Introduction -- The legal aspects -- Corporate governance and corporate performance -- Complexity and corporate governance -- Conclusion.

Abstract:This paper offers an extended critique of the proliferation of talk and writing of business ethics in recent years. Following Levinas, it is argued that the ground of ethics lies in our corporeal sensibility to proximate others. Such moral sensibility, however, is readily blunted by a narcissistic preoccupation with self and securing the perception of self in the eyes of powerful others. Drawing upon a Lacanian account of the formation of the subject, and a Foucaultian account of the workings of (...) disciplinary power, it is then argued that the governance of the corporation is effected precisely through encouraging such a narcissistic preoccupation with the self. For the most part our narcissistic concerns are bound to ethically indifferent financial interests. But in recent years they have also been harnessed to the demand for environmental, social and ethical responsibility by the corporation. It is argued, however, that the desire to be seen to be ethical—the ethics of narcissus—is the obverse of “being responsible for.”. (shrink)

How Propaganda Became Public Relations pulls back the curtain on propaganda: how it was born, how it works, and how it has masked the bulk of its operations by rebranding itself as public relations. Cory Wimberly uses archival materials and wide variety of sources — Foucault’s work on governmentality, political economy, liberalism, mass psychology, and history — to mount a genealogical challenge to two commonplaces about propaganda. First, modern propaganda did not originate in the state and was never primarily located (...) in the state; instead, it began and flourished as a for-profit service for businesses. Further, propaganda is not focused on public beliefs and does not operate mainly through lies and deceit; propaganda is an apparatus of government that aims to create the publics that will freely undertake the conduct its clients’ desire. Businesses have used propaganda since the early twentieth century to construct the laboring, consuming, and voting publics that they needed to secure and grow their operations. Over that time, corporations have become the most numerous and well-funded apparatuses of government in the West, operating privately and without democratic accountability. Wimberly explains why liberal strategies of resistance have failed and a new focus on creating mass subjectivity through democratic means is essential to countering propaganda. This book offers a sophisticated analysis that will be of interest to scholars and advanced students working in social and political philosophy, Continental philosophy, political communication, the history of capitalism, and the history of public relations. (shrink)

The King Report on Corporate Governance (1994) evoked unprecedented interest in corporate governance in South Africa. This does not mean that corporate governance was not an issue of concern before the release of this historical report. To the contrary, corporate governance in its broader sense has been at stake since the inception of the first publicly owned companies in South Africa. This article intends to give an overview of corporate governance (...) in South Africa. It starts by making a distinction between broad and narrow conceptions of corporate governance. Before applying this distinction to the practice of corporate governance in South Africa, a brief overview of the corporate landscape in South Africa is provided. Then the South African situation with regard to broad and narrow corporate governance respectively is analysed. The article ends with a discussion of the review of corporate governance that currently is in the making in South Africa. Throughout the article both the financial and ethical dimensions of corporate governance is attended to. (shrink)

Rwanda is recovering from the trauma of the 1994 war and genocide but continues to have a weak corporate and industrial infrastructure. Against this background, the present study was undertaken with the aim of tracing to what extent Rwandan enterprises are geared for the fulfillment of social responsibility within a strained socioeconomic milieu. The objectives of the study are to review the concept of corporate governance and its relation to corporate social responsibility (CSR), to describe the (...) current state of corporate governance in Rwanda, to establish the relationship between corporate governance and CSR and standard ethical practice, and to suggest solutions for problems encountered in the system. (shrink)

South Africa’s principal corporate governance report aspires to an ‘inclusive’ approach to corporate governance, in which companies are clearly advised to consider the interests of a variety of stakeholders. Yet, in common with many other countries, there is little discussion of the theoretical foundations and assumptions implicit in the recommended approach to corporate governance. The purpose of this article is to provide an analysis of corporate governance and the corporate environment in (...) South Africa in terms of existing theory and models of corporate governance, and to provide a critique based on a consideration of traditional African values and the socio-economic necessities of post-apartheid South Africa. The result is the identification of an incompatibility between the current corporate environment in South Africa and the given exposition of African values. Some prospects for change are then identified. (shrink)

Rwanda is recovering from the trauma of the 1994 war and genocide but continues to have a weak corporate and industrial infrastructure. Against this background, the present study was undertaken with the aim of tracing to what extent Rwandan enterprises are geared for the fulfillment of social responsibility within a strained socioeconomic milieu. The objectives of the study are to review the concept of corporate governance and its relation to corporate social responsibility , to describe the (...) current state of corporate governance in Rwanda, to establish the relationship between corporate governance and CSR and standard ethical practice, and to suggest solutions for problems encountered in the system. (shrink)

Trends in corporate governance to minimize employee participation and to promote shareholder rights, in both the EU and US contexts, evidence the practical efficacy of the separation thesis and the dominance of models of corporate governance founded upon decision theory. Giving expression to a vision of human agency in terms of instrumental rationality, such models of corporate governance, presuppose clearly defined objectives. Drawing on the work of Talbot Brewer, Alasdair MacIntyre, and Robert Brandom, this (...) paper offers an alternative practice-based model of corporate governance that emphasizes the role of socially and historically embodied forms of reasoning in promoting a better understanding of the aims or objectives of the corporation, particularly with respect to the social, environmental, and economic context of the firm. After reviewing recent empirical literature concerning employee participation, criteria are offered concerning effective employee participation programs, as a means of implementing a practice-based model of corporate governance. (shrink)

Aristotle indicates that although a monarchy is the best form of government in theory, in practice, a polity (“mixed regime”) is best. IDOM Engineering Consultancy is presented as an example of a “corporate polity.” In this case study, stories and rationales behind the institutionalization of worker participation in ownership and management are discussed. Arguments in favor of the corporate common good as the firm’s overarching concern are proffered. Legal challenges as well as those arising from the company’s growth (...) and overseas expansion are studied. (shrink)

This paper raises a challenge for those who assume that corporate social responsibility and good corporate governance naturally go hand-in-hand. The recent spate of corporate scandals in the United States and elsewhere has dramatized, once again, the severity of the agency problems that may arise between managers and shareholders. These scandals remind us that even if we adopt an extremely narrow concept of managerial responsibility – such that we recognize no social responsibility beyond the obligation to (...) maximize shareholder value – there may still be very serious difficulties associated with the effective institutionalization of this obligation. It also suggests that if we broaden managerial responsibility, in order to include extensive responsibilities to various other stakeholder groups, we may seriously exacerbate these agency problems, making it even more difficult to impose effective discipline upon managers. Hence, our central question: is a strong commitment to corporate social responsibility institutionally feasible? In searching for an answer, we revisit the history of public management, and in particular, the experience of social-democratic governments during the 1960s and 1970s, and their attempts to impose social responsibility upon the managers of nationalized industries. The results of this inquiry are less than encouraging for proponents of corporate social responsibility. In fact, the history of public-sector management presents a number of stark warnings, which we would do well to heed if we wish to reconcile robust social responsibility with effective corporate governance. (shrink)

South Africa's principal corporate governance report aspires to an 'inclusive' approach to corporate governance, in which companies are clearly advised to consider the interests of a variety of stakeholders. Yet, in common with many other countries, there is little discussion of the theoretical foundations and assumptions implicit in the recommended approach to corporate governance. The purpose of this article is to provide an analysis of corporate governance and the corporate environment in (...) South Africa in terms of existing theory and models of corporate governance, and to provide a critique based on a consideration of traditional African values and the socio-economic necessities of post-apartheid South Africa. The result is the identification of an incompatibility between the current corporate environment in South Africa and the given exposition of African values. Some prospects for change are then identified. (shrink)

Corporate governance and finance are dynamic academic fields that offer myriad opportunities for business ethics analysis. Within the corporate governance triad in recent years, shareholders have increased their power over boards of directors and executives through both regulation and movements to change corporate by-laws. The impact of board characteristics on firm performance has proven elusive, leading to questions concerning board processes and individual director beliefs and behaviors. At the same time, CEOs have lost considerable power, (...) leaving many struggling to regain their control and maintain their compensation levels, while others adopt a stewardship approach to their posts. In the field of finance, the recent financial debacle has led to a reexamination of financial regulation and of the fundamental nature and purpose of the industry. All of these issues provide business ethicists fodder for investigation and analysis. (shrink)

This article presents a theorized and conceptually informed method for the undertaking of an ethics audit organization. At an operational level, the overall integrity of an organization, it is argued, may be evaluated through the application of a conceptual frame-work that embraces the inter-related themes of individual responsibility, social equity and political responsibility. Finally, a method is presented for ethics audit which was developed in the auditing of a national public sector sports organization: sportscotland. This emphasizes the significance of key (...) personnel (individuals and in groups) in producing and reproducing the organizational ethos, whilst recognizing the importance of anonymity and confidentiality throughout the process. The theoretical terrain of the ethics audit is articulated through a consideration of ethics as applied moral philosophy, equity as social justice and corporate governance as the moral health (or otherwise) of a public sector sports organization. (shrink)

Although McMahon offers a potentially valuable extension of Joseph Raz's conceptualization of authority by distinguishing three different kinds of authority, this paper argues, first, that his account of the conditions and considerations that would justify managerial authority is problematic because it relies on a conception of reasons for action that excludes precisely the kind of rationality that plays an important role in the␣explanation and justification of authority in economic␣organization. This paper explains, second, why McMahon's thesis of the justificatory similarity of (...) authority in governments and nongovernmental organizations can also be seen to hold for corporate governance of publicly owned firms more specifically. Finally, this paper raises some critical objections against McMahon's presumption of democratic governance in governments and NGO's alike. The thrust of these objections is that democratic corporate governance does not make sense in the publicly owned firms because: it will not produce results that are fair or welfare maximizing, and it will undermine the legitimacy of managerial authority in such firms. (shrink)

This article surveys arguments for the claim that employees have a right to strong forms of decision-making participation. Itconsiders objections to employee participation based on shareholders' property rights and it claims that those objections are flawed. In particular, it argues the employee participation rights are grounded on the same values as are property rights. The articlesuggests that the conflict between these two competing rights claims is best resolved by limiting the scope of corporate property rightsand by recognizing a strong (...) employee right to co-determine corporate decisions. (shrink)

Over four decades, research and policy have created layers of understandings in the quest for "good" corporate governance. The corporate excesses of the 1970s sparked a search for market mechanisms and disclosure to empower shareholders. The UK-focused problems of the 1990s prompted board-centric, structural approaches, while the fall of Enron and many other companies in the early 2000s heightened emphasis on director independence and professionalism. With the financial crisis of 2007–09, however, came a turn in some policy (...) approaches and in academic literature seeking a different way forward. This paper explores those four phases and the discourse each develops and then links each to assumptions about accountability and cognition. After the financial crisis came pointers in policy and practice away from narrow, rationalist prescriptions and toward what the philosopher Stephen Toulmin calls "reasonableness". Acknowledging that heightens awareness of complexity and interdependence in corporate governance practice. The paper then articulates a research agenda concerning what "reasonably" good corporate governance might entail. (shrink)

Recent research has linked the reduction of abnormal accruals to corporate governance metrics. The results of these studies, however, are based on samples taken from periods prior to promulgated board independence requirements. In other words, during this time period, management not only had discretion over accounting accruals, but also significant influence over the choice of membership on the board of directors. This study suggests that ethical management practices may be a correlated omitted variable in these studies, thus resulting (...) in causal inference problems in the previous research. We argue that, rather than the board of directors monitoring and reducing abnormal accruals as has been posited, management who was not engaging in abusive earnings management was attempting to signal the market regarding the quality of the firm’s financial information through its choice of board membership. (shrink)

Corporate governance sits at the intersection of many disciplines, among them law, business, management, finance, and accounting. The point of departure for large portions of this literature concerns the ugliness of greed, ambition, misdemeanors, and malfeasance of corporations, their directors, and those actors who hold shares in them. This essay takes a rather different starting point. Drawing upon insights from a distant field, it uses the discussion of aesthetics in Dewey’s treatise on art to ask what motivates directors (...) to act in ways that constitute the attention and engagement that we associate with the effectiveness of boards. Using Dewey’s thinking about aesthetic experience, this paper examines the experience of organization boards, both in the literature and in the personal experience of the author. These observations point to need to reflect on motivation when considering both the practice of corporate governance and the policy frameworks in which it operates. (shrink)

The paper expands on Goshal’s criticism of what management as a scientific discipline teaches and the effects on managerial and societal ethics. The main argument put forward is that the economisation of management has a detrimental effect on the practice of management and on society in large. The ideology of economism is described and analysed from an epistemological perspective. The paper argues that the economisation of management not only introduces the problems of economics (three are identified and discussed) but destroys (...) the very essence of management because economics is focused on efficiency and management should be focused on effectiveness. What is more, the basic axioms of mainstream economics stand in stark contrast to the philosophy of the Enlightenment and therefore endanger the foundations of Western societies. Management theory (via corporate governance) is the Trojan horse carrying economism into society. (shrink)

ABSTRACT:The major aim of this article is to show that John Rawls’s theory of justice cannot be applied effectively to questions of business ethics and corporate governance. I begin with a reading of Rawls that emphasizes both the critical and pragmatic nature of his theory. In the second section I look more closely at the notion of society’s “basic structure” and its place within Rawls’s theory. In the third section, I argue that “the corporation” cannot be understood as (...) part of this basic structure and is not, therefore, a subject of justice for Rawls or his interpreters. Finally, I show that Rawls’s inability to speak to the corporation is a weakness, regardless of one’s particular view on the corporation. I conclude by considering what Rawls’s theory helps us to understand about the problems involved in integrating corporate governance, business ethics, and political philosophy. (shrink)

This study examines the three major Japanese multinational corporate governance cases of the past decade: Sumitomo Copper, Daiwa Bank, and Mitsubishi Motors. The analysis focuses on three particular matters: Does senior management and the board exhibit a form of “disaster myopia”? Were there clear signs of the impending problems that were ignored? Is there anything distinctive that makes these cases Japanese in character? The first two questions are answered in the affirmative for all three firms, but only the (...) Mitsubishi case exhibits a peculiarly Japanese characteristic. (shrink)

Control of the market microstructure theory of corporate governance perspective on the traditional theory of the firm as a deepening of the study, the use of information economics and game theory tools to the mainstream economic analysis framework for the development, the market for corporate control transactions, configuring and tuning the details of the process accurately describes the shares of companies in the separation of ownership and control of internal control case shareholders, tender offers, takeover bids and (...) other governance mechanisms different from the actual control and operation of, the existence of incomplete information and transaction costs under control conditions to analyze market transactions , from the perspective of market microstructure control to clarify the shareholders of the managers to implement effective control mechanisms, policies and conditions. Share control over the behavior of financial market issues, equity market and environmental factors control the interaction between the control and equity issues in the legal protection and market control policy design issues will be the future theoretical research in this field focus. Corporate governance theory based on corporate control market microstructure focuses on trading, allocating and adjusting process of the corporate control market, applying the information economic approach and game instrument to expand the mainstream economic analysis framework. It accurately describes the factual operation of different corporation control and governance mechanism such as corporation owner's internal control, tender offer, takeover bid and negotiating transfer, deepening the traditional firm theory. Moreover it analyzes the corporate control market transactions on the case of incomplete information and positive transaction cost, examines the effective mechanism, strategies and condition by which the owner control and monitor the management based on corporate control market microstructure perspective. Those are the future research topics in this field that behavior finance, interaction with environments and legislation protect and regulation policy designations. (shrink)

This paper explores corporate governance failure by drawing upon contemporary perspectives in the philosophy of the social sciences to identify four contending perceptions of corporate governance. Each posits a set of corporate governance ‘certainties’ that derive from incompatible contentions about what is knowable and can exist in the social world in which corporations conduct their affairs. The broad conclusion drawn is that corporate governance processes must be seen as environments where failures of (...) governance lead to one of two possible outcomes. Either trench warfare takes place between the corporate governors and those they seek to govern and with whom they disagree, resulting inevitably in victory of one over the other; or competing governance interests and desires are confronted and integrated. The latter requires tolerance on the part of both corporate governors and the governed, and a willingness to settle competing governance truth-claims with consistency and without self-deception and self-delusion. (shrink)

To achieve ethical corporate governance, directors' first priority must be to examine their own structure and operation. If theboard is vulnerable to charges of unethical conduct, it will have little credibility in its oversight role over the corporate culture of theorganization. An examination of a positive model of corporate governance in the mutual fund industry provides an effectiveillustration of several ways to add ethics to corporate governance: 1) legislation; 2) jawboning; 3) peer pressure; (...) 4) regulation; 5) training and reflection. While peer pressure and training are more effective than the others, all those methods taken together cannot solve every ethical lapse. Only individual board members, working together, can influence the conduct of the board and propel themselves and the organization towards a standard of continuing ethical excellence. (shrink)

In this article, I explore how the ideas of French philosopher Emmanuel Levinas offer insights into a debate often held today in the field of corporate governance, concerning the relative merits of statutory and voluntary approaches to the regulation of business. The philosophical position outlined by Levinas questions whether any rule-based systematisation of ethical responsibility, either statutory or voluntary, can ever equate to a genuine responsibility for the other person. I reflect on how various authors have adapted Levinas’s (...) philosophy to form a critique of bureaucracy and rule following in business, and the lack of ethical authenticity in corporate codes. However, this article also considers the question of whether a theoretical separation can be made between an ethical responsibility based on sensibility (as is suggested by Levinas) and a rational conceptualisation of how one is required to act. Considering the difficulty of disentangling these notions of ethics, I return to the problem of corporate governance and suggest an approach to stakeholder conflict based on mediation and dialogue, which rules out neither principles of conduct nor an openness of responsibility to the Other. (shrink)

This essay seeks to give a contractarian foundation to the concept of Corporate Social Responsibility, meant as an extended model of corporate governance of the firm. Whereas, justificatory issues have been discussed in a related paper, in this essay I focus on the implementation of and compliance with this normative model. The theory of reputation games, with reference to the basic game of trust, is introduced in order to make sense of self-regulation as a way to implement (...) the social contract on the multi-fiduciary model of corporate governance. This affords understanding of why self-regulation, meant as mere recourse to a long-run strategy in a repeated trust game, fails. Two basic problems for the functioning of the reputation mechanism are examined: the cognitive fragility problem, and the motivational problem. As regards the cognitive fragilities of reputation, the paper develops the logic and the structure that self-regulatory norms must satisfy if they are to serve as gap-filling tools with which to remedy cognitive limitations in the reputation mechanism. The motivation problem then arises from the possibility of sophisticated abuse by the firm. Developed in this case is an entirely new application of the theory of conformism-and-reciprocity-based preferences, the result of which is that the stakeholders refuse to acquiesce to sophisticated abuse on the part of the firm. (shrink)

Conclusion and PostscriptThis paper opened with a quotation from the credo of the Institute of Directors: “The success of a companies depends on the leadership and performance of directors.” The performance of the group of male directors at the “Enterprise and Governance” conference has revealed patriarchal ideology exercising hegemonic control of the corporate culture and strongly resisting any challenges to its dominant position.

Abstract:Shareholders’ relationship to the firm is a central theme in corporate governance, yet the investors’ perspective has been virtually ignored in governance research. This paper attempts to explain the previously unexplored role of trust in the investor decision-making process. The proposed model suggests that trust acts as the antecedent of the risk variable in existing investor decision-making models. Stock ownership involves both financial and ethical risk, which by definition requires some level of implicit trust in management and (...) the market. (shrink)

This essay seeks to give a contractarian foundation to the concept of Corporate Social Responsibility, meant as an extended model of corporate governance of the firm. It focuses on justification according to the contractarian point of view. It begins by providing a definition of CSR as an extended model of corporate governance, based on the fiduciary duties owed to all the firm's stakeholders. Then, by establishing the basic context of incompleteness of contracts and abuse of (...) authority, it analyses how the extended view of corporate governance arises directly from criticism of the contemporary neo-institutional economic theory of the firm. Thereafter, an application of the theory of bargaining games is used to deduce the structure of a multi-stakeholder firm, on the basis of the idea of a constitutional contract, which satisfies basic requirements of impartial justification and accordance with intuitions of social justice. This is a sequential model of constitutional bargaining, whereby a constitution is first chosen, and then a post-constitutional coalition game is played. On the basis of the unique solution given to each step in the bargaining model, the quest for a prescriptive theory of governance and strategic management is accomplished, so that I am able to define an objective-function for the firm consistent with the idea of CSR. Finally, a contractarian potential explanation for the emergence of the multi-fiduciary firm is provided. (shrink)

In this article, we philosophically reflect on the nature of corporate governance. We raise the question whether control is still a feasible ideal of corporate governance and reflect on the implications of the epistemic insufficiency of economic institutions with regard to grand challenges like of global warming for our conceptualization of corporate governance. We first introduce the concept of corporate governance from the perspective of economics and politics. We then trace the genealogy (...) of the concept of governance based on a selective reading of Giorgio Agamben’s work, who has pointed at two interdependent paradigms of governance in the Christian tradition, and apply his categories in the context of corporate governance. We finally engage in a critical reflection on the concept of corporate governance and develop four characteristics of corporate governance that can guide future conceptual as well as empirical research in the field of corporate social responsibility of economic institutions. (shrink)

Abstract:After a decade of intensive debate, stakeholder ideas have come to exert a significant influence on academic management thinking, but normative stakeholder theory itself appears to be in considerable disarray. This paper attempts to untangle the confusion and to prepare the ground for a more productive approach to the normative stakeholder problem. The paper identifies three distinct kinds of normative stakeholder theory and three different levels of claim that can be made by such theories, and uses this classification to argue (...) that stakeholder theorists have consistently pitched their sights either too high or too low to engage effectively with the rival shareholder theory. To the extent that they have their sights too high they have also undermined their own position by sacrificing credibility and introducing major problems of derivation. (shrink)

Abstract:Shareholders’ relationship to the firm is a central theme in corporate governance, yet the investors’ perspective has been virtually ignored in governance research. This paper attempts to explain the previously unexplored role of trust in the investor decision-making process. The proposed model suggests that trust acts as the antecedent of the risk variable in existing investor decision-making models. Stock ownership involves both financial and ethical risk, which by definition requires some level of implicit trust in management and (...) the market. (shrink)

Good corporate governance requires that managers promote shareholder interests but it cannot be assumed they will act in this manner. Though this is an observation most managers would acknowledge, many argue they should be free of external regulatory intervention because regulations designed to protect shareholders are necessarily a form of paternalism that take from shareholders decisions that are rightly theirs to make. We question this perspective by showing that regulations founded on paternalist principles are compatible with a liberal (...) economy and social relations. We identify when a paternal approach to decision making is justified and add substance to our argument by responding to claims that the Principles of Good Governance1 promulgated by the Australian Stock Exchange (ASX) are an unacceptable infringement on managers’ right to govern their enterprises because they are supposedly paternalist. We reject this argument and suggest that while the current ASX principles are not paternalistic there is a case for ensuring shareholder protection is informed by paternalist principles. (shrink)

This paper discusses internal dynamics of the firm that contribute to the failure of knowledge conditions, using the Enron scandal as a case study. Ability of the board to effectively monitor conduct at operational levels includes various dynamics: senior management being isolated from those at operational levels; individuals pursuing subgoals that are contrary to overall corporate goals; information flow along a narrow linear channel that effectively forecloses adverse information from getting to senior management; a corporate culture of intimidation, (...) discouraging open expressions of doubt or skepticism, resulting in reluctance to challenge senior officials, and pushing the limits of ethics and the law.Elements of information blockage in the corporation include: the "law of diminishing control"; deliberate concealment of information by officers; motivation to report to the boss what one perceives the boss wants to hear; theory of "bounded rationality" that explains surprising role of irrationality in decisionmaking – unconscious emotions and motivations. Discussion of behavioralist studies of cognitive dissonance, belief perseverance, confirmatory bias, entity effect, motivated reasoning, group cohesion or "groupthink," and the false consensus effect. Problem of overoptimism – tendency of many people to overrate their own abilities, contributions and talents – and tendency toward puffery and dismissal of risks in formulating disclosures and press releases. (shrink)

Lorenzo Sacconi’s recent re-statement of his social contract account of business ethics is a major contribution to our understanding of the normative nature of CSR as the expression of a fair multi-party agreement supported by the economic rationality of each participant. However, at one crucial point in his theory, Sacconi introduces the concept of stakeholders’ conformist preferences – their disposition to punish the firm if it defects from the agreement, refusing to abide by its own explicit CSR policies and norms. (...) We take issue with him over this concept: we show that the assumption of conformist preferences is a moral premise, and it arguably weakens the normativity of the theory as a whole. As an alternative, we propose an evolutionary game theoretic approach. We draw upon recent applications of evolutionary game theory to moral philosophy (Skyrms, Danielson), and we use a computer simulation of the trust game. According to this approach, the failure of the logic of reputation, which is the problem conformist preferences were introduced to solve, is overcome through the dynamics of interaction. (shrink)

In response to conventional rationalistic approaches to management and corporate governance, the Aristotelian tradition is emerging as a basis for alternative theories in which practical wisdom is central. This paper, following Aristotle and Thomas Aquinas, considers the specificity of “political wisdom” -directed to the common good- as being different from individual practical wisdom. We suggest that the business firm is a “political community”, understood as a whole formed by free and intelligent individuals called to cooperate for common goals (...) and to pursue a common good. This orientation toward the common good requires political wisdom. After discussing the concepts of “political wisdom” and the business firm as “political community” we propose a number of implications of political wisdom in management and corporate governance. (shrink)

The literature on management identifies three models for the relationships between a company’s management, its board, its shareholders and other stakeholders, as well as the corporation’s goals: the shareholder model of corporate governance, the employee governance model and the stakeholder model. One can identify in current business practice a further model of corporate governance, which may be entitled “the controlling shareholder model”. The goal of this paper is to show that these models are grounded in (...) long-standing philosophical ideas. The philosophical basis of the shareholder model is to be traced to John Locke’s theory of private property; Karl Marx’s approach underlies the employee governance model; the stakeholder model reflects the Aristotelian theory of the golden mean; and the controlling shareholder model expresses Thomas Hobbes’s conception of the sovereign power. We wish to argue that recognizing these philosophical ideas at the basis of the models of corporate governance would facilitate the analysis of the difficulties inherent to these models. We also maintain that this recognition is instrumental in forming a normative position concerning the meaning of corporate governance to present-day society. (shrink)

This paper is a response to a recent colloquy among Professors David Messick, Donna Wold, and Edwin Harman. I defend Messick’s naturalist methodology, which suggests that people inherently categorize others and act altruistically toward certain people in a given person’s in-group. This paper suggests that an anthropological reason for this grouping tendency is a limited human neural ability to process large numbers of relationships. But because human beings also have the ability to modify, to some extent, their nature, corporate (...) law can organize small mediating institutions within large corporations in order to take ethical advantage of this groupingtendency. Within a corporate law taking seriously a mediating institution’s formulation of business communities, a virtue ethicsapproach can be integrated with a naturalist approach in a way that fosters ethical business behavior while mitigating the dangers of ingrouping tendencies. (shrink)

Lorenzo Sacconi's recent re-statement of his social contract account of business ethics is a major contribution to our understanding of the normative nature of CSR as the expression of a fair multi-party agreement supported by the economic rationality of each participant. However, at one crucial point in his theory, Sacconi introduces the concept of stakeholders' conformist preferences - their disposition to punish the firm if it defects from the agreement, refusing to abide by its own explicit CSR policies and norms. (...) We take issue with him over this concept: we show that the assumption of conformist preferences is a moral premise, and it arguably weakens the normativity of the theory as a whole. As an alternative, we propose an evolutionary game theoretic approach. We draw upon recent applications of evolutionary game theory to moral philosophy , and we use a computer simulation of the trust game. According to this approach, the failure of the logic of reputation, which is the problem conformist preferences were introduced to solve, is overcome through the dynamics of interaction. (shrink)

In this article I provide a critical perspective on governing the global corporation. While the papers in the 2009 special issue of Business Ethics Quarterly explore the political role of corporations I argue that they lack a sophisticated analysis of power acrossinstitutional and actor networks. The argument that corporate engagement with deliberative democracy can enhance the legitimacy of corporations does not take into account the effects of institutional, material and discursive forms of power that determine legitimacycriteria. As a result (...) corporate versions of citizenship mediate versions of social responsibility and morality, which are reflected in the institutional and political economic norms that are produced by this power/knowledge. In order to overcome the limits of corporate social responsibility there is a need to develop more democratic forms of global governance of corporations. A radical revisioning of democratic governance would also need to overcome the limits posed by sovereignty and would require new forms of multi-actor and multi-level translocal governance arrangements in an attempt to create forms of power that are more compatible with the principles of economic democracy. (shrink)

Despite decades of theorising and empirical research, the problems of corporate governance seem intractable, particularly the relationships between investors and companies. The thought experiment in this paper asks us to look at the problem through a fresh lens. It draws on the quaint British legal custom of calling shareholders “members”, and then uses the political philosopher Michael Walzer’s idea of membership in states, clubs, neighbourhoods, and families to draw lessons for the corporate world. This paper suggests that (...) seeing how Walzer conceives “strangers” in a polity, with fewer rights but a path to membership, lets us rethink shareholder rights as something to be earned, through engagement and commitment, that is, through stewardship. Rethinking what membership of a company might mean points to a pragmatic escape from short-termism without institutional reform. (shrink)

In this article I examine corporate social reporting as a form of New Governance regulation termed “democratic experimentalism.” Due to the challenges of regulating the behavior of corporations on issues related to sustainable economic development, New Governance regulation—which has a focus on decentralized, participatory, problem-solving-based approaches to regulation—is presented as an option to traditional command-and-control regulation. By examining the role of social reporting under a New Governance approach, I set out three necessary requirements for social reporting (...) to be effective: disclosure, dialogue with stakeholders, and the moral development of the corporation. I then assess current social reporting practices against these requirements and find significant problems. In response, I propose one option for solving those problems, and encourage future researchers to consider the demands of these three requirements and the possible trade-offs between them when attempting to find ways to improve social reporting practices. (shrink)

In this article I examine corporate social reporting as a form of New Governance regulation termed “democratic experimentalism.” Due to the challenges of regulating the behavior of corporations on issues related to sustainable economic development, New Governance regulation—which has a focus on decentralized, participatory, problem-solving-based approaches to regulation—is presented as an option to traditional command-and-control regulation. By examining the role of social reporting under a New Governance approach, I set out three necessary requirements for social reporting (...) to be effective: disclosure, dialogue with stakeholders, and the moral development of the corporation. I then assess current social reporting practices against these requirements and find significant problems. In response, I propose one option for solving those problems, and encourage future researchers to consider the demands of these three requirements and the possible trade-offs between them when attempting to find ways to improve social reporting practices. (shrink)