Background
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
Consequential
theories:
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.
Deontological theories
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.
Humanist theories:
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.
Profit-oriented theory
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..
Managerial theory
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.
Conclusions
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!
Regards,
Saju Skaria
SajuSkaria@gmail.com
www.SajuSkaria.com
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