Skip to main content

Advertisement

Log in

Adam Smith’s Vision of the Ethical Manager

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

Smith’s famous invocation of the invisible hand – according to which self-interest promotes the greater good – has popularly been seen as a fundamental challenge to business ethics, a field committed to the opposite premise that the public interest cannot be advanced unless economic egoism is restrained by a more socially conscious mindset, one that takes into account the legitimate needs of stakeholders and the reciprocity inherent in networked relationships. Adam Smith has been brought into the discipline to show that his authority cannot be summoned to fully support the free market sceptics of business ethics. Little has been done, however, to illustrate that Smith’s moral writings actually contain the fundamentals of a business ethics teaching for managers who necessarily work within a variety of networks. This article analyses his moral thought to infer a Smithean framework of business ethics for managers. Smith believes that self-interest should be subordinated to moral imperatives, even in the business world. However, Smith rejects the principles of corporate social responsibility on the argument that benevolent impulses cannot be expected to prevail in the commercial arena. Instead of consciously trying to advance the social good, Smith’s ideal manager will endeavour to personally live up to the standards enforced by an impartial spectator of his conduct, a theoretical entity reflecting the ethical requirements posed by the manager’s social networks and stakeholder relationships. While this internalized onlooker expects a limited degree of benevolence, the overriding demand is for the manager to abide by the dictums of justice and prudence.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Bassiry, G.R. and M. Jones: 1993, ‘Adam Smith and the Ethics of Capitalism’, Journal of Business Ethics 12(8), 621-627.

    Article  Google Scholar 

  • Bishop, J.D.: 1995, ‘Adam Smith`s Invisible Hand Argument’, Journal of Business Ethics 14(3), 165-180.

    Article  Google Scholar 

  • Brown, V.: 1997, ‘Mere Inventions of the Imagination: A Survey of Recent Adam Smith Literature’, Economics and Philosophy 13(2), 281-312.

    Article  Google Scholar 

  • Brown, T.J., P.A. Dacin, M.G. Pratt, and D.A.Whetten: 2006, ‘Identity, Intended Image, Construed Image, and Reputation: An Interdisciplinary Framework and Suggested Terminology’, Academy of Marketing Science Journal 34(2), 99-106.

    Article  Google Scholar 

  • Campbell, T.D.: 1975, ‘Scientific Explanation and Ethical Justification in the Moral Sentiments’ in A.S. Skinner and T. Wilson (eds.), Essays on Adam Smith (Clarendon Press, Oxford).

    Google Scholar 

  • Cerqueira, H.: 2003, ‘Para Ler Adam Smith: Novas Abordagens’, Working Paper No. 183, Centro de Desenvolvimento e Planejamento Regional. Retrievable from, http://ssrn.com/abstract=383005. Accessed May 5 2009.

  • Coker, E.: 1990, ‘Adam Smith`s Concept of the Social System’, Journal of Business Ethics 9(2), 139-142.

    Article  Google Scholar 

  • Cropsey, J.: 1957, Polity and Economy (Greenwood Press, Westport).

    Google Scholar 

  • Degenne, A. and Forse, M.: 1999, Introducing Social Networks (Sage, London).

    Google Scholar 

  • Evensky, J.: 2005, Adam Smith`s Moral Philosophy (Cambridge University Press, Cambridge).

    Book  Google Scholar 

  • Fitzgibbons, A.: 1995, Adam Smith`s System of Liberty, Wealth, and Virtue (Oxford University Press, New York).

    Google Scholar 

  • Fukuyama, F.: 1995, Trust (Penguin, New York).

    Google Scholar 

  • Granovetter, M.S.: 1973, ‘The Strength of Weak Ties’, American Journal of Sociology 78(6), 1360-1380.

    Article  Google Scholar 

  • Griswold, C.L.: 1999, Adam Smith and the Virtues of Enlightenment, (Cambridge University Press, Cambridge).

    Google Scholar 

  • Hume, D.: 1978, A Treatise of Human Nature (Oxford University Press, Oxford).

    Google Scholar 

  • Jensen, M., K. Murphy and E. G. Wruck: 2004, `Renumeration: Where We’ve Been, How We Got to Here, What are the Problems, and How to Fix them', Harvard NOM Working Paper No. 04-28; ECGI – Finance Working Paper No. 44/2004. Retrievable from, http://ssrn.com/abstract=561305. Accessed August 25 2010

  • McCloskey, D.: 2006, The Bourgeois Virtues (University of Chicago Press, Chicago).

    Google Scholar 

  • Mead, G.H.: 1934, Mind, Self and Society (University of Chicago Press, Chicago).

    Google Scholar 

  • Medema, S. G.: 2007, ‘Adam Smith and the Chicago School’, Working Paper, Department of Economics, University of Colorado at Denver. Retrievable from, http://ssrn.com/abstract=902220. Accessed May 5 2009.

  • Milgram, S.: 1967, ‘The Small World Problem’, Psychology Today 2, 60-67.

    Google Scholar 

  • Minowitz, P.: 1993, Profits, Priests, and Princes: Adam Smith`s Emancipation of Economics from Politics and Religion (Stanford University Press, Stanford).

    Google Scholar 

  • Montes, L. and E. Schliesser: 2006, ‘Introduction’, in L. Montes and E. Schliesser (eds.), New Voices on Adam Smith (Routledge, London), pp. 1–14.

  • Muller, J.: 1995: Adam Smith in his Time and Ours: Designing the Decent Society (Princeton University Press, Princeton).

    Google Scholar 

  • Pack, S.J.: 1991, Capitalism as a Moral System: Adam Smith’s Critique of the Free Market Economy (Edward Elgar, Aldershot) .

    Google Scholar 

  • Raphael, D. D. and A. L. Macfie: 1982, ‘Introduction’, in D. D. Raphael and A. L. Macfie (eds.), The Theory of Moral Sentiments (Liberty Press, Indianapolis), pp. 1–52.

  • Rasmussen, D.C.: 2008, The Problems and Promise of Commercial Society: Adam Smith`s Response to Rousseau (Pennsylvania State University Press, University Park).

    Google Scholar 

  • Rosenberg, N.: 1990, ‘Adam Smith and the Stock of Moral Capital’, History of Political Economy 22(1), 1-17.

    Article  Google Scholar 

  • Rothschild, E.: 2002, Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment (Harvard University Press, Cambridge).

    Google Scholar 

  • Scott, J.: 2000: Social network Analysis: A Handbook, 2nd Ed.(Sage, Newberry Park, CA).

    Google Scholar 

  • Smith, A.: 1981: An Inquiry into the Causes of the Wealth of Nations, 2 Vols (Liberty Press, Indianapolis).

    Google Scholar 

  • Smith, A.: 1982: The Theory of Moral Sentiments (Liberty Press, Indianapolis).

    Google Scholar 

  • Tavris, C., and Aronson, E.: 2006, Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts (Harcourt, Orlando, FL).

    Google Scholar 

  • Tribe, K.: 1999, ‘Adam Smith, Critical Theorist?’ Journal of Economic Literature 37(2), 609-632.

    Google Scholar 

  • Wasserman, S. and Faust, K.: 1994, Social Network Analysis: Methods and Applications (Cambridge University Press, Cambridge).

    Google Scholar 

  • Watts, D.J.: 2003: Six Degrees: The Science of a Connected Age (W.W. Norton, New York).

    Google Scholar 

  • Wellman, B.: 1998, Networks in the Global Village: Life in Contemporary Communities (Westview Press, Boulder, Col).

    Google Scholar 

  • Werhane, P.: 2000, ‘Business Ethics and the Origins of Contemporary Capitalism: Economics and Ethics in the Work of Adam Smith and Herbert Spencer’, Journal of Business Ethics 24(3), 185-198.

    Article  Google Scholar 

  • Wight, J.B.: 2002, ‘The Rise of Adam Smith: Articles and Citations, 1970-1997’, History of Political Economy 34(1), 55-82.

    Article  Google Scholar 

  • Wilson, J.Q.: 1989, ‘Adam Smith on Business Ethics’, California Management Review 32(1), 59-72.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to George Bragues.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Bragues, G. Adam Smith’s Vision of the Ethical Manager. J Bus Ethics 90 (Suppl 4), 447–460 (2009). https://doi.org/10.1007/s10551-010-0600-4

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-010-0600-4

Key words

Navigation