As anticipated in Chap. 2, this chapter takes on directly the issue of predicating conscience of corporations. In my work over many years, I have defended the analogical predication of moral attributes of organizational actors, referring to this practice as the Principle of Moral Projection (an inversion of Plato’s strategy in the Republic). After clarifying the meaning of analogical predication, I turn to the central theme of this chapter: the institutional insight. Drawing upon the work of Hugh Heclo, professor of government and public affairs at George Mason University, I describe institutions as vehicles for achieving a measure of permanence and continuity for what we value, despite our mortality. So if we think of business as an institution, we must attribute not only a focal purpose to individual corporations but also an institutional purpose—to carry forward the provision of goods that are truly good and services that truly serve. The institutional insight does more than “give permission” or “affirm fittingness.” It asks organizational leadership to embrace not only the presenting purposes of their organizations but also their institutional purposes (as they relate to the common good). This chapter then takes on several related themes such as: Does the attribution of moral responsibility to a corporation preclude the attribution of responsibility to certain individuals within the corporation? And if corporations can be morally responsible actors, can they also deserve moral consideration as recipients of the actions of others? This chapter is an organic part of a larger work about the overall contribution of Kenneth Goodpaster to the field of applied ethics and is best read in the context of that larger work.
3.1 From Moral to Institutional Insight
In the previous chapter, I offered a view of the “architecture” of the field of business ethics, as I came to see it, drawing upon both Josiah Royce (the moral insight) and Alan Gewirth (agents and recipients). This architecture was formed from two tripartite distinctions: (1) descriptive, normative, and analytical ethics, and (2) personal, organizational, and societal agency. Implied in the second tripartite distinction, as we saw, was the idea that organizations or institutions could (and should) be treated as moral agents (and perhaps as moral recipients) analogous to individual persons (Fig. 3.1).
3.2 More About Transactions
I indicated in the display of Gewirth’s conception of a moral “transaction” that there were some larger questions awaiting our attention about the domain of moral accountability and the range of moral considerability.
The Principle of Moral Projection, as I noted in Chap. 1, presupposes that within the domain of moral accountability (see left side of Fig. 3.2) there can be not only persons but also organizations and even whole social systems. But the Principle of Moral Projection presumes more than this.Footnote 1 It also presumes that we can get a better understanding of corporate responsibility or corporate conscience by employing the analogy with personal responsibility or personal conscience—what I called the inversion of Plato’s method in the Republic.
As I pointed out in Chap. 1, Plato’s strategy in the Republic, Book II, was to see the city state as a macrocosm of the soul of the person. Eventually, the insatiability of Athens for wealth led to expansionism and wars of acquisition. This is also true, Socrates argued, for us as individuals. Without virtues like prudence, courage, and temperance, there can be no wisdom or knowledge for the soul; there can only be intemperate acquisition. Lack of virtue in the soul of the individual is analogous to lack of virtue in the life of the republic.
What was the source of my conviction that normative characteristics in the macrocosm would translate into the microcosm (or vice versa)? Organizations appear in many ways to be macro-versions (projections) of ourselves as individuals—human beings writ large. We can sometimes see more clearly in organizations certain features we want to understand better in ourselves, but often the reverse is true. Managers and leaders of organizations can frequently benefit from what we understand about ourselves as individuals. I have referred to this analogical approach in the past as the Principle of Moral Projection. Formally, it can be stated as follows:
The idea was that corporate responsibility is the projection of moral responsibility in its ordinary (individual) sense onto a corporate agent. Corporate conscience can evolve from pure self-centeredness (e.g., public relations or a preoccupation with profit) through the rule-following of corporate compliance (with legal or regulatory requirements) into an authentic, independent management concern. Such an evolution represents a maturation process analogous to the three-stage development of conscience in individuals that we saw in the work of Piaget. Note further that attributing responsibility and conscience to corporate entities does not mean that we cannot at the same time attribute responsibility to individuals within the corporation. Indeed, we might also at the same time attribute responsibility to the social system surrounding the corporation. More on this shortly.
3.2.1 Analogical Predication
Sociologist Philip Selznick articulated something like this idea more than six decades ago (1957) when he wrote about “character formation” as an important area of exploration for those who would understand the decision making of organizations:
The study of institutions is in some ways comparable to the clinical study of personality. It requires a genetic and developmental approach, an emphasis on historical origins and growth stages. There is a need to see the enterprise as a whole and to see how it is transformed as new ways of dealing with a changing environment evolve. (p. 141)
Leadership, according to Selznick, is about institutionalizing values. We can now see that leadership is the vehicle that makes moral projection both meaningful and plausible. And in the late 1970s, stakeholder thinking was most often adopted as a proxy for ethical managerial decision making and corporate conscience.
To be sure, the Principle of Moral Projection is a conjecture, but it is an intelligent conjecture. There is significant precedent for such a conjecture in the history of philosophy under the heading of “analogical predication” (Ashworth 2017).
In the work of theologian and philosopher Thomas Aquinas, for example, “analogical predication” was contrasted with “univocal predication” and “equivocal predication” of the same term of two different objectsFootnote 2:
Socrates and Plato are both human (univocal). The word “human” in this context is used with the very same meaning when predicated of the two philosophers.
This duck has a bill and the president vetoed a bill (equivocal). The word “bill” in these contexts is used with two completely different meanings.
Mary Smith is a responsible person and Lincoln Electric Company is a responsible organization (analogical). The word “responsible” in these contexts is used with quite similar—but not identical—meanings. It is predicated analogically.
In the context of Plato’s Republic, the central normative ethical quarry—justice; virtue—are predicated analogically of the republic (an organized city-state with an estimated population at the time of 120,000) and of the soul of an individual person. It is the inner dynamics of conscience in each of these differently scaled entities that carry the similarity, making the analogy meaningful. We can thus learn about ourselves from institutions and (I have argued) about institutions from ourselves.
3.2.2 Exploring the Analogy
In my book Conscience and Corporate Culture, I described the “moral agenda of corporate leadership” in terms of three broad imperatives:
There are three “practical imperatives” that anchor the moral agenda of leadership: orienting, institutionalizing and sustaining shared values. The first two involve placing moral considerations in a position of salience and authority alongside considerations of profitability and competitive strategy in the corporate mindset. The third imperative (sustenance) has to do with passing on the spirit of this effort in two directions: to future leaders of the organization and to the wider network of organizations and institutions that make up the social system as a whole. (Goodpaster 2007)
In that book, I elaborated further as I described the three ensuing chapters:
In Chapter 5, I will focus on the meaning and practical implications of orienting the ethical values in a corporate culture. I will illustrate this process with several case studies as well as a commentary on current employee survey practices in one large company that I have come to know well.
In Chapter 6, the focus will shift to institutionalizing the shared values that have been identified by the organization in the process of orientation.
Finally, in Chapter 7, I will address an often-overlooked imperative—sustaining the shared ethical values that have been identified (Chapter 5) and institutionalized (Chapter 6). This last imperative falls as much to the board of directors as to the senior leadership of the organization, making it a governance issue. (Goodpaster 2007))
The three imperatives for corporate leadership (and the implementation of corporate conscience) echo the elements of personal conscience: (a) embracing the moral point of view—achieving clarity about one’s core values/convictions (about my own and others’ interests, rights, duties, and virtues); (b) discovering ways to make my commitment to the moral point of view a practical part of my everyday behavior; (c) developing habits (virtues) that will allow me to sustain the moral point of view (to minimize the likelihood of “forgetting”) in my life.
3.2.3 The Institutional Insight
Hugh Heclo, a professor of government and public affairs at George Mason University, in his book On Thinking Institutionally (2008), offered a rich interpretation of institutions and institutional thinking that bears on the subject at hand.
In Heclo’s words, “Amid the perpetual perishing that marks our individual existences, institutions are weathered presences” (p. 127). The essence of an institution, according to Heclo, is that it provides a way to achieve a measure of permanence and continuity for what we value, despite our mortality. Institutions represent our legacies to future generations and our inheritances from past generations of structures for carrying on important values that we hope to see survive beyond our lifetimes. Here are just some examples:
the nuclear family
the church or synagogue or mosque
colleges and universities
governments (local, state, national)
guardians local (police); national (armed forces)
business organizations (for food, transportation, commerce of many kinds)
healthcare organizations (hospitals, clinics, medical schools, Red Cross, etc.)
organized communication (media, entertainment, newspapers, etc.)
voluntary associations of many kinds across our country
As we think about the institution of business and the numerous organizations, large and small, that it includes, using Heclo’s perspective, each organization has its presenting purpose or mission—its reason for being as a specific business. Yet at the same time, each organization is part of the institution of business itself, which has a social purpose: to produce goods that are truly good and services that truly serve.Footnote 3
The institutional insight is the realization that one’s own institution—like all institutions—is part of a larger enterprise of forwarding the wellbeing of humankind. This means a vision and a concurrent peripheral vision about purposes on the part of leadership.
General Motors focuses on building cars and trucks but as part of the human need for transportation;
Procter & Gamble focuses on household goods but as part of the need for family flourishing;
General Mills focuses on cereals and other foods, but as part of the human need for healthy nourishment.
An impediment to the institutional insight is a kind of fixation on the foreground and its inevitable competitiveness that I have referred to as teleopathy, the unbalanced pursuit of purpose in individuals and institutions.Footnote 4 The U.S. Department of Defense has identified a similar hazard in the training of fighter pilots:
Channelized Attention is a factor when the individual [read: institution] is focusing all conscious attention on a limited number of environmental cues to the exclusion of others of a subjectively equal or higher or more immediate priority, leading to an unsafe situation. May be described as a tight focus of attention that leads to the exclusion of comprehensive situational information.Footnote 5 (“Executive Summary” 2006)
It is worth mentioning that because of channelized attention, combat pilots now draw upon and provide mutual support to one another, as missions are always flown with at least two aircraft in formation. The lead pilot must always have a “wingman”Footnote 6 to help avoid the fixation that can occur.
The Principle of Moral Projection, in my view, gives permission and ethical fittingness to applying moral predicates to organizational or institutional agents. In Gewirth’s terms, it expands the domain of moral accountability beyond individuals. But the institutional insight does more than “give permission” or “affirm fittingness.” It requires that organizational leadership embrace not only the presenting purposes of their organizations but also their contextual or institutional purposes (as they relate to human dignity and the common good).Footnote 7
3.2.4 Moral Considerability
So far, I have drawn attention only to the left side of Gewirth’s diagram of his agent-recipient view of the central idea of ethics. I have argued that the domain of moral accountability can—indeed must—include corporate or institutional entities by analogy with individual persons. It is natural at this point to ask further: if corporations (or organizations more generally) can be held responsible as moral actors, can their own “freedom and well-being” be abridged as moral recipients? Can corporations sometimes be victims of moral actors? The answer to this question appears to be “Yes.” Consider this observation in the award-winning history Corporate Responsibility: The American Experience (2012):
The US Supreme Court in 1886 (Santa Clara Cnty v. S. Pac. R.R. Co.) decided that “joint-stock companies, chartered organizations, and corporations had the same rights, or at least the same legal rights, as individuals under the Fourteenth Amendment—rights to due process, property ownership, and equal protection—a claim that has been upheld ever since 1886. Later, in 1889 the Supreme Court ruled that a corporation was a legal person. Corporations could not vote or hold office, but a century later, in First National Bank of Boston v. Bellotti (1978) the Court ruled that corporations have rights to free speech. (p. 43)
It seems clear—to use Gewirth’s language—that there is precedent for the attribution not only of responsibilities to corporations as moral actors, but also for the attribution of rights to corporations as moral recipients.
There are, of course, many other questions that could be raised about possible occupants of the range of moral considerability (see the right side of Fig. 3.2) besides organizations or corporations, such as sentient beings generally, living things generally, and even entire ecosystems. I have explored this topic in my article “On Being Morally Considerable” (1978)Footnote 8 but I must leave it here as a theme in the field of environmental ethics.
3.2.5 Individual and Corporate Responsibility Simultaneously?
As I mentioned above, business leaders need to orient, institutionalize, and sustain the ethical values of their organizations (Goodpaster 2007). To follow these imperatives, especially the third one (sustain) they need to accomplish two important tasks: (1) passing on the ethical values of the organization to the next generation of employees and company leadership, and (2) protecting the ethical values of the company in its economic and social environment.
The former task, when it is directed toward organizational members and subgroups, includes such activities as hiring and recruitment, management selection and development, executive succession, board oversight, and (in the case of large corporations) acquisition and divestiture of business units. The latter task includes corporate communication, business-government relations, and company participation in its various communities, local and global. (Goodpaster 2007, p. 195)
This dynamic reality on the part of business leadership takes place concurrently with individual employees and managers making daily ethical decisions (responsible or irresponsible) influenced by the (internal) culture of the corporation. Similarly, the leadership agenda is pursued concurrently with (external) cultural influences from the company’s socio-economic and political environment.
As I see it, the phenomenon of institutional responsibility travels through time, providing a context for individual responsibility while living within a larger socio-economic and political system that influences it from the outside (Fig. 3.3).
I should add that this way of thinking about moral responsibility, as “interdependent” among the several levels of application (in the domain of accountability and the range of considerability) goes a long way toward resolving conundrums about “corporate responsibility” versus “individual responsibility.” It helps us to see how several levels of responsibility can be acknowledged at once—how there can be an “and” where some were convinced there could only be an “or.”
Consider this illustration: John kills William on a street corner in an urban neighborhood. The initial appearance of John killing William is a straightforward case of personal responsibility on John’s part and personal victimhood on William’s part. But the more we learn about the context surrounding this killing, the more we may see the backgrounds of the two parties (gang loyalties) and their cultural surroundings (drug wars and territorial power struggles), and the more we can appreciate the complexity of the ethical situation. Yes, this is about a murder of one individual by another—personal responsibility—but it is about more than that. It is also about a clash of groups and of social forces beyond those groups.
This suggests that moral agency can involve multi-dimensional or multi-level subjects (and of course multi-dimensional or multi-level recipients as well in the range of moral considerability). Just as individual persons can be the recipients of moral agents in the domain of moral accountability, institutional entities can be recipients as well—can be harmed, coerced, or even destroyed—along with the individual persons that populate them.Footnote 9
It is as if transactions in “moral space” carry with them multiple levels of causality and therefore multiple levels of responsibility—none of which negate the others, but each of which enhances our understanding of the others as we seek solutions and change for the future. In fact, seldom do we find a moral “transaction” between an agent and a recipient (involving the recipient’s freedom or well-being) that does not have an accompanying contextual, multi-level narrative.
Wisdom in the field of business or institutional ethics, then, often consists in appreciating the contextual factors that accompany moral transactions, influencing the agents and recipients, be they individual persons or institutions or even entire social systems. This offers us a more robust understanding of the dynamics of “moral space,”Footnote 10 and it may offer us a more reflective way to develop public sector responses to problems that “present” on one level but are multi-level in their true nature.
3.2.6 Two Varieties of Institutional Insight
There are two ways in which the institutional insight can manifest itself in the thinking of business leaders, and both relate to the common good. First, and most obviously, in the context of moral recipients, i.e., those affected by business decision making. The usual stakeholders whose freedom or well-being are under scrutiny include individuals, organized groups (e.g., labor unions), and occasionally whole societies (e.g., the water supply of a nation or the global climate). Recipients are those whose freedom or well-being deserve consideration. I have referred to limiting stakeholder thinking because of a too-narrow field of ethical awareness as “teleopathy” or “channelized attention.”
Two such “narrowings of ethical attention” involve (a) consideration for non-human beings, and (b) consideration for institutions or corporations themselves.
I have used the phrase “moral consideration” (or the phrase “moral considerability”) deliberately to signal a level of moral awareness and concern that may or may not rise to the level of attributing moral rights to the recipient in question (Goodpaster 1978). Debates about animal rights can be spirited, but we need not take a position in those debates to accord to non-human living creatures some level of moral consideration. It seems clear to most of us that animals are part of the ecosystem that we inhabit and that we have certain stewardship responsibilities toward them. Stakeholder thinking as it is conventionally deployed, especially in business ethics, often excludes animals as a category deserving consideration alongside employees, consumers, suppliers, and shareholders. But while it is frequently true that considerations about animal rights and ecological awareness can enter into stakeholder thinking as concern for future generations, it is not obvious that all of our stewardship responsibilities can be translated in this way.
Another context in which moral considerability can be overlooked by stakeholder thinking relates to our conduct toward corporations themselves. Much of business ethics, appropriately, attends to the responsibilities of corporations toward those parties affected by corporate decision making. But corporations themselves are often affected parties (stakeholders, moral recipients), for example, in legal and judicial contexts as well as contexts like boycotts or labor strikes involving public displays of disapproval.Footnote 11
The point to be made here in connection with moral recipients is not that corporations are identical in all respects with human beings as bearers of rights. There is much room for debate over the moral “personhood” of organizations. What is reasonable, however, is that stakeholder thinking needs to accord moral consideration to organizations, just as it needs to accord moral consideration to non-human living creatures.
The second way the institutional insight can manifest itself in the thinking of business leaders in relation to the common good has to do with collaboration or partnership with institutions from other sectors (political, moral-cultural). This kind of institutional thinking relates to the corporation as a moral agent. Occasionally, business leaders will insist that their organizations cannot (and so should not) see themselves as responsible for achieving objectives that are “beyond their spans of control.” A long-defended maxim in moral philosophy is that “ought” implies “can.” However, environmental preservation, public health, minimization of poverty, a culture of respect for life and liberty—these are aspirations for which no institution in any single sector (economic, political, civic) can be asked to take full responsibility. Achieving these aspirations would require the collaboration of institutions across sectors, but does this mean that business organizations have no responsibility at all in such situations? I think not. I have suggested that this means that they have partial responsibility (contingent responsibility) but not complete responsibility for the result. Business is responsible to the common good but not completely for it. Peter Drucker once observed:
We have to think through how to balance two apparently contradictory requirements. Organizations must competently perform the one social function for the sake of which they exist—the school to teach, the hospital to cure the sick, and the business to produce goods, services, or the capital to provide for the risks of the future. They can do so only if they single-mindedly concentrate on their specialized mission. But there is also society’s need for these organizations to take social responsibility—to work on the problems and challenges of the community. (Drucker 1994)
Sometimes business leaders can overlook business responsibilities for collaborative action—at least when institutions in other sectors are willing to collaborate. Businesses must do their part in support of the common good—both as collaborators and as agents acting directly within their spans of control.Footnote 12 They must develop a kind of “peripheral moral vision” and a willingness to work with other institutions to achieve what can only be accomplished together. In the words of Marvin Brown, but with application beyond public sector institutions to include families, churches, schools, and NGOs:
[T]he conversations between corporations and government agencies can develop new possibilities for the enhancement of human flourishing in civic life. Corporations cannot facilitate the flourishing by themselves. They need public corporations and government agencies, just as public corporations and government agencies need them. For these conversations to have integrity, each participant needs to cooperate with the other, guided by the mission of the city and the dynamics of civic life.Footnote 13 (Brown 2005, p. 159)
In summary, the grammar of stakeholders can be liberating, but it can also blind companies by shaping their ethical awareness in advance and inhibiting moral imagination—an imagination that sees more deeply the opportunities among social sectors (agency) and between companies and their stakeholders (fiduciary obligations and non-fiduciary obligations).
In the present context, the “neighbor” can be either a collaborating moral agent or an overlooked moral recipient.Footnote 14 Figure 3.4 depicts the two possible manifestations (arrows) of the institutional insight in the thinking of business leaders.
3.3 Leadership and the Institutional Insight
Let me gather up the several strands of reflection in this chapter surrounding the Principle of Moral Projection and the institutional insight. The Principle of Moral Projection represents an important analogical application of personal moral attributes to organizational actors (and even to entire socio-economic systems to the extent that they are “managed” in relation to neighboring systems). The implication is that the field of business ethics, in addition to including descriptive, normative, and analytical types of ethical inquiry, also allows for the exploration of these forms of inquiry on multiple levels of moral agency and moral recipiency. The resulting 3x3 “moral space” helps clarify the kinds of questions that research and teaching in the field take: corporate normative obligations, individual descriptive ethical convictions, systemic assumptions about objectivity in ethics, etc.
Moreover, this view of “moral space” in the field of business or organizational ethics also allows (even encourages) us to look closely at relationships among and between levels, e.g., corporate responsibility and individual responsibility. We may discover that both corporate and individual responsibility are not mutually exclusive in most cases—and that often a full appreciation of the ethical dynamics of a situation on one level may call for a contextual appreciation of the situation on several levels.
All this being said, the institutional insight takes the Principle of Moral Projection a step beyond an analogical attribution from persons to organizations. It offers a straightforward rationale for the normative expectations that we have of the modern institution of business within the economic sector (in contrast to the moral-cultural and political sectors) described by Michael Novak. The central insight here is that business leaders need to cultivate a dual awareness or dual vision—in the foreground, toward the needs of the specific business at hand (e.g., automobiles, household goods, nutritious foods), and in the background, toward the wellbeing of humankind, i.e., the common good.Footnote 15
In the next chapter, I expand on the meaning of human well-being and the common good under the title “The Common Good and the Anthropological Insight.”
There are other questions about the domain of moral accountability, of course, including whether it could ever be occupied by artificially intelligent machines or automata that are sufficiently sophisticated in rational decision making. This question will not be treated in this book but deserves careful attention.
Aquinas was primarily interested in predications of human-like qualities of God, or God-like qualities of humans, in order to be able to say that, e.g., “goodness” and “wisdom” were not identical (univocal) when applied to both, but neither were they completely equivocal. They were somewhat similar, analogical, in their application to humans and to God, thus permitting some degree of human knowledge of God.
See Appendix 2c. Also see Donaldson & Walsh (2015).
The principal symptoms of teleopathy are fixation, rationalization, and detachment. Avoiding teleopathy as an occupational hazard of business life is no small challenge. See Chap. 1 in Goodpaster’s Conscience and Corporate Culture (2007) as well as the teleopathy entry in the Encyclopedia of Management (1997).
Or since 1991, “wingmate” when women entered the air combat forces.
Peter Drucker seems to have puzzled over the institutional insight when he wrote: “We have to think through how to balance two apparently contradictory requirements. Organizations must competently perform the one social function for the sake of which they exist—the school to teach, the hospital to cure the sick, and the business to produce goods, services, or the capital to provide for the risks of the future. They can do so only if they single-mindedly concentrate on their specialized mission. But there is also society’s need for these organizations to take social responsibility—to work on the problems and challenges of the community” (1994).
Whether corporations are artificial entities or merely associations of individuals has been debated since Santa Clara (1886), and it makes a difference in thinking about whether and in what ways corporations are responsible. U.S. law treats corporations as legal persons and tends to hold corporations themselves, and not merely the managers and employees who make up the corporation, accountable. In fact, we refer to companies as if they are individual entities, and we speak of corporate responsibility as if it applied to a single entity, even though we cannot actually shake hands with companies or lock them up. If corporations are legal persons, and thus artificial entities, this makes sense. In practice it is often difficult to disaggregate responsibility to individuals in a large firm (Carroll et al. 2012, pp. 43–44).
In 1984, I found language to help articulate the multi-level interdependence of moral responsibility in a newly developing branch of mathematics called fractal geometry. The developer of fractal geometry was a man named Benoit Mandelbrot and he happened to be at Harvard in the 1980s when I was also at the Harvard Business School, so we were able to meet and discuss the possible application of his ideas to the field of business ethics. The insights that I took away from my study of fractal geometry and my discussion with Mandelbrot led to the article in Appendix 2a of this book.
During the past several years, the moral and legal consideration due to business organizations (and in some cases labor organizations) has come under direct scrutiny by the U.S. Supreme Court. Two cases that stand out, of course, are the Citizens United case, in which First Amendment rights of free expression were affirmed in relation to political campaign contributions and the Hobby Lobby case in which the company’s religious liberty was affirmed in its objection to abortifacient coverage of employees under the Affordable Care Act.
In 1991 and again in 2003, the U.S. Congress recognized the moral agency of corporations in its passage and revision of the Federal Sentencing Guidelines for Organizations (FSGO).
As we saw in Chap. 2, Royce’s moral insight (the “realization of one’s neighbor”) implies that conscience does not discriminate in its answer to the question “Who is my neighbor?” It is inclusive rather than marginalizing—and avoids seeing neighbors as “foreign powers.”
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Goodpaster, K.E. (2022). Corporations and the Institutional Insight. In: Times of Insight: Conscience, Corporations, and the Common Good. Issues in Business Ethics(), vol 54. Springer, Cham. https://doi.org/10.1007/978-3-031-09712-6_3
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