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

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

2. Introduction • 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. Introduction • 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. What is Business Ethics? • 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. Nexus-of-Contracts Theory • 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. Stockholder Management Theory • 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. Stakeholder Management 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

8. Agency Theory • 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. Issues • 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