationship with a supplier.

Moral reasoning begins by identifying the decision, the affected parties, the available alternatives, and the values at stake. It requires attention to facts, but facts alone do not determine moral conclusions. The fact that a decision increases profit does not establish that it is right; nor does the fact that an action is customary establish its legitimacy. Ethical reasoning therefore involves interpretation, justification, and critical examination of competing claims.

A useful distinction is between descriptive and normative analysis. Descriptive analysis explains what people or organizations do and why. Normative analysis evaluates what they ought to do. Corporate governance research may describe how incentive systems influence executive behavior; ethical analysis asks whether those incentives are defensible and whether they promote responsible stewardship.

Important Concepts and Terminology

Several concepts recur throughout ethical analysis. A moral agent is a person or entity capable of making choices for which moral evaluation is appropriate. Moral responsibility concerns whether an agent can reasonably be held accountable for an outcome or decision. Accountability is the institutional obligation to explain conduct and accept consequences. Stakeholders are individuals or groups affected by organizational activity, including employees, customers, investors, communities, suppliers, regulators, and future generations.

A conflict of interest exists when a person’s private interests, relationships, or duties create a significant risk that professional judgment will be compromised or appear compromised. A fiduciary duty is a heightened obligation to act loyally and carefully for another party, as directors and officers generally do for the corporation and its shareholders, subject to the applicable legal system. Ethical fading occurs when the moral dimension of a decision becomes obscured by financial, technical, or strategic language. Moral disengagement describes cognitive processes through which people rationalize harmful conduct, for example by blaming victims or minimizing consequences.

An ethical dilemma involves a serious conflict between values or duties in which satisfying one moral consideration may undermine another. Moral pluralism recognizes that several moral values may be genuine and irreducible, even when they cannot all be fully satisfied. Stakeholder salience concerns the degree to which a stakeholder’s claims receive managerial attention, often influenced by power, legitimacy, and urgency. Integrity refers to coherence between values, judgments, words, and actions.

Consequentialism: Judging Actions by Their Effects

Consequentialist theories evaluate conduct by its results. The most influential form, utilitarianism, holds that an action or policy is justified when it produces the greatest balance of benefits over harms for all affected parties. The theory requires decision-makers to consider consequences impartially rather than giving automatic priority to organizational insiders.

In business, consequentialist reasoning may support investment in safer production technology, a product recall, or a data-security program when the expected reduction in harm exceeds its cost. It can also illuminate opportunity costs: funds spent on one project cannot be spent elsewhere. Cost-benefit analysis resembles consequentialist reasoning, although monetary valuation may fail to capture dignity, rights, ecological value, or irreversible harm.

Act consequentialism evaluates each individual decision, whereas rule consequentialism asks which general rules would produce the best outcomes if widely accepted. A manager might conceal a defect in one exceptional case if using an act-based calculation, but a rule-based approach would consider the long-term effects on trust, safety, and organizational culture of permitting concealment.

Consequentialism offers a broad perspective and encourages attention to indirect and long-term effects. Its weaknesses include uncertainty about outcomes, difficulties in comparing unlike goods, and the possibility that a minority could be sacrificed for aggregate benefit. A profitable restructuring may create large gains for investors while imposing severe and concentrated losses on a vulnerable community. Aggregate welfare alone may not adequately protect those exposed to the greatest risk.

Deontology: Duties, Rules, and Respect for Persons

Deontological ethics evaluates actions according to duties, principles, and the intrinsic moral status of conduct, not solely according to outcomes. A central idea is that persons must be treated as ends in themselves and not merely as instruments for another objective. Truthfulness, promise-keeping, non-coercion, and respect for autonomy therefore matter even when deception or coercion might appear expedient.

In governance, deontological reasoning supports accurate disclosure, informed consent, confidentiality, non-discrimination, and the rejection of bribery. It asks whether a proposed practice could be accepted as a general rule without undermining the practice itself. If every firm manipulated performance metrics, the informational function of reporting would collapse. If every executive treated fiduciary duties as optional whenever personal benefit was available, corporate trust would be impossible.

Duty-based reasoning is especially important where stakeholders have weak bargaining power. A company should not expose workers to avoidable hazards simply because workers accepted employment or because the expected financial return is high. Nevertheless, duties can conflict. A director may owe confidentiality to the company while also confronting evidence of unlawful harm. Ethical judgment then requires determining which duty is more fundamental, whether the duty can be fulfilled in another way, and what institutional or legal protections apply.

Virtue Ethics: Character and Practical Wisdom

Virtue ethics shifts attention from isolated acts to the character of the decision-maker and the quality of organizational practices. Virtues are stable dispositions to perceive and act well, such as honesty, courage, fairness, prudence, humility, temperance, and compassion. The question is not only “What rule applies?” but also “What would a trustworthy and practically wise leader do?”

Practical wisdom involves sensitivity to context. A virtuous board member must know when transparency requires immediate disclosure, when confidentiality protects legitimate interests, and when courage requires challenging a powerful chief executive. Virtue is developed through habituated conduct, mentoring, institutional example, and the reinforcement of ethical norms.

Virtue ethics is valuable because corporate misconduct often results not from ignorance of rules but from greed, cowardice, arrogance, or conformity. It highlights tone at the top and the moral character of organizational cultures. Its limitation is that reasonable people may disagree about which virtues should govern a particular case. Appeals to “loyalty” can support solidarity or concealment; appeals to “prudence” can indicate wisdom or excessive caution. Virtue must therefore be connected to defensible principles and consequences.

Justice, Rights, and the Distribution of Corporate Benefits

Justice concerns fairness in the distribution of benefits, burdens, opportunities, and procedures. Distributive justice asks who receives what and who bears the costs. Procedural justice asks whether decision processes are impartial, transparent, consistent, and open to voice. Corrective justice concerns remedying wrongful losses. In organizations, justice issues arise in pay structures, layoffs, promotion, access to opportunities, environmental exposure, taxation, and supply-chain conditions.

A decision can be efficient but unjust. For example, relocating a hazardous facility may reduce total operating costs while concentrating pollution in a community with limited political influence. Justice-oriented reasoning asks whether affected people have meaningful choice, whether burdens are distributed fairly, and whether historical disadvantage is being reproduced.

Rights-based ethics emphasizes claims that protect individual agency and dignity. Rights may include privacy, bodily security, freedom from discrimination, due process, freedom of association, and access to truthful information. Rights constrain purely consequentialist calculations. Even a highly profitable surveillance system may be impermissible if it invades privacy without valid consent or imposes unjustified coercion.

Rights are not always absolute. Privacy may conflict with fraud prevention; freedom of expression may conflict with threats or harassment; property rights may conflict with environmental protection. Ethical analysis must examine the scope of the right, the legitimacy and necessity of interference, proportionality, and the availability of less restrictive alternatives.

Care Ethics and the Moral Importance of Relationships

Care ethics arose partly as a critique of abstract, allegedly universal reasoning that overlooked dependence, emotion, and unequal relationships. It emphasizes attentiveness to concrete needs, responsiveness, empathy, trust, and the responsibilities created by vulnerability and interdependence.

A care perspective changes the questions asked by a board. Instead of viewing employees solely as labor inputs, it considers how restructuring affects families, identity, security, and community relationships. In a health-care organization, care ethics highlights the lived experience of patients and caregivers, not merely throughput and cost. In global supply chains, it directs attention to workers whose formal contractual distance from the lead firm does not eliminate the relationship of practical dependence.

Care ethics does not mean that managers should favor familiar individuals or abandon impartiality. Its challenge is to supplement universal rules with contextual understanding. Its risks include partiality, emotional overload, paternalism, and the unequal burden often placed on women or minority workers to provide care. Effective governance combines care with fair procedures, rights, and accountability.

Social-Contract Theory and the Legitimacy of the Corporation

Social-contract approaches regard rules and institutions as legitimate when they could be justified to those subject to them. The corporation is not merely a private instrument for owners; it depends on public legal privileges, infrastructure, educated labor, enforceable contracts, and social trust. Its authority is therefore conditional on responsible conduct.

At the organizational level, an implicit contract exists among investors, employees, customers, communities, regulators, and the firm. The contract is breached when a company exploits information asymmetry, evades accountability, or imposes risks that stakeholders could not reasonably accept. A “license to operate” is thus more than public relations: it reflects the continuing legitimacy of corporate power.

Social-contract reasoning is useful for evaluating taxation, political lobbying, market dominance, platform governance, and corporate participation in public policy. It asks whether the rules are mutually justifiable, whether affected stakeholders have voice, and whether power has been used to shape the rules unfairly. A limitation is that actual consent is often absent or unequal. Hypothetical agreement can also conceal deep disagreement unless the conditions of fair negotiation are made explicit.

Moral Pluralism and Integrative Judgment

No single theory resolves every business dilemma. Moral pluralism holds that values such as welfare, autonomy, fairness, loyalty, truthfulness, and care may all matter. They may be complementary, but they can also conflict. A board deciding whether to disclose a cyber incident must consider customer harm, legal duties, trust, privacy, financial stability, and the needs of investigators. Reducing the issue to one metric risks moral distortion.

Pluralism does not mean that “anything goes.” It requires disciplined comparison of reasons. A practical sequence is:

1. Clarify the decision and separate facts from assumptions.

2. Identify all materially affected stakeholders, including vulnerable and future groups.

3. Generate realistic alternatives rather than treating the first proposal as inevitable.

4. Test each alternative for consequences, duties, rights, justice, care, character, and social legitimacy.

5. Identify conflicts and determine whether some constraints are non-negotiable.

6. Consult relevant expertise and affected voices while protecting confidentiality.

7. Decide, document reasons, assign responsibility, and establish review or remedy mechanisms.

This method resembles a reflective-equilibrium approach: provisional judgments are tested against principles, cases, and institutional realities until the reasoning becomes coherent. It is not a substitute for courage. A carefully documented decision can still be unethical if the process is designed to legitimate a predetermined outcome.

Moral Agency and Responsibility in Organizations

Individuals are moral agents when they possess sufficient awareness, freedom, and capacity for judgment. Organizational actors complicate responsibility because decisions are distributed across committees, software systems, policies, and hierarchies. Diffusion of responsibility occurs when each participant sees only a small part of the process. A “speak-up” failure may involve a target who remains silent, a supervisor who dismisses concerns, a compliance unit that lacks authority, and a board that receives filtered information.

Responsibility may be causal, role-based, supervisory, collective, or remedial. A chief executive may not have caused a supplier’s abuse personally but may be responsible for failing to establish reasonable due diligence. Conversely, organizational responsibility should not erase individual accountability where a person intentionally deceives or abuses authority.

Boards should therefore examine not only who made a formal decision but also who controlled information, had the power to intervene, benefited from the conduct, ignored warning signs, or designed the incentives. Responsible governance makes authority visible, preserves audit trails, protects dissent, and avoids rewarding outcomes achieved through misconduct.

Conflicts of Interest and Ethical Decision Processes

Conflicts of interest are not automatically evidence of wrongdoing. They are conditions requiring recognition and management. Common forms include self-dealing, gifts and hospitality, employment negotiations, family relationships, related-party transactions, financial interests, and conflicts involving advisers or auditors. The appearance of compromised judgment can itself damage trust.

A robust process includes early disclosure, independent review, recusal where appropriate, competitive evaluation, documented reasons, and continuing monitoring. Disclosure alone is insufficient if decision-makers remain powerful, incentives remain unchanged, or affected parties cannot assess the significance of the conflict.

Ethical decision models should distinguish three questions: what is permissible, what is required, and what is admirable. Compliance may establish a minimum; fiduciary and professional duties may demand more; virtues such as courage and fairness may identify the best response. Boards should also use pre-mortems, red-team challenge, stakeholder impact assessments, and escalation channels to counter groupthink and ethical fading.

Applied Case: The Meridian Data Platform

Background

Meridian Health Services, a fictional regional health provider, plans to deploy an artificial-intelligence platform that predicts which patients are likely to miss follow-up appointments. The platform will combine clinical records, socioeconomic indicators, and historical attendance data. Management expects lower costs and improved continuity of care. The vendor reports high overall predictive accuracy but does not disclose its complete model logic.

Situation and Problem

A pilot indicates that patients from two low-income communities are more frequently classified as “low priority.” The classification is not formally used to deny treatment, but staff have limited time and are likely to offer fewer outreach calls to those patients. The chief operating officer wants full deployment before the next budget cycle. The compliance officer warns that the data may reproduce historical disparities. A director owns shares in the vendor and has not disclosed the investment.

Ethical Analysis

A consequentialist analysis considers expected benefits, including reduced missed appointments, against risks of unequal access, misclassification, privacy loss, and long-term distrust. Deontology asks whether patients are being treated as persons capable of informed participation and whether the provider is fulfilling duties of non-discrimination and truthful communication. A rights-based analysis focuses on privacy, due process, and equal access to care. Justice requires examining whether burdens are concentrated among already disadvantaged communities. Care ethics draws attention to the vulnerability of patients who may lack transport, stable housing, or digital access. Virtue ethics asks whether the organization is demonstrating humility, courage, and practical wisdom by slowing deployment when evidence is incomplete. Social-contract reasoning asks whether affected communities could reasonably accept the data practices and whether they have meaningful voice.

The director’s undisclosed investment creates a conflict of interest. Even if the director believes the platform is beneficial, the board cannot confidently rely on the director’s advocacy without disclosure and independent assessment.

Approach and Solution

The board should suspend full deployment and require disclosure and recusal by the conflicted director. It should commission an independent bias and impact assessment, examine subgroup error rates, and test whether the socioeconomic variables are necessary. Patients and community representatives should participate in reviewing acceptable uses. The system should be limited to recommending additional support rather than reducing support, with human review for consequential decisions. Meridian should provide an appeal process, monitor outcomes by demographic group, publish understandable information about the system, and establish a sunset review.

Outcome

The illustrative solution does not guarantee that the technology will be adopted. It creates conditions under which adoption may become ethically defensible: demonstrable benefit, protection against discriminatory effects, accountable human oversight, transparent governance, and a remedy for those harmed. If those conditions cannot be met, the responsible decision is not to deploy the platform.

Learning Points

The case shows why ethical reasoning must examine both direct intentions and institutional effects. It also demonstrates that technology does not remove moral agency. Human beings choose the data, objectives, thresholds, incentives, and oversight arrangements through which an algorithm operates.

Limitations, Risks, and Common Errors

Ethical theories can be misused. Consequentialism may reduce human dignity to monetary value; deontology may become rigid formalism; virtue language may conceal personal preference; justice claims may ignore efficiency and feasibility; rights talk may overlook collective responsibilities; care may become paternalistic; and social-contract arguments may treat existing power arrangements as legitimate simply because they are established.

Other frequent errors include defining stakeholders too narrowly, relying on averages while ignoring distribution, confusing intention with impact, treating legal permission as moral permission, assuming that disclosure cures a conflict, delegating responsibility to algorithms, and using a code of ethics as a substitute for incentives and leadership. Moral reasoning also fails when facts are deliberately withheld, dissent is punished, or deadlines are used to prevent meaningful deliberation.

Organizations should recognize uncertainty explicitly. They should distinguish reversible from irreversible decisions, apply greater caution where harms may be severe or difficult to remedy, and create feedback mechanisms that allow correction. Ethical governance is not a one-time approval; it is an ongoing practice of monitoring, explanation, learning, and repair.

Governance, Technology, and Emerging Ethical Issues

Digital systems intensify familiar ethical questions. Automated hiring may reproduce discriminatory patterns; predictive systems may allocate opportunities unequally; generative AI may produce confidential or inaccurate material; surveillance may undermine employee autonomy; and complex vendor arrangements may obscure responsibility. Data governance should therefore address purpose limitation, data quality, security, access, explainability appropriate to the decision, human oversight, and mechanisms for contesting outcomes.

Boards need not become technical programmers, but they must ask whether management understands model limitations, whether affected groups were consulted, whether performance is monitored across relevant populations, and who is accountable when the system causes harm. Independent assurance, algorithmic impact assessments, scenario testing, and clear escalation protocols can support, but not replace, ethical judgment.

Current governance debates increasingly concern stakeholder capitalism, sustainability transitions, responsible investment, supply-chain accountability, platform power, and the social effects of automation. These developments reinforce the need for moral pluralism: environmental thresholds, worker rights, investor expectations, community interests, and innovation goals cannot always be expressed through one measure. Ethical leadership requires the willingness to identify trade-offs publicly rather than hide them behind technical language.

Best Practices for Ethical Corporate Judgment

A mature ethical governance system should:

• establish clear responsibilities for directors, executives, professionals, and technology owners;
• use multiple ethical lenses rather than relying only on financial analysis or compliance;
• protect independent challenge, whistleblowing, and stakeholder voice;
• disclose and actively manage conflicts of interest;
• assess distributional effects, especially on vulnerable groups;
• document assumptions, alternatives, reasons, and dissenting views;
• connect incentives and performance evaluation to responsible conduct;
• provide remedy, correction, and learning after adverse outcomes; and
• review major decisions as circumstances, evidence, and stakeholder expectations change.

These practices make ethics organizationally durable. They transform moral reasoning from an individual aspiration into a feature of corporate governance.

Chapter Summary

Normative ethical theories provide different but complementary ways to evaluate business decisions. Consequentialism focuses on benefits and harms; deontology emphasizes duties and respect for persons; virtue ethics examines character and practical wisdom; justice addresses fair distributions and procedures; rights-based ethics protects autonomy and dignity; care ethics highlights relationships, vulnerability, and responsiveness; and social-contract theory evaluates institutional legitimacy. Moral pluralism recognizes that several values may be valid and conflicting.

Ethical corporate governance requires more than personal sincerity or formal compliance. It requires identifying stakeholders, examining consequences, respecting non-negotiable duties and rights, considering fairness and care, managing conflicts of interest, and assigning responsibility across organizational systems. A structured, pluralistic process can improve judgment, but it must be supported by transparent information, independent challenge, appropriate technology governance, meaningful remedies, and ethical leadership.

Key Terms

Moral agent: An individual or organization capable of making choices subject to moral evaluation.

Moral responsibility: The condition of being appropriately accountable for conduct or outcomes.

Consequentialism: Ethical reasoning that evaluates actions primarily by their outcomes.

Utilitarianism: The view that conduct should maximize overall benefits and minimize harms.

Deontology: An approach emphasizing duties, rules, and principles independent of consequences alone.

Virtue ethics: An approach concerned with moral character and the development of good dispositions.

Practical wisdom: Context-sensitive judgment about how to act well in particular circumstances.

Distributive justice: Fair allocation of benefits, burdens, opportunities, and risks.

Procedural justice: Fairness of decision-making processes, including consistency and opportunity for voice.

Corrective justice: The obligation to remedy wrongful losses or injuries.

Rights-based ethics: Ethical reasoning that protects claims related to dignity, autonomy, and liberty.

Care ethics: An approach emphasizing relationships, vulnerability, attentiveness, and responsiveness.

Social contract: A principle that institutions are legitimate when their rules can be justified to those subject to them.

Moral pluralism: Recognition that multiple irreducible moral values may legitimately guide judgment.

Conflict of interest: A situation in which private interests threaten, or appear to threaten, impartial professional judgment.

Ethical fading: The process by which the moral aspects of a decision become obscured.

Moral disengagement: Rationalization that permits harmful conduct to appear acceptable.

Stakeholder: A party affected by, or capable of affecting, organizational activity.

Accountability: The obligation to explain decisions and accept appropriate consequences.

Fiduciary duty: A heightened duty of loyalty and care owed by an agent to a principal.

Review Questions

Short Answer Questions

1. How does normative ethics differ from legal compliance?

2. What is the difference between act consequentialism and rule consequentialism?

3. Why does deontological ethics restrict the use of people as instruments?

4. Define ethical fading and provide a corporate example.

5. What is the purpose of recusal in conflict-of-interest management?

Long Answer Questions

1. Compare consequentialism and deontology in evaluating a corporate product recall.

2. Explain how virtue ethics contributes to board effectiveness and ethical culture.

3. Discuss the relationship between distributive, procedural, and corrective justice.

4. Evaluate the contribution and limitations of care ethics in global supply-chain governance.

5. Explain why moral pluralism is useful for complex corporate decisions.

Analytical / Application Questions

1. A company can increase shareholder returns by closing a facility in a vulnerable community. Analyze the decision using at least four ethical theories and recommend a governance process.

2. An algorithm used for employee promotion has higher error rates for one demographic group. Apply rights, justice, consequentialist, and care-based reasoning to formulate safeguards.

3. A director supports a supplier contract involving a close family member but claims the contract is objectively best. Assess the director’s moral responsibility and design an appropriate response.

22. Multiple Choice Questions with Answers

Question 1

A board chooses to recall a profitable product because the expected reduction in consumer harm outweighs the financial loss. Which ethical approach is most directly reflected?

A. Consequentialism

B. Virtue ethics

C. Social-contract theory

D. Deontology

Correct Answer: A. Consequentialism

Question 2

Which feature most clearly distinguishes deontological reasoning from purely consequentialist reasoning?

A. It estimates total monetary benefits.

B. It treats certain duties and rights as constraints on desired outcomes.

C. It focuses exclusively on organizational culture.

D. It gives priority to existing market practices.

Correct Answer: B. It treats certain duties and rights as constraints on desired outcomes.

Question 3

A company follows a general rule requiring truthful performance reporting even when concealment would improve one quarter’s results. This most closely illustrates:

A. Care ethics

B. Act consequentialism

C. Rule consequentialism

D. Ethical relativism

Correct Answer: C. Rule consequentialism

Question 4

Which question is primarily associated with virtue ethics?

A. What action produces the largest aggregate gain?

B. What distribution maximizes shareholder wealth?

C. What would a person of practical wisdom and integrity do?

D. What action is permitted by contract law?

Correct Answer: C. What would a person of practical wisdom and integrity do?

Question 5

A restructuring produces efficiency but places nearly all health risks on a politically weak community. Which concern is most central to justice-based analysis?

A. Whether the decision increases executive status

B. Whether benefits and burdens are distributed fairly

C. Whether the firm has a strong brand identity

D. Whether the decision uses advanced technology

Correct Answer: B. Whether benefits and burdens are distributed fairly

Question 6

In the Meridian case, limiting an AI system to recommending additional support rather than reducing support primarily addresses which ethical concern?

A. Avoiding all organizational discretion

B. Preventing technology from creating or intensifying unequal harm

C. Maximizing vendor profitability

D. Eliminating the need for human oversight

Correct Answer: B. Preventing technology from creating or intensifying unequal harm

Question 7

Why is disclosure alone often insufficient to manage a conflict of interest?

A. Disclosure always creates legal liability.

B. Disclosure cannot change incentives, power, or the risk of biased judgment by itself.

C. Conflicts of interest are never morally relevant.

D. Recusal is prohibited in board decisions.

Correct Answer: B. Disclosure cannot change incentives, power, or the risk of biased judgment by itself.

Question 8

Care ethics would most likely encourage a corporation deciding on layoffs to consider:

A. Only the average financial return to investors

B. Whether the action can be expressed as a universal mathematical rule

C. The concrete effects on dependent workers, families, and relationships

D. Whether existing practice makes the layoffs customary

Correct Answer: C. The concrete effects on dependent workers, families, and relationships

Question 9

Social-contract theory is especially useful when evaluating whether a corporation:

A. Has selected the most attractive logo

B. Uses its public privileges and power in ways that affected stakeholders could reasonably accept

C. Has eliminated all disagreement among executives

D. Can avoid documenting board decisions

Correct Answer: B. Uses its public privileges and power in ways that affected stakeholders could reasonably accept

Question 10

Which sequence best reflects a pluralistic ethical decision process?

A. Choose the cheapest option, then identify supporting reasons.

B. Identify stakeholders and alternatives, test consequences and principles, document reasons, and provide review or remedy.

C. Ask whether the action is legal and disregard non-legal concerns.

D. Delegate the decision to an algorithm without human judgment.

Correct Answer: B. Identify stakeholders and alternatives, test consequences and principles, document reasons, and provide review or remedy.