Dr, Theodore Scaltsas is professor of Philosophy, University of Edinburgh
Mr Owen Kelly, OBE, Director of Engagement, Business School
Ms Shannon Chen, Postgraduate Researcher, Philosophy
University of Edinburgh, Scoltland
Everybody wants to put more accountability into business; but this seems much easier said than done. For example, David Rock summarizes three different attempts to introduce values in corporate personnel behavior, and laments their lack of success by attributing the shortcomings to the innate complexity, if not irrationality, of human decision making (‘The Business of Values’). We take a more upbeat stance on human nature here, believing that society and its institutions can be guided by values – there is ample evidence of this among developing and developed cultures, and we do not think there is anything making us unfit for it.
Is, then, our current, less-than-ethical corporate behaviour a riddle that defies explanation? If we are capable of value-guided behaviour, why don’t we practice it in corporate environments? We believe there is an explanation for this. Personal and social values are built into our character, as Aristotle explained; they are acquired by training and habituation in early age, and exhibit themselves in our dispositions to feel, to decide, and to act in accordance with them. This is what Binta Niambi Brown discovered, when she felt impelled to disclose to her client crucial information that emerged just as the deal was being struck; “Even if the deal had been blown up for good, honest reasons rooted in decent integrity and morality” disposed her to reveal the information.
Niambi Brown exemplifies what we will call the traditional-model of corporate virtue, primarily inherited from the Jesuit Order, who followed a rigorous Aristotelian education, not only in rhetorical argument, which would give them the means, but importantly, in ethics, developing moral character that embodied the Order’s values. They put moral exemplars to run their businesses, and staffed them with virtuous members of the Order all the way down; so they run their businesses in accordance with their values.
In view of such a record, why are corporations, at large, suffering on the ethical front? Why has the Jesuit model not spread? There are two reasons, which distinguish everyday businesses from strictly traditional Aristotelian business models: the company goals are, ultimately, only financial; and company employees are required to serve company goals. Company goals win over personal goals, hands down, as we found out from the Milgram Experiments; so, personal virtues systematically take second place in employees’ decision making. Methodologically, this human psychological trait has served business goals widely, overriding employee values, without businesses even needing to try to combat them; our very own ‘psychology of authority’ sees to it that we succumb. So, unless corporate employees are exemplarily trained in the moral domain, we need to redesign corporate goals and values, from purely financial to more wholesomely human values, to improve corporate ethical shortfalls.
So, what’s the problem? It is that corporations cannot be trained as if they were human agents. On the traditional Aristotelian model, moral dispositions are acquired by training and are therein embedded in the agent. We learn to desire less fatty food, to help people in distress, and to get less angry at children as a whole organism. It is thus that our whole organism should suffer if we frustrate our dispositions. However, corporations are not biological organisms; they are sociological organisms. Their corporate ‘chemistry’ is different, and hence, so are the corporate dispositions developed.
We are searching for a different mechanism of generating corporate ethical dispositions, one that does not treat corporations as human agents, and does not presuppose thoroughly trained moral employees. We propose to build this mechanism using an idea in Mihir Desai’s Wisdom of Finance, of humanising finance. We call our mechanism the paradigm-model, and it aims to show how to develop corporate virtuous behaviour that does not stem from, require, or is grounded on employees’ virtuous character, but rather, it depends only on corporate culture.
To this purpose, we re-design the Aristotelian traditional-model of moral dispositions of human organisms, to now fit ‘corporate organisms’, and ground corporate dispositions. On our paradigm-model, corporations develop corporate cultures, which shape corporate dispositions to decide and act, guided by paradigms of moral enterprise, drawn from the humanities – literature, arts and social culture.
Let us free corporate dispositions from dependence on employee character; let us emancipate corporations, and give them a character of their own, based on company culture that is grown from paradigms selected for the company. We believe this makes an enormous difference to the requirements it places on employees, for achieving ethical corporate behaviour, over the traditional model. What Desai has shown is that finance, like all business, is human social activity, comprehensible by all, achievable by all, if only we let relevant stories from the arts and humanities guide our understanding. He proposes what we might call a ‘paradigm of the narrative’, where we choose the stories of individuals that, together, create a paradigm to guide corporate moral choices. This is Aristotelian character development, only fashioned for social organisms, rather than biological ones.
We further believe that the paradigm-model can be applied equally to Western and Eastern corporations, inspired by paradigms from the respective literatures and cultures. In fact, some of the paradigms might well be part of any financial company’s paradigm. Desai’s analysis of risk aversion as the founding motivation of finance, and its contradictory relationship with the culture of unlimited accumulation, are paradigms with near-universal relevance to the finance industry. In Chinese culture, an exemplary corporate figure is Widow Qing, an inquisitive miner and merchant of cinnabar. Motivated by fairness and duty of care for her workers, Qing secured wellbeing and flourishing for them through innovation on mercury extraction techniques, introduction of branding, logistical progress, and even the modern-day equivalent of healthcare and micro financing. Widow Qing was a ‘natural’ in corporate virtue, having lived a virtuous life and leaving behind the legacy as the most venerated female merchant figure; her story is one that provides powerful paradigms for corporate virtue in the new entrepreneurial China.
The paradigm-model we are proposing rests on the essential humanity of the humanities (Desai’s subtitle is ‘Discovering Humanity in the World of Risk and Return’). Stories from literature, music and art are human artefacts, human-generated excellences, reflecting what it means to live a good and fulfilled human life, with all its financial deliberations and decisions. For Aristotle, as for Confucius, this is the very purpose and function of a human being. This not only facilitates the ‘discovery of humanity’ in business practice, it transplants an element of the human directly into the corporate.
A last thought. The paradigm-model is a mechanism for developing corporate virtue; but it is not a motivation for developing corporate virtue. The motivation has to come separately, either externally, from societal desire, or internally, from executive desire; it becomes formidable if it comes from both. A corporation would need to discover, for itself, the stories that create its paradigm; Steve Denning describes several ways; as do Harrison Monarth; Peter Bregman; and Joseph Grenny). Indeed, most corporations would see this as an important corporate task, right up there with designing a brand or drafting a mission statement.