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The Common Good of Business: Addressing a Challenge Posed by «Caritas in Veritate»



Caritas in Veritate (CV) poses a challenge to the business community when it asks for “a profoundly new way of understanding business enterprise” (CV 40). The paper proposes the concept of the “common good” as a starting point for the discussion and sketches a definition of the common good of business as the path toward an answer for this challenge. Building on the distinction between the material and the formal parts of the common good, the authors characterize profit as the material part of the common good of business and work as the formal part that expresses the essential significance of business.
The Common Good of Business: Addressing a Challenge Posed
by «Caritas in Veritate»
Alejo Jose
G. Sison
Joan Fontrodona
Published online: 7 January 2012
Springer Science+Business Media B.V. 2012
Abstract Caritas in Veritate (CV) poses a challenge to
the business community when it asks for ‘a profoundly
new way of understanding business enterprise’ (CV 40).
The paper proposes the concept of the ‘common good’ as
a starting point for the discussion and sketches a definition
of the common good of business as the path toward an
answer for this challenge. Building on the distinction
between the material and the formal parts of the common
good, the authors characterize profit as the material part of
the common good of business and work as the formal part
that expresses the essential significance of business.
Keywords Aquinas Aristotle Business in society
Benedict XVI; Caritas in Veritate Catholic Social
Teaching Common good Profit Work
CST Catholic Social Teaching
CV Benedict XVI, Caritas in Veritate
NE Aristotle, Nicomachean Ethics
Compendium Pontifical Council for Justice and Peace,
Compendium of the Social Doctrine of the
Caritas in Veritate (henceforth CV) by Benedict XVI
(2009) poses a challenge to the business community when
it asks for ‘a profoundly new way of understanding busi-
ness enterprise’ (CV 40), as well as for a deeper reflection
on the meaning of the economy and its goals (CV 32). In
the context of the economic situation at that time, Benedict
XVI states that the current crisis ‘becomes an opportunity
for discernment, in which to shape a new vision for the
future (CV 21).
Moreover, Pope Benedict also offers some insights into
a possible answer to this challenge. Together with some
remarks about current trends in business and economic
activity, he acknowledges the existence of some initiatives
that, ‘‘without rejecting profit, aim at a higher goal than the
mere logic of the exchange of equivalents, of profit as an
end in itself’ (CV 38).
Certainly, the question regarding the purpose of the firm
is not a new one, and it has been widely addressed. The
traditional paradigm that assumes that the main goal of
business is to maximize profit (Friedman 1970; Jensen and
Meckling 1976; Sundaram and Inkpen 2004) has been
revisited and questioned from different angles (Drucker
1955; Fama 1980; Duska 1997; Koslowski 2000; Kennedy
2000; Abela 2001; Handy 2002; Freeman et al. 2004;
Ghoshal 2005; Fontrodona and Sison 2006).
Furthermore, a request for a new way of understanding
business implies rethinking not only the purpose of the
firm, but also how business contributes to the common
good of the society in which it operates. As Pope Benedict
states: ‘‘Economic activity cannot solve all social problems
through the simple application of commercial logic.This
needs to be directed towards the pursuit of the common
good (CV, 36).
The concept of common good has received attention by
authors close to Aristotelian thought and/or the Christian
A. J. G. Sison
School of Philosophy, University of Navarra,
Campus Universitario, 31009 Pamplona, Spain
J. Fontrodona (&)
Business Ethics Department, IESE Business School—University
of Navarra, Avda. Pearson, 21, 08034 Barcelona, Spain
J Bus Ethics (2011) 100:99–107
DOI 10.1007/s10551-011-1181-6
tradition (Solomon 1992, 2004; Koehn 1995; Naughton
and Bausch 1996; Argandon
a 1998; Smith 1999; Alford
and Naughton 2002; Moore 2005; Hartman 2006, 2008;
Sison 2007; Mele
2009; O’Brien 2009; Mortreuil 2009).
However, most of this literature focuses on how business
contributes to the common good of society, whereas the
discussion of the common good of business itself—as a
conceptual framework for defining the purpose of the
firm—has received less attention. It is our understanding
that both questions are not independent; on the contrary,
the role of business in society, and how business contrib-
utes to the common good of society, depends on how the
purpose of business—its common good—is understood.
The purpose of this paper is to react to the challenge for
a new paradigm of business posed by CV, by reflecting on
the common good of business itself. The hermeneutical
context for this reflection will be the same context that
Benedict XVI takes for his document, i.e., ‘‘the tradition of
the Church’s social doctrine’ (CV 10), together with the
works of Aquinas and Aristotle.
First, we will highlight the main points of CV related to
our topic. Second, we will briefly make a historical review
of the concept of common good. Third, we will discuss the
concept of common good in business and we will suggest
an approach that bestows a central role to work instead of
profit. The paper will end with some suggested further
questions related to the challenge about a new paradigm for
Development, Economic Activity and the Common
Good in Caritas in Veritate
The main purpose of CV, on the occasion of the 40th anni-
versary of the publication of Populorum Progressio (Paul VI
1967), is to revisit the teachings of Paul VI on integral human
development and to apply them to the present time (CV 8). For
the purpose of our paper, the main points that Benedict XVI
highlights regarding development are:
1. An authentic development must be integral, that is, it
has to promote the good of every man and of the whole
man (CV 18).
2. An authentic human development concerns the whole
of the person in every single dimension, avoiding the
risk of being reduced to the mere accumulation of
wealth (CV 11).
3. The person in his or her integrity is the source, the
focus and the aim of all economic and social life (CV
25). The economy needs an ethics that is person-
centered (CV 45).
4. Progress of a merely economic and technological kind
is insufficient (CV 23). Conversely, ‘the key to
development is a mind capable of thinking in techno-
logical terms and grasping the fully human meaning of
human activities, within the context of the holistic
meaning of the individual’s being’ (CV 70).
5. Development cannot be guaranteed ‘through auto-
matic or impersonal forces, whether they derive from
the market or from international politics’’. Develop-
ment requires ‘upright men and women [] whose
consciences are finely attuned to the requirements of
the common good’ (CV 71).
Although development should not be reduced to eco-
nomic progress alone, economic activity ‘‘is part and parcel
of human activity’ (CV 36) and it has a role to play in
development. Economic activity is not inherently inhuman
and opposed to society, although when it is conceived
merely as an engine for wealth creation may produce grave
imbalances (CV 36). In this sense, Benedict XVI draws
attention to some concerns and risks; those of special
interest for our purpose are:
1. The distinction between the short and the long term.
Although the short-term view might favor economic
profits, ‘in the long term [it] impedes reciprocal
enrichment and the dynamics of cooperation’’. There-
fore, ‘the human consequences of current tendencies
towards a short-term economy—sometimes very short-
term—need to be carefully evaluated’ (CV 32).
2. Profit is a means of business activity, and not an end.
‘Once profit becomes the exclusive goal, if it is
produced by improper means and without the common
good as its ultimate end, it risks destroying wealth and
creating poverty’ (CV 21). Maximization of profit as
the sole criterion for action in business is one
expression of technology’s takeover (CV 71) that
gives too much attention to the ‘how’ instead of the
‘why’ (CV 70).
3. Responsibility toward the stakeholders, and not only
shareholders. Although he expresses some concerns
regarding the ethical considerations that inform the
current debate on the social responsibility of business,
Benedict XVI joinsthe ‘growing convictionthatbusiness
management cannot concern itself only with the interests
of the proprietors, but must also assume responsibility for
all the other stakeholders who contribute to the life of the
business’, and contrasts those managers who ‘‘are often
answerable only to shareholders generally consisting of
anonymous funds’ with those far-sighted managers who
are ‘increasingly aware of the profound links between
their enterprise and the territory or territories in which it
operates’’ (CV 40).
Summarizing these observations, Benedict XVI states
that ‘today’s international economic scene, marked by
100 A. J. G. Sison, J. Fontrodona
grave deviations and failures, requires a profoundly new
way of understanding business enterprise’ (CV 40) and a
‘further and deeper reflection on the meaning of the
economy and its goals, as well as a profound and far-
sighted revision of the current model of development’’ (CV
32). At the same time, he observes that, in recent decades, a
broad new composite reality has emerged, made up of
initiatives which, ‘without rejecting profit, aim at a higher
goal than the mere logic of the exchange of equivalents, of
profit as an end in itself’ (CV 38).
These concerns and observations set the scene for the
rest of this paper. We want to elaborate on this new way of
understanding business. We propose looking at the concept
of the common good of business, since the common good
helps to define the purpose of a given community and, in
the case of business, its contribution to human develop-
ment. First of all, we will learn from the historical evolu-
tion of the concept; then, we will apply it to business.
Historical Roots of the Concept of Common Good
Caritas in Veritate provides a definition of common good
that goes along the lines of other documents of the Catholic
Social Teaching (henceforth CST) (John XXIII 1961,
37–40; Paul VI 1967, 42; Vatican Council II 1965, 26). In
its broadest sense, the common good may be defined as ‘a
good that is linked to living in society’’, that is, ‘the good
of ‘all of us’, made up of individuals, families and inter-
mediate groups who together constitute society’ (CV 7).
Before its discussion by CST, the common good has
long been the object of attention in the Aristotelian–Tho-
mistic philosophical tradition. The following paragraphs
will describe the main moments of this sequence, focusing
especially on Aristotle, Thomas Aquinas and CST.
Aristotle characterizes eudaimonia or happiness as a
flourishing life, the choicest worthy, complete and self-
sufficient among the different possible goods pursued
in themselves (Aristotle 1985, 1097b, henceforth NE).
Eudaimonia consists of a good life in common, shared with
one’s family, friends and fellow-citizens in the polis.As
such, eudaimonia is not only the highest good that any
individual can pursue, but also the supreme good that all
together may achieve. In those cases where ‘the good is
the same for the individual and for the state, nevertheless,
the good of the state is manifestly a greater and more
perfect good, both to attain and to preserve (NE, 1094b).
Rourke (1996, p. 230) concludes that ‘from Aristotle we
learned to distinguish the individual good from the com-
mon good, and to perceive the moral primacy of the latter’’.
This is clearly manifested in those cases where it is ethi-
cally acceptable to sacrifice private goods in order to pro-
mote the common good, as, for example, in the case of
punishing a criminal act or expropriating a piece of prop-
erty (O’Brien 2009, p. 29). Similarly, the common good of
any community is embedded in the common good of larger
communities, the common good of the political community
being the highest of all (Aristotle 1988, I, 1) (Mele
Therefore, the common good is not a mere aggregation
of all the private goods of the members of a society, but ‘‘a
qualitatively autonomous species of good that is both
higher and richer in goodness than any other human good
enjoyed by individuals or lesser associations’ (O’Brien
2009, p. 29). In summary, ‘the common good is both a
condition for, and the result of, the happiness that those
persons who participate in the common good attain by
living virtuously’ (O’Brien 2009, p. 31).
Aquinas’ major contribution as a Christian philosopher lies
in proposing God as the common good of the whole (Aquinas
1954, c. 13, n. 634), but he does so without turning his back on
the earthly polis. Aquinas is able to combine these two aspects
by describing them as ‘‘common good’—since both act as a
final cause or common end of the whole human species and of
every human being—but in an analogous manner: God is the
extrinsic, ontological and speculative common good on which
political eudaimonia—the intrinsic, social and practical
common good—ultimately depends, i.e., God is a good that is
(1) external to the political community (extrinsic), (2) a good
himself (ontological) and (3) the object of a loving contem-
plation (speculative), whereas political eudaimonia,onthe
other hand, is (1) internal to the political community (intrin-
sic), (2) a multiplicity of beings orderly united (social) and
(3) the object of human action (practical) (Smith 1995,
pp. 72–74).
As a good that has a unity of order, political eudaimonia
is an integral common good (Walshe 2006), divisible into
formal and material parts (Rourke 1996). A material part of
the common good is that good whose effectiveness lies in
being divided and distributed; it cannot be shared without
diminishing. It is a common good only in potency, that is,
before being divided; once divided, it is not common
anymore. Water, for example, is a material part of eudai-
monia, because its quantity diminishes while being dis-
tributed among the members of the political community.
Another characteristic of a material part is that one unit (of
water, say) can be substituted by any other equal unit.
On the other hand, a formal part of the integral common
good refers to something that does not diminish when it is
divided and distributed among many, and can thus be
actually shared. Think of knowledge, for example: it does
not diminish when it is shared; indeed, it increases. Fur-
thermore, a unit of knowledge has a unique value and
cannot be substituted by another unit. In society, examples
of goods that do not diminish when they are shared would
be friendship, citizenship, solidarity, peace, justice, charity
and so on.
The Common Good of Business 101
Material and formal parts are distinct, but related.
Actually, when material parts are distributed justly, these
actions foster right relationships among the members of the
society and the development of those aspects that are more
related to the formal parts. Material or potential parts are
necessary, but not sufficient conditions for the common
good, whereas the common good rests, mainly, on the
formal parts.
(2009) rightly describes the common good as a
broad concept in which several aspects can be distin-
guished, such as socio-cultural values, as well as organi-
zational, economic and environmental conditions. The
distinction between material and formal parts might pro-
vide some help in ordering these different elements, as well
as rejecting some criticism that describe the common good
as difficult (Rourke 1996) or ambiguous (Michelini 2007).
Some authors have posited the difficulty of defining
the common good in a pluralistic society (Rourke 1996;
Hollenback 2002; O’Brien 2009). Again, the distinction
between material and formal parts might provide some help
in solving these criticisms. There is no unique material
solution to the question of how the common good can be
achieved (Rourke 1996). Determining what contributes to
the common good in each community depends on cir-
cumstances, and it is part of the responsibility of the ruler
of that society (Mele
2009). But in any case, the common
good must always have the form of the common good,
which is to say that it must be a good to which all members
are willing to contribute and participate in, and whose
distribution to one does not exclude the participation of
others (Rourke 1996). Moreover, this distribution must be
done ‘with the due respect for human dignity and innate
rights, and following the legitimate proceeds established
within such community’ (Mele
2009, p. 236).
In fact, CST highlights some aspects that manifest the
complexity of the concept of the common good nowadays.
Firstly, it recognizes—in more explicit terms than Aris-
totle—the different expressions of social life and their
interrelation (Pontifical Council for Justice and Peace 2004,
165; henceforth Compendium), in such a way that the lower
levels find their orientation and meaning in the common
good of the higher ones, the political community being the
highest (Compendium, 168). Secondly, CST states that
‘the demands of the common good are dependent on the
social conditions of each historical period’ (Compendium,
166), and that it is the responsibility of everyone to con-
tribute to the improvement of these social conditions
(Compendium, 166).
CST provides different definitions of common good,
which overall can be classified in two different and com-
plementary approaches. The first approach defines common
good as ‘the sum total of social conditions which allow
people, either as groups or as individuals, to reach their
fulfillment more fully and more easily’ (Compendium,
164; see also John XXIII 1961, 65). This definition looks
more at the means—conditions—necessary for human
development, and highlights the idea that human fulfill-
ment is not independent of the social conditions under
which human beings live. From this perspective, it is also
stated that ‘the common good of society is not an end in
itself; it has value only in reference to attaining the ultimate
ends of the person and the universal common good of the
whole of creation’’ (Compendium, 170). Benedict XVI also
refers to this point: ‘It is a good that is sought not for its
own sake, but for the people who belong to the social
community and who can only really and effectively pursue
their good within it’ (CV 7).
The second approach to the common good looks pri-
marily at human fulfillment as the end of human and social
activity. According to this view, the common good is
defined as the ‘development of the whole man and of all
men’’ (Paul VI 1967, 42), or as ‘‘the good of all people and
of the whole person’ (Compendium, 165). Mele
p. 235) reviewed some of the contemporary definitions of
the common good in line with the CST (Messner 1965,
pp. 118 and 124; Finnis 1986, p. 165) and concluded that
they highlight two features of the common good: it is
shared by all members of the community (all people) and it
contributes to human flourishing (the whole person).
Whereas the first approach tends to be more descriptive,
or, at least, open to the diversity of circumstances, the
second approach combines a descriptive element—all
people—with a prescriptive one—the whole man—since it
implies taking a position regarding what the development
of the whole man means. These two different approaches
can be identified with the material and formal parts of the
common good. The approach that looks at the conditions
that allow people to reach their fulfillment might be related
to the material common good. On the other hand, the
approach that looks at the development of the whole man
and of all men is more related to the formal common good.
O’Brien (2009) notes that sometimes common good is
mistakenly equated with the utilitarian ideal of ‘the
greatest good for the greatest number’’ or with the focus on
stakeholder value. However, the main difference is that
these two theories rely on an individualistic assumption
about the person and society, either because the good of the
society results in an aggregation of individual goods or
because it is an aggregation of the good for those groups
included in the ‘stakeholder’ category, whereas the com-
mon good relies on a notion of the person that underlines
its social nature. Benedict XVI also remarks that not all the
ethical theories that support the current debate on corporate
social responsibility are acceptable from the perspective of
CST (CV 40). Those which are acceptable include only
those that are people-centered and based on these two
102 A. J. G. Sison, J. Fontrodona
pillars: the inviolable dignity of the person and the tran-
scendent value of natural moral norms (CV 45).
In summary, a historical review of the proposals around
the concept of common good as offered by Aristotle,
Thomas Aquinas and CST provides some useful insights
into the meaning of common good:
1. Common good refers to the good of society—the polis,
mainly, but also other forms of social life—and also to the
good of the individuals, since the social conditions are
means for the human fulfillment or eudaimonia.Both
dimensions are related, since ‘any good of an individual
that is a real good is rooted in the good of the community,
and, conversely, any common good that is a real good is at
the same time the good of all individuals who share in that
community’ (O’Brien 2009,p.29).
2. The common good has a descriptive aspect that refers
to ‘a complex web of mutual relationships that enable
individuals to achieve far more than they would if left
to their own devises in isolation’’; and a prescriptive
aspect that implies a way of ordering the individuals,
since it preserves ‘this greater good even when con-
fronted with competing individual goods’ (O’Brien
2009, p. 30).
3. The common good should not be understood only as
the highest good—summum bonum—but mainly as an
integral good—totum bonum—(Adler 1970), where
the different parts—material and formal—have differ-
ent characteristics and play different roles. This
articulated and complex definition of the common
good requires a hierarchical relation of dependence (a
unity of order), not only among the different goods that
configure the common good, but also among the
different forms of society, the lower ones being
dependent on the higher ones.
4. The formal part of the common good is a constitutive
element of the significance of every particular society;
it allows all its members to contribute and participate
without diminishing. On the other hand, the material
part refers to those conditions and particular circum-
stances of a given society that set up the bases for an
integral development of people living in that society.
With these characteristics in mind, we shall now turn to
the firm and, based on this previous characterization of the
common good, reflect on the content of the common good
of business.
Dissecting the Common Good of the Firm: Its Material
and Formal Parts
Human beings socialize and achieve personal identity
through intermediate institutions that make the interaction
of individuals more manageable (Fort 1996). CST also
acknowledges this reality: ‘Civil society, organized into its
intermediate groups, is capable of contributing to the
attainment of the common good by placing itself in a
relationship of collaboration and effective complementar-
ities with respect to the State and the market’ (Compen-
dium, 356).
Business is understood as a mediating institution that
plays a significant role in a free society (Fort 1996). CST
has widely characterized business as a community of per-
sons working together (John XXIII 1961, 65; John Paul II
1991, 35; Compendium, 338). Solomon (2004, p. 1027)
concludes that, as a community, business cannot be a mere
collection of self-interested individuals, but communal
creatures who have shared interests.
Drawing inspiration from Aristotle, who emphasizes the
purposive character of every human enterprise (Solomon
2004, p. 1023), CST looks at the purpose of business
(Calvez and Naughton 2002). The concept of the ‘‘common
good’ provides a twofold interpretative reference for the
purpose of business. On the one hand, business contributes
to the common good of society (John Paul II 1991, 43). On
the other hand, business is an intermediate institution (Fort
1996), and as such it can be defined in terms of its own
common good (Sison 2007; Mele
2009). In fact, ‘no
expression of social life—from the family to intermediate
social groups, associations, enterprises of an economic
nature, cities, regions, States, up to the community of
peoples and nations—can escape the issue of its own
common good’ (Compendium, 165). Both aspects are
related in such a way that business contributes to the
common good of society through the fulfillment of its own
common good (Mele
2009, p. 238; Pe
pez 1993).
The Role of Profit
The most common belief about the purpose of business
seems to be that the primary purpose of business is to
maximize profit (Duska 1997). Benedict XVI, however,
takes a critical stand toward considering profit as the main
goal of business and considers instead that its proper role is
to serve ‘as a means towards an end that provides a sense
both of how to produce it and how to make good use of it.
Once profit becomes the exclusive goal, if it is produced by
improper means and without the common good as its
ultimate end, it risks destroying wealth and creating pov-
erty’ (CV 21).
Profit in itself is not to be rejected (CV 38) nor excluded
from the scope of legitimate business objectives (CV 46).
Benedict XVI simply warns against seeking it as an end in
itself, instead of a means to achieving other human and
social ends. Furthermore, he cautions us about falling into
the trap of engaging in financial speculation for short-term
The Common Good of Business 103
profit (CV 40) and of believing that profit maximization is
the sole rationale for business (CV 71).
In his encyclical Centesimus Annus, John Paul II rec-
ognized the legitimate role of profit as an indication that a
business was functioning well, although not the only
indicator of a firm’s condition: ‘It is possible for the
financial accounts to be in order, and yet for the people—
who make up the firm’s most valuable asset—to be
humiliated and their dignity offended. Besides being
morally inadmissible, this will eventually have negative
repercussions on the firm’s economic efficiency. [] Profit
is a regulator of the life of a business, but it is not the only
one; other human and moral factors must also be consid-
ered which, in the long term, are at least equally important
for the life of a business’ (John Paul II 1991, 35).
Profits are rightly conceived of as means or instruments.
They are partially constitutive of the common good, but
their proper role is to serve the end or main purpose of the
common good of the firm. Profits are necessary for the
medium- to long-term viability of the firm and, to that
extent, cannot be neglected. How profits are produced is as
important as whether or not they are produced, but they
cannot be understood as the ultimate goal of the firm.
Profits, like any instrumental good, must be at the ser-
vice of not just individual agents, such as shareholders or
employees, but at the service of the common good;
otherwise, profits corrupt the agent who pursues them
(Alford and Naughton 2002). Managers who first occupy
themselves exclusively with profits hardly ever get the
chance to actually focus on other governance issues, much
less on values, despite their best intentions. Faulty instru-
mental reasoning clouds their thinking (Ghoshal 2005)in
such a way that they fail to realize when they have already
achieved sufficient profits.
On the other hand, from a Thomistic perspective, the
common good of business can be understood as an ‘inte-
gral whole’’ (Walshe 2006)oratotum bonum, composed of
different parts (mainly the material and the formal parts).
Under this distinction, profit can be classified as a material
part of the common good. It has the characteristics of a
material part: its effectiveness leans on being divided and
used, either as dividends for stakeholders, as part of com-
pensation schemes for managers and employees, or kept for
future investments.
Accepting that profit is a material part of the common
good, we need to establish what can be considered a formal
part of the common good of business. For that reason, we
turn our attention to the CST’s discussion on the purpose of
CST states that the purpose of business ‘is to be found
in its very existence as a community of persons who in
various ways are endeavouring to satisfy their basic needs,
and who form a particular group at the service of the whole
of society’ (John Paul II 1991, 35). To be a ‘good firm’
means, then, not only to be productive—that is, serving
society providing goods and services in an efficient man-
ner—but also to provide the conditions for its members to
satisfy their basic needs—or, in a more positive way, to
develop their potentialities—together with contributing to
the achievement of a better society. Work or production in
common is the context where people come together in the
firm, and what unites the different individual interests
toward a common goal (Llano 1997, p. 233). Certainly,
since people’s activity does not take place in a void,
material resources are needed. But people share more
directly in work than in the final products of their work.
Work has, therefore, the characteristic of a ‘formal’
part: it can be shared without decreasing; indeed, people
working together create synergies that make their work
more productive. It is necessary, however, to clarify what
we understand by ‘work’’, since not every human activity
performed in a business context may have the character-
istics that would allow it to be described as a formal part of
the common good.
Work and the Common Good of the Firm
Caritas in Veritate calls our attention to the human sig-
nificance of every type of work as a ‘personal action’
(actus personae), a consideration that is prior to its pro-
ductive dimension (CV 41). It is reminiscent, in this regard,
of the priority of the subjective element of work—the
worker himself as a free and rational being—over the
objective element (John Paul II 1981, 5), which encom-
passes technology and all products of human activity
(CV 69).
In an Aristotelian perspective, not all human acts qualify
as work, since work consists of a purposive and free human
act (NE, 1111a). Work designates the subset of productive
actions (NE, 1139a, b) that change and transform objects,
as opposed to theory or abstract thought, which simply
reflects on the universal and necessary realities without
modifying them.
For Aristotle, activities carried out by human beings can
be divided into two: making (poiesis) or doing (praxis
). In
‘making’’, the importance lies in the external object itself,
as the product of an art or craft (NE, 1174a), and in the
techniques that are applied in the process of production; the
skills of the artist or artisan come in the second place. On
the other hand, ‘doing’ is an immanent activity, which
produces changes in the person who performs this action
(Llano 1990). In ‘‘doing’’, the human being is the agent and
the patient of production. It is a process of ‘self-produc-
tion’’, where man may be considered, in a certain sense, his
own maker (homo faber). The main result of ‘doing’’ is not
an artifact, but an operative habit or virtue (intellectual or
104 A. J. G. Sison, J. Fontrodona
moral). Therefore, this form of ‘self-production’ becomes
at once ‘self-realization’ or ‘self-perfection’’. While
‘making’ is guided by technical skills, ‘doing’ is guided
by practical wisdom (or prudence).
According to Aristotle, the distinction between making
and doing establishes a real classification among people:
the members of the productive class (making or poiesis), on
one side, and, on the other, those citizens who form the
elite, engaged in leisure, democratic deliberation and
contemplation (doing or praxis). However, going beyond
Aristotle, making and doing might be interpreted as
inseparable dimensions in any form of work (Llano 1990;
Chirinos 2002; Fontrodona et al. 2008). Using these con-
cepts as categories that might be present simultaneously in
the same reality, work is understood not as a mere com-
modity or factor of production (making), but also as a
means for self-perfection through joint deliberation and
action (doing).
This is the way that CST has thought about work. John
Paul II (1981) distinguishes two dimensions: objective and
subjective. ‘Insofar as work has a self-determining effect
on the person it is subjective. Insofar as work has an effect
on an external object (i.e., the product or service) it is
objective [] Work then is an activity that causes changes
in the subject and the object’ (Naughton and Laczniak
1993, p. 982). Despite not being directly observable, the
subjective element certainly has consequences in the
agent’s actions: changes in agent’s abilities and attitudes.
CST, therefore, democratizes Aristotelian praxis and pla-
ces it within reach even of the members of the productive
class who engage in poiesis.
Together with these two dimensions, work also has an
intrinsic social dimension (Compendium, 273; see also
John Paul II 1981, 10), since it serves as an occasion for
meaningful exchange, relationship and encounter among
human beings. In this intrinsic social dimension of work
lies the aptitude of human beings to take part in the firm,
that is, to see themselves as a community of work and not
merely as an enclave of interests (Cornwall and Naughton
2003). In summary, Cornwall and Naughton (2003),
building on John Paul II’s Laborem Excercens (1981),
describe three distinct kinds of goods that define entre-
preneurial success: the good of being technically compe-
tent (objective dimension), the good of the individual
(subjective dimension) and the good of community (social
For a person-centered approach, such as the one that
CST takes, human beings are more important than the
things they produce and the consequent profits they gen-
erate. Profits are seen as the result of an efficient productive
activity and play an important role in allowing business to
exist into the future; however, they should be perceived
only as part—and not even the most important one—of the
results of business activity, and worthy only insofar as they
facilitate the achievement of other results related to the
subject that performs the activity, such as knowledge, and
the skills and learning of craftsmanship and the fine arts.
Among the latter, moral virtues hold a place of honor, since
virtue has a critical role to play in integrating the subjective
and the objective dimensions (Cornwall and Naughton
Work is neither only an opportunity to avoid idleness
and other vices, nor just a condition or means that
allows one to put into practice other more noble aspects
of his or her personality in other spheres of life (Alford
and Naughton 2001, pp. 88–94, pp. 214–222). Work is
itself an occasion for both contemplation (theoria),
which is the highest of virtues according to Aristotle,
and growing in the moral virtues, which received
greater consideration by Aquinas and CST. All human
beings, regardless of the work they do, are equally
capable of acquiring the intellectual and moral virtues
that contribute to their flourishing as human beings
(Compendium, 336).
Going back to the distinction between material and
formal parts, the common good of the firm does not refer
primarily either to the goods and services it produces or the
profit obtained. These aspects, together with the non-per-
sonal conditions, resources, instruments and means that
make work possible, have to be understood only as
‘material’’ and ‘potential’ parts of the common good, and
as such they do not express the main content of the com-
mon good of the firm.
The constitutive element of the common good that
expresses the essential significance of business—the formal
part—is work, i.e., the activity performed by the members
of the business community, rather than the results of such
activity, i.e., the good and services that business provides
to society. Just as citizens participate in the common good
of the polis by exercising citizenship, employees and
managers (and indirectly, the rest of stakeholders) might be
considered as participating in the common good of the firm
through the work they carry out.
Through their work, human beings not only produce
goods and services (the objective dimension), but, more
importantly, develop technical, artistic and moral virtues
(the subjective dimension) and create a life of interde-
pendence with the members of their community (the social
dimension). Of course, not every work qualifies for this
definition, but only the one that has an ethical value and
takes the human person as the measure of its dignity
(Compendium, 271). In that sense, work not only contrib-
utes to the integral human development, which is the main
topic of CV, but also sets the path for an answer to the
challenge posed by CV about a new understanding of
The Common Good of Business 105
CV provides the opportunity to rethink the role and pur-
pose of business in society. It suggests an approach that,
going beyond the accepted paradigm of the maximization
of the shareholder value, will take into account a wider
range of values beyond profit. This broader significance of
business activity is convenient to construct an economy
that will soon be in a position to serve the national and
global common good (CV 41).
We have used the concept of common good—and
especially the distinction between material and formal parts
of the common good—as a framework in which to look for
an answer to the challenge of a new business paradigm.
Instead of the traditional view that takes profit as the final
goal of business activity, we consider that profit is only a
material part of the common good, and that the formal part
defining the essential content of business activity is work,
i.e., human activity.
Some related questions arise to move the discussion
forward. At least three questions immediately follow from
what has been already said and will need to be addressed in
the future.
First of all, ‘one of the greatest risks for businesses is
that they are almost exclusively answerable to their
investors, thereby limiting their social value’’ (CV 40). The
common good of the firm is not limited to shareholders, as
the financial theory of the firm suggests (Friedman 1970),
but open to other stakeholders (Freeman 1984; Mele
Shareholders have a role to play, because their financial
resources—representing accumulated or capitalized work
(Llano 1997)—are used by the firm. But, certain assump-
tions of the agency theory and the maximization of
shareholder value paradigm might be questioned (Fontro-
dona and Sison 2006). Therefore, one question still open is
to analyze how each stakeholder group (employees, cus-
tomers, suppliers, competitors and so forth) contributes to
the common good of business under this new paradigm
(Sison 2008, pp. 86–93).
A second question arises from the assertion that ‘the
economy needs ethics in order to function correctly—not
any ethics whatsoever, but an ethics which is people-
centered’ (CV 45). Therefore, it is necessary to formulate
an adequate ethical theory that goes in line with this new
understanding of business. CST can make a specific
contribution based on its underlying system of morality
that holds that man is created ‘in the image of God’
(Gen 1:27), a datum which gives rise to the inviolable
dignity of the human person and the transcendent value of
natural moral norms, as the two pillars at the base of any
other ethical consideration. From this starting point, a
critical review of different ethical theories might be
Finally, a third question arises from the claim that
‘economic activity cannot solve all social problems
through the simple application of commercial logic’ (CV
36). Benedict XVI offers a sketch of the social structure
and the articulation of the multiple spheres of human
action: besides the ‘logic of exchange’ that characterizes
market transactions (CV 39) and ‘the logic of public
obligation’ that guides the state action, Benedict XVI
proposes ‘the logic of gratuitousness,’ which finds insti-
tutional expression—as John Paul II (1991, 35) earlier
pointed out—in civil society (CV 38). From this sketch, he
suggests that the logic of gratuitousness has to find its place
within economic activity (CV 36). In that sense, it would
be interesting to evaluate how the logic of gratuitousness
enters into the realm of business and might help to refor-
mulate the nature and purpose of business in society.
Our proposal not only has an impact at the theoretical
level, regarding how to think about the role and purpose of
business, but also affects other practical issues related to
management and corporate governance. For example, it
would be interesting to analyze how managers translate
into their particular decisions the principle that establishes
that ‘labor has an intrinsic priority over capital’ (Com-
pendium, 277) or how they deal with the particular case of
those workers who also own equity stakes. It also opens a
debate about how to build respected companies (Canals
2010) and related questions, such as how to define their
success, how to measure their performance, and how to
describe the role and responsibilities of the managers and
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The Common Good of Business 107
... In their review, Eva et al. (2019) note that the positive functioning of servant leadership has typically been framed around a narrow group of theories. An alternative framework rarely mentioned in this literature is Aristotelian virtue theory (Aristotle, 1984(Aristotle, , 2004, grounded in the value of actions guided by the practice of virtue (Sison & Fontrodona, 2011, 2012. Aristotle (1984Aristotle ( , 2004 described virtue as the desires and actions that produce personal and social good to maximize the well-being of individuals and communities (Sison & Fontrodona, 2011). ...
... An alternative framework rarely mentioned in this literature is Aristotelian virtue theory (Aristotle, 1984(Aristotle, , 2004, grounded in the value of actions guided by the practice of virtue (Sison & Fontrodona, 2011, 2012. Aristotle (1984Aristotle ( , 2004 described virtue as the desires and actions that produce personal and social good to maximize the well-being of individuals and communities (Sison & Fontrodona, 2011). Teams as communities offer a context in which both team members and leaders have the opportunity to behave virtuously to the mutual benefit of everyone involved (Bright et al., 2006;Wang & Hackett, 2016). ...
... As leaders model virtues that are emulated by followers, it is positive for all involved in terms of well-being and performance (Wang & Hackett, 2016); this sets the stage for collective eudaimonia or flourishing (Sison & Fontrodona, 2011, 2012. ...
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... This strategic move towards offering benefits in addition to microfinance lending and saving represents a significant shift for an MFI in acting in a socially responsible way. From both financial and social perspectives, a broad spectrum of stakeholders, ranging from customers to communities, can benefit from such provision (Sison & Fontrodona 2011). Many MFIs undertake similar initiatives; however, concerns remain for the sustainability and the development of the sector (Reichert 2018). ...
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... The idea of a subsidiary relationship, according to which firms are beneficiaries of society, is derived from Catholic Social Teaching (Sison & Fontrodona, 2011; Congregation for the Doctrine of the Faith 1986) and its contribution to VEB in business (Cremers 2017;Naughton & Laczniak 1993;Sison, Ferrero & Guitián 2016). According to it, all intermediate institutions need the social order and the State not just to thrivemaking security, legality, and justice available-but also to even get their start because society provides the resources needed for firms' creation. ...
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... For instance, the fi rst movement engenders philanthropy as a policy of donating part of the profi t to nonprofi t organizations, whereas the second nurtures a culture of sharing: in terms of policies intended to help people in extreme necessity by alleviating societal poverty and reducing income inequalities. Sison and Fontrodona (2011 ) elaborate on the concept of the common good to build a coherent framework that o ers a moral response to the challenge of a new business paradigm. Instead of the prevailing view of profi t as the ultimate goal of business endeavor, they posit that profi t is only a material constituent part of the common good and that the formal part defi ning the essential content of any business operation is human activity. ...
Humanistic leadership is an emerging construct in leadership development invested with a strong potential to promote more humane, compassionate and values-based organizations. Not infrequently rooted in philosophical reasoning, virtue ethics in particular, humanistic leadership is intertwined with religious connotations. The present study is intended to provide a tentative framework of assessing the role of Roman Catholic common good traditions in informing leadership practices centered on moral awareness, intrinsic worthiness and respect of all stakeholders. In sum, we discuss and review certain religious views of leadership that share a vision toward a socially responsible and sustainable business environment.
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The recent global pandemic, COVID-19, has compelled the higher education sector to resort to virtual mode of teaching from the traditional methods of classroom teaching thereby causing a huge paradigm shift. In order to make online learning a more positive and meaningful learning experience teachers must resort to reflective teaching. Reflective teaching is a skilled procedure that requires teachers to take logical decisions on their own teaching pedagogy, actions and provide meaningful guidance to students for better learning outcomes. Conscious lean educational leadership can holistically transform and enhance the leadership aptitude and responsibilities of academic communities virtually. The purpose of this chapter is to integrate reflective teaching as an innovative strategy in virtual mode for the development of conscious lean educational leadership in higher education. The findings yield that conscious lean educational leadership can serve as a great means to boost teachers’ morale and enrich their understanding during worldwide crisis. Reflective teaching can assist teachers to effectively contribute to virtual academic workplace through online educational tools. This chapter complements to extant literature on the amalgamation of conscious lean educational leadership by exploring how reflective teaching can assist to achieve the desired organizational goals in the virtual academic workplace.
A key issue in the business ethics field is the design of effective measures for assessing the ethical culture of organizations. The Corporate Ethical Virtues Model (CEV), developed by Kaptein in 2008, is an instrument for measuring ethical culture, and has been applied, adapted and validated in different contexts. In 2013, DeBode, Armenakis, Field and Walker developed the CEV–S, a shortened version of the original scale. Both the CEV and CEV–S assess eight dimensions based on corporate ethical virtues: clarity, congruency of supervisors, congruency of senior management, feasibility, supportability, transparency, discussability and sanctionability. The objective of this study is to present a Spanish version of the CEV–S and its validation process. The scale was applied to two samples of 114 and 193 Colombian employees from two companies operating in the services sector. The confirmatory factor analyses revealed a good fit for the eight-factor structure of the Spanish CEV–S and the statistical tests applied showed good levels of reliability and validity for this scale. The adequate psychometric properties shown by the Spanish CEV–S may support its use in future research to measure organizational ethical culture in Spanish-speaking settings.
The Common Good and Christian Ethics rethinks the ancient tradition of the common good in a way that addresses contemporary social divisions, both urban and global. David Hollenbach draws on social analysis, moral philosophy, and theological ethics to chart new directions in both urban life and global society. He argues that the division between the middle class and the poor in major cities and the challenges of globalisation require a new commitment to the common good and that both believers and secular people must move towards new forms of solidarity if they are to live good lives together. Hollenbach proposes a positive vision of how a reconstructed understanding of the common good can lead to better lives for all today, both in cities and globally. This interdisciplinary study makes both practical and theoretical contributions to the developing shape of social, cultural, and religious life today.
The purpose of this chapter is to outline the development of the idea of "stakeholder management" as it has come to be applied in strategic management. We begin by developing a brief history of the concept. We then suggest that traditionally the stakeholder approach to strategic management has several related characteristics that serve as distinguishing features. We review recent work on stakeholder theory and suggest how stakeholder management has affected the practice of management. We end by suggesting further research questions.
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the 'separation and control' issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears the costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.