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Adam Smith (1723–1790), the Scottish thinker best known for his landmark work The Wealth of Nations, is often regarded as the father of modern economics. However, anyone who has read his other major work, The Theory of Moral Sentiments, will quickly recognize that he was far more than an economist. Smith was also a philosopher who explored the foundations of morality, society, and politics, seeking to understand the principles that govern human behavior and social order.
In this two-part series, we will explore organizations through the lens of several key concepts discussed in The Theory of Moral Sentiments—namely the distinctions between sympathy and empathy, as well as between admiration and wonder. In this first installment, we will focus on the difference between sympathy and empathy, two concepts that lie at the heart of collaboration and trust within organizations. While these distinctions may seem unfamiliar at first, a clear understanding of them can provide valuable insights into leadership, organizational culture, and effective management.
In everyday life, we often hear expressions such as “I can relate to that” or “empathy is important.” Likewise, phrases like “I sympathize with that” are commonly used in conversation. As a result, many people tend to treat empathy and sympathy as interchangeable concepts. In philosophy and psychology, however, the two are distinguished in meaningful ways.
Adam Smith’s The Theory of Moral Sentiments also draws a clear distinction between them. Smith argued that morality and social order are not sustained merely by our ability to share the feelings of others—that is, by empathy alone. Rather, they are shaped through sympathy: the capacity to understand, evaluate, and respond to the emotions and actions of others from a broader perspective.
In the context of The Theory of Moral Sentiments, empathy refers to the ability to emotionally share in another person's feelings as if they were one's own. When someone is sad, we feel sadness with them; when someone is joyful, we share in their happiness. This form of emotional connection is what we commonly associate with empathy.
Sympathy, by contrast, is a broader and more sophisticated concept than simple emotional identification or compassion. It involves imaginatively placing ourselves in another person's situation and experiencing their feelings and motives, while at the same time evaluating them through reason. In other words, sympathy is the capacity not only to understand another person's emotional state, but also to assess, approve, or disagree with it from an impartial standpoint.
If we understand this distinction, we can move beyond simply labeling people's actions as “good” or “bad” and begin to examine the underlying reasons and judgments that shape their behavior. Such an understanding allows us to look more deeply into why individuals think and act the way they do, providing valuable insight into the complex issues that arise within both society and organizations.
Sympathy functions as a fundamental mechanism for maintaining social order, extending far beyond interpersonal relationships. Why is this the case? Because empathy alone—the simple sharing of another person's emotions—is not sufficient to sustain a functioning society. For this reason, societies establish formal rules and institutions, such as laws, to define acceptable standards of behavior and provide a framework for social conduct.
However, the challenge is that no set of formal rules can fully account for every situation and variable that arises in real life. Reality is filled with nuances, contexts, and exceptions that laws alone cannot adequately address. It is precisely at this point that sympathy becomes essential.
Guided by the shared values and norms of society, sympathy allows individuals to adopt the perspective of the Impartial Spectator and evaluate the legitimacy of their own actions and those of others. Through this process, people assess, critique, or restrain behavior by asking questions such as:
- “If I act this way, that person may be hurt or disadvantaged.”
- “I can understand why that person acted in that way.”
- “That person's behavior is not justified.”
In this way, sympathy fills the gaps that formal rules and regulations cannot reach, helping to preserve social order where written norms alone fall short. It is this invisible process of judgment, restraint, and mutual understanding that we commonly refer to as "morality".
The mechanisms through which sympathy sustains social order apply equally to organizations. After all, an organization is itself a small society—one in which people with different interests, responsibilities, and perspectives must work together toward shared goals.
For an organization to function effectively, it is not enough for its members to merely empathize with one another's feelings. They must also possess the capacity for sympathy: the ability to evaluate situations through the lens of the organization's values and principles, and to adjust their behavior accordingly. This capacity is essential to the health of any organization.
Just as formal social norms cannot address every circumstance in society, countless situations within organizations cannot be resolved through policies, procedures, and rulebooks alone.
Many leaders and management experts mistakenly believe that a strong organizational culture is built through detailed rulebooks and rigorous control. In reality, written policies, culture decks, and corporate guidelines are merely tools that articulate the organization's identity and provide broad direction.
Organizational culture cannot be created through documentation alone. It does not emerge overnight, nor does it develop on its own. Rather, culture is shaped gradually by individuals who internalize the organization's purpose and values, expressing them through their attitudes, beliefs, behaviors, ways of working, and patterns of thinking.
It is at this point that sympathy plays a crucial role in shaping organizational culture. By helping people evaluate actions and intentions through a shared set of values, sympathy naturally gives rise to the unwritten norms that guide behavior within an organization.
At the heart of this process are two important questions: Can employees instinctively recognize and judge what is right or wrong in a given situation? And does the organization provide an environment where such judgments can be discussed openly and constructively?
The answers to these questions have a profound impact on organizational culture. This is also why recruitment deserves far more attention than it often receives. Hiring is one of the most influential mechanisms through which an organization's values, norms, and culture are established and reinforced over time.
Consider a situation in which a conflict or problem arises within an organization. In such cases, it is not enough simply to understand how the people involved feel. What matters is examining the situation more comprehensively: understanding the circumstances that gave rise to those emotions, the motivations and actions that followed, and whether those actions were justified or appropriate.
From this perspective, sympathy is not merely an expression of compassion, comfort, or emotional support. Rather, it is an effort to understand a situation fairly and impartially, taking into account both the emotions involved and the broader context in which they emerged.
When employees feel that their emotions and actions are being evaluated fairly through this process of sympathy, they are more likely to develop trust in their organization, its leaders, and their colleagues. Conversely, when people are expected to simply endure difficulties, make one-sided concessions, or accept problems that are addressed only through reassurance and encouragement, they may come to view the organization as fundamentally unfair.
This issue is closely tied to the legitimacy of organizational decision-making. It is also closely related to an organization's ability to recognize and address the circumstances and pain points experienced by its customers. At its core, business is about understanding the situations customers face, identifying the sources of their challenges, and working to solve them. In this sense, effective business practice can be understood as an extension of sympathy itself.
Organizations that lack sympathy rarely exhibit the kind of vibrant and energetic interactions that characterize healthy cultures. By “interaction,” I do not mean the emotional warmth or personal closeness typically associated with empathy. Yet in practice, many CEOs and managers tend to evaluate organizational culture primarily through these visible expressions of empathy and interpersonal harmony.
To be sure, empathy remains an important component of a healthy workplace. Celebrating a colleague's promotion, sharing in the joy of a new child, offering congratulations during moments of success, or mourning together during times of loss all contribute meaningfully to the culture of an organization. These forms of emotional connection help strengthen relationships and foster a sense of community among employees.
However, the concept more closely linked to organizational culture and innovation is sympathy. Innovation begins when people challenge existing assumptions, question established practices, and engage in rigorous debate over ideas. If an organization is driven by empathy alone, employees may hesitate to offer sharp criticism, bold proposals, or difficult questions for fear of damaging relationships. Over time, this can make the organization increasingly rigid and less capable of innovation.
Organizations in which sympathy is well developed operate differently. Rather than focusing their energy on preserving feelings or maintaining interpersonal harmony, people concentrate on the value of the problem being addressed and the legitimacy of the purpose behind it. Even when there is disagreement about how an idea should be executed, there remains an underlying sense of rational trust: "I may disagree with your approach, but I strongly sympathize with the importance of the problem you are trying to solve for our organization." This shared recognition creates the foundation upon which meaningful collaboration and innovation can flourish.
It is precisely this form of rational trust that creates psychological safety within an organization, enabling employees to pursue creative ideas and take meaningful risks without fear of failure. This is why leaders and executives should look beyond simple interpersonal closeness and instead pay attention to how strongly their organization is united around a common vision and shared sense of purpose. Organizations with a high level of sympathy also tend to exhibit far more active and meaningful interactions throughout the course of their work.
A common example can be found in collaboration tools such as Slack, where employees interact through comments, threads, reactions, and emojis. In these environments, leaders must develop the ability to distinguish between reactions that arise from genuine engagement with the work and those that merely reflect emotional support or personal rapport.
Interactions driven by sympathy in the course of work are strong evidence of a collaborative culture in which people actively exchange perspectives and strive to understand one another's reasoning. They reveal how deeply employees resonate with and respond to the organization's vision, identity, customer challenges, and strategic direction. In this sense, such interactions serve as a meaningful indicator of organizational alignment. More importantly, they should be recognized as one of the most important measures of an organization's capacity for innovation.
In this article, we have explored sympathy as a social capacity that enables us to understand and evaluate the emotions, motivations, and actions of others. We have also seen that sympathy serves as an important foundation for maintaining social order. Furthermore, because organizations are, in many ways, miniature societies, the same principles apply within organizational settings as well.
These principles extend beyond internal organizational dynamics and apply equally to relationships with customers. Understanding customers is not simply a matter of empathizing with their feelings. Rather, it involves making a genuine effort to understand the situations they face, the underlying causes of their problems, and the broader context that shapes their decisions and behaviors.
Only when we can thoughtfully answer questions such as “Why does the customer make that choice?”, “What frustrations or difficulties are they experiencing?”, and “What expectations do they have?” can we begin to deliver the value and experiences they truly seek.
Ultimately, empathy alone is not enough for individuals and organizations that aspire to grow and innovate continuously. Beyond sharing another person's feelings, we must cultivate the capacity for sympathy—the ability to understand another person's perspective and context, interpret its meaning, and adjust our own behavior accordingly. By developing this capability, both individuals and organizations can strengthen the foundations necessary for sustained innovation and long-term growth.
Note 2: During his lifetime, Adam Smith published only two major works: The Theory of Moral Sentiments and The Wealth of Nations. Although two additional works were published after his death, they are generally not regarded as formal publications completed and released according to Smith's own intentions. Strictly speaking, the two books published during his lifetime remain the primary works through which his thought is most directly understood.
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