People, Firms and Society - Three Proposals for Aligning Personal Motives, Firm's Goals and Societal Needs

Abstract

This paper presents three proposals for aligning personal motives, firm's goals and societal needs. A growing number of scholars are turning their attention to the impact of assumptions on management theory and practice. The search for sustainable ways for aligning economic and social goals at different levels of analysis has been and it continues to be a key task of scholars from different disciplines and, therefore, management studies. This paper aims at contributing to the effort of these scholars by revisiting the dominant assumption underlying the relationship between economic and social goals and proposing alternative models for a sustainable alignment between people, firms and society in management studies and practices.

In order to achieve this aim, this paper first revisits the assumptions and impact on practice of the dominant paradigm explaining the relationship between firm performance and societal needs. This paradigm, coined the great trade-off illusion - that is, the belief that firms must sacrifice financial performance to meet societal obligations - assumes a permanent trade-off between economic and social performance and, therefore, is unable to explain and prescribe sustainable ways for aligning personal motives, firm's goals and societal needs. After making explicit the assumptions and impact of the trade-off illusion dichotomy, this paper analyzes and build an alternative paradigm called instrumental-alignment. As in the case of the trade-off dichotomy, the instrumental alignment proposal does not allow for a sustainable alignment given its restrictive assumptions. In particular, this latter proposal is based on the assumptions of enlightened self-interest, profit maximization, societal material well-being, and a conflict between individual and collective rationalities, which create inherent trade-offs that create unsustainable alignments.

In order to overcome the limitations of the trade-off and instrumental-alignment models, this paper proposes a third model, named intrinsic alignment. This model is based on the assumptions of excellence and practical or part-whole rationality, in which both self-interest and others' interests are taken into account as ends and therefore are not assumed to be object of trade-offs. Therefore, this model allows a sustainable alignment between personal motives, firm goals, and societal needs because that alignment has value in itself. This paper ends with implications for academics, managers, and policy makers at the level of assumptions, practices, and outcomes.

Keywords: Economics, Self interest, Self love, virtue, profit maximization, assumptions, motives, nature of firms, purpose of firms, human development, trade-offs, managerial practices