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Corporate collapse

by Simon Longstaff

Corporations rise and fall with each passing day. In most cases, the demise of a company is unremarkable – just part of the evolutionary process that is part of the ecology of the marketplace.

Yet, there are occasions when a corporate collapse is caused by factors that demand comment. In the past year or so, we have seen a number of companies destroyed by unethical conduct. In some cases, people have been shocked by the extent to which greed or dishonesty has been revealed as part of the underlying culture of the business. That is, they have been troubled by the fact of unethical conduct rather than its particular consequences. In other cases, people have simply focussed on the adverse outcomes produced by unethical conduct – concerned about the loss of jobs, livelihoods and investments, rather than the fact of unethical conduct in and of itself. Of course, plenty of people are worried about both issues – but not everybody!

The significance of the fact that some people only worry about the negative consequences of unethical conduct should not be underestimated. This is because it is symptomatic of a much larger issue that goes to the heart of debate about what it means to live 'an ethical life", in general, and how this applies to the conduct of organisations, like corporations. At the core of this debate is a question to do with the relationship between motivation and conduct.

One view of human affairs is that motivation is largely irrelevant – so long as people act in a 'virtuous' manner that accords with our expectations of what is ‘good’ and ‘right’ in human affairs. For example, it is enough for some that human beings act in ways that benefit each other; irrespective of their reasons for doing so. From this perspective, it should not matter whether this beneficial conduct is a product of: deep respect, the desire to be rewarded with praise, fear of censure, or some other factor.

Another view is that, while questions of motive are important, we should only be concerned about encouraging motives that 'work' – that lead to the outcome we desire. For example, if beneficial conduct can only be produced by appealing to the principle of self-interest, then so be it. To appeal to notions of 'altruism' (as one example) is mere folly if it doesn't produce the desired outcome to the greatest degree possible.

Finally, there are those who think that the evaluation of conduct as 'ethical' requires that underlying motives be identified and assessed as an integral part of evaluating the conduct itself. Those holding this view may be pleased to note examples of beneficial conduct wherever they occur; they may even conclude that a world in which such conduct is more common than not is a better world in which to live. However, they will resist describing such conduct as 'ethical' if it is done for the ‘wrong’ reasons.

The issue of motivation and its relative importance to ethical conduct, has a significant bearing on debate about business ethics and corporate social responsibility. For example, it is tempting to argue the case for ethics on the basis that ethical conduct is, ultimately, good for the ‘bottom line’. The Ecos Corporation has recently adopted this line in a paper that argues that we should move on from applying the 'moral imperative' for sustainable business practice in favour of a view which states that, “the pursuit of sustainability must be aligned with the pursuit of growth, profit and competitive advantage. Nothing else will work quickly enough”. This is an example of the second approach to motive, outlined above, in which the focus is on identifying what best brings about the desired result and nothing more.

The authors of the Ecos Corporation's paper are not unmindful of ethical obligations. Indeed, they go to some lengths to argue the case for ethical conduct. However, they do not accept that business ought to be ethical for its own sake. Instead, they argue that to ask this of business is, in an important sense, to misunderstand the defining purpose of business and therefore to offer reasons that business is bound to resist.

The arguments put by the Ecos Corporation will probably be embraced by business as a welcome dose of 'common sense' and a helpful recognition of the world 'as it is". However, 'common sense' is not always in alignment with either reality or ethics. It used to be the case that people with 'common sense' believed the earth to be the centre of the universe and persecuted those who denied this 'fact". Furthermore, is it always so commendable to accept the world 'as it is'? What if 'the way the world is' is not as it should and could be?

Business is a human enterprise – and is therefore subject to the usual degree of ethical reflection that we would look for in any human endeavour. If we think that the reasons for doing things matter as much as the fact of our doing them (and not all think so), then the onus will be on people in business to show why (and not merely assert that) this particular field of human action should be exempt from this general requirement. The question of how motives ought to be assessed, in human affairs, is not directly addressed by the authors of the Ecos Corporation paper – leaving open an important question for each of us to consider when reflecting on their recommended approach.

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