Through the eye of a needle: The profit motive's effect on managerial moral reasoning

Ferd Schroth, Salve Regina University


The effect of the profit motive on managerial moral reasoning is examined by qualitatively reviewing and empirically testing the “Separation Thesis.” The “Separation Thesis” avers that in a free market system there is a total isolation of economic decision-making from any moral implications whatsoever. Many economists lionize homo economicus, i.e., economic man, who is seen as selfishly pursuing profit without any altruistic or moral restraint. In 1776, two centuries before R. Edward Freeman advanced his “Separation Thesis,” Adam Smith described a similar concept in An Inquiry into the Nature and Causes of the Wealth of Nations. His famous theory states that, as man pursues his own economic gain, he is led by an “invisible hand” that promotes the well-being of all society. Smith's invisible hand theory has been accepted by most economists as benignly guiding our open market economic system toward the common good. However, an often ignored viewpoint, contrary to the “Separation Thesis,” was expressed by Smith prior to the publication of his “invisible hand” premise. In The Theory of Moral Sentiment (1759), Smith concluded that, even though man may be selfish, he is still basically concerned with the well-being of others, and therefore requires their happiness to fulfill his own. University students, as well as full-time employees, were surveyed about this issue using hypothetical scenarios to simulate managerial economic decision-making in the for-profit and in the not-for-profit sectors. A statistical analysis of this data has shed light on, but neither proved nor disproved the “Separation Thesis”; however, continued research into the “Separation Thesis” is suggested for the future. Studying the profit motive's interaction with, and impact on, managerial moral reasoning, is important to better understand the impact of technology, capitalism, and the corporation on the human condition.

Subject Area

Management|Business costs

Recommended Citation

Schroth, Ferd, "Through the eye of a needle: The profit motive's effect on managerial moral reasoning" (2005). Doctoral Dissertations. AAI3178855.