How moral arguments influence economic decisions and organizational legitimacy—the case of offshoring production

Abstract

How do moral arguments influence economic decisions? This study reconstructs five discussions about offshoring production to low-cost countries to understand how moral arguments attack the legitimacy of economic strategies. From these case studies about offshoring, I derive three mechanisms by which moral arguments influence economic decisions. Firstly, moral arguments appeal to values, influencing what their addressee defines as economically rational. Secondly, denouncing management decisions as immoral can deprive managers of valuable social capital and legitimacy within their company, thereby exerting economic pressure. Thirdly, depicting management decisions as immoral can destroy a company’s public legitimacy, further exerting economic pressure. Apart from highlighting the social mechanisms underlying moral influence, this article also shows the limits of influence-seeking through moral arguments. It contributes to the existing literature on legitimacy and economic decision-making, especially with regard to offshoring. The article concludes by developing insights about how moral arguments and interest-seeking interact in capitalism based on the empirical material.