Japan Forum of Business and Society Annals, No.10, pp. 1-13, 2021

1

Corporate Purpose: Fact or Fiction? Mythor Reality?
――The Honourable Merchant as the Historic Basis of Corporate Purpose

Timothy M. Devinney
Chair and Professor of International Business
Alliance Manchester Business School
University of Manchester

Joachim Schwalbach
Professor emeritus of International Management
School of Business and Economics
Humboldt-Universität zu Berlin
Key words：Core Function of the Corporation, Corporate Purpose, Strategy and Governance, Principlesof Honourable Merchant, Responsible Leadership, Self-Responsibility, Corporate Responsibility,
Sustainable Business, Relationship between Business and Society【Abstract】
Since the financial market crisis of 2008, the call for responsible corporate management has become
both louder and broader. The politicians, activists and ordinary citizens in many countries fear thatexisting corporate control mechanisms might not be enough to put a stop to financial gamblers inwhat they perceive as a societal ethics-void. To this extent, the financial crisis revealed both societal
and corporate deficiencies in the basic understanding of responsible, sustainable, honourable and thus
successful, corporate leadership.
The paper shows that Corporate Purpose and the principles of Honourable Merchants coincide andcome into play. The guiding principles assume that responsible behaviour enacted by those inleadership position is the basis for sustainable economic success and social peace in society. While
much of this had been lost as social responsibility became more codified in law rather than driven bypractice and collective value, today we may be seeing a move back from legal doctrine to moral
suasion and collective value based action.

Although the corporation as a form datesof the 19th Century. However, up until the ear-from the 17th Century, what we would call thely 20th century there was little discussion as“modern corporation” originated with the de-to whom a corporation was ultimately respon-velopment of formal corporate law, and thesible. While historically corporations would beestablishment of limited liability, in the middle

chartered by the state (or the ruler) and hence

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招待論文 /Invited Article

their “license to operate” (LTO) would be sub-stream policy and legal discussions. If we fast

ject to the rights of the state (or the whims offorward this debate into the latter part of thethe ruler), this regulatory oversight has de-20th Century, Freeman (Strategic Management:

volved to a wide variety of jurisdictions over

A Stakeholder Approach) argued that there aretime.

more claimants on corporate rights and that

In The Theory of Moral Sentiments, Adamthe best corporations are those that recognize

Smith laid out a socio political philosophy as

and manage the complexities of those diverseto the nature of people’s personal, politicaland competing claimants, whom he call “stake-and economic interactions. In something aholders”. Today, the debate has progressedcounter balance to The Wealth of Nations,further, where regulators, investors, stake-

Smith argues that there is more to personal

holders and managers all recognize there isand commercial interaction than just self-in-

an implicit (and sometimes increasingly explicit)

terest: “How selfish soever man may be sup-“Social License to Operate” (SLTO) that goes

posed, there are evidently some principles infar beyond the traditional and narrowly legal

his nature, which interest him in the fortune

LTO that has been the commercial norm. In

of others, and render their happiness necessary

Smith’s parlance, we have moved from an era

to him, though he derives nothing from it, ex-where “rules” alone mattered to one in which

cept the pleasure of seeing it” (The Theory ofcorporations are now required to live by the

Moral Sentiments, I, §I, Ch. I, p. 9). Smith talks

rules and to act virtuously.

about two guides to decision making, rules

This leads us to the rather recent notion ofand virtues. Rules serve as the core of regula-corporate purpose. The key to corporate pur-tion of actions and articulate what is and ispose is to recognize that the core function of

not permitted in a society. Virtue, however,the corporation is not to make money, nor isgoes beyond simply following the rules andthat the ultimate goal. The making of money

reflects not just ‘intentions’ but the ‘conse-is the result of a whole series of technologies,

quences’ of decisions and actions on others.

processes, decisions, and so on that lead to the

From a corporate perspective, what mostly

most appropriate and desirable outcome to amattered to the operation of the corporationcollective of stakeholders who both co-create

were “rules” as opposed to “virtues”.

value and willingly share the value created in

It was really not until the famous Berle-

what is recognized as a fair distribution.

Dodd debates of the 1930s (see, e.g., A. Sommer,

The logic of corporate purpose is some-Jr. [1991], Whom Should the Corporation Serve –times difficult to see with respect to large

The Berle-Dodd Debate Revisited Sixty Years

public corporations who ultimately get cap-

Later, Delaware Corp Law Journal) that the idea

tured by standardize internal processes, in-that someone other than the owners of thevestor benchmarks and an increasing distancefirm (i.e., the shareholders or private owners) hadfrom their point of founding. However, thelegal and regulatory rights moved into main-idea of purpose is more visible with smaller

Corporate Purpose: Fact or Fiction? Myth or Reality?

3

enterprises or firms where a family or single

ests” – and “good strategy” that focuses “ener-

individual is the driving force. When ques-gy and resources on one, or a very few, pivot-

tioned these individuals rarely say they went

al objectives whose accomplishment will lead

into business to make money. Invariably, there

to a cascade of favorable outcomes”. Having a

was another passion that drove them to doclear and distinctive purpose, as opposed to awhat they did. Sometimes the initial purpose

plethora of goals and key performance indica-

was an expediency. As Steve Jobs noted

tors (KPIs) unique to divisions and subsidiar-about the beginnings of Apple: “Basicallyies, can be the essence of a good strategy. It

Steve Wozniak and I invented the Apple be-

makes clear the line of sight between the pur-cause we wanted a personal computer. Notpose and actions/decisions as the key ques-

only couldn’t we afford the computers thattion is simply “how does this action/decisionwere on the market, those computers were im-enable us to fulfill our purpose?” It also aligns

practical for us to use.” Similarly, Ben & Jer-

any subsidiary KPIs to a singular point of ref-ry’s founded an ice cream company because

erence. For employees it means that the domaking bagels was too expensive and Ben

not need to be driven by rules but by virtue.

(Cohen) had a condition that made it hard for

As Herb Kelleher, the late CEO of Southwest

him to smell (hence their trademark ‘chunks’ inAirlines put it, “If you create an environment

the ice cream) . For these organizations, thewhere the people truly participate, you don’t

purpose is their raison d’être. It becomes in-need control. They know what needs to be

ternalized in terms of processes and goals

done and they do it.” The key, of course, is toand, if successful, is the motivator for employ-

have a meaningful and actionable purpose

ees down the line. As we will note shortly, pur-that resonates distinctly and operationallypose can also reflect an internalization of a po-with the key stakeholders.

tential public good in a more generalized

The key to successful governance is also

sense, should all organizations choose to aligndriven by purpose. The legal requirements ofwith a “code of conduct” that embodies sharedboard members fall clearly into the category

values.

of rules. Some boards work well, and others

1.

Corporate Purpose as Strategy& Governance in the Modern
Corporation

they know the rules and choose to follow themBut how does the notion of corporate purpose

or not. We are all schooled in the rules that

apply to the large public corporation. In thisdefine “hard governance”. What matters is

instance, we can look at two aspects – strate-“soft governance” – the unwritten rules, rou-gy and governance.

tines and interactions that embody the under-

do not. But whether they work well or not
has almost nothing to do with whether or not

Richard Rumelt distinguishes between “badlying culture of the organization. It is whatstrategy” – a strategy that “accommodate[s] apeople do about the rules and what they domultitude of conflicting demands and inter-when there are no rules, or the rules are un-

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招待論文 /Invited Article

clear or provide no guidance. In other words,

The list of questions for which the answers

it is the virtues aspect of governance. The

are not clear is nearly endless. But what is

key to governance is the fact that virtues

clear is that there are no simple businessflow downward – the board and top manage-

model answers to them. It is also clear thatment team embody them and their choices

the answers to questions like these are notand decisions and modes of speaking, interact-

only strategic but critical to the head-to-toe

ing and managing signal what is virtuous andaspects of any business. So you have a series

purposeful. If they do not live the purpose ofof questions for which there is no guidance

the organization, purpose becomes shallow

and as a board or senior executive you haveand meaningless.

to signal to the rest of your organization that

So why is purpose important? Today orga-

the decisions you are making are more thannizations are facing three existential threats.

just compromises that satisfy no one and re-

The first is related to climate and it impact

flect nothing truly. It is here where purposeon businesses and societies. The second ismatters. If there is a clear purpose to the or-

public health, most noticeably seen in the caseganization, reflected in the virtues that under-of Covid-19 but seen in other major outbreaks

ly all that motivates the individuals in that or-

and systemic health issues related to lifestyleganization, the answers become clearer. Theyand longevity. The third is the failure of politi-

may no be crystal clear, but purpose helps

cal governance and the rise of populist lead-

highlight what actions can be ruled out.

ers in both democratic and autocratic political

Google reflected this when it chose not tosystems. Together they force companies into

compromise with the Chinese governments

decision making modes for which clear op-

demands for censorship and handed over thattions are not there. If you are HSBC, how domarket to competitors.

you deal with the Hong Kong Security Law?

But it is important to recognize that pur-If you are Google or Facebook, how do you

pose may be reflected in values but that it isdeal with calls for data protection, transparen-more. Companies compromise on supposedcy and hate speech? Or demands for backvalues all the time and most companies list ofdoor access by security agencies? If you arevalues amount to little more than generic

any multinational enterprise how do you ad-motherhood statements. They make commit-

dress demands for local taxation or the out-ments to employees but engage in outsourc-

sourcing of operations? If you are a pharma-

ing and retrenchment. They make commit-

ceutical company working on a Covid-19 vac-

ments to customers but raise prices when it

cine, how do you address issues of access,is convenient. They make commitments topricing and efficacy of the treatment? For any

suppliers but change them all the time. They

company, what is your commitment to climate

make commitments to the environment or so-

action over and above aspects that might becial causes but rarely beyond a limited impact

considered “greenwash”?

on their business model.

Corporate Purpose: Fact or Fiction? Myth or Reality?

5

Hence, purpose matters when it is simple.

nomic system known as the “Soziale Mark-

Purpose matters when it is embodied by thetwirtschaft”. As we, will discuss here, thisboard and top management team. Purpose

structure reflects more than corporate pur-matters when it directs operational and finan-pose alone but reflects an industrial internal-

cial KPIs. Purpose matters when every deci-

ization of common purpose that self regulatession can be justified as an alignment to thevia historic precedent.

purpose. Purpose matters when it is lived by

The PHM have, as will be shown, a thou-each and every employee and understood andsand-year tradition that has reflected a re-respected by all the organization’s stakehold-markable resiliency. A variety of economic

ers.

crises – such as the bursting of the dotcom

2.

Honourable Merchants:
Corporate Purpose inGermany’s Midsize Hidden
Championsbubble 2000/01, the financial market crisis in

Germany’s small and mid-size companies,

inforced and revitalized the PHM. The ‘As-

known as the Mittelstand, have been recog-

sembly of an Honourable Merchant to Ham-

nized as particularly unique champions ofburg’ celebrated in 2017 its 500th anniversary

global competition. Yet, despite their successas the largest and oldest association of ethicalthey have remained mainly hidden in theirbusinessmen in Germany.

2007/8 and numerous subsequent businessscandals (for instance: Enron 2001 in the U.S. andmost recently Wirecard in Germany) – have re-market niches. Hermann Simon has studied

In fact, as late as 2017, the PHM incorporat-

these hidden champions extensively and char-ed into the German Corporate Governanceacterized them as embracing five common

Code (DCGK) which “highlights the obligation

practices (Simon, 1992):

of Management and Supervisory Boards toensure the continued existence of the compa-(1) C ombine strategic focus with geographic diversity.

ny and its sustainable value creation in linewith the principles of the social market econo-(2) Emphasize factors like customer value.

my.... These principles not only require com-(3) Blend technology and closeness to cus-pliance with law, but also ethically sound andtomers.

responsible behaviour” (DCGK, 2017).

(4) R ely on their own technical competence.

In economics, the PHM are embedded in(5) C reate mutual interdependence between

the wider research area of Corporate Social

the company and its employees.

Responsibility (CSR) (Devinney et al. 2013) which
focuses on the relationship between current

If you delve into the history of the corporate

economic and social policy as well as businesspurpose of these hidden champions you comeand it promotes measures to oblige companies

across the Principles of Honourable Merchants

to develop their own responses towards such

(PHM), which is embedded in the German eco-policy as well as to regularly communicate

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招待論文 /Invited Article(positive as well as negative) impacts of theirals that self-employed, entrepreneur, and/or

business activity on the economy, the environ-manager.

ment and society.

The concept of honour is not an absolute

Members of the Mittelstand explicitly referconcept. It is strongly subject to historicaltheir corporate purpose to the PHM. For in-change. Honour is often defined in two dimen-

stance, the German family company Trumpf

sions: external honour – as the evaluation ofGmbH + Co. KG, largest producer of Machine

the individual shaped by the environment andTools and global leader for Laser Technology,social context – and the inner honour – as the

explicitly follow the PHM, by stating:sense of honour perceived by the individual
himself. The duality of the term is part of the3.

I am convinced that the question of thestability of the concept. In fact, this concept

future of the honourable merchant is

can be traced back usefully to ancient times

decided by his personal actions. Throughwith Aristotle suggesting in Nicomachean

his actions, he must demonstrate theEthics: “Honour is the triumph of virtue andmaxims according to which he leads his

is given only to the good” (Aristotle 2005: 85).

life. His example is decisive. Reliability is

Considering honour as a reward of virtue, pro-decisive. ...Credibility is the highest asset

poses external honour to be dependent on theto be acquired. .... We need ... the honourable

inner. Virtue is understood by Aristotle as abusinessman because human coexistence,

behaviour “between two wickedness; excess

if it is to function, is based on mutualand deficiency” (ibid.: 42). Honour is not a sin-trust, even across national and culturalgle virtue of many; it is the result of the ap-

borders (Berthold Leibinger, 2006).

plied virtues of the individual and it becomes

The History of Honourable
Merchants

an expression of its value, which in turn resonates with the values ​​of the epoch. Hence anhonourable person is tied to virtues: If the

For the understanding of the principles of Hon-

practiced values of the individual are recog-

ourable Merchants and for the assessment of

nised externally by the community, it can be

the transferability to modern entrepreneur-

said to represent external honour. If an indi-

ship, the historical genesis and evolution ofvidual recognises and enacts his or her own

the Principles are of central importance. The

values from inside, the person has an inner

following section explores the millennium ofsense of self-worth, which is described as in-

the Principles of Honourable Merchants andner honour. This understanding of honour istransforms these into a contemporary model

the most useful as a basis for the consider-of corporate responsibility towards society.

ation of the Honourable Merchants, as mer-

The concept of honour is the focus of thechants always directly relate to the communi-

leitmotif Honourable Merchant. The term “Mer-ty whose members measure them in theirchant” is used as a substitute for the individu-

conduct. Honour changes and represents itself

Corporate Purpose: Fact or Fiction? Myth or Reality?

7

in a dialectic process between the individual

One of the first to make a name for himself inand the community.

this context was the banker Pasion (from 400-

4.

The Honourable Merchant in
Antiquity

370 BC) from Athens, who was “apparently

very efficient and honest” (ibid.: 40) and washighly regarded in Athens. Economising with

“Whoever is fair and true in the market, Zeus

the goal of winning, as is typical for merchants,

will give him wealth,” says Hesiod of Askra in

had already become sociable at Hesiod’s time.

the Greek Boeotia around 700 BC. (Baloglou

But, as Demokrit (Greek philosopher, 460-370

and Peukert 1996: 23). This is one of the oldestBC) makes clear, “the acquisition of money istestimonies for Honourable Merchants in Eu-

not useless, but unjustly it is worse than any-

ropean history and illustrates that the behav-

thing” (according to Baloglou and Constantinides

iour of economic actors in markets has always

1993: 26).

been the subject of normative expressions. Par-

It was well known to the Greeks that Hon-

ticularly noteworthy is the combination of theourable Merchants unite economy and ethics.

desirable behavioural standard (fair, true) with

A statement from the work “Oikonomíka”,

the success (wealth).

presumed to be written by a disciple of Aris-

Comparable statements exist throughout

totle in the 3rd century BC, confirms, howev-

European history and are an expression of aer, the systematic linking of business skills

deep-rooted culture of entitlement to entre-

and virtue, which is the basis of the success:preneurial decency, which does not mean that
European merchants have always lived up to

Those who want to do business in a digni-

this claim. Many negative examples speak afied manner (oikonomein) must be aware ofdifferent language to this day, and doubts

the places where they operate, and must be

about reaching this ideal have also existed

naturally endowed, as well as to spare nosince ancient times.

effort and justice on their own initiative. If

Demosthenes, a Greek speaker and son of asomething is missing from these qualities,

manufacturer (Fellmeth 2008: 43), who, in 384-

he will make many mistakes in the proj-

322 BC, found it difficult to find a man who

ects he takes (according to Fellmeth 2008: 8).

did business and, at the same time, was industrious and Honourable (cf. Baloglou and Con-In fact, the concepts of Honourable Merchants

stantinides 1993: 61). He also observed that “inwere characterised from very early on by thethe business world and on the money market,

acceptance of profit-making and economic

it is admirable when the same man proves toperformance criteria, but these had to be in

be honest and diligent at the same time” (ac-harmony with its societal context of virtuouscording to Fellmeth 2008: 42). Of course, thisbehaviour, so that the merchants could callalso means that there were always merchantsthemselves Honourable. Rome’s decline andwho aspired to the ideal of honest merchants.

the time of the migration of the peoples led to8

招待論文 /Invited Article

a long period of European reorganisation andreceivables (see Pacioli 1494). The merchants’transition across very different societies, na-

manuals and Pacioli itself can be seen today

tional and productive strictures where theas a precursor of management science andprinciples of Honourable Merchants survived

management textbooks. For example, double-

with few changes although Hesiod’s godfather

entry bookkeeping still belongs to the basic

Zeus was replaced by the Christian faith inknowledge of every student of economics, man-the European Middle Ages.

agement and accounting, yet it is a system of

5.

The Honourable Merchant in
the Middle Ages

calculation and record-keeping designed bymerchants for their own control and for theassurance of the honest merchant’s practice.

The earliest source of Honourable Merchants

The virtuous behaviour complements thein the Middle Ages can be traced back to theprofessional abilities of the merchants. The

famous Italian handbook Pratica della Merca-

clerks of the merchant manuals were awaretura, published around 1340. There, Francesco

that ethical behavior and the good name of

Balducci Pegolotti reproduces in his introduc-merchants were assets that had to be protect-tion the verses of Dino Compagni (see Le Goff

ed as well (Pacioli 1494: 84). The first truly de-

1993: 85):

tailed handbook is the Zibaldone da Canal, of
Venetian origin, dated around 1320 (ibid.: 77).

The merchant, who wants to enjoy re-

The Zibaldone expresses the consequences ofspect, must always to act fairly, have great

smuggling as follows: “... you lose faith andfarsightedness and always keep his prom-honour by it, so that they will never trust you

ises. If possible, he should look amiable,

as before your crime was found out” (Zibaldone

as the Honourable profession which he hasda Canal ca. 1320, after Dotson 2002: 84) . By

chosen corresponds sincerely to the sale,criminal machinations, merchants lost the

be attentive to the purchase, he should

trust and honour they placed in them and thethank him and keep distance from com-long-term loss of reputation was a loss of suchplaints. His prestige will be even greater

severity that criminal machinations were, lit-

when he visits the Church, for love oferally, not worth it.

God, without haggling;

The Middle Ages already recognised theeconomic significance of the activity of the

Luca Pacioli (1445-1517), who is the inventor ofmerchants. In fact, they had a great influence

double bookkeeping, writes in 1494, in theon the development of cities. Benedetto of Ra-

first chapter of his book Summa De Arithmet-

gusa wrote in his handbook Trade and theica, Geometrica, Proportioni Et Proportionità,

Ideal Merchant in the 15th century: “The prog-that the three conditions of true merchants

ress, the common good, and the prosperity of

are: (1) the money, (2) a good calculator, and,the States depend to a large extent on the mer-(3) a proper accounting of the debt and thechants; [...]. The work of the merchants is ar-

Corporate Purpose: Fact or Fiction? Myth or Reality?

ranged for the benefit of humanity” (see Bene-9penditures (ibid.: 137-139). In addition, economic

detto, 15 century, according to Le Goff 1993: 80-arguments about ethical behaviour increas-81). In turn, merchants knew it was in their

ingly defined the relationship between mer-interest when they maintained social peacechants and the outside world (ibid., 160) where

through charity (Le Goff 1993: 106). The city

the litmus test for economic activities andwas the basis of its success, its business andtheir ethical justification became “commercial

its power and took the highest place in theirsoundness”; i.e. the reliability in keeping prom-

reflections and considerations (cf. ibid.: 120) .

ises, ‘real’ service and the accuracy in meeting

The merchants, as patrons, supported the lit-

obligations. For Sombart, this is the ‘morality

erature and art within their city and regardedof the treaty,’ since the relations among mer-

culture as indication of the city’s success andchants were not necessarily personal, but

their sponsorship as indication of their status

were rules-based and related to the businessin the success of the city.

as an organisation. The morality of the treatyth

While the surviving literature mainly refers

as a virtue contains the principles of simplici-

to Italian merchants, there is a generalizabili-ty, truthfulness, loyalty, and honesty (ibid.,ty as to the bundle of virtues and good behav-

161). In Europe, these principles had to inter-iours of merchants within the Christian com-

nalise every person who wanted to become amunity.

merchant until the eighteenth century (cf.

6.

The Honourable Merchant in
the Early Modern Period

ibid.: 162).

In England, the The Complete English Tradesman was a widely used guide since the earlyIn the early modern period, religion largely

18 th Century (Defoe 1839), with the French

disappeared as a source of understanding, in-equivalent, the Le Parfait Négociant (1675) byterpretation and of guidance for individuals

Jacques Savary predating it and serving as awithin communities (Le Goff 1993: 96). Through-basis. In the balance between business andout the Enlightenment, the bourgeois honesty

the well-being of the community, it was veryof the citizens and of the merchants became

important for bourgeois merchants to recog-

blurred (see Burkhart 2006: 93). The kind ofnise that seeing only their own advantage

honourability remained relatively stable inwas ethically wrong (see Sombart 1920: 207). “To

this respect and passed to the bourgeoisie

supply good and genuine goods” (ibid.) was

and the bourgeois merchants (see Sombart,

self-evident. The image of early-time Honour-

1920). Sombart has described the bourgeois

able Merchants reveals the consistent contin-

Honourable Merchants in detail (see Chapter

uation of the ideals of the ancient and middle-

137, 160-163, chapter 12, with a focus on the rela-aged Honourable Merchants just before thetionship to the community). He identifies thedawn of modernity.

bourgeois economic rules, such as the princi-

As the early modern age evolved into theple of keeping the revenue larger than the ex-

industrial era, there were many efforts by en-

10

招待論文 /Invited Article

trepreneurs (they often called themselves mer-

Bauer creates perspectives which are trans-chants) to preserve or even develop the image

formed into a management science theoryof the Honourable Merchants. One of them wasthat was still in its infancy, but which also in-

Oswald Bauer. His The Honourable Merchantvolved an awareness of the respectable com-and His Reputation, based on personal experi-

mercial behaviour.

ence (Bauer, 1906), marks a milestone, as it

7.

deals in depth with everyday commercial lifeof its time and explicitly illuminates how com-

Corporate Purpose andResponsibility of Honourable
Merchants

mercial activity should be carried out honest-

The historical analysis has shown that thely and honourably. Analysing and structuring

ideal of Honourable Merchants with their an-

the text, the core structure of the Honourable

cient predecessors has hardly changed since

Merchant, who had to have general, special-

the Middle Ages and overlaps with the moreised knowledge, and advanced training, would

legalistic and philosophical tradition that be-

be able to demonstrate the necessary skills

gan with Adam Smith and became codified inthat are essential for economic success. This

legal doctrine in the 20th century. The guiding‘proficient merchant’ becomes Honourable if

principle has always been part of the traininghe (still most likely to be male than female. Thereof merchants and consciously educated. The

were no female merchants of note in recorded

socio-historical analysis shows that society at

century) is also of good

any time determines by and large what is “hon-character and good manners, which also en-

ourable” for merchants, or more contempo-

able him to think in the long term (cf. ibid:

rary, what is “responsible”. The responsibility135). Bauer, thus, already addressed aspects ofmodel Honourable Merchant rests on threesustainability in commercial activity morepillars (see Figure 1): self-responsibility, corpo-

than a hundred years ago. The epochal change

rate responsibility and responsibility towards

of industrialisation, which defines the entre-

the economy and society.

history before the 20thpreneur as the dominant economic subject, isalso reflected in Bauer’s Honourable Mer-

7-1. Self-Responsibility

chants, who behave honestly towards employ-

The basis for self-responsibility is humanistic.

ees, customers, suppliers and competitors. To-

On this basis, Honourable Merchants need awards the end of his book, which considers

comprehensive economic expertise and a solidinternational trade in detail, Bauer focuses on

character, oriented towards virtues that pro-the relationship of the merchants to “his”

mote economic efficiency. The virtues do notcommunity, suggesting that merchants should

serve primarily to accomplish good deeds,

feel obliged to support the common good,they serve their own credibility, which cre-which reflects ancient political positions, andates trust, which in turn is essential for goodare continuations of the activity of bourgeois

business relations. The sound character also

Honourable Merchants. Through his work,

protects the merchant from ill-considered acts,

Corporate Purpose: Fact or Fiction? Myth or Reality?

Figure 1

11

Responsibility Model Honourable MerchantResponsibility
for Economy &Society

SelfResponsibility

Corporate
Responsibility

・Orientation on
merchants virtues

・Role model of his
activities

・Principal of goodfaith・Cosmopolitan andliberal・Provides
prerequisites forhonourable behavior

・Takes responsibility
within society

・Stands by his word
・Business judgment

・Pursues values also
in international
businesses

・Long-term andsustainable activities

source: own representationfor example, of obtaining other advantages at

tors who should place long-term trust in the

short notice. For Honourable Merchants, busi-

company.

ness and ethics can not be separated fromone another, they have merged into a unity
with the aim of successfully managing its

7-3. Responsibility Towards Business andSocietybusiness as a way of discharging the individu-

The responsibility does not end at the factoryal’s duty. Honourable Merchants develop agate. Honourable Merchants know that the so-sense of responsibility for the things that de-ciety in which they run their company is deci-termine their business success.

sive for the success of the company. However,members of society are not always aware that

7-2. Corporate Responsibility

they can only prosper when an economy cre-The sense of responsibility of Honourable Mer-

ates and promotes responsible entrepreneur-chants at the company level is characterised

ship. On the part of business, however, theby their relationship with their employees.

basic understanding is more likely to be that

The satisfaction of the employees causes, andcompanies and society are dependent on one

not just contributes to, commercial success.

another if they want to increase their respec-

Employees are to be treated fair and humane

tive prosperity.

but are also expected to perform. Secondly,

To this extent, Honourable Merchants havebusiness customers and their suppliers follow

a strong sense of responsibility regarding thewhich Honourable Merchants apply theircorporate as well as the society level. The lat-principles with the aim of establishing andter can be seen, for example, by social engage-

maintaining good relations with them in thement at the company’s location, public and po-long term. Personal ties strengthen the com-litical information about the company’spany, and this extends to relations with inves-activities and objectives, the defence of the12

招待論文 /Invited Article

market economy, and sustainable environ-sense of responsibility on the corporate as

mental protection in all company decisions.

well as the societal level. This includes fairbehaviour towards employees, customers and8.

Conclusionbusiness partners, as well as the development
and supply of innovative products and servic-

Especially since the financial market crisis,

es, social commitment at the company’s loca-

the call for responsible corporate manage-tion, transparency of company’s policy towards

ment has become louder. Citizens in many

the public, defence of the market economy, andcountries fear that existing control mecha-

sustainable environmental protection in all

nisms might not be enough to put a stop to fi-

company decisions.

nancial gamblers in an ethics-void context inIn this context, it is encouraging to see thatthe future. To this extent, the financial crisis

most of companies have long recognised therevealed both societal and corporate deficien-benefits of sustainable business and have in-cies in the basic understanding of responsible,

cluded responsibility into their corporate strat-

sustainable, honourable and thus successful,egy. In this respect one cannot transfer the

corporate leadership.

misconduct of a few to judge all managers or

Most of the public is likely to agree thateven all entrepreneurs. After all, not every (fi-only those who are economically successful

nancial) manager exercises short-term inter-are also able to act efficiently in the interest

ests to the expense of the long-term and sus-of society and the environment. And this intainable economic success, namely the tradi-turn means that the economic viability oftional entrepreneurial principle of Honourable

companies and the willingness to assume re-

Merchants.

sponsible management are inseparable.

It should also be noted that frequent con-At this point, Corporate Purpose and thetrols by auditors and regulatory authorities, ofprinciples of Honourable Merchants coincide

the supervisory boards, as well as the greed

and come into play. As has been shown, theof small and large investors, have made possi-

guiding principles assume that responsible be-ble higher returns while neglecting businesshaviour enacted by those in leadership posi-risks. The recent financial market crisis cer-tion is the basis for sustainable economic suc-

tainly had numerous causes. But, as the argu-

cess and social peace in society. While muchment above has shown the misconduct ofof this had been lost as social responsibility

their actors was primarily individual and not

became more codified in law rather than driv-

institutional, and many examples of “dishon-en by practice and collective value, today weourable” merchants and their criticism by so-

may be seeing a move back from legal doc-ciety exist throughout history as well.

trine to moral suasion and collective value
based action.
Modern Honourable Merchants have a strong

Arguably, economic crises create opportunities to learn and to stimulate a discourse on
the relationship between business and society.

Corporate Purpose: Fact or Fiction? Myth or Reality?

Economy and society are mutually and interdependent with companies prospering mainly
in modern societies with a high level of education for their citizens, well functioning markets and strong legal certainty. On the other
hand, modern societies depend on successfulcompanies, as only these can increase the prosperity of a society through market success.
Companies and society are therefore interdependent and the value systems that guideboth are mutually reinforcing.

13

Corporate Governance: An International Review,
Volume 21, Issue 5, pp. 413-419.
Dotson, J. (2002) Fourteenth Century Merchant Manuals and Merchant Culture, in M. A. Denzel, C. J.
Hocquet, & H. Witthöft (eds.), Kaufmannsbücher
und Handelspraktiken vom Spätmittelalter bis zum
beginnenden 20. Jahrhundert, Stuttgart: Franz
Steiner Verlag: pp. 75-87.
Driftmann, H. H. (2010) Das Leitbild des Ehrbaren
Kaufmanns revitalisieren, in: DIHK (eds.), Ehrensache – Engagiert für die Gesellschaft, Berlin:
DIHK: pp. 5-7.
Fellmeth, U. (2008) Pecunia non olet – die Wirtschaft
der antiken Welt, Darmstadt: Wissenschaftliche
Buchgesellschaft.

Responsible leadership based on the guid-

Freeman, R. E. (1984) Strategic Management: A Stake-ing principles of Honourable Merchants will

holder Approach, Pitman Series in Business andcontinue to be the success formula to ensure
economic and social progress in the long-term.
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