Man is the only animal that blushes. Or needs to.
Mark Twain
A remarkable development has taken place. Microscopic cells, known as foraminifera, invisible to the naked eye, much less than 1mm in diameter, have become as large as 120mm in diameter to form shells containing many chambers. They have been so successful that the great pyramids and sphinxes of ancient Egypt were constructed of stone laid down by them.1
What allowed this to occur was a process by which algae colonized the holes of the foraminifera. The foraminifera benefited from the algae’s photosynthetic capability to produce energy-giving sugars, and the algae benefited from the carbon dioxide and other metabolites produced by the foraminifera. There was a symbiosis between the two organisms that allowed them to flourish together.
The process took place over millions of years but what makes it particularly interesting is its primitive form in which a unicellular organism, the foraminifera, formed a relationship with another organism with very different but highly complementary properties. In other words, it is illustrative of a cooperative relationship that permeates all forms of life, and is the basis of evolution of much more complex types than the algae–foraminifera combination.
In fact, it is not only the basis of much biological evolution but also of organizational evolution. The traditional analogy of firms is with engineering not biological processes. A firm is a form of production in which different inputs—capital, labour, land, materials—are combined to produce an output of a good or service. It is a mechanical process that continues so long as the inputs are fed into the corporate machine and it stops when the inputs are no longer available.
This view of the firm is as inaccurate as it is uninspiring. A firm is an evolving entity as much as the organisms of life are evolving systems. It has a form of life that exactly parallels that of its biological equivalents. It is born through the combination of some primary agents. It grows through combining with other agents. It marries, produces offspring, spins off others, mutates, and dies. This is not just a play on words; it is a substantive feature of the nature of organizations in general and corporations in particular.
The significance of this reinterpretation of the firm is that it brings out many characteristics of business that remain disguised in more traditional descriptions. This chapter will emphasize three of them. The first is relationships, the second is consciousness, and the third is integrity and morality.
The aspect of biology that is discussed most frequently in economics is competition and survival of the fittest. There is a strong parallel between the biologists’ and economists’ description of competition between species and firms. In both cases competition is pervasive and threatens their existence. Only the fittest survive, and over time, through random changes and competition for scarce resources, they evolve genetically in biology and behaviourally in economics to a form that is best adapted to the environment and industries in which they operate. Competition is therefore the means by which selection of the fittest occurs and the most resilient gene variants and corporate conduct are attained.
This neo-Darwinist interpretation has increasingly come to be questioned in biology. The issue that has arisen is whether the significance attached to competition has been at the expense of a potentially equally important consideration, and that is cooperation. In particular, it is difficult to explain the altruistic behaviour that is widely observed in nature in the context of the neo-Darwinist modern synthesis except in family kinships that share common gene pools.
In economics, cooperation relies on incentive mechanisms that promote mutually beneficial conduct amongst parties who would otherwise resort to destructive self-interested tactics. These incentives make cooperation trump selfishness. However, they are fragile. If circumstances in the future change then selfishness may re-emerge as a dominant strategy and unravel the basis on which cooperation is built today.
In biology and economics, competition rather than cooperation remains the driver of adaptation and economic advancement. The fight for survival, not innate altruism, converts the selfish gene and the selfish firm into bodies that possess beneficial and benevolent properties.
However, the example of the algae and foraminifera might caution us about the lesson that economics should learn from biology. The mutually beneficial synthesis did not rest on a fragile repeated game in which one organism could walk away from the other. Once the algae entered the foraminifera their interests were intertwined and their individual interests were subsumed in the collective. They were conjoined in a form that had properties that were distinct from those of their individual components.
It might at first be thought that this evolution of life does not occur in economics. But that is precisely what occurs in a corporation. When different parties contribute to the pool of capital in a firm they do so in a way in which they make binding irreversible decisions. Capital cannot be withdrawn again except when the operations of the firm are wound up. It is permanent capital in a similar manner to the permanence of biological structures and in particular not just with symbiosis—the cohabitation of dissimilar entities in an intimate relationship—but also with their eventual fusion resulting in the formation of new species—symbiogenesis.2 The interests of the parties to a firm are intertwined in precisely the form of the creation of new organisms.
For the most part, economics emphasizes the importance of reversibility and the flexibility that derives from being able to shift resources to their most productive use at lowest cost. Impediments to the free operation of competition are viewed as undesirable. However, what the analogy with biological processes suggests is that the legal form of the corporation has created a structural solution to the problem of promoting cooperation. Both nature’s and economics’ solution is to establish structures that deliberately impose irreversibility.
One of the reasons for emphasizing the biological rather than engineering analogy of the firm is that it lends insights to the way in which cooperation as well as competition prevails in business. Relationships with machines are at best uni-directional—I might love the computer on which I am typing this manuscript but I doubt that my computer reciprocates my feelings. So it is impossible to construct a theory of relationships from an engineering view of the firm, and one of the reasons why there are such weak theories of cooperation in economics is because of the mechanistic basis of them.
By viewing corporations as living organisms rather than inert machines, biology reveals that the source of cooperation is the structure of corporations not just the conduct of their participants. It is not that the algae and foraminifera are engaged in a repeated game in which the involvement of one is conditional on the response of the other and vice versa into the indefinite future. It is not that their mutual interests are vulnerable to the whims of either. They no longer have a separate existence and their cooperation is irreversible.
Likewise once voluntarily adopting the corporate form, the providers of its capital are trapped in an embrace from which there is no escape. As with their biological counterparts, the interests of those who invest in the corporation are not just mutual or a partnership, they are joint. Their gaze diverts from their own to their collective horizons and the game of natural selection in which they are now engaged is the survival of their new corporate, not individual, forms.
What makes evolution towards the mindful corporation particularly striking in this regard is that it involves little in the way of either financial or material capital but it can nevertheless yield large amounts of value—intangible value. The agents that are bound together are not just the providers of financial capital but of human and intellectual capital, and they produce not just financial value but also social value in the form of social networks. It is sometimes suggested that human capital is inalienable in the sense that it cannot be separated from the human who possesses it. But that is precisely what happens in the mindful corporation—the human capital of individuals resides in the corporation, not just in themselves, and can only be extracted to a limited degree.
Corporations in this respect differ in significant ways from other business organizations such as partnerships where separate legal forms are not established. In partnerships, capital can be withdrawn on the agreement and departure of partners. They do not possess the permanence of the corporation or the irreversibility of symbiogenesis but are closer to teams where the parties cooperate so long as it is perceived to be mutually beneficial for them to do so.
As in the natural world in which we live, the wonder of corporate evolution is the diversity it creates. It develops new patterns of activity that previously did not exist. It allows us, its component parts, to produce benefits that we individually were incapable of realizing. And as it grows and multiplies, it yields ever-greater riches.
By viewing the corporation through the lens of biology we have literally breathed life into an otherwise moribund legal concept. We have created a vehicle that has as great a significance in terms of human evolution as the genetic components from which it derives. Indeed both nature and the corporation should probably be regarded as an indefinite set of permutations in which new forms of evolution can be propagated. We are by no stretch of the imagination at the end of means by which it will be possible to accelerate the mechanisms of evolution.
This multiplicity prevails so long as a further mechanistic view of the firm does not dominate, and that is the firm as a control mechanism. The agency concept of the firm regards it as an instrument of its owners, its shareholders, who employ agents, managers, to operate on their behalf. This master–slave relationship confers rights of control on owners to dictate how the corporation is run and the means by which they can exercise that control over their agents. These rights derive from their ability to propose motions and cast votes at shareholder meetings, appoint and remove their agents, and determine the basis on which agents are rewarded.
A control concept erodes diversity by imposing a single objective function of monetary value maximization on the organization and steers it away from the plurality of existences that we associate with the natural world. It therefore reduces an entity that is capable of a plethora of forms to one that has a singularity of purpose. It derives from a conception of the firm that regards it as having no separate existence from those who own it. There is no sense of it possessing self-determination in having a will that is distinct from its owners.
This leads us to a consideration of more than just the physical manifestation of the firm. What is particularly significant about the corporation as a binding device is not the physical body to which it gives rise, its corpus, but its mental state, its mentis, for just as humans have developed something that is more than a physical form, so too have corporations. And that something is their consciousness.
Consciousness is a difficult concept. It is difficult because in most respects it does not exist. We have minds, we have brains, we have brain cells, axons, neurons, and synapses but what, if anything, is consciousness beyond the constituent components of our brains? In considering consciousness, we are forced to move from biology to some of the most fundamental questions in philosophy, or at least that is what some people argue.
In his book Mind and Cosmos,3 Thomas Nagel sets out the notion that one should think of consciousness as our ability to determine a set of relations that impute general laws and principles from our conceptions of our interactions with others. Those principles derive from our capacity to infer results from self-reflection on our condition within a broader universe.
Consciousness is a set of thought processes that allow us to position ourselves in relation to others. Nagel argues that this broad awareness and appreciation of our presence in a larger cosmos gives rise to a state of mind that is distinct from the biological laws which determine our physical evolution. It is not correct to say that consciousness simply derives from laws of natural selection and it is wrong to see the physical and mental processes as being reducible to this one single explanation.
Consciousness is the product of processes that reflect the development of our self-awareness. Whether that process is purposeful in having a specific goal is subject to debate. Whether it has a theological foundation in the existence of a god is even more controversial. Nagel argues that it is not necessary to impute theology—the goal of consciousness may simply be that of increasing value. In other words, the guiding hand that comes from consciousness steers us towards a world in which the evolutionary processes that underpin it result in increasing value.
What is value and how do we determine it? There are two views. The first is that it is the result of rational development reflecting a correct and appropriate weighting of our assessment of the desirability and benefits of different outcomes. This is what is termed a ‘realism view’ and it stands in contrast to a ‘subjective determination’ where value reflects sentiments and perceptions that differ across individuals.
The determination of value could occur completely independently of the physical evolutionary process, in which case it would have no bearing on life as it has emerged. Alternatively, it may act as pilot of how consciousness steers the evolutionary process. It may come from the way in which we perceive the world as is and how we respond to the alternatives that it presents to us. In this case, it would be wrong to regard normative notions of value as being distinct and separate from their positive counterparts. They are intertwined with each other.
Nagel rejects natural selection as a sufficient description of the evolution of the universe and argues that the weightings we place on different outcomes are an important determinant of our physical state. It is not simply that our self-reflection impacts on our consciousness and influences evolution but our consciousness is also integral to our assessment of the weightings to be placed on different values. They may be correct rather than subjective weightings reflecting a rational assessment of outcomes but nevertheless they interact with the way in which the world has and will evolve.
The issue that this raises in the context of corporations is whether the evolutionary processes of corporations are affected by conscious processes or are just the outcome of natural selection. Are competitive markets a sufficient description of the evolution of corporations or are they influenced by consciousness? This is a fundamental question because the prevailing view in economics is that competitive markets are the driver of corporate behaviour. They are an adequate description of the way in which corporations evolve. We do not have to introduce a conscious guiding hand—the unconscious one is sufficient.
Nagel’s view of evolution questions that. If consciousness pervades natural processes presumably it influences commercial ones as well. It must be as relevant to combinations of individuals as it is to single individuals. If so, at what level does that consciousness exist? Does it reside in individuals or can it be attributed to the organizations themselves? Do corporations have a consciousness that is equivalent to that of individuals and is it distinct from or just an aggregation of the consciousness of their constituent individuals? In other words, do corporations have minds of their own?
In answering those questions we should go back to the notion of consciousness as imputing general principles and rules from conceptions of interactions with others. We as individuals have accumulated a body of knowledge that allows us to draw such inferences. Correspondingly a body of knowledge about the impact of corporations on other parties has been accumulated that allows them to have a conscious appreciation of their influence on others.
This knowledge, which has been accumulated from the study of business as an economic and social phenomenon, permits corporations to have a conscious realization of their role in their universes and societies that is equivalent to that of individuals. Like its biological equivalent, the corporate consciousness to which that experience and knowledge gives rise influences the evolution of firms and lends direction to the market processes to which they are subject.
As in the case of nature, the issue that this raises is what is the direction in which conscious behaviour takes corporations. Nagel’s notion of increasing value has an obvious familiarity and attraction in the corporate world and leads us to the question of the source and determination of that value. Whose value is the corporation pursuing and who establishes what that value is?
A realism view would regard value as reflecting a rational weighting of the benefits that the corporation confers. It leaves no room for discretion. The corporation should be guided by a correct evaluation of the benefits it confers. A subjective view leaves considerable room for discretion and suggests that value is determined by sentiment and perception.
Either way consciousness places the determination of value centre stage in the corporation. The weightings that a corporation attributes to the benefits it confers are as important in its evolution as they are in species. They are more fundamental than the purpose and goals of the corporation, which derive from the determination of its value.
The biological concept of the corporation led us to view it as an entity that binds, but is distinct from, its constituent components. The philosophical notion of consciousness extends this to recognize its presence in the world outside and to regard the entity as guided by the pursuit of value that reflects the benefits it confers. Together they point to the importance of the corporation as an entity that cements relations within it and values its benefits outside.
While not diminishing the significance of competition and natural selection, the living conscious entity conception of the corporation stands in contrast to the current prevailing notion of it as a machine buffeted around by competitive processes over which it has no influence. It replaces the inert object with an entity with a degree of self-determination that reflects its conscious assessment of its place in its universe.
One of the interesting implications of this reinterpretation of the corporation is for the historical evolution described in Chapter 1—the six ages. Recall that the corporation developed from a trading to a public entity licensed by king and parliament, to a private body owned by families producing things then services, to an international organization devoid of any clear owner, finally to the mindful corporation.
This is precisely what the living organism concept would lead us to expect. The corporation starts as a component of the state with little or no separate identity. It is then given a private life of its own but initially remains tied by the umbilical cord of ownership to its families. It breaks away to a dispersed amorphous ownership and floats freely around the world. Finally, it moves to a weightless free form with negligible material components dominated by its conscious mindful state. What we await in the seventh age of the trusted corporation is this conscious entity fully recognizing its relation to its universe and its value in conferring benefits on others.
The conscious living concept of the corporation therefore allows us to understand its historical evolution. But it has an even more important role in determining how the corporation should evolve into its seventh trusted age. Not only does the corporation have an existence and the potential to improve our existence, we should be able to trust it to do this more than we can trust ourselves.
The emergence of artificial intelligence (AI) lends particular urgency to this consideration of corporate consciousness because we will not have to wait long for AI not only to control the people and transform the processes that deliver goods and services to customers and communities but also to become the mind of the corporation replacing boards of directors as the ultimate decision-taking authority. The algorithms that underlie AI will therefore determine the corporate purpose and values—whether they are benevolent or malign, self-interested or other-regarding, humane or inhumane. This takes us firmly from biology and positive notions of mind and consciousness into the realms of ethics.
There are two ways in which the corporation has greater power to achieve value than individuals. The first is that it can bind together the constituent components involved in the production of value in a form that is not possible for us individually to do. We can look to contracts as ways of achieving relationships that are costly but not impossible for us to break. But those are not the same as the irreversible interlocking that occurs when capital is committed to a corporation in a form in which algae were committed to foraminifera.4
Second, it can form relationships with others that individually we are incapable of establishing. The reason for that is our weak power to commit and our low levels of integrity. The Oxford English Dictionary defines integrity as ‘the condition of having no part or element taken away or wanting; undivided or unbroken state; material wholeness, completeness, entirety’. It is associated with ‘the character of uncorrupted virtue, especially in relation to truth and fair dealing; uprightness, honesty, sincerity’. It involves individuals being true to themselves in possessing commitments and being true to those commitments.5
Philosophers have a somewhat ambivalent view of integrity as one of the virtues. Bernard Williams noted that integrity as a description of the state of an individual lacks association with moral purpose so that acting with integrity does not in itself possess virtuous attributes until the nature of that purpose has been determined.6 Macbeth and a Nazi soldier are, for example, in this context potentially steeped in integrity in being committed to their purpose but without a purpose that would carry any approbation. It is the combination of integrity with acceptable or moral purpose that lends it its virtuous properties.
Furthermore, we should also acknowledge that deception is intrinsic to human and animals alike from the chameleon onwards. It is inherent to self-preservation. If honesty were unequivocally beneficial then we would have developed far more reliable mechanisms of demonstrating deception than the ones we possess today. Through natural selection, we would have inherited properties that would have allowed us to reveal our true state of integrity—precise digital signals of flashing red, for example, whenever we were behaving dishonestly rather than the imprecise analogues of blushing, perspiring, and sweating to which we are confined at present. We are victims of the inherent benefits that deception confers upon us.
And nowhere is this more in evidence than in commerce, where deception is endemic. In their book Phishing for Phools, George Akerlof and Robert Shiller describe a myriad of examples of how we are systematically manipulated by people who deliberately set out to deceive us into purchasing products and services that we cannot afford or do not need or want.7 Such is the pervasiveness of deception that the desirable welfare properties that we associate with competitive markets simply do not apply, because they yield ‘an equilibrium that is optimal, not in terms of what we really want’.8
Of course, one can address both the above two points by arguing that the purposes to which our integrity commits us should be other- rather than self-regarding in promoting social rather than private interests. But then integrity is no longer simply about the wholeness and completeness of the self but also embraces others. However, even if we were to extend the concept of integrity in this direction then it would still be unclear whether integrity makes a positive contribution to economic efficiency.
Integrity is sometimes but not always integral to economic performance because, in preserving commitments, integrity can be an impediment rather than a contribution to efficiency. Achievement of beneficial outcomes frequently involves deviating from previously held convictions. An employer may be justified in violating a commitment to lifetime employment of some employees to preserve that of others. Commitments to programmes of social welfare reform may have to be abandoned in the face of deteriorating economic conditions. Integrity to the self may stand in the way of the interests of others.
We are therefore left wondering whether integrity is of itself virtuous, whether it is in our self-interest let alone those of others, whether it is remotely plausible in real economic contexts, and whether, even if realistic, it would be desirable. We might therefore be tempted to consign integrity to the bin of economic irrelevance from which some economists might feel it should never have been allowed to escape.
This would be entirely the wrong conclusion. Rather than looking to us individuals as the source of inadequate integrity, we should focus on the corporations that we create as potential enablers and extinguishers of integrity. Our current conception of corporations sees them as manifestations of those who found, own, run, and regulate them. They have a purpose—financial in relation to commercial enterprises, philanthropic in relation to not-for-profits, and social in public organizations—that owners, governance, and management have a responsibility to deliver. Their frequent failure to do so is viewed as a primary cause of the many defects that have recently been revealed in our economic and financial systems.
However, there is another interpretation of corporations as integrity transformation devices, with the potential both to extinguish the very limited degree of integrity to which we are able to commit or to enhance it significantly. One of the striking features of the individuals who are willing to perpetrate manifestly unethical conduct in the workplace is that they will frequently be models of virtue in a family or domestic context. We undertake activities for commercial purposes that we would not dream of perpetrating with our friends or families. The corporation legitimizes that which we would regard as fundamentally unacceptable in our normal lives by virtue of the pursuit of profit and investors’ financial interests—what might be termed ‘sintegrity’.
But by the same token, the corporation can do exactly the opposite. Instead of prioritizing profits, it can promote the interests of the customers and communities it seeks to serve—‘saintegrity’. In the process it produces profits, but profits are not per se the purpose of the corporation. There are numerous examples of organizations that recognize this. Many are family firms, some are owned by foundations, and some by employees. One that was mentioned in the previous chapter and is frequently upheld as exemplary in the United Kingdom is the John Lewis retail partnership, which is owned by a trust that runs the firm in the interests of its employees. Another is the Swedish bank Handelsbanken that is a listed company with dominant shareholders who lend credibility to the preservation of the long-term relations it has established with its individual and corporate customers.
A common feature of such companies is the emphasis that they place on the dignity and well-being of their employees. They enhance not detract from employees natural interests in performing fulfilling, meaningful roles that command recognition and respect. In other words, they transform individuals’ selfish interests into the pursuit of a collective goal that delivers a higher purpose than individuals are capable of achieving themselves. This is real integrity in integrating across individuals and time to create a whole that is greater than its parts. It is synergy that comes from the innate energy to contribute to communal endeavour that otherwise lies dormant or unattainable within us.
The capacity for the corporation to integrate integrity derives from its ability to provide checks and balances on individuals to ensure that they conform to a higher order than they can individually achieve. This comes from a combination of defined purpose, ownership, and governance of the corporation, as described in later chapters. In essence through these mechanisms of accountability, the corporation is able to translate our weak analogue signals of deception—‘mintegrity’—into the digitally flashing red warnings that are required to preserve integrity—‘maxtegrity’. It is therefore capable of providing us with a means of committing to a purpose of which we are otherwise bereft.
What is remarkable about the corporation is that it can be everything from a source of sintegrity to saintegrity and to convert our mintegrity into maxtegrity. In the process it allows us to move from being unsustainably anti-social creatures into sustainably social communities. Through defining its purpose the corporation provides the teleological foundation that Bernard Williams correctly identified as being a necessary but omitted component of virtuous integrity. Through its ownership, governance, and accountability, the corporation is able to provide the commitments required to convert norms into sustainable outcomes. In other words, it lays the deontic duties for transforming aretaic virtues into beneficial consequences.
Understanding what encourages and allows companies to adopt and commit to different forms of integrity is a critical research question in business. It is not to us frail individuals to whom we should look for the source of virtuous integrity but to our institutions and in particular corporations to legitimize what we as individuals seek but are otherwise incapable of achieving. This is because the corporation is capable of creating credible commitments to a common cause by integrating integrity into individual self-interests through the culture of organizations. One important manifestation of that is a culture of kindness and its adoption through kindness in leadership.
Does kindness matter? Does it matter in leadership? These questions may sound banal. Kindness is a virtue, virtues are good, so kindness is good. As a virtue, it is relevant to all types of people: strong and weak, intelligent and stupid, leaders and followers. Kindness is therefore as inherently good in leadership as it is in any other walk of life.9
One might stop there and conclude there is little further to say on the subject. The reason there is much more to it is that kindness is not just a virtue—‘it is good’—but also a value—‘it does good’. The most obvious example of that is what one might term ‘reciprocal kindness’. I will be kind to you if you are in turn kind to me. Indeed this form of kindness might not be a virtue at all. It is generated out of self-interest and can be entirely self-regarding. I would not do it for you were it not for the benefit that you confer on me. I will continue to be kind only so long as you are kind to me and as soon as you stop so will I.
This is the typical economist’s rationale for altruistic behaviour. It is a repeated game sustained by mutual self-interest. But as with most repeated games it is fragile and vulnerable to the infinite regress problem that if either party is expected to renege at any time in the future then it will be impossible to start it in the first place. But the value creation of kindness is not restricted to reciprocity between two parties. Its real force derives from multiple interactions and in particular the creation of virtuous cycles.
One of the best-known examples of this is the YouTube ‘kindness boomerang’ video10—one person fulfils an act of kindness to another who is then prompted to engage in another act of kindness to someone else who in turn does a different act of kindness to someone else, and so on, until eventually someone returns an act of kindness to the first person. Its underlying principle is kindness begets kindness. Acts of kindness encourage them in the recipients as well as making the giver feel good. There is no reciprocity but recognition of the value of kindness on the part of the recipient, which enhances appreciation of the benefit of engaging in such acts of kindness.
The remarkable feature of such acts is that they cost nothing to give but create significant value—they are priceless in all senses of the word. They may appear superficially to be like chain letters but they differ in an important respect—they are not Ponzi schemes destined to fail because of their dependence on resources being infinite. Acts of kindness each create value and do not simply divert it from one party to the other. Indeed, as the kindness boomerang illustrates they can create virtuous cycles that continue indefinitely. The world will not be exhausted by acts of kindness in the way in which it is by chain letters—on the contrary it can be infinitely enriched.
This relates to the significance of kindness in an organizational context and in particular in regard to leadership. One argument for emphasizing kindness in the context of leadership is that it moderates the excesses of authority. It is all too easy for leaders to abuse their authority to the detriment of their subordinates. It is reinforced by such convictions that ‘leaders have to take hard decisions’, ‘it is kind to be tough’, and ‘kindness is a sign of weakness’. But there is a more significant justification for kindness in leaders, which is that organizations can enhance the likelihood of boomerang kindness. The virtuous cycle is only as strong as its weakest link, and the boomerang will not complete its journey if anyone in the cycle fails to pass on kindness to others. What a kind leader can do is to establish a corporate culture in which the value of kindness is recognized throughout the organization and is therefore widely if not universally adopted.
The appreciation of kindness as not just a virtue but also a value, and the significance of leadership in converting kindness as an individual virtue into a corporate value is the reason why kindness in leadership is so significant. It transforms the micro individual virtue into a macro corporate value. Furthermore, if kindness in leadership prevails beyond the corporate world in public policy and government, it extends corporate into communal, national, and ultimately global value. Kindness becomes a value without frontiers and an antidote to the selfishness that is widely perceived to have become a universal affliction.
Leaders can create cultures and social norms of kindness in their corporations and societies, where the value of kindness is recognized and valued. But they can equally fail to do so or still worse denigrate kindness to a point that companies and nations disintegrate into a state of self-interest, greed, and intolerance. They can, in other words, create organizations and institutions of ‘saintegrity’ or ‘sintegrity’. Their power to do so in equal measure lends them a moral authority that extends well beyond the economic and financial significance with which leadership is commonly associated.
The biological view of the corporation led us to appreciate the importance of relations in its development and the way in which the corporation is able to provide binding commitments within it. The conscious concepts suggested that the evolution of the corporation is also influenced by its perception of its external relationships. These were reflected in the way in which it determined its value to the societies in which it operated.
This final section of the chapter points to the way in which the corporation can achieve higher as well as lower levels of integrity than its individual components through its organization and structure. Its external as well as internal commitments can be lent credibility by its self-governing arrangements. It can reinforce the self-regarding attitudes of its constituent members or it can restrain them and strengthen other-regarding components that promote rather than diminish integrity.
Value lies at the top of the defining elements of the corporation and below it sit purpose and the ownership and governance that are required to deliver purpose and sustain the value of the corporation. This animate view of the firm has numerous empirical implications that stand in marked contrast to its current inanimate conceptualization. As a production function and control device, there should be an optimal ownership and governance arrangement that achieves the single objective of monetary value maximization. To the extent that there is currently diversity of ownership and governance forms then over time there should be convergence on a single best form. It is merely a matter of time before we learn the optimal structure and control system for maximizing financial value.
That optimal structure has often been associated with the Anglo-American system of shareholder ownership and control, and there has, at least until recently, been a widely held view that the world was converging on it. In contrast a living, conscious view of the firm sees value in diversity and richness as well as riches in varieties of corporate forms. Diversity should prevail and persist, not only because there is no single optimal ownership and governance arrangement, but also because it is a source of innovation and inspiration for the creation of new ideas and activities.
Corporate life is as enriching as its anthropomorphic equivalent, and we should expect both the history and current nature of the corporation across the world to reflect this. While the inanimate, engineering view predicts steady convergence on a single structure, the living, conscious form anticipates divergence, persistence, and multiplicity. We will subject these alternative views to both an extensive historical and international comparative analysis in Part 2 of the book. We begin in Chapter 3 by describing how ownership of the corporation has evolved from its origins in a flock of geese in the Capitol in Rome, and then in Chapter 4 we will examine more recent and current international comparisons of ownership and control around the world. But let us first join a flock of fellows of Oxford University in the Sheldonian, gaggling vociferously about one particular corporation.