Minggu, 02 Desember 2012

Charismatic Leadership and Ethics from Gender Perspective.

Charismatic Leadership and Ethics from Gender Perspective.

By: Tuomo Takala & Iiris Aaltio

1. Introduction


In this paper we will explore leadership, charismatic leadership, gender issues and ethical aspects together. All these areas have been developed around organization studies on leadership. There is no doubt that leadership plays a role in organizational creation and growth. A number of studies are conducted that have shown its dependency on surrounding cultural context, focused on special behavioural characteristics, individual features etc. Charismatic leadership research has developed so far from 1980´s, and led from individual characters to analyse its nature in the mirror of media, social environment and various other contextual up-to-date aspects. In leadership studies gender is nowadays used as a critical focus to understand its nature, whereas in charismatic leadership studies gender as a focus is not used so far. We wonder is there are issues in charismatic leadership that make it gender related and in this paper we discuss, if the theory of charismatic leadership is gender neutral, or, laden by features favourable to masculine aspects. We will also cross issues from leadership theory, charismatic leadership theory and gender studies to explore the possibility of "feminine charisma". We use examples from political life to study their "leadership philosophy" and its charismatic nature, using ethic as a frame. All these examples of feminine and masculine charisma also reflect ideals about what it means to be a good or bad leader and we will discuss if these features also differ between women and men.


Charisma, in terms used by Max Weber (1964), means literally "the gift of grace". It is used by Weber to characterize self-appointed leaders followed up by people who are in distress and who need to follow the leader because they believe him to be extraordinarily qualified. The role of a follower is to acknowledge this destiny, and the authority of genuine charisma is derived from the duty of the followers to recognize the leader. The very nature of charismatic authority is unstable; this is because the source of charisma is continuously "moving on". It will never be stable and unchanging.


Charismatic leader uses power on his followers, but also the followers use power over the leader. This leads to the question what is good and what is bad. The study of ethics of charismatic leadership is related to questions of how to use power, i.e which ways and in what manner. The aims and vehicles, he/she uses, are the main objects when one evaluates the ethical behaviour of the charismatic leader. Gender is a cultural creation instead a feature of an individual, whether biological or psychological. It is laden with cultural meanings, and these meanings create the gendered context for women and men leaders to use their charisma. We discuss the possibility of "good" or "bad" charisma in terms of gendered leadership behaviour. While gender is a cultural creation, it is probably woven to understanding of charisma much more than usually thought.

2. Leadership and gender


In organization studies the complex relationships between leadership, power and gender became a research topic in 1970's, when Rosabeth Moss Kanter started the debate on the "blind spots" of organizational analysis (Kanter, 1977). The aspects of organizational life that hide gender attributes of leadership and power became topical in research. The prevailing gender-neutral tradition, particularly in the US, was broken, and the discourse of organizations as sites where gender attributes are presumed and reproduced, started to gain foothold especially in 1990's. The under-representation of women in high-status roles has been documented by feminist literature (for example Acker, 1992; Auster; 1993; Gherardi; 1995). 


In organizations and management, gender segregation and gender relations occur in roles and organizational positions, like the (female) secretary is subordinate to the (male) boss (Pringle, 1988), in similar way the supportive wife / mother looks up to the authoritative husband / father. There are inequalities that favor men on various criteria including salary and professional grade. Feminist theory argues that sex roles exist in patriarchal societies and organizations, which are established by social structures and relationships that favor men. (Gough, 1998). Gender regime exists and continues to exist. (Wahl, 1992). Social roles are gendered and determined by a variety of social, political and economic factors, and in addition to sex and biological differences between men and women, there are cultural and historical factors that build them. It is generally believed that leadership, organizational culture and communication are constructed with a masculine subtext, and dominant views on leadership are difficult to integrate with femininity. (Lipman-Blumen, 1992; Aaltio, 2002).


Earlier management research took it for granted that managers were men, (see for example Mintzberg, 1973, 1989; Dalton, 1959), and ignored gender issues altogether. The so-called great-man theory is one of the earliest management theories. It argues that persons (men) who have influenced Western civilization, have characteristics that are needed in a good leader. 


To give an overview of leadership theories, there are, rougly, three bodies of theories: trait, behavioural and contingency theories (Metcalfe & Altman, 2000, 107-111). Early theory development in 1930's and 1940's usead a trait theory approach based on the premise that successful leaders would possess distinguishable characteristics not found in their followers (Weiss, 1996).


Trait approaches link psychological features and capabilities like intelligence, superior judgement, decisiveness and a high need for achievement to leadership, and even physical features characteristics like weight, height, physique and energy were argued to be needed in affective leadership. This is not surprising thinking the close link between leadership and military occupations and law enforcement. There was a subtext in the trait theories that there are natural reasons that lead to the fact that there are more men than women as leaders. Instead of intelligence and logic, emotionality and therefore irrationality suit better, stereotypically, to female traits than to male, and in body strength they also become the second sex.


There are many interesting pieces of research like the one by Maddock and Parkin (1993) that highlight how women in organizations may struggle to convey appropriate female behaviour and valued management competence. They look to be difficult to combine. There is even "gentlemen's" culture which acknowledges the special skills and abilites of women, leading them to "ladies' club" that supports male management decision making. In locker room cultures there is exclusion of women from men´s club with sporty male outlook, and inclusion would mean to attend football matches and partaking male sexual joking that undermine women, that means, to compromise their feminine identity. The idealization of masculine features and seeing them as representations of ideal leadership traits is the outcome of these cultures. 


Behavioral theories focus on managers' behavior. There are three main types of behavioral theories. One distinguishes between two types of behavior; task-oriented style and interpersonally oriented style. Another distinguishes between two types of leadership; autocratic and democratic. The third type, situational theory, regards different types of behavior appropriate for various situations. The behavioral theories implicitly suggest that better managers are either masculine (i. e. high task / low interpersonal style, autocratic decision making) or feminine (i. e. low task / high interpersonal style, democratic decision making). (Powell, 1993), and are gendered as well as trait theories and great-man theories are.


Behavioral theories are seemingly more gender-neutral in that they study effective leadership in terms of leaders help their sub-ordinates to achieve their goals. Usually, the samples consisted male managers, seeing gender not relevant at all (Mills, 1988). If gender sometimes was focused, there were found interesting differences like that identical leadership style may be seen differently depending on the gender of the manager (Eagly et al., 1992), or the idea of sex-role spillover that refers to gender-based expectations for behavior that are irrelevant or inappropriate to work (discussed in Metcalfe & Altman, 2000, 108-109). 


Contingency theories focus on organizational contexts that make some leadership behaviors or features more effective than the others. There are some studies that give emphasis on the situation and its gendered consequences on leadership behavior. Men and women work differently, like women communicate in a way that exchanges feelings and creates personal relationships, whereas men communicate to establish their status and show independence. In addition, men are socialized to believe that they have the right to influence and the historical evidence with male dominantly managed organizations supports this.

3. Charismatic leadership and gender


The basic nature of charismatic leadership is in its emotional tie between the leaders and the led. Charismatic leadership takes place within the process between the leader and the subordinates, which relationship is personalized and intimate and where mutual trust prevails. Organizational contexts that allow emotionality may trigger charismatic leadership and followership in organizations. Charismatic leadership can also lead to bad or good consequences. We can study it using the threatening examples taken from history, but it is also possible to adopt a brighter and more everyday understanding of its nature instead and see it as a commonly shared attribute.

Differences and similarities between female and male managers


Overall, there is some research made using male and female gender as a critical factor. We now review a few of those studies where comparisons between female and male managers are made. Powell (1993) brings forward a modern approach to management theory and claims that there are three perspectives on the difference between female and male managers. (1) there are no differences between men and women as managers, women managers try to become like men and reject the gender stereotype. (2) men make better managers because their early socialization experiences differ: they are playing more team sports than girls do (Hennig and Jardim, 1977). (3) stereotypical differences between the sexes, where women in managerial roles bring out their feminine characteristics that tend to be stereotypical.


Feminist researchers, such as Rosener (1990), argue that female and male leaders differ in accordance with gender stereotypes. She argues that femininity is particularly needed in today's work life. Rosener claims, along the same lines as Powell (1993), Gardiner and Tiggemann (1999), that there are profound differences between male and female leaders; female leaders concentrate on the relationships between people whereas men tend to concentrate on the issues or tasks. Women use more personal power, i. e. power based on charisma and personal contacts, whereas men tend to use structural power, i. e. power based on the organizational hierarchy and position. (Eagly and Johnson, 1990). Lundberg and Frankenhaeuser (1999) in turn argue that there is no difference between men and women in interpersonal style of leadership, but that men are more task-oriented than women.


Schein's (1973) classic study concluded that both female and male executives believed that managers possessed characteristics that were more associated with men than with women. In later studies that examined the perceptions of executive women, women have no longer described successful managers as having only masculine characteristics. More recent management theories, such as the Managerial Grid Theory, claim that both masculine and feminine characteristics are important in a good manager. The Theory suggests that best managers are androgynous: they combine both (masculine) high task and (feminine) high interpersonal styles. (Powell 1993). Although the concept of androgyny has received mixed support, one aspect has been agreed upon: Leadership is generally conceived in masculine terms (Goktepe and Schneier, 1988; Kruse and Wintermantel, 1986), but also feminine features are needed in a manager. Frankenhaeuser et al. (1989) claim that female managers are psychologically more androgynous than men suggesting that female managers absorb masculine features, whereas men stick to the masculine style more.


Some researchers suggest that women should adopt a masculine style to become accepted as leaders (Sapp, Harrod, and Zhao, 1996). Women in leading positions have shown to be more masculine (Fagenson, 1990). However, Watson (1988) has indicated that masculine women's performance level is low, and women choosing such a strategy often experience role conflicts (Geis, 1993). Baril, Elbert, Mahar-Potter and Reavy (1989) claim that adopting one's masculine and feminine behavior to suit each situation separately might be the best approach. Powell (1993) argues that both feminine managers and androgynous managers seem to fit in today's work environment. This is true even if the managerial, masculine favorable subtext still exists. However, management and leadership are dependent on the local context and culture where they are practiced, and this makes drawing universal theories difficult. When overall conclusions are led, the outcome looks to be that masculine is dominant. When we essentialize the difference, the implication is that women lead not like men, but are lesser than men or men with a lack (Oseen, 1997). This is because people hold sex stereotypical beliefs and attitudes about women and men, and not tend to see that women as leaders can be as competent as their male colleagues.

About charisma and leadership


Even ancient philosophers like Plato already talked about charisma, society and leadership. Plato's view of leadership, from a normative standpoint, was that a leader must be a man of power with a sincerely truth-seeking vision. According to Plato, a leader must have charisma, a gift of grace, to be successful in his actions. Without charisma, a leader is unable to do his job, to head an organization. And this charisma is something mystical, which cannot be obtained by force or through training. It is of divine origin. Charisma is based on the aura of the leader's exceptional quality and deviates from the prototypical (Weber, 1964, Takala, 1998). 


Leadership theories can be divided into transactional and transformational theories Conger & Kanungo, 1998). In the transactional approach, leaders are seen as people who motivate and guide their followers in the direction of established goals by clarifying their role and their tasks. There is also another type of leader who inspires his or her followers to transcend their own self-interests for the good of the organization and who is capable of having a profound and extraordinary effect on the followers. Among these leaders, who may be called transformational, are charismatic leaders such as Mother Teresa and Lee Iacocca. They use their personal abilities to transform their followers' values by creating a sense of importance and value to the tasks. The inspirationality of the leadership function is emphasized in these approaches. 


Charismatic leadership in organizations has recently been the focus of several organizational studies (Steyer, 1998, Gardner & Avolio, 1998), even though basic conceptual work (Bryman, 1992, Cogner & Kanungo, 1987, 1998) and empirical work (House, 1977) has been ongoing in the field from 70´s onwards. Nowadays it is often studied in relation to organizational contexts (like Aaltio-Marjosola & Takala, 1999). The interrelationships between the leader's inner world and its outcomes affect the nature of organizational culture and even the strategic choices made in the company, as pointed out in several investigations. Among the outcomes there are also the effects of the dark sides of the leaders personalities on organizations, as amphasized in the psychodynamic approaches (Kets de Vries and Miller, 1984). 


Charisma is stigmatized by the glory given to a selected few. Charisma can serve not but personal interests but the society, and the organization as a whole. The followers must feel the over-individual, leader-independent targets and visions in charismatic leader context, in order to commit themselves to their leadership style. A charismatic leader´s selfisheness and narcissism may together lead to undesired consequences, whereas the unselfish and sacrificing features of a charismatic leader may be seen to bring about desired and admirable consequences. The nature of charisma is not very rational. Charisma works between the leaders and their followers and is evidently based on authority given to the leader only because of his or her overwhelming knowledge or experience, but rather is based on his or her personal characteristics. The acceptance of charisma, from the follower's point of view, can be regarded as dubious and showing the tendency to be easily impressed by others - a sign of weakness and subordination. Followers may leave space for irrational forces to operate in society (Aaltio-Marjosola, 1994). 


The discussion on charisma in leadership and organizations takes often a tone of danger. Charisma has sometimes been interpreted as the politically dubious characteristics of individuals in society, and it is searched the psychological mechanisms which lead to the emergence of charismatic leaders and attraction of such leaders to the people that follow them. Totalitarian aspects of societies and the truth manipulation practiced by charismatic leaders are negative and undesired consequences of charismatic leadership, as some gloomy examples taken from the history show (Aaltio-Marjosola & Takala, 2001)..


Recent developments have brought insights that emphasize the organizational contexts of charismatic leadership, as well as its consequences for organizations and followers. It looks as if charismatic leadership comes into question especially when the visionary nature, transformational role and emotionality of leadership is explored. In general, charismatic followership is crucial for understanding charismatic leadership and the processes by which it takes place. The legitimacy of charisma and charismatic leadership is sociologically and psychologically attributed to the belief of the followers and not so much to the quality of the leader. In this respect, the leaders are important because they can 'charismatically' evoke this sense of belief and can thereby demand obedience. At the same time the nature of charisma is not very rational. Charisma works between the leaders and their followers, and is evidently not based on authority given to the leader only because of his or her overwhelming knowledge or experience, but rather is based on his or her personal characteristics. The message of sceptical approaches towards charismatic leadership is that the charisma of leaders together with its acceptance by followers may leave space for 'irrational' forces to operate in society. This allows extra space for persuasion and manipulation in charismatic leadership.


Charismatic leadership is created in the ongoing process between leaders and followers in which the environment, different actors and different audiences play their role in defining a situation and in jointly constructing a charismatic leadership. Charismatic leaders make efforts to manage their followers' impressions of themselves by framing, scripting, staging and performing, which constitute the basic phases in the process.

Charismatic leadership and ethical dimensions


In such processes between the leaders and the led ethics and emotions are important. Applied business ethics, in its traditional form, seeks to "say and define" what kind of action Good Business Life is. A tricky issue is that different ethical theories state different criteria, and thus give different and occasionally contradictory solutions to ethical problems. Applied business ethics can be used in the role of a guardian in evaluating which kind of charismatic leadership is "good" or "bad", or "right" or "wrong", when studying its effect on the followers and on society as a whole. But values are both born socially and they die socially. There is no objective measure for value, and not only one right way of defining and explaining charisma. Traditional ethical theories are also rational in the sense that they imply cutting off emotions and the so-called irrational elements of the mind, or in general they do not focus on them. But certainly charismatic leadership involving persuasion and rhetoric between the leaders is emotionally charged. By contextualizing it is possible to break the guardianship and explore ethical issues in the field by showing the multiplicity and complexity in real-life occurrences of charismatic leadership.


Business ethics is a controversial issue, although it is seen as a vital part of everyday business life. The importance of ethics has usually been justified by suggesting that most people want to live in a society in which justice and charity prevail. Concern for business ethics is also a matter of practical life when the economic system is considered. The economic systems can endure only if they operate in such a way that the majority of the people believe that at least some degree of justice prevails there. If the system lacks legitimacy, it is likely to fail. Conger and Kanungo (1998, 213) refer to Thomas Aquinas, according to whom the moral goodness of behaviors should be judged on the basis of the objective act itself, the subjective motive of the actor, and the context in which this act is performed. Applying this to charismatic leadership, there are three ethical dimensions: the leader's motives, the leader´s influence strategies, and the leader's character formation. As further analyzed by Kanungo and Mendonca (1996), charismatic leadership in its positive form is altruistic, influences in empowering ways, emphasizes vision by changing followers' core attitudes, beliefs and values, and manifests needs that are self-developmental. In negative forms there are egoistic interests, control strategies, needs for personal power, and emphasis on compliance behavior and identification with the leader, that makes the charismatic leadership unethical. We now ask if charismatic theory with ethical dimensions is gender biased.

4. Discussion on gender differences in charismatic leadership


Often sport teams with coaching give excellent examples about how to succeed in leadership. Even if the context for leadership differs in business enterprises and sports, there are similar issues: there is an intimate contact between the leader and the followers and the creation of team spirit. One example of charismatic sport leadership comes from Curt Lindström (Aaltio-Marjosola & Takala, 2000), who successfully coached the Finnish ice-hockey team in 1993-94 into World Championship. As a personality C.L. was not an extravert character, but rather resembled the Finnish "deep charisma" with humility, humbleness and silence. There is a lot of dramatics and theatre in Curre's behavior as well, and even impression management style looks to appear. Charisma will emerge, ripen, and fall down, which was also true with C.L. Paradoxically, there are no examples until now of female coaches who would be given the label of charisma; even in theatres, orchestras and other cultural organizations there looks to appear more men than women. Overall, leadership charisma with its strong emphasis on individuality and autonomy looks to apply more to male character than to women - exactly the same way as there are fewer women as leaders in top positions of organizations all over the world.


But there are some examples of women who may be characterized as very charismatic, even in their old meanings of divine origin. Mother Theresa, who worked in Indian slums, was given the label of a "good" person because she sacrified her life and made people in slums see their future lighter. Also Margaret Thatcher was a charismatic leader, in many ways having a strong impact on her followers, a strong vision for Britain that she held before the EU entering by England, and it was argued that her way to lead was very 'male-like', in a negative way, and she got labeled as an Iron Lady, in fact judged to be very masculine. She was loved and hated at the same time. In England there were also other ancient strong queens, like the Bloody Mary from Scotland.


Also a sort of ancient 'military' female leader was Jeanne D'Arch, a French young, poor shepherd girl who got a divine vision and led the solders for victories towards British army. She was later burnt as a witch in England. She happened to express very feminine characteristics, sensitivity - being able to get the divine vision - and being able to share her vision with the military forces, becoming a symbol of French patriotism in those times. There is a somewhat similar kind of Finnish story about Liisa Eriksdaughter in 1700-1800's, based on an investigation by Irma Sulkunen (1999). Also Liisa was a young shepherd girl from Kalanti in 1750's. She started a large-spread ecstasian movement in Finnish cultural structures. As Sulkunen argues, those structures are seen in religious revival movements, but as well in mental and ideological-social practices.


Liisa Eriskdaughter, a shepherd girl became in an odd way 'hit by God', being alone in Santtio forest with the cattle. She read the book by Arthur Dent about religious revival. There was a page telling about sufferings and pains of those driven to hell. Liisa continued reading and fell a deep sleep, waking up after a while with a scream. Pain and threat were so real that that Liisa thought to be in hell. She run, being greatly confused, to a village, and repeated what she had seen to the village inhabitants. After some time the whole village started the same scream, wiping and crying, because of their pagan, unchristian life. 'Madness', said someone, 'women's fancies', said another. Something like that had happened also before. But now it became differently. The odd phenomena did nod stop in Santtio but spread like a wind, felling down people also in other places. There were similar stories about these outbursts, where mind and body became confused. Later those women gave religious speeches. Chaotic group movements spread, and also men joined those separatistic movements. Later there became new female revivers, some of those also older women as well, but the process of felling down was very much the same. Later the church took quite negative attitude towards the movements, and they moved far to East in Finland. Near the Eastern cost there was built a group of women revivers, who wandered around Eastern Finland. Later the atmosphere towards them became very negative. They were labeled as 'hysterical fancy-old-women' who treated the healthy Finnish Christianity. They should be silenced by men - and it was especially pointed the Bible messages according to which women should be silent in the congregation. As in the case of Jeanne D'Arch, also nationalism and patriotism walked hand in hand with religious revivals, so the treat for the state power and to male administrators, was multiple. "The healthy national fundamentals" gave their strict judgment to this turbid ecstasy, unruly mental behavior, that was breaking down the patriarchal hierarchy, and first of all, women's stepping down to modern arenas of powerful, influential positions in political and earlier church organization arenas. The image of women that these ecstasy movements pictured also became very opposite to that one built in educated, active and healthy women's movement that was religious as well. Shamanism was labeled as bad, a threat to the society and the communities rejected the ecstasy women, who, however, took their place at the history.


A person with a lot of charisma, but with very questionable consequences is Osama bin Laden. As a charismatic leader there are some notions that describe him and his ways to be a leader. Matters dealing with Osama bin Laden (abbrev.OSB) were considered in media very often during the last few years. He is called monster, hero, freak, manipulator and so on. However, there evidently are features that make it worth believing that he represents a kind of a leader, called charismatic leader.


Max Weber defined the ideal types of leadership as follows, bureaucratic, traditional and charismatic. Afghanistan, Osama's home country, can be defined as traditional society with many tribes and villages. It has the long tradition of powerful tribe-leaders. Charismatic leadership emerges at periods of transition in societies. Those sad happenings in the WTC's towers in Washington were starting shots for the new coming of Bin Laden as charismatic leader. Charismatic leaders, to be successful, demand unordinary conditions in the community.


Magical nature of charismatic leadership is commonly accepted phenomenon. It has been said that OSB lives in dark gave, and he has some kind of magical powers. His super natural talents give him strong possibilities to influence his followers. Leader-follower relation is in this case very tight. Here comes manipulation in the picture. The dark side of charisma convinces us the power and ethics of using power. The leader must have strong sense of personal responsibility to be a good charismatic leader. There have existed cases in which fatal consequences are more a rule than an exception.


Charismatic leadership is based on the emotions. It is irrational, as Weber put it. It is also interactive situation and relation, leader has power over his followers, but followers have power over the leader. The power becomes legitimised. The follower will obey in cases when his/her values are congruent with values of the leader. This is not coercion, but a voluntary action.


Presenting a vision of better life is one issue in Osama's agenda. He has a video in order to recruit new members to his group in which he puts forth some ideas concerning the wholly war. First, it is told why the whole muslim-world must rise against U.S. Second, it is told that the duty of every Muslim is to join in this war. Third, the vision of better life is presented, and the way to that is Ajihad. The texts of Koran and other writings of the wholly men are used as legitimize the jihad. In the end, there are showed terrorist training camps in Afghanistan. These camps offer a potential force for better world according to Osama's video.


The Latin word terreo means something like terrorize, or frighten people. The act of terror is messaging. Terrorist wants leave his message in any means. The purpose is justifying the means. His own ethical code is seen as suitable inner norm e.g for killing people if this is necessary to reach the ultimate purpose. This is a power in question, a power of media. The power rhetoric of media is based on violent messaging. The victims of terrorists are only means not purposes to terrorists. The discourse of violence constructs the subject receiving the message. Terrorist leaves his message, violence means more power on communication. We can see that this is a kind of talk, which is aimed to great public. The great public is a very general audience. The discourse of terrorism demands global audience to be effective. 


To study the ethical dimensions of charismatic leadership, and roughly place them in four boxes, we can put some of the figures now in their place.

ETHICAL DIMENSION

GOOD


ERIKSDAUGHTER
JEANNE D'ARC


ERIKSDAUGHTER, JEANNE D'ARC
JEESUS

CURRE LINDSRÖM

BLOODY MARY
MARGARET THATCHER

OSAMA BIN LADEN
HITLER
IVAN THE CRUEL

BAD

FEMININE "GENDER DIMENSION" MASCULINE

Figure 1. Gender and ethical dimension of charismatic leadership

Female and male characters carry charisma in ways that may differ. Many characterizations about charisma suit better to masculine ideals. This difference is not so much about the "real" differences people hold that means, their physiological differences, or tested psychological differences concerning mental abilities or personality issues. As much there are culturally based expectations, institutional and other that come from the audiences, from the followers and that have impact what is expected about female charisma. What is credible, allowed female charismatic leadership, what are the general stereotypes about essential female behaviour, and how these suit to charismatic ideals.

In general, stereotypic traits of women and men differ (Rosenkranz, 1968, Brannon, 2002, 165):


Women:
    - Gentle
    - Talkative
    - aware of feelings of others
    - interested in own appearance
    - neat in habits
    - strong need for security
    - expresses tender feelings
    - tactful
    - does not use harsh language
    - quiet
Men:
    - wordy
    - active
    - competitive
    - dominant
    - makes decisions easily
    - independent
    - logical
    - direct
    - acts as a leader
    - ambitious
    - able to separate feelings from ideas
    - adventurous

The given stereotypes of men fit much better to definitions of leadership, especially to notion of transformational leadership. If we look at charismatic leadership definitions with a strong impact, often personal, that people make on their followers, the list, again fits much better to men than women. Women, portrayed as a passive, traditional, silent sex, fit evidently better for the role of followers. Mother Theresa might present a typical, accepted female charisma because she sacrifices for the other, for "higher" targets (to work for the poor people) with a caring attitude, the special and honoured feminine characteristics. 


From the followers point of view, taking the example of Liisa Eriksdaughter, she used charisma, but in a very suggestive, manipulative and emotional way. She became a symbol of extreme female "inner" nature, features that turned out to be negative and a danger for the ruling class. She was a charismatic "witch" that created feelings on her followers, but she also led them wrongly, to wrong directions. The vision she held was important, but only for a while, and not led to remarkable social movements. Also Jeanne D'Arch was burnt as a witch, after leading the French solders with a dream, vision for France, that she got while sleeping.


To be a "bad" charismatic leader would mean to manipulate followers, being egoistic, aggressive, to lead a group of followers for evil consequences (Osama bin Laden). Female charisma (like Jeanne D'Arch) might work in another way, leading people (in this case men) to wrong direction in a chaotic way, manipulate, lead with uncontrolled emotions, making people to follow without their own consideration. The ruling class (British, USA and the unmuslim world) sees the charisma of Jeanne D'Arch and OBL in a negative light. They are charismatic leaders, but only to their own followers - for the others they become enemies with evil acts and consequences. From relational point of view "good" and "bad" charisma are much more difficult to separate than it first looks. Sport coach like Curt Lindström is working in a way that does not cause any harm for the followers, he is neutral in that way. 


There are much fewer female leaders than men, and there are much fewer charismatic female leaders than male ones. The whole idea that leaders use power, fit better to male ideals compared to female ones. Transformational leadership, part of any charismatic leadership with a strong, visionary and change agent- type of leading style fits better to male stereotypes than to female ones (look the earlier picture). Again the bad consequences of charismatic leadership style look to be gendered again: men's actions lead to warring, women´s to chaos and manipulation that threatens the ruling class ways that are suggestive. They both use the magic, the divine vision and the holy truth with divine origin, but end with bad consequences: killing people or rising patriotism that leads to war. A bad female charismatic leader might look as a witch, and a bad male charismatic leader as a devil, the sins they commit with, differs. A good charismatic leader is portrayed as self-sacrifying, inegoistic, and visionary in a sense that does not hurt anybody else, but works for other, more commonly shared and accepted targets, the holy mother and the humble saint would be the examples.

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Applying virtue ethics to business: The agent-based approach

Applying virtue ethics to business: The agent-based approach

  By: John Dobson.


It ca be argued that the presence of what are in a slightly old-fashioned terminology called virtues in fact plays a significant role in the operation of the economic system.
- Kenneth Arrow
 

Introduction

There are two basic approaches to integrating ethics in business: the action-based approach, and the agent-based approach. The traditional approach is action-based in that it focusses on developing rules or guidelines to constrain management's actions. These rules or guidelines generally manifest themselves in corporate codes-of-conduct, or codes-of-ethics.

Contrarily, rather than the action-based focus on rules governing action, the agent-based approach concerns the fundamental character and motivations of the individual agent. Under the agent-based approach, moral behavior is not limited to adherence to a rule or guideline but rather involves the individual rationally pursuing moral excellence as a goal in and of itself. In essence, ethics becomes central to the rationality concept as an objective rather than a constraint: "something positively good, ..something to be sought after" (Ladd, 1991, p. 82).

Agent-based approaches generally derive their philosophical foundation from virtue-ethics theory. This theory is attracting increasing interest from business ethicists. In essence, the 'virtue' in virtue-ethics is defined as some desirable character trait, such as courage, that lies between two extremes, such as rashness and cowardice. Thus the 'virtuous' agent is involved in a continual quest to find balance in decision-making. Such an agent does not apply any specific 'rules' in making decisions, but rather attempts to make decisions that are consistent with the pursuit of a particular kind of excellence that in turn entails exercising sound moral judgement guided by such 'virtues' as courage, wisdom, temperance, fairness, integrity, and consistency.

Rather than stepping outside one's professional role, virtue ethics would have one evaluate an ethically charged decision from within that role. Ethics becomes contextual and connected to a given person and situation, rather than separate and abstract to person and place. This is clearly a very different concept to that of ethics as adherence to a set of abstract rules, which is so common in contemporary professional codes of conduct.

For example, a financial accountant may be able to enhance her company's reported results of operations by crafting a sale-leaseback arrangement whereby some of the company's assets are sold, a gain is recorded, all the appropriate accounting pronouncements are adhered to, and the company still has use of its assets. The intent of the transaction was never to rid the company of unwanted assets, but rather to record a gain and thus possibly avoid breaching debt-covenant agreements or circumvent regulatory requirements.

In order to examine whether or not this example of creative financial-accounting is unethical, action-based approaches would have the individual step out of her accounting role and don the hat of a Kantian (e.g., "does this action violate the rights of users of the financial statements to fairly presented financial information?"), or of a utilitarian (e.g., "does this action maximize the welfare of all stakeholders?"). In this approach, the agent adopts a type of moral schizophrenia in which being a good professional in the sense of being an economically effective accountant becomes separable from being a good professional in the sense of being an ethical accountant. Thus, given this action-based approach, an accountant could be a 'good' accountant, in the sense of being very efficient and effective, yet at the same time not be a 'good' accountant, in the sense of being ethical.

The great strength of virtue ethics is that it overcomes this moral schizophrenia. Ethics is no longer merely a list of constraints on behavior. For example, our financial accountant, if she were virtuous, would not have to weigh the goal of maximizing firm profits against the constraints of an ethics code. Maximizing firm profits would simply no longer be her ultimate objective.

Indeed it is this holistic motivational focus, transcending contextual specificity, that is the great contribution of virtue-ethics theory. This theory provides an alternative value base upon which to build a morally sensitive theory of financial economics.

At first blush, however, the virtue-ethics approach might appear too esoteric for application in business: How could a financial manager pursue moral excellence through virtue? On closer scrutiny, however, the focus of virtue-ethics on the fundamental motivations of the agent actually dovetails rather neatly with the increasing focus among financial economists on the motivations of agents in business.

Virtue Ethics: An Overview

Virtue ethics is concerned with pursuing a certain type of morally inclusive excellence. Aristotle called it eudaimonia, which can be roughly translated as 'happiness', or 'human flourishing'. For present purposes, this approach to ethics can be thought of as exhibiting four basic attributes. Its primary attribute is a strong emphasis on the importance of certain generally accepted virtues of character; indeed it is through honing and perfecting these virtues that an individual becomes truly ethical. Secondly, a strong emphasis is placed on the existence of an active community that nurtures these virtues. Thirdly, virtue-ethics theory makes clear that in the moral life one cannot rely merely on rules or guidelines, in addition an ability to exercise sound moral judgement is requisite. Finally, the successful identification and emulation of moral exemplars or role models is essential for the dissemination of morality within the aforementioned nurturing community.

The remainder of this article will describe virtue ethics from these four perspectives: the role of the virtues, the role of community, the role of moral judgement, and the role of exemplars.

The Role of The Virtues

An essential feature of rationality within virtue ethics is that, rather than focussing on the material goals of the agent, it focusses on the character and motivations of the agent, and on the agent's ability to pursue a certain very particular type of excellence. A characteristic of this excellence is that its pursuit necessitates adherence to certain virtues or traits of character. These virtues place emphasis on the motivation for an action and entail the exercise of sound judgement. "Virtue lies in the reasons for which one acts rather than in the type of action one performs" (Annas, 1995, p. 250). Virtues can be split into two broad categories, namely self-regarding and other-regarding:
    When, furthermore, we look at the whole range of traits commonly recognized as virtues, we once again see that self-regarding and other-regarding considerations are both capable of underlying the kind of high regard that leads us to regard various traits as virtues. Justice, kindness, probity, and generosity are chiefly admired for what they lead those who possess these traits to do in their relations with other people, but prudence, sagacity, circumspection, equanimity, and fortitude are esteemed primarily under their self-regarding aspect, and still other traits - notably self-control, courage, and (perhaps) wisdom in practical affairs - are in substantial measure admired both for what they do for their possessors and for what they lead their possessors to do with regard to other people. [Slote, 1992, p. 9, emphasis added]
A succinct definition of virtue is supplied by MacIntyre: "A virtue is an acquired human quality the possession and exercise of which tends to enable us to achieve those goods which are internal..." (1984, p. 191). He distinguishes between internal and external goods as follows:
    It is characteristic of what I have called external goods that when achieved they are always some individual's property or possession. Moreover characteristically they are such that the more someone has of them, the less there is for other people. ...External goods are therefore characteristically objects of competition in which there must be losers as well as winners. Internal goods are indeed the outcome of competition to excel, but it is characteristic of them that their achievement is a good for the whole community who participate in the practice. [1984, pp.190-191; emphasis added]
The pursuit of external goods, therefore, is no longer recognized as the ultimate end of human endeavor, but rather as a means to the achievement of excellence. Martha Nussbaum defines this excellence as "the end of all desires, the final reason why we do whatever we do; and it is thus inclusive of everything that has intrinsic worth [i.e., internal goods], lacking in nothing that would make a life more valuable or more complete" (1991, p. 38).
A central feature of virtue ethics is its concept of professional development as fundamentally a moral process; "one cannot be practically rational without being just - or indeed without the other central virtues" (MacIntyre, 1988, p. 137). Thus rather than being some peripheral appendage or constraint on a substance-based rationality concept, this approach places morality at center stage. In a business context, Kenneth Goodpaster lists five key virtues:
    (1) Prudence - neither too short-term nor too long-term in time horizon; (2) Temperance - neither too narrowly materialistic (want-driven) nor too broadly dispassionate (idea-driven); (3) Courage - neither reckless nor too risk-averse; (4) Justice - neither too anarchic regarding law nor too compliant; (5) Loyalty - neither too shareholder-driven (private sector thinking) nor too driven by other stakeholders (public sector thinking). [1994, pp. 54-55]
Clearly, to achieve excellence through the exercise of these virtues of character requires a sense of moderation. Thus managers who are said to be 'weathering the storm' or 'sticking to their guns' may well be exercising the virtue of courage. But so might a manager who 'knows when to call it quits'. It is the reason or judgement underlying the action that will determine whether the agent is truly courageous. Thus a virtue is not a maximum or a minimum. Unlike rationality in the finance paradigm, practical rationality concerns moderation and balance.

The crucial difference, therefore, between traditional approaches to business ethics and the approach adopted in virtue-ethics theory is that the latter focusses on the character and motivations of the agent, and on the agent's ability to pursue excellence through virtuous acts. As mentioned earlier, Klein succinctly distinguishes between the traditional approach to business ethics and the new virtue-ethics approach by labelling them as "action-based" and "agent-based" respectively: the former tending to focus on moral rules that can be generally applied to contractual situations (e.g. Kantianism and utilitarianism), whereas virtue ethics concerns the aspirations of the agent, and the agent's ability to exercise the moral 'virtues'. Klein describes a similar individual in his analysis of Cervantes's Don Quixote:
    The ideal of craftsmanship is to create that which has quality or excellence; personal satisfaction, pride in accomplishment, and a sense of dignity derived from the consequent self-development are the motivations. In an 'excellent' company it is this ideal that permeates the firm, and management should provide the moral example of such an ideal; a business management craftsman attempts to create a quality organization, and quality products and services are the result of such an organization. [1998, p. 55]
Klein's managers recognize their business universe as essentially one of chaotic disorder and unpredictability where rules of logic and rationality will never fit comfortably. These managers endeavor to achieve some sort of balance and harmony in their chaotic environment. In this endeavor they are not quixotic, but rather are guided by conceptions of quality, excellence, the Good, Aristotelian eudaimonia, and by conceptions of desirable character traits -- virtues -- that may lead to these ideals. The acquisition of these character traits and the concomitant pursuit of these ideals is not achieved simply by the application of certain rules of logic, or of rationality. Indeed the whole pursuit is characterized by a marked absence of rules and set goals.

The Role of Community

Virtue ethics theory also has implications for the role of the firm or professional organization. For the virtues to flourish requires a conducive infrastructure; "one cannot think for oneself if one thinks entirely by oneself, .. it is only by participation in a rational practice-based community that one becomes rational .." (MacIntyre, 1988, p. 396). MacIntyre defines a practice as ...
    .. any coherent and complex form of socially established cooperative human activity through which goods internal to that form of activity are realized in the course of trying to achieve those standards of excellence which are appropriate to, and partially definitive of, that form of activity, with the result that human powers to achieve excellence, and human conceptions of the ends and goods involved, are systematically extended. [1984, p. 187]
Thus rationality in virtue ethics is a shared rationality with a shared conception of what is ultimately desirable in all human endeavor. This shared conception must be supported by, and indeed be the raison d'être of, the organizations and institutions that control and direct human activity. This infrastructure is an aspect of what was known in the city-states of ancient Greece as the polis: "the form of social order whose shared mode of life already expresses the collective answer or answers of its citizens to the question 'What is the best mode of life for human beings?'" (ibid., p.133). Such an infrastructure is essential for virtue ethics:
    Aristotle is articulating at the level of theoretical enquiry a thought inherited from the poets when he argues in Book I of the Politics (1252b28-1253a39) that a human being separated from the polis is thereby deprived of some of the essential attributes of a human being. .. A human being stands to the polis as a part to its whole. .. For the polis is human community perfected and completed by achieving its telos. [Ibid., p.96-97]
The virtue-ethics approach thus casts the firm or professional organization in a role that is far more active and intrusive than merely what Jensen and Meckling call a "contractual nexus" (1976) or what Miller describes as a "wealth creating machine" (1986). The firm becomes a nurturing community, a polis. "Corporations are real communities, ..and therefore the perfect place to start understanding the nature of the virtues" (Solomon, 1992, p.325). Solomon emphasizes the link between virtue-ethics and this expanded role of the firm as a nurturing community: "It [virtue-ethics] is an Aristotelian ethics precisely because it is membership in a community, a community with collective goals and a stated mission - to produce quality goods and/or services and to make a profit for the stockholders" (Solomon, 1992, p.321). Within the rubric of virtue-ethics theory, therefore, the goals and aspirations of the individual are nurtured and directed by the business organizations and institutions of which that individual forms a part.

The Role of Moral Judgment

Another significant aspect of virtue ethics is its rejection of a rule-based approach to moral education. Acting ethically in a given situation is less a function of rule adherence and more a function of exercising sound moral judgement. MacIntyre makes this very clear:
    What can never be done is to reduce what has to be learned in order to excel at such a type of activity to the application of rules. There will of course at any particular stage in the historical development of such a form of activity be a stock of maxims which are used to characterize what is taken at that stage to be the best practice so far. But knowing how to apply these maxims is itself a capacity which cannot be specified by further rules, and the greatest achievements in each area at each stage always exhibit a freedom to violate the present established maxims, so that achievement proceeds both by rule-keeping and by rule-breaking. And there are never any rules to prescribe when it is the one rather than the other that we must do if we are to pursue excellence. [1984, p. 31]
This does not mean that, for example, derivatives traders should ignore exchange standards or codes of conduct, but rather that these should be viewed - not as the entire professional ethic - but as the foundation from which to pursue the professional ideal in this activity. This professional ideal will be defined in terms of the internal goods specific to the practice of derivatives trading, but more on this later.

The Role of Moral Exemplars

The role of exemplars is critical for the application of virtue ethics because it is from these individuals that the virtues are disseminated throughout the profession. Thus, in virtue ethics, ethics is something which is learnt through observation of others' behavior. For example, in his article on "Good Works", Michael Pritchard concludes that "beyond discussing codes of ethics, principles of right and wrong, dilemmas ... and moral disaster stories, we need stories of a different sort - stories of good professionals whose lives might inspire emulation" (p. 170, emphasis added). A resurgence in recognition of the critical importance of moral exemplars is supplied by cognitive science in its invocation of "exemplar theory". Alvin Goldman summarizes the theory as follows:
    Moral theorists often assume that people's usage of moral terms is underpinned by some sort of rules or principles they learn to associate with those terms: rules governing honesty, for example, or fairness. The exemplar theory suggests, however, that what moral learning consists in may not be (primarily) the learning of rules but the acquisition of pertinent exemplars or examples. This would accord with the observable fact that people, especially children, have an easier time assimilating the import of parables, myths, and fables than abstract principles. A morally suitable role model may be didactically more effective than a set of behavioral maxims. [1993, p. 341]
In summary, what this overview of virtue-ethics theory makes clear is that an individual, whether finance professional or otherwise, cannot be ethical in a vacuum. The individual must be educated in the virtues by a nurturing community, and by the guidance of exemplars. This approach takes ethics far deeper than merely a credo or code of conduct. Ethics becomes integral to the professional's whole conception of what it is he or she is about. Rather than the opportunist of financial agency theory, the virtuous agent adopts a different notion of substantive rationality: Practical Rationality.

Virtuous behavior: Practical Rationality

A chess championship recently took place in London between the reigning champion, Gary Kasparov, and a British challenger, Nigel Short. The winner of the tournament was to receive some $2 million in prize money. Imagine that one of the players, say Kasparov, is 'rational' in the economic sense as invoked by the finance paradigm, while the other player, Short, is 'rational' in the sense of Aristotelian practical rationality as invoked by virtue-ethics theory. How, exactly, would these two individuals differ in their approach to the chess tournament?

Clearly the actions of the two agents may be indistinguishable. They would both be playing chess to the best of their ability, and would both be playing to win. Clearly, also, either player could win. The difference between the two players would likely rest entirely on their respective motivations for winning. Kasparov's motivation would derive from the external goods to be gained from playing chess, namely the $2 million prize money and perhaps also the fame and power that comes from being 'the champion'. Contrarily, Short's motivation would derive from the internal goods to be gained from playing chess. These goods are less easily identified. They are, as MacIntyre notes, "those goods specific to chess, .. the achievement of a certain highly particular kind of analytical skill, strategic imagination and competitive intensity .." (1984, p. 188).

In essence, Kasparov views chess as a means to an end, where the end is wealth, fame, and power. Short, on the other hand, views chess as an end in itself. To the practically-rational Mr. Short chess is a "practice"; indeed an understanding of the concept of a practice is central to an understanding of practical rationality.

What the rationality embedded in virtue-ethics makes very clear is that excellence within a practice is in and of itself a moral excellence; the pursuit of excellence in a practice necessitates the exercise of the virtues. "A virtue tends to enable us to achieve those goods which are internal to practices and the lack of which essentially prevents us from achieving any such goods" (1984, p. 191, emphasis added). Thus a practically rational financial manager would be one who views financial management as a practice, with goods internal to the activity itself. Contrarily an economically rational financial manager is one who views financial management primarily as a means to the attainment of external goods. This latter financial manager or agent is the one who currently populates the models of agency theory.

Both types of financial manager will pursue what they perceive as their self interest. In the case of practical rationality, however, the agent's self interest is defined in terms of the pursuit of excellence within the practice. Furthermore this pursuit will be undertaken through the exercise of the virtues within a community (the polis).

Thus practical rationality is an interactive or connected rationality. A practically rational agent pursues happiness or excellence (what Aristotle termed eudaimonia) while realizing that this pursuit cannot be successfully undertaken opportunistically: the achievement of happiness requires the exercise of the moral virtues such as honesty in dealings with others.

Acid-Test: Derivatives Trading

Many outside observers view derivatives trading -- as undertaken by hedge funds such as the George Soros fund, or Long-term Capital Management (LTCM) -- as the epitome of the ugly face of global capitalism: it appears to be an activity premised purely on the short-term acquisition of material wealth through the creation of complex and artificial financial instruments. But, as is usually the case, on closer scrutiny things are not so simple.

Although outright speculation undoubtedly explains much derivatives trading activity, it does not explain the whole market. Take, for example, two of the most popular trading strategies employing derivatives, namely portfolio insurance and index arbitrage. Without getting into the technicalities, the essential objective behind portfolio insurance is -- as the name implies -- to insure a portfolio against heavy losses. This is generally achieved by entering into derivatives positions that become profitable if the portfolio to be insured loses value. Similarly, the objective behind index arbitrage is not to maximize profits ad infinitum but rather to lock in a modest risk-free return. This is achieved by exploiting the 'spread' between the value of a futures contract and the corresponding spot value.

Rather than simple wealth maximization, therefore, such strategies are better described as risk management. Furthermore, they involve the application of a substantial body of sophisticated knowledge that evolves through time. There is an excellence to pursue here, namely the development of a trading strategy that successfully meets some risk-management goal. The activity is also communal: traders work in various groups that pursue certain common goals. For example, the traders in a 'pit' on the London-International-Financial-Futures-Exchange (LIFFE) share the common goal of maintaining as liquid a market as possible for their particular contract; or the traders in a trading room of a financial institution share the common goal of meeting performance targets and designing contracts that meet the risk-management needs of clients. But could this activity be reasonably viewed as what MacIntyre defines as a practice?

There are three basic characteristics of derivatives trading that define it as a practice within virtue ethics:
- First, it establishes its own standards of excellence in the design and successful implementation of the various trading strategies summarized above.
- Second, there are particular internal goods specific to derivatives trading. As always with the concept of internal goods it is hard to find words to define them. In After Virtue, in the context of chess, MacIntyre defines the internal goods as analytical skill, strategic imagination and competitive intensity. All these would seem to be eminently applicable to derivatives trading.
- Third, derivatives trading is undoubtedly organic. These markets are continually changing as new strategies and contracts are being developed all the time.

In short, there is no reason why the tenets of a practice-based community cannot be applied to even the most cold-bloodedly technical of business activities, namely derivatives trading. Such a derivatives trading organization would be one in which its members viewed themselves as engaged in the pursuit of the internal goods unique to the practice of derivatives trading; e.g., the successful application of the theoretical tools of option-pricing theory, or the ability to design a portfolio insurance strategy that meets as closely as possible the stated risk-management objectives.

Conclusion

For the virtues to be successfully applied to business, business activity must be viewed as a 'practice' as defined above. Whether or not any business activity qualifies as a practice depends less on the type of activity, and more on the character and motivations of the people engaged in it. The challenge that any organization faces, therefore, is to educate managers as to the desirability of virtue-based behavior.

As a 'true professional', the good manager strives to achieve a certain specific type of morally inclusive excellence. One critical feature of this excellence is that its achievement entails adherence to certain 'virtues' of character, such as honesty, fairness, prudence, and courage. The excellence pursued by the true professional, therefore, is not something that can be measured in strictly material terms, it is a moral as well as an economic excellence. Albeit hard to quantify, individuals or 'exemplars' who have achieved this excellence are generally identifiable by their predisposition to place personal integrity over and above any material considerations.

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