Ethics and Justice in Business

In my view justice and ethics must be integrated and I will support my view by reviewing Hosmer et. al (2005) who posit that “a normative stakeholder theory of firms” based on ethics will relate well to “perceptions of justice” (fairness) and will result in improved attitudinal, behavioral and performance of the firm. They propose a set of hypothesis of which the first is of particular relevance as it states that if “managers logically explain the ethical (not the instrumental) basis of their decisions (informational justice), then stakeholders will more likely believe that they have been fairly rewarded (distributive justice) been fairly considered (procedural justice) and fairly treated (interactional justice)”. The next set of four hypothesis suggest the such a scenario as painted in the first hypothesis will lead to stakeholders being more positive, have greater job satisfaction, exhibit greater organizational commitment and repose trust in management. This in turn will lead to enhanced role based and extra role behavior and result in bettering organizational performance. The final hypothesis provides a beautiful conclusion that sustainability of a firm performance will depend on the continued commitment to “balance the moral claims of all corporate stakeholders, concepts of justice, concepts of duty, and concepts of virtue”.

In a world that seem to head deeper into ethical morass, a discussion of justice without reference to ethics in my view will reek of tokenism. While we need to examine the deontological or teleological aspects of ethics that considers the consequence of an action as being “moral” or “amoral” it seems more relevant to focus on virtue ethics which looks inward and expects to address the character of the individual performing the action rather than its consequences. Mahatma Gandhi is reported as having stated that “the end of education is character” and if this is indeed so the question of willful action that is not morally sanctioned will not arise from a person who has acquired that character. In conclusion it is appropriate to return to the Mahatma who summed it up beautifully saying “commerce without morality (ethics) is sin”.

On Decision Making

Here I go after a year!

It may be argued that leadership at any level includes a fair amount of decision-making and that all the data required making an informed choice may not be available or human beings are subject to “bounded rationality” (Simon, Herbert) due to the limitations in the information they can process and the cost associated with them.
What comes to mind is the paradox that anyone who makes a decision grapples with consciously or subconsciously. Henry Mintzberg summed it beautifully, “Take your pick, in some sense, between "paralysis by analysis" and "extinction by instinct"! Any decision has with in an inherent risk, as the outcome may not be what is intended and in some instances an outcome that was not anticipated or thought to be probable may present itself a “risk”.
Ashwat Damodran quotes Knight (1921) who defined “only quantifiable uncertainty to be risk” so it may be seen as different from uncertainty. Having seen that decision-making is something we do routinely though the nature of decisions can range from simple to complex, the inherent risk will also vary in magnitude and impact. Additionally as decision-making is one thing that cannot be automated though experts in “artificial intelligence” (an oxymoron) may argue otherwise, it is relevant to the study of human behavior.
So what drives decision making … Watch this space…