A brief history of the morality of organisations

Inspired by SOAS CeDEP study programmes.Presentation © 2011 by Darren Willman.

A BRIEF HISTORY OF THE MORALITY OF

ORGANISATIONS

Wednesday 12 April 2023

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http://www.soas.ac.uk/cedep/


LEARNING OBJECTIVES

› Pinpoint landmark moments and events in the history of anti-morality and CSR, including necessary future directions to improve business virtue

› Introduce globalisation and sustainability as two main drivers for morality in modern business

› Indicate some reasons for the lack of certainty around the business case for CSR, and slow growth in responsible business


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Value neutrality is a historic concept relevant to organisations and ethics

› i.e. the separation of organisational objectives and moral responsibility

› Its origins were the institutionalisation of science:

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17th centuryRoyal Society of London and Charles II agree that science and the state mind each other’s business.

1911 Frederick Taylor’s Scientific Management, where “the system comes first, not the man, and the system shall be based on science”.

Images from abc.net.au and wikipedia.org




While it sounds unethical, it was morally justified by economics

› Economists believed that moral responsibilitycomes from the individual pursuit of self interest (Adam Smith, 18th century)

› “It is the extent of the market that limits moral responsibility”: i.e. the limits to organisational responsibility lie within a restricted area of interest.› Mainstream interest (traditional view) : ROI, $› Broader interest (that needs to be explored): stakeholders,

environment, future generations (and ROI, $)

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Image from borders.com.au

Oh! So it must be OK… right?




Henry FordOne of the world’s best performing businessmen of all time.He strictly separated business from personal/human values. He focused 100% on ROI.

Business adopted it and it became a key foundation for success

› Corporations and business schools measure and emphasise economic/financial performance criteria.

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VALUE NEUTRALITY

But does this make sense

socially?

Image from wikipedia.org

(Return on investment)




And now pervades the manner in which all organisations are managed

› Think about your job at work and how your boss decides evaluates you?› The vast majority of evaluations are measurable and objective.

› The more of a measurable you deliver given the same amount of time and resource is efficiency.› This can devalue human life and experience.› By nature, it ignores and suppresses that which cannot be described.

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These things are quite far from morals and ethics…




As a result, it generated an anti-morality business sentiment

› Friedman, 1962:› The role of business is to “increase profits as long as it stays within the

rules of the game”.

› “The Dangers of Social Responsibility”, Levitt, 1958:› Business has a better chance of survival if long-term profit

maximisation is the dominant objective› Government should take care of general welfare because CSR is

limited.

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Is this a socially responsible anti business morality

statement?

Image from amywalters.wordpress.com




And a solid case against corporate social responsibility

› It undermines the operation of a free society and a market system.

› Business involvement in government centralises control and takes us on the path of socialism.

› How can business know about the social issues to pursue?› It is wrong that shareholders cannot choose where their

money goes.› The price mechanism, not politicians, should allocate

competing resources.

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Was anti-moral, profit-maximising behaviour seen as ethical?

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MORAL

IMMORAL

Value neutrality

Economics: “self-interest is moral”

Business focus on ROI and $

Anti-morality business sentiment

REALLY???




Business was in denial, it was absolutely not moral or ethical

Henry Ford receives the Grand Cross of the German Eagle* from Adolf Hitler’s Third Reich on his

75th birthday in 1938.

* An award given to foreigners who were supportive of Nazism

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Image from orange-papers.org




Example: World War 2 and the Nazi concentration camps

› Ford and General Motors used forced labour camps in their operations

Gave substantial support, claimed no influence over its operationsChairman Alfred P. Sloan defended the operation as “highly profitable”

› THEIR JUSTIFICATION: Value neutrality & efficiency!

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Efficiency… if you are too sick to work you should

die…




The real trend was persistent immorality

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MORAL

IMMORAL

Value neutrality

Economics: “self-interest is moral”

Business focus on ROI and $

Anti-morality business sentiment




Recently, it became accepted that their views are no longer accurate

› Nowadays it is more or less consensus that they pushed too far with their views. There is more balance now.› Friedman assumes certain things that are impossible in

today’s society, e.g. unions representing their employees and economic privatisation and deregulation.

› The world has learned some lessons from its history› Business started to care› The conditions of the market changed

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One of the major drivers and changes to the market, is globalisation

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Important, inevitable

moral considerations:Accountability: who are

they accountable to?

Legal: treaties, which country’s laws to adopt

Scale of impact

Moral and ethical diversity

Cultural: gender, ethnic equality, bribery, etc




A global playground with no rules or controls

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Negative consequences:› Unsustainable natural

resource use› Sweatshops› High cost agriculture

products› Unstable economic growth› Unequal rates of

development› Issues with immigration

and cultural identity

Who is controlling the actions of global business?

Where are the laws? Where are the “rules of the

game”?Current solutions:› Self regulation› Pressure

Civil societyThe Internet

Are these really good enough?




Another driver is the increasing popularity of sustainability

› Brundtland’s Sustainable Development› The idea to introduce sustainability as the

new universal ethical consideration into the behaviours and decisions of corporations and individuals.

› Triple Bottom Line: Social, Environmental, Economic

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Anti-morality sentiment lost favour as CSR strategies emerged in the US

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MORAL

IMMORAL

Anti-morality business

sentiment

USA in the 1960-70’s:› Corporate philanthropy› Voluntary codes of conduct› Corporate lobbying› Social investment funds› Social audits› CSR rankings




Despite a dip in the 1980’s, it seems to be popular again

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MORAL

IMMORAL

Anti-morality business

sentiment

USA in the 1960-

70’s

1980’s, the “decade of greed”› Thatcherite economics› Reaganomics

1990’s and

today




Truth be told: business slowly started caring about its impact on the world

› Corporate philanthropy:› Started from a general concern for employee education

and health (a productive workforce is a happy one)› Became strategic with cause-related marketing

› Social investment:› Initially about clearing its conscious› Became strategic: NGOs in related industries

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It’s interesting how morality was not strategic at first…




Morality is seen as important, but extremely difficult to implement

› Moral responsibility is gaining popularity and momentum› BUT it’s not easy, it’s complex! Compare an individual decision

to a corporate one:

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Individual decision:› Only consult with your

own mind, values, perspectives, etc.

› Don’t need to communicate rationale

› Fewer stakeholders

Corporate decision:› Consult with 15-1,500

people each with their own minds, etc, PLUS CULTURES!

› Must be transparent and widely communicated

› MANY stakeholders

Corporations need consistency!

› POLICIES› CODE OF

ETHICS› LAWS




Leaving most organisations reliant on the law (a poor substitute)

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Law is a codification of ethics into a

societal structure.Can organisations

just use these?

Law is a codification of ethics into a

societal structure.Can organisations

just use these?

› It does not clearly determine right from wrong (even judges have to interpret the law).

› Law evolves over time, and very slowly too.

› Different across borders

› Umm…




The business case for morality also slowly began to develop

› There are volumes upon volumes of academic and consultant studies showcasing the links between CSR strategy and profit

› There are tens of thousands of case studies and press releases saying the same thing.

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Image from yellowmagpie.com




A case which is not yet closed – the literature is very disorganised

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Margolis & Walsh – found that 95 selected studies on the CSR-profits relationship were completely incomparable with each other.Griffen & Mahon – produced a journal in 1997 called “The Corporate Social Performance and Corporate Financial Performance Debate: 25 Years of Incomparable Research”.Literature reviews – there were 12 major CSR literature reviews between 1979 and 1999, with 50 shortcomings in the broader body of research…

Image from sciencephoto.com




And often exaggerates CSR as a silver bullet

› CSR’s benefits have been blown out of proportion: it is one dimension of corporate strategy› If it were a silver bullet to competitive advantage,

organisations would remain secretive about it. On the contrary, they seem desperate to promote their CSR activities!

› At the very least, good social performance does not lead to poor financial performance

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So until the business case becomes clear, business virtue will be low

› As much as I hate it, it’s true: it does not provide ROI for everyone.

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There are many business cases for

ethical and responsible

management

There are many business cases for

ethical and responsible

management

But there are many more business

cases for unethical and irresponsible

management

But there are many more business

cases for unethical and irresponsible

management




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“Were Milton Friedman now to revisit this subject, he would find much less to concern him. Virtually all contemporary writing on CSR emphasises its links to corporate profitability”. - David Vogel’s The Market for Virtue

Pursue profits

Follow the rules of the game

Image from yellowmagpie.com




REFERENCES

Unit 1 Course Material, Managing Social and Environmental Responsibility, 2011, SOAS CEDEPVogel, 2005, The Market for VirtueBetton & Hench, 2002, 'Any colour as long as it's black': Henry Ford and the ethics of businessFriedman, 1962, Capitalism and freedomLevitt, 1958, The dangers of social responsibility

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http://www.soas.ac.uk/courseunits/C167.html




http://www.amazon.com/Market-Virtue-Potential-Corporate-Responsibility/dp/0815790775

http://www.amazon.com/Market-Virtue-Potential-Corporate-Responsibility/dp/0815790775

http://www.tandfonline.com/doi/abs/10.1080/146235022000000454




http://www.amazon.com/Capitalism-Freedom-Anniversary-MILTON-FRIEDMAN/dp/0226264211



http://www.mendeley.com/research/the-dangers-of-social-responsibility/

http://www.mendeley.com/research/the-dangers-of-social-responsibility/

A brief history of the morality of organisations

Business

soas cedep study programmes

darren willman

business case

business virtue

modern business

role of business

business involvement

history of antimorality