by Dennis Tourish
26 June 2020
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The coronavirus crisis and its economic effects coincides with the 50th anniversary of Milton Friedman’s influential assertion that the social responsibility of business was only to increase its profits, within the law. This mantra has gained a strong hold on much of business practice, with a fierce focus on the short term. It is in this context that business leaders will be responding to the effects of the coronavirus crisis.
Even before it struck, self-interest had been increasingly at the fore of organizational behaviour. And what are the consequences? Employment has been casualized to a previously unimaginable extent. 2.8 million people in the UK held gig economy jobs in 2017. One in four of such workers earned less than £7.50 an hour. It is these workers who are most vulnerable to the economic fallout from the coronavirus crisis.
Mainstream leadership theorizing predominantly takes the rights of business leaders to pursue whatever purpose they have in mind entirely for granted. The job of leadership research is to develop theories that help them to do this in the most effective and efficient way possible. I don’t think this approach ever had much to commend it, but it has even less going for it now.
It is undeniable that hard choices lie ahead. But when these choices are guided primarily by the short-term interests of a few then the disenchantment that already exists with business leaders will intensify. Feelings of relative deprivation will grow, with destabilizing consequences for all of society. The resultant cynicism is not reduced when billionaires such as Richard Branson respond to the crisis by asking for state support. In response, many are asking what forms of leadership should businesses now adopt?
In my view, this is the wrong question. It suggests that those who inhabit organizations are invariably committed to an overarching common purpose and are bonded by the same set of unitarist interests. Of course, organizational actors share some interests and sense of purpose. If they didn’t, organization would be impossible. But these exist alongside tensions between the immediate short-term interest of shareholder value and the long-term welfare of those that organizations employ and the customers that they serve. It is pointless to pretend otherwise. The actions of leaders will surely depend on how businesses are organised, how power within them is distributed, and on the views that exist about the primary importance of shareholder value – what can be called the underlying theory of the business.
The actions of leaders will surely depend on how businesses are organised, how power within them is distributed, and on the views that exist about the primary importance of shareholder value – what can be called the underlying theory of the business.
These are early days. A number of large organizations in the US have pledged no layoffs this year, including Morgan Stanley and the Bank of America. Of course, these organizations have deep pockets. Others have already shown themselves to have deep pockets but short arms. Assume, also, that the main theory of business for many remains the primacy of shareholder value, and that they have fewer resources to fall back on than the examples just given. Transferring the costs of the crisis to labour rather than capital will seem an entirely rational response, and the sooner the better. In understanding the consequences of this, we need to return to “the norm of reciprocity.” Long ago, Alvin Gouldner stated that “a norm of reciprocity . . . makes two interrelated . . . demands: (1) people should help those who have helped them, and (2) people should not injure those who have helped them.”1 The promotion of shareholder value as the primary, and often only, real purpose of business has activated this norm in a purely negative sense. People have already learned to reciprocate the uncaring and dismissive attitudes that they judge many business leaders have shown to them. Actions now that are perceived as being primarily concerned with prioritizing shareholder value at the expense of employees will intensify these attitudes.
They will also activate concerns for what Al Goethals (2018) calls “procedural justice,” where people believe that they are not getting what they think they deserve.2 There are few cries more raucous than “It’s not fair.” Such agitation further fuels the fires of populism. In a familiar spiral, where cause and effect turn into their opposites, populism creates a crisis for business leaders whose responses strengthen the divisive agenda of populist leaders. In turn, this leads to more economic woes (and so on), unless and until other forces intervene.
One problem is that the strongman view of leadership which we find in populism also exists in business, fanned by conventional theorizing and fawning tributes to celebrity CEOs in popular outlets such as Harvard Business Review. Leadership scholars need to do more to problematize the concentration of power in the hands of business elites, challenge self-serving theories of the businesses that guide much leadership decision-making, and interrogate the organizational practices that many of them employ to silence dissent and pulverize opposition. We need to participate in the debates taking place about how businesses can be reconfigured to serve wider stakeholder needs, including those of long-term rather than short-term shareholders. As I have argued elsewhere, too much of our scholarship is hung up on playing with piddling variables as part of an introspective “game” where publishing has become an end in itself.3 The impact of most such publications is zilch.
The coronavirus crisis has created a practical and ethical imperative for us to do more work that matters.
This blog is adapted from Dennis Tourish’s editorial introduction to a Special Issue of the journal Leadership devoted to leadership and the coronavirus crisis. This paper can be accessed online for free. All the other papers in this Special Issue are also freely available.
1Gouldner, A. (1960) The norm of reciprocity: A preliminary statement, American Sociological Review, 25: 161–178. The quotation is on p.171.
2Goethals, G. (2018) Donald Trump, perceptions of justice, and populism, Leadership, 14, 513-523.
3Tourish, D. (2019) Management Studies in Crisis: Fraud, Deception and Meaningless Research, Cambridge, Cambridge University Press.
Dennis Tourish is Professor of Leadership and Organization Studies at the University of Sussex Business School in the UK. He is the editor of the journal Leadership, and the author of several books, including The Dark Side of Transformational Leadership (2013), and Management Studies in Crisis: Fraud, Deception and Meaningless Research (2019).