Course : Business Ethics

Effective Period : February 2022

Theories Of Corporate
Personhood
Session 5
Thank you
 Acknowledgement

These slides have been adapted from:

Tobey, S., (2018). This is Business Ethics: An
Introduction, First Edition
ISBN: 9781119055051/44
Chapter 5
 Learning Outcomes

LO2: Explain tools to solve business ethics

dilemmas
 Outline
 Business as ethical person
 Business as bureaucracies
 Business as collective person
 Theories Of Corporate
Personhood
 Powerful tools for evaluating business offer
insight into the ethical values that business
people regularly encounter in the decisions they
face along with strategies for integrating those
values into ordinary business decision‐making.
 We must consider a challenge to the possibility
of using ethical theories to evaluate business
actions.
 We have been assuming that business actions
can be ethically evaluated in the same way that
individual people’s actions can be evaluated.
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 Businesses, though, have clear differences from
human beings.
 Ethical theories were created for human beings to
evaluate their own actions, based on
characteristics that human beings possess.
 To evaluate business activities using ethical
theories.
 To what extent do businesses share these
characteristics.
Businesses as Ethical Persons
 Peter French, a twentieth‐century American
philosopher, wants to hold businesses morally
responsible for the things that they do.
 The business itself is responsible for wrongdoing:
not just the people who work there.
 Businesses cannot have social (or moral)
responsibilities: only people have moral
responsibilities.
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 According to the LA theory of corporate
personhood, corporations are like umbrellas for
biological persons, or human beings.
 The morally significant thing about a corporation
is the people inside the corporation, not the
corporation inside of which they are all working.
If a group of thieves robs a bank while standing
under an umbrella, the thieves—not the
umbrella—are held morally responsible.
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 French objects to this conception of corporate
personhood. He claims that the LA model fails to
distinguish between corporations and mobs.
 French feels that corporations and mobs have an
important difference, which the LA theory fails to
acknowledge. This difference is part of what
makes corporations more orderly than mobs.
 That important difference is that corporations,
but not mobs, are guided by a corporate internal
decision‐making structure (CID).
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 The CID is first of all an employment hierarchy: it
explains which supervisors make the decisions
for which groups of employees.
 The CID explains how to resolve disputes among
people at the same level of the employment
hierarchy.
 French’s view is called the fiction theory, in this
sense, because it understands personhood as
itself being fictional: whatever we decide it is.
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 The kinds of personhood, French discusses are
legal personhood, moral personhood, and
metaphysical personhood.
 A moral person is a member of the moral
community.
 Moral persons are defined, for French, as being
accountable for their actions.
 They can be blamed for their bad actions and
praised for their good actions.
 Businesses as Bureaucracies
 Jackall argues, though, that businesses are not
centrally organized at all. In fact, on his view,
businesses are essentially bureaucracies.
 Jackall argues that corporations should be
considered bureaucracies because of their
complicated organizational structures.
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Organizational structures, include:
an administrative chain of command;
standard work processes;
regular schedules;
uniform policies;
central control.
 Bureaucracies
The complicated systems that administer large
organizations like corporations. The word is
somewhat derisive, in that calling something a
“bureaucracy” is typically a way of criticizing that
thing. The term suggests that it is very hard to get
things done, that the channels of communication
are not clear, and that people often have to do
things completely unrelated to accomplishing their
goals in order to accomplish those goals.
 Knowledge Of Corporations

 An administrative chain of command.

 Standard work processes, regular schedules,
and uniform policies.
 Central control.
 Knowledge Of Corporations

An administrative chain of command

This means that businesses have a hierarchy of
power, such that people closer to the top of the
hierarchy make decisions that people lower on the
hierarchy must follow.
 Knowledge Of Corporations
Standard work processes, regular schedules, and
uniform policies.
These aspects of corporate organization mean
that the corporation has a standard way of doing
things, including a regular timetable by which it
brings its products to market and policies that
affect all workers in the same way.
 Businesses as Collective
Persons
 Altman’s criticisms of ethical theories that can
evaluate only the actions of individual agents.
 Altman argues that corporations are not morally
responsible from a Kantian perspective.
 He argues that Kant also struggles to attribute
moral responsibility to the individual people who
work in corporations.
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 The diffusion of responsibility in corporations. The
diffusion of responsibility in corporations means
that responsibility is spread throughout the
corporation in such a way that it is impossible to
attach it to anyone in particular.
 Altman feels that ethical theories must be able to
attribute collective responsibility if they are to be
useful in business ethics
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 Collective responsibility means that a group of

people is responsible for a particular action—
rather than individuals within that group.
 Moral theories can use collective responsibility to
hold a group of people morally responsible for an
action when it would have been impossible for any
of them to have done that action on their own.
 Assignment

1. How does French’s view help to evaluate the case?

2. Do you agree with Altman that Kantian ethics
cannot account for collective actions? Raise an
objection to Altman’s view and consider his
response.
 Reference
Tobey, S., (2018). This is Business Ethics: An
Introduction, First Edition
ISBN: 9781119055051/44