Organizational Behavior

1. CHAPTER 4
THE LURE OF
CORPORATE VIRTUE
BY: PA U L E D D Y W I L S O N

2. “Every virtue or
excellence both brings
into good condition the
thing of which it is the
excellence and makes the
work of that thing be
done well”
– Aristotle

3. Defined virtue as a point between a deficiency and an
excess of a trait.
Nicomachean
Ethics, Aristotle
At the right times, about the right things, towards the right
people, for the right end, and in the right way, is the
intermediate and best condition, and this is proper to virtue.

4. For example, generosity is a virtue between the two extremes
of miserliness and profligate.
Further examples include courage between cowardice and
foolhardiness and confidence between self-deprecation and
vanity. In Aristotle's sense, virtue is excellence at being
human.
• Aristotle describes virtue as a “mean” or “intermediate”
between two extremes: one of excess and one of
deficiency

6. 4.1 INTRODUCTION

7. 1. Corporate vices are social ills that are
blameworthy and should be avoided.
2. Little attention has been devoted to the
notion that corporations could become
virtuous.
3. He discusses how the corporate mission
statement may be instrumentally valuable
in directing corporations to pursue morally
virtuous behavior.
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8. 4.2 THE MORAL LIFE
CYCLE AND
CORPORATION

9. - Is about human action and its intentions and
consequences (Fisher 1999, Eshleman 2016).
Moral Responsibility
- Generally speaking, a person or a group of
people is morally responsible when their
voluntary actions have morally significant
outcomes that would make it appropriate to
blame or praise them.

10. 1. Morally Non-responsible Actors
 They are the actors who fail to meet the criteria
for moral agency and their actions are not
morally blameworthy or praiseworthy.
From a moral standpoint
there
are two types of actors:

11.  Irresponsible Moral Actors are a token of the type of actors
that are morally responsible, perform morally blameworthy
acts, and may be held morally liable for those acts.
 Morally Responsible Actors either refrain from performing
blameworthy acts or perform morally praiseworthy acts.
2. Morally Responsible Actors
 They are the intentional agents who are sane in the
relevant sense and capable of effecting practical
consequences in the world (Wilson 1996, pp. 293–
302).

12. Peter French
 argued that some corporations should be recognized
as moral persons.
 those corporations that qualify as moral agents are
those that can be shown to have a corporate internal
decision (CID) structure.
Corporate Internal Decision (CID) structures – refers to established procedures for accomplishing specific
goals; the framework in which policies and decisions are determined, formed, and shaped in order to affect
corporate goals.

13.  When a CID structure is in place the agency of a
corporate act is traceable to the CID structure
rather than the individual corporate officers in
agreement with the action.
(PE Wilson assumed that Peter French is correct that some
corporations count as moral persons)

14.  In his view natural moral agents qualify as responsible
moral agents only after they have undergone a specific
rite of passage, a loss of innocence.
“loss of innocence is a
prerequisite for
membership in the
responsible moral
community”

15. With the loss of moral virginity, one
gains a self-reflective moral
understanding of his or her behavior.
One who acquires this insight
recognizes the moral gravity of his or
her behavior.
Insight of moral gravity:

16.  One’s capability to do evil is having knowledge of evil
in spite knowing what is good and what is ought to be
moral.
Experiencing evil in the
process of knowing what is
evil and seeing for the first
time the possibility or
outcome of that evil in a
different way. Seeing what is
good in that situation makes
us capable of evil.

17. Mitchell Haney
 “Corporate Loss of Innocence for the Sake of Accountability”
Corporations may undergo a
formal loss of innocence, but
corporations fail for corporations
may be able to grasp the relevant
moral notions that they are
responsible for untoward behavior.

18.  However, Haney thinks that they may not be able to express
this loss of innocence, since he believes that they cannot
care.
“There is nothing that it is like for a corporation to be
in a state of a self-reactive attitude: thus, nothing that
it is like for a corporation to intrinsically care about the
moral value of its actions. In short, humans really can
care; corporations cannot”

19.  When one loses his or her innocence
one acquires the affect of care
Haney says, “At the bottom, within
the non-formal or attitudinal element
of losing innocence the morally
mature person has undergone some
significant and permanent re-
arrangement of her moral attitudes or
that about which she ultimately cares”

20. Self-reactive attitudes include
such things as guilt, remorse, and
regret (or such positive attitudes as
pride, self-esteem, etc.). How we
care and how much we care about
our actions becomes amplified such
that we find it of increased
importance to who we are and what
we do to engage in closer scrutiny of
the moral value of our actions.

21. For our purposes, one’s choices
within the moral realm are confined
to irresponsible choices and
responsible choices. Irresponsible
choices are choices to behave in
blameworthy ways, and they are
careless choices. Responsible
choices are choices to behave in
morally neutral or morally
praiseworthy ways, and they are
careful choices.

22. When one surrenders one’s
moral innocence one acquires
knowledge of one’s capacity for
good, and that includes
awareness that there is a wide
range of morally good behavior.
One can care enough to be
minimally good, or one can care
so much that he or she chooses
to display maximal goodness, that
is, virtuosity.

23. 4.3 CORPORATE MISSION
STATEMENT:
SOMETHING TO CARE ABOUT

24. • focuses on qualitative aspects of the whole
business.
• have an intangible worth that can be part of
the goodwill or going-concern value of a
corporation.
• explicit the core ideology of a company that
determines how SHALL the company
operates.
• serve as a guiding and organizing principle
to regulate the business practice of the
company.
CORPORATE MISSION STATEMENT

25. Members of Ethical
Community
Moral Agents
CARING ABOUT THE CORPORATE
MISSION STATEMENT
• Aligning the mission statement with its
practice.
• Aligning with some objective standards of
excellence.

26. Collins and Porras
“Like the fundamental ideal of a great
nation, church, school, or any other
enduring institution, core ideology in a
visionary company is a set of basic
precepts that plant a fixed stake in the
ground: ‘This is who we are, this is what
we stand for; this is what we’re all
about’”
Core ideology is an identity that establishes what an organization does and why; what it stands for
and why it exists. The core ideology of an organization should remain relatively fixed

27. genetic
code
A purpose
and a spirit

28. BUT having a mission statement or
a core ideology does not guarantee
that the business practice of that
company will not come into conflict
with the interests of other
companies or the interests of the
moral community.

29. The builders of visionary
companies seek alignment
in strategies, in tactics, in
organization systems, in
structure, in incentive
systems, in building layout,
in job design – in everything
and not on its ethical track
records.

30. A corporation can formally
care about its mission statement
by aligning its practice with its
mission statement. It can
affectively care about its mission
statement when it takes steps to
see that the mission statement is
regarded as part of its going-
concern value or goodwill value.

31. The Fortune 500
- is an annual list prepared and
published by Fortune magazine that
ranks 500 of the top firms/companies
in the United States by total revenue
for their fiscal years.
- Placement within the top tier is a
significant achievement for all
corporations.

34. 4.4 CORPORATE MISSION
STATEMENT AND THE LURE TO
CORPORATE VIRTUOSITY

35. - A linguistic tool to identify correctly corporations as the
agents guilty of corporate wrongdoing.
RESPONSIBILTY THEORY
- The corporate mission statement may be the neglected tool
that could help ethicists concerned about the prevention of
corporate wrongdoing.

36. When corporate mission statements become a
matter of public knowledge, they can become a
voluntary source of corporate goal setting.
Corporate mission statements are so valuable
for business ethics because they are non-
mandatory; hence they are produced
autonomously.

37. • Founded by Sophia Collier as a socially responsible fund.
• It was acquired by Sentinel Investments in April 2008.
• It offers everyone the opportunity to take back control of finance
and become an actor of change by financially supporting the
companies of tomorrow.
• By putting a fraction of your savings into the fund,
you support ambitious entrepreneurial projects with a social or
environmental impact beneficial to society.
Citizen’s Fund

39. “Citizens and others in the socially
responsible investments community
support a proposal to require
companies to estimate and disclose
the value of stock options”.
It was the practice of the Citizen’s
Fund to create shareholder resolutions
intended to influence corporations to
behave ethically.

40. Since the corporate
mission statement
expresses the core
ideology of the
corporation, it
epitomizes those
self-imposed values
that the corporation
says it is willing to
honor and uphold
in practice.
When a
corporation has a
mission statement
the ethical
community can
make use of the
statement to hold
the company
accountable for
violating its own
standards.

41. That after-the-fact method can
serve as a powerful deterrent to
shape future behavior, and it can
be effective in achieving a sense
of retributive justice.
Ethicists may want to direct
corporations periodically to revisit
their mission statement and see how
their behavior succeeds or fails in
embodying the values latent in its
mission statement.

42. Corporations might endeavor
to make use of their corporate
mission statement to aim to
achieve a sense of corporate
virtue.
Raise the bar on its desirability
as a workplace that would require
setting quantifiable safety and
environmental standards for
employees and endeavor to
achieve or exceed those standards.

43. Externally a
corporation may
decide to offer
products or services
that shall sustain and
improve the lifestyle of
its customers while
lowering costs.

45. In “Built to Last”, Jim
Collins and Jerry Porras
focus on timeless success
principles that can be
learned from visionary
companies like Marriott,
Proctor & Gamble, and
Walt Disney, whose
success has lasted the test
of time. Unlike individuals,
organizations can
transcend time and
generations; they can be
built to last.

46. The findings came from 6 years of extensive research of 18
Visionary Companies, compared to 18 Comparison Companies. As
of the end of 1990, the Comparison Companies did twice as well as
the stock market since 1926, while the Visionary Companies did 15
times as well as the stock market.

47. The findings came from 6 years of extensive research of 18
Visionary Companies, compared to 18 Comparison Companies. As
of the end of 1990, the Comparison Companies did twice as well as
the stock market since 1926, while the Visionary Companies did 15
times as well as the stock market.

48. 4.5 AVOIDING VICE AND
PURSUING VIRTUE IN THE
CASE OF MERCK AND
COMPANY, INC.

49. Not all Built-to-Last corporations with
mission statements would be likely to
pursue corporate virtue. For
instance, big tobacco producer Philip
Morris may know its core ideology,
but as it engages in business it may
not autonomously embrace a
concern for the health and welfare of
its customers.

50. Merck and Company, Inc.
 Is an American pharmaceutical company that
produces some of the most well-known drugs
in the pharmaceutical business, as well as
consumer health products.
 Mission:
1st Value: “Our business is preserving and
improving human life.”
2nd Value: “In discharging our
responsibilities, we do not take professional
or ethical shortcuts.”

51. Case Problems/ Findings Action/Solution
Animal Testing They use animal as subject for their research on
drug effectivity.
Merck has autonomously adopted
certain standards as it relates to
the ethical treatment of animals
Vioxx Painkiller Adverse drug reactions. Adverse effects like cardio-
vascular accidents and gastrointestinal bleeding
Concealed the known risks to
public knowledge.
Increased the adverse effect of the drug to
numerous victims.
Continued to market their product
but with ongoing studies of side-
effects of the drug.
Risks of heart attacks in just a period of 18 months
for the 20 million Americans
Vioxx is withdrawn from the
market and save face the
company
Reports on the effect are disclosed to public which
rises to lawsuits.
Paid $4.85 Billion to end
thousands of lawsuits over its
painkiller Vioxx.

52. Merck & Co. Pursuit to Virtue
• Merck seems to have taken a more cautionary approach to the
marketability of some promising drugs in its pipeline.
• Merck uses a more cautionary policy for the release of some drugs.
• Merck has chosen to continue to engage in some socially beneficial
activities known as the Mectizan Donation Program for over 25 years by
providing life-enhancing Mectizan drugs to individuals at risk for river
blindness at no cost in economically challenged societies like Africa, Latin
America, and Yemen.

53. CONCLUSION

54. Saving face while avoiding additional harm
is a good thing to do but being diligent to
insure that harm is minimized from the
outset is a better act by far.
The company could have found a moral
reason to pull its product from the market
before a significant number of individuals
were placed at risk by using the drug. If the
company had acted in this way, it would
have been actively pursuing corporate virtue
rather than simply avoiding corporate vice in
September 2004, before it was too late.

55. Corporate mission statement evolves
through a give-and-take process.
The mission statement requires certain
self-imposed boundaries and
restrictions that may govern the
behavior of the corporation to avoid
possible risks.