Strategy and Ethics
Daniel R. Gilbert, Jr.
Is a genre of management thought that deals with the question: Whose voices should be taken seriously, and on what terms, with regard to the future course of an organization? (see corporate governance). Strategy and ethics is a liberal challenge to long standing beliefs about the legitimacy of business and organizations. Strategy and ethics occupies a position on an educational margin between business policy and strategic management, on one hand, and business ethics and business and society, on the other.
A Genealogy of Strategy and Ethics
A genealogy of thinking about strategy and ethics can be traced across four ‘‘generations,’’ each of which is distinguished by a particular meaning of ‘‘good’’ management policy.
First, strategy and ethics emerged as an expression of the premise that it is ‘‘good’’ policy for executives to know themselves. ‘‘Know and admit to your own voice’’ is the imperative. Kenneth Andrews (1980: 85) argued that executives should pay close attention to the values by which they can live: ‘‘Strategy is a human construction; it must in the long run be responsive to human needs. It must ultimately inspire commitment. It must stir an organization to successful striving against competition. Some people have to have their hearts in it’’ (see virtue ethics).
Second, strategy and ethics evolved as an expression of the premise that it is ‘‘good’’ policy for executives to pay attention to other voices raised outside their organizations. ‘‘Listen to the rhetorics of other general views of the world’’ is the imperative here. This imperative is manifest in the competitive strategy approach to strategic management, where Michael Porter (1985) has identified the ‘‘five forces’’ of buyers, suppliers, rivals, new entrants, and purveyors of substitute products. These are generic voices in the vicinity of an organization. This imperative is also manifest in the study of business and society, where Lee Preston and James Post (1975) argued that business organizations are one part of a pattern of ‘‘interpenetrating systems.’’
Third, strategy and ethics has taken a new turn on the premise that it is ‘‘good’’ policy for executives to listen carefully, and to be prepared to respond, to specific persons expressing their own voices. ‘‘Listen to what specific persons are saying about their specific stakes’’ is the imperative here. These persons are called stakeholders. R. Edward Freeman (1984: 46) defined a stake holder as ‘‘any group or individual who can affect or is affected by the achievement of the organization’s objectives.’’ Freeman argued that a stakeholder approach to strategy should in volve considerations of ‘‘distributive justice’’ (see stakeholder theory; distributive justice).
Fourth, strategy and ethics has evolved more recently on the premise that it is ‘‘good’’ policy for executives to justify corporate strategies in accordance with certain common ethical principles. ‘‘Think carefully about the specific terms of your relationships with others and find ways to agree on those terms’’ is the imperative here. Freeman and Gilbert (1988) give the name ‘‘Personal Projects Enterprise Strategy’’ to one version of this imperative. They propose that strategies should honor, among others, a principle of personal autonomy and a principle of voluntary agreement.
Gilbert has gone further to argue that strategy is inseparable from a person’s ethical responsibility to contribute to human solidarity. He calls this account ‘‘Strategy Through Convention’’ (Gilbert, 1992). Edward Stead and Jean Stead (1992) have extended this particular generation of strategy and ethics by linking strategic management to an environmental ethics.
An Opposing View to Strategy and Ethics
Strategy and ethics should not be confused with strategic ethics. Strategic ethics is an argument that institutions can be structured to safeguard the rights of a strategist against the encroachment of other people. Strategic ethics is based on the assumption that trust is fleeting in human relationships, because people are prone to opportunism unless they are given incentives to act otherwise. Oliver Williamson (1985) proposed one set of safeguards based on minimizing trans actions costs. Robert Axelrod (1984) proposed a ‘‘tit for tat’’ strategy as a workable safeguard.
Strategic ethics is an antithesis of the strategy and ethics genre of management thought. On the strategic ethics view, the praiseworthy strategist is adept at rationally maximizing the gains from relationships with others (see egoism, psychological egoism, and ethical egoism). On the strategy and ethics view, the praiseworthy strategist is adept at bringing different voices into strategic deliberations and actions.
Strategy and Ethics, and Feminist Ethics
Three feminist ethics themes are prominent in the strategy and ethics genre. First, strategy and ethics educators create a prominent place for new and distinct voices in their accounts about business and organizations. This emphasis parallels a feminist concern with giving voice to those who have previously been silenced in modern institutions. This facet of strategy and ethics challenges a traditional view that the his tory of an organization can be explained in terms of the exploits of one more or less omniscient mastermind, usually the chief executive.
Second, strategy and ethics educators create an account in which new and different voices participate in debates about the legitimacy of modern business institutions. This emphasis parallels a feminist concern with empowering those who were previously powerless. This facet of strategy and ethics challenges the traditional view – for example, articulated by Andrew Carnegie (1920) – that ordinary citizens should trust business leaders to practice as wise stewards who have the good of society foremost in their minds.
Third, strategy and ethics educators spread a belief that some liberal conception of a common good can be advanced as a direct consequence of management practice. This emphasis parallels a feminist concern with empathy and human connection. This facet of strategy and ethics challenges a traditional view from neoclassical economics – sustained in strategic management – that the greatest social good will come as a byproduct of the market mechanism.
Bibliography
Andrews, K. (1980). The Concept of Corporate Strategy, revd. edn. Homewood, IL: Richard D. Irwin.
Axelrod, R. (1984). The Evolution of Cooperation. New York: Basic Books.
Carnegie, A. (1920). The Autobiography of Andrew Carnegie. Boston, MA: Houghton Mifflin.
Freeman, R. E. (1984). Strategic Management: A Stake holder Approach. Boston, MA: Pitman.
Freeman, R. E. and Gilbert, D. R., Jr. (1988). Corporate Strategy and the Search for Ethics. Englewood Cliffs, NJ: Prentice-Hall.
Gilbert, D. R., Jr. (1992). The Twilight of Corporate Strategy: A Comparative Ethical Critique. New York: Oxford University Press.
Porter, M. (1985). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press.
Preston, L. and Post, J. (1975). Private Management and Public Policy: The Principle of Public Responsibility. Englewood Cliffs, NJ: Prentice-Hall.
Stead, W. E. and Stead, J. (1992). Management for a Small Planet. Thousand Oaks, CA: Sage.
Williamson, O. (1985). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. New York: Free Press.