Hard Like Water

Ethics in Business

“HF 5387 D43 1998”

Chapter 1

This chapter first shows the ethical and functional limitations of the old private property system and to argue for a more inclusive, truly corporate, business ownership system to better reflect the size and complexity of large modern firms.

Secondly, considering the welfare of all stakeholders affected by the firm’s decisions and operations, we saw, would better reflect the broad community of interests a modern company represents, in contrast to the old concept of the business as a restrictive partnership of owners and shareholders alone.

Thirdly, including a wider range of internal stakeholders in corporate governance not only expands the community of interests involved in the company. It also should facilitate stakeholder feedback and enhance the company’s responsiveness to problems and change.

Chapter 2

This chapter began with an old tale about financial mismanagement at Barings Bank. Instead of hard-headed rational management we found a euphoric disdain of risk, and then an equally disturbing tendency to surf the latest fads. In contrast, the ‘do no harm’ maxim suggested a risk matrix, supported by the distinction between capital and payoff risk, to encourage a more prudent, risk-minimizing management style.

The second part of the chapter began by suggesting that we should distinguish between executive and administrative management.  In both instance managerial work, as Mintzberg has shown, is much more social in character than has been commonly assumed.

Chapter 3

This chapter first considered the conflict of loyalty and voice in the autocratic corporation. Instead of feedback and voice, conformity and groupthink reign in such organizations. But feedback and voice are essential to reporting and solving problems. The new tales are, firstly, that exchange values are preferable to threat values as a basis for ethical organizational value. Exchange, especially when understood as reciprocity, shows that economic organizations are implicitly ethical.

Secondly, social integration helps to design an ethical corporate culture and build on exchange, but integration can become so strong as to engender groupthink, stifle voice, and prevent feedback.