Religion and Business

Society is an aggregation of peoples in all parts of the world as well as an integration of
the institutions these people have created to better the human condition. Three of the
major institutions making up modern society are government, religion, and business.
This paper will examine religion and its guiding principles with an attempt at
demonstrating that some of those principles can be enacted more fully in a normative
model of stakeholder capitalism than in shareholder capitalism. For a significant portion
of the people around the world for which religion is an important aspect of their lives, we
seek to find a way for them to be able to more fully live their religious principles in our
economic system. In so doing, not only will this paper demonstrate how such an embrace
can positively influence business success, but more importantly strengthens peoples’
ability to more fully live their lives and strengthen society through that fulfilled life.
Capitalism, as outlined by Adam Smith (1776), has created tremendous wealth in the
United States and throughout the world. In so doing, many societal ills have been solved,
and much good has been produced. A large part of the success of capitalism came about
because of the recognition by Smith that the embrace of self-interest could lead to much
good. However, for most faith traditions, a sole focus on self-interest is antithetical to
their basic belief systems. In this paper we argue that such an embrace has a natural
limit, and that an alternative embrace of the stakeholder perspective with its promotion of
both self-interest and other-regarding interest, can lead economies to soar to even greater
heights through the embrace of religious principles practiced by many adherents of that
One of the basic tenets of all the major religions of the world is the golden rule – the idea
that we should do unto others as we would have them do unto us (Trevino & Nelson,
2010). Andrew Wicks is currently editing a special issue of the Journal of Management
Spirituality and Religion examining the relationship between spirituality, religion and
stakeholder theory. This current work parallels that effort by providing stakeholder
theory with a normative undergirding in religious principles. Such an effort is
complementary to the excellent work examining the normative bases of stakeholder
theory from a philosophical perspective (e.g. Donaldson & Preston, 1995; Phillips, 2003;
Jones & Felps, 2013).
While criticizing stakeholder theory on several fronts, Jensen (2002) does argue that
stakeholder theory has the positive aspect of providing psychic energy for the firm. In
the United States, and many other countries in the world where religion is widely
practiced, we argue that the embrace of religious principles already held dear does and
can provide even greater energy to their economic actors.
In their article on stakeholder salience and stakeholder performance, Agle, Mitchell, and
Sonnenfeld (1999) discuss the critical role of normative discourse on the future of
business in the following passage:
The capability of normative declarations to alter outcomes is well
accepted. "We hold these truths to be self-evident . .. ," "inalienable rights,
. . . life, liberty, .. . pursuit of happiness ... " and similar statements contain
within them social energy that inspires the mind, justifies new modes of
thought, and enables change… Normative discourse, we therefore believe,
must continue to be endemic to stakeholder theory and research if scholars
want this theory to flourish and fulfill its aims as a theory of the firm-not
the least of which is attending to the long-run interests of both the business
corporation and the society that gives it life.
In the paper, we will provide several examples of religious principles held by multiple
religious groups that are in line with the assumptions and prescriptions of stakeholder
theory, and which when practiced in an economic setting will allow business leaders to
live a life of integrity (“wholeness”) and provide authentic leadership to their
organizations (George, 2003, 2010). One such example of those principles as expounded
in the Articles of Faith of the Church of Jesus Christ of Latter-Day Saints, and which
builds upon New Testament scripture is as follows:
“We believe in being honest, true, chaste, benevolent, and in doing
good to all men, indeed, we may say that we follow the admonition of
Paul…if there is anything virtuous, lovely, or of good report, or
praiseworthy, we seek after these things.” (Smith, 1835: Thirteenth
The Vatican has recently released a set of principles for business ethics in its
publication entitled “Vocation of the Business Leader” (Turkson & Toso, 2012).
We will demonstrate that these Catholic principles are much closer in line to
normative stakeholder theory than shareholder value maximization theory. This
paper will also strengthen stakeholder theory by describing ways in which these
religious principles can be enacted utilizing the stakeholder perspective. As an
example, while agency theory (e.g. Jensen and Meckling, 1976) rightly
recognized some problems in the economic system, its prescriptions for
management are not nearly as in line with religious principles as are the
prescriptions of stewardship theory (Davis, Schoorman, & Donaldson, 1997), a
theory closely aligned with many faith traditions.
In Laura Nash’s book, Believers in Business (Nash, 1994), she identifies three types of
Christian business leaders – the generalist, the justifier, and the seeker. Whereas the
“generalist” doesn’t recognize the tensions between religion and business, and the
“justifier” assumes that success means God’s blessings, the “seeker” recognizes and
attempts to reconcile the tensions. We believe, and will demonstrate, that the seeker will
find those tensions greatly reduced through the stakeholder perspective.
Looking through the lens of various religious traditions, this paper will explore the ways
in which many of the principles found in various religious texts such as the Bible, Koran,
and others are often aligned. The paper will also explore how business enacting such
generally agreed-upon principles can serve as an agent of societal good through the
promotion and practice of such principles.
Agle, B. R., Mitchell, R. & Sonnenfeld, J. (1999). Who Matters to CEOs? An
Investigation of Stakeholder Attributes and Salience, Corporate Performance,
and CEO Values, Academy of Management Journal. 42(5) 507-525.
Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory
of management. Academy of Management Review, 22(1), 20-47.
Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation:
Concepts, evidence, and implications. Academy of Management Review, 20,
George, B. (2010). True north: Discover your authentic leadership. San Francisco:
George, W. (2003). Authentic leadership: Rediscovering the secrets to creating lasting
value. San Francisco: Jossey-Bass.
Jensen, M. C. (2002). Value maximization, stakeholder theory, and the corporate
objective function. Business Ethics Quarterly, 12(2), 235-256.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior,
agency costs and ownership structure. Journal of financial economics, 3(4),
Jones, T. M., & Felps, W. (2013) Shareholder wealth maximization and social welfare:
A utilitarian critique. Business Ethics Quarterly, 23(2), 207-238.
Nash, L. L. (1994). Believers in business. Nashville, TN: Thomas Nelson.
Phillips, R. (2003). Stakeholder theory and organizational ethics. Berrett-Koehler
Smith, A. (1776). The wealth of nations. New York: Modern Library.
Smith, J. (1835). The Articles of Faith. Retrieved from
Trevino, L. K., & Nelson, K. A. (2010). Managing business ethics. Wiley.
Turkson, P. & Toso, M. (2012). Vocation of the Business Leader, Pontifical Council for
Justice and Peace. The Vatican.
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