Download Individual, collective and social responsibility of the firm

Business Ethics: A European Review
Individual, collective and social
responsibility of the firm
Tuomo Takala and Paul Pallab
Introduction
In today's world of increasing consumerism,
egoism and self-absorption of individuals, protecting the natural environment for our future
generations has become a critical issue. As
economic activities of firms have contributed to
the depletion of the environment, we feel that the
firms have a moral responsibility to restore the
health of our natural environment. Safe environment is a long-term goal that will be difficult to
achieve, but if we fail to achieve it there might be
no human species left to produce and enjoy
economic plenty.
Firms are well equipped to implement proenvironment actions. Given the abundance of
resources at its disposal and its capacity to
mobilize a large group of people, the firm as a
collective unit is more efficient and effective than
any one individual. To enable appropriate actions,
the firm needs to inculcate in all employees a
moral consciousness and responsibility towards
the environment. Every member of the firm, not
simply the `employers/owners,' definitely stands to
gain from such an initiative. There would be shortterm gain of enhanced social image and profitability that accompanies it. In the long run also, a
safe environment will ensure that there is natural
abundance and a constant supply of raw materials
required for manufacture of products, and a
thriving human community to purchase that
product. But beyond the objective of making
such tangible gains, one has to remember that
moral value and action are intrinsically valuable
and need to be fostered irrespective of material
gains.
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and 350 Main St, Malden, MA 02148, USA.
A firm, however, cannot possibly promote a
pro-environment attitude that would benefit
society and the business world, without full
support from its employees across all ranks.
Positive and confirmatory action within a firm
can be achieved only when individuals are
committed to the goals and values of the
organization. To ensure commitment, the organization has to acculturate its employees into its
dominant ideas. Employees have to be socialized
into the fact that along with the firm, they are
equally responsible for morally right, proenvironmental actions. The firm definitely benefits
from cultivation of moral values. `A better
alignment of organizational policy and employee's
values holds possibilities for enhanced motivation
and work performance' (Maclagan 1999). To
achieve this synchronization of values, the firm
can resort to informal insemination of moral
values. In that case, group dynamics of informal
friendship networks through peer pressure and
codes of loyalty would ensure that every individual within the firm would consciously evaluate
their moral positions. The firm can also resort to
formal processes to announce the fact that it
consciously solicits and supports ethical behavior
even if it goes against its economic interests.
Formal means of establishing moral values could
include development of formal incentive programs
(financial or otherwise) and the conducting of
educational seminars and workshops.
Thus we see that for the firm to make collective
moral action feasible, it also needs the compliance
of all the individuals who participate in its
collective identity. Compliance is secured not
merely through enticing financial incentives but
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also by cultivating a desire to do the right thing. A
firm cannot possibly promote a pro-environment
attitude by merely luring or forcing its employees
to follow legally defined standards of environmental safety. First of all, legal restrictions on
exploitation of the environment are often not
sufficiently protective measures. Second, in the
case of absence of a moral conscience among
individuals of the firm, laws will not be sufficient
restrictors of or guides to individual actions. It is
not sufficient for the firm's employees to align
themselves to the moral agenda of the firm simply
because the firm dictates it. The employees have
to be given sufficient flexibility and autonomy to
avoid `herd mentality', take initiative, responsibility and make a choice about doing the right
thing. Self-selected goals are easier to achieve, and
when individuals are conscious of the responsibility bestowed on them they are more likely to
adhere to the path of justice. Moreover, we can
argue that morally relevant actions also satisfy
higher, spiritual, self-actualizing goals of employees.
We then argue that for true environmentally
beneficial ethics to develop there has to be a
conscious cultivation of this attitude among all
members of a firm. It goes without saying that
along with the development of a moral attitude
there also have to be concrete steps taken to
transform that attitude into action. Above all, the
burden of taking the initiative to raise ethical
consciousness lies not simply with the firm but
also with the individuals within it. It is a mutual
process. If the firm ignores ethical dictates, it is the
employee's duty to take the initiative, protest
against unethical activities of the firm, organize
collectively and make the firm conscious of its
obligation to save the environment. If the employees remain silent despite being conscious of
the firm's malpractice, they are as culpable as the
firm is for the entire harm inflicted on the society
and environment. Literature on business ethics
usually focuses on the responsibility of the firm,
but in this paper, a major focus will also be the
responsibility of the employees.
In the process of promotion of environmentfriendly attitudes, the firm may lose some of its
profits as environmentally safe acts can be costly
and the firm may not be able to sell a product for
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the cheapest price. But the firm definitely gains a
favorable social and business image, which might
boost sales among `environmentally conscious
consumers'.
The path to building up consciousness is a long
and difficult one. Individuals have conflicting
opinions and priorities. Moreover, the burden of
consciousness does not rest only with the firm and
its employees. For an environmentally friendly
firm to survive in a competitive market atmosphere there has to be a growing body of conscious
consumers who would patronize the socially
responsible firm despite its slightly more expensive
products. The consuming public has the obligation to make the trade-off between cost and
environmental integrity. The responsibility for a
safe environment lies with the entire society.
However, in this paper we will focus only on the
moral responsibility of the firm and its employees.
The concept of responsibility
When analyzing the issue of responsibility within
organizational life, one should consider several
issues. First, it is not sufficient to simply consider
an individual's (and also an organization's) awareness and observance of the formal laws laid down
by social and legal institutions of the society. It
is also important to focus on the informal moral
principles operative in social life. Moral principles,
such as ensuring the welfare of other people even
when there are possibilities of economic losses to
oneself, guide the conscience of individuals and act
as constraints on the rational actions which seek
to maximize material satisfaction, profitability and
efficiency for themselves. Sometimes an individual's
moral sense might even conflict with socially
designated formal laws. For example, a government
hospital's doctor who believes in pro-life might
be forced to conduct an abortion simply because
the law of his/her country allows that privilege to
women and because s/he works in a government
institution where s/he is bound to follow the rules.
The dilemma that arises from such a conflict of
values can create moral oppression for the actor.
Second, while analyzing the logic behind responsible actions, one should also consider a
# Blackwell Publishers Ltd. 2000
Business Ethics: A European Review
distinction between egoistic and altruistic motives.
When an individual seeks to do the `right' thing
because s/he stands to gain something out of it,
his/her motives are based on egoism and his/her
action might be labeled as egoistic. However,
eliciting responsible actions from people by
enticing them with the promise of personal
benefits is not a reliable or ethically viable method
for ensuring responsibility in social organizations.
Responsibility should basically stem from altruism. And true altruism involves the will or sincere
desire to act in the right way without giving
priority to one's own benefits. Altruistic acts can
be considered to be not just responsible but
morally responsible acts.
However, in the field of ethical theories, there
is a controversy over whether altruistic motive is
a sufficient judge of the moral correctness or the
rightness or wrongs of a human deed. Some
philosophers believe that a deed ought to be
judged by its consequences. This has given rise
to two diverging fields of thought ± deontological
and utilitarian. Deontological theory (Kant 1997)
propounds that deeds are good only when they are
carried out on the basis of a `universal' sense of
duty or the will to do right, e.g. respect for other
human beings. Utilitarianism considers that a
deed is good only when, in comparison to all
possible alternative actions, it has the best possible
positive benefits and when there are no adverse
consequences that outbalance the quantum of
benefits (Quinton 1989).
There is a major difference between deontological theory and utilitarian theory. Deontological theory simply argues about how an individual
ought to realize his/her ethical duty. Unlike
utilitarian theory, it does not take into consideration the achievement of maximum utility or
goodness from any act, i.e. there is no account of
relative evaluation of a deed. In the absence of any
evaluative measure for a deed, deontological
theory also fails to provide an explanation about
how to distribute the benefits and burdens of
deeds among the members of the society. In short,
deontological theories do not take into account
differential degrees of rewards and punishments
for actors, which are typically based on evaluation
of external utility of any act. However, allowing
# Blackwell Publishers Ltd. 2000
for an analysis of the value of an act does not
necessarily elevate utilitarianism over deontological theory. At any one point in time, evaluation is influenced by particularistic and often
elitist cultural norms of a society, as well as by
individual subjectivity. As a result, there is always
scope for injustice. So, when analyzing an act, one
should consider pure, universally just motives
along with external utility. Some theorists, like
Frankena (1973), have tried to go beyond the
dichotomized style of thought by following a
middle-path. Frankena's mixed-deontological
theory evaluates deeds by drawing on the normative principles of both the above-mentioned
theories.
It is then clear that there is no single definition
of responsible actions or morally good deeds.
Helkama's (1981) description of three usages of
moral responsibility is a case in point:
a) `Responsible' as an attribute of persons and
actions. In saying, `X is a responsible person',
`Y was a responsible action' we say something
favorable about the person and about the
action. Here responsibility is described as a
personality disposition, where a person can be
counted on to fulfill obligations and willingly
accept the consequences of his behavior.
b) `Responsible' as a synonym for `accountable',
connected with blame (praise) and punishment.
`X is responsible for Y (e.g. damage)' is usually
interpreted as meaning that it is right or
justified to blame or punish X for Y (or, if Y
is something good, to praise X for it). Here
there is responsibility attribution.
c) `Responsible' as meaning having a duty, an
`obligation'. `As a father, X is responsible for
his children' means that it is X's duty to care
for his children. One difference between this
use of the term and the preceding one is that
responsibility (b) refers to past acts (or arises
out of a performed action) while responsibility
(c) designates something still to be done (as
part of an established role-system). Another
difference is that you are always responsible
(b) for individual past actions but you may
be responsible (c) for both particular acts and
generic classes of acts.
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Among the above mentioned types of responsibility the third type is probably the most interesting to us. This is because there is a presumption
that the individual X is not simply capable of
carrying out the deed, but also, that he is acting
voluntarily, willingly and intentionally. According
to Aristotle (1995), an individual can be said to be
responsible for morally good deeds that benefit
the wider community only when they are carried
out voluntarily and with full cognizance of the
relevant circumstances and personal repercussions. Volition here is not synonymous with
arbitrariness. It essentially refers to the fact that
the individual is aware of what an act entails and
carries it out willingly. One cannot be held
responsible for deeds conducted against one's
own will. Constraints to free action may arise
out of external physical conditions set by nature
or out of physical coercion imposed by other
individuals, groups and organizations like the
state. It may also arise out of `inner compulsion',
e.g., a deed done in a state of strong surge of
emotion or emotional derangement may at
least afterwards seem strange to the actor, and
he may deny the deed as his own. Deeds are
also involuntary when conducted under ignorance due to no fault of one's own. (The importance of volition in an act will become clear when,
later on in our paper, we discuss individual performance under the aegis of collective identity of
a firm.)
Even though an individual's moral responsibility is contingent upon volition in carrying out an
act, the debate that crops up is whether an act can
be truly voluntary or whether all choices and
expressions of an act are deterministically constrained by other existing conditions as well as
preceding events. Since we know that under
normal circumstances, any action is influenced
by multiple causes, we cannot obviously argue
totally against determinism. To do so would be to
acknowledge indeterminism and admit to an
extreme and irrational explanation of events, i.e.
occurrence of phenomena without any necessary
reason. In a scenario where indeterminism prevails, there will be solely impulsive and arbitrary
individual actions but no prudent and rational
actions. Obviously that is not a feasible scenario as
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there would be no coherent social action and
social life would be impossible. But neither can we
admit to total determinism because then there
would be no scope for individual volition, choice
or action. Moreover, if we admit to either absolute
determinism or indeterminism, we would be
unable to pinpoint any individual for responsibility of actions undertaken. The individual would
be either totally helpless against external circumstances or totally clueless about why he had
undertaken an act. Under such circumstances,
there would be no way to socially mete out
`justice' in terms of rewards and punishments for
individual acts. In this context, the utilitarian
practice of judging an act by its utility regardless
of absolute juridical principles might come in
handy, though it is not necessarily the best
solution. One good way to solve this dilemma
between irrationalism and absolute determinism is
probably to try and find a middle ground, one that
acknowledges deterministic events and individual
decision.
It would be easier to try to tread a middle
ground if we make a conceptual distinction
between deed and process. A deed is necessarily
intended, right from its inception, and the conditions for its possibility are the intentional objects
of the deed. In contrast, a process is non-directed;
something or someone else other than the focal
individual carries out action. For example, we
cannot pinpoint a machine as being responsible
for a deed since it is a soulless automaton. However, the person responsible for implementing the
process of operation of the machine can be held
responsible for all outcomes of operating the
machine.
In the literature on business ethics, the firm is
usually treated as a social and legal entity, which is
responsible for all its deeds. Any claim that a firm
can be construed as being above all demands of
responsibility, as it is an `abstract entity' that is
the target of intangible processes like market
forces, is not accepted. However, we argue that
beyond a singular socio-legal entity, a firm is
also a collective unity composed of multiple
conscious and willing individuals who independently strategize, organize and implement its
actions. This holds true in spite of the separation
# Blackwell Publishers Ltd. 2000
Business Ethics: A European Review
of ownership and management in the current era.
The very existence of a firm implies a deed;
individuals have intentionally constructed it. A
firm is neither an object of abstract forces nor an
abstract entity. If the firm is considered as a
moral community then, by extrapolation, not only
the firm but also its various employees, particularly the top management, are responsible for the
deeds of the firm. One cannot absolve individuals
in the firm of all responsibilities simply because
they automatically follow the rules laid down by
the firm. Both the firm and its employees' moral
responsibility have to be acknowledged.
The relation between moral and legal
responsibility
The importance of the need to consider the distinction between deed and process can be further
reviewed by considering the relation between
moral and legal responsibility. A crucial question
that has occupied the minds of researchers is the
distinction and relation between moral and
politico-legal responsibility. When discussing responsibility in a political or legal sense rather than
an ethical sense, responsibility gets redefined. In
ethical responsibility an individual is responsible
for his/her actions without being specifically
responsible to anybody other than himself/herself
(Ewing 1957). The individual's actions are automatically regulated by his/her inner moral conscience. In the case of a politico-legal definition of
responsibility, there are two things that one needs
to look out for. It is not just sufficient to look for
what things an individual is responsible for, it is
also necessary to give weight to the question `to
whom is the individual responsible?' Politico-legal
responsibility entails `liability to be called to
account', and it is always responsibility for something (Ewing 1957). Although laws are mostly
based on certain universal ethical principles of
justice, a legal definition of `right action' may not
always match ethical standards of justice. Despite
substantial overlap between morality and law,
many an act may be legally correct but morally
dubious or even controversial, e.g. the issue of
retrenchment in corporations. The danger then is
# Blackwell Publishers Ltd. 2000
that ethically unjust actions (from a universal
standpoint) may go unpunished or unreformed
simply because the laws of a particular society do
not recognize the criminality of the deed.
We argue that `law' is analogous to `process', as
it constrains or licenses an individual to act in a
particular manner. Similarly, `moral' is analogous
to a `deed', since in the context of morality, an
individual has some control over the way he acts
and also a choice about acting in the right manner.
Laws regulate a `soulless individual' but morals
reinstate the soul as the guiding force in an
individual.
Some theorists have claimed that there is no
relevant distinction between juridical and ethical
responsibility (Abbagno 1957). They illustrate
the invalidity of the distinction by pointing to
the relation between ethical and juridical norms.
The juridical norm defines an `illegal' deed, its
minimum conditions, and the associated punishment for breaking the normative commitments of
social life. For example, the norm `do not kill' is a
legal norm. Kelsen (1990) points out that this legal
norm is not detached from ethics. It is only a
secondary norm that supports a primary ethical
norm, `respect the life of other people'.
Though legal norms can complement ethical
norms we feel that the distinction between legal
and ethical norms is still valid. An individual may
be a fully acceptable citizen in a legal sense but still
highly immoral. The distinction is particularly
important in our analysis of the firm's role in
ethical issues. In the context of a firm, which has
multiple duties to perform, it is not just sufficient
to look at the supervisory politico-juridical
regulations that constrain and determine the acts
of the firm. It is also important to look at the
`social and moral conscience' that guide those
activities of the firm that affect the wider social
populace (by extrapolation, one should also
consider the social conscience of individuals who
execute the various activities of the firm). It is true
that the firm is accountable to the state as a
political institution as well as to its judiciary,
which executes the laws formulated by the state.
Legal rules of the society constrain harmful acts of
a firm. In its absence, a firm would not have an
important motivation ± the fear of prosecution for
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destructive activities, for accepting responsibility
for its actions. However, this is not a sufficient
precondition for ensuring that the firm conducts
socially enriching activities.
In this paper, our focus is on corporate
decisions that affect the natural environment.
We believe that `Saving The Earth For Our
Future Generations' is a fundamental social
activity that a firm needs to focus on. Some
academicians, as well as environmental activists,
claim that society should push for environmentally conscious corporate decisions by framing
laws that sustain rights of human beings to live in
a clean, healthy and constantly prosperous natural
environment. But there are also some academicians and some environmentalists like Raymond
Dassman (Chiras 1995), who argue that laws only
define the minimum principles of individual
action. By themselves, they are insufficient guarantee for the materialization of ethical principles.
Individuals have to also develop a conscious
moral tenor to all their activities. Morals supplement law by bringing softer and subtler social and
interpersonal pressures to bear (Walsh 1970).
Those who subscribe to a complement of law
and morality would point out that since morality
is an imperative in environment protection, the
firm itself should also consciously cultivate a
culture where morally responsible actions are
championed. But we would also like to point out
that morals should not be cultivated simply as a
supplement to law, or as a constraint that enforces
good actions. Morals are valuable in themselves.
Ethics should not be a separate and optional
management discipline added onto basic management principles. It should be integral to good
business practice.
A sense of justice and morality develops best
under circumstances where people have a choice
and are free to make moral decisions. The firm
should cultivate such an atmosphere of freedom
and autonomy through corporate decentralization. Given an easy and flexible ambience,
employees can take initiative and rationally juggle
multiple responsibilities for the benefit of not just
the firm but also the wider society. A firm treading
a path of morality for the first time, typically goes
through a developmental path of accountability-
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imputability-freedom-rationality (MacKeon
1957). The firm first becomes aware of the fact
that it is accountable for all its actions to the legal
bodies of the society. It then follows a defined
path of `correct action' simply out of a fear of
punishment. It does not undertake good actions
out of true and unfettered volition. The need for
legal approval is gradually accompanied by a need
for social approval, a socially uplifting image for
the firm. This typically happens when the firm
comes under pressure from consumers who are
aware of wider moral issues and lobby to the
government for action against the firm's morally
unacceptable practices. For example, in 1989,
morally active American consumers consciously
boycotted the firm Exxon and its petroleum
products when Exxon refused to acknowledge its
responsibility in a major ocean oil spillage. The
company ultimately had to back down under
severely negative media image, compensated all
the concerned parties for its actions, and undertook a commitment to clean up the ocean. Thus
the firm initially undertakes moral actions out of
socio-legal compulsions. Good actions are defined
by the firm as being in accordance with the `rules
of the game'. They are a means to an end, the
end being maximizing profitability and growth.
However, over time, the firm internalizes ethical
practices as good business moral, cherishes them
for their intrinsic value and voluntarily commits
itself to environmentally safe actions. The firm
chooses to do the right thing as it cultivates an
inner will and duty to do good. Both the motive
and the deed become pure and useful as economic
rationality and morality become concurrently
valuable principles (Goodpaster 1989). The organization's adoption of environmental safety does
not go unrewarded since there can be mutually
profitable exchange between the environment and
the organization that will ensure the survival of
the system as a whole.
From the above analysis we see that we can
end up with both deontological orientation and
utilitarian action. Even though the firm starts out
with selfish motives, it can end up nurturing truly
altruistic motives as an end in itself and consequently enacting utilitarian deeds. The firm
typically begins with low levels of responsibility
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Business Ethics: A European Review
and goes on to achieve higher levels of morally
responsible actions. In this process, there can be
renewed perception about existing facts and
available alternatives, emergence of new styles of
analysis and synthesis of those facts, cautious and
well-thought out methods of implementation of a
chosen path as well as evaluation of outcomes for
clues to further betterment of the environment. In
the end the firm might achieve a `progressive'
definition of what constitutes healthy environmentally pro-active changes. In order to achieve a
revolutionary ideal about the environment, `respect' for the environment can act as a good guide
(Goodpaster 1989). Respect prompts all members
of the firm to choose rational, benevolent and
responsible ends. Conscious development of respect for the environment and resultant moral
actions can also help close gaps that usually exist
between ideal and actual corporate values and
between corporate values and personal values of
the employees (Goodpaster 1989). The firm is a
powerful actor in society. Given that, it is very
important that this particular `citizen' achieves
and demonstrates a reasonable degree of social
responsibility.
From the overall conceptual descriptions of
moral responsibility, we can conclude that, despite
partial determination by various events, an
individual or a firm can `break' this determination
by becoming conscious of the meanings of the
various events and deliberately cultivating a
morally responsible attitude. This is particularly
important if man is to prove to himself that he is a
`higher order being', blessed with the capacity for
thinking and reflecting, rather than a mindless
animal which cannot be held responsible for its
actions. Increased consciousness is also important
for the survival of our earth ± the abode of
mankind.
So far, we have been trying to clarify the
dilemma of determinism and freedom of action.
In the following section we will try to establish
the fact that despite the constraints imposed by
the larger collectivity ± the firm, an individual,
instead of being a willing partner in crime, can
employ the power of his consciousness and
volition in protesting against immoral actions of
a firm.
# Blackwell Publishers Ltd. 2000
Concepts of collective and individual
responsibility, and their mutual relation in
the context of action within a business
organization
As we have mentioned before, the firm is not just a
singular legal entity, it is also a collective identity
since it is composed of multiple active individuals.
But the individuals, apparently, are not autonomous units free to pursue their own style of
implementing an action. Every individual in the
firm is supposedly bound by their professionally
defined roles, all of which together contribute to
the collective identity of the firm. Individuals act
as representatives of the firm, and sometimes they
find themselves in situations where they have to do
things which they as private individuals they would
not choose to do. This is an example of what
Aristotle calls `non-voluntary' action (Walsh 1970).
The debate about determinism crops up here.
If an individual is limited in his/her actions by a
role prescribed to him/her by an external entity ±
the organization/institution ± how can s/he be free
to act, and by extension how can s/he be held
responsible for any harmful acts of the firm
(Flores and Johnson 1983)? If every individual is
bound by a collective identity ascribed to him/her
by the firm in which s/he works, how can an
individual ever step out of the confines of his/her
business role and take responsibility for consciously chosen moral actions?
In the last analysis, is it always the firm that is to
be held responsible for immoral activities? Some
have argued that only individuals can be moral
agents and therefore held accountable for the
consequences of their actions (Flores and Johnson
1983). Since organizations are `collective bodies',
they cannot be treated as morally responsible
agents. There is no plausibility in such an argument. We already know that even entire nations
like Nazi Germany can be held responsible for
atrocious inhumanitarian acts. It is probably safe
to claim that collective bodies are as culpable as
individuals within that collectivity. The question
then is, can collective moral responsibility be
proportionally distributed among individuals
within the firm?
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A firm is composed of multiple individuals
occupying various ranks and performing various
complementary functions. Each differential individual output is a small contribution to the overall
collective output. However, in typical business
literature, the ultimate goal of all the individuals
in the firm, irrespective of the kind and size of
their contribution, is portrayed to be production
and sale of a product for maximum profit.
Apparently, the sole motivation that drives all
activities of individuals in the firm, both administrative and productive, is competitive advantage
of the firm at any cost. Moral concerns do not
occupy a primary position in this attempt at profit
maximization by either the firm or its employees.
Economic literature also typically tends to
overlook ethics and endorse only the material
functions of a firm. In mainstream economic
literature there has been a strong advocacy of freemarket and competition among industries because
this widens consumer choice. Not much attention
has been given to how irresponsible competition
can endanger the environment. Neo-liberals have
argued for free markets where people who are
industrious, responsible, reliable and enterprising
can thrive (Ver Eecke 1982). But along with
instrumental virtues which generate enterprise,
material choices and better standards of living, the
firm should also have higher orders of moral
virtues like generosity, magnanimity, and compassion if we are to have the choice of living in a safe
environment.
As we know, perceptions about responsibilities
of a firm have changed over time. It has gradually
been acknowledged in academia and the wider
society that the firm has a moral duty to protect
the environment. However, the focus has been
only on the collective responsibility of the firm
and not on the virtues of individuals who make
possible the existence of the firm. There has been
an imbalance in the distribution of moral responsibility. Thus, in the process of production and
marketing of the firm's product if there are any
environmentally hazardous effects or any threats
to common safety, it is usually only the `firm'
which has been held responsible and not the
individuals who sought to maximize economic
benefits for the firm.
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This is a potentially threatening situation, in
which the managers and all other employees, as
part of a business collective, are absolved of all
responsibility for their behavior. If people are
detached from the consequences of their deed and
the blame is shifted onto a faceless entity, the firm,
there would be no hope of improving people's
attitudes. What concerns us here is not that
individuals within a firm are escaping legal
responsibility, but rather that they are not being
made aware of their moral responsibility, which is
of course a higher order of responsibility.
One cannot absolve individuals in the firm of all
responsibilities simply on the basis of the supposition that they follow the rules laid down by the
firm automatically rather than voluntarily. This
argument holds true particularly for the top
management. The `power theory of management'
(Donaldson 1995) acknowledges the existence of
`power elites' within the organization. Given the
fact that the powerful managers within an organization have considerable capacity to manipulate
the directions and goals of the organization, one
cannot overlook their moral involvement in the
actions undertaken by the firm.
Usually, as we have described before, managers
are portrayed as `collective' representatives of the
firm playing a role defined by the firm, rather than
as legally responsible `individuals' of a civilian
society who are free to act according to their own
choice. Given this portrayal, managers are usually
redeemed from any liability for morally reprehensible acts of the firm. However, the fact is that
despite their fiduciary duties to stockholders the
management has sufficient autonomy and is
responsible for making independent decisions,
formulating strategies, and acting on behalf of
the firm. Moreover, the managers have morally
significant non-fiduciary obligations to third
parties whose freedom and well being is affected
by their economic behavior. Since the managers
have a substantial degree of autonomy to act in
the `right' way they can bring in new values ±
environmentally friendly values ± into the various
role-sets in the firm. Following an environmentfriendly program not only benefits the firm in the
long run but also helps its individual employees to
attain higher spiritual needs.
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Business Ethics: A European Review
The downside to the above argument for
autonomy is that autonomy given to managers
can be misused. But pro-active public policies can
act as moral and legal constraints on managers,
and even if the formal judicial system of a society
absolves an individual of responsibility for morally harmful acts, the individual can perhaps be
taken to task through moral censure like public
exposure and social ostracism. But punishment
does not solve all problems. As we keep reiterating, cultivating a self-regulatory moral conscience
is far more important for achievement of high
ethical standards.
We argue that the dictates of moral sensibility
applies to both the top and middle management as
well as the lower ranked employees who may
claim that they are bound by their professional
roles and loyalty to the firm. Though constrained
by their roles within an institution, we have to
remember that,
a) Every employee voluntarily chose to be a
member of the firm. These people voluntarily
committed themselves to act in the roles
prescribed for them by the firm.
b) Despite being bound by rules and role prescriptions, employees do have flexibility as the
rules of a firm only act as general guidelines.
The employees can enrich their roles by
fulfilling them in a more moral fashion. They
can also redefine certain rules or demand the
abolition of unacceptable rules.
c) Doing what the firm prescribes benefits not
only the firm but also the employee and hence
the employee cannot deny his/her involvement
and responsibility.
The moral limits to action are apparent from the
fact that although employees have their jobs and
usually their livelihood at stake, they may break
unwritten rules of loyalty and blow the whistle on
harmful acts of the company. Despite pressures,
an individual can offer resistance and refuse to
commit `immoral' activities. Only in very rare
instances is an individual truly coerced (in the
physical sense) to commit an immoral act.
Until recently, ecology conscious business practices were to be found only in marginal, idealistic
`alternative enterprises'. But, things are changing.
# Blackwell Publishers Ltd. 2000
The apparently `normal' firms are also becoming
conscious of the considerations of the eco-system
and are starting to take first steps in the right
direction. However, we have to remember that this
is occurring primarily in the developed world.
In the developing countries where poverty along
with corruption and administrative malpractice
dominate, there is still a long way to go. In fact, it
is the duty of the First World countries to help
the Third World countries avert an ecological
disaster.
Conclusion
`The Limits to Growth' (Meadows et al. 1974),
was a pioneering book that alerted humanity to
the looming environmental disaster. The authors
of this book delineated the disastrous growth
trends in world population, the industrialization,
pollution output, food production, and extinction
of various animal species that threatened to
deplete the resources of the environment. The
thinning of the ozone layer, emission of greenhouse gases due to indiscriminate consumption of
fossil fuels, deforestation, soil erosion and spread
of deserts has speeded up the clock of environmental disaster at an exponential rate. Despite
skepticism about a future disaster as well as
optimistic hopes, technology and resource substitution cannot outrun this depletion and pollution (Dallmeyer and Ike 1998).
`Sustainable development' has become an important field of research in the academic field of
social sciences. The focus in a sustainable society
is on quality rather than quantity (Chiras 1995). In
our world where individualism is emphasized as a
value, individuals need to be made aware of the
limits of self-interest and their moral responsibility
to the wider community. The firm is one arena
where individual responsibility for safeguarding
the environment can be emphasized. But organization theory has not focussed significantly on the
moral responsibilities of managers for creating a
safe environment.
Business literature has, however, become increasingly conscious and focussed on the issues of
ethics and morality. But, the ethical issues have
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Number 2
been largely concerned with stakeholders like
workers, other firms, and other countries and
their culture. In short, an analysis of the environment of the firm has been restricted to its
`relationship network'. In addition, whenever
issues regarding the natural environment have
been addressed, it has always been secondary to
the primary concern of ensuring consumer satisfaction. Typical stakeholder theory has never
really taken into consideration the natural environment. We feel that here is a big gap that
managerial theorizing can fill. A firm's relationship to its environment needs to be re-thematized.
As economic activity expands, it threatens the
environment in general, systematic, modal, and
endemic ways; it strains overall ecological limits
and threatens to exceed the `carrying capacity' of
the planet (Dallmeyer and Ike 1998). This
perspective needs to be reflected in stakeholder
theory.
Keeping in mind the viewpoints of different
stakeholders in society, and also the dictates of
justice, human rights and quality of social life; the
business community needs to find a harmonious
definition of the concept of environmental responsibility, its various forms and objects, and the
whole process needs to be re-evaluated continuously over time. The decision-making strategic
management in various firms and various interest
groups of society should collaborate to shoulder
the moral responsibility of saving the environment. To achieve success in the effort to save the
Earth, ecological ethics need to be cultivated for
its `intrinsic value' and not just for its utility.
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