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The Morality of the Corporation: An Empirical or Normative Disagreement?

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  • Maitland, Ian

Abstract

In the canonical view of the corporation, management is the agent of the owners of the corporation—the stockholders—and, as such, has a fiduciary duty to manage the corporation in their best interests. Most business ethicists condemn this arrangement as morally indefensible because it fails to respect the right of other corporate constituencies or “stakeholders” to self-determination. By contrast, the modern agency theory of the firm provides a defense of this arrangement on the grounds that it is the result of stakeholders’ right to self-determination. This paper uses the example of managers’ fiduciary duty to stockholders to argue that different normative judgments often mask empirical disagreements.

Suggested Citation

  • Maitland, Ian, 1994. "The Morality of the Corporation: An Empirical or Normative Disagreement?," Business Ethics Quarterly, Cambridge University Press, vol. 4(4), pages 445-458, October.
    • Handle: RePEc:cup:buetqu:v:4:y:1994:i:04:p:445-458_01
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    Cited by:

    1. Ananya Reed & Darryl Reed, 2009. "Partnerships for Development: Four Models of Business Involvement," Journal of Business Ethics, Springer, vol. 90(1), pages 3-37, May.
    2. John Hasnas, 2013. "Whither Stakeholder Theory? A Guide for the Perplexed Revisited," Journal of Business Ethics, Springer, vol. 112(1), pages 47-57, January.
    3. Aseem Kaul & Jiao Luo, 2018. "An economic case for CSR: The comparative efficiency of for‐profit firms in meeting consumer demand for social goods," Strategic Management Journal, Wiley Blackwell, vol. 39(6), pages 1650-1677, June.
    4. Jose-Luis Godos-Díez & Roberto Fernández-Gago & Laura Cabeza-García, 2015. "Business Education and Idealism as Determinants of Stakeholder Orientation," Journal of Business Ethics, Springer, vol. 131(2), pages 439-452, October.
    5. Joseph Heath, 2011. "Business Ethics and the ‘End of History’ in Corporate Law," Journal of Business Ethics, Springer, vol. 102(1), pages 5-20, March.
    6. Lori Verstegen Ryan, 2006. "Foundation and Form of the Field of Business Ethics," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 22(Spring 20), pages 34-49.
    7. Boatright, John R., 2002. "Contractors as stakeholders: Reconciling stakeholder theory with the nexus-of-contracts firm," Journal of Banking & Finance, Elsevier, vol. 26(9), pages 1837-1852, September.
    8. Frederick R. Post, 2003. "A Response to ÒThe Social Responsibility of Corporate Management: A Classical CritiqueÓ," American Journal of Business, Emerald Group Publishing, vol. 18(1), pages 25-36.
    9. Joan Fontrodona & Alejo Sison, 2006. "The Nature of the Firm, Agency Theory and Shareholder Theory: A Critique from Philosophical Anthropology," Journal of Business Ethics, Springer, vol. 66(1), pages 33-42, June.
    10. Andrew West, 2016. "Applying Metaethical and Normative Claims of Moral Relativism to (Shareholder and Stakeholder) Models of Corporate Governance," Journal of Business Ethics, Springer, vol. 135(2), pages 199-215, May.
    11. John R. Boatright, 2006. "What's Wrong—and What's Right— with Stakeholder Management," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 22(Spring 20), pages 106-130.
    12. Jiao Luo & Aseem Kaul & Haram Seo, 2018. "Winning us with trifles: Adverse selection in the use of philanthropy as insurance," Strategic Management Journal, Wiley Blackwell, vol. 39(10), pages 2591-2617, October.
    13. Arturo Luque & Noelia Herrero‐García, 2019. "How corporate social (ir)responsibility in the textile sector is defined, and its impact on ethical sustainability: An analysis of 133 concepts," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1285-1306, November.

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