Leiden Law Blog

Moral leadership through value-driven behaviour

Moral leadership through value-driven behaviour

In this contribution, I will examine the role which can be played by virtue ethics when it comes to corporate governance. The term corporate governance refers to the way in which an enterprise is governed and in which decisions are made. In many cases the term has a certain moral connotation, referring to good, efficient and morally responsible leadership. This includes accountability towards stakeholders such as the owners of the enterprise (including shareholders), employees, customers, and, in the end, society as a whole.

Much literature on corporate governance focusses on compliance, implying that good, efficient and morally responsible leadership entails the obeying of certain legal rules, thus acting in compliance with all relevant minimum regulations. But should moral responsibility be limited to acting in accordance with certain legal rules? Does moral integrity really come down to complying with the bare minimum, as required by the relevant laws and regulations?

My contention is that moral responsibility and integrity involve more than just compliance with certain minimum rules. In my opinion, good entrepreneurship should not be approached from the legalistic – and, in all honesty, rather limited – viewpoint of compliance, but from the altogether different perspective of virtue ethics. The focus should be on the moral character of those responsible within the organisation. Good entrepreneurship should flow from the personalities of those responsible, rather than from literalistic compliance with the bare minimum as is legally required. Ideally, the moral character of those involved should be recognisable in the way in which the enterprise conducts its affairs and from the mechanisms and processes by which the enterprise is directed.

Moral character in this context encompasses the moral values that are inherent within the personalities of the people involved. These are the moral values that one has learned throughout life and that are ingrained in one’s personality. By constantly and consistently acting in a morally responsible manner, morally responsible behaviour becomes a habit that gradually becomes more and more natural, up until the point at which morally responsible behaviour becomes all but second nature. When moral values are in this way deeply-rooted in one’s personality they are referred to as virtues of character. These virtues of character constitute the bedrock on which all one’s actions, be it in one’s personal or professional life, are ultimately based.

However, such moral character is far from self-evident. Moral character requires a considerable amount of practice. Moral integrity and responsibility do not become second nature by themselves; they are far from easily learned. That is why, in the end, morally responsible leadership requires that  compliance comes into play. After all, moral actions and decision-making stemming from morally virtuous second nature are the outcome of a gradual learning process in which one constantly and consistently acts in compliance with the necessary legal and moral precepts. What this learning process ultimately yields is a form of corporate governance that comes far more naturally and is much more self-evident than will ever be the case in the more common, but rather limited approach of compliance.

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