Journal of Business Ethics

, Volume 44, Issue 1, pp 49–59 | Cite as

Loyalty and Trust as the Ethical Bases of Organizations

  • Josep M. Rosanas
  • Manuel Velilla


The last years of the 20th Century have been somewhat contradictory with respect to values like loyalty, trust or truthfulness. On the one hand, (often implicitly, but sometimes very explicitly), self-interest narrowly defined seems to be the dominant force in the business world, both in theory and in practice. On the other hand, alliances, networks and other forms of cooperation have shown that self-interest has to be at least "enlightened".

The academic literature has reflected both points of view, but frequently in an ambiguous way, since the concepts of loyalty and trust are somewhat elusive and equivocal. This paper attempts to analyze the concept of loyalty in depth, examining the different conceptions about the word that can be found in the literature. We begin by going to the management classics (specifically, Follett, Barnard and Simon), and we then turn to the anthropological approach of Pérez López (1993), with its built-in ethical analysis, and show how trust and loyalty are crucial to the development of organizations. We end by suggesting in what ways loyalty and trust can be created and fostered in organizations.

business ethics ethical foundations of organization loyalty management theory motivation trust 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Anderson, C.: 1997, 'Values-based Management', Academy of Management Executive 11(4), 25–46.Google Scholar
  2. Antony, R., J. Dearden and V. Govindarajan: 1992, Management Control Systems, 7th. Edition (Richard D. Irwin, Homewood, IL).Google Scholar
  3. Barnard, C. I.: 1938, The Functions of the Executive (Harvard University Press, Boston).Google Scholar
  4. Bidault, Francis and J. C. Jarillo: 1997, 'Trust in Economic Transactions', in F. Bidault, P. Y. Gomez and G. Marion (eds.), Trust, Firm and Society (Macmillan Business, London), pp. 81–94.Google Scholar
  5. Carbone, J.: 1997, 'Loyalty: Subversive Doctrine?', Academy of Management Executive 7(3), 80–86.Google Scholar
  6. Cole, C. L.: 2000, 'Building Loyalty', Workforce (August), 44–48.Google Scholar
  7. Evans, B.: 2000, 'Does Loyalty Still Matter?', Information Week (May 22), 176.Google Scholar
  8. Follett, M. P.: 1920, 'The Individual in Society', Chapter Ten in Graham, 1996.Google Scholar
  9. Follett, M. P.: 1925, 'How Must Management Develop in Order to Become a Profession', Chapter Eleven in Graham, 1996.Google Scholar
  10. Follett, M. P.: 1927, 'Management as a Profession', in Henry C. Metcalf, A. W. Shaw Co. (eds.), Business Management as a Profession, Chapter IV (Publisher, Chicago), pp. 73–87.Google Scholar
  11. Graham, Pauline (ed.): 1996, Mary Parker Follett, Prophet of Management (Harvard University Press, Boston).Google Scholar
  12. HRfocus: 2000, 'Why Loyalty is Not Enough', 77(11), 14–15.Google Scholar
  13. Jensen, M.: 1994, 'Self-Interest, Altruism, Incentives and Agency Theory', Journal of Applied Corporate Finance 7(2), 40–45.Google Scholar
  14. Kanungo, R. and J. Conger: 1993, 'Promotion Altruism as a Corporate Goal', Academy of Management Executive 7(3), 37–48.Google Scholar
  15. Kreps, D.: 1990, 'Corporate Culture', in J. Alt and K. Shepsle (eds.), Perspectives on Positive Political Economy (Cambridge University Press, Cambridge).Google Scholar
  16. Melé, D.: 2001, 'Loyalty in Business: Subversive Doctrine or Real Need?', Business Ethics Quarterly 11(1), 11–26.Google Scholar
  17. Pérez López, J. A.: 1993, Fundamentos de la Dirección de Empresas (Rialp, Madrid).Google Scholar
  18. Powers, E. L.: 2000, 'Employee Loyalty in the New Millennium', SAM Advanced Management Journal 65 (Summer), 4–9.Google Scholar
  19. Randall, D. M.: 1987, 'Commitment and the Organization: The Organization Man Revisited', Academy of Management Review 12(3), 460–471.Google Scholar
  20. Reichheld, F.: 1996, The Loyalty Effect: The Hidden Force Behind Growth, Profits And Lasting Values (Harvard Business School Press, Boston).Google Scholar
  21. Reichheld, F.: 2001, Loyalty Rules. How Today's Leaders Build Lasting Relationships (Harvard Business School Press, Boston).Google Scholar
  22. Rosanas, J. M.: 2002, On the Decision-Theoretic Foundations of Trust, mimeo, IESE, University of Navarra.Google Scholar
  23. Sen, A.: 1977, 'Rational Fools: A Critique of the Behavioral Foundations of Economic Theory', Philosophy and Public Affairs 6, 317–344.Google Scholar
  24. Sharf, S.: 2000 'Loyalty Lost. What Happened to Career Paths and Promotion from Within?', Ward's Auto World, Detroit, 36(7) (July), 21.Google Scholar
  25. Sheppard, D.: 2000, 'Is Loyalty Dead?', Executive Excellence 17(6), 17.Google Scholar
  26. Simon, H.: 1947, Administrative Behavior (The Free Press, New York).Google Scholar
  27. Simon, H.: 1964, 'On the Concept of Organizational Goal', Administrative Science Quarterly 9(1) (June), 1–22.Google Scholar
  28. Watson, S.: 2000a, 'End of Job Loyalty?', Computerworld (May 15), 52–53.Google Scholar
  29. Watson, S.: 2000b, 'Why Staffers Stay?', Computerworld (May 22), 56–57.Google Scholar

Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Josep M. Rosanas
    • 1
  • Manuel Velilla
    • 1
  1. 1.IESE, Business SchoolUniversity of NavarraBarcelonaSpain

Personalised recommendations