Philosophy of business

The Development of management theory and philosophy considers the fundamental principles that underlie the formation and operation of a business enterprise; the nature and purpose of a business, for example, is it primarily property or a social institution; its role in society; and the moral obligations that pertain to it. The subject is important to business and management, and is closely related to business ethics and political economy. It is influenced significantly by philosophy, ethics, and economic theory. One must draw an important distinction between the philosophy of business and business philosophy, which is an appellation that one often hears in the business world. More often than not, the latter designation is intended to denote a way of doing business or a business outlook, a popular use of the term philosophy, instead of its more formal, academic meaning, using the concepts and methods employed by philosophers. The latter meaning applies to the philosophy of business in this article. The phrase philosophy of business also might be used in the same way as business philosophy, for example, "Risk taking represents my philosophy of business." However, this is not the same sense that philosophy is used in this article. It is a somewhat curious truism that despite the fact that business touches nearly every aspect of our lives, few thinkers have shown an interest in it from a rules or philosophical perspective until relatively recently. Indeed, few philosophers can be said to have paid much attention to the business enterprise, itself, prior to the latter part of the 20th century. Many philosophers tended to look askance at commercial activity, believing, as Plato did, that only the worst sort of people are involved in such matters. Plato is not unlike many academics throughout history, even today, who tend to think of business as a necessary evil in society, and not as something worthy of serious philosophical consideration. Although there have been few "philosophers of business", per se, business and economics has not developed in a vacuum. It is built on many tacit philosophical principles and assumptions that we can examine. As a general rule, business practitioners and theorists tend to accept the principles that are current in their so iety. In the European Middle Ages, for example, the dominant Christian influence resulted in a pricing practice known as just price, and in the Enlightenment the dominant view of economic decision making was one of rationality. The formative years in the development of the modern philosophy of business and economics was the 17th and 18th century. At that time, thinkers like Hobbes, Locke, Rousseau, Shaftesbury, and Smith created the intellectual foundation upon which modern business and capitalism was built. A basic principle subsumed within business practice and economic theory alike is the notion of free will. Thomas Hobbes, John Locke, and Jean-Jacques Rousseau all accepted that we are free moral agents, able to make decisions, control our own destiny, and engage in a social contract. This notion would later be celebrated in the idea of the entrepreneur, someone that freely decides to pursue a risky venture in the hope of receiving great rewards. It is also at the core of utility theory, a model of consumer behaviour in economics in which consumers freely choose what to purchase. Another philosophic principle that would become part of business theory and practice is rationality. The general philosophic predilection of the enlightenment was that people were fundamentally rational. Philosophers such as Rene Descartes and Spinoza had built whole systems of thought on this assumption. Capitalism would do the same. For two hundred years economics was founded on the assumption of Homo economicus. This assumption has recently been challenged by Herbert A. Simon, among others. Another key philosophic assumption is atomism. It was John Locke's view of society as an aggregation of independent, autonomous individuals, rather than Jean-Jacques Rousseau's vision of society as an organic collective that would become an integral part of business philosophy. The key ethical unit is the individual. Social institutions are merely constructs that individuals can use for their own purposes. Many years later, Milton Friedman used this assumption in arguing that corporations have no moral responsibility because, he contended, they are not individuals capable of responding to moral claims. Only the individuals within the business enterprise have a moral responsibility.