Toward a Socially Rational Management: Insights from Japanese and Islamic Business Ethics

Abstract

Purpose

This study investigates an approach for business management based on social rationality, which is attained through a proper balance between profits from economic exchange and benefits from social exchange.

Methodology/approach

First, this study examines the economic rationalization process developed by the business corporation, which is a great innovation in the modern West, but criticized for dominating people through overwhelming capital and power. Second, social rationality is explained by focusing on the balance between economic exchange and social exchange. Third, the ethics and practices of traditional Japanese and Islamic business management are examined including their underlying social rationality in business and shared commonalities in business practices that circulate economic gains in their societies.

Findings

By encapsulating all the relevant elements drawn from traditional Japanese and Islamic business, four conditions were found which successfully establish socially rational management based on sharing and reciprocity: an appropriately life-sized economy; relation-oriented management; a market in which a profit-seeking exchange economy and a profit-cyclical gift economy coexist; autonomous associations that are independent from the control of both state and business corporations.

Research implications

This research reevaluates the rationality of management complying with business ethics, which has been kept in traditional and non-Western business practices. These management styles are considered to be incongruous with modern management philosophies that solely rely on economic gain, resulting in the neglect of significant cultural principles in modern management.

Practical/social implications

This chapter suggests a way to circulate the profits among people through sharing and reciprocity for the public to diminish external diseconomies and solve social problems such as poverty, pollution, war, and alienation through business.

Originality/value

This study presents a method of shifting the paradigm from economically rational to socially rational management, which is urgently required in current business practices worldwide.

Citation

Sakurai, H. and Sendo, A. (2016), "Toward a Socially Rational Management: Insights from Japanese and Islamic Business Ethics", Finance and Economy for Society: Integrating Sustainability (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 271-292. https://doi.org/10.1108/S2043-905920160000011012