Skip to main content
SpringerLink
Log in

Must Managers Leave Ethics at Home? Economics and Moral Anomie in Business Organisations

  • Published:
Philosophy of Management Aims and scope Submit manuscript

Abstract

Why is it that some business managers appear to behave differently in private and at work? How, if at all, are the decisions managers make affected by the nature of their organisations? What impact do organisational values have on the moral autonomy of managers? A research project into these questions is now under way in three disparate Australian business firms and this paper sets out the premise underlying it. For purposes of research the general premise is that the moral character of a business influences the moral judgements and actions of its members. More specifically, it is suggested that the economic paradigm renders a business organisation amoral rather than moral or immoral, and as a result moral responsibility comes to be assigned to individual members. However, the socio-cultural nature of such firms interferes with the ability of managers to exercise moral autonomy. Governed as it is by the market or laws of economics, the amoral organisation is likely to transform its members into individuals without moral standards.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  1. Ewing D ‘Employee Freedom Within The Organization’ in M W Hoffman (ed) Power And Responsibility In The American Business System: Proceedings Of The Second National Conference On Business Ethics April 7 & 8 pp 168–172 University Press of America Washington DC 1978

    Google Scholar 

  2. Nesteruk J ‘Legal Persons and Moral Worlds: Ethical Choices within the Corporate Environment’ American Business Law Journal 29 (1991) pp 75–97

    Article  Google Scholar 

  3. See eg Badaracco J L J ‘Business Ethics: Four Spheres of Executive Responsibility’ California Management Review 34 (3 1992) pp 64–79; De George R T ‘GM and Corporate Responsibility’ Journal of Business Ethics 5 (1986) pp 177–179; French P A ‘Integrity, Intentions and Corporations’ American Business Law Journal 34 (2 1996) pp 141–155; Weaver W G ‘Corporations as Intentional Systems’ Journal of Business Ethics 17 (1998) pp 87–97; Werhane P H ‘Corporate and Individual Moral Responsibility: A Reply to Jan Garrett’ Journal of Business Ethics 8 (1989) pp 821–822.

    Article  Google Scholar 

  4. See eg Clinard M B & Yeager P C Corporate Crime New York The Free Press 1980; Dahler-Larsen P “Corporate Culture and Morality: Durkheim-Inspired Reflections on the Limits of Corporate Culture’ Journal of Management Studies 31(1 1994) pp 1–18; Katz D & Kahn R L The Social Psychology of Organizations (2 ed) New York Wiley 1978; Parsons T The Social System London Routledge & Kegan Paul 1951.

    Google Scholar 

  5. See eg Metzger M B & Dalton D R ‘Seeing the Elephant: An Organizational Perspective on Corporate Moral Agency’ American Business Law Journal 33 (1996) pp 489–576; Seabright M A & Kurke L B “Organizational Ontology and the Moral Status of the Corporation’ Business Ethics Quarterly 7(4 1997) pp 91–108; Sharp Paine L ‘Managing for Organizational Integrity’ Harvard Business Review (March-April 1994) pp 106–117; Werhane op cit.

    Article  Google Scholar 

  6. Petrovich O ‘Moral Autonomy and the Theory of Kohlberg’ in S M Modgil (ed) Lawrence Kohlberg Consensus and Controversy Philadelphia The Farmer Press 1988

    Google Scholar 

  7. See eg Colby A & Kohlberg L The Measurement of Moral Judgement (Vol 1) Cambridge, Cambridge University Press 1987; Crittenden P Learning to Be Moral: Philosophical Thoughts about Moral Development New Jersey Humanities Press International Inc 1993; Tappan M Kohlberg L Schader D Hoggins A Armon C & Lei T ‘Heteronomy and Autonomy in Moral Development: Two Types of Moral Judgements’ in A Colby & Kohlberg L (eds) The Measurement of Moral Judgement (Vol. 1, pp. 315–380) Cambridge, Cambridge University Press 1987.

    Google Scholar 

  8. For a full discussion see Rothschild K W Ethics and Economic Theory: Ideals — Models — Dilemmas Aldershot Edward Elgar 1993.

    Google Scholar 

  9. See eg Wilber C K ‘Economics and Ethics’ in J B Davis, Hands D W & Maki U (eds) The Handbook of Economic Methodology (pp. 138–142) Cheltenham Edward Elgar 1998.

    Google Scholar 

  10. Evensky J ‘Ethics and The Invisible Hand’ Journal of Economic Perspectives 7 (2 1993) pp 197–205

    Article  Google Scholar 

  11. See Raphael D D & MacFie A L (eds) Adam Smith: The Theory of Moral Sentiments Oxford, Clarendon Press 1976 VII ii1.20 (Original published 1759/1790).

  12. Rothschild K W Ethics and Economic Theory: Ideals — Models — Dilemmas Aldershot, Edward Elgar 1993

    Google Scholar 

  13. This argument is developed by Blaug M The Methodology of Economics: Or How Economists Explain Cambridge, Cambridge University Press 1992; Keat R & Urry J Social Theory as Science London, Routledge. & Kegan Paul 1975; and Rothschild op cit

  14. Keat R & Urry J Social Theory as Science London Routledge & Kegan Paul 1975

    Google Scholar 

  15. Hauman D M & McPherson M S Economic Analysis and Moral Philosophy Cambridge, Cambridge University Press 1996

    Google Scholar 

  16. Boland L A The Foundations of Economic Method London, George Allen & Unwin 1982

    Google Scholar 

  17. See Boland op cit.

  18. See eg ibid Caldwell B J Beyond Positivism: Economic Methodology in the Twentieth Century London, George Allen & Unwin 1982; Hutchison T The Significance and Basic Postulates of Economic Theory (2 ed) New York, Kelley 1938/1960; Maki U ‘Reorienting the assumptions issue’ in R E Backhouse (ed) New Directions in Economic Methodology pp 236–256 London, Routledge 1994.

    Google Scholar 

  19. Ryan A The Philosophy of John Stuart Mill (2 ed) Basingstoke, Macmillan 1987 p 197

    Google Scholar 

  20. Friedman M ‘The social responsibility of business is to increase its profits’ New York Times Magazine New York, The New York Times Company (September 13 1970). Of course Friedman said more than this but it is surely significant that this is the remark that ‘stuck’.

  21. Clower R & Howitt P ‘Foundations of economics’ in A d’Autume & Cartelier J (eds) Is Economics Becoming a Hard Science (pp 17–34) Cheltenham, Edward Elgar 1997

    Google Scholar 

  22. Loasby B J The Mind and Method of the Economist: A Critical Appraisal of Major Economists in the 20th Century Aldershot, Edward Elgar 1989

    Google Scholar 

  23. In attempting to show that economics is a natural science, like physics, economic theorists abstracted economic variables from the nominal (monetary) form in which economic magnitudes occur. That is, they took it that there were true values underlying the values expressed in monetary terms, which could be, and are, changed by rulers and political institutions.

  24. Benetti C & Cartelier J ‘Economics As An Exact Science: The Persistence Of Badly Shared Conviction’ in A d’Autume & Cartelier J (eds) Is Economics Becoming a Hard Science (pp 204–9) Cheltenham, Edward Elgar 1997

    Google Scholar 

  25. Particularly in Berle A A & Mears G C The Modern Corporation and Private Property New York, Macmillan 1932/1967; Coase R H ‘The Nature of the Firm’ Economica 4 (1937) pp 386–405; Commons J R Institutional Economics Madison, University of Wisconsin Press 1934

  26. These three branches and their primary advocates are: the growth of the firm, Penrose E The Theory of the Growth of the Firm (3rd ed) Oxford, Oxford University Press 1995; transaction cost, Williamson O E Markets and Hierarchies: Analysis and Antitrust Implication New York, The Free Press 1979; and X-inefficiency, Leibenstein H Inside the Firm: The Inefficiencies of Hierarchy Cambridge, Harvard University Press 1987. The growth of the firm branch concerned itself with the maximisation decisions of senior managers, arguing that growth in owner wealth coincides with managers’ pursuit of their own self-interest. Transaction cost theory sees self-interest expressed through opportunism and uses this to argue the benefits of hierarchy as a form of economic governance superior to markets. X-inefficiency sees the absence of competition providing a context within large organisations that allows individuals to maximise self-interest by withholding effort.

    Book  Google Scholar 

  27. Duska R F ‘The Why’s of Business Revisited’ Journal of Business Ethics 16 (1997) pp 1401–1409; Hausman D M & McPherson M S Economic Analysis and Moral Philosophy Cambridge, Cambridge University Press 1996

    Article  Google Scholar 

  28. Fay B Social Theory and Political Practice. London, Allen & Unwin 1975

    Google Scholar 

  29. See Duska op cit who identifies these as motives (subjective reasons — to make a profit) and objective purposes (justification — to be beneficial to society).

  30. Ibid p 1402

  31. Etzioni A On Ethics and Economics Oxford, Basil Blackwell 1988

    Google Scholar 

  32. Benn S I A Theory of Freedom New York, Cambridge University Press 1988

    Book  Google Scholar 

  33. Kant ‘The Critique of Practical Reason’, cited in Serrin T Practical Reason and its Autonomy: The Foundations of Kant’s Moral Theory Unpublished dissertation, Bachelor of Arts with Honors Amherst College Amherst 1995

  34. Bielefeldt H ‘Autonomy and Republicanism: Immanuel Kant’s Philosophy of Freedom’ Political Theory 25 (4 1997) pp 524–558

    Article  Google Scholar 

  35. Ibid p 538

  36. Stark C A ‘The Rationality of Valuing Oneself: A Critique of Kant on Self-Respect’ Journal of the History of Philosophy 35 (1 1997) pp 65–82

    Article  Google Scholar 

  37. MacIntyre A ‘Social Structures and their Threats to Moral Agency’ Philosophy 74 289, 1999 pp 311–329

    Article  Google Scholar 

  38. Ibid. In After Virtue: A Study in Moral Theory (2nd ed) London Duckworth 1993 p 44 MacIntyre describes Kant’s moral philosophy as centred on two deceptively simple theses: ‘if the rules of morality are rational, they must be the same for all rational beings, in just the way that the rules of arithmetic are; and if the rules of morality are binding on all rational beings, then the contingent ability of such beings to carry them out must be unimportant — what is important is their will to carry them out’. A C Ewing’s analysis of the Kantian notion of the a priori nature of ethical knowledge demonstrates the difficulty of accepting certain acts as always right or wrong regardless of the conditions. See Ethics (2nd ed) New York The Free Press 1965.

  39. Dworkin G The Theory and Practice of Autonomy Cambridge, Cambridge University Press 1988 p 15

    Book  Google Scholar 

  40. Ibid p 12. Frankfurt (1981 cited in E M Hartman ‘The Role of Character in Business Ethics’ Business Ethics Quarterly 8 (3) 1998 pp 547–559) originally developed the idea of the relationship between second order desires and autonomy, granting the autonomous person consistency between second order desires and first order desires, or the ability of second order desires to override first order desires.

  41. Benn op cit p 215

  42. MacIntyre op cit 1993 p 12

  43. Lindholm C ‘Logical and Moral Dilemmas of Postmodernism’ Journal of the Royal Anthropological Institute 3(4) 1997 pp 747–761

    Article  Google Scholar 

  44. Lukes S Individualism Oxford, Basil Blackwell Limited 1973

    Google Scholar 

  45. Jackall R Moral Mazes New York, Oxford University Press 1988

    Google Scholar 

  46. See eg Etzioni op cit; Gioia D A ‘Pinto Fires and Personal Ethics: A Script Analysis of Missed Opportunities’ Journal of Business Ethics 11 (1992) pp 379–389; Jones T M ‘Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model’ Academy of Management Review 16 (2 1991) pp 366–395. Jones refers to role and event schemata: the moral decision making is an event schema, the moral decision-maker is a role schema.

  47. It may be argued that the workplace also allows its members to experience a negative freedom, a freedom from their liberty and thus turns them into automatons as Fromm claimed in The Fear of Freedom London, Routledge & Kegan Paul Ltd 1942. Radin and Werhane concede that the employment relationship grants a certain degree of control to employers over the behaviour of their employees, resulting in the relinquishment of some of their autonomy. This is understandable and necessary if one considers the likely effect of the retention of one’s general autonomy in an organisation. See Radin T J & Werhane P H ‘The Public/Private Distinction and the Political Status of Employment’ American Business Law Journal 34 (2 1996) pp 245–260.

    Article  Google Scholar 

  48. Jackall 1988 p 127

  49. Mitroff I Smart Thinking for Crazy Times: The Art of Solving the Right Problem San Francisco, Berrett-Kohler 1998

    Google Scholar 

  50. For example in the fourth edition of Management and Organisational Behaviour Pitman 1996 Laurie Mullins writes ‘The variables outlined above provide parameters within which can be identified a number of interrelated dimensions — the individual, the group, the organisation, and the environment — which collectively influence behaviour in work organisations. … The individual is central feature of organisational behaviour and a necessary part of any behavioural situation …’ (p 5) ‘...early attempts to develop a new type of applied ethics for business were strongly opposed by those who regarded the role of people in business as fundamentally different from that practised in the ‘closed professions’ of medicine, law, engineering and accountancy. That said, there is little to choose between the view that business is distinct from all other forms of human activity, however sophisticated the argument, and the Old American political battle-cry that ‘The business of business is business’ (p 316).

  51. Russell B Authority and the Individual (2nd ed) London, George Allen and Unwin Ltd 1964

    Google Scholar 

  52. Miceli N S ‘Deviant Managerial Behavior: Costs, Outcomes and Prevention’ Journal of Business Ethics 15 1996 pp 703–709

    Article  Google Scholar 

  53. May T ‘The Concept of Autonomy’ American Philosophical Quarterly 31, 2, 1994 pp 133–145. The standard May proposed for autonomy is whether the behaviour reflects the agent’s evaluative assessment, or are the circumstances such that no sensible man could chose otherwise. The emphasis of autonomy as selfrule is thus on active evaluative assessment and not independence or self sufficiency.

    Google Scholar 

  54. Hampden-Turner C Radical Man: The Process of Psycho-Social Development Cambridge, Schenkman Publishing Company 1970

    Google Scholar 

  55. Durkheim developed the concept of anomie as a condition of relative normlessness in a society or a group. Anomie occurs when society’s moral regulative power is dissolved by the explosive multiplication of output of a capitalist economy (See Lindholm op cit). In such a catastasis, where people have lost their social roots, Lindholm claims, people come to believe that they create themselves through their own successes in the expanding market place.

  56. Rothschild 1993 p 50

  57. Gemmill G & Oakley J ‘Leadership: An alienating social myth?’ Human Relations 45, 2 1993 pp 113–129

    Article  Google Scholar 

  58. Moxley R S Leadership and Spirit: Breathing New Vitality And Energy Into Individuals And Organizations San Fancisco, Jossey-Bass 2000

    Google Scholar 

  59. Spears L C (ed) Insights on leadership: service, stewardship, spirit, and servant-leadership New York, Wiley 1998

  60. Interestingly, there is evidence, provided by Moxley, Spears and others, that when the pressures to focus solely on delivering shareholder value is resisted and the needs of other stakeholders (such as employees, customers, local community) are considered, companies show better financial performance.

  61. The research project examines moral decision making of managers in three disparate organisations in Australia. It explores how managers’ moral decisions are affected by the organisation and it endeavours to clarify the effect of organisational values on the individuals’ moral autonomy in organisational decisions. Data collection took longer than anticipated due to the reluctance of senior managers in selected organisations to participate. As a result analysis is still in progress. However, we expect our research will encourage further inquiry in organisations operating as amoral economic structures.

Download references

Author information

Authors and Affiliations

  1. Faculty of Business and Public Management, Edith Cowan University, Western Australia, Australia

    Richard J. McKenna (senior lecturer in the School of Management) & Eva E. Tsahuridu (Ph D candidate in business ethics)

Authors
  1. Richard J. McKenna
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Eva E. Tsahuridu
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

McKenna, R.J., Tsahuridu, E.E. Must Managers Leave Ethics at Home? Economics and Moral Anomie in Business Organisations. Philos. of Manag. 1, 67–76 (2001). https://doi.org/10.5840/pom2001138

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.5840/pom2001138

Keywords

Search

Navigation