By: Ronald F. White, Ph.D. Professor of Philosophy College of Mount St. Joseph

Questions about Corporations Descriptive Scientific Theories- –What is a Corporation?” Social science –Psychology, Sociology, Political Science, Economics Biology –Evolutionary biology Prescriptive Moral Theories- –What is a “good corporation?” Teleological: “good consequences” Deontological: “rights-based” Virtue-Based: “human excellence”

Orthodoxy is business management and business ethics is currently occupied by a deontological “Nexus-of-Contracts Theory,” whereby: “Each constituency or stakeholder group bargains with the firm over a set of rights that will protect the firm specific assets that it makes available for production.” (Boatright p. 1837)

Contracts as Promises Corporate Stakeholders –Stockholders –Employers –Consumers –Suppliers –Financiers –Local Community

Human Nature –Individuals, Rationality, Self Interest, Free Will Classical Liberalism (Locke-Nozick) –Life, Liberty, and Property –Persons/Property –Invisible Hand –Role of Government in Human Affairs –Natural and Artificial Monopolies Obligations to Stockholders –Corporations as “Money Machines” Agency Theory

Human Nature –Individuals, Rationality, Self Interest, Free Will Welfare Liberalism (Kant-Rawls) –Life, Liberty, and Property –Persons/Property –Invisible Hand –Role of Government in Human Affairs Natural Advantage and Rights –Corporations as Persons –Stakeholders Stockholders Employees Consumers Society Government

Machiavellian Background Jensen and Meckling: “Theory of the Firm” (1976) –Conflict of interest between contracting parties (shareholders, corporate managers, debt managers etc.) Conceptual Framework- –Contractual Obligations –Trust –Principals –Agents –Behavior of Principles and Agents Delegation of Authority from Principle to Agent –Incentives and Monitoring- Problem of Self-Interest- Agency and Moral hazard: Who bears cost? Who enjoys Benefits? –

Whose interests “ought” CEOs Serve? Does serving the interests of stockholders necessarily lead to exploitation of the other stakeholders? Is it possible for a CEO to “blend” the interests of all stakeholders. Are corporations “private property” or “public goods?” Whose “values” ought the govern CEOs of multinational corporations? –When in Rome do what the Romans do. (stockholder Theory) –When in Rome do what’s right. (stakeholder theory).