What is Organizational Morality

The classical view of organizational responsibility is best illustrated by Adam Smith's (1937) belief that an "invisible hand" directs all activities towards the public good, and that the responsibility of an organization was only to maximize profits within the constraints of the law. 

The free market system was seen as a self-controlling mechanism, whereby an organization producing the best goods and services would prosper. Any interference with the free market system was viewed as an affront against the best interests of society.

The accountability concept states that organizations receive their charter from society as a whole, and therefore their ultimate responsibility is to society. Environmental and worker protection laws reflect the belief that maximization of profits is secondary to the health of society. The extensive proliferation of laws restricting business demonstrates a growing skepticism concerning the morality and ethics of corporate management.

Some theorists believe that organizations have the social responsibility "to take actions which protect and improve the welfare of society as a whole along with their own interests" (Davis and Blomstrom, 1980, p. 6). Others take a more narrow approach, and believe that social responsibility extends only to "social problems caused wholly or in part by the corporation" (Fitch, 1971, p. 38).

Linda Stark (1989) discusses the five stages of corporate moral development, although she is quick to point out that progression through the stages is neither linear or one direction. An amoral corporation pursues profit at any cost. A legalistic corporation follows the letter of the law, but not the spirit. A responsive corporation makes ethical decisions based on long-term economic decisions. An emergent ethical corporation recognizes its social responsibility and balances ethics and profitability. The ethical corporation places social responsibility at its center and bases its existence on ethics.

Environmental awareness has evolved to become a major ethical consideration in many corporations. During the 1950's, science and technology were viewed as the answer to the world's problems. The ecological ramifications of that era became apparent in the 1960's. The 1970's began with the organization of the first Earthday. The Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA) were created to monitor the environment and worker safety. During the 1980's, many corporations began to take proactive conservation measures. Environmental considerations began to be addressed at the manufacturing level so that harmful materials and waste were minimized or removed from the production process. 

Citizen action groups became increasingly effective in forcing corporations to examine their environmental impact. In the 1990's, many corporations have adopted the policy of "sustainable development." The key issue is that environmental protection is one of the highest priorities of every business.