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Corporations are legal fictions. Dont have the capacities necessary for responsibilities.
What about the fact that corporations are frequently held criminally and civilly liable? Also, corporations are increasingly granted the rights of individual citizens (First National Bank of Boston v. Bellotti).
Only people with the appropriate capacities. But to whom are they responsible? The owners. What is the nature of that responsibility?
The market guarantees maximization of good (usually characterized as satisfaction). Managers have a responsibility to conform closely with market expectations (maximize satisfaction). Evidence is expressed preferences of consumers and owners.
There are a range of instances in which the pursuit of profits does not maximize satisfaction.
Market Failures
Externalities (Polution, resource depletion). Public Goods (Air, water, fisheries)-no pricing mechanism. Prisoners Dilemma (cooperation more optimal than competition).
Complexity of markets and the contexts in which they function make it unlikely that a single-minded focus on profit will guarantee good outcomes.
Of course, there may be mechanisms that could be developed to meet the sort of objections just noted.
First-Generation Problem: markets are reactive, not proactive. Satisfaction does not equal happiness. Its not always good to get what you want.
Corporations are the property of their owners. Officers of corporations are responsible to the desires of the owners. The primary desire of the owners of the corporation is profit maximization.
Stockholder of a corporation have limited liability for actions of their corporations. They have no direct rights of access/control.
A modified version of the Classical Model. Supplements the Classical Model by adding reference to fundamental moral standards.
Which standards is up for debate, but reference to the Harm Principle (Do no Harm) is common.
The pursuit of profit is understood to be constrained by these standards, in addition to the law.
The Moral Minimum Model is open to criticisms similar to those leveled against the Classical Model. In addition, whatever additional moral standards are invoked can also be sources of controversy.
The Social Contract Theory account of corporate social responsibility has its roots in a broader political theory.
Responsibilities and rights of individuals grounded in a hypothetical contract between members of society.
Expanding on this notion, people have suggested that the moral responsibility of businesses are similarly rooted in a contract between them and society.
Accumulation of capital; distribution of risk; jobs. Resource depletion; political corruption; concentration of wealth; threats to democracy.
A contract is the best way to understand the tradeoffs between these benefits and risks
Takes the form of specific principles which guide behavior of all parties to the contract.
There are both theoretical and practical criticisms of this account of corporate social responsibility. Theoretical
Specifying the terms of any contract requires identification of initial conditions, but there is considerable disagreement about how these conditions should be understood. Granting the idea of a contract, how do we specify the actual prescriptions that it underwrites? Social Contract theory is insufficiently action-guiding.
Practical
Stakeholder Theory
The current focus of much of the thinking about corporate social responsibility is Stakeholder Theory. Adherents of the theory argue that all stakeholders in a corporation have a fundamental right to respect, and thus that corporate officers have a responsibility to treat them as ends rather than as means to ends.
Who is a Stakeholder?
Narrow Definition
Any individual or group vital to the survival and success of the corporation. Any individual or group whose interests can affect or are affected by the corporation.
Wide Definition
Examples?
Most defenses of Stakeholder Theory begin with the recognition that Stakeholders are conceptually related to stockholders. Justification then focuses on the reach and number of relevant normative concerns.
Who are the stakeholders? How do they count? How should managers take them into account in their decisions?