Showing papers in "Business Ethics Quarterly in 2020"
TL;DR: In this article, the authors argue that there is often an adversarial element in the relation between companies and NGOs, and that an orientation towards consensus can be in tension with this adversarial relation.
Abstract: Many companies engage in dialogue with nongovernmental organizations (NGOs) about societal issues. The question is what a regulative ideal for such dialogues should be. In the literature on corporate social responsibility (CSR), the Habermasian notion of communicative action is often presented as a regulative ideal for stakeholder dialogue, implying that actors should aim at consensus and set strategic considerations aside. In this article, we argue that in many cases, communicative action is not a suitable regulative ideal for dialogue between companies and NGOs. We contend that there is often an adversarial element in the relation between companies and NGOs, and that an orientation towards consensus can be in tension with this adversarial relation. We develop an alternative approach to stakeholder dialogue called 'agonistic deliberation.' In this approach, conflict and strategic considerations play a legitimate and, up to a certain point, desirable role.
36 citations
TL;DR: In this article, the authors identify four types of internal contestation which can be present in MSIs and argue that embracing contestation and engaging in ongoing revision of provisional agreements, criteria, and goals can enhance the democratic quality of MSIs.
Abstract: This article studies multi-stakeholder initiatives (MSIs) as spaces for both deliberation and contestation between constituencies with competing discourses and disputed values, beliefs, and preferences. We review different theoretical perspectives on MSIs, which see them mainly as spaces to find solutions to market problems (economic approach), as spaces of conflict and bargaining (political approach), or as spaces of consensus (deliberative approach). In contrast, we build on a contestatory deliberative perspective, which gives equal value to both contestation and consensus. We identify four types of internal contestation which can be present in MSIs—procedural, inclusiveness, epistemic, and ultimate-goal—and argue that embracing contestation and engaging in ongoing revision of provisional agreements, criteria, and goals can enhance the democratic quality of MSIs. Finally, we explore the implications of this perspective for theorizing about the democratic quality in MSIs and about the role of corporations in transnational governance.
30 citations
TL;DR: This article examined how a firm's prior record on corporate social responsibility (CSR) influences individual stakeholders' perceptions of corporate hypocrisy in the wake of a corporate social irresponsibility (CSI) event.
Abstract: This article examines how a firm’s prior record on corporate social responsibility (CSR) influences individual stakeholders’ perceptions of corporate hypocrisy in the wake of a corporate social irresponsibility (CSI) event. Our research extends extant corporate hypocrisy literature by highlighting the role of individual stakeholders’ inferences about a genuine CSR motive in their judgments of corporate hypocrisy. This can serve to differentiate perceived corporate hypocrisy from inconsistency that arises because of a lack of ability and/or resources. Our research further identifies a source for such perceptions: individual stakeholders’ perceptions of firm warmth generated by a firm’s prior record of CSR. In addition, we find that when CSR and CSI are in the same (vs. different) domains, it can strengthen perceptions of hypocrisy. This provides direct evidence to explain why markets react differently when CSR and CSI events occur in the same domain (vs. different ones).
30 citations
TL;DR: The authors empirically examined the conceptualization of privacy postdisclosure assumed in the privacy paradox, and found that consumers retain strong privacy expectations even after disclosing information, and broadened the scope of corporate responsibility to suggest firms have a positive obligation to identify reasonable expectations of privacy of consumers.
Abstract: The oft-cited privacy paradox is the perceived disconnect between individuals’ stated privacy expectations, as captured in surveys, and consumer market behavior in going online: individuals purport to value privacy yet still disclose information to firms. The goal of this paper is to empirically examine the conceptualization of privacy postdisclosure assumed in the privacy paradox. Contrary to the privacy paradox, the results here suggest consumers retain strong privacy expectations even after disclosing information. Privacy violations are valued akin to security violations in creating distrust in firms and in consumer (un)willingness to engage with firms. This paper broadens the scope of corporate responsibility to suggest firms have a positive obligation to identify reasonable expectations of privacy of consumers. In addition, research perpetuating the privacy paradox, through the mistaken framing of disclosure as proof of anti-privacy behavior, gives license to firms to act contrary to the interests of consumers.
27 citations
TL;DR: In this paper, the authors argue that the possibility of an ethics of care for coworkers requires boundary work that suspends the separation of personal and professional selves and constitutes the worker as a whole person.
Abstract: Organization and management researchers praise the value of care in the workplace. However, they overlook the conflict between caring for work and for coworkers, which resonates with the dilemma of care allocation highlighted by ethicists of care. Through an in-depth qualitative study of two organizations, we examine how this dilemma is confronted in everyday organizational life. We draw on the concept of boundary work to explain how employees negotiate the boundary of their caring responsibilities in ways that grants or denies care to coworkers. We argue that the possibility of an ethics of care for coworkers requires boundary work that suspends the separation of personal and professional selves and constitutes the worker as a whole person. We contribute to research on care in organizations by showing how care for coworkers may be enabled or undermined by maintaining or suppressing the care allocation dilemma.
24 citations
TL;DR: In this paper, a longitudinal study of the socially responsible investment (SRI) market in France was conducted, and three modes of governmental CSR intervention were identified: regulatory steering, delegated rowing, and micro-steering.
Abstract: Although a growing stream of research investigates the role of government in corporate social responsibility (CSR), little is known about how governmental CSR interventions interact in financial markets. This article addresses this gap through a longitudinal study of the socially responsible investment (SRI) market in France. Building on the ‘CSR and government’ and ‘regulative capitalism’ literature, we identify three modes of governmental CSR intervention – regulatory steering, delegated rowing, and microsteering – and show how they interact through the two mechanisms of layering (the accumulation of interventions), and catalyzing (the alignment of interventions). Our findings 1) challenge the notion that, in the neoliberal order, governments are confined to steering market actors – leading and guiding their behavior – while private actors are in charge of rowing – providing products and services; 2) show how governmental CSR interventions interact and are orchestrated; and 3) provide evidence that governments can mobilize financial markets to promote CSR.
21 citations
TL;DR: In this article, the authors take up the market-failures approach as its basis to demonstrate what is wrong with using big data to personalize prices, arguing that it unfairly undermines consumers' ability to benefit from the market, which is the very point of having a market.
Abstract: Technological advances introduce the possibility that, in the future, firms will be able to use big-data analysis to discover and offer consumers their individual reservation price (i.e., the highest price each consumer would be willing to pay, given their preferences and available income). This can generate some interesting benefits, such as a better state of affairs in terms of equality of both welfare and resources, as well as increased social welfare. However, these benefits are countered by considerations of relational equality. This article takes up the market-failures approach as its basis to demonstrate what is wrong with using big data to personalize prices. The article offers an improvement to the market-failures approach and argues that what is wrong with using big data to personalize prices is that it unfairly undermines consumers’ ability to benefit from the market, which is the very point of having a market.
20 citations
TL;DR: The authors developed a qualified account of the concept of supererogation from ethical theory, which examines voluntary responses to moral obligations from which a business is normally excused, to identify the unique features of the initiatives that are not readily understood within conventional reasoning, which is generally focused on a business case.
Abstract: Some firms are initiating pro-stakeholder activities and policies that transcend conventional corporate social responsibility (CSR) conceptions and seem inconsistent with their business interests or economic responsibilities. These initiatives, which are neither legally nor morally obligatory, are responding to calls for a more active role of business in society and for a broader interpretation of CSR. In fact, they benefit stakeholders in a superior and an innovative way and are difficult to reconcile with commonly used rationales in the extant CSR literature, such as win-win opportunities, creating shared value, or corporate philanthropy. For better insight, we develop a qualified account of the concept of supererogation from ethical theory. This account, which examines voluntary responses to moral obligations from which a business is normally excused, is applied to identify the unique features of the initiatives that are not readily understood within conventional reasoning, which is generally focused on a business case.
18 citations
TL;DR: In this article, Sison and Fontrodona show how the common good principle can serve as the basis for a new diversity perspective by considering different community levels, which it connects by subsidiarity, and it embraces the moral, social, and economic fields.
Abstract: Drawing upon the theoretical debate on the concept of common good involving, in particular, Sison and Fontrodona (2012), I aim to show how the common good principle can serve as the basis for a new diversity perspective. Each of the three dominant diversity approaches—equality, diversity management, and inclusion—runs the ethical risk of focusing on community or individual levels, or on particular disciplines—economic, social, or moral. This article demonstrates that the common good principle could mitigate the ethical risks inherent to each of these diversity approaches. There are three positive aspects to a comprehensive common good perspective: 1) it includes considering different community levels, which it connects by subsidiarity, 2) it embraces the moral, social, and economic fields, which it connects by teleological hierarchy, and 3) it avoids the risk of exclusion by generating a sense of solidarity.
16 citations
TL;DR: In this paper, the authors investigate questionable research practices from a normative perspective using the theory of communicative action, and highlight the role of the collective in assessing individual behaviours, thus providing grounds for developing scientific standards to raise the quality of scientific research.
Abstract: Despite the extensive literature on what questionable research practices (QRPs) are and how to measure them, the normative underpinnings of such practices have remained less explored. QRPs often fall into a grey area of justifiable and unjustifiable practices. Where to precisely draw the line between such practices challenges individual scholars and this harms science. We investigate QRPs from a normative perspective using the theory of communicative action. We highlight the role of the collective in assessing individual behaviours. Our contribution is a framework that allows identification of when particular actions cross over from acceptable to unacceptable practice. Thus, this article provides grounds for developing scientific standards to raise the quality of scientific research.
15 citations
TL;DR: In this article, four experiments examine how construal levels moderate the influence of ingroup versus outgroup identity cues in ethical consumption and find that consumers will act more consistently with their inner goals rather than focusing on ingroup and outgroup cues.
Abstract: Business ethics research has long been interested in understanding the conditions under which ethical consumption is consistent versus context-dependent. Extant research suggests that many consumers fail to make consistent ethical consumption decisions and tend to engage in ethical decisions associated with ingroup (vs. outgroup) identity cues. To fill this gap, four experiments examine how construal levels moderate the influence of ingroup versus outgroup identity cues in ethical consumption. The studies support the contention that when consumers use concrete construal to process information, they will focus on ingroup cues and make ethical consumption decisions that are aligned with ingroup biases. However, when consumers use abstract construal, they will act more consistently with their inner goals rather than focusing on ingroup and outgroup cues. Social goodwill, which indicates desires to give back to society, is identified as mediating the effects. The findings have important implications for ethical consumption and social influence literature.
TL;DR: In this article, the authors apply the theory of confluence to demonstrate that cross-cultural capability of cultural intelligence can lead to both positive and negative outcomes, and propose that expatriates high in cultural intelligence excel in customer relationship performance while simultaneously behaving opportunistically.
Abstract: Employees who possess cross-cultural capabilities are increasingly sought after due to unparalleled numbers of cross-cultural interactions. Previous research has primarily focused on the bright side of these capabilities, including important individual and work outcomes. In contrast, the purpose of this study is to demonstrate that the cross-cultural capability of cultural intelligence (CQ) can lead to both positive and negative outcomes. Applying the general theory of confluence, we propose that expatriates high in CQ excel in customer relationship performance, while simultaneously behaving opportunistically. We also suggest that ethical relativism moderates these relationships. Using mixed methods, four separate studies generally support our predictions while also deepening our understanding of various forms of opportunism and the mechanism behind two seemingly opposing effects. Conceptual and managerial implications of CQ for opportunism, customer relationship performance, and ethics are discussed.
TL;DR: This article argued that Smith's political approach to business ethics focuses solely on the outcomes of political choices, and that if we think of politics in terms of processes, as in, ongoing disagreement and contest, and not merely a series of legal, administrative, or institutional outcomes, a different view of business ethics emerges.
Abstract: In his 2018 presidential address to the Society of Business Ethics, Jeffery Smith claimed that political approaches to business ethics must be attentive to both the distinctive nature of commercial activity and, at the same time, the degree to which such commercial activity is structured by political decisions and choices. In what we take to be a friendly extension of the argument, we claim that Smith does not go far enough with this insight. Smith’s political approach to business ethics focuses solely on the outcomes of political choices. But if we think of politics in terms of processes—as in, ongoing disagreement and contest—and not merely a series of legal, administrative, or institutional outcomes, a different view of business ethics emerges. In particular, we argue that such an emphasis points us toward seeing business actors as having a normative duty to preserve the integrity and functioning of democracy.
TL;DR: This article shows how food-related public health problems can be understood as structural injustices and makes clear how the industry is sustaining these health injustices, and that due to this connection, corporate actors share responsibility for addressing food- related health problems.
Abstract: The responsibility of the food and beverage industry for noncommunicable diseases is a controversial topic. Public health scholars identify the food and beverage industry as one of the main contributors to the rise of these diseases. We argue that aside from moral duties like not doing harm and respecting consumer autonomy, the food industry also has a responsibility for addressing the structural injustices involved in food-related health problems. Drawing on the work of Iris Marion Young, this article first shows how food-related public health problems can be understood as structural injustices. Second, it makes clear how the industry is sustaining these health injustices, and that due to this connection, corporate actors share responsibility for addressing food-related health problems. Finally, three criteria (capacity, benefit, and vulnerability) are discussed as grounds for attributing responsibility, allowing for further specification on what taking responsibility for food-related health problems can entail in corporate practice.
TL;DR: A New Pro-Business Manifesto as discussed by the authors is an attempt to "persuade [us] that it deserves more of [our] love and less hate" (11).
Abstract: Many business ethicists see themselves more in the role of critic than of cheerleader, and rightly so. Miscarriages of justice naturally call for some kind of critical reflection. On the other hand, excessive asceticism or diffidence—the kinds of things that might call for some antidotal encouragement—are not among the central theoretical or practical problems in business. But in Big Business, economist Tyler Cowen thinks there is a real casualty to an overly critical stance. For him, generally critical stances against business—present among young people, ordinary citizens, the media, and operatives spanning the political spectrum—are not just often premised on factual misconceptions; they also threaten support for policy that would preserve or enhance the rewards of business, “one of the most beneficial and fundamental institutions in American life” (7). The book’s first chapter, “A New Pro-Business Manifesto,” lays it on a bit thick. Whereas the rest of the book offers shrewd and fascinating reflections on the incentives, behavior, purpose, and power of business in various domains of interest to business ethics scholars, the introductorymanifesto packages it all in an attempt to “persuade [us] that it deserves more of [our] love and less hate” (11). How could we not love business, he offers, when it “makes most of the stuff we enjoy and consume,” like cars, phones, and clothes for our children, and “gives most of us jobs” (1)? Of course, business does not “give” so much as it sells us things and buys our labor. When I offer money to buy clothes or a phone, whymust I also offer my love? Or when my employer makes payroll and I am paid what was bargained for, why should I classify it as “nothing less than a heroic act” (2), as Cowen would? Confusion is added to the reader’s skepticism as Cowen simultaneously concedes that businesses are “apparently selfish, profit-maximizing . . . entities” (11). We are supposed to think of them as both heroes and egoists? Perhaps Cowen’s point is in its best formulation when he instead uses the language of appreciation, in lamenting those who are “so unwilling to appreciate” business and its immense benefits (7). This statement of the view preserves the thrust of the book— that we don’t know how good we’ve got it—without cloying pleas to “love” business more (6, 11). Although Cowen overindulges his contrarianism in his introductory manifesto, it comes in just the right doses in the subsequent chapters. Chapter 2 addresses the trustworthiness of business. Cowen urges us to focus on the standard to which we are comparing business. He posits that the “propensity of business to commit fraud is essentially just an extension of the propensity of people to commit fraud” (23, emphasis his). The difference for Cowen is that businesses seem to have more incentive to limit fraud because of their valuable reputations. He points out that businesses commit less tax fraud and CEOs perform better in trust 608 Business Ethics Quarterly
TL;DR: The moral obligation to steward entrepreneurial rent is consistent with traditional bases of property rights and the norm of social welfare maximization, and it applies to corporations and their shareholders, as well as individual entrepreneurs as discussed by the authors.
Abstract: Entrepreneurs should act as stewards of entrepreneurial rent. Entrepreneurial rent is the difference between the ex post value of a venture and its ex ante costs. It is the result of competition among buyers and sellers within the market process rather than the sole efforts of the entrepreneur. As a result, entrepreneurs should allocate entrepreneurial rent for the benefit of other market participants rather than consuming it for themselves. The moral obligation to steward entrepreneurial rent is consistent with traditional bases of property rights and the norm of social welfare maximization, and it applies to corporations and their shareholders, as well as individual entrepreneurs.
TL;DR: In this paper, the authors argue that the logic of double effect (LDE) can be useful in helping business actors decide whether or not to pursue potentially harmful activities in commonplace business activity.
Abstract: Business actors often act in ways that may harm other parties. While the law aims to restrict harmful behavior and to provide remedies, legal systems do not anticipate all contingencies and legal regulations are not always well-enforced. This article argues that the logic of double effect (LDE), which has been developed and deployed in other areas of practical ethics, can be useful in helping business actors decide whether or not to pursue potentially harmful activities in commonplace business activity. The article illustrates how LDE helps to explain the exploitative nature of payday lending, the distinction between permissible and impermissible forms of market competition, and the potential wrong of imposing risk of harm on others. The article also addresses foundational debates about LDE itself. We offer the article as an illustration of the sort of “midlevel” theorizing that can address directly the needs of practitioners.
TL;DR: In this paper, the authors distinguish and explore three conceptions of wages: a wage is a reward, given in recognition of the performance of a valued task; it is also an incentive: a way to entice workers to take and keep jobs, and to motivate them to work hard.
Abstract: In this address, I distinguish and explore three conceptions of wages. A wage is a reward, given in recognition of the performance of a valued task. It is also an incentive: a way to entice workers to take and keep jobs, and to motivate them to work hard. Finally, a wage is a price of labor, and like all prices, conveys valuable information about relative scarcity. I show that each conception of wages has its own normative logic, or appropriate justification, and these logics can come apart. This explains some of the debate about wages and makes the project of justifying a wage simpliciter difficult. I identify which logic we should choose, since we must choose, and say what this means for how we should think about the justification of pay.
TL;DR: In this article, the authors argue that the value of fairness can plausibly be appealed to in order to vindicate the view that consensual, mutually beneficial employment relationships can be wrongfully exploitative even if employers have no obligation to hire or otherwise benefit those who are badly off enough to be vulnerable to wage exploitation.
Abstract: In a recent article in this journal, David Faraci (2019) argues that the value of fairness can plausibly be appealed to in order to vindicate the view that consensual, mutually beneficial employment relationships can be wrongfully exploitative, even if employers have no obligation to hire or otherwise benefit those who are badly off enough to be vulnerable to wage exploitation. In this commentary, I argue that several values provide potentially strong grounds for thinking that it is at least sometimes better, morally speaking, for employers to hire worse-off people at intuitively exploitative wages than to hire better-off people at intuitively fair wages. Rather than suggesting that hiring badly off people at intuitively exploitative wages is permissible, however, I suggest that this gives us reason to think that employers can be obligated to hire worse-off people rather than better-off people and to pay them nonexploitative wages.
TL;DR: In this article, the authors focus on the argument that NCCs should be banned because they unfairly restrict the options of employees and argue that this argument fails because it neglects the economist Thomas Schelling's insight that limiting exit options can be beneficial for a person.
Abstract: Noncompete clauses (NCCs), or agreements by employees to not work for a competitor or start a competing business, have recently faced increased public scrutiny and criticism. This article provides a qualified defense of NCCs. I focus on the argument that NCCs should be banned because they unfairly restrict the options of employees. I argue that this argument fails because it neglects the economist Thomas Schelling’s insight that limiting exit options can be beneficial for a person. This employee-based defense of NCCs does not absolve all their uses, but it does give us a rough test for evaluating the permissibility of NCCs. With this test in hand, I turn to some of the more controversial uses of NCCs. For those who weigh heavily the interests of employees, the question is not whether NCCs, but when.
TL;DR: In this paper, the authors question the plausibility of Hughes's claim that workers intend the foreseeable risks of harm as a means to the pay premium and then develop a conception of the concept of means sufficient to make it plausible.
Abstract: Is offering hazard pay ethically permissible when the pay premium is the only reason that a dangerous job is accepted? Robert C. Hughes argues that it is not. Central to his argument is the claim that in such cases, workers intend the foreseeable risks of harm as a means to the pay premium. Herein I question the plausibility of this claim and then develop a conception of the concept of means sufficient to make it plausible. By so doing, I provide support for Hughes’s stringent position.
TL;DR: In this paper, Johanna Stark explores the ways in which regulatory competition conflicts with our usual understanding of the law and its role in society and successfully shows the tensions that exist between the idea of legal markets and a variety of views on politics, ethics, law, and economics.
Abstract: I n Law for Sale, Johanna Stark explores the ways in which regulatory competition conflicts with our usual understanding of the law and its role in society. As a result of regulatory competition, the law becomes a market good for which states act as suppliers and compete for customers (individuals and organizations). Stark successfully shows the tensions that exist between the idea of legal markets and a variety of views on politics, ethics, law, and economics. Stark does not go so far as to claim that legal markets are wrong; rather, shemoremodestly claims that it is very unlikely that one can consistently hold favorable views of regulatory competition while also holding a variety of standard views in political philosophy on the justification for the state and on the role of the law. The theme of markets for everything is not a new one, but the idea of a “market for law” can be seen as taking the idea of the market to its logical end. The orthodoxy of markets as situated within a legal framework that is conceptually prior to the market is turned on its head once we seriously think about regulatory competition, as Stark does. Overall, Stark’s book meshes legal, economic, and philosophical literatures well, resulting in an extremely interesting and insightful discussion of regulatory competition and markets for law. Stark lays out the framework for the book in chapter 1, explaining what regulatory competition and competitive law markets are and examining how successful and useful the metaphor of a law market is. In the first part of the chapter, Stark argues that there are three structural preconditions for regulatory competition (legal diversity, physical mobility, and legal mobility), and she discusses the political and economic incentives lawmakers have to engage in regulatory competition. The second part of the chapter establishes that regulatory competition is a real-world phenomenon. Stark’s focus is on the supply side of law markets, and she convincingly demonstrates that states indeed engage in such regulatory competition. The primary areas where such regulatory competition clearly exists are tax law—with some states aiming to become tax havens—and labor law, with the relaxing of labor standards to reduce the cost of labor and attract mobile capital. Chapter 2 focuses on economic arguments for and against regulatory competition. In favor of regulatory competition are arguments that it leads to increased legislative efficiency and that it corrects problems that arise from the regular political process. Arguments against regulatory competition include the specter of market failures that result in a “race to the bottom,” negative externalities for those who are unable to exercise legal mobility, the worry of regulatory capture by those able to exert pressure through the threat of “exit,” and the bundling effects that make it difficult to read the price signals sent by locational decisions. Stark’s economic discussion is rather brief, because she thinks that the economic cases both for and against 433 Book Reviews
TL;DR: In this article, a theory of whistleblowing is proposed to change the prevailing view of a whistleblower as an independent agent who acts alone, arguing that attachment to the organizational and institutional norms also governs one's life and sense of who one is as a whistleblower in the broader society.
Abstract: L ike all heroic stories, this book starts with a fairy tale of a whistleblower in which an employee—soon to be a whistleblower—discloses wrongdoing internally and to the public and experiences major retaliation for doing the right thing. With her new theory of whistleblowing, Kate Kenny is trying to change this everpresent tale of a whistleblower. She is proposing novel ways to perceive whistleblowers’ identity at its core and comprehend their conflict against powerful organizational and external influences. Her arguments critique the current literature’s descriptive view of a whistleblower as an independent agent who acts alone. As a remedy, she suggests that attachment to the organizational and institutional norms also governs one’s life and sense of who one is as a whistleblower in the broader society. Towholly understand the difficulties experienced by thewhistleblowers, we need to examine the “affective and desire-driven dynamics” (9) powered by the cultural norms and political and institutional structures. Kenny is drawing on Judith Butler’s (1990) concept of “affective recognition” to capture the richness of whistleblowers’ complex and multifaceted experiences. With her affective-recognition approach to whistleblowing, Kenny aims to answer four main questions that are fundamental to understanding the relationship between the whistleblower and the context: 1) “How are individual whistleblowers affected, day to day, by the macro-level influences, whether laws or norms?” 2) “What are the dynamics by which they engage with the powerful institutional structures in which they are embedded?” 3) “We know that whistleblowers are retaliated against, but what fuels the extreme and vitriolic nature of some reprisals, and how do whistleblowers survive such attacks?” Finally, 4) “Is the fate of the whistleblower predetermined, as suggested by classic narratives, or can it be altered?” (30). To answer these questions, Kenny conducted qualitative, in-depth research with thirteen prominent participants working in global financial institutionswho had been given the label “whistleblower.” The majority of her participants had worked in watchdog roles in which their job descriptions involved discovering and disclosing wrongdoing. Inspired by recent developments in qualitative data analysis, Kenny used what she calls a “politically-engaged theory of performativity”methodology to
TL;DR: The Form of the Firm as discussed by the authors is a normative analysis of the corporation that synthesizes economic and political insights from Adam Smith, John Stuart Mill, Karl Marx, Friedrich Hayek, and Ronald Coase.
Abstract: So, let’s get the first question out of the way: Is this book any good? The short answer is, it is excellent. The Form of the Firm is not an introductory text. One can assume that the intended audience is already familiar with some of the work’s central theories and concepts, for example, transaction-cost theory and John Rawls’ theory of justice. That said, the book has much to convey to a wide readership. The book sets the broad goal of answering the following question: “What are the moral commitments implicit to our society, and does the corporation live up to them?” (21). In answering this question, the text aims to “articulate a normative theory of the corporation that synthesizes economic and political insights” (19). The purpose is a prescriptive ideal of corporate conduct that takes the social and economic realities of business seriously. The book has three parts: “The Economic Theory of Corporate Efficiency and Justice,” “A Normative Account of Corporate Efficiency,” and “Towards a More Just Corporate Regime: Governance and Ethics.”The first part sets out the economic structure of the firm from various perspectives, such as the Chicago school, while the second part is an in-depth critique of said theories. The analysis here is exceptional. The third part then builds on this analysis to set forth Singer’s own normative contribution, which has much merit but also some difficulties. Let us take a closer look at these parts in turn. The introduction starts out by articulating the twofold “moral commitments implicit to our society,” which are held to be “liberal democracy” and “markets.” Liberal democracy consists of individual liberty, formal equality, and democratic decision-making, while a commitment to markets is seen as a better institution for coordinating economic activities than its alternatives. That these are the moral commitments inherent in our society is not argued for at great length but is taken as somewhat self-evident, which is not unreasonable. These moral commitments are then used as a backdrop for a normative analysis of the corporation as we know it. Here, a tension in need of resolution is highlighted whereby the corporation seems to violate both “liberal democracy,”with its hierarchical structure, and the “market,” by organizing production internally apart from the market. Part one is an insightful history of how the corporation has been conceptualized, stretching from Adam Smith, through to John Stuart Mill, Karl Marx, Friedrich Hayek, Ronald Coase, and culminating in the Chicago School. Broadly speaking, this is a progression from regarding the corporation’s existence as one based in hierarchical authority for directing resources to a neoliberal conception of the corporation as a nexus of contracts that are individually and freely contracted by the factors of production. The Chicago School, with Milton Friedman at its helm, is often regarded in business ethics circles as a counterpoint, but Singer points out the sophistication of Chicago’s emphasis on corporate 277 Book Reviews