Can corporations be held to account? This week’s research articles consider some different methods.
Does regulation enable corporate responsibility?
Both advocates of corporate regulation and its opponents tend to depict regulation as restrictive—a policy option that limits freedom in the name of welfare or other social goods. Against this framing, I suggest we can understand regulation in enabling terms. If well designed and properly enforced, regulation enables companies to operate in ways that are acceptable to society as a whole.
This paper argues for this enabling character by considering some wider questions about responsibility and the sharing of responsibility. Agents who are less able or willing to act well are obviously more likely to face criticism, mistrust, and adverse responses. It will be more difficult to hold those agents responsible, especially so when there are many who fail in their responsibilities or where there are wide-reaching disagreements about those responsibilities.
Regulatory standards, like other norms and ways of defining responsibilities, address these problems: by restricting, they also enable social cooperation. Like other forms of holding responsible, ways of enforcing those standards against recalcitrant agents, or encouraging conformity to them, may also seem restrictive.
Again, however, these practices play an important role in enabling responsible agency. This is partly because they can bolster readiness to act well in agents who experience or witness such responses. It is also because they free other agents to exercise initiative and commitment in defining their individual responsibilities in line with higher standards.
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Garrath Williams. 2019. Regulation Enables: Corporate Agency and Practices of Responsibility.
Journal of Business Ethics, 154(4), 989–1002.
Can corporations be held to the public interest, or even to the law?
This article addresses our failing ability to hold business corporations to the public interest, or even to bare legality. It defends, in brief compass, the reasonableness of the expectation that corporations provide public benefits as consideration for their public privileges. But as succeeding sections recount, the traditional instrument for holding corporations to the public interest has gradually been undermined; and our standard, punitive tools for holding them even to bare legality, suffer from inherent limitations and fail adequately to deter corporate misconduct.
A more adequate approach would be to supplement the current punitive regime with reform of corporate governance in directions that would decrease the temptation of managers to engage in misconduct in the first place. Several possibilities are considered, with the most promise found in allowing corporations to be owned by Danish-style “industrial foundations.”
Among its advantages, the reform is realisable and would reduce incentives to corporate misconduct without compromising on performance. Industrial foundations also customarily direct a portion of corporate profits to charity, in effect reinstating the norm that for-profit corporations provide public benefits.
David Ciepley. 2019. Can Corporations Be Held to the Public Interest, or Even to the Law?
Journal of Business Ethics, 154(4), 1003–1018.
Do auditors reflect the true image of the company contrary to the clients’ interests?
In recent years, after various scandals, the role of auditors has been called into question, even casting doubt on whether their reports reliably reflect the true financial situation of the auditee, especially when this situation is not good.
Normative changes in the way auditors have to rate certain questions provide a good opportunity to study this problem. These changes have acquired great relevance among the factors involved in studying audit quality. Thus, the present study analyzed the effect of the normative change that took place in Spain in December 2010, related to opinions modified for going-concern uncertainties. Until that date, the auditor’s uncertainty about the company’s going-concern status led to a qualified opinion. However, under the new regulation, it became an opinion that included an explanatory paragraph stating the reasons for concern, which was considered less serious.
In all, 152 small- and medium-sized enterprises that had begun bankruptcy proceedings were studied. Expert systems were used for their analysis, based on classification trees assembled through boosting and bagging. In addition, the logistic regression was used as baseline to compare previous methods.
The main result obtained was that a change in the norm that catalogs the going-concern issue as less serious made auditors more likely to report this situation, thus questioning the audit quality.
Agustín J. Sánchez-Medina, Félix Blázquez-Santana and Jesús B. Alonso. 2019. Do Auditors Reflect the True Image of the Company Contrary to the Clients’ Interests? An Artificial Intelligence Approach.
Journal of Business Ethics, 155(2), 529–545.
Corporate agency and possible futures
We need an account of corporate agency that is temporally robust—one that will help future people to cope with challenges posed by corporate groups in a range of credible futures. In particular, we need to bequeath moral resources that enable future people to avoid futures dominated by corporate groups that have no regard for human beings.
This paper asks how future philosophers living in broken or digital futures might re-imagine contemporary debates about corporate agency. It argues that the only temporally robust account is moralised extreme collectivism, where full moral personhood is accorded (only) to those corporate groups that are reliably disposed to respond appropriately to moral reasons.
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Tim Mulgan. 2019. Corporate Agency and Possible Futures.
Journal of Business Ethics, 154(4), 901–916.
Kantian group agency
Although much work has been done on Kant’s theory of moral agency, little explored is the possibility of a Kantian account of the moral agency of groups or collectives that comprise individual human beings. The aim of this paper is to offer a Kantian account of collective moral agency that can explain how organised collectives can perform moral (or immoral) actions and be held morally responsible for their actions.
Drawing on Kant’s view that agents act by incorporating an incentive into their maxims, it is argued that groups of agents can engage in practical deliberation in much the same way individual agents can, resulting in the formulation of a distinctive “group maxim” for which the group, as such, can be morally responsible.
Amy L. MacArthur. 2019. Kantian Group Agency.
Journal of Business Ethics, 154(4), 917–927.
Individual actions and corporate moral responsibility
This paper examines the resources of Kantian ethics to establish corporate moral responsibility. The author defends Matthew Altman’s claim that Kantian ethics cannot hold corporations morally responsible for corporate malfeasance. Rather than following Altman in interpreting this inability as a reason not to use Kantian ethics, however, the author argues that the Kantian framework is correct: business ethicists should not seek to hold corporations morally responsible.
Instead, they should use Kantian (and/or other ethical-theoretical) resources to criticise the actions of individual business people. The author sets forth a model for decomposing business actions into their individual parts and reconstituting them in a context-specific “maxim” that Kantian ethics can evaluate. The reconstituted form of Kantian ethics is better able to manage decision-making complexity than traditional interpretations. To demonstrate the usefulness of this approach, the author applies it to the recent Wells Fargo bogus-accounts scandal.
Tobey Scharding. 2019. Individual Actions and Corporate Moral Responsibility: A (Reconstituted) Kantian Approach.
Journal of Business Ethics, 154(4), 929–942.