Activities of an Organization

Another hypothesis that bears consideration (see original post) is that an organization does not make any decision to act, nor undertake any action as an organization. The same can be said of business: the business itself does not decide or act. Decisions and actions of the individuals who compose the business decide or to act, and not all decisions or actions are made in interests of the business.

The interests that drive a decision, then, may be considered as a differentiating factor: if the intention of a decision to act is made with the intention of accomplishing a purpose that serves the interests of the business, rather than those of the individual making the decision, then the activities that precipitate from that decision can be considered to be "business activities."

However, that alone seems insufficient. There is some danger in assigning responsibility for an action to an individual or entity simply because they derive a benefit from that action. The example that comes to mind is in a charitable donation of funds that were gained by an unethical activity - are those that are benefited by the donation to be held accountable for the activities that generated the funds donated to them? This seems unreasonable, in that they had no part in making the decision of how the funds were generated.

It seems to me that authorization is also a factor, and is likely more important a factor than the receipt of benefits. If a charitable institution engaged in unethical activities to raise funds to support its operations, then it is to be held responsible for the decision to undertake those activities. It might also be suggested that if the institution encouraged others to undertake those actions for its benefit, it is to some degree responsible for providing that motivation.

But this runs afoul of the premise: that the institution does not decide or act, but certain individuals within the organization have made the decision to decide or act. And while the decision was made in the context of the institution, and for the benefit of the institution, the responsibility for the decision rests with an individual.

And the argument at this point comes full circle, because the individual who made the decision to participate in or encourage others to undertake an unethical action was motivated to do so to his desire to achieve some benefit for the institution.

I don't think that this has been fully explored, but it seem to be pointed toward the conclusion that the actions undertaken to achieve a certain goal can be said to be related from, or even to originate directly from, that goal. Hence any decision made to benefit a business precipitates actions that can be called "business activities."

This seems a matter of classification that may have no direct bearing on ethical responsibility: the decision-maker rather than the benefactor is responsible for the ethics of a decision, though it may be said that it is for the sake of the benefactor that the decision was made.

What is Not Business?

It seems worthwhile to distinguish "business" from other forms of organization - while there may be some similarities in their nature, their operations, and the ethical environment surrounding them, there are distinct differences that are essential to the consideration of an organization as a business as opposed to an organization of another kind. Specifically, business is to be differentiated from government and nonprofit organizations.

The difference between government (1) and business is in the absence of force. It is accepted, or at least conceded, that government accomplishes its goals by the application of force, in the sense of physical violence. Certain actions are prohibited or required, and the consequence of failing to comply is to do violence upon those who refuse to comply - or, as a mitigating step, to threaten violence before actual recourse to violent action. This is common to goals pertaining to actions as well as goals pertaining to material goods.

It's also worth noting that the application of physical force is characteristic of government, but the absence of physical force is a quality, but not a distinguishing characteristic, of business. Nonprofit organizations also seek to accomplish their goals without recourse to violence.

The difference between business and nonprofit organizations would seem to be the generation of profit (a non-profit being, by its very name, and organization that does not generate profit). However, this is not entirely accurate. Many nonprofits sell merchandise, and even those who do not engage in fundraising sales generate earnings from donations that exceed the value of the benefits they provide, by more than enough to cover overhead expenses. Therefore it can't be accurately said that nonprofit organizations do not make a profit at all.

The chief difference is in the way in which the profits of a business or a nonprofit are dispersed. The top-line or "gross" profit of a business or nonprofit organization may be reinvested in the organization or held in reserve. But the bottom-line or "net" profit of a business is redistributed to its owners, whereas a nonprofit organization seeks to use all net profit to accomplish the goals of the organization. While it may happen that in a given fiscal year or quarter, a nonprofit organization has generated a net profit, this amount is consumed by the organization in the long run, rather than being dispersed to owners.

Admittedly, there are instances in which the profit of a nonprofit organization is dispersed to the owners of the nonprofit in the form of benefits - a youth group holds a fundraising event to generate cash that pays for a benefit to the members of the group (such as a vacation trip for members of the organization) - so it may be argued that this is not a legitimate nonprofit, or a legitimate use of funds for the purpose of the nonprofit, but this seems like a red herring.

Insofar as differentiating a business from a nonprofit is concerned, the distinguishing characteristic of business seems to be the generation of a profit that will be returned to the owners of the business as a monetary payment.

I expect that the details will bear further consideration, and that there may be a number of "exceptional" cases, but my sense is that the essence of this distinction is correct.

NOTES

1. I realize that any mention of "government" tends to draw fire. My intention is not to open that can of worms, but merely differentiate government from business. Comments along those lines - particularly in suggesting a more accurate way to distinguish the two - will be accepted. Comments on politics in general will not be posted here. There are more appropriate venues for political discussions.

Does an Organization Decide?

This seems fairly straightforward, and brings to light a significant concept: that an organization is not an actor, in the sense previously discussed. That is to say that the organization itself does not undertake any action or make any decision. It is the individuals within the organization who decide and act.

And this is the source of inaccuracy: if one suggests that the organization has made a decision, this obscures the fact that the decision was made by a person. Others within the organization may attempt to have input into or influence a decision, still others may agree or consent to the decision, and still others may undertake action to effect the decision - but the fact remains that the decision is not made by the organization, but an individual.

I would also suspect it to be true that a decision made by an individual within an organization is not universally accepted by all members of that organization. Some may oppose rather than support it, and a great many others may be unaware of it and wholly uninvolved.

And so, an "organization" can be seen as an effect of a purpose. The people and physical artifacts that the organization comprises are means to achieving its end. This may bear further consideration.

It also seems reasonable to suggest that an organization influences the decision-making process of its members, in that self-interest is replaced by the interests or goals of the organization as the driving force behind each decision to act.

However, organizations are often held liable, in a legal and political sense, for any action undertaken by a person who is identified as a member of that organization, even if the action is not motivated by the purpose of the organization. This seems a separate topic, to be explored later.

There is also the dynamic of people working in groups: not only are decisions influenced by the common purpose, but they are negotiated with and influenced by others with whom the decision-maker interacts. There are internal considerations - such as whether a decision will be accepted by other members of the organization, and whether they will support or resist the decision, whether they will assist in effecting it, and whether they will reward or punish the decision-maker or those who act in support of the decision. But to be clear, each of these actions is undertaken by an individual, not "the organization."

So it is the task of each individual within the organization to decide and act - and the suggestion that "the organization" makes decisions and undertakes actions is inaccurate.

Purpose of Organization

I have defined "organization" is a group of people who have chosen to gather into a unit to fulfill a specific purpose. The previous post considered the nature of an organization as being composed of people, but left off at the concept of a purpose.

The concept of purpose is significant, in that the purpose of an organization drives the behavior of those who constitute the organization. Within any other group, there is no unity of action. Take the example of race: one can distinguish a group of people as belonging to a given race, and the people may even accept that they are members of that race, but the race has a purpose or agenda (though certain members claim as much so to encourage others to support their personal agenda), it is merely a category.

Likewise, the residents of a given neighborhood happen to live in the same defined geographic area, but are not necessarily an organization. They may have certain interests in common, as a result of their similarity in the location in which they reside (not to mention that there are often other similarities among people who reside proximate to one another, such as their economic class), but are not necessarily organized to serve their common interest.

I have used "not necessarily" in the previous paragraph because there are instances in which a neighborhood organizes itself for a purpose, forming a homeowners' association. While that seems to be the trend in certain areas, it is not a necessity: people can live proximate to one another without forming an association.

An organization is gathered for a specific purpose, and is generally internally structured to suit that purpose. Participants or members of the organization have specific roles, which may be directly related to the core purpose or done in support of other members, and the affairs of the organization are conducted with some degree of formality.

Admittedly, this is a generalization: I would expect that, within any organization, there are members who do not actively support the agenda or interests of the organization, but have ulterior motives for participation. However, even in such instances, there is the expectation of the organization that its members will fulfill certain roles, and this is understood by all its members, even if they choose to act otherwise.

Choice is significant, and it occurs to me (though I am not entirely firm in this conclusion) that voluntary participation is a characteristic of an organization - an individual chooses to identify himself as part of an organization, and the other members of the organization choose to accept that individual into the organization. The individual may choose to leave the members, or other members may choose to expel him.

I'm not sure this is strictly necessary: there may be instances in which a person is not able to decide whether to join or leave an organization, or in which other members of an organization are unable to block his entry or mandate his exit. However, I have the sense that mutual acceptance of participation is a distinguishing characteristics that differentiates organizations from arbitrary groups.

What is an Organization?

The previous post discussed the ethics of organizations without considering an essential definition: what is an organization? In common parlance, there is the notion of an organization as an entity: it is often said that decisions are made an actions undertaken by an organization - but my sense is that this is an abstraction that leads to inaccuracy.

As a working definition:

An organization is a collection of people, which makes decisions and undertake actions to achieve a specific purpose.

I've decided to define an organization in terms of the people it comprises rather than any physical artifacts: objects or structures. My sense is that it is a commonly accepted notion: a "church" is not so much the building but the congregation, a "nation" is not so much the geographic area as the persons who identify themselves as a member of that nation.

It is possible for an organization to exist without physical artifacts. Taking the examples above, a "church" is organized among devotees before a building is constructed, and a "nation" is organized among citizens who remain members of that nation when they travel abroad (and immigrants are not necessarily members of the organization simply by stepping into a geographic area).

In this sense, the artifacts are incidental. They may be obtained by the organization for a given purpose, related to the purpose of the organization. The physical artifacts may even be disposed of without dissolving the organization.

However, the people are not disposable to an organization. If the people disband, or abandon the purpose of an organization, the organization itself ceases to exist. With that in mind, I do not think it is inaccurate to suggest that an organization is, by definition, a group of people.

The addition of "to achieve a specific purpose" also seems essential to the notion of organization. The difference between an "organization" and a random group of people is that there is a commonality of purpose among the individuals who compose the organization. This bears further consideration.