Ethical Dimensions of Leadership. - Review - book reviews

Administrative Science Quarterly,  Sept, 1998  by Ronald Duska

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Rabindra N. Kanungo and Manuel Mendonca. Thousand Oaks, CA: Sage, 1996. 152 pp. $36.00, cloth; $17.95, paper.

With a growing consensus that businesses need to be ethical, society turns to educators and consultants to help improve ethical behavior in business. Yet it is not too clear how they can help. Most of us agree that it is wrong to lie, cheat, and steal or to exploit, harass, and irresponsibly break one's word, so we don't need an ethics consultant or ethicist to teach us what we already know. What is needed more is a plan for effecting some change in behavior patterns from unethical patterns to ethical. The problem of influencing and altering unethical behavior can be addressed on the individual level, where success is unlikely unless a host of conditions are met: (1) a change in perception about the desirability of current practices, (2) a moral imagination that offers alternative ways of behaving, and (3) the courage to begin modifying one's behavior one step at a time, i.e., character building. What helps such individual effort enormously is an organization dedicated to providing an environment that makes ethical behavior attractive, led by a person who practices such ethical behavior and has such a character. The two books under review approach business ethics from such an organizational theorist and leadership perspective, while appealing to some form of Aristotelian ethics. Hartman resurrects the Aristotelian emphasis on the social influences on individual ethical behavior and character development, and Kanungo and Mendonca stress the need to develop an ethical character in leaders, which manifests the Platonic/Aristotelian core virtues of prudence, justice, temperance, and fortitude. Such a person will be a spiritual leader who can effect change.

According to Hartman, "Ethical theorists should concentrate first on the nature of the good community, rather than trying to combine utility and justice and rights to make a theory that can guide action" (p. 5). Rather than applying ethical theoretical principles to problems of business, he turns to an examination and evaluation of the context and culture of business organizations. Since "business ethics requires an understanding of business" (p. 98), we need to understand business as a specific kind of organization, with its incentive systems and its production goals. Then we can look to see if those organizations encourage ethical behavior and help make people better off, which, according to Hartman, is the purpose of ethics.

As Hartman makes clear, in the context and culture of business in the late twentieth century, the production of the good life or making people better off is not usually seen as the purpose of business. Rather, economists generally claim that the purpose of business is to maximize profits, or shareholder value, which purpose just happens to have the benevolent side effect of making society better off. Hartman shows that in reality the maximization of profits does not necessarily make people better off and, as a goal of business, cannot make people better off, because it creates the problem of the commons, and/or the problem of the free rider - who fails to show restraint in checking his or her own interests while depending on the restraint and sacrifice of others to preserve the commons. Hence, the ethical requirement is to change the context of business from a market context to the context of the commons, in which cooperation and restraint are necessary to help the commons survive and the members flourish. According to Hartman, the profit maximization position is based on a misunderstanding of human nature and what will make people better off. Not everyone is narrowly selfish, and so the pursuit of narrowly self-interested concerns will not make people better off.

People are interested in other people. Since people are social animals, the good life requires living in a good community. From such a viewpoint, the test of the manager is to arrange matters such that morality and self-interest overlap, at least for intentional agents who are reflective thinkers.

But what is the nature of the good community where people are better off? It is not just a community that maximizes utility or good, as utilitarians would insist, and even if it were, we are "not in any position to designate any one conception of the good as the right one" (p. 6). Nevertheless, some conditions for the good life are "the autonomous exercise of one's powers and enjoyment of one's goods as one wishes," taking into account "the importance of justice and rights." We need a community that fosters liberty within the constraints of justice and rights, but justice and rights based on more than just what one deserves from being efficient and productive. Such a community must result from a freely given agreement, a social contract, but one that cherishes and protects as much liberty as possible while being as productive as possible. These are the central components of John Rawls' notion of a just society, to which Hartman adds Hirschman's minimal conditions of an ethical community - exit, voice, and loyalty. Finally, a good community also requires not only good rules but also people of civic virtue. Moral persons are necessary for good organizations, but a good organization helps make people moral.