Business Education

Defining the “Virtuous Organization”

Behind-the-Scenes: Developing the Theory of the Virtuous Organization

The purpose of this segment is to draw back the curtain and show some of the “making-of” of the initiative, and hopefully encourage you to add your piece. The project is highly collaborative, relying on various diverse and often dissenting opinions. 

The following is taken directly from class notes and subsequent correspondence with professors. 


These are a few thoughts that your discussions inspired! I know there’s never enough time in class, so I wrote a few out. 


Observation #1: Endeavoring to classify a company’s product or service as “virtuous” or “vicious” leads down an endless rabbit hole of ethics that the legal system professionally tackles for us anyway. 

(Example: McDonalds might be termed “virtuous” because it’s technically in the “family fun” industry. A cigarette company would not be “virtuous” because it’s life-threatening. However, heart disease due in large part to fast food like McDonalds kills more Americans every year than tobacco. Which one is more virtuous now?)

Big Potential Game Changer: What if we abandon trying to classify a product itself as “virtuous” and instead just be satisfied if it’s legal. If it’s legal, then for all intents and purposes it’s virtuous. Leave it at that. Professional legal debates go on all the time about if a product is okay for the market. Why would we try and re-invent that process? Just being satisfied with a product’s legality would save us time and free us up to move onto more concrete considerations such as…

Observation #2:  What if we define a virtuous organization having less to do with the abstract internal values of a company and more to do with a company’s impact on social ills? 

Check out this very well-crafted sentence by Alyssa: 

“…instead of creating do-good off-shoots, take what [companies] are already great at and ensure it’s strategically aligned to benefit and grow the value system of employees, communities, consumers, stakeholders.” 

“You take what you’re already great at” and do good with it. 

That means that the company shouldn’t have to create a separate foundation, change its product line or even be less profitable for having donated money. AT ALL!! The company uses what made it great to maintain its profitability and at the same time lift the community. 


Here’s  a stab at the definition of a virtuous organization:

Virtuous organization: a profitable company or enterprise whose business model includes and relies on social impact in their major processes. 

An alternative might be—

Virtuous Organization: a business or enterprise whose social impact is 1) tied to its profits and 2) inherent in its business model. 

Okay, so basically there’s two parts to this equation: 

The profitable company + the social ill = a virtuous organization. 

(By social ill, I mean a problem with injurious consequences on society– poverty, prisoner abuse, illiteracy, human trafficking, etc)

Example #1: The Other Side Academy

Note: I know that this is a non-profit, but it’s a profitable non-profit whose business model demonstrates the above definitions. 

The academy is a residential treatment facility where ex cons can go to change their lives free of charge. The company does not rely on any kind of outside funding and is completely self-sustaining through their business ventures. These include a moving company and a thrift store. The students are the sole employees of the moving company and the thrift store as an important part in their rehabilitation and training. Therefore, the more profitable the businesses are, the more residents the Other Side Academy can admit into their school. The company’s profits are tied to their social impact. 

Example #2: Cotopaxi

Cotopaxi’s suppliers are farmers in Bolivia whose llama-farming craft would have melted into obscurity along with their income. Cotopaxi reduces poverty by providing a profitable product that demands their services. And there’s more to it than that, I’m sure, but you get the idea. The company’s profits are tied to their social impact. 

And now for exciting BONUS material, haha — (SEE BELOW)

 I went through the sheet of businesses and their mission statements and put few of them into buckets based on a quick google search regarding their social impact work. I’ve identified four possible categories. 

(This was an idea that I got after listening to class on Tuesday and also approaches what we were doing with the spectrum today in class.)

THE SPECTRUM: Legally Okay (Level 1) —> Virtuous (Level 5)

Note: I didn’t even bother with anything before “legal” or “neutral” on the spectrum. We could just say that the companies that aren’t even legal definitely aren’t virtuous and probably never will be and just leave it at that. 

Level 1: Profitable company, very limited social outreach. 

Level 2: Profitable company, but uses just its funding for outreach. 

Level 2a: Financial funding of nonprofits are linked to sales

  • SweetGreen donates 1% to a cause based on every app download
  • Nordstrom donates to various causes based on some brand sales

Level 3: Profitable company, uses its goods and services (strength) to promote a given social cause

  • Warby Parker donates a pair of glasses to underprivileged people with the campaign “Buy a Pair, Give a Pair”. 
  • Zappos donates shoes and goods to school children

Services linked to their mission:

  • Life is Good Foundation provides a health-professional coaching service

A Virtuous Organization

Level 4: Profitable company whose social impact is directly linked to its profits

  • The Other Side Academy– rehabilitates multiple-offenders and ex cons
  • Cotopaxi reduces poverty by employing low-income farms in Bolivia for their supply chain

These are very rough categories. Please also know that the research into these companies is very light and would require more.

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