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Corporations are under fire. Hardly a day goes by that executive conduct doesn’t appear as a topic—or, more accurately, as a problem—in the media. This leads to increased public pressure on corporations, many of whom are reacting and publicly assuming their corporate responsibility. But how serious are they? Doesn’t the shiny façade of an environmentally and socially aware corporation simply conceal a game played according to the market’s purely economic rules? The notion that business and ethics are mutually exclusive refuses to die. And the prejudice that business success is possible only at the expense of morality continues to prevail. Or as the satirist Karl Kraus alledgedly responded to a student: “You want to study business ethics? Then study either one or the other!”

Last Thursday, you went out for lunch with an acquaintance from class, a nice-enough fellow but not a candidate for lifelong friendship. As you were wolfing down your last bite of cheeseburger, you suddenly gulped and flushed: you realized that you had forgotten your wallet. You were flat broke. Embarrassed, you entreated your classmate to lend you five dollars, which you would, of course, pay back on Tuesday. Today is Wednesday; you forgot.

The problem business ethics—as any other applied ethics — is facing to put formal ethical considerations developed a priori into practical use in real-life situations. It becomes apparent that applied ethics in this sense must do more than just reflect on philosophical principles if it is to be of relevance in the dynamically developing real world. This means we must move away from the idea implied by the term “applied ethics” that we can simply take — from whichever source — pure ethics and apply it wherever we like. However, this makes it impossible to separate the ultimate justification of principles from practical implementation in order to solve real ethical problems, as propagated for example by transcendental pragmatics. In applied ethics there is a fundamental relationship between applying valid principles, and criticising and modifying them. In the prescriptive field this relationship exhibits structures similar to those in the field of understanding. Ethics which takes this into consideration can be called “hermeneutical ethics” (Zimmerli 1995). It can resolve the “dilemma of philosophical ethics” (Zimmerli 1990, pp. 205f.): that ethics as a theory for justifying moral norms presupposes that they are factually valid, yet must be able to distinguish between legitimate and illegitimate validations. Hermeneutical ethics resolves this dilemma thus: when applying ethical principles, it presupposes their factual validity; when however, testing their suitability in altered situations, it questions it.

The accelerating globalization of economic transactions provokes the impression that human values and patterns of behavior will sooner or later converge into one worldwide culture. This assumption seems to be especially true for the business world with its ‘culturally invariant rules of the market’. In fact, however, this convergence of the various business cultures of the world takes place only on their very surface and does not reach the different fundamental value systems. They are the result of a mostly unconscious and complex process, having developed over centuries, and thus resisting short-term change.

Few doubt that leaders play a role, either as founders or promoters of values in organizations. So the more important question is not “Whose values?” but “What values?” Just because a leader has values doesn’t mean that they are good ones. Furthermore, the question is not so much about what a leader values, but what a leader actually does to demonstrate his or her values. This paper is about how leaders translate values into action and actions into enduring organizational values. I first examine how we have come to think about the values of business leaders and success. I also reflect on what theories of leadership say about how leaders influence followers. Then I argue that the language of having values is often inadequate for understanding individual and organizational ethics. Lastly, I look at the leadership of P. Roy Vagelos of Merck & Company to illustrate the how the values of founders and current leaders shape the values of their own organizations, and can shape the values of the industries in which they operate.

Servant and leader — can these two roles be fused in one real person, in all levels of status or calling? If so, can that person live and be productive in the real world of the present? My sense of the present leads me to say yes to both questions. This chapter is an attempt to explain why and to suggest how.

Leadership is a process of morality to the degree that leaders engage with followers on the basis of shared motives and values and goals — on the basis, that is, of the followers’ “true” needs as well as those of leaders: psychological, economic, safety, spiritual, sexual, aesthetic, or physical. Friends, relatives, teachers, officials, politicians, ministers, and others will supply a variety of initiatives, but only the followers themselves can ultimately define their own true needs. And they can do so only when they have been exposed to the competing diagnoses, claims, and values of would-be leaders, only when the followers can make an informed choice among competing “prescriptions”, only when — in the political arena at least — followers have had full opportunity to perceive, comprehend, evaluate, and finally experience alternatives offered by those professing to be their “true” representatives. Ultimately the moral legitimacy of transformational leadership, and to a lesser degree transactional leadership, is grounded in . Hence leadership assumes competition and conflict, and brute power denies it.

What’s so good about work? Throughout history some have praised it, others have cursed it, but few escaped it or had the luxury of deciding whether they should work or not. At some time or another we all wish that we didn’t have to work. We fantasize about catching up on chores or hobbies, spending more time with family, friends or a loved one, reading great books, and traveling. Lotteries seduce with the vision of freedom from work and material need, yet a surprisingly large number of lottery winners and other independently wealthy individuals continue to work. It is easy to imagine not working for a short time; the task of imagining a whole life without work is more difficult. For some people the question “Why work?” is ridiculous because they don’t have a choice in the matter. “We work because we have to make a living.” That is why people have paid jobs, but it doesn’t explain why they do other kinds of work. Nonetheless, the economic interpretation of work is so strong in our culture and a growing number of other cultures, that we tend to equate work with “being on the job”.

Organizational integrity refers to the ethical integrity of the individual actors, the ethical quality of their interaction as well as that of the dominating norms, activities, decision making procedures and results within a given organization. This article discusses these manifold aspects of organizational integrity and outlines the main driving forces and dimensions of ethical and unethical behavior in corporations. Reflections on ethics in general start with the assumption that it has to do with human actors who do or omit something. It has to do with their motives and the product of their interrelated activities. Thus, the individual might be regarded as the main point of reference for analyzing organizational integrity. However, the ongoing formalization and institutionalization of the ethical dimension of management is based on a simple observation: Organizational integrity goes beyond managerial integrity and is more than the presence of individuals with good characters within the organization. Having “good” managers is certainly a precondition for organizational integrity, but it does not prevent organizations from obtaining bad ethical results. It is possible to take the bad apples out of the barrel but the risk of deviant organizational behavior will not be reduced to zero. The good apples might develop a bad taste and sometimes it might be a problem of the barrel itself.

At first it seemed as if Enron was just too big, just too important and just too valuable to fail (Walker 2002). It ranked seventh among the world’s largest corporations in the Fortune 500 list, and for six consecutive years since the mid-1990s, it was voted “America’s Most Innovative Company”. During that period, Enron reported an almost eight-fold increase in sales from $13.3 billion to $100.8 billion, with a market capitalization of $63 billion. Its financial statement in 2000 reported a record-setting net income of $1.3 billion, with recurring earnings per share up by 25 per cent, and a total return to shareholders of nearly 89 per cent. Even as late as 2001, Enron’s board of directors was named the third best board in the US by Chief Executive magazine. Yet on 3 December 2001, the unbelievable became inevitable and Enron became the largest corporation ever to file for bankruptcy in American history (Oppel & Sorkin 2001). Enron and its affiliates sought Chapter 11 court protection for assets worth $49.8 billion and debts of $31.2 billion. The air was heavy with accusations of accounting fraud, insider trading and other securities law violations.