Let us open with a context. In 1990 the giant American-based fast-food chain McDonald’s opened its first restaurant in Russia, on Pushkin Square in Moscow. The company quickly expanded its operations, eventually opening 850 restaurants, of which 84 percent were proprietarily owned by McDonald’s. The restaurants employed a total of around 62,000 employees. But in 2022, because of the Russian invasion and war in Ukraine, McDonald’s decided to close all its restaurants, selling most of them to Russian owners and removing their name. Shortly following this action, almost 1,000 other foreign companies closed or curtailed their Russian operations. McDonald’s decision was not without challenges, since most of these restaurants were very popular and profitable. A number of other American-based companies withdrew from the Russian market as well.

This book, like its predecessor Moral Imagination and Management Decision-Making (1999), explores the role of moral imagination in managerial and corporate decision-making. The aim here is to progressively develop some fresh process philosophy and systems insights into organizational and managerial thinking on three simple questions: Why do ordinary, decent managers engage in questionable behavior? Why do successful companies ignore the ethical dimensions of their processes, decisions, and actions? And what motivates a successful company such as McDonald’s to withdraw from a large and very profitable market?

Working from the assumption that all human experience is socially constructed and incomplete, we will then argue that a critical missing element in many instances of alleged managerial or corporate wrongdoing is a simple phenomenon: moral imagination.

By “moral imagination” we include the awareness of various dimensions of a particular context as well as its operative framework and narratives. Moral imagination entails the ability to understand that context or set of activities from a number of different perspectives, the actualizing of new possibilities that are not context dependent, and the instigation of the process of evaluating those possibilities from a rational and moral point of view. It is the latter that distinguishes moral imagination. Thus, we shall argue, moral imagination, together with moral reasoning, are necessary ingredients in management decision-making. Otherwise, one often gets trapped in a particular “schema” or narrative that fails to take into account important dimensions of one’s activities, or one’s imagination fails to take into account the moral dimensions of any human decision-making. McDonald’s withdrawal from the lucrative Russia market illustrates such decision-making.

If ethics involved simply a process of evaluating questionable people or questionable institutions engaged in bad behavior, there would be many fewer ethical issues. However, most ethical issues in business are not a result of clear-cut misbehavior. They usually involve smart managers and reputable companies that somehow, in some ways strayed in their behavior. For example, recent Boeing 737 MAX disasters and other Boeing headaches we will outline in Chapter 2 are not results of pure evildoing. Rather, and reminiscent of the features of “Postmodern Ethics” (Bauman, Reference Baumann1993), it is a processual distancing of administration from engineering, the preoccupation with profitability rather than quality control and a number of other seemingly simple factors contributed to these tragedies. (See Englehardt et al., Reference Englehardt, Werhane and Newton2021 and Chapter 2 of this book.)

Another recent incident was the BP Deepwater Horizon disaster, one of the largest environmental catastrophes in history (Averill et al., Reference Averill, Durkin, Chu, Ougradar and Reeves2022): a massive oil spill that occurred in April 2010 in the Gulf of Mexico and which gives us an opportunity to consider the processes involved. An explosion on the Deepwater Horizon oil rig, operated by Transocean and leased by BP, led to the deaths of eleven workers and triggered an oil spill that lasted for eighty-seven days, releasing around 4.9 million barrels of oil into the sea. Key causes of this accident were complex and can be seen as arising from a number of overlapping processes:

1. – Well design failures – the well design for the BP Macondo Prospect well was complex and lacked the adequate redundancy measures that might have prevented a blowout. The operator chose a less expensive, “long string” well casing, that was more susceptible to leaks, rather than selecting a liner system that would have provided additional safety barriers.

2. – Structural failures – Halliburton, the contractor responsible for cementing the well, used a nitrogen-foamed cement that was intended to create a seal around the well. In fact, this cement seal failed to hold. Laboratory tests, to which BP had access, had indicated that this cement mix could be unstable, but they went ahead without taking any extra precautions.

3. – Equipment failures – the blowout preventer (BOP), manufactured by Cameron, was a final line of defense to prevent oil from flowing uncontrollably. It was found later that this BOP had a depleted battery and it failed to function, making it redundant when the blowout actually occurred.

4. – Safety culture lapses – BP and its contractors demonstrated historic safety lapses and cost-cutting measures. In a drive to reduce expenses, BP often compromised on safety. Investigations later showed there were clear warning signs of the risk of an impending blowout, but both BP and Transocean supervisors either ignored these or downplayed their severity to stay on a less expensive maintenance schedule.

5. – Failures in attention to routine – just before this blowout, there were inconsistencies in the pressure tests conducted to check the integrity of the well. However, these test results were misinterpreted by both BP’s and Transocean’s crew, and operations continued despite signs of pressure imbalances, which should have been taken as a clear indication that gas was seeping into the well.

Even worse, the disaster was also the result of multiple incidents of compounding poor decisions made in pursuit of economic efficiency, and a lack of regulatory oversight and safety protocols further amplified the risk. United States government investigations later found that the regulatory agencies involved actually lacked the resources and authority to enforce the highest safety standards, and that BP and its partners had not been held strictly held accountable.Footnote ¹ This case illustrates how a whole system can go awry because of simple neglect of procedures and obvious signs of weaknesses in the operations.

Why do these tragic events occur? The former Federal Reserve chairperson Paul Volcker argues that the common thread in these scenarios is “good, old-fashioned greed” (quoted in Bacon and Salwen, Reference Bacon and Salwen1991, AI0). But that explanation, while probably partially true, is not altogether satisfactory. No one at Boeing nor its subcontractors had any wish or anything to gain with the explosions of the 727 MAX. Nor has BP profited from their failure. Yet, as we shall see, these incidents were caused by human and organizational failures.

These cases raise seemingly simple questions with which we began this book. Ethical issues in business, like those in personal life, are troublesome, the more so because most managers in today’s open and competitive economy are smart, well-intentioned people, and the companies they manage ordinarily intentionally try to avoid egregious behavior. Why is it, then, that some become involved in questionable activities or produce harm while others do not? Is merely human fallibility the cause, or is something more at stake?

A second set of questions derives from other cases. Most managers and most companies are not without ethical difficulties. Indeed, it would be strange if they were, because neither the people nor the companies they constitute are infallible. But the problem is not merely a one-time weakness of will but what we would call moral amnesia or moral blindness, an inability to remember or learn from one’s own and others’ past mistakes and to transfer that knowledge when fresh challenges arise. As a result, as we saw at Boeing, after the two tragic crashes of their newly reconstituted 737 MAX, when a door from one of their 737 planes fell off while in flight (Gelles, 2019). Fortunately, no one was killed, but it was a close call. And there were further questions and mishaps, caused in part by organizational failure. Are these failures merely due to sloppy quality control or can they be traced to managerial decision-making that pressured the company to produce more planes, putting production ahead of quality.

These cases, and others, tell a story about business, and it is not a positive story. None of these incidents need to have occurred, nor should they have been repeated. They create a false impression that business is not a morally worthwhile enterprise, although, as we will contend, this is not true, as the McDonald’s and other companies’ withdrawals from the very profitable Russian market illustrate, withdrawals based primarily on principle, not profit. This is not to conclude that McDonald’s or any other company is perfect. Companies are created by human beings, and we are each, in different ways, imperfect; so, too, are the organizations we create and manage. But the conclusion that free enterprise commerce is evil is troublesome if not false. In order to tell a positive story about business, we have to figure out how to avoid these needless negative outcomes.

There is a third set of issues we will investigate in this book: cases that illustrate how a certain set of beliefs or a narrative becomes so dominant that we begin to believe that narrative without verifying its truth. We organize our experience through a nexus of mental models that create a series of stories or narratives. When one narrative becomes widely accepted, it can affect one’s judgment and bias the ways one deals with other facts even to the extent of excluding from consideration or even falsifying verifiable data.

The role of narratives is important, for example, in following the adventures of Sam Bankman-Fried (SBF) in his creation of enormous very profitable cryptocurrency trading firms, through which he became the darling of Wall Street and was admired by politicians whom he wooed and supported. Despite this myth of a successful trader, SBF’s firms eventually went bankrupt because they “lost” (i.e., they could not find) $7 billion of depositors’ assets. Perhaps SBF thought he was playing a game with these currencies. He thus created a narrative, an interpretation of reality that cryptocurrency trading was a game like chess, and one explanation of his behavior is that others as well as SBF bought into that narrative despite its fantasy.Footnote ² Similarly, according to at least two commentators, after numerous successful launches, NASA officials began to think that the agency was invincible and that the space shuttle was a perfect, even risk-free vehicle (Feynman, 1989, 179–183; Schwartz, Reference Schwartz1987, 56–67).

The consequences of accepting these sorts of narratives are obvious. The more than 20-year-old and still ongoing series of cases of alleged fraud involving over 600 sub-postmasters in the British Post Office system was due primarily to a managerial belief system that assumed all software was infallible (Flinders, Reference Flinders2024). The software the Post Office organization employed turned out to be faulty, but it took at least fifteen years to unearth this faulty belief system that perpetuated wrong convictions of these sub-postmasters.

Chapter 2 begins with an exploration of a number of tempting ways to approach these complex issues of intentionality and moral accountability. If “good, old-fashioned greed” is a factor, we need to investigate the role of self-interest in managerial decision-making. It will turn out, however, that self-interests are complex matters, that people are motivated by other interests including genuine interests in other people, and that egoism, alone, is a defective mechanism for explaining human and organizational behavior.

According to the moral development literature, a second option is to speculate that managers at Boeing, for instance, operated on the lowest level of moral development, gauging their moral judgments on what Lawrence Kohlberg and other psychologists call the preconventional level, using self-interest and personal gain as the only goal of their activities, and basing their actions simply on whether they would be caught. This analysis might be plausible to describe some behaviors, although there is independent evidence of his strong moral upbringing, but it hardly describes most managerial decision-making. It is true that most managers act for the self-interest of their companies, and one can safely conclude that no one wants to get caught engaged in wrongdoing. Yet evidence from a number of studies suggests that most managers operate at least on the conventional moral development level; they care a great deal about interrelationships and appeal to conventions, social mores, and the law to guide their actions (Derry, Reference Derry1989).

Alternately, one could conclude that managers of companies in trouble are of weak moral character, that they do not exhibit the virtues of excellence, honor, and respect for community (Solomon, Reference Solomon1992). This, too, is a difficult contention to verify, and again, there is contrary evidence that Boeing’s engineers were basically decent, even personally virtuous people.

There is still another set of explanations of moral amnesia or moral blindness. Each of us, as a member of a particular society embedded in family, religious, social, and political relationships and as a professional, a manager, or an employee, has, or acquires, a number of social roles. These roles are defined by the social institutions in which one finds oneself or is a member. Sometimes these roles and their concomitant responsibilities overwhelmingly shape one’s worldview and strongly influence one’s judgments. We find, for example, religious zealots so committed to a cause or, on a smaller scale, employees so committed to their company and its survival, that they will perform activities unconscionable or even absurd to the ordinary outsider. In the Volkswagen (VW) diesel engine scandal, the numerous managers and engineers who participated in this fraud had to know that this was illegal as well as opaque to its customers. Their perceived commitment to keep VW as the world’s largest car manufacturer and their obedience to managerial authority of VW overrode ordinary role expectations and the universal code of safety all engineers are expected to adhere to. It overrode moral considerations and legal requirements. That this behavior was a conflict of interest for an engineer did not deter their commitment to the company as the first priority.

Moral philosophers offer another set of reasons. Few managers have had serious training in moral philosophy, nor do many of them understand the nuances of deontology, utilitarianism, rights theory, and theories of virtue or justice. There is a set of arguments that develops the thesis that training in moral reasoning might increase moral awareness, facilitate moral decision-making, and, it is proposed, prevent many of the problems from occurring. Moral education, if complete, would prevent many of the incidents we have cited, according to this thesis. It will turn out, however, that the simple teaching and application of moral principles or rules may not alleviate all problems. It is not always lack of logic or ignorance of moral principles that causes these problems but the principles’ general character that fails in the specificity of its application. This specificity has not so much to do with the particular situation at issue, per se, but rather with how the situation is perceived and framed by its protagonists. What is evident, however, in many cases, is not weak moral development: neither a failure of moral character, nor a lack of understanding what is right or wrong, but rather a setting aside of moral considerations in the pace or fog of business activities. So simply learning about moral reasoning or moral theory, in the abstract, by itself, does not appear to be enough unless one somehow and with attention integrates those reasoning skills into actual practice.

We shall argue that most individual managers are not without moral sensibilities or values, nor are they motivated merely by greed or even self-interest, nor are most of these managers at a low level of moral development. Companies, too, are not without moral sensibilities, and many corporations such as Boeing have a values statement and an ethics program for managers. Nevertheless, in many situations and in the course of many processes, managers have an unduly narrow perspective on their situation and little in the way of moral imagination. As SBF illustrates, some managers confuse reality with what they want it to be. Others lack a sense of the variety of possibilities and moral consequences of their decisions, as well as the ability to imagine a wide range of possible issues, consequences, and solutions. Some individuals and institutions are trapped in the framework of history, organization, corporate culture, and/or tradition of which they are only at best vaguely aware, a framework that often drives their decision-making to preclude taking into account moral concerns, a framework that sometimes even allows or encourages managers to overestimate their powers and abilities. Still other managers are so focused on their roles and role responsibilities to a particular organization that they fail to consider simple norms of morality.

To account for these phenomena, we shall defend a simple point. All reality is socially structured. All experience is interpreted or constituted by a conceptual scheme and an overlapping set of incomplete mental models through which we selectively frame, order, organize, and interpret the data of experience. Each of us functions through a set of mental models that are socially learned, culturally inculcated, educationally reinforced, and experientially altered. These mental models are necessarily incomplete and volatile; that is, they can be relearned and changed. They are neither universally, socially, institutionally, nor culturally the same in every individual, although they overlap and are socially, institutionally, and culturally shared or shareable with others. In some settings certain mental models function as scripts that focus our attention on a particular set of habits for dealing with that set of events in that context. In those cases these mental models serve as focusing mechanisms to bracket out other points of view or other schema. Thus, the kinds of mental models operative in any setting create decision-making habits that may preclude the taking into account of some important data. For example, as we shall argue in more detail, Boeing’s long-term successes in the aerospace industry may have led to lethargy: to a failure to reinvigorate safety and quality measures.

Moreover, all human experiences are embedded in a set of narratives, many of which are not of one’s own making. We are born into a particular historical tradition, and we find ourselves part of religious, social, and cultural traditions embedded in a language. We do not choose these traditions and narratives, nor can we always escape them. Sometimes these narratives can be distorting, as the SBF case illustrates. Still, we shall argue further, none of us is merely defined by our background narratives. Each of us is an author of, as well as a participant in, our own history and narratives.

Therefore, even though all experience is interpreted, reality is socially constituted, and our experiences are embedded in series of narratives, we shall argue that who we are, what we do, and how we behave are not merely narrative driven or conceptually constrained. There are at least two reasons why this is so. First, we shall argue, the self cannot be merely equated with its roles and social relationships, despite the impossibility of getting at the self apart from those roles and relationships. Thus, the existence of some narrow-minded decision-making, or the dominance of strongly differentiated role responsibilities, does not morally excuse misbehavior or the occurrence of untoward consequences that could have been avoided. Second, because mental models and narratives are incomplete and overlap, human choices are not merely context determined. Underlying all human activity is what Donald Davidson calls a “common coordinate system” (Davidson, Reference Davidson1974, 5) that accounts for human understanding and communication and for the fact that any particular mental model can be examined and revised.

One of the primary reasons for the undesirable outcomes in the cases we have cited is a paucity of moral imagination. Most managers and their institutions do not lack moral principles. Rather, they sometimes have a narrow perspective on their situation. They lack a sense of the variety of possibilities and moral consequences of their decisions and the ability to imagine a wide range of issues, consequences, and solutions. Some individuals are trapped in an organizational framework and tradition of which they are only vaguely aware, a framework that often drives their decision-making and excludes considerations of moral concerns. Managers do not always remember and thus learn from their mistakes, because they do not realize they have made mistakes. Sometimes, too, a dominant narrative creates a story that, while plausible, distorts and narrows the frame of decision-making.

A developed moral imagination gives managers means to disengage themselves from a particular situation, from its narrative, from one’s roles, and from a dominating conceptual scheme. Moral imagination enables one to assess one’s situation, to evaluate present and new possibilities, and to create decisions that are not parochially embedded in a restricted context or confined by a certain point of view. Without moral imagination, mistakes are reiterated.

However, one should not confuse moral imagination with practical moral reasoning. As we outline in Chapter 6, moral imagination is a necessary but not a sufficient condition for creative moral managerial decision-making. Without moral imagination one can easily be drawn into a particular mindset that does not take into account other critical perspectives. On the other hand, imagination alone can create fantasies that, too, become dominating and falsifying narratives, as the British Post Office cases demonstrate. Moral reasoning is a crucial element in management decision-making, an element that nevertheless depends on moral imagination as its driving force and on moral standards as its “bottom line.” Practical moral reasoning takes into account ethical theory but not abstractly. Moral reasoning begins with the particular – a specific scenario. This is because in the first instance ethics has to do with human relationships and human activities, not with abstract formal principles. It generates conclusions from that particular set of events, taking into account not merely the situation but its narrative and the set of mental models or conceptual schemes that frames these events. Moral imagination is essential to get one from a particular situation to a more disengaged perspective. At the same time, moral reasoning helps to challenge any event with stipulative principles or minimum moral standards that are not context dependent or merely forms of role morality. Management decision-making, then, must be contextual, imaginative, and rational. It must begin with the particular, but go beyond that, in order to avoid obvious errors in judgment. Moral imagination and moral reasoning provide concrete managerial and organizational decision-making skills with which to avoid questionable activities, prevent unseemly consequences, and enable a manager or a company to create decision models that contribute positively to corporate and societal well-being.

There is one more dimension of moral imagination: reminding ourselves that decision-making, and indeed all human activities are embedded in systems and subsystems that entail ongoing ever-changing processes. This dimension of analysis will be outlined in Chapter 7.

To conclude the body of this work in Chapter 8 we step back from our analyses of individual, managerial, and organizational moral imagination to look more broadly at the role of moral imagination in analyzing and critiquing contemporary global capitalism and multinational corporations (MNCS), which seemingly have ubiquitous roles in expanding this phenomenon. We will engage in morally imaginative thinking to disengage from a Western capitalist mindset to look more broadly at the various cultures and “social imaginaries” that inhabit our world. While conceding that various forms of capitalism dominate economic thinking, we conclude that, given the cultural and ethnic diversities existing throughout the planet, an approach or set of approaches that acknowledges diverse social imaginaries might better serve these localized points of view. In the long run the goal of poverty alleviation, if not economic development, might better be achieved.

Throughout the book we have cited cases in which imaginative decision-making has enabled or even driven managers to be creative, profitable, and morally exemplary. Companies such as McDonald’s and others that withdrew from Russia, have, in certain circumstances, gone beyond what is expected in the processes of ordinary managerial decision-making. These managers and their companies knowingly and creatively exhibited moral imagination, an imagination “disciplined by respect for the real” (Tuan, Reference Tuan1989, 10). They took moral risks, and they exhibited exemplary moral leadership while continuing to be profitable.

We end the book with an example of moral imagination in practice. This chapter is written by two managers at Google who conduct workshops using moral imagination as the template for managerial ethical decision-making . Their narrative illustrates how moral imagination and moral reasoning are not merely theoretical ideas but can be employed in practice to raise awareness of the many dimensions of corporate decision-making and action and strengthen managerial decision-making so that questionable behavior is alleviated if not avoid altogether. With their moral imaginations fully at work, decision-makers become, in Henry James’s words, “finely aware and richly responsible” (James, Reference James1934, 62, cited in Nussbaum, Reference Nussbaum1990, 111).

Or, to take an idea from Iris Murdoch (1919–1999) whose text appears as an epigraph to this chapter, managers and executives are giving their fuller attention to what they are doing and to the possible outcomes along the way. In Murdoch’s philosophical and literary work, “attending” is a central concept that refers to a form of moral perception and a disciplined, compassionate attention to reality. Murdoch was influenced by philosophers such as Simone Weil (1909–1943), who had written about “attention” as a form of profound, selfless focus on the other, beyond personal desires or prejudices. Murdoch proposes that moral growth requires overcoming the ego’s impulses and focusing on the true nature of others and the world. In this sense, attending involves cultivating a clear-sighted, loving gaze toward others, unclouded by selfish desires, which Murdoch saw as central to the development of virtue (Murdoch, Reference Murdoch1971). Her novels (see for example Murdoch, Reference Murdoch1969) illustrate this idea through characters who struggle to see each other clearly among an array of personal illusions, demonstrating how attending is both difficult and transformative. For Murdoch, this attending to the reality of others’ is closely linked with love and compassion. In our genuinely attending to someone, we acknowledge their complexity, allowing for deeper empathy. Murdoch believed (and expressed in a more secular way) that attending to others would help dissolve self-centered patterns that often distort human relationships (Weil, Reference Weil[1947] 1952).