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Why Be Moral? A Different Rationale for Managers

Published online by Cambridge University Press:  23 January 2015

LaRue Tone Hosmer
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Abstract:

It is proposed that mangers have to be moral, have to be concerned about the distribution of benefits and the allocation of harms brought about by their decisions and actions, in order to build trust, commitment, and effort among the stakeholders of the firm. Trust, commitment, and effort on the part of all of the stakeholders are essential for long-term corporate success, given the economic conditions of intense global competition that now exist for the foreseeable future.

Type
Articles
Information
Business Ethics Quarterly , Volume 4 , Issue 2 , April 1994 , pp. 191 - 204
Copyright
Copyright © Society for Business Ethics 1994

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References

Notes

1 Locke, J., “Instance in Keeping Compacts,” from An Essay Concerning Human Understanding, annotated by Alexander C. Fraser (New York: Dover, 1959), p. 69.

2 Plato, “Ring of Gyges,” from Book II of The Republic, translated by Benjamin Jowett, reproduced in Robert Solomon, Morality and the Good Life (New York: McGraw Hill, 1985), p. 45f.

3 The coincidence of the interests of owners and managers is the topic of recent work in “agency theory;” for an excellent summary and critique of this work see Kathleen Eisenhardt, “Agency Theory: An Assessment and Review” in Academy of Management Review, vol. 14 (1989), pp. 57–74.

4 The social benefits of optimal profits is based upon the concept of Pareto Optimality; see the famous piece by Milton Friedman, “The Social Responsibility of Business is to Increase its Profits,” from The New York Times Magazine, Sept 13, 1970 or, for a less intemperate approach, see Alan Blinder, “The Principle of Efficiency: More is Better than Less,” from Hard Heads, Soft Hearts: Tough Minded Economics for a Just Society (Reading, MA: Addison Wesley, 1987).

5 Freeman, R., Strategic Management: A Stakeholder Approach (Marshfield, MA: Pitman, 1984), p. 46.

6 The best discussion of extended organizations is to be found in Jeffrey Pfeffer and Gary Salancik, The Extended Organization: A Reource Dependent Perspective (New York: Harper & Row, 1978). This is an exchange theory, not a moral theory. The essential argument is that the resources necessary to continue the existence of organizations are exchanged for organizational control.

7 Hamel, G. and C. K. Prahalad, “Strategic Intent,” Harvard Business Review (May-June 1989), pp. 63–76.

8 Ibid., p. 66

9 Ibid., p. 67

10 Motivation is a complex topic with multiple variables and constraints; for a clear introduction to the present status of the field see R. M. Steers and Lyman Porter, Motivation and Work Behavior, 4th Edition (New York: McGraw-Hill, 1987).

11 For a good discussion of “moral hazards” and their relationship to microeconomic theory see once again Kathleen Eisenhardt (op. cit.).

12 Peters, T. J. and R. H. Waterman, In Search of Excellence: Lsessons from Americas’s Best-Run Companies (New York, Harper & Row, 1982).

13 Websters’ New World Dictionary (Cleveland, OH: World Publishing Company, 1953), p. 1565.

14 Approximately the same definition is to be found in R. Edward Freeman and Norman Bowie, Ethics and Agency Theory: An Introduction (New York: Oxford University Press, 1992).

15 Andrews, K.R., The Concept of Corporate Strategy, 3rd Edition (Homewood, IL: R. D. Irwin, 1987).

16 Barnard, C.I., The Functions of the Executive, 30th Aniversary Edition (Cambridge, MA: Harvard University Press, 1968), p.???

17 Ibid., p.???

18 Simon, H., Administrative Behavior (New York: Free Press, 1947), p. 47.

19 Andrews, op. cit., p. 174.

20 Schendel, D. and C. Hofer, Strategic Management: A New View of Business Policy and Planning (Boston: Little Brown, 1979).