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Thus, from the standpoint of virtue ethics, according

to Koehn (1995), the important ethical matter is that indi-

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vidualsmust be able tomake contributions of value to a society

or communal enterprise and that the virtuous agent simply is

the personhabituated to desire to dowhat is good andnoble.By

extension, then, MacIntyre’s practice–institution schema

suggests that both the motivation and reward for such contri-

butions is not monetary but rather an ‘‘internal goods’’—a

sense of wellbeing.

While transformational leadership is normally applied to a

context of organizational change, the same qualities of virtue

ethics have also been applied to the study of social en-

trepreneurship, sustainable enterprise, and a range of similar

concepts. In understanding various aspects of social en-

trepreneurship, Sullivan Mort et al. (2003) argue that the key

features of social entrepreneurship include not only its con-

cern and commitment in the social domain, the entrepreneur’s

leadership aptitude, and exceptional capacity, but also the

virtue and moral characters of both the entrepreneur and the

enterprise. As Roper and Cheney (2005) point out, private

social enterprises are often led by value-driven, charismatic

leaders who style themselves and their organizations as both

innovative and socially responsible. Using examples such as

Anita Roddick, the founder of the Body Shop, Grant (2004)

and Roper andCheney (2005) alsopoint out the importanceof

the character of successful social entrepreneurs. They argue

that at their inception these successful social enterprises share

in common the entrepreneurs’ vision of socially responsive

business and their ability to instill such values in the


Pratt and Pratt (2010) conducted a study of nine sus-

tainable enterprises from around the world, all selected

because they were established by a leader who explicitly

put sustainability principles at the core of the business from

the time of its inception. Examples included The UK’s

Eden Project, New Zealand’s Comvita, and Sri Lanka’s

Dilmah Tea. Kearins and Collins (2012), among others, use

the term ‘‘ecopreneur’’ in referring to those who establish a

business ‘‘in order to have a positive environmental and

social impact, as well as to make a profit’’ (p. 72). They

include ecopreneurship as one specific category of ‘‘values-

based business’’. There is clear synergy among the various

terms applied. By whatever term, what is truly fundamental

to successful social/sustainable enterprises, those that end

up transforming their business and society, is the virtue and

moral character of their leaders. In other words, a suc-

cessful sustainable enterprise must be anchored in, and

sustained through, a moral purpose—a deep and genuine

concern for the environment and the society. Being a

successful social entrepreneur then, returning to Bass and

Steidlmeier (1999), is a way of embracing virtue and

morality; and a way one engenders virtue in self, others,

and society through the example and virtuous conduct of

social enterprise.

Importantly, the value of transformational leaders and

social entrepreneurs lies not only in their success in cre-

ating a sustainable business, but also in the moral influence

they exert on others, their organizations, and the society at

large. In fact, the cultures of organizations in which such

transformational leaders and social entrepreneurs operate

may be profoundly shaped and ultimately sustained by

certain values, practices, and habits. Virtue ethics, in

placing an emphasis on moral character, provides a useful

way to understand how individuals’ ethical and moral be-

liefs can transform conventional self-serving business

practice into virtuous business conduct.

Indeed, in the discussion of transformational leadership

and social entrepreneurship, as with organizational value-

based action in general, the question of whether leader

charisma is essential for inspired organizational perfor-

mance is a persistent one. Weber (1978), for instance, was

concerned about exemplary character on individual as well

as organizational levels. The problem of charisma is how to

move it beyond the individual performance as a key means

70 Y. Wang et al.




of expressing authority and indeed directing the actions of

an organization. This remains a key question for collective

applications of virtue ethics and for assessing as well as

promoting virtuous behaviors in organizations. On a prac-

tical level, all sorts of organizations that are committed to

social values wrestle with the problem of how to, in We-

ber’s terms, ‘‘routinize’’ charisma given that so much of the

socially inspired leadership in all sectors is tied to indi-

vidual leaders and their initiatives.

The importance of virtue theory, therefore, lies in its

emphasis on individuals’ values and moral convictions in

understanding business practice. Specifically, it depicts

how individuals’ moral character can become the key dri-

ver behind an organization’s collective pursuit of ethical

business conduct. Such a virtue ethics approach to business

ethics is founded in our understanding of business as a

human-based social entity, or, as Solomon (2004) has put

it, a human institution in service to humans. According to

Arjoon (2000), the pursuit of ‘‘internal goods’’ corresponds

with a state of ‘‘being,’’ whereas ‘‘external goods’’ corre-

spond to a state of ‘‘having.’’ It is only under the state of

‘‘being,’’ the author posits that we can fulfill our true po-

tentialities which cannot be accomplished or satisfied by a

state of ‘‘having.’’ In this sense, virtue theory turns the

central issue of business ethics—‘‘how business should

act’’ to the question ‘‘how people should act,’’ where in-

dividuals’ moral capacity becomes the key to cultivating an

ethical climate in all aspects of social life. As demonstrated

in the many examples of transformational leaders and

successful sustainable enterprises, when individuals act as

moral agents, not only do their values and ethical pursuits

weigh at the core of business sustainability decision mak-

ing, but also their virtuous conduct can help foster, and in

turn be sustained through, a virtuous environment.

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