IESE Research Papers,
IESE Business School

Abstract: There are many, often mutually inconsistent, theories about organizations that explain organizational phenomena to the same, limited extent. Most of them ignore the ethical dimension completely. In this paper we propose the basic principles for a theory of decision-making in organizations that has ethics at its core. This theory is based on the work of Juan Antonio Pérez López (1991, 1993) and is essentially a humanistic view of the interrelationships between people and their implications for organizational decision-making. First, we show how, in any interrelationship between two people, what each person learns is crucial to the future of the relationship. We then consider the different aspects of what each person learns. Second, we apply the preceding analysis to the organizational context, as a guide to organizational decision making, and show how any decision in an organization needs to be analyzed in terms of three criteria: short-run effectiveness, development of distinctive competence, and unity and identification of employees with the organization.

Keywords: business ethics; ethical foundations of organization; trust; management theory; learning

25 pages, October 13, 2006

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