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P H I L O S O P H Y F O R B U S I N E S S ISSN 2043-0736
Issue number 33
11th October 2006
I. 'Philosophy Meets Business' by Ute Sommer
II. 'Aristotle's Doctrine of the Mean: The Quest for Arete in the New
Corporation' by Sean Jasso
III. 'Virtue and Organizational Culture' by Surendra Arjoon
All three articles in this issue explore the same question: how philosophy can
contribute to improving a corporate culture. However, there are interesting
variations on this theme.
According to Sean Jasso, Aristotle is the moral philosopher who more than any
other formulated the questions which today's managers need to address: what is
it to act with virtue in a business context, and how can the moral virtues be
Surendra Arjoon's contribution to the debate is to make a clear distinction
between the attempt to increase the standard of behaviour through structural
and organizational changes, and the more difficult task of improving the moral
character of individuals themselves. Enron is a classic case where all the
right structural features were in place but were not enough to guard against
the effects of a deeply rotten corporate culture.
Meanwhile, Ute Sommer makes the case for broadening the discussion of the
contribution of philosophers to include not only in the area of ethics and
values, but also the question of the nature and value of knowledge, and the
role of understanding and communication.
I. 'PHILOSOPHY MEETS BUSINESS' BY UTE SOMMER
2500 year old philosophies as the driver for innovative management?
In my role as editor of the German e-journal 'Philosophie und Wirtschaft' I
have been lucky to meet and to talk to philosophers, business people, students,
and professionals who think seriously about change and ethics in business. I was
pleasantly surprised to discover that I am not alone in wanting more humanity in
business. Quite contrary to what I expected there are many contemporaries who
like me are looking for an answer to the question how business and human beings
can develop in a 'post-capitalist' era, in which enterprise seems to gain a new,
more important role in society.
Individuals as well as businesses now want to do more than just seek to
maximize profit. Almost everyone in business is talking about corporate social
responsibility, corporate governance and sustainability. Companies run
programmes like 'change and values' or 'implementing values in business
These are neither new topics in business nor is it a brand-new way of thinking.
I am aware of that. However there is a big question which does not seem to me to
have been finally answered -- it is the question, 'how'. For example, how can
enterprises implement values in their entire and complex organisation and
achieve real sustainability? What can sustainability mean since it is a
value-free word in itself? How to determine a value?
My questions may sound simple at first sight. However, I have to admit that
despite the fact that I have been a senior manager and management consultant
who has worked in many different countries, companies and environments and in
many different change and restructuring programmes, I was not able to see the
necessity of the question 'how' since all my actions and thinking was
economically driven. My questions were more in the direction, 'What are the
possibilities to improve productivity in this business unit and what will the
positive financial impact be?' or 'What are the financial risks and
opportunities a particular business model?'.
In my thinking, human beings were mainly reduced to headcount numbers and cost
units -- that is the way many managers like me thought and acted. Questions of
'values' in an organisation were as unimportant as the question, 'How is the
weather today?' when one anyhow had to spend all day in a darkened conference
room pushing an agenda. Or they were only appropriate in economically better
times, when profits were high and budgets for education were available. In
times of economical crisis all action was driven by hard factors again --
financial results and forecasts.
Times have changed. And like many other managers I have changed, or better,
broadened my view. It is not about questioning capitalism or profit making. So
far capitalism has been the only system that allows human beings to be free in
their decisions and actions so long as what they do is line with the law.
Herewith capitalism encourages innovation and freedom.
A private enterprise is launched with the main purpose of profit making. In
general I cannot see anything wrong with this -- as everybody knows, without
the financial contribution of companies in the form of tax payments or other
social contributions a society could not function. The question of more
importance is in the direction of how businesses are run -- the way a company
as an entity with all its employees 'acts' and generates profits while having
an ethical and responsible awareness towards all its stakeholders.
I have been asked many times why I think philosophy can help business to find
and implement values and to change management. Having the provocative question
of the header in mind, '2500 year old philosophies as the driver for innovative
management?' the non-philosopher might also ask whether the widely held picture
of the philosopher as an 'old man with a beard talking with other old men with
beards about theoretical ideas without any practical relevance in a language
nobody else is able to understand' is obsolete?
I am lucky in another way too. In the last two years I had the opportunity to
talk with philosophers about business practices and issues. And philosophers
took considerable effort to contribute articles for 'Philosophie und
Wirtschaft' on a range of different topics. Despite the fact that some of them
are indeed elder men with beards I discovered a real treasure, a treasure full
of knowledge, reasonable thinking and arguing. I had to realize that although I
could achieve a successful career and hold responsible positions, there is no
doubt that I have been lacking some important qualities and insights which help
a manager to do a 'better' job. And isn't this what we all want, to become
The attempt to explain in a few paragraphs the enormous potential for positive
development practical philosophy can bring into companies and to business
people as individuals is probably too ambitious and requires a book.
But to start with here is what I learnt. Practical philosophy does not aim to
give a definitive solution to every problem. There is no such a thing as right
or wrong only, it is rather a kind of 'thinking tool', a 'method of determining
sound arguments' that helps to meet the challenge of a permanently changing
working and business environment and the challenge of social demands in a
First I had to laugh when I read a quote from Epicurus, 'Philosophy is the
pursuit of happiness through reason,' but later I understood. Philosophy is
about thinking and acting based on reason. And this is a capacity, which in its
wider sense is one that managers need in order to make an enterprise successful
and profitable as well as meaningful in the long-term. It is not that a
philosopher has to become a manager or the manager a philosopher. Rather it is
a question of combining their skills.
As far as I can see it, business has next to its primary tasks -- namely to
develop products and services as well as strategies to market them -- the task
of determining a value-based way of running its operation, not just for the
sake of 'being good' but also with the long-term aim of surviving as a social
and commercial entity in competing world markets. And this requires
understanding of every single business process together with the impact of
change on those processes, as well as knowing how to determine and implement
There are many possible examples to demonstrate what philosophical thinking in
business can mean. Let me give a few from my experience.
With my 'old' manager hat on, my immediate answer to what a company's assets
are, is goodwill, capital, tangible and intangible assets, receivables, cash.
Today I would add: human values, knowledge, communication.
Sure, I thought about the fair treatment of people working for me but did I
really understand or even think about what it would mean to give the
organisation I was responsible for a meaning that my staff could identify
themselves with? And had I seen the demand, would I have been able to determine
Restructuring programs and reducing staff is the price many Western companies
and subsidiaries have to pay for globalization. Globalization cannot be stopped
or kept away by governmental protection. As the responsible manager in a number
of restructuring projects, did I ever raise ethical questions? Did I understand
what difference ethical reflection can make in a phase when staff have to been
Our society is a society of knowledge. Thus a company is a source of knowledge,
every single staff member has knowledge, about the company, about his job, about
things he learnt in seminars and talking to others. In my role as leader, was I
fully aware of this fact and its implications? Did I appreciate and help my
staff to advance their knowledge? Did I see the necessity of doing this in
order to encourage innovation?
Managers spend much of their time in meetings, conference calls or video
conferences. So did I. What everybody does there is talk, trying to make one's
own point and forward one's own agenda. Did I really consider the possibility
that my view or my approach could be wrong? Did I listen to what others said
with sufficient care or see the possibility that thinking about and weighing up
their views or even their resistance could improve the quality of my own
decisions and actions? Did I try to ensure that my communication partners
understood what exactly I meant?
Most likely you already suspect my former incapacity -- I have to answer all
these questions with no. Nevertheless, I do not feel ashamed. Life is about
learning. I am a different, more conscious manager and consultant today and I
am able to think more open-mindedly and in a more rational way. I can build my
arguments on a more rational basis, I continually strive to become better and
to help companies to become better without losing sight of their real task.
But what is for sure, is that neither my colleagues nor I can achieve any
further improvement in our 'soft factor skills' nor can we work on the 'how'
question asked in the beginning without a different, new and advanced way of
thinking, reasoning and acting. For this purpose philosophers and philosophy,
the 2,500 year old science of thinking and finding possible answers to
questions about values, meaning and knowledge can be of substantial help.
(c) Ute Sommer 2006
Web site: http://www.philosophieundwirtschaft.de/archiv.php
II. 'ARISTOTLE'S DOCTRINE OF THE MEAN: THE QUEST FOR ARETE IN THE NEW
CORPORATION' BY SEAN JASSO
In my field research for this project as well as my role as a faculty member in
a graduate school of business with ongoing academic interests in the study of
the corporation, I have found that ethics even amidst the Sarbanes-Oxley era is
lukewarm in the overall perception of students and practitioners who live among
the influences of government, business, and society. As anyone in the
securities and public corporation industry would attest, business ethics is
indeed a hot topic in the boardroom, the new employee orientation, the MBA
program, and in the language of a firm's annual report. One of the driving
forces of my research has been to address what I see as a paradox between all
of the fuss about business ethics and what the practitioners of ethics (that
is, the employees, directors, and owners) of the firm are actually doing to
exhibit behavior that is in fact ethical.
This article focuses on the following question: Where are human excellence,
goodness, and justice in the corporation? First, I look to Aristotle and his
doctrine of the mean providing a theoretical framework for strengthening the
modern necessity of exhibiting good behavior not only in the corporation, but
in society at large. Second, I use Aristotle's ethics to build my own model to
begin a debate as to how corporations can flourish not just profitably, but for
life's ultimate meaning -- excellence and the good life.
ON ARISTOTLE'S THEORY OF ETHICS: Roots, Perspectives and the Virtues
Why Be Good?
Why Aristotle? Why not his teacher Plato or his teacher Socrates? Each of these
men helped shape modern civilization by introducing their students to the
methodology of deep, intellectual inquiry -- on existence, on politics, on
commerce, on love, on life. Aristotle's approach to the questions of meaning
was not only written down by himself, and potentially by Aristotle's son
Nicomachus -- a unique and time-consuming skill in his or anyone's time -- but
in addition the instructive approach, or the scientific method per se, is
attributed to him. This article examines the roots of how the quest for meaning
in life can play a role in the quest for meaning in the corporation.
Looking to the literature on Aristotle, his writings and the criticisms of his
philosophy, the shelves are long and tall, filled with hundreds of years of
published discussion. For example, according to Seth, who writes on ethics as a
method of discovery, 'Aristotle, the father of science, clearly distinguished
ethics as the science of the Good (for man)... whose task was the investigation
of the universe itself' (1897, p. 275). On meaning, Seth continues describing
'the moral being [as] always judging the moral evolution, and there is an
evolution of moral judgment as well as of the conduct which is judged' (1897,
p. 280). And finally, Seth helps frame the objective of the ethical 'modeler'
and the quest for goodness affirming 'the reality of the Good, and our ability
by reflection to discover it (more or less fully), are the postulates of
ethics, as the reality of Truth' (1897, p. 280). Jumping ahead one century to
the present, we can see the ongoing debate of the quest for rightness among
individuals and society as a whole, noted by Stark:
Aristotelians claim that moral virtue is constituted by
correct action and correct emotion... I argue that there
are good reasons for siding with the Aristotelians:
virtuous agents must experience the emotions appropriate to
their situations. Moral virtue requires a change of heart
(2004, p. 31).
The change of heart essentially is the reevaluation of behavior as stated
above, 'correct action and correct emotion' whereby the individual in the
business environment, or any environment for that matter, must make choices
that have consequences. The consequences for Aristotle are not necessarily that
one's bad behavior, for example, will impact society, as indeed it may, but
rather, the consequence of bad behavior removes the individual further and
further from achieving and contributing 'good' which, by endowment, yields a
positive contribution to one's own life and to humanity. Yes, one person's
actions can permeate the aggregate society.
The theory of the good deserves further attention here and a vast literature
pours over the issue throughout the centuries. In 1874, Henry Sidgwick, famous
for his philosophy on ethics and more utilitarian in scope than Aristotle,
argued on the nature of ethics as method as a distinction between the nature of
positive and normative theory or, as he described, the difference between 'is
and ought'. For example on method, Sidgwick asserts, 'what is judged to be
'good' would appear to have the same quality as the term imports within the
range of its practical application: 'good' is the kind of thing that we 'ought'
to seek to produce or maintain... so far as it is in our power' (2000, p. 59).
Why be good? Why not heed to your self-interest and take care of your own self
at the expense of others? Adam Smith helps us here, as it is 'in Smith's
scheme, the quest for personal gain often benefits others. The merchant in
pursuit of his own profits acts as if guided by an 'invisible hand' to supply
the products we most desire' (Frank, 1988, p. 22). If the merchant goes
bankrupt because of fraudulent behavior, he loses his livelihood and the
consumer loses her desired product or service. To be 'good' still requires
deeper evidence than self-interest.
As we study the ethical person, Walsh adds an extra layer to the question of
'why be good?' He builds upon the concept of moral purpose -- moral in the
sense that moral is essentially what is right and wrong and what is ethical is
attributed to the tools we use to achieve morality. I compare the two later.
For Aristotle goodness is attributed to moral purpose, that is, a life with
meaning obtained only by understanding first what the practical nature of
'goodness' really is. Walsh writes:
Moral purpose is a more subtle matter than practical
purpose in the gross sense. To know a man's moral purpose,
we must not only observe what he does, we must find out
what he does it for. A man may lose his moral purpose, he
may lose his moral choice, without losing his ability to
act for ends, much less his ability to link actions
together into a productively coherent sequence. And moral
weakness, for Aristotle, is the loss of effective moral
purpose. In the gross sense, this is not loss of control.
But in a more subtle sense, that is just what it is'
(1963, p. 158).
With an understanding of moral purpose as prescribed by Walsh, we can relate
philosophically to the manager whose primary function is decision making. The
tools to make decisions that are for the 'good' are his ethics driven by his
sense of moral purpose. Where he learns his morals and what kind of ethical
environment the organization might be depends of course on leading figures --
parents, teachers, the boss, the owner, etc. To clarify the difference between
morals and ethics Lee helps solidify the definitions where morals and morality
'refers to the broad field of conduct evaluated in terms of aims, ends, or
results... On the other hand, ethics is the systematic attempt to understand
rationally the evaluation of conduct [morality]' (1928, p. 452).
Toward a Theory of the Virtues
So far I have examined the concept of ethics as a model to achieve good
behavior. Yet, more is needed to clarify what ethics we should follow, teach
others, or aspire to attain. There are many categories of ethics -- those
associated with religion, business, professions, and politics, for example.
Earlier I asked the question, 'Why Aristotle?' I also stated the fact that he
wrote them down and famously they are listed in the main text that I look to:
Nicomachean Ethics (NE). A central theme that I wish to develop and connect
later with the future manager is the concept of virtue ethics. As in all of the
literature associated with Aristotle, the literature on virtue is vast. The
works I present here are those that helped me best unveil the mystery of
virtues and their modern application to life in general and, more directly, the
life of the manager.
In Book I of the NE, Aristotle gets directly to the point of 'why be good'
-- 'both ordinary people of quality say 'happiness', and suppose that living
well and doing well are the same thing as being happy' (NE, 1095a14-20). I
recently described the 'happiness' argument with my students as we studied
ethics in the context of government, business, and society. My question was
purpose-related and when I unveiled the purpose according to the Aristotelian
'happiness' paradigm the students were in awe of its apparent simplicity. What
is simple is that 'happiness' is the destination; however, achieving happiness
is not simple at all. Why should meaning be difficult? Time and the advancement
of civilization has laid its claim on this need for complexity, yet, the shelves
are still filled in the library on the upper, more prevalent stacks with the
simplicity of Aristotle's enduring messages. Even in recent business ethics
textbooks we see the usual half a page dedicated to Aristotle and the concept
of virtue ethics. Virtuosity in theory is simple and elegant, yet in practice,
a more demanding model is still needed to frame our complex reality.
The Quest for Arete
For Aristotle, happiness is a destination by way of doing acts of goodness.
Slote explains that 'an act is noble or fine if it is one that a noble or
virtuous individual would perform, and he does say that the virtuous individual
is the measure of virtue in action' (2001, p. 5). If action leads to achievement
of virtue, then the question remains what actions and for what reason? I
describe the actions in more detail below in an overview of the Aristotelian
virtues, but more development on 'why seek this level?' of what could appear to
be self-interested and glorified personal happiness is needed. The title of this
project is a quest for arete which for Aristotle is the 'guiding light'
associated with ethics.
Human beings, part of the biological world but endowed with
the special characteristic of rationality, have the capacity
to use their reason so as to maximize their potentialities
for fulfillment. Guided by excellences of intellect, we can
set about training ourselves so as to develop excellences of
character -- courage, generosity, truthfulness, [to name a
few] -- the permanent dispositions of action and feeling
that will constitute true virtue, the activity of the soul
in accordance with reason. Strengthened by the instilling
of the right habits, and guided by a rational vision of the
good life, we shall be able to actualize the potentialities
we are born with, and achieve an optimally successful and
enriching life -- the life of eudaimonia or happiness
Crisp & Slote help to formalize the aretaic theory ascribed to happiness and
meaning by affirming that Aristotle's concept of arete 'is perhaps one of the
most radical virtues ethics ever, since he can be understood to be saying that
there is nothing worth having in life except the exercise of the virtues'
(1997, p. 2).
Accordingly, Aristotle holds the bar high -- reach for perfection in all you do
is essentially what he is prescribing. On a grand scale, arete brings us closer
to the answer of 'why be good?' -- simply, for our own sake. This I can live
with. Strive hard and you will enjoy the fruits of your hard work resulting in
a higher development of your relationships, your craft or trade, and, most
importantly to the endowment of society. How do we reach this plateau of
greatness through our actions when we are imperfect beings, driven by
self-interest, influenced by a diverse environment, and scarred by history?
Again, Aristotle offers a simple answer, 'habit'. In NEII, Aristotle builds on
his previous argument attributed to 'happiness' as the destination and teaches
us that by applying the virtues through habit we build our character and move
closer to a life of excellence. For example, he writes,
Excellence being of two sorts, then, the one intellectual
and the other of character, the intellectual sort mostly
both comes into existence and increases as a result of
teaching whereas excellence of character results from
habituation -- which is in fact the source of the name it
has acquired [_thik_], the word for 'character-trait'
[_thos] being a slight variation of that for 'habituation'
[_thos]. This makes it quite clear that none of the
excellences of character comes about in us by nature; for
no natural way of being is changed through habituation, as
for example the stone which moves downwards will not be
habituated into moving upwards' (NEII 1103a15-22).
For the student of ethics, note that Aristotle in the reference(s) above brings
us closer to a theory of ethics by defining the content of the word (ethics)
with what the actions of a person of ethics are to ensue: character, habit, and
excellence. The subtitle of this section is Toward a Theory of the Virtues, the
thesis being to develop the concept of virtue in the aretaic theory, described
above, and to bring us to the actual enumeration of the Aristotelian virtues
further in Book II of the NE. The next section is a discussion on the virtues
and addresses the question of 'how to be good'.
ARISTOTLE AS METHOD: The Doctrine of the Mean for the Future Manager
How to Be Good
In NEII, we are introduced to the ideas of character, habit, and arete as they
point to the question of 'why be good' and it is Book II that Aristotle also
introduces us to 'how to be good'. For example, he writes, 'since, then, the
present undertaking is not for the sake of theory... for we are not inquiring
into what excellence is for the sake of knowing it, but for the sake of
becoming good, since otherwise there would be no benefit in it at all, we need
to inquire into the subjects relating to actions, i.e., how one should act'
(NEII 1103b27-31). At the root of philosophical inquiry is the quest for
knowledge and the answer to Aristotle's question from the tools we have would
include knowledge of the acts we are to engage in, and, forsaking self-interest
at this point, we do these acts because they are good. Ultimately, we do these
acts not only because they are good acts to do, but also because our excellence
of character leads us to pursue such acts. At last, Aristotle provides a
framework for us to pursue arete -- 'the intermediate'.
Again, simple in theory, however conceptually to achieve of all things ultimate
excellence of character Aristotle explains,
the equal is a kind of intermediate [or the mean] between
what exceeds and what falls short; by intermediate 'with
reference to the object' I mean what is equidistant from
each of its two extremes, which is one and the same for
all, whereas by intermediate relative to us, I mean the
sort of thing that neither goes to excess nor is deficient
-- and this is not one thing, nor is it the same for all
Essentially, Aristotle is describing the choices we make and their associated
actions are to be pursued within the context of excellence in character with
the guide of landing in the intermediate -- the mean -- of two extremes. He
For to arrive at one of the extremes is more erroneous, to
arrive at the other less; so, since it is hard to hit upon
the intermediate with extreme accuracy, one should take to
the oars and sail that way, as they say grasping what is
least bad of what is available, and this will be most
easily done in the way we say... This then shows that the
intermediate disposition is to be praised in all
circumstances, but that one should sometimes incline
towards excess, sometimes towards deficiency; for in this
way we shall most easily hit upon what is intermediate, and
good practice (NEII 1109A33-b27).
Critics are quick to challenge Aristotle's doctrine of the mean as described
My claim is that these mean dispositions cannot be analyzed
as goal-directed dispositions. They are not primarily
goal-directed dispositions, but character-traits which
govern the manner in which goals are pursued. To treat them
as if they were simply or primarily goal-directed is to
overlook their very core and to confuse one kind of
mean-disposition with another kind. It is to obscure
important distinctions... [Furthermore, the emphasis on]
goal-oriented behavior as the central or paradigm case of
human action... recognizes that goal-directed behavior is
frequently explained by reference to dispositions such as
courage, good temper, liberality, and high mindedness
(Fortenbaugh, 1968, p. 228).
What Fortenbaugh is warning us here, is the list of virtues are not merely
destinations, but also traits of human character that are virtuous in practice
if and only if we pursue destinations of virtue through authentic virtuous
actions. Young helps clarify the problem of the virtue of courage, for example,
even more clearly: 'thus courage is in some sense located 'between' rashness and
cowardice, and courageous actions are in some sense intermediate relative to
rash actions and cowardly actions' (2006, forthcoming).
Returning to the manager for a moment, one of the functional duties of
management pertains to decision-making, which, by its very nature, involves
risk. Aristotle's theory of virtue with its cornerstone of intellect helps to
complete our original puzzle of not only 'why be good', but also 'how to be
good,' and the 'intermediate' as a tool, destination, and host of the virtues
brings us to our final question of decisive risk taking -- how do we make the
right decision based on the assumption that we epitomize aretaic virtuosity?
... that making right decisions require a certain sort of
perceptual acuity, but opinions differ on what sort of
perception this might be and in particular how cognition
shapes it. Employing a verbal formula he was clearly fond
of, Aristotle insists that 'making a decision depends upon
particulars and on perception... We see, then, that
practical wisdom is concerned with knowing just what to do
in particular cases in order to hit the mean... that it
calls for something like perception to recognize at what
point one's action would become blameworthy... this
ability, Aristotle plausibly insists, must be learned
through experience -- for only experience of particles
yields an eye for what is salient and an ability to seize
the occasion (1996, p. 116).
For the manager, or any person for that matter, good decision making requires
skill, intellect, experience, and of course character according to the
Aristotelian ethic. Theoretically, then, the manager endowed with good training
and good habits from an early age, the so-called 'work ethic' applies here, has
a greater probability of making insightful decisions, excelling in her career,
leading by example, getting promoted, and, in return, has the potential to
increase her wealth for the wellbeing of her family and the redistribution of
her assets into society. The person with these traits in lesser degree has a
higher probability of failure to reach the mean state on the virtue scale, and,
sadly, falls short of the benefits for the person endowed with arete.
CONCLUSION: The Virtues and a Framework for Application
I was introduced formally to Aristotle by teaching the ethics component in
management courses in strategy, government, and society. Each time we would
approach the future business realities confronting the future manager, we would
have our lesson on ethics. As I have stated early on, my frustration and
dissatisfaction with the content grew over time and I recognized two things:
first, the students needed to understand the importance of ethics and good
behavior in business and society. Students are desensitized from the media and
see CEOs handcuffed going to jail as a normal blip on the news. Those images
have little meaning and lack deterrence impact to regulate their future lives
as managers. It is not to say that these students are unethical or lack the
intellect to make ethical decisions; rather, the fact that so little effort is
devoted to teaching ethics and its marginalization in the media forced me to
look beyond the standard teaching tools and to look to the roots of ethical
My objective here is to bring us closer to the application of theory to enhance
the future manager's success rate beyond reading about ethics in a single
chapter or taking an elective ethics class for half of a semester. Sullivan
helps build this bridge between theory and application stating, '... The
theoretical and the practical must be part of the good life for [humanity]...
the good life is not possible without either' (1980, p. 176). The good life --
a life of happiness achieved by the pursuit of excellence and the knowledge of
why it is important to yield toward the 'mean' -- is enhanced here by knowing
the virtues Aristotle teaches.
The virtues include: Courage, Temperance, Generosity, Pride, Good Temper,
Truthfulness, Wittiness, Friendliness, Modesty, and Righteous Indignation.
Among these ten, Aristotle also describes later in the NE his commentary on
Justice -- a key virtue that takes its own theoretical journey most identified
with Rawls and his own theory of justice. Rawls said of Aristotle,
... the Aristotelian Principle [where human beings flourish
when they reach their potential abilities] is a principle of
motivation... it expresses a psychological law governing
changes in the pattern of our desires' (1999, p. 375).
Furthermore, on the Aristotelian connection to justice and the good, Rawls
... social institutions are just only if they can be
defended to each of their members on the basis of the
contribution they make to his good as assessed from his
point of view (Richardson & Weithman, 1999, p. 172).
In a forthcoming article, I analyze the results of a recent experiment in which
I survey 300 business students with the objective of getting a deeper
understanding of the future manager's perception of corporate ethics. I use
Aristotle's doctrine of the mean as the framework for the experiment which
leads to the introduction of a new model I call Corporate Arete. The virtues
listed above are the central variables I test to see how far or near the future
manager lands on the 'intermediate' -- the optimum virtue state.
My objective here has been to reach beyond the standard teachings of business
ethics by looking to our original teacher on the matter and to see how
Aristotle's method can help not only in understanding how ethics work, but why
they matter. Sullivan says it best about studying Aristotle:
Like his teacher Plato, and like Plato's teacher Socrates,
Aristotle leaves us with questions, but they are far better
questions than we had when we first came to him. [Aristotle
is neither the first nor the last on moral philosophy]. His
heritage is not a neat set of doctrines to be memorized and
filed away, but the example of what it is to wrestle with
the problems involved in trying to make sense out of what
it is to be a human being. If he helps us do that better
than we could by ourselves, then he is a mentor worth
choosing and a friend worth having (1980, p. 177).
1. All references to NE are from Broadie & Rowešs translation (2002)
Broadie, S. & Rowe, C. (2002). Aristotle: Nicomachean ethics: Translation,
Introduction and commentary. Oxford: Oxford University Press.
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(c) Sean D. Jasso, Ph.D. 2006
Malibu, California, USA
III. 'VIRTUE AND ORGANIZATIONAL CULTURE' BY SURENDRA ARJOON
As corporate reputation and reputational value become more critical in light of
the recent business scandals, companies are now focusing on building strong
ethical cultures. Recent legislation on corporate governance measures have
focused on legal and ethical compliance and risks, but this may not be enough
to create an effective and ethical corporate culture. For example, Enron would
have met all the requirements usually found in most legal and ethical
compliance programs. It separated the Chair and the CEO positions, recruited a
distinguished roster of independent directors and had an audit committee
consisting exclusively of non-executive directors. In fact, it was Enron's
culture that caused its implosion with disastrous consequences. We are now
entering a second phase in corporate governance which focuses on building an
ethically strong culture which discerns the importance of core values such as
integrity and respect for the individual, rather than an exclusive focus on
business operations, as the essential factor in corporate success. It is
therefore the quality of governance that matters more than the structure.
A corporate culture or DNA can be considered to be the social life of the
organization, which comprises collective values and behaviors, or simply
stated, it is the way that things are done. A strong corporate culture is a
powerful influence which can signal what is or is not acceptable behavior. It
can therefore put pressure on an employee to do what is right or encourage an
employee to do what is wrong. In strong cultures, the guiding values are
communicated more visibly. The core values of a strong corporate culture guide
its strategy and business decisions, therefore culture turns out to be the
leading risk factor in shaping or compromising the ethical behavior of
individuals in companies. A company's guiding values are shaped by the
collective tone at the top and flow down through the organization at all
levels. It is therefore important to understand the organizational culture in
order to develop or strengthen the ethical culture so as to better align shared
values and core or guiding values. Corporate performance ultimately depends on
the consistent application of core vales and principles in order to build trust
and strengthen relationships.
Traditionally, codes of ethics and conduct have been used as a useful first
step in establishing the corporate culture. Codes and business principles
reflect universal core values such as honesty, integrity, loyalty,
responsibility and fairness. However, although codes do not cover all aspects
of appropriate behavior in specific areas, they should provide guidelines on
handling gray areas. Also, for codes to be effective, it is important to
monitor compliance. Essentially, codes attempt to align individual values with
corporate values through rules-based and ethics-based principles, and therefore
help shape the corporate culture to some extent. However, the debate on
corporate governance has largely overlooked the importance of effective
governance at the individual level. An overemphasis on compliance measures,
suggests that people are governed rather than governing. We have become so
intent on governing what is outside ourselves that we have neglected to govern
what is inside. The key to business growth in the first place is to be found in
personal growth and development. It is not enough to recall principles, state
intentions, point to injustices or utter prophetic denunciations; individual
transformation comes before institutional reform. Only by helping individuals
to behave uprightly can an organization then be transformed. Although we can
speak of the concepts of corporate conscience or the corporation as a moral
entity, in effect, the concepts are only collective nouns; the actors are the
individuals. The ultimate solution for restoring and promoting ethical behavior
at all levels lies in the individual where every type of injustice imaginable
comes into existence. It is also in the individual that the possibility of
fostering all human relationships is conceived.
Situationist social psychologists maintain that deviant behavior is generated
by the cultural environment. However, such an assertion does not explain the
anomaly that many persons, including the socially and economically
disadvantaged, have been able to consistently behave uprightly in the face of
adverse circumstances. However, while situational factors have proven to be
powerful influences in shaping one's outlook and actions, they cannot take away
one's personal freedom or personal responsibility. For example, the convictions
of former Enron executives pointed directly to a lack of personal
responsibility, integrity and trust. Former Enron Chairman, Ken Lay was found
guilty on conspiracy to commit wire fraud, perpetrating wire and bank fraud,
and making false and misleading statements. As well, former Enron CEO, Jeff
Skilling, was found guilty of insider trading, securities fraud and conspiracy.
In addition, if we were to accept the view that the cultural environment
determines behavior (cultural determinism), then there is no room for
intervention strategies at the individual level to change behavior in spite of
the cultural environment. Specifically, it is the lack of virtues that result
in ethical lapses as demonstrated by the following quotes from former
'I'm sorry for the hurt that has been caused by my cowardly
behavior.' Scott Sullivan, CFO
'Faced with a decision that requires strong moral courage,
I took the easy way out...There are no words to describe my
shame.' Buford Yates, Director of General Accounting
'At the time I consider the single most critical
character-defining moment of my life, I failed. It's
something I'll take with me the rest of my life.' David
The real issue is precisely 'How can we support and encourage good people to do
the right thing?' It is through the exercise of the virtues that people can
properly exercise their responsible use of freedom. The virtues that focus on
the development of the individual provide the basic guiding values of a strong
corporate culture. In other words, it is precisely the virtues that are at the
heart of corporate culture. A virtue is defined as an enduring quality of
character through which a person is able to act in a praiseworthy way or to
live a morally good life, and thereby contribute to the development of business
and society. An organizational culture that encourages commitment to legal and
ethical compliance hinges on the commitment of the individual person. In other
words, one cannot have an effective meaningful compliance without
self-governance or what can be more appropriately termed the virtuous life. The
focus of the virtues is to establish a series of practical responses which
depend on the consistent application of core values and principles as well as a
commitment to ethical behavior. Virtues are good habits that are acquired by
repetition, which follow the rule of right reason. Because of their strong
appeal to reason, virtues diffuse passion, prejudice, pride and self-interest,
and are a civilizing force in bringing about justice. Developing virtues helps
to improve the employee who in turn helps the institution to be more profitable.
Traditionally, four virtues have been found to form the foundation of all
others: sound judgment, responsibility, mental toughness, and self mastery.
Sound judgment or competence is the habit of recognizing what is worth pursuing
and choosing the most efficacious and morally licit means to attain it. In
business, it requires familiarity with the different elements of business
decisions and a deep understanding and appreciation of the environment.
Responsibility or fairness, describes a habit in which one consistently give to
others what is due so that they can properly fulfill their duties and exercise
their rights in the work place. Mental toughness is the ability to face and
overcome difficult situations and to act even when we are afraid. It enables a
person to consistently overcome fear, to stand up for their rights of others,
to venture unpopular criticisms, to relocate incompetent employees, to proceed
in difficult downsizing or rightsizing exercises, to participate in politically
charged labor management negotiations or to take action in worthwhile projects
in spite of the risks involved. Mental toughness does not mean that one might
never retreat from danger or never assume a risky venture, but rather that this
person's judgment about such situations is consistently sound. It therefore
leads one to be patient when unpleasant things happen in dealing with
obstacles; to overcome one's whims, selfishness or laziness; to face up to the
normal obstacles of everyday life including sickness; and to avoid outer
displays of bitterness, bad temper, or gloominess. Finally, self-mastery or
discipline is the ability to have control over our tendencies to laziness,
anger, complacency, procrastination, and reluctance to fulfill one's
responsibilities. It is required for example, to overcome pressures to play
favorites, to be excessively frugal or to waste money, and to help make good
judgments about economic decisions concerning allocating scarce resources.
All virtues are related to the foundational virtues, which for the building
block. Sound judgment is the first among the fundamental virtues since it is
required to practice the others and provides the measure of responsibility,
mental toughness and self-mastery. In other words, only a person with sound
judgment can be just, courageous, and disciplined. On the other hand, a person
who is not just, courageous or disciplined cannot have sound judgement so that
there is an interdependency among the foundational virtues. This implies that
development in any virtue implies an improvement in all others, while a decline
in one results in deterioration in others. Typically, a person possesses many
character flaws, but it would be impractical to address these deficiencies
simultaneously. Given the interdependent relationship among the virtues, it is
a more practical strategy to target and strengthen one or two dominant defects
or vices. This strategy has its basis in the Pareto Analysis phenomena in which
eighty percent of the effects (unethical behavior) are caused by twenty percent
of the defects (character flaws).
Dell's Ethical Culture: An Example of Organizational Virtues
Dell is an example of a company which encourages the pursuit of organizational
virtues such as justice, courage, truthfulness, integrity and trust, and also
encourages a conducive environment which promotes the exercise of virtues at
the individual level. Dell has developed a model that deals with the
cultural risk factors both at the risk environment and individual levels. Dell
was founded by Michael Dell at the age of 20 with an initial investment of
$1000, and now employs over 55,000 people worldwide with revenues close to 50
billion in 2005. The company's growth outside the US has been over 125% over
the last five years. Dell is a diversified global technology company operating
in six continents. It has developed and promoted a One-Firm concept, in that it
sets and practices the same standards of ethical behavior and ethical
commitments wherever the company does business. Realizing that with growth
comes risk, Dell has devised the program 'Winning With Integrity' in order to
achieve growth while creating and maintaining a culture of higher ethical
standards. This strategy can prevent or minimize ethical problems from
occurring and can respond appropriately if they do occur. The company
emphasizes the importance of ethics and cites several benefits of ethical
behavior: enhancing the company's reputation as an employer of choice; helping
in the acquisition and retention of the best and most talented employees;
building stakeholders trust, confidence and loyalty; providing consistency in
applications of higher standards of company-wide conduct; minimizing the impact
of ethical issues on the company's operations and financial performance; and
demonstrating commitment to global responsibility.
Dell's ethical standards of behavior, which go well beyond legal minimums,
include several key components and characteristics which reflect all of the
fundamental virtues: (1) sound judgment (thinking before acting and considering
the consequences of one's actions); (2) fairness reflected in honesty (saying
what is true, open and transparent in communications), respect (treating people
with dignity and valuing their contributions, maintaining fairness in all
relationships);(3) mental toughness or courage (speaking up for what is right
and reporting wrongdoings), and (4) self-mastery or discipline reflected in
trust (keeping commitments), integrity (doing the right thing without
compromise, avoiding the appearance of impropriety), and responsibility
(accepting the consequences of one's actions, admitting mistakes and correcting
them quickly, not retaliating against those who report violations of law or
In sustaining an ethical culture globally, Dell's Ethics and Compliance team
was created so that it functions at the global level, but is implemented in
such a way that it takes into account the local or regional culture. To
demonstrate its commitment to higher ethical standards, the team's structure
includes the engagement of the Board of Directors, the Chairman and CEO, and
the regional ethics committees and offices which are accountable for driving
the culture and for training and communications tailored to each region. Dell
also provides multiple resources to address ethical questions and concerns, not
only through its comprehensive codes of conduct and policies, but also through a
feedback mechanism, 'Tell Dell,' which is designed to promote a culture in which
an employee feels comfortable raising issues without fear or retaliation. The
company also encourages employees to raise questions or concerns before making
decisions through its legal team, human resources department, ethics team and
an office of the ombudsperson. An ethics help-line is also available to
anonymously ask questions about ethics issues. All employees are required to
complete ethics training in four required courses, additional courses which are
tailored to the needs of each region, and special courses for business units.
Dell creates many opportunities to help its employees understand how ethics is
integral to their job and equips them with the ability to differentiate between
what is the right thing to do and what are unethical decisions. Feedback from
its employees through the company's 'Tell Dell' mechanism revealed that
ninety-nine percent rated the company as exceeding their higher standards of
ethical behavior, ninety-six percent rated the company's directors as exceeding
their higher standards of ethical behavior, while some eighty-eight percent felt
that managers exhibited ethical business behavior.
The former President of the American Psychological Association, Philip
Zimbardo, sheds some light on our capacity and potential to do good or to do
evil as he explains that '...the line between good and evil is permeable. Any
of us can move across it. We all have the capacity for love and evil -- to be
Mother Teresa, to be Hitler or Saddam Hussein.' The inclination to do wrong
is not part of our nature, but rather stems from a defect or imperfection in
human nature. These inclinations are fuelled by a self-love that is
unavoidable, so the goal to perfect our nature through a virtuous life is a
lifelong and relentless struggle. We tend to ignore or allow moral slippages
many times since we mistakenly identify them as being part of our nature,
rather than imperfections. Since scandals and fraudulent activities in a
business are a direct result of people's actions, ultimately the real risk in
business is therefore posed by this defect of human nature as well as by the
organizational culture that promotes them.
1. Gebler, D. 2006, 'Creating an Ethical Culture,' Strategic Finance, May 29-34.
2. The following web addresses give more information on Dell's Ethical Culture
and Code of Conduct:
3. Dittmann, M. What Makes Good People Do Bad Things? Monitor on Psychology
(c) Surendra Arjoon 2006
Senior Lecturer (Ethics)
Department of Management Studies
The University of the West Indies
St Augustine, Trinidad, West Indies
Email : firstname.lastname@example.org