Handout 04 Managerial Ethics XLRI 2015

The Ethics of Executive Virtue

Ozzie Mascarenhas S.J., Ph.D.
June 15, 2015

Case 4.1: Panama Nature Fresh Pvt. Ltd.

India, a developing nation, is primarily an agricultural country. It ranks second worldwide in farm output.
Agriculture (along with allied sectors like fisheries and forests) accounts for approximately 16.6 % of the GDP and
about 50% of the total workforce. It is demographically the broadest economic sector and plays a significant role in
the overall socio-economic fabric of India.
Panama Nature Fresh Pvt. Ltd was founded by Mr. Vivek Raj (Founder & Chairman of the board, Panama
Corporation Ltd).
He is a pioneer in mineral trading, mining and organic farming that works with passion to
discover and transform resources and essential commodity to peoples daily lives. His areas of industrial focus are:
Trading of minerals, Organic farming and very soon diversifying into the glamour and entertainment industry. The
company is headquartered in the World's financial capital New York, USA Regional Offices in London and India, and
in India, the company operates from Mangalore. In 2013, the company was formally incorporated as Panama Nature
Fresh Pvt. Ltd. Currently, the company is Indias largest ginger farming company. It also grows potato, lettuce,
pomegranate, tomato, green peas and green beans. Its future five year plans include: increasing farming area to
12000 hectares, and produce some 48 farm products in Asia
Panama Nature Fresh Pvt. Ltd. was formally incorporated in India in 2013 with a mission of revolutionizing
farming in India. The company has been trading in agricultural produce as early as 2011. But it soon encountered
difficulties in procuring the produce from the farmers. This was primarily because the farmer producers were badly
organized and/or were much controlled and exploited by crony middlemen. Hence the company decided to
revolutionize this collection-distribution sector and thereby empower the bondaged farmers. To this effect, Panama
Nature Fresh Pvt. Ltd. introduced professionalism and scientific knowhow to every activity of the value chain of
farming: e.g., furrowing, fertilizing, seeding, irrigating, disinfecting, harvesting, and post-harvest handling, trying to
render the entire agricultural value chain not only expeditious but also hygienic. The company collected the farm
produce directly from the farms and transported it to the markets via climate controlled trucks, thereby reducing
wastage by nearly 48%. The saved benefits were transferred to the farmers who were so long deprived of them.
Moreover, Panama Nature Fresh Pvt. Ltd. assured that the produce met with every international standard in vogue
both with respect to farming, harvesting, and post-harvest handling of produce.
Revolutionizing farming also meant using all high-end farming equipment and products from internationally
reputed companies such as John Deere tractors and harvesters, Mahindra Tractors, Kirloskar power generators, CRI
Pumps, Honda support generators for bore wells, Aspee medicine sprayers, Jain Pipes from Jain Irrigation Systems
Ltd. Currently, the company has 630 full time workers. In this connection, Panama Nature Fresh Pvt. Ltd. gratefully
acknowledges the unconditional support provided by Dr. M. N. Rajendra Kumar, president of SCDCC Bank Ltd and
president of Novodaya Charitable Trust.
With this mission in mind, in 2011, the first year of its production, Panama Nature Fresh Pvt. Ltd. did some
backward integration by leasing out 480 hectares (1,186 acres) of farmland in the fertile farmland of Chikmangalur
and Shimoga districts of Karnataka, specifically to grow ginger, potato, lettuce, pomegranate, tomato, green peas and
green beans. The results were astounding. Panama Nature Fresh Pvt. Ltd. is already the countrys largest ginger
farming company. The farms looked after by Panama Nature Fresh yields close to 15000 metric tons of ginger, 12000
tons of chili and 5000 tons of potatoes every year. They have plans to increase these numbers manifold in near future.
Panama is also planning to start the farming of sheep, hogs and cattle. 50,000 sheep have already been ordered
by suppliers from Maharashtra and Karnataka. The company is in talks with breeders of hogs from Germany, cattle
from Switzerland, and sheep for export for high-end clientele in New Zealand. Panama Corporation is planning to set
up a new company very soon to do this.
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Future expansionary plans of the company include increasing farming area to 1100 hectares (2,718 acres) and
to produce some 14 farm products. In five years, Panama Nature Fresh Pvt. Ltd plans to expand farming operations
to 12,000 hectares (29,652 acres), hoping thereby to be the largest farming company in Asia with 48 different crops in
its portfolio. With corporate office in Bangalore, regional office in Mumbai, and international offices in USA and
London, Panama Nature Fresh Pvt. Ltd is well positioned to be a global leader in modernized farming.
Whatever PNFPL was doing, allegedly, it did within proper bounds of the law. It tried to empower farmers
not by conning or scamming, but by a legitimate use of technology. PNFPL has aimed to bring happiness to all
stakeholders, especially rural farmers. PNFPL could next consider its business as a village community activity in
which all work together for a common good as well as for profitability, ecology and sustainability. It has tried to
root out the middlemen by providing financial independence to farmers and because of its profitability it has also
tried to pay off its own debts. But PNFPL should not exclusively focus on wealth creation, but make it a sustainable
model that enables them to live well, share with others, and be proud of themselves as an exemplary village.
PNFPL seems to be emotionally engaged in village farming activities; these emotions should shape their
moral response that help determine what is relevant and required in the villages they work. PNFPL is morally good
if it consistently strives to be good before launching into action. What matters for moral predication is that PNFPL
consistently seeks to do well and avoid evil consequences. Since PNFPL has a different set of strengths and
weaknesses, it is differently inclined to right or wrong. Any judgment call should take this into account.
The Panama Nature Fresh Private Ltd. case is unique in terms of the results it might show in coming past,
present and the future. There are several benefits of removing the middlemen but we need to be sure that all the
farmers really reap any benefits from this intervention. It surely is a virtuous act to use processes which reduce the
wastage of the farmers produce. The short term effects of something like Panama Nature Fresh might help the
farmers but in the long term the company might end up owning too much land. While cash crops are good, they
may totally alienate village cultures used to traditional and seasonal crops that defined the Chikmangalur and
Shimoga districts of Karnataka for ages. Agricultural Produce, High end equipment, Climate Controlled Trucks.

Ethical Concerns
Revolutionizing Indian farming by introducing scientific knowledge and professionalism to every activity of
the farming value-chain ( e.g., seeding, fertilizing, irrigating, pesticides, harvesting, storing, distributing, etc.), and
using high end equipment from internationally renowned suppliers and adhering to international quality standards,
backward integration by leasing out farmland, are complementary strategies of good industrialization. But
industrialization is not everything in a village context. Training of full time workers, maintaining quality of
products and equipment, expanding portfolio of agricultural crops, and geographical expansion into states with
rich and fertile farmlands are equally laudable. But do the farmers participate in the benefits? Have village life,
education, infrastructure, health, sanitation, safety, security, privacy and overall human development kept pace?
Other issues are:

The organization is not a non-profit one in any way and seems to be making profit. They have utilized the
opportunity of removing the middleman and replaced themselves. Is this activity written off as CSR?

Long-term leasing of thousands of hectares of village farm land can deprive the farmers of their right to
ownership of their own lands and its free use for developing and maintaining their cultures. Will it deprive
the farmer ownership of his land and the use thereof?
Though, from the first outlook, the process employed by the company has been beneficial for both partners, yet
by leasing out, the farmers have become dependent on the company. Apparently, the farmers had to give up
the full rights of their own land.
What happens to the small farmers? Were they consulted? Will mass industrialization of villages marginalize
the small farmers?

What is the basic role of the company? Though it is agreed that the company is benefitting the
farmers by providing it with latest state-of-the-art farm equipment, but eventually is the
organization playing the role of middleman?
Is the land being excessively used? Since the land is very fertile, it remains to be seen whether the
land is excessively used or not. What will happen to the farmers when the land becomes unfertile?
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What is the role of South Canara District Central Cooperative (SCDCC) Bank Ltd? And Navodaya
Charitable trust? Is there any profit motive involved? Is there a case that the three organizations
have formed a coalition and tried to exploit the farmers?
Since, we do not have information about the actions taken up by the middlemen against the
organization, how did they acquiesce to this intrusion on their commissions as middlemen? Or, have
they been part of the industrialization loop?

Ethical Questions:
1
2
3
4
5
6
7
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The company decided to revolutionize the farm-produce collection-distribution sector and thereby empower the
bondaged farmers. To what extent did the company free the farmers from oppressive middlemen? Were the
middlemen replaced by the organization itself?
Is this a virtuous act? If so, what type of virtue is it, and why?
Is this greed under the guise of virtue ethics? Why or why not? Explain.
Is this corporate social responsibility in the real sense, and why?
Is this ecology and sustainability in every sense of the terms, and why?
The company grew so much so quickly. Did the farmers grow proportionately, and by how much?
Leasing thousands of hectares of village farming land and modernizing its farming, even though very productive,
may encroach on farmers rights and may eventually deprive the farmers of ownership and use of their land
hence argue and develop an ethics of modernized expansionary farming for India.
Would you suggest this corporate farming model for the rest of rural India, and why?

References:
1.
2.
3.
4.

See the PNFPL Ad in the Deccan Herald, Friday, May 9, 2014, p. 2. Other online sources include:
http://panamacorporationltd.com/#!productservices;

http://companyinfoz.com/company/panama-nature-fresh-private-limited
http://panamacorporationltd.com
http://www.worldbox.net/company/panama-nature-fresh-private-limited_IN0011790902

Case 4.2: The Horrors of Chicken Farms

A typical supermarket chicken today contains more than twice the fat, and about a third less protein than 40
years ago. Two in three farm animals in the world are now factory farmed. Confining so many animals in one place
produces much more waste than the surrounding land can handle. As a result, factory farms are associated with
various environmental hazards, such as water, land and air pollution. The pollution from animal waste causes
respiratory problems, skin infections, nausea, depression and even death for people who live near factory farms.
Dairy cows typically live to their third lactation before being culled. Naturally, a cow can live for 20 years. Egglaying hens are sometimes starved for up to 14 days, exposed to changing light patterns and given no water in
order to shock their bodies into molting. Its common for 5-10% of hens to die during the forced molting process.
Worldwide, about 70 billion farm animals are now reared for food each year.
Factory farming started with chickens and first appeared on the scene in 1926. It wasn't by design but
rather the result of an over delivery of 450 chicks to a small farm on the Delmarva Peninsula. Instead of returning
the overage, the farmers wife decided to keep them indoors through the winter. The chicks survived and almost
ten years later, she had increased her flock to 250,000. The first giant animal factories appeared for egg production
by 1970. Since then, massive use of antibiotics has enabled farm owners to put more and more chicken into less
and less space. In California, a farm began keeping 3 million hens in one locale. By the early 2000's, some 62
companies were keeping over 1 million or more hens and Cal-Maine had 20 million chickens, the largest by far.
Most American chicken farms display truly reprehensible practices. On the same day they hatch, these
chickens, referred to as broilers by the industry, arrive at the grow-out facility where they will spend the next few
weeks of their short lives. As is standard industry practice, these birds are genetically manipulated to rapidly grow
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from tiny hatchlings into obese, adult-sized chickens in a matter of a few weeks. This abnormally fast growth
commonly causes birds to collapse under their own weight. They suffer from painful and debilitating leg
deformities that make it nearly impossible for them to access food or water. Other birds may suffer from sudden
heart attacks, which the industry casually calls flip-over disease. Unable to escape their own nauseating waste,
virtually all of these birds endure severe ammonia burns on their chests.
For instance, millions of chickens destined for one of the more than 1,600 Chick-fil-A outlets will spend the
day packed wing-to-wing in dark, stifling warehouses, wallowing in their own excrement and bred to grow so fast
that some of them cant even support their own weight. Of course thats part for the course in Americas factory
farmshell holes of mass consumerism that produce more than 90 percent of the beef, pork and poultry we eat.
Chicken facilities, in particular, are harrowing places. The People for the Ethical Treatment of Animals
(PETA) declared chickens arguably the most abused animal on the planet. Upwards of six billion meat chickens
known as broilersare produced for slaughter each year in the hundreds of factory farms that dot the southern
United States and California. Thats nearly as many as the entire human population of the earth. If they dont die
as chicks on the way to the farm, and hundreds of thousands of birds each year do, they can look forward to a short
miserable life followed by a grim death at the hands of low-paid workers who have little incentive to mollify their
suffering. And since poultry are excluded from the 1958 Federal Humane Methods of Slaughter Act, there is
currently no government oversight of killing practices in broiler facilities. Still, deathwhich is typically delivered
via a combination of electrocution and throat cutting while the bird is hanging by its feetis better than life for the
average factory-farmed broiler chicken. Each year hundreds of thousands of birds die of disease or neglect directly
related to the conditions of their captivity.
In a 2003 article for The New Yorker, journalist Michael Specter described his first visit to an industrial
chicken shed: I was almost knocked to the ground by the overpowering smell of feces and ammonia. My eyes
burned and so did my lungs and I could neither see nor breathe . There must have been 30,000 chickens sitting
silently on the floor in front of me. They didnt move, didnt cluck. They were almost like statues of chickens,
living in nearly total darkness, and they would spend every minute of their six-week lives that way.
According to a history of the practice published by the group In Defense of Animals, factory farming took
root in the 1920s, shortly after the vitamins A and D were first isolated, which made it possible to raise animals
that required little exercise or sunlight. But a funny thing happens to living creatures when they are deprived of the
ability to breathe fresh air and move about freely: They get sick. So, agricultural veterinarians began pumping the
birds full of antibiotics to keep them alive, a practice that continues today.
The Natural Resources Defense Council estimates that the average American chicken consumes four
different antibiotics daily; and while the effects of so-called sub-therapeutic levels of drugs in meat on humans is
thought to be low, no one is really sure. The overuse of antibiotics in livestock production is proven to create drugresistant strains of bacteria. In 2005, the Food and Drug Administration (FDA) banned the use of fluoroquinolone
antibiotics like Cipro in poultry based on findings that it created drug resistance in Campylobacter bacteria, which
causes dysentery, cramps and fever in humans. However, reports suggest the industry is still surreptitiously using
the drug.
Earlier this year, a pair of studies reported finding trace amounts of arsenicalong with acetaminophen and
the active ingredient in Benadrylin feather meal samples taken from large-scale poultry farms. (Feather meal is
used as a component of animal feed and in fertilizers). Why would a farmer poison their own animals? It turns out
that in small doses arsenic helps fight infection and keeps meat looking unnaturally pink. Since the studies only
looked at feathers, its not clear how much arsenic actually makes its way into the meat supply, but even a small
amount of arsenic in feed eventually makes its way into humans.
According to the abstract of one report published by Johns Hopkins Universitys Center for a Livable
Future: Feather meal products represent a previously unrecognized source of arsenic in the food system, and may
pose additional risks to humans as a result of its use as an organic fertilizer and when animal waste is managed.
Most non-vegetarians favor chicken among meats. So what can these people do to avoid supporting a
system that mistreats livestock and funnels poison and antibiotics into the human food supply? The food supply
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may be Chick-fil-A, KFC, McDonalds, or Burger King. Or when we shop for meat, how can we avoid massmarketed products from brands like Perdue or Tyson chicken that presumably come from factory farms.
In Philadelphia, USA you dont have to look hard to find alternatives to factory-farmed meat, but you might
have to pay a little more for them. I call that the price of peace of mind and its well worth it. But even if you are
not ready to change your eating habits, at the very least be conscious of what youre supporting when you plunk
down your money for a chicken sandwich.
According to PETA, on todays factory farms, animals are crammed by the thousands into filthy, windowless
sheds and confined to wire cages, gestation crates, barren dirt lots, and other cruel confinement systems. These
animals will never raise their families, root around in the soil, build nests, or do anything that is natural and
important to them. Most will not even feel the sun on their backs or breathe fresh air until the day they are loaded
onto trucks bound for slaughter. The green pastures and idyllic barnyard scenes of years past are now distant
memories. The factory farming industry strives to maximize output while minimizing costsalways at the
animals expense. The giant corporations that run most factory farms have found that they can make more money
by cramming animals into tiny spaces, even though many of the animals get sick and some die. The industry
journal National Hog Farmer explains, Crowding pigs pays, and egg-industry expert Bernard Rollins writes that
chickens are cheap; cages are expensive. Source: http://www.peta.org/issues/animals-used-for-food/factoryfarming/#ixzz38sLNHY2t
Obvious ethical issues involved in this case include:

The substandard treatment meted out to chickens which are reared for consumption purposes
Use of chemicals and drugs to alter the appearance and weight of these chickens.
The use of these chemicals is threatening for humans who inadvertently consume these chemicals
The harrowing conditions for workers in these chicken facilities; working for a long in such places
can have a very adverse effect on a persons health

Larger ethical and moral problems are:

The chicken farms facilities are harrowing places which store tens of thousands of chickens living in
the dark & its own defecation.
Due to the short life span of these chickens (about 6 weeks) the ones which face a swift death through
farming are the lucky ones. Due to the unhygienic conditions, disease and sickness is rampant
amongst the remaining ones.
In order to increase the life of these chickens in storage and augment their breeding process the
chickens are pumped full of antibiotics, an age old practice. This places a further threat to humans
as when consumed in large quantities these chemicals can enter humans bodies and deposit there,
possibly leading to health complications.
Such is the nature of the industry that banned drugs which have proven to cause ill effects to humans
are still being surreptitiously administered to the chickens.
How can consumers of these goods avoid mass-marketed products from popular brands without
paying a premium for the healthier alternatives?
What can consumers do to avoid supporting a system that mistreats livestock and funnels poison and
antibiotics into the human food supply?
The chicken farms and non-vegetarianism in general is a dilemma and clear rights and wrongs
cannot be established that easily.
Animals are fed and sprayed with huge amounts of pesticides and antibiotics, which can remain in
their bodies and are passed on to the people who eat them, creating serious health hazards in
humans.
The beaks of chickens, turkeys and ducks are often removed in factory farms to reduce the excessive
feather pecking and cannibalism seen among stressed, overcrowded birds.
Confining so many animals in one place produces much more waste than the surrounding land can
handle. As a result, factory farms are associated with various environmental hazards, such as water,
land and air pollution.
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The pollution from animal waste causes respiratory problems, skin infections, nausea, depression
and even death for people who live near factory farms.
As human beings we have a responsibility to ensure that our actions do not cause harm to other
living creatures. By the existing conditions in chicken farms this moral duty has been grossly
violated.

In the mad rush for money and profits, the farm owners over fill their capacities and force the chickens in uninhabitable environment, depriving the chickens of any animal rights. If the same were to be done to horses, or
dogs this would have been severely punished in America. Chicken Farming can be radically changed by using a lot
of methods like open farming, larger areas for the chicken to live in, and killing mercifully. The imperative is here
to focus less on profits and more on being compassionate.
As individual consumers we may have no choices whatever owing to circumstances, but still be totally
autonomous. That is not the case for companies. Often there can be external conditions that might influence
companies (market, economic, political, competition), but there are real choices that a company can follow within
itself. It can set itself on the path of virtue by looking at its actions, the relationships it has with various
stakeholders and decide for itself what it wants to be. It is not only important to have profits, it is also important
to exist in a meaningful way, creating goodwill and taking pride in what a company does. A company has several
duties and responsibilities to execute and it is the duty of us managers who have to ensure that a company does this
in the right way.
Various solution alternatives proposed are:

Government incentives such as tax benefits and subsidies to organic farming of poultry.

Extra duties levied on factory farming to nullify the price gap between factory farmed chicken and
organically farmed chicken
Enforcement of FDA restrictions on usage of antibiotics and arsenic on chickens.

Heavy fines and embargoes applied on non-compliance

Large corporations that are non-compliant should be subject to public scrutiny and loss of face
PETA and other such organizations must highlight the non-inclusion of poultry in the 1958 Federal
Humane Methods of Slaughter Act and push for the inclusion of the same
Public awareness needs to be increased regarding the conditions of the birds held in captivity. Rise
in awareness and general consciousness will force large corporations to revamp their facilities and
adopt more humane methods of raising these birds
Stronger legislation is the need of the hour to protect these birds. Until the government does not take
a stand, there is very little that will change and the vicious cycle will continue unabated
There has to be some amount of restraint from us, humans. As we are the most evolved species, it is
our ethical and moral responsibility that this suffering stops for others.

Critical Ethical Questions:

1.
2.
3.
4.
5.
6.

How different is the situation in Indian chicken farms?

Is cruelty to animals an ethical or moral or legal or human issue and vice, and why?
Should ahimsa - the doctrine of nonviolence include farm animals too, and why?
How do you analyze the horror of chicken farms from an ecological and sustainability perspective?
How can you justify the long-term harmful effects of chicken farms on human food supply chains in the
world?
As a virtuous (compassion for all) critical thinker, how would you alleviate the suffering of chicken from farms
to slaughter?

References:
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For details see If you think the fast-food chain hates gays, just wait until you hear what they do to chickens,
by Christopher Moraff, shared email, August 2, 2012 at 9:36 am; The publishing of articles by Cristopher Moraff
and Michael Specter led to widespread awareness of the issue. There has also been a video which was secretly
filmed in a chicken farm in UK which caused widespread outrage.
See also, https://www.dosomething.org/facts/11-facts-about-animals-and-factory-farms.

Case 4.3: Dividend Payments via Debt

[See Dividend Payments via Debt a Concern, Business Standard, Weekend Markets 1, Kolkata, May 24, 2014].

Based on past dividend paying record, India Ratings analyzed 419 (excluding banks and financial services
companies) of the Bombay Stock Exchange (BSE) 500 companies in 2013 and found that a significant number had
adopted aggressive dividend payment strategies despite reduction in profits. Of the 419 companies investigated, 42
were public sector units (PSU) and 377 were private firms. Of these 419 companies, 37 public sector units (PSU) and
302 private firms paid dividends in FY13. Of the 339 companies that paid dividends in FY13, 221 paid dividends
from their adequate cash flow from operations (CFO), 81 paid dividends from inadequate CFO, while 49 paid via
debt. The total aggregate debt paid for paying dividends was estimated at Rs 18,000- 20,000 crore for dividend
payouts, worth Rs 1-1.2 lakh crore for FY14. India Ratings said that despite corporate deteriorating business
performance, aggregate dividend payments steadily increased during FY09-FY13. While typical dividends are paid
from CFO, if the dividends paid exceed CFO, then they are funded from free cash reserves, investments or nonrecurring income. Companies that do not fund dividends from these cash components resort to debt financing.
In FY13, total debt raised by these companies for paying dividends stood at Rs 19,176 crore, against the
estimated Rs 4,000-7,000 crore through FY09 to FY12. In FY13, these companies paid an aggregate dividend and
dividend tax of Rs 1.04 lakh crore. Public Sector companies were the main culprits in this regard, with eight such
companies accounting for 67% of the debt raised in FY13. A significant portion of this debt was raised through
government-owned banks. Among the 49 private companies that raised debt to pay dividends in FY13, 14 were large
companies with debt/equity leverage more than 5.0.
This case discusses the rationale behind doling out dividends to shareholders at the cost of liquidity and
financial robustness. It has always been hotly discussed in financial circles what the ideal strategy is for a firm that is
facing cash crunch. Dividend payout, on the one hand, is an indirect indicator of performance for most of the
stakeholders in a firm. But paying them via borrowing indicates cash flow crisis or poor performance. High growth
firms rarely pay dividends or pay very little. They want to use idle cash or free cash to invest in more profitable
ventures. However, a mature organization with few high return projects streamlined, likes to offer handsome
dividends.
However, as mentioned in the case, the last few years have witnessed too many aberrations to the rule. The
companies are not following the ideal strategy of handing out dividend only when idle cash is mounted in the firms
books. Instead, they are more concerned over projecting a rosy picture to shareholders. Dividends are paid from cash
reserves of the firms. When a firm is facing loss its retained earnings go down which impacts its CFO. But many
firms would like to boast of being a consistent dividend payer and do not wish to upset the momentum by restraining
from issuing dividends. This makes the less informed investors feel cheated at times. They gain in short term by
getting dividends. But in long run, the capital gains forgone hurt their total holdings.
The case is a good example of shades of grey in companies, where analysis of ethical aspects is not black and
white. Legally, there is no harm in paying out dividends even if the company is facing losses. More so, payment of
dividends by a cash starved firm is also allowed in the Companies Act (with consent from all Board of directors as
well as financial institutions which has granted loans to the firm).
The Companies Act 2009 states out the following guidelines for declaration of dividends: Section 205 of the
Act provides that a company can declare dividend out of the profits of the previous years. But, Clause 110 of the
Companies Bill, 2009 stipulates further conditions to declare dividend in such cases. It stipulates that if owing to
inadequacy or absence of profits in any Financial Year, the Company proposes to declare dividend out of the profits
of the previous financial year or years and transferred to its reserves, such declaration shall be passed by a
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resolution at the Board Meeting with the consent of all the directors and approval of the financial institution whose
term loans are subsisting and also to be passed by the shareholders by a special resolution at the Annual General
Meeting.
The above mentioned clause makes an important revelation. Financial institutions such as banks who loan
money to loss-making firms to grant dividends are also playing on thin ice. Already the net Non-Performing Assets
(NPA) as percentage of loans is soaring in case of banks. The banks are also fully aware of the facts that the money
they are lending to a cash crunch business might result into a non performing loan. But the pressure for increasing
advances and high rivalry among the banks have forced them to go along this path. Since they have a proper say in
dividend payout decisions of a loss making firm, they should make a thorough analysis of the future profitability of
the firm as well as the chances of revival of the business. This way they would be able to save huge amount of taxpayers money as well as save the investors from future losses. The credit risk mitigation will be a shot in the arm in an
ailing economy.
So, the point of discussion is whether it is in the interests of shareholders to get dividends out of a lossmaking
firm or they should not get dividends in order that they judge the current profitability of business better. Many firms
like to hide their sorry state of operation by hiding behind the camouflage of hefty dividend payments. Many investors
are not well informed that raising debt to pay dividends would augment interest charge which, in turn, may affect the
debt/equity ratio, and often, even impact ones bond ratings from financial analysts.
Further, banks are often less potent in influencing the Board of big Blue chip firms with renowned
management and Board of directors. Most of the firms in India which display the dividend payout problem are not
small market cap firms but the larger ones. In fact, since banks loan mostly to bog firms, s maller companies have
been among the worst hit as they face liquidity issues. Banks became more cautious in lending and reduce their credit
growth to smaller firms.
Due to relationship issues, banks also generally prefer to lend to the top names
(http://indianexpress.com/article/ business/ companies/indian-blue-chips-turn-to-debt-to-pay-dividends/2/).
Bankers should be concerned about the debt to equity ratio of the leverage of the firms while granting the loans
for dividends. But firms like Hindalco and DLF have leverage ratio above 5 and are considered as big-shots in the
financial arena. So, it is imperative for banks to look for financial ratios rather than promoters personality before
granting risky loans. It is also very much a lesson for investors not to look for big players but better books.
In fiscal 2014, around Rs 180 billion - Rs 200 billion debt is likely to be borrowed to support dividend
payments, the rating agency estimates (http://www.anirudhsethireport.com/top-500-cos-raise-rs-20000-cr-debt-fordividend-payouts-in-fy14/). The modification in Companies Act in last fiscal hasnt provided much headroom to
SEBI to disallow companies from their current practices. As long as Board and financial lenders agree, it becomes
almost impossible to avoid a firm handing out handsome dividends to shareholders. However, with increased
transparency laws and regulations regarding reduction of promoter holding, better decision-making is expected in the
future that would benefit the shareholders in long run.
Dividend should be driven by profits of the concern. The effects of dividend payment should not be limited
to its immediate owners but all stakeholders that extend to the sustainability and environment. Wealth
maximization with the dividend payment should not be the ultimate concern. Indian companies not paying heed to
the dropping profits and still being very aggressive in dividend payments should know that this strategy is not a
viable option in the long run.
Dividend payments are purely the prerogative of the management. There are no legal issues regarding the
amount or time of dividend payments. But there are ethical and moral issues involved. The owners know their
company best. Honesty and transparency towards the external stakeholders, especially the shareholders, should
drive the companys dividend decisions. This will lead to corporate sustainability and advantage in the long run.
Other moral issues that need to be addressed are:
a)

How to decide upon the upon the ratio of profits and dividends that best reflects the reality of the
company to the stakeholders;
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b) Should there be a regulation of not profit making companies.

c) There has to be a benchmarking other than dividends for judging a companys net worth.
d) How else can a company keep growing without paying regular dividends?

Ethical Questions:
1.
2.
3.
4.
5.
6.

Is it legally right and virtuous to pay dividends when the company records losses?
Is it ethically and morally right to pay dividends when the company records losses?
Under what accounting conditions and legal provisions could paying dividends by raising debt be legitimate, and
why?
Is paying dividends via debt tantamount to aggressive accounting that can lead to stakeholder and investormarket deception?
Is this strategy tantamount to borrowing Peter to pay Paul with domino chain effects?
Hence, argue for an ethic of dividend payments via debt financing.

Additional References
http://www.taxmann.com/taxmannflashes/articles/flashart23-12-10_1.htm
http://indianexpress.com/article/business/companies/indian-blue-chips-turn-to-debt-to-pay-dividends/2/
http://www.anirudhsethireport.com/top-500-cos-raise-rs-20000-cr-debt-for-dividend-payouts-in-fy14/

The Ethics of Executive Virtue

In the wake of the extraordinary scandals described in Chapter Two, discussions about the executive
virtues of honesty and integrity are no longer academic or esoteric, but critically urgent and challenging. As
representatives of the corporation, its products and services, corporate executives in general, and
production, accounting, finance, and marketing executives in particular, must be the frontline public
relations and good will ambassadors for their firms, products and services. As academicians of business
education, we must analyze these corporate wrongdoings as objectively and ethically as possible. What is
wrong must be declared and condemned as wrong, what is right must be affirmed and acknowledged as
right. We owe it to our students, our profession, and to the business world.
Contemporary American philosopher Alasdair MacIntyre, in his publication After Virtue (1981), has
ignited new enthusiasm for virtue theory and its attendant concerns with issues of character. MacIntyre
proposes the issue of morality in a three-fold question: Who am I? Who ought I to become? How ought
I to get there? The answer to each question refers to the virtues. Responding to this three-fold question,
Waddell (1989: 136) wrote: The project of the moral life is to become a certain kind of person. That person
is a virtuous one.
Applied to business professionals, the three questions raised by Alasdair MacIntyre are:

Am I a virtuous (e.g., prudent, temperate, brave, and just) business executive?

What sort of a virtuous business person should I become?
Which virtues specific to the business or corporate profession or practice should I pursue in
order to be the exemplary virtuous person I ought to be?

In the wake of the Enron and related scandals (see Appendices 01 and 02), these questions are no more
casuistic or irrelevant, but very connected, cogent, urgent, and challenging. Virtue is its own reward.
Retrieving Aristotelian doctrine on the ethics of virtue, MacIntyre (1981: 178) defined virtue as an acquired
human quality the possession and exercise of which tends to enable us to achieve those goods which are
internal to practices and the lack of which effectively prevents us from achieving any such good. While
9

acting virtuously may indeed yield good results, virtuous business executives act primarily to be true to
themselves. They recognize a range of goods internal to business practices within the company not because
of their utilitarian significance, but primarily because of their capacity to shape and mould them to be a
person they want to be for humanity (Bollier 1997; Peters and Austin 1985; Williams and Murphy 1990).
By its renewing influence, virtue is becoming once again the language of ethics (Keenan 2006: 111).
The language of virtue builds in a kind of flexibility, even ambiguity, which is not so evident in the languages
of law and duty. That ambiguity and flexibility are what allow virtue to be the medium of comparative ethics
(Porter 2005: 219, 206). The interest in personal transformation permeates much of the contemporary
writings on virtue ethics. Virtue ethics summons business executives to become better people. The best
practices of personal formation stem from virtue ethics the latter believes that we need to awaken from a
slumber of moral complacency (Stalnaker 2006: 386-391). We must re-envision what it means to be moral
virtue ethics empowers us to do so (Flescher 2003: 11).
A pioneer of value investing in India, Chandrakant Sampat (an Indian counterpart of Warren Buffett?)
passed away recently leaving a legacy of virtue-based life of integrity, simplicity, wisdom and discipline. His
definition of integrity was humility + courage, said Rohan Shah, Partner, Kroma Advisors &Traders LLP.
Integrity, simplicity, transparency and humility were central to his value system. He also defined integrity as
complete congruity between thought, speech and action they formed the bedrock of Sampats personal
ethics. He focused on values in investing, in society, in institutions, in ecology, and most importantly, in the
conduct of ones life. He lived and practiced the first and the last with dedication, discipline, devotion and
detachment, said Chetan Parikh, Director, Jeetay Investments. Whilst he decried the perils of unrestrained
technology, he also looked for innovation capabilities in companies that he chose to invest in. Like Peter
Drucker, he sought a balance between continuity and change. He found that balance missing when confronted
with a world of excessive consumption, excessive debts, excessive government, excessive money-printing,
excessive inequalities, and an excessive focus on the short term. Chandrakants mental models and metaphors
came from a broad spectrum of disciplines such as sociology, biology, ecology, history, psychology, literature
and physics. Sampats concern for the past few years was about the unsustainable credit-driven global asset
bubble that was being formed, and which will bust with disastrous consequences for economies and societies.
[The first bust already took place during the September-October financial market crisis in the USA!] Leo
Tolstoy wrote of a supremacy expressed altogether in moral power and in the greatness of character, and
Chandrakant Sampat was an embodiment of this supremacy (see Parikh, Chetan (2015), In a Class of His
own, Outlook Business, March 6, 2015, p. 67; Shah, Rohan (2015), A Man of Value and Wit, Outlook
Business, March 6, 2015, pp. 68-69). Chandrakant Sampat exemplifies an excellent icon of executive
virtuous life that this Chapter writes about.

The Primacy of Virtue Ethics

Virtue-based ethics is a new method of ethics: from action-based ethics (deontological ethics,
teleological ethics, and justice ethics) to person-based ethics. Principles, rules and guidelines tend to concern
the action in question and its objective moral character. Virtue ethics, by contrast, governs the interior life of
the agent who performs the action ones subjective moral character. Both are needed in business executions
in general, and in corporate management, in particular. Right actions with evil intentions are no good; rules
and principles unless interiorized and lived in virtue will not effectively motivate in the long-run (Pellegrino
and Thomasma 1996: 15).
While the ethics of principles (deontology, teleology) and the ethics of consequences (distributive
justice, corrective justice) are valid and relevant, they are subordinate to the ethics of character (virtue ethics).
Unlike deontology, teleology, and distributive justice and corrective justice theories of ethics that deal with
human actions and their moral content, virtue ethics deals with the very person who acts. Virtue ethics looks
primarily on the type of persons we ought to be and become. That concern is expanded to three questions
10

Who are we? Who ought we to become? How do we get there? Virtue ethics is, therefore, proactive. It
invites us to see ourselves as we are, to assess ourselves, and to see what we can become. It not only beckons
us to become something, but also indicates the means (virtues) that can help us get there (Keenan 2006).
To the corporate virtue ethics practitioner, the first question (Who are we?) is the same as Are we
virtuous? Such a question focuses on: a) the standards against which we measure ourselves, and b) how we
know whether we are measuring ourselves fairly.
Aristotle (1965) proposed some basic virtues as standards friendship, magnanimity, and practical
wisdom. Thomas Aquinas (1964) borrowed and proposed four other complementary (cardinal) virtues:
prudence, justice, temperance and fortitude, to which he later added the three theological virtues of faith hope
and love. The question of self-understanding (Who am I?) then, translates to, Are we just, prudent, temperate,
fortitudinous, friendly, magnanimous and wise? How do we know we are not deceiving ourselves? Aristotle
(1965) suggested that we could know ourselves by how we act in spontaneous situations. For instance, if I
acted bravely in unanticipated situations, then I am brave. If I acted cowardly under such circumstances, then
I am a coward.
If we can develop ourselves physically by regular exercises, we can also develop ourselves morally by
exercising virtues regularly. The virtues are therefore teleological guides that aim for the right realization of
the human person. For Thomas Aquinas (ST I-II, 61) the cardinal virtues correspond to and perfect four
powers

Prudence is related to the power of practical reason,

Justice to the will-power,
Temperance to the concupiscible power, and
Fortitude to the irascible power.

According to Aquinas, the virtue of justice is a habit whereby a man renders to each one his due by a
constant and perpetual will (ST II-II, q 58, a 8). Thus, justice as a particular type of virtue is an external
virtue. It does not primarily focus on regulating the internal character of the agent by ordering the passions
(as do the virtues of temperance and fortitude); instead, it focuses on the results of the agents actions in the
external world, the concrete effect they have upon the lives, property and interests of other people (Kaveny
2009: 119). Temperance and fortitude are predominantly at the service of justice, and prudence determines
the nature and choices of justice.
Thus, in analyzing our cases: Panama Nature Fresh Pvt. Ltd, or The Horror of Chicken Farms, or
Dividend Payments via Debt, we not only reflect on what we do, but also reflect to foresee as what our
current decisions and actions will empower us to become and what they will enable us to be as companies and
its stakeholders. To the extent all executive actions are humanized by the executive virtues of prudence,
fortitude, temperance, and justice we should expect to do the right things rightly, to become all that we can,
and be where we ought to be.

The Importance of Virtues Ethics in Executive Life

The heroic examples of business management practices [e.g., Johnson & Johnsons timely withdrawal
of Tylenol, the Rely decision by Proctor & Gamble (see Williams and Murphy 1990), Levy & Strausss
exemplary business management strategies (see Bollier 1997: 339-51), the heroic investments of Merck &
Co. in inventing and distributing cure for river blindness disease that plagued millions in the Third World (see
Donaldson and Gini 1996: 299-308) and hundreds of other business management heroisms cannot be
adequately explained by ethical theories of deontology, teleological, or distributive justice theories. The heroic
lives of Nelson Mandela, Captain Lakshmi and Amar Gopal Bose that we reflected in Chapter 03 are
examples of heroic virtue. These exemplary business management strategies and practices are outcomes of
11

acquired executive virtue.

With over 25 million dead because of HIV+ AIDS, and another 42 million people infected, why is there
a universal hesitancy to recognize the moral summons that this fatal disease confronts us? Maria
Cimperman1 asks this haunting question, and develops a basic profile for the type of people we must become
if we are to be disciples in a time of AIDS. After reflecting on the need to be historical realists, she proposes
five virtues as constitutive of contemporary discipleship: justice, prudence, fidelity, self-care, and mercy.
Cimperman calls us to change now and offers us the virtues as the medium for such transformation
(Cimperman 2005). Virtue, being transformative, leads inevitably to action. By realizing the here and now as
the moment for transformative change and action, we actually become happier (Keenan 2006: 114).
To the questions, who ought we to become? and how to get there? the answer is the theory of
ends. For the honest person, virtues are not what one acquires, but what one pursues as ends. The ends of
virtue is to be prudent, just, temperate and fortitudinous. Hence, we examine our ways of acting and ask if
these ways are making us more prudent, more just, more temperate and more brave. These are executive
virtuous exercises.
Dorothy Day, a Christian political activist of early 19th century America, believed that her moral task
was to combat poverty by assuming poverty, by living its challenges. Her invitation, argues Andrew Flesher,
is a real explication of our call to be moral. Virtue ethics maintains that if we do not work on our character
development, and thereby fail to dispose ourselves to love the neighbor and subsequently act on behalf of the
neighbor to a much larger degree than we currently do, then we can be found to be morally blameworthy.
While living virtuously is not synonymous with living altruistically, living altruistically is the kernel of living
virtuously (Flescher 2003: 11).
Business management as a human activity is a social community of individuals or stakeholders:
customers, producers, suppliers, distributors, creditors, bankers, media, governments and the local
communities. Business management in general, and corporate management in particular, is a public and
moral community activity by membership and function, goals and objectives. Business management is a
moral enterprise because it deals with human (stakeholder) problems. Hence, the ethics of business
management derives from business as a human activity. The art and science of business management and the
way it functions is exchange relationship implied in the executive-stakeholder or producer-consumer
relationship, and what is primarily at stake is the personhood of the vulnerable stakeholder.
The stakeholder and the management executive, as rational beings, each play a part in realizing the end
of business management, which primarily is the good of the stakeholder communities. In this relationship, the
management executive is the embodiment of the business management art, whose end is the stakeholders
good, and the dignity and happiness of the human person grounding the good. Beneficence and benevolence
are both a moral obligation that should inform and transform the art of business management, and both are
crucial virtues for management executives. A management executive who does harm to stakeholders violates
the art; an executive who is not benevolent to his customers compromises the art (see Sirdeshmukh, Singh and
Sabol 2002). Thus, the art and science of business management should establish the way in which the
management executives and the stakeholders relate to each other this is the internal morality of business
management, or to cite Macintyre (1981), it is the internal practices of the virtue of business management.
1

Maria Cimperman RSCJ is a Religious of the Sacred Heart of Jesus. Her work is at the intersection of moral theology, social
ethics and spirituality. Maria's first book, When God's People Have HIV/AIDS: An Approach to Ethics, received a Catholic
Press Association Award. The Reverend Mark R. Francis, CSV, president of Catholic Theological Union (CTU), Chicago,
announced that Maria Cimperman, RSCJ, has been appointed the first director of the Center for the Study of Consecrated Life.
Maria Cimperman is an Ursuline Sister; she teaches moral theology and social justice at the Oblate School of Theology in San
Antonio, Texas.

12

While rules and guidelines may offer rational criteria for public agreement and public moral policy, the
latter also rest on publics presuppositions of what is good life and what is happiness for the community. The
latter come from virtue and virtue ethics, and not necessarily from social construction or political
accommodation (Foot 1978). Without a theory of good life and the good society, there is no check on political
expediency, market opportunism, and business management malpractice. In a secular society, if moral rules
and injunctions were to derive their binding force, they must have such either from a theory of moral law or
from the assent of virtuous individuals who choose the rules and the society they live in as part of their selfdefinition (Anscombe 1981: 30).
Since, according to MacIntyre (1981), the authority of moral law is best when it is theological (i.e.,
based on divine law and revelation), the latter (i.e., the virtues of virtuous people) is the only place to turn it
is only from the debate and shared life of virtuous people that we may obtain a consensus on what is common
good and what is good life. A business management situation constitutes a moral community in which the
debate about common good for society can take place, and an account of the virtues is required therein.
Opportunism is "seeking self-interest with guile" (Williamson 1985) or seeking "self-interest
unconstrained by morality" (Milgrom and Roberts 1992). Opportunism is rampant in every area of business
(e.g., Murry and Heide 1998; Wathne and Heide 2000; Wilkie, Mela, and Gundlach 1998), including business
management. Opportunism is a strategic behavior whereby one makes false or empty "threats and promises
in the expectation that individual advantage will thereby be realized" (Williamson 1975: 26). Opportunistic
behavior manifests itself in various ways, such as lying, stealing, cheating or other "calculated efforts to
mislead, distort, disagree, obfuscate, or otherwise, confuse" (Williamson 1985: 47) partners in business.
Opportunism is "the ultimate cause for the failure of markets and for the existence of organizations"
(Williamson 1993: 102). However, for opportunism, "most forms of complex contracting and hierarchy
would vanish," and markets alone would be sufficient for handling most transactions through autonomous
contracting (Williamson 1993: 97). The risk of opportunism can be very high, and considerable resources
might have to be spent in controlling and monitoring it, resources that could have been deployed more
productively elsewhere in the company. In a world of unbridled opportunism in the marketplace, what can
make all of us honest and moral is virtue ethics.
Opportunism is hard to detect owing to information asymmetry between the party engaging in
opportunistic behavior and the other exchange partner. It is even harder to control, and strategies for
suppressing opportunistic behavior may undermine existing exchange relationships (Murry and Heide 1998)
as well as forfeit valuable deals in the process (Calfee and Rubin 1993). While several strategies of
external control of opportunism have been devised, tried, and often failed (e.g. reduction of information
asymmetry, closer monitoring, higher monetary incentives not to engage in opportunism, higher contracted
penalties for opportunistic behavior), very few internal control mechanisms have been tried. A major
internal control such as selecting and contracting business management managers whose virtue of honesty,
prudence, commitment and fiduciary responsibility has been tested and proven may help to control
opportunism far more effectively than external monitors.
When deciding to hire top business management executives, one looks over and above academic and
technical qualifications to their virtuous dispositions: Are they honest or dishonest, sincere or insincere, greedy
or selfish, reliable or unreliable, trustworthy or untrustworthy, dependable or undependable? Employee
resumes do not necessarily feature or reflect these virtues, and yet we all know that a successful and lasting
encounter between an employee and the employer is the life of virtue that supports the character and judgment
of the person on both sides of the hiring equation. Moral virtues are those dispositions that are generally
desirable for people to have in the kinds of situations they typically encounter in living or working together
(Pickoffs 1986). Hence, without specifically referring to virtues per se, Sirdeshmukh, Singh, and Sabol
(2002) advocated three management policies and practices for building long-term trustworthy relationships
among frontline service employees and customers: operational competence and problem solving competence
13

(both intellectual virtues) and operational benevolence (moral virtue).

In the sessions that follow our focus is on virtues and virtue-based ethics for corporate executives. This
Chapter has two parts:
Part I: Toward a Theory of Virtue-Based Ethics for Corporate Executives
Part II: Virtue-Based Ethics Applications for Corporate Executives

Part I: Toward a Theory of Virtue-Based Ethics for

Corporate Executives
Virtue (from "Aret" in Greek that stands for excellence) is difficult to define. Hence, the definition of
virtue, the virtues, and the virtuous person has occupied philosophers since Plato (1985) first raised the
question of virtue, its nature, number, and teachability. Despite numerous efforts since then, no one has
improved upon Aristotles imperfect but still useful definition (Pellegrino and Thomasma 1996: 7). In general,
however, most agree that a virtue is a disposition to act, desire, and feel that involves the exercise of
judgment and leads to a recognizable human excellence, an instance of human flourishing (Yearley 1990: 2).

Understanding Virtue: A Historical Perspective

Socrates (c. 470-399 BC) began the discussion by identifying virtue with knowledge, and held that one
could not know the good without likewise willing it. Plato (c. 428-347 BC) contributed an extensive and
subtle analysis of four virtues: wisdom, courage, temperance, and justice. Aristotle (384-322 BC) in his
Nicomachean Ethics (NE) described virtue as an acquired character trait that manifests itself in habitual
action. He identified moral virtues as a state of character; that is, the things in virtue of which we stand well
or badly with reference to the passions (NE 1105 b 25-6). Honesty, for example, does not consist in telling
the truth occasionally but habitually. A person must become honest by proper upbringing and self-training.
That is, virtues suppose a good character. One hardly admires courage in a villain, or charity in a thief
who donates stolen goods, or fortitude in a murderer these dispositions are not virtues. Cowardice can be
someones reason for not committing murder; vanity and boastfulness can on occasion lead someone to tell
truth these actions are not virtues (MacIntyre 1984: 152).
Following Aristotle, Aquinas (1963) defined moral virtues as dispositions for the formation of passions
and/or habits; moral virtues enable us to follow reason in dealing with our desires, emotions, and actions and
in accepting that the four pivotal or cardinal virtues are courage, temperance, justice and prudence. Aquinas
also held that the purpose of a person is not merely the exercise of reason in this world, but union with God in
the next. Hence, to Platos moral virtues he added the theological virtues of faith, hope and charity the
virtues that enable persons to achieve union with God. He also maintained that charity (or self-giving love
agape in Greek) is the virtue of virtues that forms all other virtues. Aquinas also held that humility is a
Christian virtue and pride is a vice. Whereas Aristotle, who predominantly wrote to an Athenian aristocratic
society, argued that for the Greeks, aristocrat pride is a virtue and humility is a vice.
Like Aristotle, Aquinas distinguished between intellectual and moral virtues; both are human and
acquired virtues as opposed to faith, hope and charity, which are supra-human and infused virtues. The end
of the human virtues is proximate, a level of happiness that is imperfect that is attainable through human
nature. The end of the supra-human or theological virtues is the last end, God, and therefore supreme
happiness, attainable only through the infused virtues and grace. While the object of theological virtues is
God, that of the intellectual and moral virtues is something comprehensible to human reason (ST I.II 62,
2c). The good or the perfection to which the human virtues are directed is defined according to the rule of
reason, from which their objects are derived. The good or the perfection of the theological or infused virtues
14

is the good as defined by divine law (ST I.II 63.2c; 63.4c; 65.3c). Moral and intellectual virtues are produced
in us by humanly reasoned acts, and they perfect us through the doing of good deeds; that which perfects
the intellect is an intellectual virtue, and that which perfect the appetite or will is a moral virtue (ST I.II 58.3c;
68.1c and 8c). By human virtues, we live a good life, but the good life refers only to the rectitude of life
measured by the rule of reason (ST I.II 68.1 ad3). In contrast, the theological virtues, being beyond our
capabilities, are produced in us by God. Through these infused virtues God enables us to live a good life of
union with God.
Immanuel Kant (1772-1804) related virtue to those categorical duties that are firmly settled in our
character. It does not concern directly with our happiness, but our worthiness to be happy. Hence, virtue is
its own end and reward. However, Kant did banish virtuous dispositions from morality since they are
strictly hypothetical and not categorical imperatives (Spohn 1992: 65). According to Foot (1978),
virtues are specific dispositions determined by the need to correct certain deficiencies. For MacIntyre (1981),
virtues are skills internal to activities or practices that are necessary for the performance of certain roles or
offices in society. Thus, virtue is the most ancient, perdurable, and ubiquitous concept in the history of ethical
theory, especially given the inseparability of the moral agent from the events and acts of moral life (Pellegrino
1995).
Exhibit 4.1 checks the three Cases (4.1, 4.2 and 4.3) against major definitions of executive virtue.

Intellectual and Moral Virtues

Aristotle (1985) was the first to distinguish between intellectual and moral virtues, relating the former
to the theoretical life and the latter to the practical life. Intellectual virtues are acquired through teaching,
while moral virtues of character are acquired by habitual exercise. We become just or courageous by
performing just or courageous acts; we become theoretically or practically wise because of systematic
instruction. Intellectual virtues, highest of which is wisdom, result from the proper use and functioning of
our higher intellectual aspects (e.g., reasoning, judging, analyzing) as rational animals. Since reasoning is
the capacity that distinguishes humans from sub-humans, the proper development of reason constitutes the
highest excellence we can achieve, and wisdom is the highest intellectual virtue of human reasoning. Moral
virtues, on the other hand, result from control of reason over our bodys natural and proper appetites and
inclinations.
Further, according to Aristotle (1985), a moral virtue is a habit that enables a human being to act in
accordance with a specific purpose of human beings, and the distinguishing purpose of human beings that sets
them apart from animals is to exercise reason in all their activities. Hence, moral virtues are habits that
enable a human person to live according to reason. A person lives according to reason, Aristotle (1985)
continues, when the person knows and chooses the reasonable middle ground between two extremes: one of
going too far and the other of not going far enough in ones actions, emotions and desires. A proper control of
our reason and passions should not just repress them completely nor indulge in them freely. Rather a good
virtue is to seek the mean between two extremes, both of which are vices. Finally, Aristotle (1985) maintained
that prudence is the virtue that enables one to know what is reasonable (or the mean) in a given situation.
According to Thomas Aquinas, Intellectual and moral virtues are distinguished by their subjects. The
subject of the moral virtue is the appetite: justice is in the will; temperance and fortitude are in the
concupiscible and irascible powers. As an intellectual virtue, prudence is in the reason. In addition, as the
habit of an immanent operation, an acquired virtue perfects the subject in which it dwells as its matter. Thus,
while a moral virtue perfects the appetite, an intellectual virtue perfects the reason. That is, justice perfects
the will; temperance perfects the concupiscible powers; fortitude perfects the irascible powers, and prudence
perfects reason (Keenan 1992: 100).
15

Some virtues are corrective or remedial of human passions. Human passions incite us to something
against reason and so we need the curb called temperance; or passions may make us shirk a dangerous or
risky course of action dictated by reason, and then we need the virtue of courage to pursue the action
nevertheless. Similarly, industriousness corrects the inclination to be idle, humility corrects our proclivity
to overrate ourselves, and hope corrects the tendency to despair.

Executive Virtue as Practical Reason or Phronsis

According to Aristotle (1985), moral virtue is a disposition to choose, consisting essentially in a mean
relatively to us determined by a rule, i.e., the rule by which a practically wise man would determine it (NE
1106 b36 1107 a2). Aristotle regarded this virtue-mean as a possession of practical wisdom (phronesis); he
held that the ability to see what is the right thing to do in the circumstances, as essential to the truly virtuous
person. Accordingly, Aristotle (1985) attached much more value to the moral judgments of the enlightened
conscience than to any a priori and merely theoretical principles (Copleston 1963: 336). Phronsis is an
intellectual virtue; it is a central virtue; it is that virtue without which none of the virtues of character can
be exercised (MacIntyre 1984: 154).
Ethical perception is an exercise of practical reason (Phronsis) preliminary to choice. Ethical
perception is a registering of the ethical features of a situation in response to which action may be required.
It comes to mean someone who knows how to exercise judgment in particular cases. It is the Phronsis or
practical reason that concerns itself and the ultimate (to eschaton), the latter is the object not of discursive
knowledge but of perception, not the perception of the special senses or sense-objects, but the perception of
the ultimate in actual situations (NE 1142 a 23-30).
Phronsis integrates the different ends of character, refining and assessing them, and ultimately
results in all considered judgments of what is best and finest to do. In this context, political wisdom and
practical intelligence (Phronsis) are same skills but, in effect, put to use in different relations. Phronsis
shows itself in the ability to judge well about ones own well-being and how to achieve it in ones own
private life; political wisdom is the knowledge of the same thing essentially, but aims at its realization in
whole communities (e.g., as legislative wisdom, as day-to-day administrative wisdom) (Cooper 1987: 337). The practical intelligent person (Phronimos) is someone who knows what the correct end of human life
is (NE VI 1140a28; 1142 b33) and, accordingly, organizes his or her life and makes the relevant practical
decisions.
The exercise of practical reason involves various aspects: perceptual, deliberative and collaborative.
With Aristotle (1985), the descriptions of the virtues of character are in all cases descriptions of character
states that are at once modes of affect, choice and perception. To have virtue is to be able to make the choices
characteristic of the person of practical wisdom. According to Aristotle (1985: NE 1107 a1) virtue is a
character state concerned with choice, lying in the mean relative to us, being determined by reason and the
way the person of practical reason would determine it. It is not possible to be fully good without having
practical wisdom, nor practically wise without having excellence of character (NE 1144 b31-2).

Executive Virtue of Practical Reason that Assesses Contingency

The effective moral agent must be exposed to a wealth of diverse contingencies and circumstances. It
is not enough to have the right states of character, but one must have the capacities for knowing when and
how to exhibit them. An agent is praised not merely for the possession of virtue, but for its exercise and
exemplification in concrete circumstances. In this sense, virtue is a capacity to choose (NE 1107 a1) and
reason correctly. The virtuous person is one who knows how to act and feel in ways appropriate to the
circumstances. This entails not only that efforts are well intentioned and appropriate, but that subsequent
actions are correct and successful (Sherman 1987: 51). Aristotles point, therefore, is not that a good and
16

virtuous action requires the achievement of causal consequences, but that it requires knowing how to
exemplify virtue here and now. Thus, decisions are clearly right or correct may nonetheless lead to
unforeseeable ill consequences (NE 1135 a25; 1136 a5-10).
Practical reason does not start with a mere practical syllogism - start with some end, and then decide
how to act. On Aristotles view, an ethical theory that begins with the justification of a decision begins far
too down the road. The process begins with the perception and assessment of circumstances and recognition
of its morally salient features. Before we can know how to act, we must assess the necessity of that action,
and this reaction to circumstances is itself part of the virtuous response - all these stages, perception,
reaction and assessment, are ethical considerations expressive of the agents virtue (Sherman 1987: 29).
Perception informed by ethical considerations is the product of experience and habituation. Through
such education, we come to recognize and care about the ethical consideration (Sherman 1987: 31). Moral
habituation is not a mindless drill but a cognitive shaping of desires through perception, belief, and
intention capacities that involve character and emerge from acquiring character. Thus, moral education
will itself cultivate the perceptual and deliberative capacities requisite for moral character (Sherman 1987:
7). It is not enough to know about virtue, but we must also try to possess and exercise it, or become good
in any other way (NE: 1179 a33-b4).
All perceptions, reactions and assessments are contextual. The virtuous act that hits the mean is
directed toward the right persons, for the right reasons, on the right occasions, and in the right manner (NE
1106 b21). Thus, the overwhelming sense is that virtue must fit the case (Sherman 1987: 35). Determining
the mean will presuppose critical and self-reflective ways for accurately reading the ethically relevant
features of the case. Ethical perception requires methods by which we can correct and expand our point of
view. Conscientious discernment will entail adjusting ones perception to correct for biases and pleasures
towards which one naturally tends, but which are likely to distort (NE 1109 b1-12).
Our ethical perceptions reflect our character; but so also do our deliberations about and responses to
particular situations. Aristotle asserts that the ends of our actions correspond to our character: For we
ourselves are somehow part causes of our states of character, and in being person of a certain kind we
posit the particular end (NE: 1114 b24). Aristotle also maintained that how an end appears also
corresponds to character: Some might say that everyone aims at the apparent good, but does not control
its appearance; but the end appears to each person in a way that corresponds to his character. For if each
person is somehow responsible for his own state of character, he will also be himself somehow responsible
for the ends specific appearance (NE 1114 b1-3, b17). It seems in Aristotles view this ascription of
responsibility is tentative as judged by the word somehow or part causes meaning thereby we are
partially responsible for our character (Sherman 1987: 32, fn 36).

Corporate Executive Virtues and Moral Education

Even though intellectual virtues are taught and moral virtues are exercised, the two kinds of moral
education are intimately related. As we transform our initial naturally given dispositions into virtues of
character, we do so by gradually exercising those dispositions according to ones reason. The exercise of
intelligence is what makes the crucial difference between a natural disposition of a certain kind and the
corresponding virtue. Conversely, the exercise of phronsis or practical reason requires the presence of the
virtues of character; otherwise, it degenerates into some cunning capacity for linking means to any end
rather than to those ends that are genuine goods for humanity (MacIntyre 1984: 154). Thus for Aristotle,
excellence of character and intelligence cannot be separated; genuine practical reason requires knowledge
of the good and goodness of the agent; one cannot have practical intelligence unless one is good (NE 1144
a37). Hence, Aristotle maintained that one cannot possess any of the virtues of character in a developed
form without possessing all others (NE 1145a); that is, central virtues are intimately related to each other.
17

In this belief of unity of the virtues, Aristotle followed Plato. According to both Plato and Aristotle, virtues
are all in harmony with each other and the harmony of individual character is reproduced in the harmony of
the state (MacIntyre 1984: 157). Any conflict between virtues is evil, and as such is eliminable either by
practical reason at the individual level, or by the polis at the collective level. Conflicts in ones virtues result
either of flaws of character in individuals or of unintelligent political arrangements.2
Thus, Aristotles (1985) position on moral virtue implies five logically sequential steps:

A moral virtue is a habit that enables us to act in accordance with the specific purpose of human
beings.
The specific purpose of human beings that distinguishes us from animals is to exercise reason in all
our activities.
Hence, moral virtues are habits that enable us to live according to reason; that is, to exercise reason in
all our activities.
We live according to reason when we know and choose the reasonable middle ground between two
excesses: one going too far and the other not going far enough in ones actions, emotions and desires.
Finally, prudence is the virtue that enables us to know what a reasonable middle ground in a given
situation is.

The eighteenth-century Scottish philosopher, David Hume (1711- 1776), agreed with Plato and
Aristotle that virtue is the central moral concept, but refuted the Greek view that reason was the final guide
to moral action. Hume (1988) argued that "feelings" motivate action, not reason; feelings are the foundation
of morality. A. J. Ayer (1936) relegated virtues to the realm of emotions.3
According to Aristotle (1985), the end of life that all human beings should aim is happiness
(eudemonia). The virtues are not merely means to happiness, but constitute it. However, happiness does not
merely consist of what we get in life but also includes who we are. Even Plato maintained that a despot with
all wealth and power would not be really happy because that persons personality would be disordered in the
process. The distinction between happiness and pleasure is usually blurred. In ordinary language, happiness
is frequently used to indicate a more stable, less intense state than pleasure. Yet one could hardly predicate
happiness of life that was altogether without pleasure. Some teleological moralists who favor utilitarian
conception of moral obligation have adopted a hedonist conception of the end of moral action (GE Moore and
his associated opposed this tradition), but those moralists who combine teleological ideas with the rejection of
utilitarianism have adopted a conception of happy life as the end of human beings, happiness being found in,
and sometimes identified with, a life of fulfillment and harmony both within the individual and in that
individuals relation to others this position is often called Eudemonism.

Executive Virtue and Virtuous Character

Virtue, according to Aristotle, is a particular state of character, one that both brings into good
condition the thing of which it is the excellence and makes the work of that thing be done well (NE 1106 a167). The virtue of a person will also be the state of character which makes a man good and which makes him
to do his work well (NE 1106 a-224). Thus for Aristotle, a moral virtue is an acquired disposition that is
valued as part of the character of a morally good human being and that is exhibited in the persons habitual
behavior. A person has a moral virtue when the person is disposed to behave habitually in the way and with
reasons, feelings and desires that are characteristic of a morally good person (Velasquez, 2002: 135).
2

In this context, Aristotle argued that virtues are unavailable for slaves or to barbarians, precisely because both lack social
political structure and/or the liberty required pursuing virtue. Freedom is the presupposition of the exercise of virtues and the
achievement of the good (MacIntyre 1984, pp. 160-61).
3
For other modern views on primacy of virtues see, for example, Foot 1978; Geach 1977; MacIntyre 1981; Pense 1984; Slote
1983; and Von Wright 1963.

18

Defined thus, Aristotle makes several crucial points:

Virtues are, as they were for Socrates, excellences (aretai).

They have a functional and teleological character, since they make things or persons do their work
well.
Thus, virtues make the thing itself or the person himself good.
The virtues are intellectual when their end is truth and they are moral when their end is the good
life, and
The good person learns virtues by practice and is guided in their use by practical reason (Phronsis)
(Pellegrino and Thomasma 1996: 7).

As to the goodness of human character in general, Aristotle says that we start by having a capacity for
it, but that we need to develop it by practice of doing virtuous acts. We become virtuous by doing virtuous
acts. This argument may sound circular, since how can we do virtuous acts unless we are already virtuous?
Aristotle (NE B1, 1103 a 14-b; B4, 1105 a 17-b 18) responds that we begin by doing acts that are objectively
virtuous, without having a reflex knowledge of the acts and the deliberate choice of the acts as good, a choice
resulting from an habitual disposition. For instance, a child obeys its parents when told not to lie but without
perhaps realizing the inherent goodness of telling the truth, and without having yet formed a habit of telling
the truth. The acts of telling truth, however, gradually form the habit and as the process of education goes on,
the child comes to realize that telling truth is right in itself, and eventually chooses to tell truth for its own
sake. The child is then virtuous as far as telling truth is concerned. The circularity is thus resolved by the
distinction between the acts that create the good disposition and the acts that flow from the good disposition
once it has been created (Copleston 1963: 335). That is, virtue itself is a disposition that has been developed
out of a capacity by the proper exercise of that capacity. Incidentally, some individuals may have an inherited
a natural disposition to do good on occasion what a particular virtue requires. Nevertheless, this happy gift or
fortune is not to be confused with the possession of the corresponding virtue; for just because it is not
informed by systematic training and by principle even such fortunate individuals will be the prey of their own
emotions and desires.
Exhibit 4.2 is a second check on company cases against major developments of executive virtue.

Corporate Executive Virtue as a Perfection of Power

According to Thomas Aquinas (1984: 50-4), virtue designates a certain kind of perfection of a power.
Now the perfection of a thing is considered especially in relation to its end. Hence, virtue is a perfection of a
power in relation to its end. Some powers are determined to their acts, such as active natural powers. Hence,
these natural powers are in themselves called virtues. But rational powers, proper to humans, are not
determined to some one thing, but are indeterminately related to many, and they are determined to their acts by
habits, and therefore, these human habits are virtues. Also, power is twofold: power in regard to being and
power in regard to acting. Virtue is power in regard to acting - it is an operative habit. If virtue implies a
perfection of power, then virtue of anything is determined by the maximum of which power is capable, and as
a maximum of any power, it must be good. Hence, virtue as an operative habit is a good habit productive of
good works.
Aristotles theory of the virtues presupposes a crucial distinction between what any particular
individual at any particular time takes to be good for one self and what is really good for ones self as a
human being. It is for the sake of achieving the latter good that we practice the virtues and we do so making
right choices about means to achieve that end. Such choices demand judgment and the exercise of virtues
requires therefore a capacity to judge and to do the right thing in the right place at the right time in the right
way. This exercise is not a routinizable application of rules. Hence, perhaps the most obvious and
19

astonishing absence from Aristotelian thinking: there is relatively little mention of rules anywhere in his
Nichomachaen Ethics (MacIntyre 1984: 150).

Corporate Executive Virtue as a Golden Mean between Extremes

It is a common characteristic of all good actions that they have a certain order or proportion.
Accordingly, Aristotle declares virtue is a mean between two extremes, the extremes being vices, one being a
vice of excess of feeling or action, the other being a vice of defect thereof (NE B6ff). Thus, in relation to the
feeling of confidence or fear, the excess vice is rashness, and the defect is cowardice. The mean is courage
and is the virtue in respect to the feeling of confidence. Similarly, the virtue of the action of giving money is
liberality that stands between prodigality (excess) and illeberality (defect). The action-virtue of claiming
honor on a large scale is self-respect that lies between vanity (excess) and humility (defect). The action-virtue
of telling truth is truthfulness that lies between boastfulness and self-depreciation. Relative to the action of
building relationships, virtue is friendliness that ranges between obsequiousness (excess) and sulkiness
(defect). In relation to the feeling of anger, virtue is gentleness that lies between irascibility and unirascibility.
Relative to the feeling of shame, virtue is modesty that lies between bashfulness and shamelessness.
Concerning the feeling of pain at the good or bad fortune of competitors, the executive virtue will be
righteous indignation that poses between envy (excess) and malevolence (defect).
In defending virtue, an important question is why should one live according to reason and choose the
golden mean between excesses? For instance, if our conception of a good and successful life were amassing
wealth and power, then would not ruthlessness be a virtue? If as business executives, our corporate mission
were to grow, expand, make profits, and dominate the market, then would not ruthless cutthroat competition
and price wars be a virtue? If as business management executives our success was defined by higher sales,
higher revenues, higher market share, and higher profits, then would not ruthless undercutting competition,
blocking market entry, price dumping, predatory pricing, exorbitant pricing, price gouging, and the like be
executive business virtues than vices? Thus in defending both intellectual and moral virtues, we cannot
consider merely their contribution to some end, but must also inquire into the morality of the end itself
(Boatright 2000, p. 64).

Corporate Executive Virtue as Eudemonia or Happiness

The classical quest of ethics was to find and teach the good life and how to live it. This was the
common task of philosophers as diverse as Plato, Aristotle, Augustine, Aquinas, the Stoics, Confucius, the
Hindu sages, and Lao-tsu. Despite their different reasoning, all these philosophers shared the conviction that
it is in the nature of human beings to seek the good and that happiness and a good moral life are somehow
synonymous (Pellegrino and Thomasma 1996: 7). To be a good person and to live a good life are considered
human aspirations in tandem. Such aspirations were not imposed on human beings but rose from their very
nature as individual and social human beings.
Aristotle postulated happiness (eudemonia) as the ultimate good for human beings, and carefully
defined it as something specific to human beings alone: an activity of virtue in accordance with reason. This
happiness may also be translated as blessedness or prosperity; it is the state of being well and doing well in
being well (MacIntyre 1984: 148). The virtues are precisely those qualities the possession of which will
enable us to achieve happiness and the lack of which will frustrate our movement toward happiness. Activity
of growth and reproduction cannot be the ultimate happiness for humankind, since we share this happiness
with the animal world.
Happiness as an ethical end cannot consist simply in virtues as such: it consists rather in activity
according to virtue or in virtuous activity, understanding by virtue both intellectual and moral virtues.
Moreover, if it really deserves the name of happiness, then we must manifest over a whole life and not merely
20

for brief periods (NE 1100, a 4ff; 1101 a 14-20). Moreover, the virtuous activity of pursuing happiness may
be itself pleasurable, since pleasure is the natural accompaniment of an unimpeded and free activity. Virtues
are dispositions not only to act in particular ways but also to feel in particular ways (MacIntyre 1984: 149).
This makes virtuous activity worthwhile and endurable this shows the common sense (or nontranscendental) character of Aristotelian ethic of virtue (Copleston 1963: 335).

Corporate Executive Virtue as Human Flourishing

The traditional English translation of eudemonia is happiness, possibly stemming from its Latin
translation, felicitas. Cooper (1985: 89, footnote 1) finds this inadequate, since happiness is predominantly
a subjective psychological state that is temporal and recurrent. Much of what Aristotle says about
eudemonia is not fully captured by happiness since eudemonia implies a full, long lasting adult life of
fulfillment (NE 17 1098 a18-20; EE 1219b5). Cooper (1985: 89), following Anscombe (1958), suggests
instead the postmodernist term human flourishing as an adequate rendering of eudemonia: flourishing
implies the possession, use and fulfillment of ones mature powers or natural capacities over a long period
of time (NE I 10 1100 a22-30, 1101a22ff). Eudemonia is central to Aristotelian ethics. Even though
Aristotle treats it only in the Fourth Book of Nichomachean Ethics, yet the first two chapters prepare for it
by seeking answer to the question: What is at the most extreme limit of all good things achievable in
action? (NE I 2 1094a18-9; EE I 2 1214b7-9). Eudemonia is this ultimate end of all human yearning.
This ultimate end has three important properties (Cooper 1986: 92):

It is sought for its own sake;

Everything else is sought for this ultimate end, and
It is not desired for the sake of anything else.

Everyones desires must be thus structured toward this ultimate end. In reality they may not always
be, but ideally they ought to (EE I 2 1214b6-14).
Ones conception of what happiness or human flourishing is should determine what it means to flourish
in ones life, and what kind of life one regards as flourishing now (Cooper 1986: 96). Human flourishing as
an ultimate end belongs to a different order from any of the concrete ends one might adopt in ones life ends
like the exercise of ones physical, intellectual or social capacities. Thus to aim at having a flourishing life is
to pursue a second order end towards which other first-order ends are subordinated (Rawls 1971).
Virtue is critical for corporate executives functioning in a management situation. The virtue of virtues,
eudemonia or human flourishing, bears additional implications to management executives. Each of the
above eight propositions has different challenges for management executives. Each proposition implies
different legal, ethical and moral obligations in a management situation.
We may characterize the current debate on ethical assessment of executive behavior as polarized along
three behavior aspects: the person acting, the act itself, and the consequences. The first, person-based ethics,
popularly known as virtue ethics, is advocated by many moral philosophers such as Aristotle (1985), Aquinas
(1971), Carney (1973), Frankena (1973, 1975), Hauerwas (1975), and MacIntyre (1981), and among
marketing scholars, by Morgan and Hunt (1994) and Williams and Murphy (1990). The second, act-based
ethics is basically deontological ethics, while the third consequences-based ethics is teleological ethics. After
Alasdair MacIntyre's (1981) most influential work After Virtue, virtue or person based ethics is gathering
momentum and advocates.4

For a review see Donahue 1990; Kruschwitz and Roberts 1987; Pence 1984, Trianosky 1990, and Yearley 1990.

21

Part II: Virtue-Based Ethics Applications for

Corporate Executives
Analogous to MacIntyres (1981) threefold question posed earlier, there are complementary questions
such as:
1.
2.
3.

Why should Corporations be Moral?

Why should Competitive Management Activities be Moral?
Why should Management Executives be Moral?

Many scholars have posed the first question under varied forms (e.g., Goodpaster and Matthews 1982;
Hosmer 1994; MacIntyre 1988; Stark 1993; Velasquez 1983). Answering the first question convincingly
should answer the second and third questions. Apparently, the conventional ethical theories of deontology
and teleology have not adequately responded to the first question (MacIntyre 1984; Solomon 1992a) and
hence, are now looking for better answers in virtue-based ethics (e.g., Bowie 1991; Dobson 1998; Dunfee
1995; Lambeth 1990; MacIntyre 1984; OMeara 1997; Solomon 1992; Spohn 1992). In this section, we deal
with questions two and three.
Frankena (1973, 1975) maintains that virtue ethics cannot be an independent method of moral
reasoning. For him, virtues merely augment an existing method; they do not supply specific directives for
determining right or wrong conduct. Principles and rules direct, while virtues merely enable us to perform
what the principles command. But Nussbaum (1986, 1988) counter-argues that the Greeks used virtues
precisely to judge moral conduct. That is, virtues can provide the standards of morally right conduct, and
hence, virtues, not moral principles, are the source for understanding normative conduct. In fact, principles
and rules are derived from virtues: they are directives that obtain their content from the virtuous activity
which humanity enjoins (Nussbaum 1988). Dunfee (1995: 167), on the other hand, considers virtue-ethics
theory as an alternative to the stakeholder theory or the social-contracts theory.
Developing a virtue-based ethics for business, Solomon (1992a: 104) argues that mere wealth creation
should not be the purpose of any business. We have to get away from bottom line thinking and conceive
of business as an essential part of the good life, living well, getting along with others, having a sense of selfrespect, and being part of something one can be proud of. Individuals are embedded in communities and that
business is essentially a community activity in which we work together for a common good, and excellence for
a corporation consists of making the good life possible for everyone in society (Solomon 1992a: 209).
Some argue that a true understanding and living the virtue concept will be antithetical to competitive
economic activity. Thus, corporate executives fundamentally engaged by their profession in the competitive
acquisition of wealth, opportunity and growth could only exercise simulacra of the true virtues (Dobson
1998). According to MacIntyre (1984: 254), the tradition of the virtues is at variance with central features
of the economic order. According to MacIntyre (1984: 187), a necessary condition for a business person to
be virtuous is cooperative or communal business activity within the firm that qualifies for internal
practice. The concept of internal practice involves that any coherent and complex form of socially
established cooperative human activity through goods internal to that form of activity are realized in the
course of trying to achieve those standards of excellence which are appropriate to, and partially definitive of,
that form of activity, with the result that human powers to achieve excellence, and human conceptions of the
ends and goods involved, are systematically extended (1984: 187).
Stated thus and as applied to the corporation, MacIntyres concept of internal practices (that
presumably are a necessary condition for executive virtue) imply three points (Schwartz 1993):
1.

Internal practices of a firm define their own standards through ethical codes and organizational
culture, and corporate executives thereby define themselves by these standards.
22

2.

These internal practices are goal-oriented, each practice being directed by a set of goods or ends
intrinsic to the practice, such that engaging oneself in such practices is to pursue corresponding
goals.

3.

These internal practices are organic: they are systematically extended by the executive powers,
and by the ever-changing human conception of goals and end.

Internal practices with goals and results can change, expand, diminish, but not at the expense or gain of
another. These internal goods are not competitive, not objects but outcomes of competition to excel; they
are unique to the internal practices; they are fairly non-exhaustive; the more one has them, the better off is the
corporation and the community thereof (MacIntyre 1984: 188-91). External goods on the other hand, are
properties, possessions, profits, sales and market shares; they are objects of competition; they are competitive.
In relation to external goods, winners imply losers, the pie is fixed, and benefits imply costs. This is the
teleological aspect of virtues. This is the virtue-zone of hypothetical imperatives.
Virtue, therefore, is incompatible with external goods and the cutthroat competition they imply. But
virtue is possible and expected in relation to internal practices and internal goods they generate - these are
not competitive but invite cooperative human activity a necessary condition for virtue. It is of the
character of a virtue that in order that it be effective in producing the internal goods which are the rewards of
the virtues it should be exercised without regard to consequences (MacIntyre 1984: 198). This is the
deontological aspect of virtues. This is the virtue-zone of categorical imperative.
Hence, according to MacIntyre (1984, 1988), corporate and executive virtue belongs to the realm of
internal practices and internal goods. These should be nurtured, expanded, and shared throughout the
organization for their own sake without specific external goods in mind. The latter can contaminate them,
just as Kantian hypothetical imperatives can diminish the force of categorical imperatives. The more the
internal practices and integral goods are nurtured, the more will the company be disposed for betterment of its
external goods.
The distinction between internal practices where virtue should abound and external goods where
virtue is incompatible seems to be based on a false dichotomy. If internal practices feed into external goods,
why should virtue, which is compatible with internal practices, be incompatible with external goods? In fact,
it becomes more challenging and demanding in the zone of external goods. We illustrate this argument in
Table 4.1. We described the internal practices in relation to the traditional upstream, middle-stream and
downstream aspects of value chain activities each of which can generate its own specific external goods
where much virtue can be predicated. In fact, as indicated in Table 4.1, there is no area in business, internal
or external, where virtue is incompatible. Specifically in business managements, a good and virtuous
management executive will and should encounter challenges of virtue everywhere

The Nature of Virtue-Based Ethics in the Corporate World

To act rightly is to act rightly in affect and conduct. It is to be emotionally engaged, and not merely to
have the affect as accompaniment or instrument (Sherman 1989: 2). Emotions themselves are modes of
moral response that determine what is morally relevant and, in some cases, what is required. Business
management executive moral behavior is not a mere impartial application and observance of ethical and moral
rules. These rules fail to account for the executive virtue or disposition for caring, serving and developing
long-term human relationships with various stakeholders, chief among whom are customers and employees.
That is, over and above the ethics of deontology, teleology and distributive justice, we need an engaging ethic
of the virtue of caring, serving, and of building stakeholder communities - in short, an ethic of virtue.
23

Currently applying the Aristotelian approach of virtue to business, some recent authors (e.g., Gadamer
1975; Morris 1997; Solomon 1992a) have developed the notion of business as a human endeavor in which
executives ought to find fulfillment, and therefore, emphasize the need for virtue in business. Corporations are
wherein many executives spend most of their adult life. If executives must achieve happiness and develop as
full human beings, then corporations should nurture a corporate climate or culture that will facilitate this
development. The virtue approach to business is a valuable reminder that business is part of human life and
so part of moral life (De George 1999: 125).
Similarly, when thinking about a moral business management decision, one often thinks not so much of
what one is obliged to do, but instead of the kind of person one would be by doing it (Hauerwas 1981, 1983;
Pickoffs 1986). To act rightly is to act rightly in affect and conduct. Discerning the morally salient features
of a situation is part of expressing virtue and part of the morally appropriate response. Pursing the ends of
virtue does not begin with making choices, but with recognizing the circumstances relevant to specific ends.
In this sense, character is expressed in what one sees as much as what one does (Sherman 1987: 4).
Knowing how to discern the particulars is a mark of virtue (Aristotle 1985). Thus, in executing the business
management decision, besides asking the question whether the decision is morally good or bad, right or
wrong, fair or unfair, one should also ask more important questions such as - would I be honest or dishonest,
sincere or insincere, selfish or unselfish, in deciding and acting so?
Virtue ethics addresses these questions. While moral rules and principles (e.g., deontological,
teleological) are clearly essential to guide ethical executive choices, principles without virtuous character
traits are impotent (Anscombe 1958; Francine 1974: 65), and ethics without virtue is an illusion (Kreeft
1992). Principles by themselves do not provide the vision of moral good life and character that virtue ethics
emphasizes (Keenan 1995; Porter 1991, 1997; Spohn 1992; Williams and Murphy 1990). An action
motivated by the right principle but lacking in the right gesture or feeling falls short of the mean: it does not
express virtue (Sherman 1987: 2).
We must distinguish and contrast wisdom from cleverness, shrewdness, cunningness and other
manipulative capacities in business managements and transformations. The latter are often invoked in the
pursuit of overstating sales, revenue, market-share and profit; these so-called creative accounting skills
may often imply taking right steps but to wrong ends or wrong steps to defensible ends (Alderson 1964;
Bollier 1997; Galbraith 1971). Real business management-transformation wisdom or prudence takes right
steps to right ends, especially those that serve the common good of all stakeholder communities and
society.
There may be a strategic virtue in doing things rightly, but there is a moral virtue in doing right
things rightly (Aristotle 1985). In a similar sense, vices such as vanity, avarice, greed and worldliness are
contrary to wisdom, since they pursue wrong values. Vanity sees admiration as the highest value;
worldliness pursues good life primarily in terms of wealth and power; avarice and greed seek money and
other money equivalents (such as land, investments, businesses, wealth) as supreme values. Virtues strike a
golden mean between the excesses of too much or too little of the kind.

Exhibit 4.3 is a third check of our three case companies against major processes of an ethic of
executive virtue.

Realizing Good in Corporate Executives

Democritus (460-370 BC) held that to call a person good one had not only to do the good but also
want to do it because it was good. As mentioned before, Aristotle maintained that a virtuous person is not one
who does virtuous acts once in a while, but one who does them regularly over long periods of time and does
them as second nature. That is, just doing good or being occasionally virtuous is not sufficient ground for
24

characterizing a person as good. 5

Until very recently, moral philosophers, following Aristotle and Aquinas, had only one source for moral
description: the act. If a bad action was performed, mitigating circumstances were investigated to see if the
agent was partially or fully exonerated of moral guilt (Mascarenhas 1995). The question of subjective
goodness was rarely raised, and if so, almost exclusively in the context of imputability (Keenan 1992: 4).
That is, philosophers did not examine cases on the other side of the distinction: they did not discuss people
who do objectively good acts but on selfish grounds. The question of the good person was rarely examined.
The presupposition was: we are what we do. Thus, the person who did good was good and the one who did
bad was bad. Obvious other combinations, such as a good person who did bad, or a bad person who did
good, were not explored. Reinforcing the presupposition, the word good primarily described acts.
Goodness was not used, as it is today, primarily and principally to describe persons (Keenan 1992: 4-5).
Table 4.2 characterizes this way of dichotomous thinking. The vectors are good versus bad motives
that result in good versus bad actions. This table makes room for people with good motives doing bad things
and for people with bad motives doing good.
Kant argued that good was descriptive only of the human will: that is, not acts but willing persons are
good. His presupposition was not that we are what we do, but that we may not be as good as our actions
appear to convey. He distinguished a person who acts out of duty from any act in accord with duty. An act
in accord with duty, e.g., executing a prisoner, could not itself be called good. Rather, good acts were those
done by persons acting out of duty. A mother acting out of duty to parent a child is doing good. But Kant did
not examine the distinction whether persons were good who acted out of duty but who performed acts not in
accord with duty. Though Kant examined acts in accord with duty performed by people not acting out of
duty, he did not explore the converse (Keenan 1992: 5). For instance, a parent acting out of duty to taking
care of her child may act not in accord with duty and err through too much leniency or rigidity.
Twentieth century philosophers asked a different question: they did not ask questions about goodness,
but about rightness. Moore (1912) asked whether we could describe actions as right or wrong without
considering the motives of the agent. Moores answer to this question establishes the distinction between
goodness and rightness. Moore (1912: 80) sought to determine the objective notion of right. His definition is
utilitarian: the act that produces a maximum pleasure will always be called right, for an act can only be wrong
if it produces less than maximum. Moore (1912: 187-9) distinguished the agents motives from the act:
whether an agent deserves praise or blame depends upon the agents motives, and not on whether ones action
is right or wrong. Secondly, Moore distinguished a persons perception of the right from what in fact is
objectively right; even with the best of intentions a person may not perceive the right. 6 With these two
distinctions, Moore provided a fresh insight: persons are good, while actions are right. However, like
Democritus and Kant, Moore did not call a person good who with good motives performed a wrong act. He
also presumed that a right act was a necessary condition for calling an agent good. Over against the
presumption, we are what we do, Moore made it clear that right actions can be done by good and by bad
people. Hare (1952: 185) refined this distinction by identifying good acting with good motives.
5

During the Middle Ages, related questions discussed were such as, was one bad if the person followed an erroneous conscience?
For instance, if one broke the law not knowing anything about the law, was he bad? Some declared that the person was bad on the
grounds that breaking the law, knowingly or not, was sufficient grounds for calling the person bad. Others denied and maintained
that any person who acted conscientiously (i.e., followed ones conscience) was always good. Aquinas turned the debate right side
up and asked whether a person who refused to follow the conscience was bad, and answered in the affirmative. He then asked,
whether a person who followed an erroneous conscience was good, and argued that person who both could not have known the law
and tried to do the good was excused from any moral blame for the bad action (Aquinas 1963, Summa Theologiae I-II 19 5c, 6c).
6

On the other hand, a person motivated by selfishness may nevertheless calculate what the right act is and do it. Thus, Moore
(1912) concluded with a paradox (later called the Moores Paradox) regarding the act of an agent with bad motivations: A man
may really deserve the strongest moral condemnation for choosing an action which actually is right (1912: 193-5). But Moore
came off with a new insight: that a person is bad does not affect the rightness of an action.

25

Realizing Goodness in Corporate Executives

Contemporary moral philosophers argue that executed acts are not necessary for the moral description
of persons. That is, goodness (or badness) is not consequent to questions of rightness or wrongness but
antecedent to it, distinct from it, and determinative of it. Persons are good who strive to realize the right, and
actions are right when they satisfactorily fulfill the demands of protecting and promoting values. They hold a
new presupposition concerning moral description: good and bad people behave rightly and wrongly. With
this new presupposition, a person who performs a wrong action can be called good for performing the action,
as long he strives to do the right. Thus, we no longer call people good if they do good actions, rather we call
them good when they strive to realize rightness. Conversely, people are bad not when they perform bad
actions but when they fail to strive to perform the right. Badness, then, is not simply acting out of selfishness
or malice; prior to act, badness pertains to the failure to strive for rightness (Keenan 1992: 6-7).
Goodness, then is striving for rightness, and badness, its contradictory, is failure to strive for rightness.
Thus, goodness is distinct from rightness but not independent of it. Thus, parents who simply dote on their
children without seeking the right cannot claim to love their children. A claim may be made, but the claim
remains empty. Similarly, parents who strive to raise their children well but err through extreme severity or
leniency truly love; that is, such parents are good, but their parenting is wrong. Since goodness is antecedent
to rightness, good parents are those who strive for right parenting, and all of them may not succeed. Good
business management executives, accordingly, are those who strive for right business management. Goodness
in business managements simply asks whether one strives out of love or duty to realize right business
management activity. Rightness asks whether the activity itself protects and promotes values. Goodness is
not a term of acquittal. If good executives perform wrong actions, their primary concern should be to remedy
the situation in which harm has been done, because being good, they want to do the right. Compared to Table
4.2, Table 4.3 characterizes a more comprehensive way of multilevel of dichotomous thinking in
understanding virtuous versus non-virtuous behavior and its consequences. There are four vectors in Table
4.3:
a) Good versus bad executive motives this is the zone of morality ethics;
b) People striving to be right and wanting to do right versus those who do not strive nor want to be
right this is the zone of goodness versus badness a virtue-ethics domain;
c) People doing the right versus wrong action this is the zone of deontological ethics, and
d) The resulting consequences being good versus bad this is the teleological question.

Thus, Table 4.3 is sufficient to characterize people as good versus bad not based on actions alone
or their consequences, but also on what precedes these actions, namely, executive motives and striving-efforts.
This table makes room for good people with good motives and good striving to do both right or wrong with
good or bad consequences. It also includes the bad people with bad motives and bad striving to do both
right or wrong with good or bad consequences.
Contemporary understanding of moral goodness is fundamentally related to the concept of human
freedom (Schller 1979; Fuchs 1983). Each individual enjoys a distinct degree of personal freedom. Due to
nature, nurture, economics, luck, and other external causes, some people are more capable of realizing right
activity; that is, realizing goodness. Some have a ready disposition to be temperate; others have a ready
disposition to be chaste; some can never be racist; some are timid by nature, while others are innately brave.
Personal strengths and weaknesses arise from a variety of formative forces (Keenan 1992: 8). In general,
people perform right activity based on their strengths, and wrong activity from their weaknesses. Since each
person has a different set of strengths and weaknesses, each person is differently inclined to right or wrong.
One could improve upon ones strengths and reduce ones weaknesses this is the exercise of virtue by which
one orders oneself. The more a person enjoys personal freedom, the more is that person rightly ordered, and
26

vice versa.
Conversely, the more a person is rightly ordered, the more is that person predisposed to realize right
activities, and this is goodness. The reason that some people behave more rightly than others is not
necessarily due to striving; rather, those who behave rightly tend to be persons that are rightly ordered, and
those who behave wrongly tend to be persons that are disordered (wrongly ordered) people. They (e.g., those
who are inclined to excessive drinking, dishonesty, or opportunism) are less likely to behave rightly (Keenan
1992: 9).
Rightness concerns two dimensions of human living: a) that the agent is rightly ordered; b) that the act
is rightly ordered. One does not follow from the other: temperate people may occasionally fall, and not all
alcoholics always drink excessively. Consider, prudence, the most important of the virtues: the selfish and the
amoral are as capable as the saints of giving right advice. Similarly, one can imagine the loving and the
selfish to be temperate, or the wicked to be brave (MacIntyre 1981: 166-7).
No one, no matter how well ordered, is perfect; no one, no matter how disordered, is an absolute
failure. Hence the need to distinguish whether a person is actually living a rightly ordered life and whether a
persons action is right; neither description, however, depends upon goodness. Goodness asks whether one
strives through right action to make oneself rightly ordered. The good person consistently looks for
opportunities that better ones strengths and reduce ones weaknesses that order oneself, and that make one
more free.
Exhibit 4.4 is a fourth check of case companies against major antecedents of executive virtue that we
have discussed thus far.

Goodness and Virtue for Corporate Executives

Something is called good insofar as it is perfect. Perfect signifies what is good, since the perfection
of anything is its goodness. The perfection of a thing is called good because the perfect is that which all of
us seek. Good perfects because it is perfect. Goodness is, then, the completion or fulfillment of some
entity, i.e., its perfection. Should a being lack something that it ought to have, it would be imperfect. The
identity of the good with the perfect is continuous throughout Aquinas writings (Keenan 1992: 96). In his
Summa Contra Gentiles Aquinas writes: the good for each thing is its action and perfection(SCG
1.37.307).
According to Aquinas, virtue is an operative habit: it does something. Virtue perfects a power for its
operations: it perfects the intellect in intellectual virtues, and it perfects the will and the appetitive powers
(will, emotions, and passions) in moral virtues. As a form, virtue perfects the power in which it resides.
Thus, virtue perfects the person, making the agent good and the operations also good (ST I.II 55.3c; 56.1,
ob2; 58.3c; 68.1c; II.II 47.4c).
We generally call a person virtuous who is both rightly ordered and therefore, predictably good. When
we attribute a specific virtue to someone, we imply that we can predict a specific behavior relative to that
virtue. For instance, a temperate person will enjoy a party without getting drunk; a brave person with neither
shun nor search for danger; a just person will take delight in respecting the rights of all people; a prudent
person will always assess the costs and benefits before deciding on a value-balanced activity. Each attribution
of virtue describes someone as rightly ordered in a specific area of human activity. Often goodness is not even
presumed. And in general, we call someone virtuous, if that person demonstrates striving to right activity in
all the dimensions of his or her personality. To remark that a person is virtuous is to predict that the person
will consistently perform rightly ordered behavior (Keenan 1992: 10). In practice, that person is temperate,
brave, just and prudent. People who are rightly ordered are persons with virtues: their will, reason, and
27

passions are ordered. As habits of living or conduct, virtues belong to those who live rightly (Fagothey 1959).
In turn, virtues enable persons to act rightly. The virtues are acquired not by repeatedly performing the same
types of actions but by intending and executing the same types of actions: the virtues are acquired willfully
and not accidentally (Keenan 1992: 13).
From a practice point of view, MacIntyre (1999: 66-98) speaks of a threefold classification of
ascription of good:
1.

Ascription of good by which we evaluate something only as means; for instance, to possess certain skills,
to afford certain opportunities, to be at certain places at certain times is a good insofar as it enables
one to be or do or have some further good; these things are good only as means for that further good.

2.

Ascription of goodness to someone in some role or function within some socially established practice; this
is to judge that agent good insofar as these goods are internal to the practice and are considered as
ends worth pursuing for their own sake. For example, excellence as a chess or bridge player, as a
doctor or lawyer, as a golfer or soccer player, as a violinist or figure skater are values sought as ends
within each practice, art or skill. Some operant virtues such as temperance, courage, prudence and
justice belong here.

3.

Ascription of goodness to all human beings as human beings, not as fulfilling certain roles but fulfilling
ones human being and becoming. These are unconditional judgments about human flourishing, how
best they enable us to live genuine human lives of effective practical reasoning in almost every culture
and space and time. Some general intrinsically human virtues such as goodness, truthfulness,
benevolence and freedom belong here; these virtues are pursued for their own sake and qua human
beings.

Practical reasoning is used under all three ascriptions, but the exercise of independent practical
reasoning is one essential constituent to full human flourishing (MacIntyre 1999: 105).

Benevolence and the Four Cardinal Executive Virtues

Not all good people are virtuous or rightly ordered; some good people may still be disordered in some
areas of their life. Hence, beyond the virtues of temperance, courage, justice and prudence, moral
philosophers postulate a fifth virtue that conditions all these four cardinal virtues to make the person good:
charity or benevolence (Keenan 1992: 11; Rahner 1966). Charity or benevolence does not only mean
performing charitable acts; this is one of its outcomes. Real charity or benevolence is the love that strives for
greater union with God and neighbor through attempts that realize right living.
Charity or benevolence is a virtue of striving, whereas temperance, courage, justice, and prudence are
virtues of attaining. Benevolence (or charity) is the moral description for a person who literally strives to
realize rightness (Frankena 1973). The benevolent persons will is bent on right realization, but it may not
always attain the beneficial act (Schller 1979: 188ff). The benevolent person is good, but his or her behavior
may sometimes miss the mark (Keenan 1992: 11). Thus, when someone possesses the four cardinal virtues,
that person is rightly ordered; if in addition that person is also benevolent, that person is good. Conversely,
one may be benevolent but not with the four cardinal virtues: this person strives to be temperate, brave, just
and prudent, but has not yet attained such integration. That is, many people may be benevolent, but not yet
brave, temperate, just and prudent; but notwithstanding their failure to attain rightness, they often may mean
well, try hard, and certainly wish to be otherwise.
Any willful exercise is twofold: the primary exercise out of which we are moved, and the secondary
exercise by which we execute the judgment to act. The primary exercise defines goodness; the secondary
exercise defines rightness. For instance, out of benevolence a mother may judge to overlook the wrongdoing
of a child. The mother is good, because she is seeking what is right for the child. Nevertheless, perhaps the
28

child actually needs in this particular instance to be corrected or punished. If so, then the act of overlooking
is wrong in this case; by exercising this wrong judgment, the mother is failing to grow in parental prudence.
The first exercise of being moved by benevolence has no connection to rightness, as its does not necessitate a
right judgment. However, it requires the willingness to exercise oneself toward what one believes is right
judgment (Keenan 1992: 55-6).
Virtues are constant interior dispositions that produce promptness and facility of action as well as joy in
acting; but they do not pertain per se to goodness (Pinckaers 1962). As rightly ordered interior dispositions,
they enable us to intend and execute other rightly ordered acts. Whether these rightly ordered acts are
acquired out of goodness or badness, pertains to whether the agent is benevolent or not. For instance, one
may be brave, temperate, just and prudent for different reasons: for instance, an egoistical politician may try
to be just for the sake of political gain; a sexually frigid person may find temperance easy; a young rookie
may strive to be brave for career objectives. A specific virtue tells us only that one wants a rightly ordered
disposition in a specific aspect of life such as temperance, courage, justice or prudence; they do not tell us
why. We need benevolence to explain that the person who intends to acquire virtue is intending rightness out
of goodness (Keenan 1992: 13).

Corporate Ethics Failures

Our moral judgments are made by our conscience the inner voice that is not so much developed as
is a gift given to us by our religion, upbringing and culture. Often, conscience is what decides in a moral
dilemma; the latter is called dilemma because competing values make it difficult for one to find the right
answer. As corporate executives take on more responsibilities and juggle more roles and commitments,
their dilemma becomes increasingly complex, loaded with grey areas, and difficult to resolve. Confronting
conflicting dilemmas requires careful attention to the facts, objects, people, events, properties, values and
cultures that are involved, and investigating many possible solutions to the problems originating dilemma.
Making the right judgment and decisions depends less on feelings and emotions but on a rational process of
moral deliberation. Moral judgments require more than knowledge of the values drilled into us since
childhood. We need what Greek philosophers like Aristotle called phronesis, a kind of prudence or
practical judgment of knowing that apprehends the theories but also appreciates how these theories apply to
experience and good judgment. Phronesis is like wisdom the capacity to make good decisions in real-life
situations. Phronesis does not occur by mere transfer of knowledge from teacher to student; it needs
facilitative and discursive teaching; it requires drills in order to make sound moral decisions; it demands
that mentors guide students through the actual process of making a moral judgment or decision (PalmaAngeles 2014).
Most corporate failures today reflect low levels of wisdom and phronesis, low level of ethical maturity,
and often, a badly trained conscience. A person may be good or morally upright in his personal dealings
as a good son, daughter, parent, a classmate or friend that is being good to people close to us. Being just
good in this sense does not prepare a person for professional life. Being ethical is not only about being a
good spouse, a good neighbor. Ethical maturity is more than that: it is about rising to a level of living
where we become concerned with the interests of anonymous others affected by our decisions. It is like
the Golden Rule: Do unto others what you would others do to you. It is about being a good citizen, being
cognizant and fair to those we do not know personally, but who are nonetheless stakeholders in our world.
As Howard Gardner (2006: 129-30) observes, the more morally mature we become, the more we
develop our ability for abstraction. In the jargon of cognitive science, ethics involves an abstract attitude
the capacity to reflect explicitly on the ways in which one does, or does not, fulfill a certain role. Ethical
maturity requires us to go beyond a personal point of view to the standpoint of an impartial spectator.
Ethical maturity transcends inward looking concerns to identifying ourselves with the most objective point
of view the point of view of the others or the universe. Ethical maturity is the result of a deliberate
29

process of formation a process that transforms us into self-propelling moral agents capable of logical and
abstract thinking and reasoning whereby we can anchor our decisions upon universal moral principles.

Observation and Measurement of Corporate Virtues

How can one assess a rightly ordered person? How can one assess a person as virtuous? Given our
discussions above, we should be able to define and measures some of aspects of these two related notions.
Both notions imply behaviors that can be observed such as, the rightly ordered or virtuous persons can discern
and keep striving for the right actions, can discern and avoid wrong actions, will have consistently acted
rightly, will have consistently avoided acting wrongly, and will be comfortable with right actions and
uncomfortable with wrong actions. Moreover, they have an uncanny way of striking balance between
excesses. They demonstrate patterns of temperance and bravery, justice and prudence, above all,
benevolence, in our previous encounters with them. As judged from their behavior their motivations seem
right and their intentions seem good. The final outcomes of their rightly ordered actions most often seem
genuine goodness for all, with harm meant to none. All these activities are observable and/or interpretable,
documentable and verifiable, and hence, predictable. Regarding the last qualifier - these people have acted
rightly in the past, and have demonstrated high levels of goodness thus far, and we can safely predict they will
behave so in the future. In general, benevolence can serve as a description for all good persons. Recent moral
philosophers emphasize the observability of otherwise abstract notions such as being rightly ordered, virtuous,
and good (Hampshire 1982). Goodness per se, may not be directly observable, but must be deduced or at
least presumed from other observable behavior such as ceaseless striving for and consistently rightly ordered
actions (Keenan 1992).
However, some cautions are in order. Regarding observation of virtues, Augustine raised some
questions (Langan 1979). Each virtue has a version of what Augustine called a deceptive resemblance. For
instance, imprudence is a vice that is contrary to the virtue of prudence, but craftiness is its deceptive
resemblance: the latter is cleverness of a bad or selfish person. Thrift as contrary to vice of prodigality is
right behavior, but niggardliness is its deceptive resemblance; the latter is thrift of a selfish person. Similarly,
according to Augustine, injustice is a vice contrary to the virtue of justice, but vengeance is its deceptive
resemblance: vengeance belongs to the selfish, and justice to the benevolent. Thus Augustine argued that
moral virtues have both contrary vices and deceptive resemblances; while the virtues and their contrary
vices can be observed and measured, deceptive resemblances being deceptive and outcomes of selfishness
are both hard to observe (Langan 1979). These could be right behavior, but resulting from bad dispositions
(Keenan 1992: 13).
Another elusive aspect of moral behavior is underlying motivations and intentions. The boundary
between goodness and rightness is marked by the distinction between motivation and intention. Rightness
has two dimensions: the choice, and the agents reasoning for acting; the latter is intention. Rightness pertains
to intention and choice: one can actually have the right intention but, lacking prudence, make a wrong choice;
or one make a right choice but from a selfish intention. According to some moral philosophers (e.g., Frankena
1980: 48; Hare 1964: 185) moral goodness depends solely on the motivation of the person. Motivation can
be psychological or moral: psychological motivation concerns question of rightness or wrongness whereas
moral motivation concerns whether one moves oneself out of benevolence or charity to realize oneself or ones
action rightly. Moral motivation explains the agents fundamental disposition: the driving force behind ones
prudent, temperate or chaste behavior. If one is morally motivated solely out of self-aggrandizement or
egoism, then it could be immoral; if one is motivated predominantly by benevolence, it is moral (Toulmin
1950: 155-60, 201-11). Moral motivation gives moral significance to all right dispositions, virtues and
actions, and it alone is the singular description of moral goodness (Keenan 1992: 15).
Summarizing the above discussion on moral goodness, Exhibit 4.5 is the fifth and last check of
company cases against major requirements of moral goodness via executive virtue.
30

Cultural and Geographic Determinants of Virtue

Following MacIntyre (1981, 1984, 1988), we may define the task of virtues as the acquisition and
development of practices that perfect the agent into becoming a moral person while acting morally well.
Virtuous practices enhance both one's actions and character. The crucial question that poses immediately is,
precisely what are the most important virtues that make one a moral or good person? The answer is
complicated on two counts: a) claims of culture and geography, and b) the uniqueness of individuals.
Regarding both these propositions, MacIntyre (1981, 1988) warns that historically local communities
determined the practices that shape the virtuous person. For instance, in the Greek Homeric culture, one
considered the warrior to be the prototypical virtuous person. Aristotle (1984) reflecting on Greek
aristocratic culture posed the Athenian gentleman as the paragon of virtue, especially, of prudence. Each
community and era elevates its own icons of holiness: a young Maria Goretti who dies fighting off a rapist is
not a Dorothy Day (Patrick 1987). Besides the claims of culture, the uniqueness of the individual makes its
own claim. Similarly, American individualist cultures (e.g., The American Idol) have venerated their own idols
of virtue and good life (Bellah et al., 1985, 1992). No single portrait of a moral saint or hero has ever
provided a definitive expression of what a human person ought to be. Thus, any attempt to articulate a single
anthropological portrait normative for moral conduct is futile and fictitious; moral excellence is as unlimited
as the individual is complex and as human experience is itself original (Flanagan 1991). The deep truth is
that persons find their good in many different ways; the heterogeneity of the moral is a deep and significant
fact (Flanagan 1991: 158, 195). People can only become morally excellent persons by being themselves; the
saint has always been an original, never an imitation (Keenan 1995).
Even Kohlberg's (1981) model of the morally right person who goes through a series of six successive
stages of growth to reach the final stage of moral development is essentially reductionistic and demands
unreasonable conformity; the person emerging through the six stages may not be a right thinker, but just a
Kohlberg clone (Whitebeck 1992). Kohlberg's theory suppresses the fact that that the "heterogeneity of the
moral is a deep and significant fact" (Flanagan 1991: 158). Even the prefabricated categories of
psychological testing (e.g., a J, E or P in Myers-Briggs, or 1 to 8 in anagrams) by which we try to predict and
understand behavior surrender the uniqueness of our human identities (Flanagan 1981).

Reverence as an Executive Cultural Virtue

[See Ciulla, Joanne B. (2015)]

Several philosophers and researchers touch on what Pruzan (2014) says about the consciousness and
personal character of the leader. Confucius observes, If a ruler sets himself right, he will be followed without
his command. If he does not set himself right, even his commands will not be obeyed (Confucius, Analects
13.6). Spirituality may be a way of setting oneself right but the humanistic approach emphasizes doing so
through others. Confucius writes, A man of humanity, wishing to establish his own character, also
establishes the character of others, and wishing to be prominent himself, also helps others to be prominent
(Confucius, Analects 6.28).
Empirical studies of authentic leadership focus on self-knowledge. Bruce Avolio and Fred Luthans
define authentic leadership as a process that draws from both positive psychological capacities and a highly
developed organizational context, which results in both greater self-awareness and self-regulated positive
behaviors on the part of leaders and associates, fostering positive self-development (Luthans and Avolio
2003: 243). This definition later adds explicit and doable moral elements such as: a pattern of leader
behavior that draws upon and promotes both positive psychological capacities and a positive ethical climate,
to foster greater self-awareness, an internalized moral perspective, balanced processing of information, and
relational transparency on the part of leaders working with followers, fostering positive self-development
(Walumbwa et al. 2008: 94).
31

Authentic leadership is basically about how a leaders self-knowledge contributes to making oneself an
effective and a moral leader. There is an inherent circularity in this definition of authentic leadership. Morality
seems to be both - the cause, the effect or result, and quality of being authentic. One senses a similar problem
with spiritual-based leadership. Spiritual-based leadership seems to entail a more introspective process than
servant leadership in which leaders grow and develop by improving the people that they serve (Greenleaf
1977). Spirituality may not be necessary for ethical leadership; however, Pruzan believes that spirituality
motivates leaders to be ethical. Yet, people can also motivate each other to be ethical.
The Southern African concept of ubuntu offers another example of how identity and moral growth are
connected to the community. Archbishop Desmond Tutu says that a person with ubuntu is open and not
threatened by others because he or she has a proper self-assurance that comes from knowing that he or she
belongs in a greater whole and is diminished when others are humiliated or diminished, when others are
tortured or oppressed, or treated as if they are less than who they are (Tutu 2000: 31).
Philosophers such as Confucius and ancient Greeks such as Socrates, Thucydides, and Protagoras refer
to the virtue of reverence in a way that seems similar to spirituality. The ancient Greeks emphasize reverence
as the primary virtue for leaders. As philosopher and classicist Paul Woodruff writes in his book Reverence:
Renewing a Forgotten Virtue, reverence is the virtue that keeps leaders from trying to take tight control of
other peoples lives. Simply put, reverence is the virtue that keeps human beings from trying to act like gods
(Woodruff 2001: 4). According to Woodruff, reverence consists of the ability to feel awe and a profound
respect for others that comes from the realization that leaders and followers are all part of a larger whole.
Reverence is a kind of umbrella virtue that encompasses humility, respect for persons and the world
around us, and a sense of awe about things greater than the self. Today people usually think of reverence in
relation to religion however, it is also a secular notion that makes an explicit connection between the self and
others, leaders and followers. Pruzan touches on this idea when he talks about the feeling of unity that
comes with love. Since reverence is a virtue, which is not a feeling but a practice and way of doing things, it
is easier to get around Pruzans paradox of pragmatism. Aristotle defines virtues as conscious habits or
things that we do. We learn them through education and role models (Aristotle, Nichomachean Ethics, Book.
2.5).

Cardinal Virtues for Corporate Professionals

Cardinal virtues concern rightly ordered lives, and acquired cardinal virtues are accessible to all people.
Being virtuous is more than having a particular habit of acting, e.g., prudence. Rather, it means having a
fundamental set of related virtues that enable a person to live and act morally well. The cardinal virtues (the
word cardinal is derived from the Latin word cardo for hinge) provide the minimal both of what human
persons should basically be and at what human action should basically aim. They do not characterize the ideal
business management person nor exhaust the entire domain of business management virtue. They enable a
person to be sufficiently rightly ordered to perform morally right action. Beyond the cardinal virtues other
virtues may be needed and important, but the cardinal virtues perfect the fundamental anthropological
dimensions of being human that are needed for integrated virtuous behavior (Aquinas 1963: ST I-II, 61:2-3).
All other issues of virtue hang on the skeletal structures of both rightly integrated dispositions and right
moral action (Keenan 1995). That is, we could make the description of cardinal virtues formal enough so that
each business management culture (specific to country, industry, firm, product, and brand) could fill each
virtue with its specific material content for practical application.
Thus, if we want to pursue the project of naming cardinal virtues in business management, we need
to take the claims of business management culture and the uniqueness of business management professionals
32

into account. Following Flanagan (1991), our pursuit is not so much naming so called cardinal virtues in
business management, but whether we ought to preconceive a definitively virtuous person in business
management (as a unique incarnation of business management virtues). Alternately, following Keenan
(1995), we can simply identify the minimal conditions that must be met to call a business management person
virtuous. That is, we will investigate the possibility of naming certain minimal though universal expressions
of corporate virtues that subsequently may be given content in diverse business and market cultures.
We pursue the proposition of cardinal virtues for the corporate executive primarily to respond to the
three-fold question of MacIntyre (1981) posed earlier: Who am I? Who ought I to become? What steps
ought I to take to become that person? These questions move from self-examination to an expression of
goals to finally a discernment of means to achieve those goals (Keenan 1997). These questions are
extraordinarily general: they cross cultural boundaries and transcend individual uniqueness. Rather than
being definitive expressions of character, the cardinal virtues perform a heuristic function to answer broadly
the three questions raised by MacIntyre; they express what minimally constitutes a virtuous person.
The classical cardinal virtues proposed by Aristotle (1984), Aquinas (1963), MacIntyre (1981), Pieper
(1966), Porter (1987), and others are prudence, justice, fortitude, and temperance. Hence, rather than reinvent a list, we might as well investigate into this time-tested set of four virtues as a fit for business
management professionals. They are called cardinal because they are principal or fundamental to the
rectitude of virtuous living. They provide the basics for all right order in human action. They are necessary
and sufficient conditions for describing an agent and an action as virtuous (Keenan 1995). This rectitude
consists in ordering the appetitive, intellectual and moral powers that enable us to act. For instance, prudence
orders our practical reason; justice orders the will or our intellectual appetite; temperance and fortitude
perfect the passions. The four virtues are cardinal because they sufficiently order all those areas of our lives
that are engaged in moral acting (Porter 1993).
The cardinal virtues are connected. The basic intellectual virtue among these four is prudence: the
practical reason (phronesis according to Aristotle 1984). It looks forward to the overall end of life and sets
the agenda for attaining that end and all intermediate ends (Aquinas 1963); it discerns and sets the
standards of moral action. Hence, Aristotle (1984) and Aquinas (1963) held the absolute priority of
prudence: no acquired virtue is more important. That is, prudence governs all the other three cardinal
virtues. That is, prudence can properly direct the agent to be just, temperate, and fortitudinous. Fortitude
or courage perfects the irascible or struggling power; temperance or moderation perfects the concupiscible
or desiring struggle in us. Both fortitude and temperance primarily reflect the morals of the body: they
order us interiorly. However, we pursue temperance and fortitude in order to be more just. Next to
prudence, justice is the chief moral virtue. Justice is the only relational virtue. Justice relates us to others
and orders all our relationships and exterior activities with people (Rawls 1971). A virtue is greater to the
extent it expresses higher and more rational good. Justice expresses that greater good both by the fact that
it is in the rational appetite and thus nearer reason, and because it alone orders not only the agent, but the
agent in relationship to others. For this reason, justice is the chief moral virtue (Aquinas 1963; I-II, 66.4).

Cardinal Corporate Virtues in Conflict

To the extent that prudence, justice, fortitude and temperance have their own domain and subject
matter, they may not conflict, nor have competitive claims against each other. In their hierarchical
relationship to reason, prudence comes first, then justice, then fortitude and temperance. That is, while
temperance governs all our interior appetites, fortitude governs our appetites in relation to others, and justice
governs all our external actions, prudence governs the right dispensation of justice, fortitude and temperance.
Hence, a descending hierarchical sequence, both logical and ontological, from prudence to justice to fortitude,
and to temperance seems intuitively reasonable. If there is any conflict between temperance, fortitude and
justice, then justice would take simple priority (Aquinas 1963; I-II, 61.2-4; 66.4). Thus, according to
33

Aquinas, justice holds a privileges place; it has no competition; it is both necessary and sufficient by itself.
But giving justice too much priority and prominence may degenerate virtue ethics back to a distributive
justice ethic of principles and rules, precisely what virtue ethics is trying to avoid. Hence, contemporary
virtue-ethics scholars do not accord justice its self-sufficiency, but instead twin justice with other virtues such
as trust or faith, love or charity. Contemporary virtue-ethics acknowledges the possibility that cardinal virtues
could be in competition or conflict with one another (Spohn 1992). In this sense, virtue ethics concurs with
deontologists and teleologists in maintaining that conflict among key directing guidelines is inherent to all
methods of moral reasoning (Keenan 1995).
Frankena (1973: 52), for instance, saw irresolvable conflict between the two fundamental principles of
beneficence and justice. In the context of biomedical ethics, Beauchamp and Childress (1989: 211) argue that
there is no overriding authority or principle in either the patient or the physician, not even to act in the
patients best interest. Similarly, Hauerwas (1981: 144) argues that we have the task of sorting out conflicting
values throughout our moral lives; that is, in the long run, we must live a life that ethically incorporates a
variety of relational claims that are made on us. This we do through the narrative of our lives we live.
Thus the virtues are related to one another not in some inherent way as was argued by the classical
exponents of cardinal virtues. Nor do they complement one another per se. Rather, they become integrated
in the life of the prudent person who lives them (Keenan 1995: 722). The unity of the virtues is found not in
some theoretical apportioning of the cardinal virtues to specific powers or faculties; it is found rather in the
final living out of lives shaped by prudence anticipating and responding to virtuous claims.

The Unique Role and Primacy of Prudence in the Corporate World

Among the intellectual and moral virtues, prudence stands in a category by itself. Prudence is in reason
as its subject, and since virtue perfects the subject that it dwells in, prudence perfects reason. The object of
prudence is things to be decided and done; i.e. the object of prudence is all immanent operations. Hence, the
object of prudence needs the specific moral virtues to provide the context of its activity. For this reason,
prudence is the only intellectual virtue that needs the moral virtues. In other words, as all immanent
operations are its object, prudence always engages the same objects as the moral virtues.7
In his Theory of Moral Sentiments, Adam Smith (1790: 189) defines prudence as the union of two
qualities of a) reason and understanding, on the one hand, and b) self-command on the other. Smith used the
notion of self-command from the Stoics; this has nothing to do with either self-interest or what Smith calls
self-love. Prudence goes well beyond self-interest maximization; among all virtues, prudence is most
helpful to the individual, whereas other virtues such as humanity, justice, generosity, sympathy and public
spirit, are the qualities most useful to others (Smith 1790: 189).
7

Prudence requires the moral virtues, and the moral virtues require prudence their interconnection spells their mutual
dependency. Without prudence, this interconnection could not be posited and the three moral virtues could be just habits but nor
virtues (ST I.II 65 1c, ad1, ad3, ad4). That is, without prudence the three habits will be just inclinations lacking the complete
character of virtue. Acting through prudence, however, reason directs and forms these inclinations into the moral virtues (ST II.II
47.5 ad1). The centrality of prudence in establishing the interconnection of the virtues is unique to Aquinas. The moral virtues are
interconnected through prudence. He refers to the form in describing the relationship of prudence to other virtues: prudence
unites the virtues because in defining the mean for each moral virtues it stands as that which is formal in all the moral virtues
(ST I.II 66 2c), and hence, all these other virtues are matter to prudence (ST I.II 65 1 ad3). And since all moral virtues derive
their goodness from their formal element, they derive goodness from prudence (ST I.II 67 1c). Each habit is specified by its own
matter: justice by operations, fortitude by passions, but each habit is a virtue by prudence (ST II.II 47 5c). Thus, the whole matter
of moral virtues falls under the one rule of prudence(ST I.II 65.1 ad3), and prudence because of its priority, is more excellent than
the moral virtues (ST I 79.12c; II 47 .6c and ad1, ad3 and 7c).

34

Concluding Remarks
Despite their marked different approaches, all three ethical theories, deontology, teleology and
distributive justice, ask the same question: What actions are right? Virtue ethics asks instead: What kind of
person should we be? Moral character rather than right action is fundamental to the virtue ethics tradition.
Since the Enlightenment, moral philosophers concentrated on specific acts that are justified by rules or
consequences, while deliberately ignoring the questions of virtue, character, and the nature of human
happiness (Spohn 1992). Virtue-based ethics emphasizes the role of judgment, character and virtues in moral
life. In this view, people are the center of ethics, and not just their actions. Moral rules prescribe how one
should act, whereas agent-based virtue ethics pays attention to what type of person an executive is or should
become. Although executive actions can be prima facie judged right or wrong, good or bad, moral or
immoral, based on deontological, teleological and distributive justice considerations, yet there are cases when
we need to go far beyond these considerations to the very character and virtue of the executive who acts.
Often, the 30 moral rules (deontological, teleological and distributive justice) presented in Chapters Two and
Three may not apply, of even if they do apply, their application requires judgment, and one needs to be
virtuous in order to apply the right rule rightly and at the right time. Moreover, too much emphasis on moral
rules and laws can make morality too legalistic, if not inhuman (De George 1995: 124).
Almost all proponents of virtue ethics consider it more adequate than utilitarianism or neo-Kantianism
because it provides a more comprehensive picture of moral experience and reflects closer to the issues of
ordinary life (Donahue 1989). Virtue ethicists believe that a virtue defined as disposition to act, desire, and
feel that involves the exercise of judgment can lead to a recognizable human excellence - an instance of
human flourishing (Yearley 1990: 2).
Under certain conditions normative ethics may not be strong enough to induce good executive behavior;
it needs to be supplemented by virtue-based ethics. Table 4.4 summarizes the reasons.
Much of right moral conduct cannot be codified in rules and principles. Real moral situations are too
complex: while moral rules are too general and simplistic. Substantive virtues such as benevolence, justice,
and generosity make one more responsive to moral claims, and enabling virtues like empathy and sensitivity
can conscientize us to the demands of particular cases. In such cases, the judgments of virtue will be primary
and judgments of rightness derivative (Trianosky 1990: 342). Prudent and wise persons whose virtue
incorporates an appreciation of the basic principles of moral rightness will make the best practical judgments
(Hursthouse 1991), most tolerant pluralists (Mara 1989), or good citizens (Burt 1990).
Virtue is a form of competence that enables us to grasp the meaning and melody of life as a whole
and to arrive at that basic option for good that brings all our thoughts, desires and actions to maturity
(Hring 1997: 3). Everybody admits today that competence and relationships in ones profession are well
worth the effort they take. Virtue is a much more comprehensive and profound sort of competence than
professional or relational competence. It guarantees that our personal life and our life with others will be
completely meaningful. The issue at stake is moral competence: the value and nobility of the human person
in ones private and public life. The goal of a virtuous life is nothing less than true, inner freedom to
achieve the Good, the True, and the Beautiful. Virtue is always concerned with the whole, with the whole
personality in the context of all relationships and activities. According to Aristotle and Aquinas, the end of
virtue is happiness, and real happiness is comprehensive of all our life and activities, and something that
endures forever. Hence, they both concluded that there is only one virtue: according to Aristotle, the
virtuous individual will have all the virtues and these cannot conflict in principle (NE 1145 a2); or
conversely, if a person has one virtue constitutive of goodness, he or she has them all (NE 1144 b30- 1145
a2); according to Aquinas, there is only one moral virtue: happiness (ST I.II 60.1, ob3).
Other skills-related excellences such as expertise in science (medicine, engineering, nuclear physics),
35

in commerce (business, law, politics), in arts (music, poetry, writing), in crafts (painting, sculpting,
building) and in sports (racing, skiing, skating, pitching) require tremendous body-power,
mind-concentration and will-power, and may be considered as "moral" virtues in so far as these "capacities"
are put to good humanitarian use.

36

Exhibit 4.1: A Preliminary Check of Cases against Major Definitions of Virtues

Dimensions of Executive Virtue

Panama Nature
Fresh Pvt. Ltd
(PNFPL)

Chicken
Farm Production
(CFP)

Socrates: Virtue is both knowing

the good and willing the good of
our actions.

PNFPL knew the good

of village farming and
was willing to do it.

Plato: Four cardinal virtues of

prudence, justice, fortitude and
temperance.
Democritus (460-370 BC) held that
to call a person good one had not
only to do the good but also want to
do it because it was good. Aristotle
maintained that a virtuous person
is not one who does virtuous acts
once in a while, but one who does
them regularly over long periods of
time and does them as second
nature. (p.19)
Aristotle: Virtue is an acquired
character trait that manifests itself
in habitual action of doing good.
Aquinas: Moral and intellectual
virtues are produced in us by
humanly reasoned acts, and they
perfect us through the doing of
good deeds.
Kant: Virtue is a categorical
imperative; often it may be a
hypothetical imperative.

PNFPL seems to
demonstrate all four
cardinal virtues.
PNFPL can be called
good and virtuous
not only because they
do good among village
farmers, but because
doing this activity is
itself good. They
should do it as their
second nature.

Those indulging in CFP

know the evil of chicken
farm production and will
it since CFP continues to
be cruel even to this day.
CFP seems to disregard
all four cardinal virtues.

Foot: Virtues are specific

dispositions determined by the
need to correct certain deficiencies
MacIntyre: virtues are skills
internal to activities or practices
that are necessary for the
performance of certain roles or
offices in society.

PNFPL is a virtue in
this sense.

CFP as action-strategy
can be called if CFP for
food chain is itself a good
activity. CFP can be
made good when it is
highly civilized and
humanized.

Dividend Payments via Debt

(DPD)
DPD may not be evil by itself,
but not good in the long run.
Continuing to do it is not
virtuous.
DPD seems to demonstrate
fortitude and temperance but
little of prudence and justice.
DPD as a strategy can be called
good if it a good activity by
itself, and not only when profits
are low.

PNFPL seems to
verify this definition

CFP as action-strategy
does not verify it

DPD as a strategy cannot be a

habitual action that does good.

PNFPL is an
intellectual virtue; as
a moral virtue it may
be questionable.

CFP as action-strategy is
hardly an intellectual or
moral virtue.

PNFPL is definitely a
hypothetical
imperative, but not
apparent as a
categorical imperative

CFP is mostly a
reprehensible
hypothetical imperative
as feeding fast food
chains, but never a
categorical imperative.
CFP is a virtue to the
extent it feeds the food
chain.
CFP is a virtue to the
extent it feeds the food
chain.

DPD as action-strategy is
arguably an intellectual virtue
in the short run, but fails as
intellectual and moral virtue in
the long run.
DPD may be a hypothetical
imperative for satisfying
investors, but never a
categorical imperative.

PNFPL is a virtue in
this sense.

37

DPD is a virtue in this sense.

DPD is a virtue in this sense.

Exhibit 4.2: A Second Check of Company Cases against Major Developments of

Executive Virtue
Dimensions of Executive Virtue
According to Aristotle, moral virtues are
habits that enable a human person to live
according to reason (see p. 9).
Aristotle argued that a proper control of
our reason and passions should not just
repress them completely nor indulge in
them freely. Rather a good virtue is to
seek the mean between two extremes,
both of which are vices. Prudence is the
virtue that enables us to know the mean
in a given situation (see p. 10).
Aristotle also said that a virtue is a
character state concerned with choice
ruled by the golden mean determined by
prudence or the practical reason. It is
not possible to be fully good without
having practical wisdom, nor practically
wise without having excellence of
character (p. 11).
An agent is praised not merely for the
possession of virtue, but for its exercise
and exemplification in concrete
circumstances. The virtuous person is
one who knows how to act and feel in
ways appropriate to the circumstances
(p.11).
All perceptions, reactions and
assessments are contextual. The
virtuous act that hits the mean is
directed toward the right persons, for
the right reasons, on the right occasions,
and in the right manner (p. 12).
The end of life that all human beings
should aim is happiness (eudemonia).
The virtues are not merely means to
happiness, but constitute it; that is,
happiness does not merely consist of what
we get in life but also includes who we are
(p. 13).
Real virtue presupposes that what we do
is not only good for one self at a given
time but is really good for ones self as a
human being. It is for the sake of
achieving the latter good that we practice
the virtues and we do so making right
choices about means to achieve that end
(p. 14).

Panama Nature
Fresh Pvt. Ltd
(PNFPL)

Chicken
Farm Production
(CFP)

Dividend Payments via Debt

(DPD)

PNFPL exhibits moral

virtues as habits that
enable us to live
according to reason.
PNFPLs over-expansion
plans may not realize
virtue as a golden mean
between two farm
production extremes.

CFP hardly verifies moral

virtues in the Aristotelian
sense.

PNFPL seems to be a
right choice as long as the
choice is ruled by the
golden mean determined
by the market place. But
is the choice sourced by
practical reason and
character excellence?
PNFPL seems to be a
right choice and an
exercise of virtue led by
concrete village
circumstances of India.

CFP as a choice and actionstrategy can be a virtue if

ruled by the golden mean of
reducing cruelty to animals.
But is the choice as mean
sourced by practical reason
and character excellence?

DPD as a choice and strategy can be

a virtue if and when determined by
the golden mean. But is the choice as
mean sourced by practical reason or
character excellence?

CFP can be a right choice

and an exercise of virtue
when led by concrete
circumstances of providing
affordable quality food via
fast food chains to the
marginalized.
CFP is a contextual
perception, reaction and
assessment that might have
hit the right persons at the
right time and for the right
reasons.
CFP can best aim at
consumer satisfaction;
happiness as eudemonia is
farfetched via CFP, unless in
the midst of squalor.

DPD can be a right choice and an

exercise of virtue when led by
concrete circumstances of keeping
investors happy in a stagnant
market.

CFP is a virtue if it benefits

not only the company but all
its stakeholders as human
beings and in a permanent
way.

DPD may be a temporary virtue to

the extent it benefits not only the
company but all its stakeholders as
human beings and in a permanent
way.

CFP seems necessary in a

non-vegetarian food chain
context; but cruelty to
chicken from farms to
slaughter could be reduced
following the golden mean.

PNFPL is a contextual
perception, reaction and
assessment that seems to
hit the right persons at
the right time and for the
right reasons.
PNFPL should aim to
bring happiness
(eudemonia) to all
stakeholders.

PNFPLs farming
activities can be a virtue if
they do good not only for
the company but for all its
stakeholders as human
beings and in a
permanent way.

38

DPD may be a temporary moral

virtue and habit, but it does not
empower the executives to live long
according to reason.
DPD could be tempered as a
strategy using the golden mean rule
of virtue.

DPD can be a contextual perception,

reaction and assessment that may
not have hit the right persons at the
right time and for the right reasons.
DPD is a satisfaction strategy at
best. Happiness as eudemonia via
DPD is a fuzzy dream.

Exhibit 4.3: A Third Check of Cases against Major Processes of an Ethic of Executive Virtue
Dimensions of Executive Virtue

Panama Nature Fresh

Pvt. Ltd (PNFPL)

Chicken
Farm Production (CFP)

Developing a virtue-based ethics for

business, Solomon (1992a: 104) argues
that mere wealth creation should not be
the purpose of any business. Instead, we
must conceive of business as an essential
part of the good life, living well, getting
along with others, having a sense of selfrespect, and being part of something one
can be proud of (p. 17).
Individuals are embedded in
communities and that business is
essentially a community activity in which
we work together for a common good,
and excellence for a corporation consists
of making the good life possible for
everyone in society (Solomon 1992a: 209)
(p.17).

PNFPL should not

exclusively focus on wealth
creation, but make it an
essential part of the good life
of village farmers that
enables them to live well,
share with others, and be
proud of themselves as an
exemplary village.
PNFPL should consider its
business essentially as a
village community activity in
which all work together for a
common good. PNFPLs
virtue as excellence should
consist of making good life
possible for all its
stakeholders.
PNFPL seems to have
developed its own internal
practices and internal
goods that are not
competitive, but outcomes
to excel. These outcomes are
unique to its internal
practices. The more one has
these internal practices, the
better is PNFPL.
PNFPL is best when it
becomes a human endeavor
that is part of village human
life and also part of their
moral life.

CFP if focused only on profits

can be degrading to animal and
human life. Instead, CFP,
humanely conceived and
designed, can transform itself
into creating a good life for
all, human and non-human
beings.

DPD is a profit-based concept. It

should widen its domain to the
company and its stakeholders, its
local and broader communities in
creating a good life for them
beyond wealth.

CFP can be transformed if its

business is essentially a
community activity where it
functions in which all work
together as a farm community
making good life possible and
available for all its stakeholders,
especially, the poor.

DPD may be temporarily justified if

its purpose and business is
essentially a community activity in
which all work together as a
stakeholder community making
good life possible and available
for all.

CFP does have its own internal

practices that are competitive
and questionable. They are
more based on external goods
that MacIntyre speaks of. Virtue
is incompatible with external
goods and the cutthroat
competition they imply.

DPD as an internal practice can

be just temporary as they are
deceptive in the long run. They are
based on external goods such as
properties, possessions, profits, sales
and market shares; they are objects
of competition; they are competitive.
In relation to external goods,
winners imply losers, the pie is fixed,
and benefits imply costs.
DPD as a temporary strategy can be
a human endeavor; but it cannot be
a lasting feature of human and
moral life of the investor
communities.

According to MacIntyre, internal

practices with goals and results can
change, expand, diminish, but not at the
expense or gain of another. These
internal goods are not competitive, not
objects but outcomes of competition to
excel; they are unique to the internal
practices; the more one has them, the
better off is the corporation and the
community thereof (p.17).
Business should be a human endeavor in
which executives ought to find
fulfillment, and therefore, emphasize the
need for virtue in business. This is a
valuable reminder that business is part
of human and moral life (p.18).
To act rightly is to act rightly in affect
and conduct. It is to be emotionally
engaged and not merely to have the
affect as accompaniment or instrument
(Sherman 1989: 2). Emotions
themselves are modes of moral response
that determine what is morally relevant
and, in some cases, what is required (p.
18).
According to Hauerwas (1981), moral
business management decision is not so
much of what one is obliged to do, but the
kind of person one would be by doing it .
To act rightly is to act rightly in affect
and conduct. Discerning the morally
salient features of a situation is part of
expressing virtue and part of the morally
appropriate response (p. 18).
There may be a strategic virtue in doing
things rightly, but there is a moral
virtue in doing right things rightly
(Aristotle 1985) (p. 19).

PNFPL must be emotionally

engaged in village farming
activities; emotions should
modes of their moral
response that help determine
what is relevant and required
in the villages they work.
PNFPL can be a moral
business management not in
terms what it feels morally
obliged to do, but in being
the kind of moral person it
becomes by doing what it
does. Discerning morally
salient features of village
farming should be a part of
PNFPLs moral virtue.
PNFPL should aim at moral
virtue that not only does
right things, but also does
them rightly.

39

CFP needs to be much refined

and civilized before it can be a
human endeavor that is part of
human and moral life of
communities that depend upon
fast food chains.
CFP is best humanized when all
stakeholders (producers,
distributors and consumers
included) are emotionally
engaged in the lives of animals
they feed on; these modes of
emotional responses should
prompt what is relevant and
required.
CFP is an essential part of the
non-vegetarian food chain. The
challenge is to make it a human
and moral business endeavor in
relation to both humans and
non-humans. Discerning the
morally salient features of CFP
should be a part of expressing
its moral virtue.
CFP should aim at moral virtue
that not only does right things,
but also does them rightly.

Dividend Payments via Debt

(DPD)

DPD is currently profits measure;

when mixed with debt it may become
deceptive. Only emotional
engagement could reveal what is
morally relevant and required in
DPD strategies.

DPD as a temporary choice and

strategy is moral if the business is
itself a moral and human endeavor.
Discerning the morally salient
features of DPD is part of expressing
virtue and part of the morally
appropriate response.

DPD should aim at moral virtue that

not only does right things, but also
does them rightly.

Exhibit 4.4: A Fourth Check of Case Companies against Major Antecedents of

Executive Virtue
Dimensions of Executive Virtue

Panama Nature Fresh

Pvt. Ltd (PNFPL)

Chicken Farm
Production (CFP)

Dividend Payments via Debt

(DPD)

Contemporary moral philosophers argue

that executed acts are not necessary for
the moral description of persons. That is,
goodness (or badness) is not consequent
to questions of rightness or wrongness but
antecedent to it, distinct from it,
determinative of it. Persons are good who
strive to realize the right, and actions are
right when they satisfactorily fulfill the
demands of protecting and promoting
values (pp. 20-21).
Thus, a person who performs a wrong
action can be called good for performing
the action, as long he strives to do the
right. Thus, we no longer call people good
if they do good actions, rather we call
them good when they strive to realize
rightness (p. 21).

PNFPLs executed good acts

are not enough to describe
them as moral. Goodness is
antecedent and
determinative of what
PNFPL does. PNFPL is
morally good when it
consistently strives to be
good before launching into
action.

Whether companies that

engage in CFP thinking it
CFP is good does not make
them moral. They are moral
when they consistently strive
to be good before launching
into any CFP action.

DPD does not make companies that

do it automatically moral. Goodness
is antecedent and determinative of
what DPD does.
Companies that engage in DPD are
moral when they consistently strive
to be good before launching into any
DPD choice or venture.

PNFPLs over-expansion
plans do not determine
whether they are moral or
bad; the question is whether
PNFPL always seeks to do
the right thing rightly
antecedent to whatever it
does.
What PNFPL does may be
good or bad or indifferent.
What matters for moral
predication is that PNFPL
consistently seeks to do
good and avoid bad.

CFP seems a necessary evil in

a non-vegetarian food chain
context; antecedent to CFP if
companies are consistently
seeking to strive for
rightness, then the guilt that
doing CFP entails may be
exonerated.
What CFP does may be good
or bad or indifferent. What
matters for CFP people for
being moral is that they
consistently seek to do good
and avoid evil.

DPD may be a necessary evil in a

highly competitive world. Doing
DPD in itself does not make one
good or bad; Striving consistently
to be right and good before any DPD
decisions, defines goodness and
being moral.

PNFPL makes a right

choice and an exercise of
right virtue when acting
freely from innate strengths
and controlled weaknesses.

CFP can be a right choice

and an exercise of virtue
when led by true freedom of
ones striving for rightness
and avoiding evil.

DPD can be a right choice and an

exercise of virtue when led and
determined by true freedom of ones
striving for rightness and avoiding
evil.

Since PNFPL has a different

set of strengths and
weaknesses, it is differently
inclined to right or wrong.
Any judgment call should
take this into account.

Those who engage in CFP

come from a different set of
strengths or weaknesses, and
hence, differently inclined to
right or wrong. Any
judgment call should take
this into account.

Those who engage in DPD come

from a different set of strengths or
weaknesses, and hence, differently
inclined to right or wrong. Any
judgment call on them should take
this into account.

PNFPL should continuously

and freely seek to augment
its moral strengths and
eliminate its moral
weaknesses. The more it
does this, the more morally
ordered is its strategic
deliberation, choice and
action.

Those who engage in PFP

should continuously and
freely seek to augment their
moral strengths and diminish
their moral weaknesses. The
more they do this, the more
morally ordered are their
subsequent strategic
deliberations, choices and
actions.

Those who engage in DPD should

continuously and freely seek to
augment their moral strengths and
combat their moral weaknesses.
The more they do this, the more
morally ordered are their
subsequent strategic deliberations,
choices and actions in relation to
DPD.

Conversely, people are bad not when they

perform bad actions but when they fail
to strive to perform the right. Badness,
then, is not simply acting out of
selfishness or malice; prior to act, badness
pertains to the failure to strive for
rightness (Keenan 1992). [p.21]
Contemporary understanding of moral
goodness is fundamentally related to the
concept of human freedom. Due to
nature, nurture, economics, luck, and
other external causes, some people are
more capable of realizing right activity
and goodness. Some have a ready
disposition to be temperate, or just or
prudent (p.21).
In general, people perform right activity
based on their strengths, and wrong
activity from their weaknesses. Since each
person has a different set of strengths and
weaknesses, each person is differently
inclined to right or wrong (p. 21).
One could improve upon ones strengths
and reduce ones weaknesses this is the
exercise of virtue by which one orders
oneself. The more a person enjoys
personal freedom, the more is that person
rightly ordered, and vice versa (p.21).

40

DPD may be good, bad or

indifferent. What matters for moral
attribution is that those engage in
DPD consistently strive to do good
and avoid evil for all its
stakeholders.

Exhibit 4.5: A Fifth Check of Company Cases against Major Requirements of Moral
Goodness via Executive Virtue
Dimensions of Executive Virtue

Panama Nature Fresh

Pvt. Ltd (PNFPL)

41

Chicken Farm
Production (CFP)

Dividend Payments via

Debt (DPD)

Moral goodness always requires that we

strive to realize the right. Failure to
strive to realize the right is moral failure.
Moral goodness as a striving is not simply
wishing; it is actual selfmotivation willing to
consider all the factors
necessary to moral
living, to deliberate
about them, and to
execute the decision.
That is, moral goodness
is found in the exercise
of the will to do and be
good this is virtue
ethics.
The contrary of moral goodness is not the
willingness to be bad,
but the failure to be
good. The will becomes
or is morally bad in its
failure to consider all
the values and factors
that pertain to moral
life.

We grow in virtue only if we exercise right

acts in relation to that
virtue. If we do not
exercise right or
virtuous acts, we do not
become rightly ordered
or virtuous. Exercise
needs both
encouragement to
execute the act and the
wisdom to know which
act to execute, in which
case exercise follows
reason.
Not all good people are virtuous or rightly
ordered; some good
people may still be
disordered in some
areas of their life.
Hence, beyond the
virtues of temperance,
courage, justice and
prudence, moral
philosophers postulate a
fifth virtue that
conditions all these four
cardinal virtues to make
the person good: charity
or benevolence.

PNFPL should seek moral

goodness by always striving
to realize the right, and
avoid moral failure of not
striving to realize the right.
PNFPL should seek moral
goodness by the exercise of
corporate will - by willing to
consider all the factors
necessary to moral living,
to deliberate about them,
and to execute the
consequent decision.

Any CFP activity should seek

moral goodness by always
striving to realize the right, and
avoid moral failure of not
striving to realize the right.
Any CFP action should seek
moral goodness by the exercise
of corporate will - by willing to
consider all the factors
necessary to moral living
despite CFP, to deliberate
about them, and to execute the
consequent decision.

Any DPD strategy should seek

moral goodness by always
striving to realize the right, and
avoid moral failure of not striving
to realize the right.
DPD should seek moral goodness
by the exercise of corporate will by willing to consider all the
factors necessary to moral living
despite DPD, to deliberate about
them, and to execute the
consequent decision.

Moral badness for PNFPL

is not its
willingnes
s to be
bad, but
its failure
to be good
when it
fails to
consider
all the
values and
factors
that
pertain to
moral life
in village
farming.
PNFPL can grow in virtue
only if it exercises right acts
in relation to that virtue,
failing which it cannot
become rightly ordered or
virtuous. Exercising right
acts needs wisdom and
reason or prudence.

Moral badness of CFP is not its

willingness to be bad, but its
failure to be good when it
fails to consider all the values
and factors that pertain to
moral life in a CFP context.

Moral badness for DPD is not its

willingness to be bad, but its
failure to be good when it fails
to consider all the values and
factors that pertain to moral life
involved in DPD.

Those who must use CFP can

still grow in virtue of
compassion only if they exercise
right acts in relation to that
virtue, failing which they can
easily become disordered.
Exercising right acts needs
wisdom and good reasoning.

Those who must use DPD can still

grow in virtue of honesty to
stakeholders only if they exercise
right acts in relation to that
virtue, failing which they can
easily become disordered.
Exercising right acts needs
wisdom and good reasoning.

PNFPLs village farming

strategies should be not
only transformed by the
four cardinal virtues of
prudence, fortitude,
temperance and justice, but
also by benevolence that
conditions and sharpens the
four cardinal virtues.

CFP activities should be not

only humanized and civilized by
the four cardinal virtues of
prudence, fortitude, temperance
and justice, but also by
compassion or benevolence that
conditions and sharpens the
four cardinal virtues.

DPD strategies should be not only

informed by the four cardinal
virtues of prudence, fortitude,
temperance and justice, but also
by charity or compassion toward
all stakeholders.

42

Charity or benevolence is a virtue of

striving, whereas
temperance, courage,
justice, and prudence
are virtues of attaining.
Benevolence (or
charity) is the moral
description for a person
who literally strives to
realize rightness.

PNFPL can strive for moral

goodness while exercising
benevolence, and can attain
moral goodness while
seeking the four cardinal
virtues of temperance,
courage, prudence and
justice.

All engaged in CFP can still

strive for moral goodness when
exercising compassion and can
attain moral goodness while
seeking the four cardinal virtues
of temperance, courage,
prudence and justice.

Companies that must engage in

DPD can still strive for moral
goodness when exercising
benevolence on all affected by
DPD and can attain moral
goodness while seeking the four
cardinal virtues of temperance,
courage, prudence and justice.

Any willful exercise of virtue is twofold:

the primary exercise out of which we are
moved, and the secondary exercise by
which we execute the judgment to act.
The primary exercise defines goodness;
the secondary exercise defines rightness.

PNFPL needs to seek

goodness by the primary
exercise of being properly
motivated and seek
rightness by the secondary
exercise of deciding to act
rightly.

Any CFP activity needs to seek

goodness by the primary
exercise of being properly
motivated and seek rightness by
the secondary exercise of
deciding to act rightly.

Any PDP activity needs to seek

goodness by the primary exercise
of being properly motivated and
seek rightness by the secondary
exercise of deciding to act rightly
at the right time.

43

44

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

MoralEthical/

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

Profitable

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

Sales-Stimulating

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

Ecological

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

Customer Privacy

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

Customer Safety-Security

Fair &Just Procedures

Downstream
Value Chain:
Back-end
Innovations
(21 areas)

Honesty-Integrity

Midstream
Value Chain:
Mid-end
Innovations
(10 areas)

Cost-Effec-tiveness

Upstream
Value Chain:
Front-end
Innovations
(18 areas)

Innovation Idea generation

Innovation Concept generation
Creativity-Innovation
Patentable ideas and concepts
Prototype generation
Design-testing
Fabrication-casting
Materials selection
Components selection
Assembly line operations
Supply chain management
Purchasing
Transportation logistics
Warehousing
Process Technology
Product Technology
Quality Control
Inventory optimization
Product sizing
Product packaging
Product labeling
Instruction Manuals
Order Processing
Delivery Logistics
Installation/use/maintenance
Inventory replenishment
Store shelving
Shelf replenishment
Product preannouncements
Press Release
Unit Costing
Unit Pricing
Price Bundling
Product Bundling
Rebate and discounting
Free sampling and testing
Promotions & advertising
Credit/financing
Store choice and retailing
Point of purchase display
Salesperson service
Servicing Warranties
Customer complaints
Customer redress
Customer loyalty generation
Building brand Community
Customer co-designing
Customer co-production
Customer co-partnering

Feasibility -Viability

Table 4.1: Characterizing the Virtuous Zone of both Internal Practices and External
Goods in a Business Environment (V = Virtue Potential)
Value-Virtue Enhancing Parameters along:
Value-Chain
Value-Chain
Components:
Internal Practices
External Goods
Internal Practices

V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V

Table 4.2: A Partial Characterization of Goodwill and Good and the

Opposites
Executive
Motives

Good

Bad

Executive Actions
Good

Bad

[Right actions that promote good

values]

[Wrong actions that promote

disvalues]

Assumption 1: Right actions with

right motives are a necessary
condition for calling a person good
(Hare 1952)

Assumption 2: Wrong actions

are not a necessary condition for
calling a person bad (Aquinas
1964).

Good people doing good.

Good people doing bad.

Examples:

Examples:

A good person
A virtuous person
A moral person
An ethical person
A just person
A righteous person
An upright person

A good-willed failure
An ignorant mistake
A misinformed disaster
A conscientious boycott
An addicts violence
Killing in a just war
Involuntary murder

Assumption 3: Right actions are

not a necessary condition for
calling a person good (Kant 1964).

Assumption 4: Right actions are

a necessary condition for calling
a person good (Moore 1912)

Bad people doing good.

Bad people doing bad.

Examples:

Examples:

A bad-willed success
A malevolent courage
An ill-willed victory
Parading charity
Almsgiving for power
Oppressive kindness
Philanthropy for tax write-offs

A wicked person being wicked

A vicious persons vice
A malicious persons malice
A selfish person acting selfish
Deliberate drunken violence
Killing in an unjust war
Voluntary murder

45

Table 4.3: A Synthesis: Goodwill, Goodness, Right & Good to Understand Virtue versus Vice
Agents
Motives
(Morality
Ethics)

Virtue as
Habitual Predispositions
(Virtue Ethics)

Nature of
Action
(Deontology)

Nature of
Consequence
s
(Teleology)

Good
Right
Goodness as
striving and
wanting to be
right

Bad
Good
Wrong
Bad

Good

Good
Right
Badness as not
striving and
not wanting to
be right

Bad
Good
Wrong
Bad
Good
Right

Goodness as
striving and
wanting to be
right

Bad
Good

Wrong

Bad

Bad
Good

Right
Badness as not
striving and
not wanting to
be right

Bad
Good

Wrong

Bad

46

Corporate Executive Examples of

Virtue versus Vice
Good-willed corporate executives
Good-striving corporate executives
Right-acting corporate executives
Good corporate management results
Good-willed corporate executives
Good-striving corporate executives
Right-acting corporate executives
Bad corporate results (e.g., bad economy)
Good-willed corporate executives
Good-striving corporate executives
Wrong-acting corporate executives
Good corporate results (e.g., sheer luck)
Good-willed corporate executives
Good-striving corporate executives
Wrong-acting corporate executives
Bad corporate results (e.g., poor planning; bad model)
Good-willed corporate executives
Poor-striving corporate executives
Right-acting corporate executives
Good corporate results (e.g., a booming industry)
Good-willed corporate executives
Poor-striving corporate executives
Right-acting corporate executives
Bad corporate results (e.g., a stagnant industry)
Good-willed corporate executives
Poor-striving corporate executives
Wrong-acting corporate executives
Good corporate results (e.g., a booming economy & luck)
Good-willed corporate executives
Poor-striving but good motive corporate executives
Wrong-acting corporate executives
Bad corporate results (e.g., bad performance)
Bad-willed but good-striving corporate executives
Right-acting evil corporate executives
Good corporate results (e.g., a malevolent success)
Bad-willed but good-striving corporate executives
Right-acting corporate executives
Bad corporate results (e.g., a malevolent failure)
Bad-willed but good-striving corporate executives
Wrong-acting corporate executives
Good corporate results (e.g., a fraudulent success)
Bad-willed but good-striving corporate executives
Wrong-acting corporate executives
Bad corporate results (e.g., a fraudulent failure)
Bad-willed and bad-striving corporate executive
But acting right with good corporate results
(e.g., a shrewd corporate success)
Bad-willed and bad-striving corporate executive
But acting right with bad corporate results
(e.g., a shrewd corporate failure)
Bad-willed and bad-striving corporate executive
Acting wrong with good corporate results
(e.g., an immoral and wicked corporate success)
Bad-willed and bad-striving corporate executive
Acting wrong with bad corporate results
(e.g., an immoral and wicked corporate failure)

Table 4.4: Normative versus Virtue-based Ethics for Corporate Executives

Dimensions
Definition

Normative Ethics

Virtue-based Ethics

The ethical Theory that bases the morality of

executive actions primarily in relation to
compliance to existing social and/or moral
norms.
Search and conformity to the proper norm

The ethical Theory that bases the morality of executive

actions primarily in relation to the moral virtuous
quality and predispositions of the executive agent.

Rule Utilitarianism: The rule of norm does not

express the intrinsic morality of the action but
only the reasonableness or rightness of a given
executive behavior that conforms to a given
moral or social norm.
The moral rightness or wrongness of the
executive action that conforms to norms
Under what conditions does an executive action
become morally right or wrong?
Legitimacy of the social or moral norm.
Fundamental rightness of the given norm.
Close conformity of the executive action to the
moral norm.
Rightness of the intended and unintended
consequences of the chosen action.

Rule Ontologism: The rule of virtue-based ethics does

express the intrinsic morality of the action not in its
conformity to a given moral or social norm but by the
goodness of the executive agent whose moral virtues
prompted the given action.
The moral goodness or badness of the executive agent
and action
Under what conditions does an executive action become
morally good or bad?
Fundamental moral goodness of the chosen action.
Fundamental moral goodness of the choosing person.
Fundamental goodness of the executive moral virtues
backing the action.
Goodness of the intended and unintended consequences
of the chosen action.

Subjective
Source
(conditions) of
Moral Value

Right internalization of the norm.

Objective
Source of
Moral Disvalue

Illegitimacy of the social or moral norm.

Fundamental wrongness of the given norm.
Close conformity of the executive action to the
wrong moral norm.
Wrongness of the intended and unintended
consequences of the chosen action.

Goodness of executive intentions that desire the action.

Quality of executive freewill that chooses the action.
Goodness of the intellectual moral virtues that prompt
the execution of the action: wisdom, prudence.
Goodness of the executive volitive moral virtues that
prompt the execution of the action: Moral courage,
pertinacity, consistency, passionate commitment.
Fundamental moral evil of the chosen action.
Fundamental moral badness of the choosing person.
Fundamental badness of the executive moral vices
backing the action.
Badness of the intended and unintended consequences
of the chosen action.

Subjective
Source of
Moral Disvalue

Wrong internalization of the wrong norm.

Expected
moral
outcomes

Rightness of the moral norm.

Conformity to the moral norm.
Rectitude of the conformity.

Moral
Orientation
Predominant
Philosophy

Domain of
Moral Value
Domain of
Inquiry
Objective
Source
(conditions) of
Moral Value

Right interpretation of the chosen norm.

Rightness of the execution of the chosen norm.

Wrong interpretation of the chosen wrong norm.

Wrongness of the execution of the chosen norm.

47

Virtue-based ordered will and good-oriented choices

Badness of executive intentions that desire the action.

Quality of executive free will that choses the evil action.
Wickedness of the intellectual moral vices that prompt
the execution of the action: lack of wisdom,
imprudence.
Wickedness of the executive volitive moral vices that
prompt the executive action: Moral cowardice, lack of
perseverance in seeking goodness and truth, in
consistency, passionate commitment for evil.
Goodness of the choosing executive.
Goodness of the executive choice.
The agent and the organization becoming good.