Listen to this article
Many chief executives and top management teams consider globalisation the most critical challenge they face today. One of the most pressing issues related to this challenge is the changing role of business in society.
Large companies are often seen as powerful social actors who are expected not only to behave responsibly but also to help deal with problems such as climate change, poverty and human rights abuses.
In examining the role of business in contemporary societies, the work of the German sociologist and political economist Max Weber (1864-1920) is especially relevant and inspirational, both for its legacy and its ongoing validity.
From today’s perspective, the most surprising thing about Weber is the enduring authority of his thinking, of the contemporary nature of the issues he addressed and, especially, of the questions he raised – much more than the answers he proposed.
As a sociologist, Weber stands out for his dissection of both the western world and economic modernisation – a process that he characterised as the progressive “rationalisation of the world” in economics, politics and the state, as well as in ethics and values.
Weber’s most important legacy is his analysis of capitalism and bureaucratisation, and his understanding of society as a set of structures and social practices. Also of particular significance was his justification of the triumph of capitalism on moral – rather than exclusively material – grounds: the efficiency of Calvinist values, embodied in a particular lifestyle (ethos) and concept of work that supported an identification between one’s vocation (religion) and trade or profession (economic activity).
In order to understand how capitalism worked in his day, Weber believed it was necessary to examine how business had come to be the ultimate rational model of social action.
This concept, adapted to the present day, implies that we must not see business as separate from society. The current success of the “business in society” perspective within the management field demonstrates that Weber’s intuition – that when we do business, we are building society – remains valid.
The specificity of the modern world described by Weber – which, to a large extent, mirrors today’s world – consisted of an indivisible framework of economic forms, social structures, political institutions, and a particular individual and social ethos. All of these elements influenced the standardisation and rationalisation of society – processes in which business had a crucial role.
In our present-day dialogue with Weber, we must ask ourselves whether business will continue to play this role in the future and, if so, whether its function will be the same.
He saw that business, without being aware of it, contributed decisively to the rationalisation process. He also discovered that the development of capitalism and economic activity was closely related to the personal ethos of businessmen.
The question about the role of business remains relevant, but with a twist: present-day companies and their managers are aware of their impact on society.
For managers, this means reflecting on what kind of society their companies, through their business activities, are helping to build. Moreover, in a global and organisational context that is a far cry from the local context Weber knew, it is no longer enough to talk about the ethics and individual commitment of those in top leadership positions.
Companies find themselves obliged to decide what corporate ethos and shared values they wish to promote among their employees.
In the mid 1970s, sociologists began discussing the “cultural contradictions of capitalism”. Within democratic capitalism, there was a rupture between moral values and the instrumental values upon which it had been founded.
The so-called malaise of contemporary capitalist societies is probably due to the disconnection between actions in a mechanical sense – whether economic, professional or business-related – and the “spirit”, that is, the purpose or meaning behind the action. In fact, Weber predicted this outcome at the end of his book The Protestant Ethic and the Spirit of Capitalism when he warned that human beings could become “specialists without spirit, hedonists without heart”.
Today, any re-examination of the role of business must take into account and reflect on these risks. If we do not wish to live or work in what Weber called “iron cages” – organisations that are highly efficient and rational yet cold and dehumanised – we must reconsider the raison d’être and purpose of business in the twenty-first century.
A dialogue with and about Weber can help us redefine the role of business according to an “ethics of responsibility”. Today, this ethics refers not only to the responsibility for one’s own actions, but also to the responsibility, shared with other social actors – governments, civil society – for our societies’ problems. This brings us to our question: what individual and collective role should business play in social governance at the local, national and global levels?
In short, following in Weber’s footsteps, a re-examination of the role of business in the 21st century involves redefining the ethos of economic activity in a global and interdependent world – an ethos that should incorporate the economic, social and environmental aspects of companies’ actions.
We now face the important and exciting challenge of developing social innovation capable of integrating these three aspects in a way that is viable and sustainable.
Only in this way will business legitimately be perceived by society as an agent of world benefit.
Get alerts on when a new story is published