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Ethics and Corporate Culture


A Critical Relationship1

Josep M. Lozano — ESADE Barcelona

This paper reflects on the possible relationship zational theory (Smircich, 1983). Viewing organ-
between organizational cultures and ethics. It izations as cultures is novel in that it does not
begins by pointing out that viewing companies as reduce them to their formal and rational dimen-
cultures legitimates the creation of values and sions. Instead, it leads us to seek another type of
shared meanings as part of business practice. But rationality. It is no longer a question of basing all
it also points out that there is a risk involved: decisions solely on economic objectives and
management by values can be a new form of quantitative techniques, but of also examining
manipulation and control. The author suggests alternatives in terms of their consistency with
that this danger can be averted and proposes that organizational values (Bourcier, 1988). It is an
creation of corporate cultures be examined in the approach that goes beyond the normal interpreta-
light of Aristotelian thought. However, he stress tion of Weberian tradition which sees certain
that this return to Aristotelian tradition cannot organizational forms as an expression of rational-
ignore corporate social responsibility or the need ity and focuses instead on the informal and non-
to imbue corporate cultures with a post-conven- rational features of organizational life (Ouchi and
tional perspective. Wilkins, 1985) that cannot be explained by “the
paradigm of formal organizational structure”.3
In recent years, organizational culture has become Smircich stresses that describing organizations
one of the most popular subjects of management with such well-worn metaphors as “machine” and
theory and practice.2 According to Morgan ‘organism’ has led to a deviation in both theory
(1986), understanding organizations as cultures and practice: “organizational theory is always
has two particular strengths: it focuses attention rooted in the imagery of order [...] and develop-
on the symbolic meaning, or mystique, of many ment of organizational theory is a history of the
of the most rational features of organizational metaphor of orderliness [...]What we see in the
life, and it demonstrates that organizations are link between culture and organization is the inter-
based on systems of shared meanings and frame- section of two sets of images of order: those
works of interpretation that create and recreate associated with organization and those associated
these meanings. This approach has introduced a with culture.4 What then is the problem? That
whole new language in organizational studies — prevailing theories assume that the coordination
symbols, meanings, interpretative frameworks, and control of activity are the critical dimensions
etc. — a language which, at least initially, does on which formal organizations have succeeded in
not address the issues one assumes should be the modern world. This assumption is based on
addressed when studying organizations: perform- the view that organizations function according to
ance, efficiency, effectiveness, and the like. their formal blueprints: coordination is routine;
It should be noted that discussions on organi- rules and procedures are followed and actual
zational culture basically revolve around the activities conform to the prescriptions of formal
epistemological issues that underlie all organi- structure. But much of the empirical research on

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Ethical Perspectives 5 (1998)1, p. 53
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organizations casts doubt on this assumption.”5 a dynamic vision (Schein, 1985) which under-
This approach, then considers that formal scores not only the fact of organizational culture,
structures and procedures actually work more like but also the processes that comprise it, so that the
‘myth and ceremony’ (Meyer and Rowan, 1977) discourse on corporate values legitimated by this
which clothe, legitimate and give meaning to approach is not reduced to a perspective that is
certain practices with which they do not necessar- merely analytical or instrumental.
ily agree. Morgan (1986) has pointed out that To this end, Schein’s approach provides us
modern organizations are sustained through a with several instruments which enable us to focus
system of beliefs that underscores the importance more closely on ethics.7 Schein (1988) describes
of rationality, so that their legitimacy often culture as a model of basic assumptions —
depends on their skill in demonstrating the objec- invented, discovered or developed by a particular
tivity and rationality of their actions. If to this we group determined to gradually learn how to con-
add the impact on the organization’s life of the front its problems of external adaptation and
influence of the socio-cultural context in which it internal integration — that have been influential
operates (Dent, 1991; Meyer and Rowan, 1977; enough to be considered valid and consequently
Morgan, 1986; Price Waterhouse-Cranfield, taught to new members as the correct way of
1992), perhaps we will be better able to under- perceiving, thinking about and experiencing these
stand the increased attention now being paid to problems. Schein focuses on leadership as the key
organizational cultures. In short, the aim is to factor in understanding and influencing corporate
more accurately charge the complexity of contem- dynamics. Without dismissing his approach, I
porary organizational reality (Schein, 1985). nevertheless feel that it is more important to
explore corporate culture in the context of organ-
izational processes (which obviously include
1. Some questions about the concept of
leadership) because this provides a broader and
organizational culture
more global view of the organization.
Smircich proposed that the issue be systematically One then inevitably begins to wonder about
researched along five lines which boiled down to the role of corporate culture in creating cohesion
one basic alternative: considering culture as an and guiding organizational change. I feel that it is
organizational variable (whether independent or here that we can begin to link organizational
dependent, external or internal) or considering it culture with ethical thought: “in the final analysis,
as a metaphor for conceptualizing organization talking about corporate culture always involves
(Smircich, 1983). The option was clearly talking about a group, a content (values), certain
expressed in the main question posed in her borders (shared), and a relationship between
work: Do organizations have a culture or are they them, a diagnostic method and a training process
a culture? that transmits this culture” (Bourcier, 1988).
Be that as it may, I feel that the most impor- According to Gagliardi (1986), this makes the
tant thing is that “whether one treats culture as a task of creating and maintaining symbols of or-
background factor, an organizational variable or ganizational culture perhaps one of the most
as metaphor for conceptualizing organization, the important features of management. We should
idea of culture focuses attention on the expressi- view “the creation of culture as a dynamic learn-
ve, non-rational qualities of the experience of ing process”8 on the basis of which both cultural
organization. It legitimates attention to the subjec- values and their underlying assumptions are
tive and interpretative features of organizational shaped, accepted, transmitted and possibly trans-
life”.6 It is therefore necessary to also incorporate formed. In this way, the process by which a value

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Ethical Perspectives 5 (1998)1, p. 54
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system is born and consolidated can be explained 2. Corporate culture and ethics:
on two levels: the psychological and the organi- an ambiguous relationship
zational and social9 “which are interrelated to
such an extent that it has been claimed that any An analysis of the links between corporate culture
organization of work can be described as a and ethics can take two directions. On the one
’psycho-structure’ that selects and moulds charac- hand, corporate culture can be viewed as a funda-
ter”.10 mental ingredient in institutionalizing ethics in
Thus, a distinction should be made between organizations. On the other, it can be considered
organizational processes that refer to the core of the backbone of corporate ethics, to such a point
cultural identity (which tends to be enduring and that occasionally the terms ethics and culture are
difficult to change) and those that deal with ex- confused.
pressions of this culture (which are easier to Studies on organizational culture were quick
deliberately change). Change processes have to promote the idea that “organizational culture
traditionally been viewed as a matter of techno- had great potential as a means of improving
logical and structural change, employee skills and ethics in the organization”.11 Indeed, ethics and
motivations. Although this vision is partly cor- culture began to be confused from the moment in
rect, genuine change also involves changing the which both were able to share a reference to
images and values that guide actions. Change certain common values in an organization, Values
programs should therefore pay careful attention to which supposedly embody basic shared beliefs
the kind of corporate character required by par- about what work and the company are and sig-
ticular situations. Assuming that the organization nify for everyone involved in it.12 In this way,
is based on shared frameworks of interpretation, the solution to a standard problem in business
the view of organizations as cultures makes it ethics is sought in corporate culture: developing
increasingly important to explore the changes in corporate culture would be the way to resolve the
corporate culture that can facilitate organizational antinomy between individual and corporative
viability (Morgan, 1986). This link between or- values (Hoffman, 1986; Weiss, 1986). The possi-
ganizational and cultural change has led certain bility of approaching organizational cultures from
authors to stress that organizational culture is not an ethical standpoint thus arises as soon as study
only a matter of values but also of ethos of these cultures has verified that many of the
(Gagliardi, 1986). thoughts and actions of individuals in organi-
In short, discussions on organization cultures zations are culturally influenced, that individuals
(in all their dimensions) have ended up proposing can act and operate according to different stan-
an approach to companies and organizations that dards and criteria depending on the context, and
does not reduce companies and organizations that socialization processes in organizations are
merely to their technical and formal aspects but usually aimed at shaping individuals to fit into a
also takes into consideration the meanings and normative structure (Trevino, 1990).
values shared through company operations. The Two approaches have been proposed with the
challenges (and ambiguities) of interpreting or- aim of moulding organizational culture towards
ganizational culture as ethics are underscored ethical ends: “the first and most popular is the
when we realize that in many cases corporate approach of creating a unitary corporate culture
culture is understood not as a particular expres- around ethical values [...]. The second advocates
sion of human character and vitality, but as a new fosters the co-existence and diversity within the
form of influence and control (Morgan, 1986; organization of national and racial cultures as
Sinclair, 1993). well as professional and occupational sub-cultures

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[...] Each approach defines organizational culture attention to process than to static features
and the nature or process of good ethics different- (Sinclair, 1991). “Both approaches involve differ-
ly way and each argues a different role for man- ent risks for business ethics. In the first, the risk
agement in the of shaping of ethical values”.13 is that the ethics will be those of the managerial
A single culture can be said to exist when the elite, with no contact with the environment in
members of an organization share (and not sim- which the organization operates, or alternately
ply give lip service to) certain values — which that this ethic is not interiorized, but is only a
may involve ethics — to such an extent that they verbal reference for a good part of the organiza-
operate within the framework of certain norms tion. The risks of the second approach lie in the
regardless of the social or geographic setting in possibility that the wealth of the subcultures’
which they are located. In cases like this, the competing values permits divergent groups to
literary genre in which these shared values is flourish and management turns out to be
publicly expressed is not a corporate code of incapable of finding a common basis on which to
ethics so much as a ‘credo’ that understands the proceed and the organization becomes anarchic or
organization’s goals as more than just economic paralysed. Each approach offers the opportunity
performance. for a different brand of ethics. A single, cohesive
Discussions on this focus stress the danger of culture encourages adherence to certain recog-
it becoming an imposition of management’s nized and reinforced standards of contact [...] In
ideology or outlook (Drake and Drake, 1988) that contrast, the sub-cultural approach relinquishes
uses an ethical discourse to legitimate its func- the idea of imposing standard patterns and leads
tions. It has also been pointed out that it is not efforts to nourish individual process of critical
necessarily the strongest cultures that get the best self-examination and discussion”.14
results. This is true only under certain circum- I feel, however, that both approaches are
stances and can cause a sort of strategic rooted in the conviction that personal and corpo-
nearsightedness in the organization, making it less rate excellence are closely intertwined and that
sensitive to changes in its environment (Sinclair, organizational culture can be understood as the
1993). Lastly, it has been stressed that strong linkage of personal dimensions with all the
cultures socialize people in a way that closely organizational dimensions (technical, economic,
resembles indoctrination (Pascale, 1985) 50 that, social and ethic). (Garcia, 1992,1993). Bureau-
in the final instance, individual autonomy can be cracies no longer link these dimensions and there-
watered down by collective, ostensibly moral, fore the management approach needs to be
values. changed: when the development of an organi-
In contrast, a fragmented culture indicates that zation includes recognition of cultural dimens-
the organization not only recognizes the existence ions, “the role of management becomes a support
of different viewpoints but also of different for culture rather than control of the work
groups to which one can belong. This co-exis- force.”15
tence of various sub-cultures makes it more likely This does not mean, however, that attention to
that the organization will have a certain dyna- organizational cultures detracts from attention to
mism and there will be a certain capacity for competitiveness. Instead, it means that in a com-
criticism. However, unless there are integrating plex society and a changing context corporate
features, this can unleash centrifugal forces. culture is also a key competitive factor. In short,
Nevertheless, recognizing the existence of a frag- due to the complexity of the bureaucratic system
mented culture enables management to address and the shortage of individual creativity and
the company’s cultural dimensions, paying closer motivation, traditional coordination systems are

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Ethical Perspectives 5 (1998)1, p. 56
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inefficient in terms of integrating people. The fact or facade”.18 In other words, the challenge
idea then is to minimize these shortcomings by here is to avoid the temptation to almost
getting people to identify with the values and automatically consider the content of
norms that guide their actions. “Ethics is profit- organizational culture as synonymous with
able precisely because of its capacity to reduce ‘ethics’. This temptation must be fought by
the company’s internal and external coordination critically examining the ingredients of the
costs because coordination takes place through organization’s culture and exploring how it relates
the values of the institution and the individual to an ethical perspective.
and not through functional structures”.16 What we must determine is the extent to
In other words, ambiguous interpretations of which certain forms of organizational culture
the relationship between ethics and business cul- have eclipsed the fact that very close individual
ture occur when one accepts that “competitive links with a company put certain aspects of per-
advantage is gained through a dual focus: satis- sonal development at risk (Amado et al., 1990).
fying customers and developing people”.17 All In short, the discourse on organizational cultures
business can be assumed to strive for customer can lead one to conclude that the mutual influ-
satisfaction, but it is not clear whether developing ence of individuals and organizations (in terms of
people refers to developing employees’ personal values) can easily lead to a situation in which
qualities, their professional and organizational ties personal values are colonized by their organi-
and commitments, their learning skills or their zational counterparts.
moral fibre. Thus, attempts must be made to Thus, a superficial or non-critical reading
clarify just what companies mean when they could lead us to conclude that organizational
include human development as part of their or- culture makes it easier to make (moral) values an
ganizational culture. But first and foremost, we integral part of the things organizations must take
need to discover whether or not human develop- into account if they are to be viable. “It seems,
ment includes recognition of individual autonomy then, that one of the essential features of the
or is limited simply to attempts to motivate and cultures of the excellent corporations is the
more closely integrate employees in order to respect that is given and the space that is allowed
ensure the organization’s viability. for personal expression and initiative. Rather than
The confusion becomes evident when compar- the culture snuffing out individual autonomy, the
ing standard opinions with those of authors like culture itself is actually built on and around such
Trevino (1990) who sees the issue as ethical autonomy”.19 Here, in turn, autonomy can be
change and development in organizations and considered at once an organizational value (linked
feels that the way to achieve it is through corpo- to initiative and development) and an ethical
rate culture. “Organizational culture is created principle: “The nature of the moral corporate cul-
and maintained by a complex interplay of formal ture is the key. [...] This moral culture, which
and informal organizational systems. Formally, gives meaning, identity and integrity to the whole
leadership structure, selection systems, orientation corporate collective, must also value and encour-
and training programs, rules, policies, reward age the moral autonomy of each of its individual
systems and decision-making processes all members. To deny such moral autonomy is to cut
contribute to cultural creation and maintenance. off the possibility of rationally developing and
Informally, the culture’s norms, heros, rituals, examining the ethical principles of the culture
stories and language keep the culture alive and itself and to fail to respect the persons making up
indicate to both organizational members and the culture itself — both being violations of the
outsiders know whether the formal systems reflect moral point of view to which the moral culture is

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committed”.20 Is ... or should be ... committed? sis and approach proposed by Peters and Water-
Because it is precisely this commitment to a man is thus their emphasis on companies as
moral stance that is usually lacking — at least places where certain values are shared.
explicitly — from the discourse of companies as Their understanding of excellence is rooted in
cultures. what could be called a normative anthropology.
Although business ethics has not been dis- Peters and Waterman not only consider this as
cussed very often, the paradox of corporate cul- obvious but also as a justification of their ideas.
ture is that its ‘moral’ statement can also be an Thus they begin by recognizing a very human
affirmation of individual submission and integra- need: the simultaneous search for self-determina-
tion in the corporate status quo (Pascale, 1985). tion and security. According to Peters and
In my opinion, the dilemma implicit in the con- Waterman, excellent companies will be those that
trast between affirming corporate values and understand such important human needs and offer
manipulating people has strongly influenced the an opportunity to shine combined with a philos-
business world’s recent fascination with excel- ophy and a system of convictions that establish
lence. I believe that confronting this dilemma is transcendent meanings. The culture of excellent
essential if we are to develop business ethics that companies, then, is what enables them to assert
are not overwhelmed by corporative cultures. themselves as institutions that allow people to
stick out in their jobs and be individually recog-
nized for it, but in such a way that this takes
3. Ambiguities in the search for excellence
place in the framework of the company’s values,
In my opinion, Peters and Waterman’s (1982) in accordance with them and as a result of their
book is first and foremost a sociological phen- identification with these values
omenon. The sales figures bear this out. Although In my opinion, this cannot be separated from a
it was not very well-received in the academic constant affirmation of the value and central role
world, everyone acknowledges that it drew atten- of employees (or individuals). People have to be
tion to — and enshrined — a certain interpretation treated like adults, or partners, with dignity and
of organizational cultures and how they work. respect. They have to be treated as the main
This interpretation was widely circulated and source of productivity increases. The basic lesson
examined and this in itself is fairly significant. to be learned from excellent companies sums up
Peters and Waterman define excellence in as follows: if you want to increase productivity
organizational terms and conclude that excellent and obtain the consequent financial rewards, you
companies share eight qualities. As Soeters have to treat your employees as your most
(1986) noted, half of these attributes are not important asset. Dignity, then, is not a matter of
unfamiliar in the field of business administration considering people as an end in themselves, but
management ( a close-to-the-customer orientation, of viewing them as the most important corporate
a competitive climate within the company, thus asset.
encouraging autonomy and entrepreneurship; a Peters and Waterman theorize that this cre-
dislike of diversification, and a simple organi- ation of meanings and personal-institutional rela-
zation structure), “but the other four tions opens the door to the use of moral terms.
characteristics concern the social and cultural side They talk about leadership born of the human
of the organization”.21 According to Peters and need for meanings, a leadership that creates insti-
Waterman, excellent companies are distinguished tutional purpose. This kind of leadership would
by the very intensity of their deeply rooted con- appear to operate in such a way that leaders and
victions.22 The most typical feature of the analy- followers elevate one another to higher planes of

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Ethical Perspectives 5 (1998)1, p. 58
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motivation and morality. Various adjectives are this doesn’t mean that they go so far as to con-
used to describe such leadership: elevating, sider their employees as mere infants.
mobilizing, inspirational, exalting, improving, Before going on to discuss the positive fea-
exhorting, evangelizing. According to Peters and tures of some of the ideas on companies as cul-
Waterman, transformational leadership ultimately tures, I feel that we should briefly re-examine
becomes moral leadership because it raises the Peters and Waterman’s ideas in terms of ethics,
level of human conduct and ethical aspiration of especially inasmuch as they have been so widely
both leaders and followers and consequently circulated — and embraced. This is particularly
transforms them both. It should be noted here that important if we acknowledge that culture not only
at some point the authors themselves mention the is, or could be, a very effective form of control
possibility that, taken to its extreme, this might (when it is taken truly to heart by individual
turn companies into a sort of sect. Soeters (1986) employees), but that the very concept of excel-
states this outright. In short, this approach is an lence somehow includes the ideal of assimilating
attempt at (moral) improvement that does not a strong culture and control (Sinclair, 1991). In
question the ethics of where the process leads or short, “Peters and Waterman propagate a lot of
how it is justified. human interest, but this attention tends to be
I believe that the importance of Peters and manipulative. People are viewed as instrumental
Waterman’s approach lies in the fact that it does for productivity, not valued per Se. Using sym-
not reduce companies merely to their economic bolic management, legends, myths and so on, the
operations. However, rather than broadening our leaders of the excellent companies try to guide
view of the corporation by including its social their employees exactly in the direction they
aspects, they broaden it by emphasizing its cul- want”.24
tural features. No mention is made of the com- In other words, when corporate culture or
pany’s social responsibility, yet excellent com- values are self-affirming and need no social con-
panies are considered to be those whose values text, when they are affirmed as a form of
include ideas on economic health, customer ser- organizational life without ethical justification,
vice and meanings for personnel. But the way when they are affirmed with ethical pretenses
this is expressed only appears to confirm the while -paradoxically — being reluctant to undergo
suspicion that excellent companies bear a strong the winnowing out to which an ethical criticism
resemblance to sects: a characteristic of excellent would subject them, we have a form of manage-
companies is “their obsession with service” so ment by values where ‘ethics’ and ‘values’ ulti-
that they “cling fanatically to their beliefs about mately perform the same functions previously
service”, which leads them to an “obsession with performed by control and discipline without
quality”. really questioning the understanding of manage-
Thus, excellent companies’ emphasis on listen- ment and the organization. What happens then is
ing to individuals, taking them into account, their that corporate values are first and foremost iden-
stress on the importance of communication is all tified with ‘everybody cooperating’, with group
the result of their conviction that this is the best solidarity and adoption of the common project,
way to achieve the quality and service with which with sharing group values; in short, with the aim
they are obsessed. Obviously, bureaucratic organ- of ensuring standard behaviour with no disagree-
izations and rational working systems do not lead ment over anything related to corporate objec-
people to share obsessions. But the fact that many tives.
of the best companies really consider themselves What this paper aims to do, then, is not so
to be extended families23 makes us wonder if much deny the pertinence of viewing the com-

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Ethical Perspectives 5 (1998)1, p. 59
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pany as a culture as to question whether this view zation itself constantly helps produce (Aubert and
implies no reference to its ethical and social Gaujelac, 1991).25
legitimation. Just to take one example: there is In the final instance, then, what we are dis-
something symptomatic about the fact that the cussing here is not the interpretation of
discourse on corporate values has almost never companies as cultures but an overly pragmatic
coincided with the traditional concept of the vision of corporate culture that is in fact self-
business firm’s social responsibility. As Le Mouël affirmative, ignoring the autonomy and dignity of
(1991) points out, management literature on the individuals who form part of it. To the extent
values has addressed the ‘how’ rather than the that this is true, we should not be surprised that
‘why’ so that terms like excellence, motivation, so many analogies have been discovered between
shared business project, values, and so on have the way excellent companies treat leadership,
become part of a management jargon that fre- values and the group spirit and what sociological
quently serves no purpose beyond the strictly studies have revealed about sects. But we should
ideological. Worse still, all organizations try to also recognize that the empirical discourse of
encourage individuals to adhere to them, not by organizations as creators of meaning can have
physical force as in the 19th century but by exer- consequences that are not necessarily contradic-
cising a mental pressure that works the same way tory in terms of certain ethical criteria.
as bonds of love, i.e. identification, idealization, I further believe that this involves shaping a
pleasure and anxiety (Le Mouël, 1991). more complex vision of the organization, whose
Thus, adherence to certain shared values rules could thus aim to integrate those dimensions
becomes part of an attempt to manage by merg- in which, like it or not, the company is by nature
ing the meaning of life and the meaning of work implicated. The goal would be to integrate eco-
within a business project that reconciles personal nomic profitability, ecological awareness and
interests and goals with their corporate counter- social responsibility and promote a personal bal-
parts. The company will attempt to respond to the ance that respects individual autonomy. I main-
hopes and dreams of every individual, structuring tain that the issue of integration is a crucial one
their mental representations in accord with cor- in which there is room to develop ethical thought
porate culture: adhesion is achieved by linking and that this development necessarily involves a
the company’s sociocultural world with the dialogue between organizational culture and
individual’s psychosocial world. The company is Aristotelian tradition.
not solely a combination of functions destined to
satisfy consumers’ material needs, It also creates
4. Opening the door to Aristotelian tradition
a social group that attempts to respond to a series
of questions about purpose and existence. It Business ethics has traditionally not been very
should be able to give meaning to life in order to sensitive to the Aristotelian tradition.26 Nevert-
become more human (Aubert and Gaujelac, heless, organizational culture27 has opened the
1991). My aim, then, is to try to discover whether door slightly. Nevertheless, the results have been
this ability to imbue life with meaning is intended ambiguous because organizational discourses
to humanize business organizations or introduce a involving values or styles of action have some-
new form of submission that infantilises times been automatically identified with the
employees and cultivates narcissism. By calling Aristotelian viewpoint (or simply with ethics).
on excellence, the organization proposes that Thus, certain Aristotelian-based approaches have
individuals immerse themselves in their jobs as a had to take a distance from some features of the
defence against anxiety, an anxiety the organi- discourse on organizational culture. To sum up,

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then, I believe I can safely say that, compared to zational life: decision making. One cannot speak
other lines of thought, the Aristotelian tradition is of management without referring to decision
still in swaddling clothes and continues to be making. Rather than viewing decisions as the
overshadowed by the discourse on organizational outcome of a process that can be understood in
cultures. However, I also feel that it is with these terms of strategic or calculated rationality,
very cultures that the tradition might have the Aristotelian-influenced business ethics views
closest affinity. actions and decisions, be they strategic or ethical,
The specific contribution of Aristotelian tradi- as an expression of individuals’ characters and
tion to business ethics is not a recovery of habits in the context of their organizational life.
Aristotle’s vision of economic activity, but a “Simplifying a good deal, the first model of
change of perspective. Instead of viewing busi- moral choice affirms the primary importance of
ness ethics as an applied deduction of ethical conscious deliberation while the second empha-
doctrines or as the result of an ethic or philos- sizes character”.30 Consequently, this would lead
ophy of economics, proponents of Aristotelian- to an ethical view of organizations as instrumen-
based business ethics consider that “What we tal in shaping their members’ characters.
need in business ethics is a theory of practice, an There is, then, a shift in viewpoint which now
account of business as a fully human activity in embraces companies and organizations in terms
which ethics provides not just an abstract set of of their assets (the attainment of which is their
principles of side-constraints or an occasional objective) and not just in the performance regis-
Sunday school reminder but the very framework tered or their social function. Making business
of business activity”.28 In other words, this view practice an affirmation of the internal good and a
is critical of business ethics which have tradi- way to cultivate it (Sacconi, 1991a) is not an easy
tionally been more concerned with actions than task because neither the market nor companies
with agents (Klein, 1989). encourage actions that are guided by intrinsic
The idea then is to “develop a more appropri- values.31 But the ethical view of organizational
ate focus for business ethics theory, one that cultures aims precisely to go beyond the para-
centres on the individual within the digm of rational maximization of one’s own
corporation”.29 However it is not a focus on interest as the key to interpreting organizational
individuals, but on individuals in the context of life and approaching it from the paradigm — and
the corporation and, moreover, on the corporation the conviction — that “a commitment to moral
in the context of society. Thus this approach ideals and principles becomes a part of one’s self-
implies that all aims must be placed within a interest as an agent, a part of one’s identity as a
context: individuals in the corporation and the professional [...]. Virtue talk stands in contrast to
corporation in society. Individual good cannot be regulatory ethics mainly because it is as con-
viewed independently but must be understood in cerned with the agent’s being as with his doing.
terms of what it contributes to the corporate good Virtue talk involves notions of character, habit,
and, through this, to the good of society. We thus disposition, inclination. It implies a way of being
arrive at a contextualized vision in which the in the world, a general orientation towards good-
corporation shapes the characters of its members ness on the part of the self in the living of a
— all its members, not just its senior management whole life”.32
personnel (Norton, 1988; Paine, 1991; Solomon, Still, we must remember that this implies the
1992). existence of certain shared beliefs based on cer-
This alters and enhances the conventional tain shared experiences, among which is the idea
approach to one of the core issues of organi- that the common good contextualizes corporate

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Ethical Perspectives 5 (1998)1, p. 61
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actions rather than reducing them to the work of not an excellence that is suited to its subject, but
an ‘invisible hand’ (Solomon, 1992). Neverthe- an external demand expressed as a requirement
less, Aristotelian-type business ethics do not for competitiveness. It is not an excellence that is
always go so far as to consider that “ethical linked to practice, but one that depends on results
knowledge, like all social knowledge, is created which are unconnected with practice.
and maintained through processes of socialization That is why I believe that we should perhaps
and legitimation [...]. Different organizations join Solomon (1993) in saying that “it is the role
provide very different experiences of organi- of the individual in the corporation (and of the
zational reality, somewhat analogous with the corporation in society) that concerns me, not the
idea of different corporate cultures”.33 Therefore, individual alone, not the structure of the corpo-
the possibility of a narrow reading that deviates ration abstracted from the individuals that are its
from Aristotelian tradition corresponds members (and not the nature of capitalism,
symptomatically with tendencies to always abstracted from the character of particular corpo-
identify corporate cultures with what we earlier rations and the communities they serve). That is
referred to as ‘strong’ cultures. why the idea of business as a practice is absolute-
Thus, if, on the one hand, we recognize that ly central to this approach: it views business as a
“the basic values that guide an organization help human institution in service to humans and not as
to mould the character of the people in the firm a marvellous machine or in terms of the mysteri-
(by nurturing certain habits) [and that] moral ous ‘magic’ of the market”.37
virtue and organizational values are, therefore, Consequently, the Aristotelean approach to
intimately connected”34 and, on the other that business ethics emphasizes specific aspects of
“the culture metaphor has limitations too, and one corporate life38 which are integrated in a global
of them is that it still tends to be too self- vision. I feel that, among them, community39
enclosed”.35 However, it is symptomatic that should now be stressed as a way of understanding
overcoming this problem has been approached the corporation that makes it clear that our activ-
both in terms of a strictly to Aristotelian tradition ities (personal and professional) acquire a mean-
and in terms of embracing a civic outlook.36 We ing in the context of our membership in organ-
could say that the aim here is to bring integration ized groups and not individually or before under-
and autonomy to the corporation without resort- taking professional commitments. This certainly
ing either to a socialization that focuses merely presupposes that organizations are heterogeneous
on adaptation or to subjectively-focused individ- groups, but also that their actions and the actions
ualism... and, moreover, to do it as a management of their members are understood and justified by
process. their links to their own context.40 Therefore “the
I feel that it is important to note that there is Aristotelian approach to business ethics presumes
room for a critical reading of organizational cul- concrete situations and particular people and their
tures even within Aristotelian tradition. There is places in organizations”.41 It is not an approach
no need to take an exclusively post-conventional that aims to be generalized and refers to isolated
stance. The vision of excellence, as symbolized in individuals (whether people in the organization or
the work of Peters and Waterman (1982) is organizations in society). An Aristotelian
reduced to (professional) success (Camps, 1990) approach to business ethics always refers to
and to a hollow cliche’ (Solomon, 1993). It is not people within their contexts, both when attempt-
a question of accepting a point midway between ing to shape a reflection and when trying to
two extremes and developing it to its fullest, but facilitate processes designed to improve morals.
of reaching the furthest end of one extreme. It is This does not mean that it ignores today’s diver-

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sity of roles and commitments. Quite the oppo- individualistic, able to consider the whole and not
site, in fact.42 But neither does it mean blindly just the sum of its parts and, what is more, able
accepting it as good, as an unsurpassable and to understand the role of the parts within the
irrefutable fact. whole. It then becomes possible to view stake-
Getting back to what I said earlier, the aim is holders not just in terms of the interests at stake
to link personal belonging and autonomy, which or their consequences for the various groups
is unquestionably a complex and difficult task. involved in corporate activities but by weaving
But I also believe that this is a fundamental this set of relations into a more global and all-
aspect of the framework of ethical reference embracing perception of reality (Solomon, 1993).
proposed in this approach to business ethics.43
Because it can reach a point where it is of such
5. Final considerations:
decisive importance in the complexity of contem-
the place of ethics in corporate viability
porary organizations, moral exemplarity should be
given more importance than it is usually assigned To sum up, I believe that there is still a long way
by approaches which are less sensitive to the role to go in terms of linking the view of organi-
of context, history and narrations in shaping zations as cultures to the idea of business ethics.
corporate ethics. Because, when all is said and We have barely begun to map out the trail that
done, it is through moral examples that the cor- should be followed.44 It certainly seems difficult
poration transmits practical knowledge of how to refute the assumption that the vision of the
one should live. This therefore makes organization as a culture (and everything this
professional careers susceptible to being inter- implies) makes a significant contribution towards
preted and perceived in terms of their a de facto understanding of organizations. It also
exemplarity. Consequently, we can consider the appears difficult to reject the idea that “applied
possibility of not limiting our understanding of ethics is not just a matter of applying general
decision making to an application of strictly principles, but also in discovering the internal
rational criteria (which, moreover, does not good which each of these activities should pro-
coincide with the way people really act and vide to society, what goals each should pursue
decide). Deciding is tantamount to constructing and what values and habits must be inculcated in
an interpretation of a situation (an interpretation them in order to reach these goals”.45 What’s
which always takes place within the context of a more, the consideration of business and organi-
history and a process). Failure to realize this can zations could be seen as one of the ‘social
be not only a shortcoming in terms of ethics but spaces’ in which it might be possible to regain a
can also lead to a simplistic understanding of sense of belonging; as a ‘social space’ in which it
decisions as such because it ignores the impor- is possible to forge bonds and create identities in
tance of character and virtues in developing a relation to certain ends, and also as a ‘social
practical wisdom that enables one to be discern- space’ in which it is possible to create an added
ing rather than merely analysing the situations value understood and experienced as the personal
that require decisions. In organizational terms, contribution — through the organization — to
this means having a mental picture of corporate society and the common good. In this way,
actions as part of the overall scene rather than businesses and organizations could reach a point
reducing them to strategic calculations or con- where they are also ‘ethical spaces’ understood
frontations. Our complex and interdependent now as the social space where organizational
society of organizations appears to require a particularities are the basis for shaping “an ethos
frame of reference that is holistic rather than as a space for innovation, cooperation and responsibility”.46

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When it comes right down to it, this space can become increasingly competitive. However, we
only be ethical47 if attempts are made to develop must not forget that modern economics is one of
a post-conventional48 internal moment as a con- the things that has caused social differences and
stituent feature of the corporate culture itself and therefore requires an ethical model that is not
we do not simply bless with the name of ethics only communitarian but specifically modern in its
any discourse that talks about corporate culture, rational structure”.49
no matter how much this discourse might include When taking the organization into consider-
morally relevant and attractive values. Otherwise, ation we must attempt to address the totality of
as we have already seen, corporate cultures can persons and their interactions and relations. In
end up legitimating new forms of manipulation this sense I feel that we can speak of ethics as a
and control without in any way acknowledging factor in integrating people in a corporation. But
the human condition of their members. I per- this must not be done from a purely individualis-
sonally believe that ethical thought can provide a tic vision but from a corporate understanding of
critical and innovative interpretation of the possi- dialogue because, among other things, integration
bilities and limitations of the vision of business always has a strong relational component. The
as cultures. This was eloquently expressed by idea, in short, is to not confuse integration with
Conill, who wrote, “curiously enough, in the con- standardization but to make it possible for shared
text of modern societies business economics diversity to exist in the organization, jointly pro-
frequently insists on returning to a pre-modern moting belonging and autonomy.50 In the final
model of ethics as the most appropriate way to instance, “the value of a shared mission is not the
empower the business as an institution. This outcome of the shared agreement itself, but the
model recognizes the importance of individual opportunity it creates for the tolerance of discord,
satisfaction and self-realization within a company, for creative individual expression. [...]. Agree-
viewed as a community, in which the individual ment, in fact, is never identity, and so even the
feels integrated. Because, as is the case with the appearance of unanimous agreement is only a
Aristotelian model of polis, the aims (interests) of comforting fiction”.51 I therefore believe that
the individual coincide with those of the group so ethical integrity (and ethics as integration) in an
that integration in the company, harmony and a organization must also be linked to dialogue, to
spirit of cooperation among corporate members the recognition of diversity and to promoting
benefits employers and employees alike. The development processes and not be viewed simply
idea, then is to recover a communitarian model of as a way to make everyone alike or cut down
ethics in order to achieve institutional integration, coordination costs.
not to speak of global and complete social inte- I believe that on-going discussions between
gration. This then is the reason for again advocates of the view of companies as cultures
proposing virtues, attitudes and codes of conduct and proponents of Aristotelian tradition not only
in which excellence plays an important part. We facilitate the affirmation of the individual as a
could then say that in a modern or post-modern moral subject but also affirm the need to develop
context like ours, the model most frequently conventional morals which make the business
proposed by the business version of economic ethics discourse meaningful and relevant.
ethics is a premodern, communitarian model. It However, before this point is reached, we
seeks cooperation through a community of must accept the need to overcome that ambiguity
interests, identifying individual values with those that is always latent in any approach to corporate
of the business organization, and expects that by cultures: we must overcome the tendency to
virtue of this cooperation the company will identify ethics with corporate culture. To sum up,

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then, my hypothesis is that unless a corporate ultimately leads to the disappearance of ethics as
culture is developed it will be impossible for such. The way this is handled will prove whether
either business ethics or organizational change or not there is any truth in the idea of organiz-
and development processes to materialize. But ations or companies as ethical spaces.
identifying corporate ethics with corporate culture

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Notes

1. This paper is part of the research project Rentabilitad de la etica para la empresa, directed by Dr. Adela Cortina,
Universidad de Valencia, and financed by the Fundación Argentaria. Translated from Spanish by Patricia Mathews.
2. Note that according to “an analysis of the most popular management books published in 1990 the key buzz
words for the early part of the decade are corporate culture, holistic, ethics and ecologically conscious management”
(Dierke and Zimmerman, 1994, p. 533).
3. Ouchi and Wilkins, 1985, p. 468.
4. Smircich, 1983, p. 341.
5. Meyer and Rowan, 1977, p. 342.
6. Smircich, 1983, p. 355.
7. Schein’s work is considered among the most fundamental references. See also Bourcier (1988); Brown (1990);
Drake and Drake (1988); Morgon (1986); Price-Waterhouse-Cranfield (1992); Weber (1993).
8. Gagliardi, 1986, p. 120.
9. Gagliardi, 1986, p. 123.
10. Macoby, 1976, p. 100.
11. Sinclair, 1993, p. 63.
12. “For a corporation is to be morally excellent, it must develop and act out of a moral corporate culture”
(Hoffman, 1986, p. 236).
13. Sinclair, 1993, p. 65-66.
14. Sinclair, 1993, p. 71.
15. Sherwood, 1988, p. 12.
16. Garcia, 1992, p. 40.
17. Sherwood, 1988, p. 15.
18. Trevino, 1990, p. 202.
19. Hoffman, 1986, p. 239.
20. Hoffman, 1986, p. 241
21. Soeters, 1986, p. 301.
22. “According to P and W the most important task in management is making the employees fully aware of the
‘basics’; the central values of the organization. [...] Thus the organizational culture, socialization processes and the
integration of employees in the organization play a major role in P and W’s analysis” (Soeters, 1986, p. 302).
23. The term is not mine. Authors have found that the words ‘family’, ‘extended family’ and ‘family spirit’ are
widely used in the following excellence companies: Wal-Mart, Tandem, Hewlett Packard, Disney, Dana, Tupper-
ware, McDonald’s, Delta, IBM, TRI, Levi-Strauss, Blue Bell, Kodak, Procter & Gamble, 3M.
24. Soeters, 1996, p. 309. See also Scott and Mitchell, 1986.
25. I believe that this explains the ‘admirable’ dedication to work which usually goes hand in hand with excellence.
26. One has only to leaf through US business ethics manuals and textbooks to see that their focus is almost exclu-
sively utilitarian and deontological.
27. It is significant that Solomon (1993) chose the title Ethics and Excellence for his Aristotelian approach to
business ethics. In one of its chapters, he describes organizational culture as an Aristotelian metaphor.
28. Solomon, 1993, p. 99.

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29. Solomon, 1992, p. 319. See also Norton (1988) who argues that contemporary ethical issues are born of practi-
cal problems and cannot be resolved by resorting to abstract principles, but by asking ourselves what human good
is at stake and what understanding of the good life is implicit in the option taken.
30. Paine, 1991, p. 71. We agree with the author, who immediately goes on to state his conviction that “these two
models of choice are not necessarily rival models”.
31. Norton (1988) has suggested that they usually tend to almost exclusively encourage rewards that are not inherent
in practices themselves.
32. Jennings, 1991, p. 565.
33. Philips, 1991, p. 794, 789.
34. Klein, 1989, p. 62.
35. Solomon, 1993, p. 134.
36. “That’s what civic discourse is all about. It is about the kind of society we want to have and to build. How do
we want to distribute power and authority? To what ends to de want to use technology and professional expertise?”
(Jennings, 1991, p. 567).
37. Solomon, 1993, p. 103-104.
38. Solomon (1992) proposed as a framework for virtue ethics in business: community, excellence, role identity,
holism integrity and judgement. See other less systematic approaches (which usually include some of the points
discussed by Solomon) in Duska (1993), Jennings (1991), Hart (1992), Klein (1989), Malloy and Langf (1993),
Norton (1988), Paine (1991).
39. This should be complemented with a discussion of communitarianism’s contribution to business ethics, which is
beyond the scope of this paper.
40. “Aristotelian ethics takes both the corporation and the individual seriously without pretending that either is an
autonomous entity unto itself. Corporations are made up of people and the people in corporations are defined by the
corporation [...] Communities are essential units of morality, and corporations are ultimately judged not by the
numbers but by the coherence and cooperation both within their walls and with the larger communities in which
they play such an essential social as well as economic role.” (Solomon, 1993, p. 152).
41. Solomon, 1993, p. 162.
42. “Virtues tend to be context-bound, but contexts overlap and clash with one another. In any organization, there
are overlapping and concentric circles of identity and responsibility, and a virtue in one arena may conflict with a
virtue in another — indeed it may even be a vice. [...]We always wear multiple hats and have potentially competing
responsibilities. There is no denying the disunity of the virtues. But neither is there any denying the fundamental
importance of role identity in establishing the contextual basis for virtue in business.” (Solomon, 1993, p. 167).
43. “It is the divided self that makes integrity so important to us, a kind of coordination problem as well as an ideal
in ethics” (Solomon, 1993, p. 169). “This would not have surprised the ancients, who recognized integration as the
first problem of worthy living” (Norton, 1988, p. 57).
44. See Duska (1993) for an analysis of what the Aristotelian tradition can contribute to business ethics. The
author’s premises strike me as highly questionable, among other reasons because he links the possibility of this
contribution to a non-critical acceptance of certain premises inherent to the postmodern discourse.
45. Cortina, 1994, p. 33.
46. Cortina, 1994, p. 96
47. Nevertheless, this ethical space cannot be shaped solely on the basis of cultural aspects and this is a significant
feature of our approach. Shaping it in terms of corporate culture is a necessary condition (and there is increasing
agreement on this) but it is not sufficient (and not enough emphasis has as yet been placed on this). That is why
Weber (1993) insists that business ethics that are sensitive to the reality of the company as a culture can be a key
factor in corporate viability (and, of course, its profitability), but only if organizational culture in its formal expres-
sion (codes, missions, etc.) is linked to well-thought out specific training programs and reward systems. Trevino
(1990) considers that organizational change processes based on an ethically shaped cultural outlook should address
the organization’s formal and informal systems equally and cannot be the result of a top-down approach.
48. I have discussed this issue in detail in Lozano (1995).
49. Conill, 1993, p. 25.

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50. “When individuals become members of an organization, deliberate efforts must be made to support their
autonomy while not sacrificing their membership or their bonds with one another.” (Srivastava and Barrett, 1988, p.
305).
51. Srivastava and Barrett, 1988, p. 308.

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