Economistic Perspective

From a purely economistic perspective, organizations are not necessary; instead, the market could coordinate individuals in their maximization of fixed-utility functions. Similarly, the economistic view of human behavior has little to say about the role of collaboration. Competition is the only relationship that matters and rational, utility-maximizing individuals need only be coordinated through the market. Only when additional assumptions are introduced, such as transaction costs and bounded rationality, can economistic theories explain collaboration in situations where the market provides suboptimal results.¹ Economist Ronald Coase famously stated that organizations emerge when transaction costs become too high and the market itself cannot provide effective and efficient solutions.² When these additional constraints of transaction costs and bounded rationality are included in the baseline economistic perspective, organizational arrangements make sense. When the market is suboptimal, market advocates ironically often turn to advocates of hierarchy. Hierarchical structures that use command and control mechanisms are deemed particularly superior to market-based arrangements, because they lower transaction costs.

In the economistic perspective, an organization is built on the basic assumptions of homo economicus or REMM. Since the economistic perspective on human nature assumes that individuals maximize their benefit, organizations also need to follow the maximization imperative. As a logical extension of the individual maximization hypothesis, organizations only make sense to homo economicus and REMM if they maximize their respective utility. Whereas the REMM perspective suggests that this utility could (theoretically) be any kind of objective, the orthodox interpretation says that shareholder value maximization is the firm’s optimal focus. Michael Jensen, the intellectual father of REMM, argues that a business needs to maximize shareholder value. Refuting stakeholder theory, Jensen argues that there has to be a single objective for the firm, otherwise a manager could not manage it purposefully. He bases this claim on the assumptions of economic theory, which posit that maximization strategies are required in situations where there are no externalities:

An optimal way of ensuring utility maximization is for organizational leadership to focus on shareholder interests only. As a consequence, managerial decisions made according to the economistic paradigm aim at maximizing one overarching drive: The drive to acquire, as described in Chapter 3.

The economistic perspective presents a clear logic. Still, when one examines not only its assumptions of human nature, but also its premise regarding shareholder value maximization, important fallacies become apparent. Michael Jensen argues that “in the absence of externality and monopoly, and when all goods are priced” shareholder value is a necessary organizational strategy. In this statement, he already makes important qualifications that turn out to be rather unrealistic. Externalities, for example, are very real. The current environmental crisis, including climate change, is a prime example of negative, drastic, and persistent external costs to society. Monopolies are real, and the emergence of oligopolistic structures in such industries as consumer goods, technology, pharmaceuticals, health care, and automotive technology does not bode well for Jensen’s argument. As stated before, not all goods can be priced. The philosopher Immanuel Kant famously suggested that in life there are goods that can be priced and exchanged, and there are those that have intrinsic value, which cannot. While it is theoretically possible to put a price on everything humans care about, including a stable climate and healthy environment, it is not only undignified but wildly impractical. It seems increasingly obvious, then, that the economistic paradigm, which currently functions as the operating system of our economies and societies, is suboptimal.⁴

Humanistic Perspective

The humanistic perspective suggests that organizations are better seen as communities. The perspective of organizations as communities transcends the economistic perspective of organizations as hierarchies, or a market-based set of contracts.⁵ Domènec Melé, the Spanish academic argues that businesses are much more than mere sets of contracts or mechanisms for profit creation.⁶ Humanism views organizations as a social phenomenon essential to the relational nature of human beings. Lawrence argues that because humans have a drive to create close friendly and cooperative relationships,⁷ humanistic organizations embrace a balance of qualitatively desirable outcomes. These goals can vary, and often accommodate multiple interests. Humanistic organizations tend to involve stakeholders actively in their decision-making processes. Overall, humanistically oriented firms aim to simultaneously support independent drives for acquisition, bonding, comprehending, and defending.⁸ In fact, Harvard Business School professors Nitin Nohria, Boris Groysberg, and Linda Eling-Lee find that when firms fulfil the four drives, they not only motivate their employees and other stakeholders but also produce more desirable organizational results.⁹

Rather than follow shareholder value maximization as a predefined goal, the humanistic perspective suggests that there are many potential organizational goals. In line with the humanistic perspective on human nature, organizations exist to enhance the common good and promote human well-being. To establish common goals, humanistically managed organizations use discourse-based social processes, rather than hierarchical command-and-control mechanisms. Their organizing practices respect the four independent drives, aim to protect foundational human dignity, and promote well-being. Organizations such as Gore, a family-owned industrial conglomerate best known for Goretex; Novo Nordisk, a Danish pharmaceutical; Broad Air Conditioning, a Chinese manufacturer; and many other organizations around the globe implement humanistic organizing practices successfully (see Chapter 8 for more on this). These organizations have been run profitably and competitively, yet renounce the urge to maximize a single objective, such as shareholder value maximization. They have developed highly sophisticated stakeholder engagement processes to support collaboration, innovation, and the creation of mutually beneficial goals.¹⁰

The humanistic view of human nature would have business organizations balance their objectives rather than maximize any particular objective. Humanism’s universal ambition requires that multiple objectives are integrated and harmonized. Recently, even Michael Porter, the renowned strategy professor, has accepted that businesses need to create shared value.¹¹ According to Porter, businesses need to do so, because they otherwise lose legitimacy and the necessary societal support. In the humanistic perspective on organizations, shared value-creation processes are not only theoretically and practically possible but imperative. Organizational strategies need to strike a balance between multiple stakeholders and between short and long-term interests. To enhance organizational legitimacy, such strategies need to balance the four independent drives of all the stakeholders involved at a level above the dignity threshold. To enhance well-being, organizations can address the societal problems that are most detrimental, and can develop value propositions that promote the common good. Chapter 8 provides examples of organizations that have done so.

Economistic Perspective

Harvard Business School professor Rakesh Khurana argues that, as a relevant topic of study, leadership emerged from the paucity of economistic theorizing at the beginning of the twentieth century.¹² Economist Harold Demsetz argues that the economistic framework was built to explain human behavior in market situations.¹³ Logically, there is no place for leadership in the economistic framework, because all individuals make their own independent decisions in the market; all market participants are considered equal. However, since leadership plays such an obvious role in real-life organizations, business schools merged the dominant economistic paradigm with insights from psychology in order to teach it.¹⁴ This meant, however, that the economistic paradigm influenced a considerable part of the research and teaching on leadership.

In the more advanced economistic view, the organization is seen as a nexus of contracts that is continuously negotiated. As a consequence, the role of the leader requires being involved in a constant negotiation process. The task is to clarify goals and desired outcomes with followers. Leadership researchers Bernard Bass and Bruce Avolio call the economistic type of leader a “transactional leader.”¹⁵ The transactional leader is primarily involved in ensuring compliance and setting incentives so that followers can deliver. Nurturing, long-term relationships are rather irrelevant and seen as a hindrance (the practice of, e.g., “hire and fire” requires leaders to be emotionally disconnected from followers). Followers are considered human resources (not human beings), and a skillful transactional leader is one that maximizes efficiency. Thus, a good leader in the economistic view is a skillful commander who can manage linearly and hierarchically to support efficiency maximization.

Borrowing from the misguided Spencerian version of Darwinism, leadership is also often understood as being the top dog in an institution. The prototypical business leader is frequently portrayed as successfully accumulating power, status, and wealth. Donald Trump represents such an economistic type of leader focusing on transactions rather than relationships. He arguably fits the Spencerian perspective of leadership of the fittest/strongest, focusing on the drive to acquire. Many psychologists maintain that he is highly narcissistic and sociopathic, personality disorders that seem to be at the core of his “success.”¹⁶

In similar ways, Lawrence and Babiak argue that the economistic leadership model supports the rise of psychopathic individuals to the top.¹⁷ According to their estimates, it is 6–10 times more likely that a psychopathic individual will be in a leadership position than in the general population.¹⁸ The people pursuing “opportunism with guile,” as Oliver Williamson describes them,¹⁹ can use hierarchical institutions to rise to the top. It is therefore ironic that personality disorders may be key to successful economistic leadership. Hare argues that psychopaths and narcissists benefit from a lack of empathy and a genuine drive to bond with fellow humans, and are not hindered by moral qualms. The traits of such leaders – like Bernie Madoff – are described as cunning, smart, sly, and manipulative. Such leadership, when viewed through the lens of the four-drive theory, focuses on the drive to acquire via power, status, or rank. Very smart leaders in the economistic mold are aware of the need to satisfy their followers’ other drives, but they use dC, dD, and dB to serve dA. A practical example: Networking is often sold as a way to connect with colleagues to enhance professional success. This practice instrumentalizes the drive to bond to serve the drive to acquire. Such instrumentalization often reduces people to means, thus undermining their dignity.

Humanistic Perspective

The humanistic perspective positions itself against such instrumentalization of human beings. What Bass and Avolio term “transformational leadership,” fits well with a humanistic view of leadership.²⁰ Transformational leaders actively balance their four personal drives, and engage their followers to do so, as well. Based on moral values, transformational leaders inspire followers, stimulate them intellectually, and engage them emotionally with organizational tasks. They base their influence on the power of the argument rather than hierarchy, and demonstrate care for the individual follower and his or her personal development. Transformational, humanistic, or four-drive leaders are able to create a climate in which people understand cognitively and emotionally embrace the organization’s purpose (drive to comprehend), are able to maintain very positive long-term relationships with each other (drive to bond), create financial value (drive to acquire), and can count on their collective strengths to weather the storms of competition (drive to defend).

Humanistic leaders do not draw the line at acting and influencing within their organization. Their four active drives compel them to contribute to a society that allows all humans to balance their four drives as well. Lawrence, therefore, argues that business leaders should play a far more active and constructive role in the public policy process, not, as is currently seen in terms of a laser focus on firm profitability (dA), but rather in terms of creating a balance in society between the four drives.²¹

The humanistic perspective on leadership gives us insights into the need for and emergence of responsible leadership. The evolutionary perspective on human nature explains good leadership as behavior that respects the dignity of all human beings and promotes human well-being by balancing the satisfaction of all four drives. Based on the humanistic view of human nature, one could view leadership as the art of building and sustaining good relationships with all the relevant stakeholders by addressing and balancing all four drives above the dignity threshold. By developing the capabilities of such practical wisdom, leaders will be able to contribute to sustainable human flourishing.

Such responsible leadership is a demanding and complex task, but, as Darwin has observed, there are certain in-built rules that can guide responsible decision-making. In his book The Descent of Man, Darwin states that morality developed in man so that responsible social action was possible.

He reinforced this perspective by adding:

This moral sense of conscience can serve as a guiding post for responsible leadership. Psychologists Marc Hauser presents empirical evidence of the existence of specific moral rules that hold across cultures, primarily the following:

• Help others rather than harm them.

• Tell truths, not lies – except for white lies.

• Keep promises.

• Seek fair exchanges that reflect merit differences.

• Detect and punish cheaters.²³

Similarly, Lawrence cites the Golden Rule, which has regularly appeared in religious and philosophical teachings over the past three thousand years. He suggests that the following decision rules based on the four drives could help responsible leadership:

Moral Rules Deduced from the Golden Rule and Four Drives

• dA: To support the other’s drive to acquire:

  • Help enhance rather than steal or destroy the other’s property.

  • Facilitate, do not frustrate, the other’s pleasurable experiences.

• dB: To support the other’s drive to bond:

  • Keep, rather than break, promises.

  • Seek fair exchanges, no cheating.

  • Return a favor with a favor.

• dC: To support the other’s drive to comprehend:

  • Tell truths, not falsehoods.

  • Share, do not withhold, useful information. Respect, do not ridicule, the other’s beliefs, even when disagreeing.

• dD: To support the other’s drive to defend:

  • Help protect, do not harm nor abandon, the other.²⁴

Lawrence and others argue that when responsible leaders treat all stakeholders according to these rules, stakeholders will be engaged, because leaders will be contributing to the fulfillment of all four of the basic drives – the ultimate motives – of human beings. Supporting this claim, research conducted by Nohria, Groysberg, and Eling-Lee found that leaders’ ability to meet the four fundamental drives explained, on average, about 60 percent of employee variance in motivational indicators, while previous models only explained about 30 percent. They also found that leaders can best improve employee motivation by satisfying all four drives in a balanced manner. “The whole is more than the sum of its parts. A poor showing on one drive substantially diminishes the impact of the other three drives.”²⁵ This finding supports the humanistic view that effective, responsible leaders need to address all four drives above the dignity threshold in a balanced manner for all types of stakeholders.

Economistic Perspective

Agency theory largely informs the governance notions of the economistic perspective. Agency theory builds on REMM, and assumes that people are acting opportunistically. Consequently, governance mechanisms focus on creating an environment in which opportunistic, self-serving managerial agents are held in check. The main goal of the governance structure is to control managers so they cannot harm the fulfillment of whatever goal the owners, as principals, intend to fulfill. One way to control managers is through top-down hierarchical governance structures, which unitary boards control. Unitary boards need to ensure that shareholder value is maximized. Accordingly, the organizational structure is typically centered on top-down decision-making, which maximizes efficiency.

The shadow of homo economicus looms large in the argument for unitary board structures. Two reasons why unitary boards are considered acceptable stem from the memetically adopted assumptions of complete information access and the focus on efficiency at the firm level. Board members are considered rational decision makers. Accordingly, they possess all the information needed for making optimal decisions, and follow the rational decision-making model. It is argued that they start their decision-making by identifying a problem, then defining the decision criteria, allocating weights to the criteria, developing alternatives, evaluating the alternatives, and, finally, selecting the best alternative.²⁶ Such a process should lead to impeccable decision-making. It would have been useful to have such board performance to manage risk so as to avoid, or mitigate the 2008 financial crisis.

Obviously, the process is not an accurate description of what actually happens in corporate boardrooms, as shareholders and stakeholders found to their enduring detriment during the financial crisis and various earlier crises. A large body of research has previously debunked this model as flawed.²⁷ With regard to complete information assumption, Nobel Laureate Oliver Williamson writes succinctly that human beings have a limited ability to receive, store, process, retrieve, and transmit information.²⁸ Other researchers suggest that these limits are rooted in physiological, neurological, and psychological mechanisms.²⁹ Consequently, board members have a hard time controlling command and control-based hierarchical organizations.

An alternative form of establishing control in economistic organizations is based on incentive systems. Incentive systems are considered a central structural element for aligning diverging interests, and are seen as another way to effectively deal with opportunistic agents. Economistic incentive schemes are mainly monetary in nature, and include financial bonuses or stock options. These incentives are usually targeted at the individual and mainly address the drive to acquire (dA). Such incentives are often tied to a quantitative measure that can be established in the short term. There have been some attempts to tie incentives to long-term outcomes, but, as a Danish proverb says, “It is hard to make predictions, especially about the future.”³⁰

Not only did the unitary board structure not help control managerial opportunism during the financial crisis, but the incentives schemes favored by proponents of economistic management also failed to support organizational excellence or shareholder value maximization. Jim Collins, who studied companies that consistently outperformed the stock market for fifteen consecutive years, finds that incentive schemes played no role in their success.³¹ In fact, there are examples, like Enron, where researchers suggest that their incentive scheme propagated their downfall.³²

Humanistic Perspective

Governance practices inspired by the humanistic paradigm support the fulfilment of stakeholders’ drives above the dignity threshold. In contrast to the strong focus on the drive to acquire, humanistic governance theories, such as stewardship theory, focus on reinforcing the other-regarding, relational aspects of human nature (dB). According to governance scholars, stewardship theory assumes that higher-order needs, such as social and self-actualization needs (dB/dC), also drive intrinsically motivated human beings.³³ In the humanistic perspective, managers are not agents, but stewards guided by the intention to serve all stakeholders. They demonstrate a high level of commitment to total value creation, a focus on long-term results, and an equitable distribution of rewards to all stakeholders. As such, humanistically inspired governance mechanisms focus on strategic support for the steward, and less on hierarchical control. Economistic types of top-down control (such as time clocks, monitoring systems, etc.) are found to undermine motivation and are detrimental to the performance of stakeholders.³⁴

While top-down control mechanisms are essential for the governance structure of economistic organizations (some organizational theorists call them the “remnants of feudalism”), checks and balance systems are essential in humanistic organizational structures to prevent power abuse. Lawrence argues that checks and balance arrangements parallel the function of the prefrontal cortex in the human brain.³⁵ That is why, he argues, checks and balance systems (such as those instituted in the US constitution) better represent all major stakeholders in strategic decisions. Akin to democratic institutions, organizations governed by humanistic principles can use different stakeholder councils (e.g., worker councils) to prevent decisions that favor one group over the other in the long term.³⁶ Humanistic governance scholars argue that when there are internal checks and balances, they mutually reinforce each other to serve various stakeholder needs in a balanced way.³⁷

Rather than serve one group only (shareholders), humanistic governance structures include many relevant stakeholders in the governance process.³⁸ Rather than maximize shareholder value, humanistic governance structures support the creation of shared value. These governance structures have a higher motivational effect, because they engage the drive to bond (dB), as well as the drive to comprehend (dC). Governance scholar Shann Turnbull suggests that participatory governance structures also increase the likelihood that management will protect and, ideally, promote the various stakeholders’ human dignity. As Bob Chapman and Raj Sisodia document in their book Everybody Matters, humanistic managers “reject the idea that employees are simply functions, to be moved around, ‘managed’ with carrots and sticks, or discarded at will.”³⁹ Instead, they argue that governance and management processes need to ensure everyone’s dignity. According to the authors:

Humanistic governance structures center on building trust between stakeholders and the organization (dB). Furthermore, the structures are intended to build human capabilities. As a consequence, humanistic governance structures reduce authority levels in the organization. In humanistic organizations, decision rights are spread throughout the organization in a way that utilizes the expertise of all employees, and provides them with the opportunity to fulfill their drive to comprehend at work (dC). To extend their employees’ capabilities further, humanistic organizations employ integrative mechanisms that cut across the vertical lines of control, i.e., product or project managers, task forces, matrix elements, and innovative information management systems. Such structural elements help keep the focus on overall organizational goals, but also provide employees with opportunities to make their work meaningful and fulfill their drive to comprehend (dC), and to extend their network of collaborative stakeholders (dD).

Scholars suggest that governance structures can be purposefully built to support the balance of the four drives above the dignity threshold.⁴¹ They suggest, for example, that directors:

• dA: Use incentives of various types (monetary and non-monetary), and allow for some control of corporate resources, so that all employees have a chance to acquire financial gain, status, and a sense of personal accomplishment.

• dD: Create a transparent performance measurement system that allows for accountability, and at the same time provide an early-warning system to alert individuals and groups to threats to the achievement of their goals.

• dC. Provide all employees with a continuous learning experience, to allow for creativity, experimentation, and continuous improvement. Appoint teams and task forces that cut across organizational lines and charge them with innovating of behalf of the entire organization.

• dB. Organize by means of teams and support collaboration by building a strong organizational culture, to focus on integrity as the cornerstone of relational exchanges, and to build trusting relationships with all stakeholders.⁴²

In business practice today, governance structures favor the shareholders’ drive to acquire, and leaders’ success is measured largely by shareholder value creation. Humanistic governance structures support the balanced fulfillment of all the relevant stakeholders’ independent drives above the dignity threshold. The argument here is that this humanistic perspective can help develop new structural designs that support more responsible leadership and collaborative governance practices (such as in cooperative governance or network governance structures).

Economistic Perspective

In the economistic model, motivation does not really pose a problem, because human wants are considered insatiable. However, in reality, people tend to be pretty content with what they have. In the economistic context, the typical approach to motivation is to focus on rewarding the drive to acquire. Built on the intellectual framework of REMM and agency theory, incentives have become the standard instrument to drive behavior change. Even at universities, for example, administrations increasingly motivate faculty by offering monetary incentives for intellectual work in the form of publications.

Incentives work, so the saying goes. The question has long not been whether they work, but how they work. Much research shows that extrinsic incentives do not work all that well. Author Daniel Pink received a lot of attention when his summary of the research findings on motivation underlined this. His main argument centers on the failure of incentives for work that demands creativity and innovation.⁴³ Other scholars have found that incentives actually undermine the quality of work, and crowd out intrinsic motivation.⁴⁴ In a famous study, behavioral economists found that when volunteers worked for free, they were far more productive than when they were paid.⁴⁵ The behavioral economist Bruno Frey argues that once you introduce financial rewards, volunteers’ mindset shifts from a logic of gift toward a logic of exchange.⁴⁶

Humanistic Perspective

Through the humanistic lens, it is possible to understand why incentives often do not work as intended. In fact, an extensive literature on behavioral economics has shown that extrinsic rewards (dA) crowd out intrinsic rewards, such as the pleasure of serving (dB) or learning (dC). In the humanistic perspective, such crowding out effects can be understood as the effect of price over dignity. Whenever something becomes part of an exchange, it follows a different logic than when it is intrinsically appreciated. For example, research finds that monetary incentives undermine (dA) the intrinsic motivation to help (dB). In the context of children’s daycare, workers wanted to ensure that kids were picked up promptly, so they instated a late pickup penalty. However, instead of decreasing late pickups, the penalties increased late pickups. It turned out that asking parents to pay for each minute the kids overstay made them feel less guilty. Similarly, the number of volunteers for blood donations decreased significantly when they were offered cash incentives.⁴⁷ The focus on the drive to acquire undermined the focus on the drive to bond, so that people ended up caring less about others and the task, but merely saw it as a transaction.

There is another context in which the humanistic perspective can help us understand motivations: Influential economistic research has examined how people can make decisions more rationally, i.e., by enhancing their drive to acquire.⁴⁸ Through this lens, certain behaviors, such as concerns for fairness or altruistic punishment (dB), are considered irrational and basically stupid.⁴⁹ The humanistic perspective, however, allows such concerns to be part of the drive to bond, and endorse this behavior as totally reasonable.

Conflict negotiation is an area where the traditional focus on rational interests (dA) has often failed. Donna Hicks has written about the power of considering the full humanity of individuals (all four drives), rather than just rational interest.⁵⁰ She suggests that understanding the idea of a dignity threshold, and the violations thereof, can be key to successful conflict management. She writes that during a civil war situation in Central America, the dignity focus made the actual realms of concern visible, which a focus on rational interests would have completely overlooked. She states

Hicks suggests that when one employs a humanistic perspective, it is easier to resolve conflict. By engaging in organizational practices that allow the full range of human motivations (rational and emotional) and creating a safe space (dD) to discuss serious mistreatments (dB), or incomprehensible action (dC), it is easier to make progress.⁵² While such an understanding of human behavior in negotiation processes may be helpful in difficult contexts such as that of a post–civil war period, it may also provide helpful insights into intra-organizational decision-making and engagement processes.

According to the humanistic perspective, managers do well when they protect human dignity and promote well-being by focusing on a balance of the four drives. Typically, this means that in most modern-day business organizations the focus needs to shift from fulfilling the drive to acquire only and to finding ways to balance it with responses to the drive to bond, comprehend, and defend.

Economistic Perspective

Economistic organizations support cultures and organizational identities that are mostly oriented toward the individual.⁵³ These cultures are also often described as transactional in nature.⁵⁴ Consequently, economistic organizations follow rather linear, mechanistic, and closed-loop thought and interaction processes. Business ethicists Jane Collier and Rafael Esteban argue that mechanistic organizations attempt to transform the environment “adversarially and competitively rather than seek to respond to it.”⁵⁵ Uncontrolled change is viewed as a threat, because it interferes with the optimal implementation of the maximization paradigm. In addition, the domination of the drives to acquire (dA) and to defend (dD) translates into a need to control the outside, and to manage and manipulate the environment, particularly government, in order to support firm profitability.⁵⁶ Economistic cultures are, at most, two-drive cultures. Paul Lawrence likens economistic companies to four-cylinder cars only driving on two cylinders.⁵⁷

Humanistic Perspective

Conversely, organizations that follow humanistic principles support cultures that are more transformational in nature, and create organizational identities based on inter-human relations inclusive of a larger group.⁵⁸ These organizations create cultures that allow the balance of all four human drives. Humanistic organizational cultures are open, organic, circular, and constantly changing and evolving to allow this balance. Organizational practices are inclusive, participative, and values-based. Humanistic organizations thrive through exchanges with the outside, and foster constant dialog between and with their stakeholders.⁵⁹ They not only balance the four drives of internal stakeholder groups but also aim for a balance of the four drives for external stakeholders. Google, Nucor, Medtronics, and the Grameen Bank can, for all their respective faults, be seen as organizations with four-drive cultures.

Economistic Perspective

From an economistic viewpoint, the corporation’s main function is to accumulate wealth, thus heeding the drive to acquire, while the main function of the state is to provide safety and cater to the drive to defend. In this division of labor, the state creates rules to coordinate organizations, and organizational leadership’s main responsibility is to obey these rules while maximizing profits. These rules are, however, based on laissez faire assumptions, allowing individuals and organizations to follow their respective utility functions. Any further commitment to societal causes is incompatible with utility maximization at the individual and organizational levels. Talk of responsibilities is generally viewed as systematic interference with liberty. Calls for corporate responsibility and sustainability are only heeded when they are compulsory and part of the legal infrastructure. Voluntary engagement with societal issues, such as equity and intergenerational justice, do not fit the economistic view unless they make strategic sense in terms of increasing material wealth.⁶⁰ As Milton Friedman famously said,

Humanistic Perspective

In the humanistic perspective, individuals, organizations, and the state all play important roles in balancing the four drives. Since there needs to be a balance on each level, there is no real division of labor in terms of fulfilling the four basic drives. Rather, there is cooperation in terms of ensuring that checks and balances enable an optimal balance on all the levels. In the humanistic view, personal morality is connected with responsibility for the systemic consequences of one’s actions. Therefore, business leaders should accept and assume responsibility for the consequences of their actions, both on the systemic and the individual levels. As such, organizations engage with the outside world, and view responsibility to stakeholders (people) as elementary in terms of conducting business. Liberty is contingent on morality; individual and organizational freedom materializes through care and concern for the other. Sustainability and corporate responsibility are intrinsically relevant concerns in the humanistic view of business; attempts to alleviate social problems through business are an imperative. A balance of the four drives is only possible in the mutual responsibility for individuals, organizations, and the wider system.⁶²