Will Strategies Based On Moral Virtues Produce Outcomes Far More Superior Than Those of Rationale?

The answer is yes, because outcomes produced based on rationality has the upper bound (say X), while results produced based on moral virtues equal to upper bound plus., i.e., X+ε. In other words human beings will never be able to use their rationality fully in the decision making process, but partially.  Herbert A. Simon (1947) called this phenomenon as bounded rationality.  If this is the case, then any entity managed based on Neo-classical or Rational Expectation will no longer possible to advance further after it hits the upper bound.  This is not a new concept, but has been discussed by Ricardo with his famous diminishing return to scale hypothesis.  Let us take an example of the Apple company.  It starts as a market leader in the smart phone industry until Samsung, and now potentially Huawei entered the market.  The classical example can also be taken from automobile industry.  The US companies dominated supply of cars in the world, until the Japanese car manufactures took over as the global players.  Market leaders discussed above may have applied the Neo-classical profit-maximizing mindset as the center of their operations.  But newer competitors focusing more toward customers satisfaction and customer perceived value as their competitive weapons.  Therefore, profit is seen as the results, and not the choice variable as seen by the Neo-classical concept adopters.

In the higher education industry, students and employees level of satisfaction are the choice variables.  Therefore, higher ed entities should focus on maximizing their utility function, instead of someone’s else.  This hypothesis has huge implications, and may require significant paradigm shift in the process to manage a higher ed institution.  The transformation in attitude and conduct from different players in the system are required, and this is not an easy task.

The exemplar evidences of practicing moral virtues need to come first from the upper level management.  Sadly, like in any others, education industry has been known to its strong buddy-buddy and a close-knit system.  In such a system, each element will protect each other’s interest.  This reality may cause biases which push the main focus further away to the buddy-buddy group’s interests.  Under such a condition, maximizing group’s interest (example: increase group members’  pay check) will be the focus, instead of students’ utility function. But students’ focus will be used as a rhetoric jargon to camouflage the hidden agenda.  Others, outside the group will be used as the working bees to support the group’s interests.  The pay gap from these two groups is going to be wider. If the institutional budget is finite, and because of the big chucks of it go to the select group, then only a small amount remained to pay the outsiders.  However, their workload go to the other way around.  In contrast to the group members’, the peons will do most of the laundry lists.  Those who go against the group’s interest will be wiped out and this will create further fear in the work place.  This kind of system will only produce yes-man employees while creativity and innovation will be (near) null.  This is the reason why a system operates based on moral virtue produces fruits far more superior than those of bounded rationality.

The paranoid behavior phenomenon is found at higher ed organization and pratically in any industry, big or small are consistent with Herbert’s bounded rationality hypothesis. The close-knit paranoid group behaviors occur because of they in-capabilities to formulate and solve complex problems.  Therefore, the only way they can protect their individual objective is by sticking together.  They are also fear of retaliation or dismay of losing their position and money associated with it, once their lose their power grips.  Sadly on the expense of everyone else in the system, students’ and outsiders’.