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Dialogue and scrutiny in organisational ethics

Kevin Morrell and Michael Anderson

Dr Kevin Morrell (www.kevinmorrell.org.uk) is a Senior Research Fellow at

Warwick Business School. Prior to that he was ESRC Postdoctoral Fellow at

Loughborough University Business School, and recently finished work on a

Department of Health funded research project at King’s, London. His main interests

are in the broad subject area of organizational behaviour; particularly in ethics,

leadership, careers and choice.

Dr Michael Anderson is Academic Director of Diploma Programmes at Warwick

Business School. Prior to that, he was a Senior Research Associate and Lecturer at

the University of Newcastle for 6 years, before working in the private sector. He has

a background in social anthropology and has undertaken research on organisational

culture and individual identity, with particular research interests in the individual and

collective management of social change.

Correspondence should be addressed to Dr. Kevin Morrell, Warwick Business

School, The University of Warwick, Warwickshire, CV4 7AL, UK (e-mail:

kevin.morrell@wbs.ac.uk).

This paper was presented at the 9th Conference of the European Business Ethics

Network - UK, Royal Holloway, University of London, 31st March & 1st April 2005.

1
Dialogue and scrutiny in organisational ethics

Abstract

Socrates’ mode of questioning draws out contradictions in a belief set. This prompts

further introspection and reflection. By analysing this dialogical process, we provide

a novel framework that offers a model of organisational scrutiny. In doing so we

draw parallels with contemporary literature that develops the notion of distributed

modes of engagement: where people are required to share responsibility for solving

problems. Our framework for scrutiny is derived from the theoretical and abstract

scrutiny of assumptions demonstrated by Socrates but has practical implications in

two modalities. The first of these is in an operational or technical modality, where we

suggest dialogue is a necessary mechanism for scrutiny. The second is in a

provocative or metaphorical modality, where we explore the wider implications of

Socrates as a model for scrutiny, identifying three strands in his dramatis persona:

the radical, the ethicist, and the problem finder. The implications of this framework

for scrutiny are illustrated with reference to a contemporary case of ethical failure: the

collapse of Enron.

Keywords: Dialogue, Enron, Ethics, Leadership, Socrates

2
Introduction

Contemporary business scandals have prompted renewed interest in the study of

ethics in organizations (McCall, 2004). The resultant criticism has been directed at

those in the business community, but also at the academy. Donaldson (2003: 363)

sees the fiascos as symptomatic of neglect, ‘exposing how little academic research

had to say’, but the notion that such scandals simply illustrate a failure to observe and

analyse is contestable. Ghoshal argues that, ‘by propagating ideologically inspired

amoral theories, business schools have actively freed their students from any sense of

moral responsibility’ (2005: 76), a view broadly supported by Kanter (2005), Pfeffer

(2005), Mintzberg (2005) and Donaldson (2005). This is partly because the way in

which we describe and label social phenomena can directly influence those

phenomena (Ferraro, Pfeffer and Sutton, 2005).

3
Ghoshal traces current corporate failings to theories which routinely frame research

and teaching in organization studies in terms of individual (at an agent or

organisational level of analysis) motivations, responsibility and accountability, for

example: agency theory, game theory, transaction cost economics. What these have

in common is they assume principal actors are self-regarding, opportunistic and

isolated rather than embedded in a wider context or community. Such instances of

what Ghoshal calls ‘bad management theories’ can also be understood as scripts,

since they encapsulate, ‘institutionalized expectations and legitimations’ about

behaviour in organizations (Mueller and Karter 2005: 222). Ghoshal suggests that

underpinning these scripts are broader normative assumptions about society

(liberalism) and human nature (homo economicus) which are the legacy of British

empiricism. This combination produces a ‘gloomy vision’ (Hirschman 1970) of self-

interested employees working in organizations whose sole pursuit is wealth

appropriation, and an account of social action that is atomistic and fragmented. These

‘bad management theories’ are also a recipe for incoherence, since they generate

theoretically compelling accounts of action in organizations but fail to explain how

social activity is ‘part of a fabric that goes beyond the individual and binds him or her

to a larger human network’ (Solomon 2004: 1025). The gloomy vision is incapable of

articulating virtues, since these are situated and socially constituted; virtues have, ‘a

place in a social context, in a human practice’ (Solomon, 2004: 1025).

4
Beginning with a discussion of responsibility, we develop Heifetz’s (1994) theme of

‘distributed’ forms of engagement, subsequently drawing on Plato’s Socrates. The

contemporary relevance of this is illustrated using a notorious case of ethical failure,

the collapse of Enron. This emphasises the role of dialogue and scrutiny in

understanding organisational ethics.

Who is responsible?

The topic of leadership is one area where the gloomy vision seems to have shaped

accounts of behaviour and influence. In contrast to ancient writings, in the

contemporary leadership literature, ‘values, ethics, and morality have been leached

away’ (Sankar 2003: 45). This reveals itself partly in accounts that model the

activities of ‘leaders’ who work in ‘organizations’ or ‘teams’, with ‘followers’. Such

language ignores that referents such as ‘leader’, ‘organization / team’ and ‘follower’

need to be understood relationally and as embedded in a context. The gloomy vision

casts leaders as separate from their surroundings, for example in the dominant

theories of, ‘trait’, ‘situational’ and ‘contingency’ accounts (Grint 2000). This

undermines the scope for context-rich accounts that explore dialogical processes.

Distillations of the gloomy vision for leadership result in recipes for action, or scripts,

that are impractical, ‘leadership talk stands in a highly ambiguous relationship to what

managers actually do… the character and impact of leadership may be understood in

terms of incoherence, contradiction, confusion and fragmentation’ (Alvesson and

Sveningsson 2003: 965).

5
Heifetz describes the challenge of understanding authority in quite different terms; in

such a way that activity and engagement is distributed. This carries the sense of being

embedded in a network of social relations, but also the sense in which the burden of

organizational actions and dilemmas is shared:

Instead of looking for saviours, we should be calling for leadership that will

challenge us to face problems for which there are no simple, painless solutions

– problems that require us to learn in new ways (Heifetz 1994: 3).

Nonaka and Teyama (2002) describe this ‘distributed’ mode of engagement as a

process where issues of authority are worked out across different organizational

levels, and iteratively as problems are progressively addressed (Nonaka and Takeuchi

1995). In acknowledging the complexity this entails, they identify a key challenge of

resolving questions of authority and responsibility, ‘leaders need to improvise by

changing the context to transcend contradictions they face and constantly improve’

(Nonaka and Teyama 2002: 1005). In what they call the dialectics of action, they

describe this process of improvisation.

Improvisation is not just about adapting to the changes in the situation; it is an

action that can change the situation. As a situation unfolds through action,

contradictions will be solved while new contradictions are generated (Nonaka

and Teyama 2002: 1005).

6
The process of being able to reconcile apparent contradictions is a feature of what

Kramer calls ‘advanced thinking’ (Kramer 1989). Through this kind of synthesis,

new knowledge is created and shared. By emphasising a dialogical process, Nonaka

and Teyama indicate ways in which greater understanding of dialogue, and dialectical

techniques may be useful in increasing the capability of organizational actors to

manage contradiction. Being able to tolerate these kinds of tensions is necessary to

enact distributed forms of engagement. It also requires what Heifetz calls a ‘holding

environment’, a shared space which, ‘contains and regulates the stresses that [problem

solving] generates’ (Heifetz 1994: 105). An explicit consequence of Heifetz’s idea of

a holding environment, and Nonaka and Teyama’s dialectics of action, is that it

results in a situation where the responsibility for addressing a particular problem is

shared. Another way in which to express this is that solutions are not seen as the sole

province of a leader, but ‘co-produced’ (Gaudin 1998: 53).

7
To allow for distributed forms of engagement, notions of authority need to be

challenged and reconstructed. This means it is necessary to surface and scrutinise

assumptions about the activity of leading and scrutinise notions of responsibility and

authority. These are closely linked to the theme of accountability. Following Mulgan

(Mulgan, 2000), here we wish to establish and emphasise the core sense of the term

accountability – that of holding person or persons to account. A key element in this is

the process of identifying and challenging existing mental models (Senge 1990) or

social scripts (Mueller and Carter 2005; Schank and Abelson 1977) about who is

responsible. Both scripts and mental models can be understood as cultural resources:

cognitive structures that assist inference, facilitate decision making and thereby guide

behaviour. Example scripts about who is responsible might be that it is necessary for

one person to be ‘in charge’ (Senge 1990), or that the authority figure is either a

‘saviour’ (Heifetz 1994) or the villain of the piece.

The process of identifying and challenging such assumptions is valuable because it

simultaneously acknowledges that complexity is acceptable, as well as

communicating that it is not the sole responsibility of authority figures to resolve

tension. Although the leading role could be understood as orienting others towards the

need for action, it becomes the responsibility of others to grapple with the

implications of apparent contradiction (Authors 2004a) or difficult problems. Only by

devolving this process of grappling with contradiction can responsibility and

accountability be fully shared.

8
Heifetz argues that forms of distributive engagement are particularly needed for that

class of problems which are ‘adaptive’. Whereas ‘technical’ problems concern issues

such as the most efficient allocation of resources, adaptive problems involve people

trying to address a fundamentally intractable issue, where there is no one solution.

This may be because different groups have conflicting views as to the appropriateness

of particular goals, or, more fundamentally, have mutually exclusive views of what

values should be prioritised in pursuit of those goals. As an example, consider the

various complexities involved in locating a power station or airport runway.

Tackling such problems requires an ability to understand and address the needs of

different communities, something which accounts of behaviour predicated on self-

interest and appropriation cannot do. In such scenarios, the role of an authority figure

is perhaps more usefully thought of in terms of enabling others to choose wisely,

rather than identifying a wise choice (Katz 1969).

To explore these issues more fully, we develop and apply a particular reading of the

Greek philosopher Socrates, which we argue can stand as an ideal model for how to

enable effective dialogue, and to examine notions of authority and responsibility. The

extract below, from the dialogue the Theaetetus, illustrates how Socrates, albeit with

unconvincing modesty, portrays his dialectic.

9
 The common reproach against me is that I am always asking questions of

other people but never express my own views about anything, because there is

no wisdom in me; and that is true enough… But with those who associate with

me it is different… And yet it is clear that this is not due to anything they have

learnt from me; it is that they discover within themselves a multitude of

beautiful things, which they bring forth into the light (Theaetetus 270 c-e).

Socrates outlines here how the responsibility for addressing problems is distributed,

simultaneously challenging notions of expertise and authority. He was the architect

of the prime dialectical mechanism for surfacing and scrutinising basic assumptions

and as such he offers a useful model for examining scripts. The themes in his

dialogues continue to be relevant (Solomon 2003), though his contribution to ethics in

organizations has been overshadowed somewhat compared to Plato’s pupil, Aristotle.

More so than Aristotle however, different aspects of Socrates as a historical and

dramatic character are also informative.

Socrates and scrutiny

10
The historical context for Socrates was the 5th Century B.C., in Athens. As well as

being the birthplace of democracy, Athens was the first city state. As such, there was

an unprecedented interest in Athenian life on the principles underpinning trade, and

also politics; consequently, there was a demand for education and practical instruction

in governing the city. An itinerant professional class of speakers and educators, the

Sophists, arose to meet this demand. They, ‘became the dominant educational

influence… especially among the more talented and wealthy families, who were

naturally best able to afford their fees’ (Guthrie 1956: 12). The Sophists taught a

range of topics: rhetoric, politics, ethics, law; ostensibly to prepare Athenians for city

life. The Sophist’s teachings became widely known recipes for action in various

arenas: the courts, the market place, in politics.

Socrates can be seen as the embodied antithesis to Sophist teachings, undermining

their ready-to-hand solutions to intractable questions. In many of the dialogues,

Socrates’ protagonists rely on Sophist teachings uncritically, but their

pronouncements on virtue and justice soon become exposed as inadequate because

they run in contradiction to commonly held beliefs. For instance in the dialogue

Gorgias, which is concerned with the problem of defining justice, Gorgias’ response

that it is whatever satisfies ‘the interest of the stronger’ is shown by careful

questioning to lead to injustice (MacIntyre 1985: 159). Elsewhere, Socrates shows

that Sophist scripts are severely limited, and break down under close inspection

(Authors 2004a). More generally, Plato’s dramatisation of these dialogues shows the

inherent contradiction in the sophist’s role as educators and their truth claims

regarding virtue, justice, and wisdom (MacIntyre 1985).

11
It has been argued that Socrates, ‘influenced subsequent thought as much as any

person’ (Lee 1987: 15). He founded the first Academy (Mautner 1997), and his

dialogues address all the major themes in Western philosophy (Russell 1984).

Curiously, given the degree of influence he has had, Socrates left no records himself,

which means that we always see him through the eyes of others (for example Plato,

Xenophon, Aristophanes, Nietzsche). As a consequence of these different readings, it

is difficult to try to separate the dramatic character from the historical figure, but

Plato’s dialogues and other sources show someone who works by ‘rigorous

argumentation and basic examination of principles’ (Mautner 1997).

This method has become the basis for Western philosophy and is also closely related

to our notions of wisdom. This means we can legitimately invoke a Socratic stance:

questioning of basic principles and rigorous argument; in many fields, but in this

paper we explore how a carefully selective reading of Socrates can contribute to

understanding of holding authority to account. To do this, below we explore

Socrates’ dialogical technique, the elenchus, and three facets of his character: radical,

in challenging the established order; ethicist, in emphasising the primacy of moral

questions; and problem finder, in challenging received assumptions. Later, in

applying this reading of Socrates, we combine these different aspects with the

technique of the elenchus to analyse a case where ethical failure prompts questions as

to how the organisation could be better held to account. Here, to enhance conceptual

clarity in terms of our particular reading of Socrates, these strands are disaggregated.

The Elenchus

12
Our reading of Socrates is based on the Platonic dialogues. These dialogues typically

take the form of a pursuit of a definitional question, so for example: the Republic

asks, ‘what is justice?’; the Theaetetus asks, ‘what is knowledge?’; and the

Protagoras and Meno ask ‘can virtue be taught?’ (dialogues are usually named after

Socrates’ principal interlocutor). In these dialogues, a key feature is the Socratic

mode of questioning, or the elenchus. In simple terms, the elenchus has three stages

(Authors 2004a):

1. A definitive answer to a complex problem is given by Socrates’ interlocutor.

2. Socrates asks a series of questions that show inconsistencies implied by this

definitional answer.

3. These questions result in a realisation by Socrates’ interlocutor that there are

problems with the initial definition.

So for example in the Laches (Laches 190e in Saunders 1987), Laches gives as a

definition of courage that it is when ‘someone is willing to remain in the ranks and

ward off the enemies and not run’. Socrates refutes this by gaining Laches’

agreement that Homer’s hero Aeneas and the Scythian army were both courageous,

even though they fought whilst retreating. What is significant about this admission is

that Socrates draws the answer from Laches through a process of rigorous

questioning. The ‘answer’ that overturns Laches’ definition of courage is one that

Laches himself arrives at, albeit guided by Socrates’ questions. Generally, this

process makes learning more powerful because it is not a simple matter of instruction,

but involves guidance through a dialogic process.

13
Learning occurs as complexities surface that make simplistic solutions untenable.

Since this learning involves revising established values, rather than simply making

incremental refinements, in contemporary terms it can be understood as ‘double-loop’

(Argyris 2003). Perhaps most dramatically we can see the consequence of this third

stage in the dialogue the Meno, where Meno feels he is under attack from Socrates,

whom he compares to a stingray (80a):

My mind and my lips are literally numb, and I have nothing to reply to you.

Yet I have spoken about virtue hundreds of times, held forth on the subject in

front of very large audiences and very well too, or so I thought (Meno 80b).

This extract from the Meno illustrates that the process of the elenchus can be quite

savage, suggesting that it needs to be used carefully. Nonetheless, it shows how the

Socratic method can remove potentially harmful assumptions, in the process

identifying how a social script is inadequate in terms of addressing a complex,

multifaceted concept (Authors 2004b).

14
An obvious role for the elenchus could be to scrutinise scripts in management

rhetoric, thereby surfacing incoherence between the espoused talk and the actual

activity (Alvesson and Svenningson 2003). Drawing comparisons between modern

management gurus and sophists, though tempting, is somewhat trite. More

interestingly, one can see parallels between works that scrutinise management ‘talk’

and the Socrates-sophist dialectic. For example, in problematising terms like

teamworking (Knights and McCabe 2003), flexibility (Legge 1995), globalisation

(Bradley et al. 2000), empowerment (Authors 2002), and TQM (Mueller and Carter

2005), scholars are engaged in an analogous project to Socrates in his interrogation of

Meno, the professional expert on virtue. It could be argued that this comparison falls

short in that it overstates the influence of academic work and implies a greater degree

of parity in dialogue than is achieved between practitioners and scholars. The

Socratic dialogues also illustrate an unmediated process of instant exchange. Though

these are fair criticisms, Ghoshal (2005) persuasively argues that academics are a

powerful constituency, ‘these theories have been in the air, legitmizing some actions

and behaviours of managers, deligitimizing others, and generally shaping the

intellectual and normative order’.

15
This suggests there is also a need for scrutiny that reveals and challenges the scripts,

or to paraphrase Ghoshal, ‘theories in the air’ underpinning academic writing. Where

research underplays the importance of ethics, and fails to acknowledge that people are

embedded in communities, this is a grave concern. Faddist terms are readily seen as

problematic and questionable (Abrahamson and Fairchild 1999), but it is less

frequently acknowledged that basic concepts such as ‘accountability’ (Mulgan, 2000),

‘leadership’ (Grint 2000) or ‘work’ (Glucksmann 1995) are contested and power- and

value-laden. As Grint identifies (2000), the leadership literature is dominated by

accounts that cast the leader as separate from their context, and this is prejudicial to

any account of virtue that is socially constituted (Solomon 2003). Meno’s confusion

is occasioned by the elenchus, and his numbness is the realisation of an incoherence

between his script for virtue and some of its implications: a literally classic example

of what Ghoshal calls the ‘pretense of knowledge’ (2005: 77). This numbness

resonates with Alvesson and Sveningsson’s analysis of ‘ugly ambiguity’, as managers

aspire to a discourse that makes them, ‘vulnerable to the contradictions and

confusions that follow’ (2003: 984):

By choosing to confront managers with what they are actually referring to

when talking about leadership, it has been possible to problematize and

critically examine the usual leadership rhetoric (2003: 985).

16
This critical examination of the ‘usual leadership rhetoric’ finds expression in

Heifetz’s account of distributed modes of engagement, which challenge the idea that

one person is responsible for providing the answers (Heifetz 1994). To overturn this

idea, those working within organisations, and those with responsibility for scrutinising

activity within organisations need to acknowledge the cultural dimensions to

accountability and in doing so, be able to surface and scrutinise assumptions about the

nature of authority and expertise. One could argue that this is simply offering an

alternative script within the discourse on responsibility, but this is to overlook the

increased scope for critique that a dialogic approach has within itself. Sharing power

and overturning traditional notions of authority are necessary elements within

distributed modes of engagement. Since these are occasioned through a dialogical

process, opportunity for critique is ever-present.

Socrates as Radical

17
As outlined above, Socrates’ influence as a subversive was fundamental. He

undermined the Athenian hegemony, and decried the self-professed expertise of the

Sophists. Though this poses personal challenges to those who may benefit from being

figures of authority, there is scope to learn from Socrates’ radical stance. At heart it

results from a rejection of the notion that complex problems can be addressed

unthinkingly, with reference to an established expert’s solution (Heifetz 1994).

Socrates’ strength on one level was to draw out the flaws in the solution itself – an

intellectual, analytical attack. On another level, he represented a challenge to the

established order of Athenian life, and its values – a politically subversive attack. For

most contemporary readers what is most powerful about Socrates is the message that

he conveys indirectly, namely that addressing complex problems requires independent

thought, and identification of tacit assumptions. However, for our purposes it is

useful to differentiate between the intellectual / analytical facet of Socrates’ character

and his politically subversive role. For example, many decisions in organizations are

not purely rational, but influenced by culture (Vecchio 2000), power (Kanter 1979),

conflict (Camerer and Knez 1997) or tradition (Salancik and Brindle 1997). Indeed

even what qualifies as ‘rational’ could itself be defined by cultural norms. Given this,

it is useful to acknowledge the potential value of the subversive aspect to distributed

modes of engagement, which enables others to challenge an existing order.

18
This resonates with other ideas in the management literature. As noted above, there is

a sense in which the practice and talk of management are characterised by fads and

fashions (Abrahamson 1991; Abrahamson and Fairchild 1999). These may be applied

within organizations without subjecting them to critique, which can be harmful.

Second, there is a danger in any community where there is a monoculture (Janis

1982). A lack of diversity can result in diminution of creativity, or damage the ability

to respond effectively to changes in the context. Legitimising the role of a radical is

one way to safeguard against this.

Socrates as Ethicist

There has been recent interest in the role of ethics in business, in the wake of a series

of high-profile corporate scandals, and concerns over corporate governance

(Donaldson 2003). Notwithstanding this, much of the contemporary leadership

literature is comparatively silent about the importance of ethics (Sankar 2003) and the

standard reference text, Bass and Stogdill’s Handbook of Leadership, embodies the

‘paucity of research energy’ devoted to this area (Ciulla 1995: 7). In contrast, in

ancient Greece, the notion of the good was core to leadership. For Socrates, this was

enveloped within a wider ontology of forms, for Aristotle, (political) leadership is

described as ‘the science of the good for man’ (Nicomachean Ethics: 1094a).

19
Plato’s dialogues essentially deal with basic questions that relate to both our sense of

identity, and our sense of ethics (Bolten 2001). Though one has the sense in reading

these dialogues, that Socrates has himself settled on answers to problematic ethical

questions (namely, by calling on his world of the forms), he does not ever reveal them

directly. Instead he invites his interlocutors to explore these questions for themselves

in a structured way. This illustrates how Socrates can guide thought and action

without dispensing ‘solutions’ (e.g. Theaetetus: 157cd). It is also consistent with the

idea that these are questions everyone has to think through themselves, as this

involves being aware of one’s basic assumptions and values. These elements of

reflection and attention to ethical issues are central to addressing complex problems in

organisational life.

Socrates as Problem Finder

20
Socrates’ way of asking questions is multifaceted, but essentially, he pursues his

interlocutors by questioning them about their beliefs. Through a sustained process of

cross-examination, this questioning about beliefs reveals inconsistencies;

inconsistencies that would normally go unnoticed and hence unchallenged. This

process results in ‘problem finding’, which Arlin (1990) describes as a feature of

wisdom. The phrase is revealing because it illustrates the need to identify tacit

assumptions, and understand the complexities involved in making moral choices. As

a form, dialogue is eminently suitable to develop argument and critical thinking

(Burnyeat 1990). Increased familiarity with the form of dialogue, and with the

dialectical technique of Socrates provides a vehicle for problem finding, encouraging

diversity and enabling differing perspectives to be valued. This in turn provides an

opportunity for what Arnold (1997) calls ‘decentring’; the appreciation of different

and even contradictory perspectives, which provides a firmer basis for collective

decision making.

21
A well established strand of literature in sociology argues that a central role of

authority figures is to create meaning for others (Selznick 1957) and that in doing so

they provide the conceptual architecture for collective choice (Weber 1948). Some

have argued that as organizations become more formal in their structure, and larger

scale, they may become less effective in their ability to choose (Koza and Thoenig

2003). Although this is not an empirical necessity, it is worth considering Arlin’s

(1990) assertion that in many circumstances people are less able to make wise

decisions, because their facility to find problems decreases. Socrates undermines the

Sophist’s short-hand solutions to complex problems, and encourages questioning of

basic assumptions, in the process ‘finding problems’. Analogously, those in power

may overturn the tendency for scale and formalisation to lead to ineffectual decision

making if they emphasise the value of genuine dialogue, which allows received

wisdom to be challenged, potentially enhancing collective decision making.

Having outlined our four-part reading of Socrates, we now apply it to a contemporary

case.

Application

Enron

22
There are advantages and disadvantages in introducing the case of Enron in our

argument. Summarily, we feel the principal advantages of a case-study method apply:

this case offers a concrete and familiar context that should enhance accessibility. In

turn this can enable readers to make an informed, grounded assessment of the

credibility of our account. These factors we feel outweigh the main potential

disadvantages: that there is insufficient space to develop a detailed exposition, which

can prompt accusations of selective and partial reading; or that introduction of such a

well used case may actually muddy analysis because of the prevalence of

preconceptions about the case. We contend that other cases in the past, present and

future could illustrate the benefits of our framework, and that the framework could be

used in a diagnostic, prospective mode as well as (as here) in a retrospective,

illustrative mode. We feel this framework has the potential to offer something new to

the analysis of even such a well studied case.

23
Enron was formed in 1986 as the result of a merger between Houston Natural Gas and

Internorth. In the decade and a half that followed it diversified into numerous

products and services related to energy and communications. Enron collapsed when

the market lost confidence in it after profit and asset write-downs in the latter part of

2001. However, the loss of market confidence was not so much the cause of the

collapse as a symptom of the long term inflated reporting of assets and expected

earnings (McCall, 2004). This was compounded by the passive compliance of the

auditors who were, ‘willing to allow the types of financial reports and reporting

decisions that produced fundamentally unfair and inaccurate portraits’ (Jennings

2004: 1). Aggressive accounting and auditing practices ensured that these

exaggerations were not detected, and the company’s reputation was bolstered by its

meteoric rise during the 1990s. In this period Enron reported soaring profits, was

listed as a Fortune 500 top ten company, was voted America’s most innovative

company, best company to work for, and acted as an advisor to the US Government.

Following the collapse of Enron, the fallout was far reaching. The United States

Department of Justice heard 16 guilty pleas from former Enron Executives and almost

50 others in at least 6 companies have been formally indicted (Watkins 2003). Some

time after the demise of Enron, the scurrying to find those responsible and the

attempts to compensate those who lost their jobs and pensions, the debate continues as

to how such a scandal was allowed to happen and what should be done to avoid its

repetition. This case has been seen as in some way emblematic of problems with

contemporary corporate governance (Deakin and Konzelmann 2003), and alongside

other high profile scandals, has led to a renewed interest in the topic (Daily et al.

2003).

24
Table 1 (see table 1) outlines the relevance of our reading of Socrates to the case of

Enron, and by extension to other cases of ethical failure in organisations.

Table 1 about here

The first column ‘extract’ shows an illustrative quote detailing one feature of the

Enron case, taken from an article in the Washington Post. In the second column,

‘abstraction’, this is reframed in more generic language to enhance generalisability to

other contexts. The third column, ‘element’ shows the correspondingly relevant part

of our reading of Socrates, and the final column ‘benefit’ gives an indication of how

applying this could prove effective in other contexts:

Discussion

25
To develop this analysis further, it is worth considering other parallels between the

Athenian context for Socrates and contemporary organisational life. Commenting on

Enron in an address to students at the Stern School of Business at New York

University, Senator Lieberman (2002) stated that ‘the drive for earnings, unchecked

by other values, usually ends in disaster’. In this light is interesting to contrast the

espoused value system at Enron, and the actual practices by agents of Enron. The

company ostensibly subscribed to virtues such as respect, integrity, communication

and excellence: described as ‘core values’ in their annual report of 2000 (Rampersad,

2003). However, it is clear that they simply chose to reject these when it was

commercially expedient. For example, the board permitted their ‘Code of Ethics’ to

be disregarded for Andrew Fastow, the chief financial officer, so he could manage

their partnerships in June 1999. This action was repeated in October of the same year

to allow a larger partnership to be developed (Tonge et al. 2003). These actions were

symptomatic of a committee who, ‘had the power to ask the kinds of questions that

would have stopped Enron from establishing the kinds of deals and systems that led to

its demise’ (Tonge et al. 2003: 10).

Dialogue

26
The incoherence between espoused values and actual practices is the dialectical motor

within Plato’s dialogues, where there was a basic inconsistency between the local,

particular recipes offered to Athenians by the Sophists (as expedient guides to

negotiating life in the city state), and the universal, human values associated with

notions of virtue, justice and the good. MacIntyre describes this as being where, ‘the

question of the relationship between being a good citizen and being a good man [sic]

becomes central’ (MacIntyre 1984: 133). The reason Socrates is so effective as a

radical, ethicist and problem finder is not simply because he has a superior intellectual

armoury, ‘it is because his discussants unknowingly exemplify a state of moral

confusion’ (Authors 2004a). The dialectical technique that Socrates uses to expose

this incoherence, the elenchus, could prove useful as an analogy for dialogic activity

in other organizational settings, to test for whether there is such incoherence between

ostensibly global values (such as those enshrined in a mission statement), and the

local activities of a given agent of the organization, or business unit.

27
‘Enron’ can be emblematic, straightforwardly signalling the implications of ethical

failings in corporate life, but the complexities of the case mean any simple summary

will be inadequate and partial. In essence though, it exemplifies how incoherent

accounts of ‘good’ action; the espoused values versus those in use, can have dramatic

consequences (Rampersad, 2003). In a similar way, invoking Socrates signals

important themes, and we have carefully focussed here on those that are salient. His

dialectical technique confounds sophist recipes by demonstrating that ethical

considerations are inescapable, and by embodying this challenge to sophistry he is a

radical. Socrates’ problems demonstrate that what counts as virtuous is open to

question, and should be questioned: understanding what courage means depends on

the setting, else it may be recklessness or suicide (Laches); received accounts of

justice may create inequities and injustice (Republic). Socrates’ pursuit is an ethical

one, where virtue is understood not in commensurable or aggregate terms, but in

relation to a community (Solomon 2004).

Scrutiny

28
One way to foreground ethics, and underline the embedded nature of social action

would be to scrutinise some of the labels used to represent people by both the

business world and the academy. Often people are described as ‘assets’, ‘capital’ or

‘resources’, labels which may, or may not, be prefaced by ‘human’. These labels

imply that individual worth is to be understood in terms of shareholder value, and also

that people are commensurate with other assets. A person who is an ‘asset’ or

‘resource’ becomes one part of a workforce who as an aggregate exist to create

wealth. To state that this is purely a business, or organizational perspective ignores

that businesses are situated in a wider community, and that whereas people do not

typically think of goods in the same way that they think of others, the very act of

commensuration conditions expectations and serves to legitimise some actions and

behaviours (Espeland and Stevens 1998). Using the language of assets, resources and

capital to refer to people produces an incoherence between organizational talk, and

talk in other social settings. An alternative approach would be one that

counterbalances this with other accounts of value, that are acknowledged as legitimate

and common to other communities, for example a good ‘person’ or ‘people’ rather

than ‘employee’ or ‘workforce’.

29
Commentators suggest Enron is not an isolated incident, and that virtues such as

honesty and fairness are lacking in many firms (Deakin and Konzelmann 2003;

Watkins 2003). Jennings (2004) advocates formal guidance as a way to influence the

character, motivations and attitudes of individuals so as to enhance scrutiny. We

suggest that our reading of Socrates offers an example of such guidance. Although

Socrates was prosecuted for ‘corrupting the youth’, in reality his crime was to

challenge the assumptions upon which the Athenian hegemony was predicated. The

resonance of this for potential corporate scandals is to recognise the value of

questioning self-appointed and self-interested experts, as well as to appraise critically

both the assumptions they propagate, and the way in which these assumptions are

consumed (Mueller and Carter 2005). This involves a process of critique which

should confront people with discrepancies between espoused theories, and the

theories-in-use. This involves challenging defensive reasoning and, to paraphrase

Argyris, making the undiscussable, the discussable (Argyris 2004). The elenchus is

an appropriate vehicle for doing this because it reveals the limitations of locally

derived scripts, in the process identifying alternative principles. Such critique is

necessary to avoid future draughts of corporate hemlock.

Limitations

30
One of the problems with using Socrates as a model is that the Platonic epistemology

hints at an overarching reality, where absolute knowledge is possible through

knowledge of the good and the world of Plato’s forms. The absence of absolute truths

in management makes this unrealistic. A second limitation is that Socrates is an

impossible role model in that he seems to have an answer (or more accurately

perhaps, a question) for everything his interlocutors say. This does not sit easily with

the constant need for organisational actors to take decisions and implement them.

Additionally, enacting distributed modes of engagement requires trust not only in

terms of ‘individual reactions’, which is the level at which the dialogues work, but

also in terms of ‘systemic’, or ‘collective reactions’ which may need to be the basis

for challenging authority figures (Shamir and Lapidot 2003). These limitations

qualify a straightforward account of Socrates as a role model, or ideal example to

leaders. Therefore, instead of advocating Socrates as a role model, we offer our

selective reading of Socrates for consideration. This implies a two-part focus, (i) on

the Socratic technique of dialogue as a means for problem finding (Arlin 1990), and

(ii) on the dramatic character created by Plato. The first of these can be considered as

an operational or technical modality, where we suggest dialogue is a necessary

mechanism for scrutiny. The second can be considered a provocative or metaphorical

modality, where our account of Socrates may prove inspirational as a model for

scrutiny, or means of identifying areas for research.

31
This selective reading implies that we do not need to struggle with the limiting notion

of Socrates as a person to copy or follow, but instead we can invoke a particular

construction of him to reference two different aspects: the technical ability to

examine received truths critically, and the strength of character that challenges

entrenched interests in pursuit of what is good. This goes beyond the gloomy vision

identified by Ghoshal in that, though it recognises individual agency, our reading of

Socrates reinforces the role of virtues that constitute desirable features of a moral

community (Solomon 2004). Most obviously, work groups or organizations may

benefit from invoking this approach where they are engaged in strategic planning, and

defining the role or meaning of systems and activities, as well as in periodic processes

of review. More generally, the reading of Socrates presented here could be useful as a

reminder of the dangers of hegemony, as a means to make organizational scripts

explicit, and a vehicle for scrutinising such scripts to test for coherence between local

and universal accounts of virtuous action.

Conclusion

32
In this paper we have argued that there are parallels between the dramatic character of

Socrates and his mode of questioning, and contemporary accounts of distributed

engagement (Heifetz 1994; Nonaka and Toyama 2002). By drawing on these

parallels, we develop a framework for dialogue and scrutiny that has practical

implications in two modalities. The first of these is in an operational or technical

modality, where we propose dialogue as a critical mechanism for learning and

prompting questioning (Arnold 1997; Kramer 1989). The second is in a provocative

or metaphorical modality, where we explore the wider implications of Socrates as a

model for scrutiny. We applied this to analysis of a well known failure in

organisational ethics.

33
Seeing Socrates as a radical enables us to understand the dangers of a self-supporting

monoculture (Janis 1982). Those with power in organisations need to be aware of the

importance of cultural diversity, and the potential harm of hegemonies. Critique is

also important to enhance effective dialogue, given the prevalence of fads and

fashions in management (Abrahamson and Fairchild 1999) and incoherence in

management talk (Alvesson and Sveningsson 2003). Seeing Socrates as ethicist,

emphasises that ethics is central to organising (Sankar 2003), and that some questions

are irredeemably complex. Faced with these questions it is preferable to encourage

people to work through these on their own, albeit with guidance, rather than to

provide an off the shelf solution (Heifetz 1994). Finally, seeing Socrates as ‘finder of

problems’ illustrates the importance of being able to question basic assumptions, to

recognise the value of having different perspectives on a problem, and allow for

received wisdom to be challenged (Arlin 1990). Recognising the importance of

dialogic interaction can enhance collective action, and promote ethical behaviour in

organisations.

Note References to Plato and Aristotle use a combined number & letter format,

representing the page & section of early collections. Here, dialogues are referenced

under Plato.

34
Table 1: Socrates and scrutiny in organisational ethics

Extract Abstraction Element Potential Benefit

From Behr and Witt (2002)

‘Enron's top executives…

Failure to recognise
fancied themselves the best Identify assumptions and
potentially damaging
of the brightest, the most Elenchus make them explicit, then
assumptions about
sophisticated connoisseurs of critically examine them
‘knowing’
business risk’

‘Lay… was obliged as

chairman… to ‘rely on
Check the power of
talented people whose
Entrenched authority of particular groups,
trustworthiness he had no Radical
specialist cadre interrogate established
reason to doubt’, according
norms
to his spokeswoman, Kelly
Kimberly.’

‘a culture of ambition, Lack of consideration of Acknowledge importance

secrecy and greed made implications of actions, Ethicist of moral character, surface
collapse inevitable’ greed moral incoherence

‘Some people had nagging

suspicions. But like the Identify faults, surface
Unwilling to question,
cowed townspeople in the Problem contradictions in
critique or identify
children's story, few Finder assumptions about what is
problems
questioned the emperor's acceptable and good
new clothes.’

35
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