MGMT 2010 · HKUST BUSINESS SCHOOL
Business Ethics & the Individual
Lecture 2: Virtue Ethics
Detailed Revision Notes · Compiled March 2026
1 What Is Virtue Ethics?
Virtue ethics is one of the three major normative ethical frameworks alongside Deontology and
Consequentialism. Its defining feature is that it focuses on character rather than rules or outcomes.
Core question: "What kind of person should I be?" — not "What should I do?" or "What produces the
best results?"
It originates from Aristotle (384–322 BC), particularly his work Nicomachean Ethics. The central idea is that a
good person will naturally make good decisions — so the goal of ethics is to cultivate good character, not just
follow rules.
Virtue Ethics Deontology Consequentialism
"Who should I be?" "What is my duty?" "What produces best results?"
Focus: Character & Focus: Rules & obligations. Focus: Outcomes & welfare.
disposition. Origin: Aristotle. Origin: Kant. Origin: Bentham & Mill.
2 Eudaimonia — Human Flourishing (幸福)
Eudaimonia is often translated as "happiness" but more accurately means human flourishing or living well. It
is the ultimate goal of human life according to Aristotle.
NOT A FEELING ULTIMATE GOAL OBJECTIVE, NOT
Eudaimonia is not a subjective It is the telos (end-goal) of SUBJECTIVE
emotion like pleasure or human existence — Not "whatever makes you feel
contentment — it is an everything else (wealth, good" — it requires
activity, a way of living and honour, pleasure) is pursued actualising your full human
functioning excellently. as a means to eudaimonia. potential through virtuous
activity over a lifetime.
Exam tip: Distinguish eudaimonia from mere pleasure or subjective happiness. Eudaimonia is about living
well and doing well — exercising your capacities excellently over an entire lifetime, not just feeling good in
the moment.
3 What Is a Virtue? (Aretē)
A virtue (aretē in Greek) is a character trait or disposition that allows a person to function excellently as a
human being.
Key features of a virtue
Stable disposition — not just a one-off action but a deep-seated tendency to act, feel, and think in certain
ways
Involves both feeling and action — a virtuous person not only acts rightly but feels the right emotions in
the right situations
Acquired through habituation — not innate; developed through practice and repeated action
Hits a mean between two extremes — every virtue is the right balance between deficiency and excess
(the Golden Mean)
Examples of virtues and their vices
VIRT UE D E F ICIE N CY ( TOO L IT T L E ) E XCE SS ( TOO MU CH)
Courage Cowardice Recklessness
Generosity Miserliness Prodigality
Honesty Deceitfulness Bluntness / Brutality
Temperance Insensibility Self-indulgence
Humility Servility Arrogance
4 The Golden Mean — Doctrine of the Mean
Aristotle argues that every virtue is the mean between two vices — one of deficiency and one of excess. The
virtue of courage illustrates this clearly:
VICE OF D E FICIE N CY V IR T U E ( T HE M EA N) VICE OF E XCE SS
Cowardice Courage Recklessness
Too little courage — fleeing all The right response to danger, for the Too much courage — charging into
danger, excessive timidity right person, at the right time danger heedlessly
Important: The mean is not a mathematical midpoint. It is the right amount for the right person, in the
right situation, at the right time, in the right way. This requires practical wisdom (phronesis) — see Section
5.
The "right" formula: Virtue = the right action + the right feeling + for the right reason + at the right time
+ toward the right person + in the right way.
5 Phronesis — Practical Wisdom
Phronesis (practical wisdom) is the master virtue in Aristotle's framework — arguably the most important of
all virtues. It is the capacity to discern the right course of action in particular, real-world situations.
SPE C IF IC SITUATION
G E N E RA L P RIN C IP L E S PH RON ESIS
Right action here & now
"Be courageous" → Practical Judgment →
"In this case, the courageous
Virtue ethics framework Bridges principle → action
move is to speak up"
Bridges principles and circumstances — connects general virtue rules to the specifics of each unique
situation
Without phronesis, other virtues fail — you need moral judgment to know what "courageous" or
"generous" looks like in this particular scenario
Developed through experience — unlike intellectual knowledge, phronesis grows from lived experience
and sustained reflection over time
The "master virtue" — it governs and coordinates all other virtues
Exam tip: Think of phronesis as moral judgment or wisdom — the ability to know what the virtuous
response actually looks like in complex, messy, real-world scenarios. It is what distinguishes a merely rule-
following person from a truly virtuous one.
6 Habituation — How Virtues Are Developed
Virtues are not innate — they are acquired through practice and habit. Aristotle famously stated:
"We become just by doing just acts, temperate by doing temperate acts, brave by doing brave acts." —
Aristotle, Nicomachean Ethics
Just as you become a musician by playing music, you become virtuous by consistently acting virtuously. Over
time, virtuous actions become second nature — part of your character, no longer requiring deliberate effort.
The process of moral development
1. Perform virtuous actions — even before you "feel" virtuous
2. Develop the habit — repeat until it becomes natural
3. Character is formed — the disposition becomes stable and deep-rooted
4. Emotion aligns with reason — you now feel the right things, not just do them
5. Eudaimonia — living virtuously constitutes human flourishing
CHILDHOOD EDUCATION ROLE MODELS & SOCIETY
Moral education in early life is critical — children A supportive community and good role models
form habits before they can reason. Parents, are essential — virtue ethics is inherently social,
teachers, and community shape character. not purely individualistic.
7 Virtue Ethics vs. Other Frameworks
Understanding how virtue ethics compares to deontology and consequentialism is essential for the exam —
you must be able to apply each lens to a scenario and identify its distinguishing features.
D E ON TOLOGY
FE AT URE VIRT UE E T HICS CONSE QUE NT IAL ISM
( K AN T )
Core focus Character of the agent Rules / duties Outcomes /
consequences
Key question "Who should I be?" "What is my duty?" "What produces best
results?"
Basis of Virtuous character Rational moral law Utility / welfare
judgment
Role of emotion Important — virtuous person feels Irrelevant to moral Irrelevant
rightly worth
Flexibility Context-sensitive Rigid, rule-based Flexible but outcome-
focused
Moral Central — ethics is about growth Not emphasised Not emphasised
development
8 Virtue Ethics in Business
Virtue ethics translates naturally to the management context — asking what a virtuous manager or leader
looks like, and how character shapes organisational culture.
What does a virtuous manager look like?
INTEGRITY PRACTICAL WISDOM COURAGE
Consistent honesty and Good judgment in complex Willingness to speak up
strong moral principles — business decisions — against wrongdoing —
acting the same whether knowing what the right call is whistleblowing — even when
observed or not. in messy, real situations. it is personally costly.
FAIRNESS TEMPERANCE
Treating employees, Not driven purely by greed or
customers, and stakeholders short-term gain — able to
equitably — not just those restrain impulses for long-
who can benefit you. term ethical behaviour.
Virtue Ethics and Corporate Culture
The character of an organisation's leaders shapes its culture. If leaders are virtuous, ethical culture cascades
downward. Virtue ethics suggests companies should hire for character, not just competence.
Case Application: Whistleblowing
A virtuous person has the courage to report wrongdoing — but also the practical wisdom (phronesis)
to know when and how to do so appropriately. Virtue ethics would say: the right action flows naturally
from being a person of good character. It is not primarily about legal obligations or outcome
calculations, but about who you are as a person.
Virtue Ethics lens: Would a person of practical wisdom speak up here? What virtues are in tension?
Key insight: Virtue ethics uniquely captures the motivational and emotional dimensions of moral action — courage
requires that you want to do the right thing, not just that you comply with a rule.
9–10 Strengths & Criticisms of Virtue Ethics
ST RE NGT HS C R IT IC I SM S / LI M ITAT ION S
Captures the whole moral agent — emotions, Vague action guidance — "be courageous"
motivations, and character, not just actions in doesn't tell you exactly what to do in a
isolation specific dilemma
Context-sensitive — recognises that different Culturally relative — different cultures define
situations call for different responses; no rigid virtues differently (e.g., humility vs.
rules assertiveness)
Motivationally rich — virtuous people want to Circular reasoning risk — virtuous action =
do good, not just comply with rules from what a virtuous person would do → but who
obligation counts as virtuous?
Emphasises moral development — ethics is Doesn't resolve conflicts well — what if two
about lifelong growth, not rule-following virtues clash (e.g., honesty vs. kindness)?
Fits naturally with leadership — explains why Limited applicability to institutions — virtues
character and role models matter in apply to individuals; hard to apply to
management corporations directly
11 Key Terms to Know for Exam
Virtue Ethics Ethical framework focused on character and who we should be — associated
with Aristotle.
Eudaimonia Human flourishing; the ultimate goal of human life — not mere pleasure, but
living and functioning excellently.
Virtue (Aretē) A stable disposition to act, feel, and think in excellent ways — acquired
through habituation, not born with.
Golden Mean Virtue as the right balance between excess and deficiency — not a
mathematical midpoint, but contextually sensitive.
Phronesis Practical wisdom — the master virtue; the ability to judge what is right in
specific real-world situations.
Habituation The process of developing virtues through repeated practice — "we become
just by doing just acts."
Vice A character defect — either excess or deficiency of a virtue (e.g., cowardice
= too little courage; recklessness = too much).
Telos The natural purpose or end-goal of a thing — for humans, it is eudaimonia.
Virtue ethics is teleological.
12 Quick Revision Checklist
Tick off each item once you can answer it confidently without notes.
Can you define eudaimonia and distinguish it from mere pleasure or subjective happiness?
Can you explain the Golden Mean with an original example (not just courage)?
Can you explain why phronesis is the "master virtue" and how it bridges principles and circumstances?
Can you explain how habituation develops virtues, and why childhood and community matter?
Can you compare virtue ethics to at least one other framework across multiple dimensions (focus, role of
emotion, flexibility)?
Can you apply virtue ethics to a business scenario (e.g., a manager facing a whistleblowing dilemma)?
Can you list at least 2 strengths AND 2 weaknesses of virtue ethics and briefly explain each?
Can you define vice and explain both types (deficiency and excess)?
C O R E TA K E AWAY S — V I R T U E E T H I C S I N O N E PA R AG R A P H
1 Virtue ethics (Aristotle) asks "who should I be?" — focus is on cultivating good character (aretē)
rather than following rules or calculating outcomes.
2 The ultimate goal is eudaimonia (human flourishing) — not pleasure, but living and functioning
excellently through virtuous activity over a lifetime.
3 Every virtue is the Golden Mean — the right amount between deficiency and excess — judged by
phronesis (practical wisdom), the master virtue.
4 Virtues are acquired through habituation — repeated practice shapes character over time. Moral
education and community are essential.
5 In business, virtue ethics highlights why character matters in leadership — a virtuous manager
brings integrity, courage, fairness, and practical wisdom to every decision.
Business Ethics & the Individual
Lecture 2: Virtue Ethics
Detailed Revision Notes · Compiled March 2026
1 What Is Virtue Ethics?
Virtue ethics is one of the three major normative ethical frameworks alongside Deontology and
Consequentialism. Its defining feature is that it focuses on character rather than rules or outcomes.
Core question: "What kind of person should I be?" — not "What should I do?" or "What produces the
best results?"
It originates from Aristotle (384–322 BC), particularly his work Nicomachean Ethics. The central idea is that a
good person will naturally make good decisions — so the goal of ethics is to cultivate good character, not just
follow rules.
Virtue Ethics Deontology Consequentialism
"Who should I be?" "What is my duty?" "What produces best results?"
Focus: Character & Focus: Rules & obligations. Focus: Outcomes & welfare.
disposition. Origin: Aristotle. Origin: Kant. Origin: Bentham & Mill.
2 Eudaimonia — Human Flourishing (幸福)
Eudaimonia is often translated as "happiness" but more accurately means human flourishing or living well. It
is the ultimate goal of human life according to Aristotle.
NOT A FEELING ULTIMATE GOAL OBJECTIVE, NOT
Eudaimonia is not a subjective It is the telos (end-goal) of SUBJECTIVE
emotion like pleasure or human existence — Not "whatever makes you feel
contentment — it is an everything else (wealth, good" — it requires
activity, a way of living and honour, pleasure) is pursued actualising your full human
functioning excellently. as a means to eudaimonia. potential through virtuous
activity over a lifetime.
Exam tip: Distinguish eudaimonia from mere pleasure or subjective happiness. Eudaimonia is about living
well and doing well — exercising your capacities excellently over an entire lifetime, not just feeling good in
the moment.
3 What Is a Virtue? (Aretē)
A virtue (aretē in Greek) is a character trait or disposition that allows a person to function excellently as a
human being.
Key features of a virtue
Stable disposition — not just a one-off action but a deep-seated tendency to act, feel, and think in certain
ways
Involves both feeling and action — a virtuous person not only acts rightly but feels the right emotions in
the right situations
Acquired through habituation — not innate; developed through practice and repeated action
Hits a mean between two extremes — every virtue is the right balance between deficiency and excess
(the Golden Mean)
Examples of virtues and their vices
VIRT UE D E F ICIE N CY ( TOO L IT T L E ) E XCE SS ( TOO MU CH)
Courage Cowardice Recklessness
Generosity Miserliness Prodigality
Honesty Deceitfulness Bluntness / Brutality
Temperance Insensibility Self-indulgence
Humility Servility Arrogance
4 The Golden Mean — Doctrine of the Mean
Aristotle argues that every virtue is the mean between two vices — one of deficiency and one of excess. The
virtue of courage illustrates this clearly:
VICE OF D E FICIE N CY V IR T U E ( T HE M EA N) VICE OF E XCE SS
Cowardice Courage Recklessness
Too little courage — fleeing all The right response to danger, for the Too much courage — charging into
danger, excessive timidity right person, at the right time danger heedlessly
Important: The mean is not a mathematical midpoint. It is the right amount for the right person, in the
right situation, at the right time, in the right way. This requires practical wisdom (phronesis) — see Section
5.
The "right" formula: Virtue = the right action + the right feeling + for the right reason + at the right time
+ toward the right person + in the right way.
5 Phronesis — Practical Wisdom
Phronesis (practical wisdom) is the master virtue in Aristotle's framework — arguably the most important of
all virtues. It is the capacity to discern the right course of action in particular, real-world situations.
SPE C IF IC SITUATION
G E N E RA L P RIN C IP L E S PH RON ESIS
Right action here & now
"Be courageous" → Practical Judgment →
"In this case, the courageous
Virtue ethics framework Bridges principle → action
move is to speak up"
Bridges principles and circumstances — connects general virtue rules to the specifics of each unique
situation
Without phronesis, other virtues fail — you need moral judgment to know what "courageous" or
"generous" looks like in this particular scenario
Developed through experience — unlike intellectual knowledge, phronesis grows from lived experience
and sustained reflection over time
The "master virtue" — it governs and coordinates all other virtues
Exam tip: Think of phronesis as moral judgment or wisdom — the ability to know what the virtuous
response actually looks like in complex, messy, real-world scenarios. It is what distinguishes a merely rule-
following person from a truly virtuous one.
6 Habituation — How Virtues Are Developed
Virtues are not innate — they are acquired through practice and habit. Aristotle famously stated:
"We become just by doing just acts, temperate by doing temperate acts, brave by doing brave acts." —
Aristotle, Nicomachean Ethics
Just as you become a musician by playing music, you become virtuous by consistently acting virtuously. Over
time, virtuous actions become second nature — part of your character, no longer requiring deliberate effort.
The process of moral development
1. Perform virtuous actions — even before you "feel" virtuous
2. Develop the habit — repeat until it becomes natural
3. Character is formed — the disposition becomes stable and deep-rooted
4. Emotion aligns with reason — you now feel the right things, not just do them
5. Eudaimonia — living virtuously constitutes human flourishing
CHILDHOOD EDUCATION ROLE MODELS & SOCIETY
Moral education in early life is critical — children A supportive community and good role models
form habits before they can reason. Parents, are essential — virtue ethics is inherently social,
teachers, and community shape character. not purely individualistic.
7 Virtue Ethics vs. Other Frameworks
Understanding how virtue ethics compares to deontology and consequentialism is essential for the exam —
you must be able to apply each lens to a scenario and identify its distinguishing features.
D E ON TOLOGY
FE AT URE VIRT UE E T HICS CONSE QUE NT IAL ISM
( K AN T )
Core focus Character of the agent Rules / duties Outcomes /
consequences
Key question "Who should I be?" "What is my duty?" "What produces best
results?"
Basis of Virtuous character Rational moral law Utility / welfare
judgment
Role of emotion Important — virtuous person feels Irrelevant to moral Irrelevant
rightly worth
Flexibility Context-sensitive Rigid, rule-based Flexible but outcome-
focused
Moral Central — ethics is about growth Not emphasised Not emphasised
development
8 Virtue Ethics in Business
Virtue ethics translates naturally to the management context — asking what a virtuous manager or leader
looks like, and how character shapes organisational culture.
What does a virtuous manager look like?
INTEGRITY PRACTICAL WISDOM COURAGE
Consistent honesty and Good judgment in complex Willingness to speak up
strong moral principles — business decisions — against wrongdoing —
acting the same whether knowing what the right call is whistleblowing — even when
observed or not. in messy, real situations. it is personally costly.
FAIRNESS TEMPERANCE
Treating employees, Not driven purely by greed or
customers, and stakeholders short-term gain — able to
equitably — not just those restrain impulses for long-
who can benefit you. term ethical behaviour.
Virtue Ethics and Corporate Culture
The character of an organisation's leaders shapes its culture. If leaders are virtuous, ethical culture cascades
downward. Virtue ethics suggests companies should hire for character, not just competence.
Case Application: Whistleblowing
A virtuous person has the courage to report wrongdoing — but also the practical wisdom (phronesis)
to know when and how to do so appropriately. Virtue ethics would say: the right action flows naturally
from being a person of good character. It is not primarily about legal obligations or outcome
calculations, but about who you are as a person.
Virtue Ethics lens: Would a person of practical wisdom speak up here? What virtues are in tension?
Key insight: Virtue ethics uniquely captures the motivational and emotional dimensions of moral action — courage
requires that you want to do the right thing, not just that you comply with a rule.
9–10 Strengths & Criticisms of Virtue Ethics
ST RE NGT HS C R IT IC I SM S / LI M ITAT ION S
Captures the whole moral agent — emotions, Vague action guidance — "be courageous"
motivations, and character, not just actions in doesn't tell you exactly what to do in a
isolation specific dilemma
Context-sensitive — recognises that different Culturally relative — different cultures define
situations call for different responses; no rigid virtues differently (e.g., humility vs.
rules assertiveness)
Motivationally rich — virtuous people want to Circular reasoning risk — virtuous action =
do good, not just comply with rules from what a virtuous person would do → but who
obligation counts as virtuous?
Emphasises moral development — ethics is Doesn't resolve conflicts well — what if two
about lifelong growth, not rule-following virtues clash (e.g., honesty vs. kindness)?
Fits naturally with leadership — explains why Limited applicability to institutions — virtues
character and role models matter in apply to individuals; hard to apply to
management corporations directly
11 Key Terms to Know for Exam
Virtue Ethics Ethical framework focused on character and who we should be — associated
with Aristotle.
Eudaimonia Human flourishing; the ultimate goal of human life — not mere pleasure, but
living and functioning excellently.
Virtue (Aretē) A stable disposition to act, feel, and think in excellent ways — acquired
through habituation, not born with.
Golden Mean Virtue as the right balance between excess and deficiency — not a
mathematical midpoint, but contextually sensitive.
Phronesis Practical wisdom — the master virtue; the ability to judge what is right in
specific real-world situations.
Habituation The process of developing virtues through repeated practice — "we become
just by doing just acts."
Vice A character defect — either excess or deficiency of a virtue (e.g., cowardice
= too little courage; recklessness = too much).
Telos The natural purpose or end-goal of a thing — for humans, it is eudaimonia.
Virtue ethics is teleological.
12 Quick Revision Checklist
Tick off each item once you can answer it confidently without notes.
Can you define eudaimonia and distinguish it from mere pleasure or subjective happiness?
Can you explain the Golden Mean with an original example (not just courage)?
Can you explain why phronesis is the "master virtue" and how it bridges principles and circumstances?
Can you explain how habituation develops virtues, and why childhood and community matter?
Can you compare virtue ethics to at least one other framework across multiple dimensions (focus, role of
emotion, flexibility)?
Can you apply virtue ethics to a business scenario (e.g., a manager facing a whistleblowing dilemma)?
Can you list at least 2 strengths AND 2 weaknesses of virtue ethics and briefly explain each?
Can you define vice and explain both types (deficiency and excess)?
C O R E TA K E AWAY S — V I R T U E E T H I C S I N O N E PA R AG R A P H
1 Virtue ethics (Aristotle) asks "who should I be?" — focus is on cultivating good character (aretē)
rather than following rules or calculating outcomes.
2 The ultimate goal is eudaimonia (human flourishing) — not pleasure, but living and functioning
excellently through virtuous activity over a lifetime.
3 Every virtue is the Golden Mean — the right amount between deficiency and excess — judged by
phronesis (practical wisdom), the master virtue.
4 Virtues are acquired through habituation — repeated practice shapes character over time. Moral
education and community are essential.
5 In business, virtue ethics highlights why character matters in leadership — a virtuous manager
brings integrity, courage, fairness, and practical wisdom to every decision.
