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J Bus Ethics (2012) 106:89101 DOI 10.

1007/s10551-011-1051-2

The Firm as a Community of Persons: A Pillar of Humanistic Business Ethos


` nec Mele Dome

Published online: 14 October 2011 Springer Science+Business Media B.V. 2011

Abstract The article starts by arguing that seeing the rm as a mere nexus of contracts or as an abstract entity where different stakeholder interests concur is insufcient for a humanistic business ethos, which entails a complete view of the human being. It seems more appropriate to understand the rm as a human community, a concept which can be found in several sources, including managerial literature, business ethics scholars, and Catholic Social Teaching. In addition, there are also philosophical grounds that support the idea of business as a human community. Extending this concept, and drawing from some Phenomenological-Personalist philosophers, we propose that the rm should be seen as a particular community of persons oriented to providing goods and services efciently and protably. Being a community of persons emphasizes both individuals and the whole, and makes explicit the uniqueness, conscience, free will, dignity, and openness to human ourishing. This requires appropriate communication about and participation in matters which affect peoples life, and makes it essential to cooperate for the common good of the business rm and the society. Keywords Aristotle Business as a community Business enterprise Business ethos Catholic Social Teaching Corporation Firm Personalism

Introduction The concept of business ethos is none too common in either business or business ethics literature. Two exceptions are Woller (1996), who considers that there is a liberal business ethos and Castro (1999) who uses business ethos in the sense of customs and activities around business, although he reduces the meaning of business ethos to making prots without any further consideration. In spite of the scarce use of the term, we suggest that it makes sense to discuss the business ethos underlying any particular way of understanding business. As we try to explain here, business ethos is relevant for a sound understanding of business and also to open horizons for business ethics. Etymologically, ethos, a word coming from Greek, means moral character, nature, disposition, habit, custom.1 The Merriam-Webster dictionary denes ethos as the distinguishing character, sentiment, moral nature, or guiding beliefs of a person, group, or institution.2 Thus, we can talk of business ethos as the guiding ideas and values which provide a distinctive spirit in understanding business. Epistemology, anthropological philosophy, ethics, and esthetics may be relevant disciplines in analyzing ethos. For many decades an economism-based business ethos has been the mainstream in business, and particularly in business schools. Although without actually employing the concept of business ethos, several wellknown scholars (Donaldson 2002; Pfeffer and Fong 2002; Ghoshal 2005; Pfeffer 2005, among others), have criticized
Ethos in Online Etymology Dictionary: www.etymonline.com/ index.php?search=ethos&searchmode=none. 2 http://www.merriam-webster.com/dictionary/ethos.
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(& ) D. Mele IESE Business School, University of Navarra, Pamplona, Spain e-mail: mele@iese.edu

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a vision of business schools dominated by social science and, more specically by economics. Ghoshal (2005) was particularly explicit in pointing out that economic theories dominant in many business schools entailed an ideologybased gloomy vision about people and institutions. These theories assume that human behavior is based on a view of the human individual dened as a rational, self-interested, utility-maximizing homo oeconomicus, and on the idea that the purpose of the rm should be to maximize shareholder value. The view of the human being adopted is a pillar of each business ethos. But there is another pillar on which we will focus: the view of the rm (understood here as synonymous of the corporation or the business enterprise). The economism-based business ethos generally sees the rm as a set of contracts. In contrast, there is a humanist business ethos, which tries to see business enterprises in their human wholeness. Aligned with the challenge for a humanistic manage 2003), the aim of this article is to provide a ment (Mele better understanding of what the business enterprise is by considering its human wholeness. We will proceed as follows. First, we will discuss two current views of the rm, and show the limitations of these. One of these views reduces the rm to a nexus of contracts; another sees the rm as a set of interests of autonomous subjects with a stake in the corporation or rm. Second, we will provide a bibliographical review which shows that the view of the rm as a human community can be found in several sources, including managerial literature, business ethics scholars, and Catholic Social Teaching. Third, we will present some philosophical grounds to support the idea of business as a community. Fourth, drawing from some Phenomenological-Personalist philosophers we will go into the concept of community of persons, suggesting that this concept entails an axiological meaning that ts well with a business enterprise, and becomes a pillar of a humanistic business ethos. Finally, we will explore some of the ethical implications for managing organizations of being a community of persons.

Two Current Views of the Firm The Firm as a Nexus of Contracts There is a view of the rm associated with the idea that the rm is a mere aggregate of individuals united exclusively for reasons of power and interests, through a set of contracts. Hessen, a leading proponent of this position, afrmed: every organization regardless of its legal form or features consists only of individuals () The term

corporation actually means a group of individuals who engage in a particular type of contractual relationship with each other (1979, p. xiii). This way of understanding the rm can be found in the work of the inuential economist Ronald Coase (1937) on the nature of the rm.3 He considered the business rm exclusively from an economic point of view, and therefore as an instrument for economic efciency. According to him, there is a reduction of costs, and therefore more economic efciency when a hierarchical structure and an appropriate organization are used, rather than business being conducted by individuals, who exchange products in the marketplace. Coases theory was extended with Agency Cost Theory (Ross 1973, Jensen and Meckling 1976), which has become very popular in Neoclassical economics, corporate nance, and in business management. In accordance with this theory, within the organization relations are articulated through explicit and implicit contracts between two groups. One of these (principal) engages another group (agent) to perform some activity on their behalf. Management is seen as the agent of those who hold the company stock (stockholders), who are the principal. Other sets of contracts between principals and agents can also be found within the rm. From this position it can be afrmed that the private corporation or rm is simply one form of legal ction which serves as a nexus for contracting relationships. (Jensen and Meckling 1976, p. 311) Written contracts identify mutual duties and responsibilities in a generalized form. This includes an often very unspecic set of duties and rights. Some scholars extend existing contracts in organizations to so-called psychological contracts (Conway and Briner 2005). These refer to informal obligations for the employer and the employee which specify in detail practical aspects of how the work should be done and how it will be compensated. Some authors extend this vision by introducing the idea that people in corporations are linked through social contracts, a concept used in political theory to explain society. This is the case of Keeley (1995), who considered that organizations have social contracts with their employees and with other stakeholders. The view of the rm as a set of contracts is actually a hypothesis for economic purposes and one which is useful for developing theories to understand empirical facts and to make predictions; but it is not what the rm actually is, as we will discuss below.

3 See also Coase (1991a, b), where he explains the meaning and inuence of this seminal article.

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The Firm a Set of Concurrent Interests A different perspective is to assume that corporations are connected networks of stakeholder interests (Freeman and Liedtka 1991, p. 96). From a dynamic perspective, the corporation is then seen as a center of coordination of stakeholder interests, or in Freemans words, a clearinghouse or nexus of activity where stakeholders satisfy their desires. (2000, p. 176) According to Clarkson, another proponent of this view, the corporation itself can be dened as a system of primary stakeholder groups [those who are necessary for the survival of the rm], a complex set of relationships between and among interest groups with different rights, objectives, expectations, and responsibilities. (1995, pp. 196107) Although the stakeholder-interests-view goes beyond the idea that the rm is a mere nexus of contracts, it maintains the idea that the rm is an abstract and ctitious entity, not a real entity.4 Donaldson and Preston connected this view with normative obligations by arguing that stakeholders not only have interests in the affairs of the corporation, but also the interests of all stakeholders have intrinsic value. (1995, p. 81) Understanding the rm as a constellation of interests adds a human aspect to the skeleton of contracts, but it is still insufcient for a whole view of the rm. Corporations are much more than a nexus of contracts or a set of interests, and to see the rm as being articulated by social contracts seems insufcient. Not Only Contracts or Interests Modern psychology has proved the existence of interpersonal and social links and exchanges based on emotions (Lawler and Thye 1999). There are also links based on commitments and moral behaviors. As Solomon wrote, in a corporation, relationships between people, whether of affection, friendship, loyalty, power, position or expertise, dene the organization. Social contract theory only muddles this picture because it suggests, almost always falsely, that the primary relationships involved are predominantly contractual. This is a sure way to misunderstand the notion that corporations are communities. (1994, p. 274) Messick (1998) suggested that people inherently categorize others and act altruistically towards certain people in a given persons in-group. Fort (2000) added that there is an anthropological reason for this grouping tendencya limited human neural ability to process large numbers of relationships. This is an insight which indicates that

altruistic behaviors exist and express human sociability, in the Aristotelian sense. Managerial literature also shows that commitment, loyalty and willingness to cooperate in a common purpose beyond self-interest is something else that can be found in employees, at least in certain organizations. There are even a number of concepts widely used in organizational behavior research which consider bonds between an individual and his or her organization, other than those of contacts and interests. Thus, the concept of organizational commitment, which regards the attachment of employees to the organization and involves economic, sentimental and also normative motives for such attachment (Meyer and Allen 1997); organizational identication, or degree to which an employee experiences a sense of oneness or psychological bonding between themselves and his or her work organization (Rotondi 1975; Reade 2001); and organizational citizenship behavior which has been dened as individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in aggregate promotes the effective functioning of the organization. (Organ 1988, p. 4); that is, a behavior which goes above and beyond the call of duty. Case-studies exist showing this reality, for example Gittell (2003), who focused on Southwest Airlines, a company in which coordination is solidly based on interpersonal trust and mutual adjustment of behavior. Another perspective, which leads to understanding organizations and rms as complex sets of relationships comes from social capital theory (Kogut and Zander 1992, 1995). In organizations a social capital exists which can be dened as a resource reecting the character of social relations within the organization (Leana and Van Buren III 1999, p. 538). This concept, in which trust and cooperation are crucial, seems an appropriate factor to explain several organizational phenomena (Adler and Kwon 2002). Drawing on social capital theory, Nahapiet and Ghoshal (1998) argued that organizations have factors such as stability over time, interdependence, interaction, and closure which help develop high levels of social capital. In light of these contributions, we suggest that considering a business enterprise as a human community is more appropriate than seeing it as a set of contracts or an abstract entity with concurrent interests. In the next section, we will provide a deeper justication for such a proposal.

Business as a Human Community The term community comes from the Latin word communitatem, the roots of which are in communis, meaning common, shared by all or many. In Medieval Latin, communitatem was used concretely in the sense of a body

This is made explicit in Evan and Freeman (1988, p. 151) and Freeman (1997, p. 71).

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of fellows or fellow-townsmen.5 Community is made up of relations or feelings with a sense of fellowship. Although there are dozens of different denitions of community,6 most conventional meanings of community have to do with its etymological roots. Community is understood as a unied body of individuals; people with common interests or living in a particular area or having a common history. A community is also a group of people with common characteristics or beliefs, or who are interconnected, or a group organized around common values and with certain social cohesion. In sociology, the concept of community was introduced nnies in the late by the German sociologist Ferdinand To nineteenth century when considering the young industrial nnies distinguished European society he encountered. To between community (Gemeinschaft) and society (Gesellschaft) (2001/1887), as two sociological concepts with different logical forms, which in essence derive from the substance of their respective relationships. Communities are nnies termed essential will derived the result of what To from blood relations, spatial relations and spiritual relations. Family, a small village, and churches are typically commu nniess sense. In contrast, societies emerged by nities in To will of choice for common interests or to attain specic ends. A large city is a society, as is a large bureaucratic nnies time. factory such as those existing in To nniess original denition, today a comWider than To munity is generally understood as the result of personal and affective stable relationships with reciprocal trust. Communities mature in reciprocal sentiments and in a sense of belonging, moral conscience and willingness to cooperate; individuals focus on the social whole they belong to rather than on their own interest. Within a community people are regulated by common rules and beliefs about what a right behavior is and what responsibilities exist of individuals toward the community. Regarding the rm, three types of sources support the idea that rm is and should be considered as a community: managerial literature, business ethicsmainly scholars within the Aristotelian tradition, and Catholic Social Teaching. We will now review some signicant contributions from these three elds. Managerial Literature Managerial literature often refers to a business rm as an organization, an analysis which only expresses one of its dimensions, or it alternatively considers the two above5 Online Etymology Dictionary: http://www.etymonline.com/index. php?term=community, Accessed June 29, 2010. 6 More than 50 years ago, Hillery (1955, p. 111) found 94 discrete denitions of the term community.

mentioned views based on contracts (particularly the contract between the agent-manager and the principal-owner) or interests. Seeing the business as a community provides a different perspective. Seeing a rm as a community is not very common in managerial literature, since this is generally a descriptive discipline, and examines particular forms of organizations or how a rm is managed or governed in practice. Long ago, however, pioneers of management thought, such as Mary Parker Follett and Chester Barnard highlighted cooperation as being crucial for any business rm; and one might well doubt whether contracts and interests are sufcient to achieve strong cooperation. Follett stressed that the fact of management has seen that an enterprise can be successfully run by securing the co-operation of the workers. (Follett 1940, p. 172, the original writing come from the 1920s) In addition, she suggested changing a management understood as power-over for one conceived as power-with which provided a sense of par and Rosanas 2003). Her ticipation and cooperation (Mele idea of cooperation underlies a type of relationship which is much more than a mere nexus of contracts. Similarly, Chester Barnard (1968/1938) stressed the necessity for cooperation to meet common goals in the rm, although people can have different motives for doing so. Barnard also underlined the theoretical and practical importance of the willingness of persons to contribute efforts to the cooperative system (p. 83). According to this writer, cooperation entails technical aspects and also leadership, as the factor of chief signicance in human cooperation (pp. 258259). Leadership creates faith, which is the catalyst by which the living system of human efforts is enabled to continue its incessant interchanges of energies and satisfactions. (p. 259). No doubt leadership is important in business, but a leadership based only on transactions and interests is quite poor. James MacGregor Burns (1979), from descriptive research on political and organizational leaders, introduced a clear distinction between leadership based on interchange or transactional leadership, and another type of leadership which creates signicant change in the life of people and organizations, and which is now know as transformational leadership. This leadership is based neither on contracts (give and take, in colloquial terms), nor on static interests but in obtaining fellowship and cooperation; it operates through example, articulation of an energizing vision and challenging goals. This latter leadership ts better with the notion of the rm as a community, rather than a society based on a nexus of contracts or a set of interests. Along with leadership, the understanding that companies have an organizational culture entails shared beliefs and values and practices, and not only contracts and interests (Kotter and Heskett 1992; Schein 1997).

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In contrast to the individualistic and collectivistic views of the rm, Ouchi proposed Theory Z, in which the rm is seen as a clan-like relationship among people (1981, with precedents in Ouchi and Jaeger 1978). In line with the Japanese style of management in the Japans successful years of the 1980s, Ouchi focuses on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. Theory Z considers strong links between the rm and its employees as necessary, which is characteristic of the view of business as a community. However, seeing business as a community does not necessarily mean adopting this or any other specic model of management, nor does it mean assuring a job for life. Sampson (1995), without mentioning the concept of community, talked about company man (companyperson we could say now), which once existed in the USA, but no longer does. Company man also includes a view of the rm. It was a different model to the Japanese one, but at one time US rms, as well as European rms, had loyal and committed employees, who felt that their company was a certain source of identity and meaning for him or her. Pfeffer (2006) regretted that, in recent decades, US companies, with noteworthy exceptions, have increasingly lost the sense of community. He observed a tending away from communal and caring relationships towards more arms-length and market-like transactions between organizations and their employees. As a consequence employees have less trust of and psychological attachment to their employers and organizations. Job satisfaction, employee engagement, and trust in management are all low and declining. In contrast with this situation, Pfeffer focused on companies who have arrangements for helping employees in need, offer generous employee benets and assistance, have adopted anti-nepotism policies, have more companysponsored social events, are better at resolving work family issues, and foster long-term employment relations. He added that although there are clearly disadvantages accrued from building a more inclusive relationship with the workforce, some case evidence and theory suggest that organizations that have become more community-like enjoy signicant advantages. The writings of Sampson (1995) and Pfeffer (2006) lead one to think that there are different degrees of intensity in being a community, and even that the sense of community has been lost in some companies. It is not fully clear whether they consider that the business enterprise is a community by naturealthough every rm to differing degreesor being a community is ideal. They present descriptions of companies with a strong sense of community based not only on the unity given by contracts and interests but also on commitment, loyalty and a sense of

belonging, shared beliefs and values, and cooperation towards common goals. There are also companies in which the presence of such elements is very weak. However, these scholars went beyond mere descriptions, and expressed their favor of building companies with a strong sense of community.

Business Ethics Writers Some scholars have pointed out that human relationships are closely related to the efciency of the organization. Solomon stated that what makes a corporation efcient or inefcient is not a series of well-oriented mechanical operations but the working interrelations, the coordination and rivalries, team spirit and morale of many people who work there and are in turn shaped and dened by the corporation. (1992, p. 150) Freeman himself, who, as noted above defended the view of the rm as a center of coordination of stakeholder interests, has more recently considered that the corporation also required motivation by values. Cooperating with stakeholders and motivated by values, business people continuously create new sources of value. (2000, p. 177) Business as community is especially the position of scholars in the Aristotelian tradition. Robert Solomon, for instance, defended with particular emphasis his claim that corporations are communities (1992, pp. 145152; 1994, 2004). According to Solomon relationships between members of the rm make the community, since a community is, rst of all, an open-ended and immensely complex set of relations between members, who may within the context, be called individuals (italics of the author) (1994, p. 277). From this perspective the business springs as a real entity, not only a mere aggregate of individuals, and not a homogeneous body in which the person practically disappears. On the contrary, Solomon (2000) stressed that a corporation is a heterogeneous conglomerate that is bound to be riddled with personality clashes, competing aims and methodologies, cliques and rivalries, and divided loyalties but still presenting unity in its activity. Koehn noted that people become what they are within a community and their moral character is relevant for making contributions to the society or communal enterprises (1995, p. 537). Hartman (1994), going back to Aristotle, suggested that the organization should be a good community in the sense that, among other things, it permits the disaffected to exit, encourages reective consideration of morality and the good life, and creates appropriate loyalty. Solomon (1994) applauded the idea that morality and virtues are essential in corporations, although he disagreed with Hartman on other points.

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Business as a Community in Catholic Social Teaching Catholic Social Teaching (see a compendium in PCJP 2004) includes relevant insights on business ethics, including the consideration of the rm. A recurring idea in such teaching is that of the business rm as a community, and sometimes as a community of persons. This thought explicitly appeared rstly in 1961 the Encyclical Mater et Magistra by Pope John XXIII. He afrmed that the ideal form of the enterprise is modeled on the basis of a community of persons working together for the advancement of their mutual interests in accordance with the principles of justice and other Christian teachings. (John XXIII 1961, # 142) In these words, being a community has a dynamic and normative sense, as ideal. It is taken for granted that in the rm there are interests; and this is a minimum of community (a community of interests) but, if my interpretation is correct, this proposes that any rm will become a more human community by adding moral bonds based on justice and other ethical values. This normative sense is made clearer in another paragraph of this document, where one can read: Every effort must be made to ensure that the enterprise is indeed a true human community, concerned about the needs, the activities and the standing of each of its members. (John XXIII 1961, # 91) This entails certain ethical requirements, to which we will return toward the end of this article. The Second Vatican Council, in one of its most famous documents (Gaudium et spes, # 68), emphasized the condition of persons of those who join to contribute to the rms goals: In economic enterprises it is persons who are joined together, that is, free and independent human beings created to the image of God. This conception is far from one which sees the rm as a set of impersonal elements who merely join forces to produce or as a simple contract through which workers exchange labor for wages. On his part, Pope John Paul II, considered the fact that people work with each other, sharing in a community of work (1991, # 32, italics in the original) and stressed the business rm as a society of persons in contrast with the vision of a mere society of capital goods: A business he said cannot be considered only as a society of capital goods; it is also a society of persons in which people participate in different ways and with specic responsibilities, whether they supply the capital necessary for the companys activities or take part in such activities through their labour. (1991, # 43) Even more explicitly, he refers to the rm as a community of persons in talking about the purpose of the rm. According to Pope John Paul II, the purpose of a business rm is not simply to make a prot, but is to be found in its very existence as a community of persons who in various ways are endeavouring to

satisfy their basic needs, and who form a particular group at the service of the whole of society. (1991, # 35) In conclusion, according to several sources a business enterprise is a community and there are some associated ethical requirements. The question which arises is what philosophical arguments can give rational support to this vision, which is the topic of the next section.

Being a Community: Philosophical Grounds More than 2,400 years ago, Aristotle stated that the human on, this is, a political (or being is by nature a politikon zo social) animal, in a sense quite different from a bee or any other gregarious animal (Politics, I, 2). Aristotle observed that human beings have a tendency or disposition to associate with their fellows and, in fact, they live in community. He explicitly stated that among all men [for human beings] there is a natural impulse towards this kind of association (Politics, I, 2). This tendency is usually called sociability. Sociability entails that humans have a capacity for empathizing with others and a willingness to cooperate with, and to help people in need. Exchanges and their corresponding contracts are not excluded from sociability. On the contrary, sociability is a pre-condition for trade-offs and for making contracts, but sociability is much more than having the capability for contractual exchanges. Sociability also leads to a sense of reciprocity and permits the developing of associations to satisfy human needs. In the Aristotelian tradition, sociability explains the origin of society and communities, where people satisfy a great variety of human needs, including human ourishing. Aristotle, in his Politics, after observing historical facts, explained that the oldest and most basic human community is the family. Villages (or towns) derived from the union of several families. These can satisfy different and wider needs than the family can. The citystate (polis) is formed by several towns. In Aristotles words, Every state is a community of some kind, and every community is established with a view to some good; for mankind always acts in order to obtain that which they think good (Politics, I, 1). In the pursuit of the human good, ethics and politics are co-joined, which elevates political science (containing the theory of economics) to a position of the highest importance. In Aristotles words, in all sciences and arts the end is a good; and the greatest good and in the highest degree a good in the most authoritative of all this is the political science of which the good is justice, in other words, the common interest. (Politics, III, 12) Nowadays, we could extend this vision to any association for different purposes established by people (civil society) or by public authorities. Supra-state communities and business rms, among

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many other associations, also have their anthropological base in human sociability. Drawing from Aristotle, one can afrm that the social order is not based on social contracts, as the individualistic view of the society suggests, but on the existence of human communities the roots of which are in human sociability. But what kinds of relationship build a community? Finnis, after afrming that a community is a form of unifying relationship between human beings (1980, p. 136), distinguished four basic ways in which unifying relationships can take place: (1) physical unity, (2) unity for shared knowledge, (3) cultural unity, and (4) unity for common action. Applying this classication to a rm, the rstphysical unityis extrinsic to the rm, but the three other ways are much more common in business. Within rms people will share known-how, knowledge regarding corporate history and ideals, goals, objectives, proceeds, descriptions, explanations, and arguments related to the organization; messages transmitted by decisions and practices, and so on. Obviously, not everybody shares the same knowledge but everyone in a rm has some common knowledge, which gives certain unity. Cultural unity can also be found in many rms in which people share some values and internalize some basic convictions. In addition, people will share a language which permits communication and even, to some extent, the possession of a symbolic language, which permits them to decode formalized signs, expressions, symbols, and attitudes. Finally, people in organizations are united by actions connected with the actions of other people within the organization. In a certain sense, people participate in a common action, although they can have different motives for doing so and the subsequent relationships can also differ. Complementary to this perspective is another which proposes three types or categories of unifying relationships. These can be found within a business organization or even in a working team: (1) utilitarian relationships based on utilitarian interests, (2) emotional relationships, based on enjoyment, and (3) and virtuous relationship, based on moral motives.7 Imagine, for instance, a business project. People of various backgrounds have a common interest in working together because, in this way, the interests of each party in achieving results will be satised. In this case, the source for the unifying relationship is based on utilitarian interests. They are utilitarian relationships.

It may also be enjoyment of working with people who make the work particularly pleasant, or because of the human climate around the project. Here the union is produced by sharing a good time. These kinds of relationships are found in certain organizations or in working teams where people are happy to carry out their activity in a pleasant environment or to work with peers with whom they get on. These are emotional relationships. Finally, there are relationships motivated by goodwill and willingness to help others or to cooperate, in some way, with a good cause. This is the case when people are aware that their work or collaboration is making a positive contribution to human needs. These are virtuous relationships. On her part, Edith Stein, a pupil of Edmund Husserl, the founder of the phenomenology school of thought,8 argued that the human condition is not isolated individuality, but inter-human sociability. Man nds himself in community with others (1998, p. 250). For her, as well as for Husserl, you are another I located over there. Community is based on inter-subjective relations and empathy becomes the foundation of such relations (Stein 1989). Stein gave two denitions of community, one in a broad sense and other in a strict sense. In a broad sense, she stated that community can be talked about where there are not only mutual relationships between persons but further, where these persons form an unity and shape a we (1998, p. 248). In a strict sense, a community entails a permanent community of life between persons that affects them in the depth of their being and confers on them a lasting stamp. (1998, p. 249). There are ephemeral communities, such as an occasional meeting. In contrast, a stable group of friends or any association is a substantive community (a community in the strict sense). Accordingly, there are types of communities as diverse as families, churches or cultural associations, and different degrees of involvement within the same community. Accepting this denition, a business rm would normally be considered as a substantive community, although if you look at how the persons involved are affected in the depth of their being by working in the rm, then the rm can be seen as a strong or a weak community, probably depending on several factors, including organization size, contacts, types of links, etc. Within a large corporation one could consider that departments, business unities, project teams, etc., are small communities, maybe with strong intersubjective relationships with larger communities, and these within the community of the whole corporation.
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Similarly, this approach can be applied to the practice of , 2010). As Finnis (1980) noted, these three kinds networking (Mele of relationship can already be found in Aristotles treatise on friendship, elaborated after a careful observation of reality in Nicomachean Ethics, chap. VIII.

Explained in a very simple way, the phenomenological method introduced by Edmund Husserl focuses purely on phenomena and on describing them. It consists of recognizing the presence of an object and elucidating its meaning through intuition.

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Another relevant philosophical contribution in line with the phenomenological-personalist approach can be found in Wojtyla (1979, 1993), who developed a creative and original line of thought.9 Although not easy to understand for a non-specialist in philosophy, we will try to present some elements of his approach which might serve our purpose. Similar to others, Wojtyla considered the relation between I and you as the precedent to explain human communities. The relationship I-you refers more directly to the relationship between two persons (inter-subjectivity) who possess full subjective personalities and interests, while the multiplicity of the we, without eliminating the full subjective personalities and interests of I and you refers in a more direct manner to the pursuit of a common goal. According to Wojtyla a community is the unity of a multiplicity of subjects. This unity arises as a relationship or as a sum of relationships between individuals. In ontological terms, these individuals are substantial subjects while the unity is accidental. The we involves neither diminishing nor distorting the I. However, this unity gives sense to talking about people as members belonging to the community created by such unity. Many corporations are aware of how important it is that employees have a sense of belonging to the corporation and internalize appropriate shared attitudes (Riketta and Landerer 2005). Every newcomer socializes with other members of the organization, and goes through the forementioned stages, one by one, at least to the third. The fourth will be completed by some people, at least partially.

The Firm as a Community of Persons: Its Axiological Meaning Adding of persons to the concept of community can seem superuous if we are talking of human communities; but its not. First of all, it helps us avoid a collectivist view of the rm in which the individual practically disappears. Person entails both an individual and a relational meaning (Spaemann 2006). The word person, generally considered as synonymous of human being, comes from the Latin word persona (probably borrowed from Etruscan phersu sopon in Greek, a term origimask10). It translates pro nally used in the ancient theater denoting a mask or face.
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He enriched the philosophical anthropology learned from Aquinas with insights taken from the phenomenology of the philosopher Max Scheller. 10 Person in Online Etymology Dictionary: http://www.etym online.com/index.php?search=persona&searchmode=none. Accessed on January 18, 2011.

This has a connotation of individuality, uniqueness, and possession of intimacy. A person is someone possessing self-conscience, self-determination, and consequently, a subject of moral acts, and endowed with intrinsic dignity (Crosby 1996; see also Ferrer 2002). Spaemann (2006), who has studied the concept of person in depth, agreed in that person denotes dignity (see also Zaborowski 2010). Following the phenomenological method, something else can be added. Wojtyla (1979, 1993) by looking in depth at self-determination in the acting person, argues that human action is not only aimed at external good but is also oriented toward the person him or herself. A person transcends him or herself in the very action of making free decisions regarding a certain action and gives or denies his or her own assent to it. Each action is not a simple deed, but includes a moral judgment by which the person determines him or herself as a human being. The person who acts realizes that his or her action not only brings about external outcomes, but is also an act of self-determination and self-realization of the acting person. Certain actions contribute to human ourishing while others erode the humanity of the person who acts. Our conscience shows this as an internal experience of humans. In this way, a person experiences the value of his or her action not by results but by its human or personalistic characteristics, different to an action performed by machines or animals. This is the personalistic value of the human action, which derives from the fact that it is performed by someone with freedom and capacity of self-realization. The personalistic value of an action is previous to the ethical value of this action. While the former is related with the fact that the subject of the action is a person, a rational, and free subject; the latter is evaluated by ethical norms. Wojtyla identies the personalistic value inherent in every human action when this is performed working with others. When a human action is preformed together with another or others, the action has an intrinsic social or communitarian dimension and communities emerge when people are working together. Acting with others requires the respecting of the personalistic value of the action in oneself and in others. Being aware of you as another I, one is participating in the very humanity of other people, and dealing with others by respecting and caring for their humanity leads to self-realization. Furthermore, participating in the humanity of others is the base on which an authentic community is built. The word participation is used by Wojtyla (1979, 1993) in a different way than that common in management. In his approach, participation indicates the way in which, in common actions, the person protects the personalistic value of his or her own action and participates together with another in the realization of the common activity and its outcomes respecting you as another I.

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Here, the idea of participation is not a form of management, as usually appears in managerial literature, but a philosophical concept with a normative signicance. Participating in the humanity of others, and consequently recognizing their dignity, respecting their rights and taking care of their real needs requires a sort of organization or living together in which the person is respected and is able to experience every act of the collectivity as his or her own. This happens when the choices of those who lead are directed towards the common good and are made with the responsible involvement of all members of the organization. Individual interests should be subordinated to the common good. Such subordination, however, must not diminish or destroy the person. Being aware of the transcendence of the person in the action, one should engage him or herself in the task of recognizing the same value in other persons. This permits Wojtyla to reformulate the well-known Kantian categorical imperative, in its second enunciation, regarding human dignity. What he called personalistic norm states that whenever a person is the object of your activity, remember that you must not treat that person as only the means to an end, as a instrument, but must allow for the fact that he or she, too, has, or at least should have, distinct personal ends. (Wojtyla 1981, p. 28) It can be also called 2009). Personalist Principle (Mele This vision goes beyond both sociological determinism, which attempts to explain the persons action through a set of social relations in which person is only a cog within a mechanism, and the other position in which individuals are crucial in explaining human actions, but the inter-subjective dimension present in any action is seen as irrelevant, or even as something added from outside (Buttiglione 1997, p. 168ff). Considering the rm as community of persons provides, therefore, an anthropological and axiological meaning richer than saying that the rm is merely a community. Community of persons is a concept of great human richness and also comprehensive of the complexity of the links which maintain people united within a business enterprise. Thus, it should be included within a humanistic business ethos, since it expresses a more complete humanity. However, being a community of persons is not exclusive to the rm. Stronger arguments could be found to see the family, the school and others institutions as communities of persons. Consequently, other dimensions should be considered for a sound understanding of the rm. Business enterprises, rst of all, are involved in trading and in creating economic value and being competitive within the market system. However, saying that a business enterprise is only a productive unity or an instrument for prots is not sufcient either. Business enterprises are also networks of

relationships, social actors within the society, who may also be political actors, apart from being a community of persons. A simple way to express what a business enterprise is could be that the business enterprise is a community of persons based on cooperative activity to provide goods and services in an efcient, competitive and protable way.

Ethical Implications of Being a Community of Persons Summarizing, when we afrm that a rm is a community of persons, we emphasize both individuals and the whole, making explicit the uniqueness, conscience, free will, dignity, and openness to self-realization of each one who forms the community. This entails ethical requirements toward persons because they deserve respect, benevolence, 2009). In addition, the idea of community, and care (Mele and therefore a community of persons, involves a teleological meaning. Solomon dealt with this point in several writings. Following Alasdair MacIntyre (1984/1981), and ultimately Aristotle, he stated that a community presumes some higher purpose, a teleology, which includes the cultivation and improvement (by whatever standards) of its members as well as its own perpetuation. (1994, p. 275). Such a teleological perspective sheds some light on business ethics within the organization. In business ethicswrote Solomon (1992, p. 148), the corporation becomes ones immediate community () A corporation that encourages mutual cooperation and encourages individual excellence as an essential part of teamwork is very different to a corporation which incites either/or competition, antagonism, and continuous jostling for status and recognition. Likewise, the concept of community entails an understanding of societal business ethics. For Aristotle, small communities must contribute to the common good of the larger communities to which they belong: if all communities aim at some good, the state or political community, which is the highest of all, and which embraces all the rest, aims at good in a greater degree than any other, and at the highest good. (Politics I, 1) Solomon applied this view to societal business ethics. He stated that the rst principle of business ethics is that the corporation is itself a citizen, a member of the larger community, and inconceivable without it. (1992, p. 148) Saying that business is a community within a large community brings about a view which is different to a voluntaristic assumption of corporate social responsibilities. Solomon criticized the classic arguments for the social responsibility of business by afrming that they fall into the trap of beginning with the assumption of the corporation as an autonomous, independent entity, which then needs to consider its obligations to the surrounding community. But corporations, like individuals, are part and

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parcel of the community that created them, and the responsibilities that they bear are not the products of argument or implicit contracts but intrinsic to their very existence as social entities. (1992, p. 149) In line with this view of the corporation, Fort (1996) defended the idea that a business can be helpfully conceived of as a mediating institution, which serves a vital function in a free society to provide social justice out of an expanded civil society and provides a framework for a ourishing free market. Hartman (1994), as noted above, stressed that a good community permits the disaffected to exit, encourages reective consideration of morality and the good life, and creates appropriate loyalty. Seeing the rm as a community of persons allows us to add some other business ethics requirements associated with this notion, apart from those presented by Solomon and Hartman. Although appropriate development of this point would require a whole paper, we will proceed here to briey explore such ethical requirements. If the rm is a community of persons, managers should pay attention to groups and individuals who are part of this community. Some stakeholders (employees, managers, committed stockholders) are at the core of this community, while others (habitual suppliers and clients) are closely related. This is an argument as to why managers bear responsibility for these stakeholders, and should treat them with respect and a sense of cooperative reciprocity. The dignity and uniqueness of each person requires not only respecting the human rights associated with their human dignity, and not dealing with them as mere means, but also the consideration of personal conditions, activities, real needs and standing of each person, even adopting an 2009). Respect for attitude of benevolence and care (Mele personal diversity and spirituality at the workplace is also a manifestation of consideration to each person. As noted above, Pfeffer mentioned a number of issues he perceived as expression of a sense of community: helping employees in need, offering generous employee benets and assistance, solving workfamily issues, and fostering a more inclusive relationship with the workforce and long-term employment relations, among others. They seem good illustrative examples, although specic policies and personal practices will depend on the given situation, each of which should be considered with practical wisdom. Acting with a sense of benevolence (wishing do good) and care does not mean lack of attention to provide goods and services in an efcient, competitive, and protable way. This can bring about situations of tension between people and prots, which will require an appropriate balance, although without violating human dignity and human rights. In addition, and facing such tension, one should not forget that acting with benevolence and care has benecial consequences in terms of trust, loyalty, and willingness to cooperate on the part of people in the rm.

Another ethical requirement which generally converges with good managerial practice is to provide communication on and participation in matters which affect peoples life. People tend to want to know what is happening in organizations in which they are involved. Communication gives knowledge of the whole and fosters a sense of belonging. Knowledge-sharing is a form and resource of social capital (Rheingold 2002). Human dignity requires that such communication is based on trust and relevant information and on trustworthiness. A moral and trustworthy communication builds a community (Etzioni 2001). As noted above, following Wojtyla, a person within a community participates together with others in the realization of the common activity. But participation also means taking part in the community or in the decisionmaking on matter which affect ones own life. Through appropriate formulas within each situation, a community of persons requires participation in this latter activity. Participation within the organization constitutes respect for the freedom of corporate employees (Brenkert 1992), but also expresses their condition as a person, one who can never be treated as a passive or unconscious element within the organization. Last, but not least, a community has common goals which are in benet of the whole community. They become common good. Cooperating to achieve them is an ethical requirement of each member of the community. Managers should foster cooperation in common goals within the organization. This is an essential responsibility of the executive within an organization (Barnard 1968/1938). In a community of persons, contractual agreements and the ethical requirement of honoring them are not eliminated, but relationships are not only contractual, and ethical requirements go beyond contractual duties. In communities of persons, the stress should be put on developing good faith and commitment towards the common good and, in this way, on fostering human ourishing.

Conclusion Several arguments presented here suggest that understanding rms as human communities is more appropriate than seeing them as a nexus of contracts or a set of interests, as common models generally assume. Firms contain multitudes of unifying relationships, and the contractual relationship and the satisfaction of a set of interests are only some of these. Thus, we have tried to show that considering rms as human communities is more appropriate than seeing them as an aggregate of individuals united exclusively by contracts or interests. This has strong support in human sociability. In addition, we have suggested extending the notion of human community to a

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99 Aristotle. (1925). The Nicomachean Ethics (D. Ross, Trans.). Oxford: Oxford University Press. Aristotle. (1981). The Politics (T. A. Sinclair & T. J. Saunders, Trans.). London: Penguin. Barnard, C. (1968/1938). The Functions of the Executive. Introduction of K. Andrews London: Oxford University Press. Brenkert, G. G. (1992). Freedom, participation and corporations: The issue of corporate (economic) democracy. Business Ethics Quarterly, 2(3), 251269. Burns, J. M. (1979). Leadership. New York: Harper Torchbooks. Buttiglione, R. (1997). Karol Wojtyla: The thought of the man who became Pope John Paul II (Foreword by M. Novak. P. Guietti & F. Murphy, Trans.). Grand Rapids, MI: WmB Eerdmans Publishers. Castro, B. (1999). Faust and the ethos of business: A report from Grand Rapids, Ciudad Juarez, and Muskegon. Journal of Business Ethics, 19/1(2), 181191. Clarkson, M. B. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 92, 92117. Coase, R. H. (1937). The nature of the rm. Economica 4, 386405 (Reprinted in The nature of the rm: Origins, evolution, and development: 19611974, by O. E. Williamson & S. G. Winter, Eds., 1991, New York: Oxford University Press). Coase, R. H. (1991a). The nature of the rm: Meaning. In O. E. Williamson & S. G. Winter (Eds.), The nature of the rm: Origins evolution and development (pp. 4860). New York: Oxford University Press. Coase, R. H. (1991b). The nature of the rm: Inuence. In O. E. Williamson & S. G. Winter (Eds.), The nature of the rm: Origins evolution and development (pp. 6174). New York: Oxford University Press. Conway, N., & Briner, R. B. (2005). Understanding psychological contracts at work: A critical evaluation of theory and research. Oxford: Oxford University Press. Crosby, J. F. (1996). The selfhood of the human person. Washington: Catholic University of America Press. Donaldson, L. (2002). Damned by our own theories: Contradictions between theories and management education. Academy of Management Learning & Education, 1, 96106. Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 6591. Etzioni, A. (2001). The monochrome society. Princeton, NJ: Princeton University Press. Evan, W. M., & Freeman, R. E. (1988). A stakeholder theory of the modern corporation: Kantian Capitalism. In T. Beauchamp & N. Bowie (Eds.), Ethical theory and business (3rd ed., pp. 145154). Englewood Cliffs: Prentice Hall. signica ser persona?. Madrid: Palabra. Ferrer, U. (2002). Que Finnis, J. (1980). Natural law and natural rights. Oxford: Clarendon Press. Follett, M. P. (1940). Dynamic administration. The Collected Papers of Mary Parker Follett, ed. by H. C. Metcalf y L. Urwick. New York, London: Harper & Brothers. Fort, T. L. (1996). Business as mediating institutions. Business Ethics Quarterly, 6(2), 149164. Fort, T. (2000). On social psychology, business ethics, and corporate governance. Business Ethics Quarterly, 10(3), 725733. Freeman, R. E. (1997). A stakeholder theory of the modern corporation. In T. L. Beauchamp & N. E. Bowie (Eds.), Ethical theory and business (5th ed., pp. 6676). Englewood Cliffs: Prentice Hall. Freeman, R. E. (2000). Business ethics at the Millennium. Business Ethics Quarterly, 10(1), 169180.

more explicit notion of community of persons, which is also more meaningful in axiological terms. Being a community of persons emphasizes both individuals and the whole and makes explicit the uniqueness, conscience, free will, dignity, and openness to selfrealization and human ourishing of each one who form the community. This requires an appropriate communication and participation in matters which affect peoples own lives, and the necessity of fostering good will and commitment towards the common good of the organization and the society. This challenges managers to change their commonly accepted role of being the builder of systems, structures, and strategy, to being the facilitator of goodwill in the rms stakeholder relationships. Being a community of persons is a pillar of a managerial ethos which stimulates the managerial role to favor the development of people within the community. This contrasts with the economism-based managerial ethos, which is often limited to preventing possible employee misbehaviors. The control mechanisms associated with this latter ethos neither stimulate ethics in the organization nor the personal development of its members. A managers ability to build communities is signicantly constrained by prevailing assumptions of an economismbased managerial ethos. Using economic models, as Rocha and Ghoshal (2006) suggested, human intentionality such as self-interest and opportunism leads to a restrictive form of social exchange. From this under-socialized perspective, relationships between people are seen as primarily instrumental, self-interest being the dominant intention. Contrastingly, in humanistic-based management models which take the rm as a community of persons, persons are seen as conscious and free beings who make decisions on their own and who are owners of their own destiny. Since a community of person is continuously under construction, managers also have the challenge of building such communities. The type of managerial behavior necessary to develop a community of persons falls outside any job description or any mandatory rule or procedure. It is difcult to imagine that management can construct social relations based on goodwill when the usual practices are based on protecting the organization from its own employees, using hierarchical authority to prevent opportunistic behavior, or rewarding and punishing employees to guarantee that everyone does what they are expected to do (Adler and Kwon 2002).

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