Economists: Big Business Needs Aristotelian Virtue

LiveScience Staff

Date: 14 April 2008 Time: 08:00 PM ET

Big businesses succeeds by offering better or cheaper products and services and, ultimately, by pleasing shareholders. Wouldn't it by nice if they could operate with good ol' Aristotelian virtue and still make a living?

It might work, a pair of economists say.

At a time when the subprime mortgage problem and a global credit crunch have eroded consumer confidence in the business world, the researchers figure conventional models of excellence are too narrow and for today's global economy and the problems of tomorrow.

The idea, from Alistair Anderson of Robert Gordon University in the UK and Carter Crockett Westmont College in California, is based on the ancient principle of virtue, dating back to Aristotle. They think a little do-gooding could allow underachieving businesses to excel without moral compromise.

Aristotle emphasized character over consequences.

Today, power and influence of business in society is greater than ever before, Anderson and Crockett contend. Yet business is often at odds with the rest of society. "They seem to pursue different ideals in different ways and for different reasons," the researchers write in the International Journal of Business Excellence.

Conventional methods of assessing business excellence are limited in scope, the researchers say, and they can't cope with emerging socioeconomic priorities in the light of globalization, rising populations, energy and water demands, and climate change. The conventional tools to measure performance are useful but focus on a business internally and with shareholder interests in mind. Managers' pay is linked to successes that are all tied to the bottom line of share value.

While old ways drove impressive growth, global issues such as climate change, poverty and the looming energy crisis, will not be addressed through this approach to business, they argue. "We, in contrast, try to set out a broader framework that encompasses, through notions of purpose, richer, fuller and more complete aspirations of excellence."

To fix the division between business and society, Anderson and Crockett say excellence should be seen not as a purely profit-led aspiration, but by incorporating virtue.

"Excellence itself is worth striving for," they conclude, and companies that do so "are more likely to be able to face the competing demands of today, as well as those of the future, by gleaning from this wisdom of the past.