They Reap but Do Not Sow: How Multinational Corporations Are Putting an End to Virtuous Capitalism

• Published date: 01 September 2015
• Author: Gerard A. Callanan
• DOI: http://doi.org/10.1111/basr.12059
• Date: 01 September 2015

They Reap but Do Not Sow:

How Multinational

Corporations Are Putting an

End to Virtuous Capitalism

GERARD A. CALLANAN

ABSTRACT

The actions of “world-based” multinational corporations

(MNCs) have effectively decoupled the revenue generation

and the production sides of the business equation. This

decoupling has led to an end of “virtuous capitalism,”

which has widespread ramifications for the societies

within highly developed countries as well as those in

developing and underdeveloped nations. This article

presents an overview of the defining aspects of virtuous

corporations and the linkages to virtuous capitalism. It

then describes the actions of Apple Computer as

emblematic of an MNC that is nonvirtuous in its prac-

tices. The article then discusses how the encouragement

of globalized trade has prompted the shift away from

virtuous capitalism and closes with a summary of pos-

sible actions that could reverse the decline in corporate

virtue.

Gerard A. Callanan is a Professor in the Department of Management, West Chester University,

West Chester, PA. E-mail: gcallanan@wcupa.edu.

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Business and Society Review 120:3 363–384

© 2015 Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc.,

350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

The biblical reference in the title of this article gets at the

long-recognized connection between hard work and benefi-

cial outcomes, as in the planting of seeds and the subse-

quent harvesting of crops. Indeed, the moral meaning of this

linkage is woven both into the old and the new testaments of the

bible. Specifically, in biblical times, the idea of “reaping” without

“sowing” would have been an anathema, likely indicating immoral

or opportunistic behavior on the part of the reaper. Fast forward

roughly 2,000 years and much of corporate America engages in

the practice of reaping but not sowing. High-profile multinational

corporations (MNCs) headquartered in the United States enjoy the

immense benefits of selling their products to a consumer base

eager to spend, while also being protected in a stable and sup-

portive business environment. Yet these same companies, in

pursuit of the lowest possible labor cost, willingly move produc-

tion, technical, and customer service resources to parts of the

world with minimal labor and environmental standards, in

essence, allowing large U.S.-based MNCs to reap but not sow.

The rapid acceleration in the globalization of commerce, both

on the production and the consumption sides, effectively elimi-

nates sovereign borders, allowing a decoupling of the revenue-

generating part of an enterprise from the production and

customer service pieces. This decoupling goes directly against the

historical concept of virtuous capitalism, which reflects a

“normal” cycle of business expenses being plowed back into the

local economy, which then produces greater business demand,

and so on. While pursuing the lowest cost unit of production is

recognized as a primary law of capitalism (Wallerstein 1974), for

large, modern organizations, the issue becomes whether that

pursuit trumps the corporation’s responsibility to the societies

from which it draws its customers, revenue, and protection. Put

another way, should society expect an MNC to display “virtuous

qualities” in the ways it conducts its business and makes deci-

sions, or has globalization and the never-ending and all-

consuming pursuit of ever greater profits ended forever the

practice of linking the production and revenue generation func-

tions of the corporation?

To answer these questions, this article first presents a discus-

sion of whether modern, for-profit corporations can be “virtuous”

in their practices and achieve the related outcome of virtuous

364 BUSINESS AND SOCIETY REVIEW