Success in the modern business firm requires the development of critical thinking skills: the ability to understand what someone is saying and then to apply evaluative criteria to assess the quality of the reasoning offered to support the conclusion. There are many forms of critical thinking, but they all share one characteristic: They focus on the quality of someone’s reasoning. Critical thinking is active; it challenges each of us to form judgments about the quality of the link between someone’s reasons and conclusions. This article review ethical theories and applies these theories with critical thinking approach for ethical leadership decision making.
Business Ethics and Leadership
How does one link between Critical thinking, business ethics, and leadership? American Heritage Dictionary defines ethics as the moral quality of a course of action; any set of moral principles or values; the study of the general nature of morals and of the specific moral choices to be made by the individual in his [or her] relationship with others. Business ethics is a subset of the study of ethics and is defined as the study of what makes up good and bad business conduct. This conduct occurs when the firm acts as an organization, as well as when individual managers make decisions inside the organization.
Examining what comprises the organizational culture should reveal some key attributes that encourage ethical behavior. Scholars who studied organizational reputation maintained that a positive reputation, such as one for ethical behavior, had a beneficial effect in the marketplace. The sum total of individual employees’ ethical values influences corporate conduct, especially in a corporation’s early years. The activities during these years, in turn, form the basis of what constitutes a corporate culture, or an environment for doing business. In a free-market society, values of productivity, efficiency, and profits become part of the culture of all companies.
Theories of ethical thought
Ethicists, businesspeople, and workers who adhere to a consequential theory of ethics judge acts as ethically good or bad based on whether the acts have achieved their desired results. The actions of a business or any other societal unit are looked at as right or wrong only in terms of whether the results can be rationalized. This theory is best exemplified by the utilitarian school of thought, which is divided into two sub-schools: act utilitarianism and rule utilitarianism. In general, adherents of this school judge all conduct of individuals or businesses on whether it brings net happiness or pleasure to a society. They judge an act ethically correct after adding up the risks (unhappiness) and the benefits (happiness) to society and obtaining a net outcome.
Deontology is derived from a Greek word meaning “duty.” For advocates of
deontology, rules and principles determine whether actions are ethically good or bad. The consequences of individual actions are not considered. The Golden Rule, “Do unto others as you would have them do unto you,” is the hallmark of the theory. Absolute deontology claims that actions can be judged ethically good or bad on the basis of absolute moral principles arrived at by human reason regardless of the consequences of an action; that is, regardless of whether there is net happiness. Immanuel Kant provided an example of an absolute moral principle in his widely studied “categorical imperative.” He stated that a person ought to engage only in acts that he or she could see becoming a universal standard.
A third school of thought, the humanist school, evaluates actions as ethically good or bad depending on what they contribute to improving inherent human capacities such as intelligence, wisdom, and self-restraint.
The profit-oriented theory of social responsibility begins with a market-oriented
concept of the firm that most readers were exposed to in their first or second course in economics. Holders of this theory argue that business entities are distinct organizations in our society and that their sole purpose is to increase profits for shareholders. Businesses are to be judged solely on criteria of economic efficiency and how well they contribute to growth in productivity and technology. Corporate social responsibility is shown by managers who maximize profits for their shareholders, who, in turn, are able to reinvest such profits, providing for increased productivity, new employment opportunities, and increased consumption of goods..
Advocates of the managerial theory of social responsibility argue that businesses, particularly large institutions, have a number of interest groups or constituents both internally and externally that they must deal with regularly, not just stockholders and a board of directors. A business has employees, customers, suppliers, consumers, activist groups, government regulators, and others that influence decision making and the ability of the entity to make profits.
It is whether or not we foster the development of wisdom--through Business Ethics--that will ultimately dictate the direction in which our part of the universe moves. In fact, the idea that human beings are acting as co-creators for the present and future is something that has become a tangible reality. When examining business ethics, one must recognize that the corporations, partnerships, and other entities that make up the business community are a composite of individuals. Corporations, and the culture of a corporation, are greatly influenced by what ethical values individuals bring to them. For an organization as a whole to be ethical, it must have an organizational culture that values ethical decision-making. The best way to achieve the ethical value in organization is to foster critical thinking in organizations.
I wish you good luck and see you next week!