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

2. Two Issues –What is a corporation and what does a manager do? Descriptive scientific theories –What is a “Good” corporation and what does a “Good” manager do? Prescriptive moral theories

3. 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”

4. The Moral Landscape –Relationship between “Descriptive Facts” and “Prescriptive Values” –Moral Theory Rights-Based (Enlightenment Deontology) Consequentialism (Teleology: egoism, utilitarianism)) Virtue-Based (Aristotelian/Judeo-Christian) The “Is-Ought Gap?” –Descriptive Egoism and/or Altruism Is there a naturalistic foundation for altruistic cooperative human behavior or is it solely the product of social learning? –Prescriptive Egoism and/or Altruism Is altruistic cooperative human behavior “Good” and if so, “ought it be preserved and or cultivated? Legality v. Morality –Liberal (Kant: “good citizen” vs. “good person”) –Communitarian (good citizen=good person) Theory of the Firm –Nexus-of-Contracts Theory Stockholder theory (Locke) Stakeholder theory (Kant) –Agency Theory

5. 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)

6. 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

7. 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

8. 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 (owners) –Agents (managers) –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? –

9. Moral Relationships Between: –Corporate Agents and Stockholders –Corporations and Employees –Corporations and Society –Corporations and other Corporations –Corporations and Government Regulation of Corporations –Competition –Morality »Utility »Beneficence »Non-Maleficence »Justice