Business Ethics and Corporate Governance, Second Edition

NORMATIVE THEORIES

Ethics is a normative study, that is, an investigation that attempts to reach normative conclusions. It aims to arrive at conclusions about what things are good or bad, or what actions are right or wrong. In other words, a normative theory aims to discover what should be, and would include sentences like ‘companies should follow corporate governance standards’ or ‘managers ought to act in a manner to avoid conflicts of interests’. This is the study of moral standards which are correct or supported by the best reasons, and so ‘attempts to reach conclusions about moral rights and wrong, and moral good and evil’.¹² For instance, the stakeholder theory has a ‘normative’ thrust and is closely linked to the way that corporations ...