Gourlay Professorship of Ethics in Business

Wednesday 30 September

'Really getting out of the mess: putting Ethics and Business together once and for all'

With Public trust in the institutions of Capitalism at an all-time low following the Global Fincial Crisis, Professor R Edward Freeeman from the Darden School at the University of Virginia believes we all have the wrong idea about business and that no regulatory reforms will fix it.

Indeed, the 2009 Gourlay Visiting Professor of Ethics in Business at Trinity College suggests that we need to ‘abandon the Old Story of Business’.

Delivering the Gourlay Professorship 2009 Annual Public Lecture at the RACV Club in Melbourne this evening, Professor Freeman told an audience of around 200 people that the current ‘Conceptual Crisis in Capitalism’ stems from using an outdated model that says business is primarily about making profits, that only shareholders matter, that capitalism works due to people’s self-interest and that, given the opportunity, business people will cheat or cut corners.

Rather, he believes a better model for successful business would see happy, engaged human beings, creating value for all stakeholders – customers, suppliers, employees, communities, financiers and others. ‘Resolving the conflicting interests of stakeholders provides the fuel for creativity and innovation,’ Professor Freeman said.

Turning his attention to ‘The Humanity Story’ – the role of human beings in business – the Gourlay Professor said: ‘Humans are complex creatures. We use reason and have values. We are emotional and have a history. We are relational and social as well as individual. And we have aspirations.’

As a result, he argued that the ‘carrot and stick’ method of leadership – ‘the Jackass Model’ – must change. ‘Individuals need to speak up and “push back” in the way we lead to create value.’

‘Good leaders understand that their role in creating value is enabling others to do great things.  When free people make voluntary decisions to collaborate responsibly, society flourishes,’ he said.

Within Ed Freeman’s ‘New Story’, business becomes an Institution of Hope.