Practical wisdom in managerial decision making

Purpose - The aim of this paper is to present the necessity for practical wisdom in the managerial decision making process and its role in such a process. The paper seeks to contrast the position with two conventional approaches based on maximizing and satisficing behaviors respectively. Design/methodology/approach - Following Aristotle and Thomas Aquinas it is argued that a correct decision should consider an "integral rationality" which includes not only "instrumental rationality" but also "practical rationality". The latter permits the evaluation of both means and ends from the perspective of human good. Practical wisdom helps the decision maker to determine how a decision will contribute to the human good in each particular situation. Findings - Maximizing and satisficing behaviors are based on the facts-values dichotomy, which separates business and ethics and presents a rationalistic and incomplete view of the reality. The alternative presented here sees the decision as a whole, and this is a more comprehensive understanding of the reality. Ethics is better integrated into the decision making process, since it is an intrinsic part of such a process, not an extrinsic addition. Practical implications - Every decision has an ethical dimension, which should be considered by managers for making good decisions. Practical wisdom is essential in perceiving such a dimension and in making sound moral judgments in the making of decisions. Managers do not need only skills for making correct decisions, but practical wisdom and moral virtues, too. Originality/value - The approach presented in the paper defeats the conventional but narrow views of managerial decision making based on maximizing behavior or on satisficing behavior and introduces the categories of good and evil as the main driver for managerial decision making.