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r \
LIBRARY
Michigan State
University

 

This is to certify that the

dissertation entitled

THE DUO-DIMENSIONALITY OF
CORPORATE RESPONSIBILITY

presented by

Carmela Parisani Axeman

has been accepted towards fulfillment
of the requirements for

Ph.D. degree m Interdisciplinary
Studies

\CL Vw?@70/%
Major professor
Ki

 

 

[Mm November 1990

 

MSU is an Affirmative Action/Equal Opportunity Institution 0-12771

 

PLACE IN RETURN BOX to remove this checkout from your record.
TO AVOID FINES return on or before date due.

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MSU Is An Affirmative Action/Equal Opportunity Institution
c:\circ\detedueipm3-pi 1

THE DUO-DIMENSIONALITY OF CORPORATE RESPONSIBILITY

BY

Carmela Parisani Axeman

A DISSERTATION

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY

Department of Interdisciplinary Studies

1990

ABSTRACT

THE DUO-DIMENSIONALITY OF CORPORATE RESPONSIBILITY
BY

Carmela Parisani Axeman

This dissertation addresses a contemporary business
ethics query regarding moral accountability of the large
business corporation: Can the corporation be held morally
responsible for its untoward actions? Also, the question
is raised as to whether the large business corporation is
a moral person. For if the corporation is a moral person,
then it can be held morally responsible for its actions.
On the other hand, if the corporation is not a moral
person, then opposing arguments regarding legal and human
moral agency will be explored to develop a dual scheme of
corporate responsibility.

It is an observable fact that large corporations are
held morally responsible for their activities. But do
moral judgments about corporate behavior indicate that
corporations are moral persons, or do people make moral
judgments about corporate activities in order to elicit
corporate acceptance of causal or legal/compensatory

responsibility? Or could moral responsibility he meant

Carmela Parisani Axeman

for the corporation's human members who make the
decisions? Furthermore, could responsibility he meant for
both the corporation as a legal entity and its decision-
making members as moral persons? These questions direct
the search for a viable concept of corporate responsi-
bility.

I present an in-depth examination of Peter A.
French’s moral person view, with an extensive evaluation
of his argument in the light of challengers such as Thomas
Donaldson, Manuel G. Velasquez, and John Ladd. Counter—
arguments to the moral person view are assessed, including
notions of corporate responsibility as explained by the
moral projectionists Christopher D. Stone, Kenneth E.
Goodpaster, and John B. Matthews, Jr. Ultimately,
French's moral person view and the projectionists are
refuted.

Findings of the investigation indicate that the
corporation cannot qualify as a moral person, but that the
corporation is merely a legal entity separate from its
human members, who are moral persons. The corporate
setting sustains two types of responsibility--lega1 and
moral. Thus, corporate responsibility has two dimensions:
legal responsibility of the corporate entity and moral/

legal responsibility of corporate decision makers.

Copyright by
CARMELA PARISANI AXEMAN

1990

 

To my Mom, who has been a model of
human courage and intelligence, as
well as a constant pillar of support.

ACKNOWLEDGMENT

DEO GRATIAS

AD MAJOREM DEI GLORIAM

vi

Chapter

I.

II.

III.

IV.

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . .
Notes . . . . . . . . . . . . . . . . . .
SEARCH FOR CORPORATE PERSONHOOD AND

RESPONSIBILITY . . . . . . . . . . . .

Moral Responsibility Ascriptions .
Identity and Collectivity . . . . .
Collectivity and Responsibility . .
Aggregates and Responsibility . . .
2.5 Conglomerates and Responsibility . .
Notes . . . . . . . . . . . . . . . . .

NNNN
:h-WNH

FRENCH’S ARGUMENT FOR CORPORATION AS A
MORAL PERSON . . . . . . . .

3.1 Concepts of Personhood . . . .

3 2 Intentional Agent View Versus Inten-
tional Action . .

3.3 Intentional Dimensions of Corporate

Framework . . . . . .
3.4 Summation of French’s Moral Person

View . . . . . . . . . . . . . . . .
Notes . . . . . . . . . . . . . . . . . .
MORAL PERSON VIEW CHALLENGED . . . . . .

4.1 Donaldson and Moral Agency . .
4 2 Velasquez and Principles of Moral

Responsibility . . . .
4.3 Velasquez and Differentiation of Key
Terms . . . . .

4.4 Velasquez and Intentional Action . .
4.5 Ladd and the Formal Structure View .
Notes . . . . . . . . . . . . . . . . . .

QUASI-CHALLENGERS--THE MORAL PROJECTIONISTS

5.1 Exponents of Moral Projection . . .
5.2 Goodpaster and Matthews on Moral
Rationality and Respect . . . . . .

14

15
16
2O
24
31
37
39
40
41
46

50
52

54
56
61

65
70

85

87

89

91

5.3 Stone on Rule-Following and Cognitive
Processes . . . . . . . 97

5.4 Summary of Moral Projection Views . . . 103

Notes . . . . . . . . . . . . . . . . . . . . 107

VI. REFUTATION OF THE MORAL PERSON VIEW AND THE
MORAL PROJECTION VIEW . . . . . . . . . . . . 109

6.1 Refutation of French’s Moral Person
View . . . . . . . . . . . . . . . . . . 115
6.2 Refutation of Moral Projection . . . . . 135
Notes . . . . . . . . . . . . . . . . . . . . 144
VII. CONCLUSIONS . . . . . . . . . . . . . . . . . 147
VIII. RECOMMENDATIONS . . . . . . . . . . . . . . . 151
BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . 152

GENERAL REFERENCES . . . . . . . . . . . . . . . . . 155

viii

CHAPTER I

INTRODUCTION

In the emerging discipline of business ethics, an
ongoing dialogue has transpired on the subject of
corporate responsibility. Various ideas on the concept of
collective responsibility have circulated in the
literature (n1 corporate responsibility. Yet, there
remains a pressing question regarding moral accountability
of the large business corporation: Can the corporation be
held morally responsible for its actions beyond the
demands of law? Concern about the moral character of a
business corporation stems not from the dictates of law,
but from society’s moral expectations. This dissertation
addresses the problem of searching out the moral character
of the large, modern corporation.

To pursue an enlightened understanding of corporate
responsibility, an important subsidiary question must
first be answered for purposes of assigning moral
responsibility: Is the corporation a moral person? For
if it is found that the corporation is a moral person,
then the corporation can be held morally responsible for

its actions. However, if the corporation is not found to

 

be a moral person, then the notions of legal and human
moral agency will need to be explored for development of a
dual scheme of corporate responsibility for ascribing
responsibility in corporate settings.

It is an observable fact that moral blame is ascribed
to large corporations for untoward activities. But do
moral judgments about corporate behavior imply that
corporations are moral persons, or do humans make moral
judgments about corporate wrongdoing in order to elicit
corporate acceptance of causal or legal/compensatory
responsibility? Or could moral ascriptions he meant for
the corporation’s human members who make decisions that
bring about harmful events? And further yet, could
responsibility ascriptions be meant for both the
corporation as a legal entity and its decision-making
members as moral persons? These questions direct the
search for a plausible conceptualization of responsibility
in corporate settings.

The underlying problem of corporate personhood is
addressed forthrightly with an in-depth examination of the
corporate moral person ‘view as expounded by the moral
theorist, Peter A. French. As the major exponent of the
notion that a corporation is a moral person, French
expounds his position on corporate personhood in the

classic work entitled, Collective and Corporate

Responsibility. An extensive evaluation of French's moral
person view is presented in the light of significant
challengers such as Thomas Donaldson, Manuel G. Velasquez,
and John Ladd. Counterarguments to the moral person view
are assessed, including notions of corporate responsibil-
ity as expounded by the moral projectionists Christopher
D. Stone, Kenneth E. Goodpaster, and John B. Matthews, Jr.
Ultimately, French’s moral person view and the moral
projectionists are refuted.

The search for corporate personhood and responsibil—
ity begins in Chapter II with a survey of basic concepts
for understanding individual and collective responsibil-
ity. Key terms such as moral responsibility, causal
responsibility, distributive and nondistributive responsi—
bility, identity, and agency are clarified to facilitate
the understanding of moral responsibility ascriptions. An
explanation of concepts such as collectivit , aggregates,
and conglomerates is provided as groundwork. for under-
standing French’s determination of the identity of a
corporation as a: conglomerate collectivity with nondis-
tributive responsibility.

Chapter III contains French’s agency argument for
intentional moral personhood of the corporation.
Initially, three distinct notions of the term person are
presented. French refers to the concepts of personhood as

(a) metaphysical, (b) moral, and (c) legal. While French

discounts the legal notion of person, he combines the
metaphysical and moral notions of person for an
interdependent comprehension of intentional moral
personhood, so that an intentional person is also a moral
person and vice versa. For French, then, intentionality
or intentional agency is sufficient to be a moral person.
Therefore, if French can show that the corporation is an
intentional agent, he can declare the corporation a moral
person and consequently morally responsible for its
wrongful actions. However, French’s notion of intention-
ality differs from the traditional understanding of
intentional-actional agency, which requires that inten-
tional action be performed by a human intentional agent.
According to French, if one can describe an action as
a corporate act and show corporate purposive reasons for
the act, then one can conclude that a corporation is an
intentional moral agent. For French, then, the subject of
a moral responsibility ascription need not be a human
moral agent; it can also be a corporate collective entity.
The only requisite for moral predication is that the
subject be an intentional agent; that is, the subject
intended to do the act or did the act intentionally. As
evidence of corporate intentional agency, French points to
the corporation’s internal decision structure (CID

Structure), which he claims demonstrates the corporation’s

intentional reasons for corporate decision action. The
corporate decision-framing structure consists of
recognition rules of procedure and policy that reflect the
corporation's intentional purposes and provide valid
criteria for corporate intentional action. This corporate
internal decision structure satisfies the intentionality
requisite for' moral predication that compels French to
propose admission of the corporation to the moral
community as a "full-fledged" moral person. Summarily,
French’s line of reasoning for corporation as moral person
states that the corporation’s identity as conglomerate
collectivity, along with the corporation’s intentional
agency of CID structure, adds up to the corporation as an
accountable moral person.

In Chapter IV, French’s moral person view is
challenged in the light of three notable philosophers:
Thomas Donaldson, Manuel G. Velasquez, and John Ladd.
These challengers oppose the notion that the corporate
entity is a moral person, which can be held morally
responsible for its wrongful actions.

The main point of controversy pertains to the notion
of intentionality, which in the individualist moral
tradition can be attributed only to individual human
persons. Our philosopher-challengers object to French's

idea that corporate intentional agency can qualify as

being on the same moral level as human intentional agency.
Donaldson argues that there is a significant distinction
between corporate agency and human moral agency, and shows
that a corporation cannot qualify as an intentional moral
agent because it does not initiate intentions or carry out
intentional actions. Two principles of moral
responsibility, mens pea and gpgus :eus, are presented by
Velasquez as requisites for intentional moral agency. He
explains that the corporate entity is incapable of
originating intentions and carrying out intentions with
bodily movements. The corporation cannot perform a
morally intentional act, and therefore cannot be held
morally responsible for untoward corporate acts. Last,
John Ladd’s formal structure view of the corporation
diametrically opposes French’s corporate moral person view
in that the corporation is perceived as an amoral, goal-
oriented organization. A formal organization seeks to
achieve its particular purposive ends by selection of
appropriate strategic actions to accomplish its goals.
Now, the large business corporation has essentially
economic and financial goals, which it strives to attain
by responsible decision actions that are directed toward
the accomplishment of corporate organizational objectives.
Challengers of French’s moral person view offer compelling
arguments on the comprehension of intentional moral agency

and action that disprove French’s notion of corporate

moral personhood and consequential corporate moral
responsibility. The corporation as a conglomerate
collective entity does not have the wherewithal of a mind-
body ‘unity of agency to act intentionally. It cannot
qualify as an intentional moral agent with ability to
initiate purposive, rational action. The corporate
collective entity does not meet the requisites for
admission to the moral community of intentional, actional
persons.

Chapter V treats of the moral projectionists, who, as
quasi-challengers of French’s moral person view, argue
that a corporation is expected to engage in moral
deliberation as part of the corporate decision-making
process, and to take moral responsibility for consequences
of corporate decision actions. The moral projectionists
expect the corporation to act morally responsible without
the prerequisite of corporate moral personhood. They
neither completely oppose French’s argument for moral
personhood and responsibility of the corporate entity, nor
concur with French that the corporation is a moral person.
The projectionists seem to sidestep the problems
associated with proving that the corporation has the
metaphysical status of intentionality. Instead, the moral
projectionists examine what is understood by individual

moral action and responsibility, and then project this

understanding onto the level of corporate action to
provide moral guidelines for corporate decision making.
Moral projection, then, establishes a standard of moral
expectation for responsible corporate decision making.

The major exponents of moral projection are
Kenneth E. Goodpaster, John B. Matthews, Jr., and
Christopher D. Stone. Their ideas of moral projection are
examined and evaluated to discover whether and how the
corporate entity can be said to act responsibly.
Essentially, the exponents of moral projection attempt to
superimpose morality on corporate decision making so as to
effect corporate moral responsibility for decision
actions. They promote the use of moral criteria in
corporate decision making, similar to that used by human
persons in individual moral decision making. Goodpaster
and Matthews suggest moral projection criteria of
rationality and respect, which represent key characteris-
tics of individual moral responsibility. First, rational-
ity in decision making involves deliberation on possible
alternative actions and outcomes to satisfy goals and
purposes. Second, respect in decision making entails
conscious awareness of and concern for the effects of
one’s actions on others. Stone’s proposal of moral

criteria for mature corporate behavior includes both rule

 

following or obedience to law and exercise of cognitive

processes of perception, deliberation, and justification
in decision making.

Thus, the projectionists attempt to accommodate
corporate action to moral responsibility by projection of
moral criteria to corporate decision making, so as to make
corporate decision action morally responsible. In spite
of their arduous scheme to ascribe moral responsibility to
the corporate entity, the projectionists awkwardly, if not
invalidly, apply criteria of individual human morality to
the corporation’s decision-making process, which in itself
is not a human intentional person. They attempt to
compare the corporate entity and its decision process to
that of human moral decision makers, even though the
analogues do not share the property of intentional agency.
The projectionists unwittingly circumvent the authentic
moral agents, the corporate decision members, who could
use the moral exhortation since they are expected to act
responsibly in their intentional decision making done on
behalf of the corporate entity.1

In Chapter VI, both French and the projectionists are
refuted for their adherence to corporate moral personhood
and agency, respectively, in that they argue for
assignment of moral ascriptions to the corporate entity
itself, so that it can be held morally responsible for
wrongful acts beyond the demands of law. French’s

proposed evidence of corporate intentionality as that of

10

the corporation’s internal decision structure (CID
Structure) is found erroneous and fallacious in
demonstrating intentional moral action. The traditional
notion of intentional action with consequential moral
responsibility is based on the agency of a mind-body
unity, whereby an agent plans or intends an act in his
mind and then carries out the intended action with his
bodily movements. French is challenged by Donaldson and
Velasquez with the charge that the corporation lacks the
intentional agency of a mind-body unity which is required
for intentional action and moral responsibility.

Moreover, French illegitimately uses the Davidsonian
notion of intentional agency to support his argument for
corporate intentionality, since Davidson in no way
indicates that an intentional agent is anything other than
a human person. Although French attempts to describe or
speak of corporate actions as brought about for corporate
reasons as explained by the CID Structure, this does not
necessarily make the corporate entity an intentional agent
nor ‘the corporate actions derivatives of corporate
intentional agency. The sort of description French offers
is merely metaphorical. What actually transpires in
corporate decision making involves the intentional
decision. actions of human corporate members, who bring

about corporate acts on behalf of the corporate entity.

11

The corporate entity acts, metaphorically speaking, only
through its intentional human decision members. The
corporation does not qualify as an intentional agent or
moral person because it cannot "intend" the same way as
other members of the moral community, namely, human-
intentional persons. Therefore, it cannot be given full-
fledged membership in the moral community as French
proposes.

The projectionists, like French, argue for corporate
moral responsibility; but they sidestep trying to prove
corporate intentionality and propose an analogy between
individual human behavior and corporate responsible
action, whereby criteria of individual moral behavior are
projected onto the corporate decision-making process to
provide standards of moral expectation for responsible
corporate action. They wrongly compare the corporate
entity with human decision makers in that the analogues do
not share the significant property that would make them
similar, namely, the intentional agency that derives from
human mind-body unity of action. Projectionism seems an
awkward and ambiguous way to accommodate corporate
financial and economic goal-directedness to human moral
concerns. There are essentially two plausible ways that
human moral concerns can enter the corporate decision
process: by way of the law and the moral decision making

of corporate decision members. Since the law is limited

12

in legislating morality, we are left with the human

2 Our moral

decision makers in corporate organizations.
projectionists, Goodpaster, Matthews, and Stone,
needlessly circumvent the morally responsible agents in
corporate settings--the corporation’s human decision
members.

Concluding statements on this work are made in
Chapter VII, based on the findings of research on
corporate moral person and corporate moral responsibility.
The most significant conclusion states that the
corporation is not an intentional, moral person with moral
responsibility for its acts, and therefore cannot be
admitted to the moral community of human persons, as
Peter A. French proposes. It is also concluded that the
corporation is just a legal entity with only legal respon-
sibilities. Thus, the corporation as a legal entity can
only be held legally responsible for its actions. It is
further concluded that the corporation's human members are
the authentic moral persons who can be held morally
responsible for their actions. Only the human members can
bring moral character to corporate organizational enter-
prise. The corporation's human decision members comprise
the moral dimension of corporate organization. Last, it
is concluded that the corporate organizational setting

sustains two identifiable modes of responsibility--lega1

13

responsibility of the corporate entity itself, and moral
responsibility' of the «corporation’s human decision
members.

Chapter VIII ends this work with a recommendation
that perhaps can move the business ethics debate on
corporate responsibility a minuscule step forward to
better understand responsibility in large corporate
organizations. From the conclusions of this study of
corporate moral personhood and responsibility, we discover
that corporate responsibility has two dimensions, which
derive from (a) the corporation itself as a legal entity,
and (b) the human moral persons who are members of the
corporation. The corporation as a legal entity can be
held legally responsible for corporate acts, while the
corporation’s decision members, who are intentional moral
persons, can be held morally responsible for their
decision actions at the job made for the corporation at
large. Perhaps this dual perspective of corporate
responsibility could stimulate further discussion on
corporate responsibility. Thus, I recommend that the duo-
dimensionality of corporate responsibility be considered
in the ongoing discussion of the topic of corporate

responsibility.

14

-- e

1The term W is used

throughout this work to refer to those corporate members
who make organizational decisions for the corporate entity
or corporation at large.

2Laws, for the most part, are written to forbid
wrongdoing, rather ‘than ‘to encourage good or virtuous
behavior.

CHAPTER II

SEARCH FOR CORPORATE PERSONHOOD

AND RESPONSIBILITY

The probing question that directs this discussion of
corporate personhood and responsibility asks: In what
way(s), if at all, and to what extent, if any, can a large
business corporation be held responsible for its untoward
activities? To begin the inquiry for a plausible
conceptualization of corporate responsibility, a
significant subsidiary question needs to be addressed,
namely: Is the corporation a moral person? For if it can
be found that the large business corporation is a moral
person, then moral responsibility ascriptions can be
assigned to the corporation and it can be held morally
responsible for untoward acts. On the other hand, if the
corporation is not found to be a moral person, then some
other avenues of thought will be explored to discover what
the corporation might be, if anything, in terms of
assigning responsibility for its action and holding it
accountable.

In exploring the notion of corporate moral

personhood, certain key terms such as moral

15

16

responsibility identifx and must. W. as well
as W versus 221mm s o s'-

pillty, will be examined and clarified along the way for
use in the discovery of the kind of personhood and
responsibility, if any, that is pertinent to the large

corporation.

2.1 W

In the ordinary assignment of a moral responsibility
ascription, the subject of such a moral judgment is
usually an individual human person. Moral responsibility
for untoward behavior is ordinarily ascribed to a human
person. Although, if moral responsibility be assigned to
a group, responsibility is then distributive or reductive
to individual responsibility of each member of the group.
This understanding of moral responsibility ascription is
derived from the individualist or reductionist tradition
of moral responsibility, which reduces all group or
organizational structures to individual, natural person
members in order to evaluate behavior for blame, punish-
ment, or reward.

The individualist school of ethical thought conceives
of morality as involving a moral community, which is an
aggregate of persons about whom moral judgments are made,
on whom moral requirements of actions are imposed, and to

whom moral admonitions are directed.1 In our Western

17

ethical thought, the standard member of moral community is
a natural person--a human rational being with powers of
volition and intentionality that comprise moral character.
Consequently, in the individualist moral tradition, only
individual intentional human beings can be ascribed with
moral responsibility for their untoward actions.

The root of individualist tradition lies in western
Aristotelian or classical philosophical thought and the
Judeo-Christian religious view of individual personal
salvation. Individual human moral perfection became a
religious goal that would improve and benefit the moral
community. Hence, the Western moral tradition contains
directives for individual human behavior as found in such
statements as the Decalogue, the Beatitudes, the Golden
Rule, and the Kantian Categorical Imperative.

In the tradition of individual moral responsibility,
it is unthinkable that either a group, club, corporation,
or nation could be a nonreducible subject of moral
judgments. In fact, the idea of collective corporate
responsibility is anathema to the individualist tradition
because only human rational agents have moral worth, not
business corporations, nations, or similar collectives.2
Any responsibility ascription assigned to a group must be
reduced or distributed among members of the group or
collective. Reductionists or individualist theorists

today deny that groups qualify as proper moral entities or

18

subjects of moral disapprobation.3 They claim that the
burden of proof for thinking otherwise falls on the camp
of revisionists, who think and argue that corporations
should be included as members of the moral community. One
such revisionist is the foremost contemporary moral
theorist, Peter" A. French, who conceives the business
corporation as a moral person by adaptation of
individualist principles to the corporation, thereby
admitting the corporation to "full-fledged membership in

the moral community."4

In his classic work, entitled Cplleppive and
Coppozate gesppnsipility, French subjects the corporation

to standard tests of moral responsibility involving
metaphysical notions of mm and aggppy in order to
determine the moral personhood of the corporation. He
begins his study of corporate collective responsibility
with the observation that there are many people who make
moral judgments about corporate behavior. Corporations
are praised because they provide material goods and
services, jobs, and wealth creation; they are blamed for
pollution, high prices, plant closings, and foreign wars.
French reiterates the moralist’s concern with the
accountability aspect of the large corporation, which has
become extremely powerful and influential in the society.

Large business corporations control the nation’s economic

 

19

and financial resources with access to greater revenues
than the national government.5 Business activities of the
largest two hundred American corporations or
megacorporations contribute to about two-thirds of the
gross national product, with earnings reaching to about 90
percent of all corporate profits.6

As French indicates, the inquiry into corporate
responsibility is prompted not only by the extensive
socioeconomic and political power of large corporations,
but. more importantly' by 'their scandalous and untoward
activities that adversely affect human life and the
environment. French’s examination of corporate collective
responsibility is motivated by the many attributions of
moral responsibility for corporate action that prevail in
ordinary' discourse on large corporate enterprise. He
intuitively believes that the corporation, as a certain
identifiable kind of collective with intentional agency,
can be held morally responsible for untoward acts.
However, French proceeds to examine the business
corporation in the light of metaphysical notions of
identity and agency in order to determine moral personhood
and consequential moral responsibility. The search for
the identity of corporate personhood gets under way with

the following discussion on types of collectivities.

20

2.2 Identity and Collectivipy

Initially, French presents us with categories or
types of collectivities that demonstrate the distinctions
among collectivities, so as to discover the kind of
collectivity that can be identified as pertinent to the
large business corporation. To distinguish among
collectivities is French’s way of pointing to the kind of
collectivity' by ‘which the large corporation can be
properly identified for purposes of responsibility
ascription. He describes essentially three types of
collectivities: (a) aggregate collectivities, (b) con-
glomerate collectivities, and (c) statistical collectivi-
ties. First, an aggregate collectivity is a collection of
people, such that a change in the aggregate’s membership
effects a change in the identity of the collection.7 This
kind of collectivity involves spatial/temporal contiguity
of collective membership; that is, members of the collec—
tive usually are together in that place and at that time
because of their respective individual interests. For
example, students waiting at a campus bus stop or shoppers
waiting at a check-out counter constitute, in each case,
an aggregate collectivity. There are no planned group
actions, nor ties of solidarity in these aggregate collec-
tivities. The identity of the group corresponds with only
the aggregation of the individual members, so that if any

one member withdraws from the group, the identity of that

21

particular group is lost or destroyed.8 Thus, the iden-
tity of an aggregate collectivity lies in the aggregation
of the component members. Any change in the membership of
the aggregate constitutes a change in the identity of
the aggregate collectivity. Constant membership is an
essential property of an aggregate collectivity.

French briefly points out another type of aggregate
collectivity. This type of aggregate is defined by the
very features or characteristics, by virtue of which
blaming or other responsibility predicates are ascribed to
it. For example, in the utterance, "White American
racists are to blame for the plight of various minorities
in the United States," "White American racists" identifies
the aggregate collectivity, by virtue of the specific
characteristics of component members of the collectivity.9
Each member of the collectivity must have the same
characteristic in order for the collective to be
identified as an aggregate collectivity.

The second collectivity category that French
describes is referred to as conglomerates or conglomerate
collectivities. He tells us that "a conglomerate
collectivity is an organization of individuals whose
identity is not contingent upon the identities of the

"10

organization’s members. A change in membership does

not affect the identity of the organization. Members can

 

22

come and go, and position holders in organization
hierarchy may change, but identity of organization remains
intact. A conglomerate is not identified by the aggregate
of persons associated with it. It has an identity all its
own, separate from its membership or organizational
position holders. A conglomerate’ 8 identity is not lost
or diminished by change in number or kind of membership.
Some examples of conglomerates are General Motors,
Congress, Democratic Party, Yale University, and Harbor
Springs. Country' Club. French cites 'the following
characteristics of a conglomerate that are not found in an
aggregate:

l. A conglomerate has internal mechanisms and deci-
sion procedures by which concerted actions are
determined.

2. Enforced standards of conduct for individual
members of conglomerate are different and usually
more strict than those thought to apply in the
larger community of individuals.

3. Members of a conglomerate fill different roles or
positions and some may have powers over other
members; a change in position-holders does not
entail a change in the identity of the conglom-
erate.

4. Individuals usually become members of conglomer—
ate by either holding stock, employment, election
and/or appointment.

5. A conglomerate is a legal person under the law;
it can own propfrty, sue and be sued, be indicted
and convicted.

The third type of collectivity that French discusses
is the statistical collectivity. This kind of
collectivity is usually designated by a collective noun or

noun phrase in statements of fact, predication, or

23

ascription.12

An example of a statistical collectivity is
offered in the following statement: "American people have
the highest standard of living in the world." According
to French, the statement does not mean that each and every
American citizen has a high standard of living. Neither
does it mean that the entire conglomerate entity of
American people has the highest standard of living in the
world. The term "American people" is a disguised
aggregate, comparable to saying "most Americans."13 Thus,
the name of a statistical collectivity-~American people--
is shorthand for saying "most members of this group." Use
of a collective noun or noun phrase as a shorthand form
amounts to a statistical collectivity.

From the examination of the different kinds of
collectivities, the clue to the identity of the large
corporation is revealed in the description of a
conglomerate collectivity, which has an identity all its
own separate from its membership, and it is not changed or
destroyed by any change in membership or position
hierarchy. The conglomerate collectivity is an
identifiable whole or entity that can be the subject of a
predication, irrespective of membership or those
associated with it. Thus, French arrives at the identity
of the large business corporation as being that of a

conglomerate collectivity. The inference that a

 

24

corporation can be identified as a conglomerate collectiv-
ity seems plausible at this point.

The search for corporate responsibility continues on
in the next section with an examination of kinds of
responsibility ascriptions and how they pertain to the
different collectivities, in order to discover what kind
of responsibility ascription, if at all, could specifi-
cally pertain to a conglomerate collectivity or large

corporation.

2.3 e t'v' s on ' ' 't

In the tradition of individual moral responsibility,
all ascriptions or statements about collective
responsibility are to be reduced to ascriptions of
individual responsibility. This is referred to as the
reductionist position on moral responsibility.14
According to this school of moral thought, a
responsibility ascription assigned to either a group,
club, organization, or nation must, in effect, be reduced
to the individuals who were responsible for bringing about
the.*wrongdoing. Thus, in the individualist, moral
tradition, ascriptions of moral responsibility cannot be
collective and nondistributive.

As a revisionist and critic of moral reductionism,

French points to the failure of traditional individual

ethics to deal with collective responsibility, as well as

25

the inaccuracies it generates if used in the assignment of
moral responsibility ascriptions to collectives.15
Innocent individuals could be assigned moral responsibil-
ity for untoward acts they neither knew about nor
intended. Adherence to individual reductivism, he
suggests, also breeds skepticism about assigning moral
responsibility to collectives. And, of course, French’s
goal is to be able to assign moral responsibility to a
conglomerate collectivity--to a large corporation such as
General Motors.

In his discussion on types of collectivities, French
also distinguishes between kinds of responsibility
ascriptions and explains how they can pertain to the
different collectivities. He describes two notions of
"blaming," which make for the distinction between causal
responsibility and moral responsibility ascriptions.
First, responsibility ascriptions of blame/disapproval
usually fix or establish the cause of untoward events.
Thus, in this first sense, to blame is to fix responsibil-
ity; that. is, to» identify' the (cause or causes of an

16

untoward event. Second, and more important, to blame is

to "hold responsible," that is, morally responsible for an

untoward action performed intentionally.17

Implicit in
this second meaning of blame is the notion of causal
responsibil ity . Usual 1y , moral responsibil ity includes

causal responsibility because moral wrongdoing involves

 

Eu

26

both causal and intentional elements. Nevertheless, to
fix blame or responsibility amounts of assigning causal or
nonmoral responsibility, whereas to "hold responsible" for
an untoward act amounts to assigning moral responsibility.

Causal or nonmoral blaming is appropriate in cases of
accident, mistake, or other unintentional or unknowing
actions. Nonmoral blaming merely identifies the causes of
the untoward event and affixes causal responsibility to

18 For

either persons or animate and inanimate objects.
example, causal responsibility ascriptions can be assigned
as follows: to a toddler for having broken a vase, to a
dog for having chewed the oriental rug, and to the cold
weather for a malfunctioning garage door opener.
According to French, causal responsibility is
insufficient blame for moral or intentional wrongdoing.
Ascriptions of moral responsibility involve both the
identity of the cause of untoward event and the
intentional action of subject of moral predication or
judgment.19 However, the primary focus of moral
responsibility ascriptions remains the subject’s
intentions. To justly assign a moral responsibility
ascription to a subject, it must first be established that
the subject either intended to perform the act or did the

act intentionally.

 

27

Now, according to traditional individualism, moral
responsibility can be ascribed only to a human being who
has the capacity to be intentional and/or able to perform
acts intentionally. Individualist or reductionist
theorists insist that only individual human beings, and
not collectives, can qualify as intentional actors or
moral agents. French thinks that these theorists are
blind to differences between types of human organizations

20 Reductionists tend immediately to reduce

or groupings.
all groups’ actions and intentions to the actions and
intentions of the individual human beings who comprise the
respective groups. Group activities are perceived as
disguised individual activities. French shows his
objection to reductionism by distinguishing among
collectivities, as well as among ascriptions of blame.
The following two sections elaborate on these distinctions

and point to the kind of collective responsibility that

can be had by the large corporation.

2.4 Aqgreggtes and Responsibility
As indicated above, an aggregate collectivity differs
in identity from a conglomerate collectivity, as well as
from a statistical collectivity. Given that the identity
of an aggregate collectivity is determined by a nonunified
togetherness of members at a particular place and time,

any responsibility ascription assigned the aggregate,

 

 

 

28

according to reductionism, must be distributed among the
individual members. If an aggregate (an angry mob) is
blamed for untoward events (destruction of private
property and personal injury), the ascription would be a
nonmoral blaming of causal responsibility against the
aggregate, and then distributed among the aggregate’s
members. Since moral responsibility can be assigned only
to a human individual person acting intentionally to bring
about an untoward act, an ascription of moral
responsibility cannot be assigned to an aggregate
collectivity. Only causal or nonmoral responsibility can
be assigned to an aggregate and then distributed among its
individual members.

French concedes that reductionism can legitimately be
used for aggregate causal responsibility ascriptions,
since blaming of this kind fixes responsibility on the
cause of untoward action and not on intentional actions of
individuals, which would be difficult to do given the
tentative nature of an aggregate collectivity, namely, an
angry mob that quickly aggregates and then soon
disperses.21

It must be remembered that any change in membership
of an aggregate constitutes a change in the identity of
the aggregate collectivity. The identity of the aggregate
lies in the aggregate of the individuals, and not in the

individuals themselves. The individuals who comprise the

29

aggregate do not denote the aggregate, but the aggregate
denotes the collection of individuals. Consequently, a
moral responsibility' ascription, can.‘virtually' never’ be
justly assigned to an aggregate collectivity. Only causal
or nonmoral responsibility can be ascribed to aggregates,
and then distributed among individual members.
Nevertheless, French suggests that "each member of a
nonmorally' responsible aggregate. is or is not morally
responsible for an untoward action, only insofar as he is
or is not capable of supporting some exculpatory or
mitigatory excuse in his own behalf with regard to the

"22 In other words, it is possible that each

wrongdoing.
member of a nonmorally responsible aggregate can be held
morally responsible, as an individual, for an untoward
event, if he or she cannot support some good excuse or
extenuating circumstance for being involved in the
untoward event. For example, a member of the angry mob,
mentioned above, could be held morally responsible for
untoward events of destruction of property and personal
injury, unless he or she could offer an excuse, such as he
or she was forced into the angry crowd against his or her
will and was moving along with no intention of destroying
property or injuring others. This example of a moral

responsibility ascription for a member of a causally

responsible collective will be of some interest further on

 

30

in this work when discussing causal responsibility of
corporations for wrongful activities, and the possible
moral responsibility that could be assigned to individual
members of the corporation who are found to be involved in
bringing about the wrongful act.

As we have seen, nonmoral responsibility ascriptions
assigned to an aggregate collectivity are distributive
among the members, thereby assigning nonmoral responsibil-
ity to each member. What is predicable of an aggregate is
reducible to the individual members of the collective.
Only nonmoral or causal responsibility can be assigned to
an aggregate, and justifiably distributed among members of
the aggregate. Consequently, moral responsibility can
only be justifiably assigned to intentional individuals,
not to "unintentional" aggregate collectivities.

The statistical collectivity, which is the third kind
of collectivity discussed above, and that can be
identified by a collective noun or noun phrase such as the
term, "the American people," refers to what French calls a
disguised aggregate collectivity. Although, by identity,
a statistical collectivity differs from an aggregate, yet,
as subjects of responsibility predications, they are
similar collectivities for assignments of causal or
nonmoral and distributive responsibility. Thus, responsi-
bility ascriptions predicated of statistical collectivi-

ties are similar to ascriptions predicated of aggregates;

 

31

that is, only causal or nonmoral ascriptions can properly
be assigned the statistical collectivity and justly
distributed among its members.23

The final collectivity to be examined for
responsibility' implications is .French’s second. type of

collectivity discussed above, namely, the conglomerate

collectivity.

2.5 gppglpmepates apg Bespopsipility

As previously indicated, a conglomerate collectivity
is an organization of individuals, such that its identity
is not altered or destroyed by variation in number or kind
of membership. Thus, a conglomerate has its own identity,
separate from its individual members; it is not identified
by the aggregate of associated persons. There are some
important characteristics of a conglomerate that warrant
reiteration: (a) a conglomerate has internal mechanisms
and decision procedures, and (b) a conglomerate is a legal
or juristic person that is subject to the law.

As regards predications of responsibility that may be
directed toward a conglomerate collectivity, French holds
that they do not pertain to the individual members. What
is said about or predicated of a conglomerate is not
necessarily predicated of any one or all of the individual
members associated with it.24 French asserts that seldom,

if ever, does the name of a conglomerate, for example,

32

General Motors, refer to a determinate set of individuals.
Likewise, ascriptions of blame toward General Motors, for
example, seldom, if ever, refer to any and all of its
members. Thus, for French, responsibility statements,
whether "causal" or "moral," ascribed to a conglomerate
are not reducible to a conjunction of statements ascribing
responsibility to the individual members of the
collectivity.25 For a conglomerate collectivity, then,
responsibility is nondistributive. Responsibility
ascriptions made about conglomerates cannot justly be
assigned to the individual members of conglomerates merely
on the basis of their being associated with the accused
conglomerates. If and when a corporate conglomerate is
found responsible for some untoward action, one cannot
justly conclude that any and all of the individuals
associated with the corporation are consequently

responsible for the untoward action.26

Corporate
conglomerate responsibility for an untoward action must be
considered and handled separately from individual
responsibility. Reductive ethics of individualism cannot
be justly used in corporate responsibility ascriptions;
hence the nondistributive character‘ of conglomerate
responsibility ascriptions. One would have to make the

connection between individual persons and the untoward

action, and then search out the human persons involved in

 

33

the causal action and/or intentional decision that brought
about the untoward event.27

From French’s examination of conglomerate
responsibility, we find that any responsibility ascription
assigned to a corporate conglomerate must be nondistribu-
tive. He seeks a singular identity for the corporate
collective, so that moral responsibility can be assigned
to the corporation if he can show that the corporation is
an intentional moral person. If French does not succeed
in proving corporate moral personhood, the situation will
reveal a double approach to assigning responsibility in
corporate settings in order to justly reach the
responsible actors, both legal and moral. First, causal
nondistributive responsibility ascriptions for untoward
corporate actions can be assigned the corporate
conglomerate itself. Second, moral responsibility
ascriptions can be assigned the corporation’s individual
members who are found to be "intentionally" involved in
the untoward corporate action. Thus, individual human
members of a corporate conglomerate can be held morally
responsible for decision actions or inactions that caused
or brought about a wrongful corporate event. If members
can be linked to a wrongful corporate action and found
responsibly related or intentionally connected to the
wrongdoing, they can be held causally and morally

responsible for the event. Yet, whether or not

 

34

individuals can be found responsibly related to corporate
wrongdoing, the corporation itself can, at most, be held
causally and/or legally responsible for the event.

This discussion on the dual character of conglomerate
responsibility, that is, of corporate responsibility and
individual responsibility, points to the two-dimensional
tenet of corporate responsibility that this dissertation
proposes and defends. As we have seen, nondistributive or
causal responsibility ascriptions can be justly ascribed
to the conglomerate for wrongful acts. So, too, is it
just that ascriptions of individual moral responsibility
be assigned to individual corporate members who are found
to be responsibly related to corporate wrongdoing. The
two—dimensional approach to corporate responsibility could
provide a plausible way to properly assign responsibility
ascriptions in corporate settings.

Thus far in the exploration of French’s corporate
moral person view, we have examined the concepts of moral
responsibility, individual versus collective responsibil-
ity, identity, and types of collectivities. We have
arrived at a basic comprehension of a corporate
conglomerate and found that it is an identifiable entity
subject to collective nondistributive responsibility, as
well as moral predications, if French can prove the

corporation is an intentional moral person. An important

 

35

feature of a conglomerate collectivity is its constant
identity, regardless of change in corporate membership.
The identity of the corporation is separate from the
aggregate of individuals who comprise its membership. The
corporation can be the subject of both causal and moral
responsibility predications. For French, then, the
corporation can be held causally and morally responsible
for its acts, contingent, of course, on the successful
acceptance of French’s corporate moral person View.
Individual members can likewise be subjects of causal and
moral responsibility predications depending on their
knowledge, intentional action, and responsible relation-
ship to the wrongdoing. For example, the corporate
entity, General Motors, could be causally blamed (and
morally, if French can show corporate moral personhood)
for dumping toxic wastes into a water supply, as well as
particular corporate executive members, who could be found
blameworthy of ignoring or sidestepping Environmental
Protection Agency (EPA) regulations during the decision
planning process for plant production. In this particular
case, corporate members could, technically, be held
legally and morally responsible for dumping toxic wastes
into a community's water supply. Causal and legal
responsibility is had by General Motors Corporation in
violation of federal EPA laws, whereas moral

responsibility is had by the human decision members for

36

bringing about a harmful situation that threatens to
impose injury to human beings.

Nevertheless, for now, the conglomerate type of
collectivity, with its nondistributive responsibility
character, remains centrally significant to French’s
argument for moral personhood of the corporation, the
notion of which this work ultimately refutes. If French
cannot show that the corporation is a moral person, then
all moral responsibility must revert to the human
intentional. corporate :members, and. only' causal
responsibility can be validly assigned the corporation
itself. Any moral responsibility assigned the corporation
must find its way to the human corporate members.

Thus, while French uses the conglomerate concept to
assert. moral personhood. of 'the corporation, this work
treats the corporate conglomerate merely as an
identifiable legal entity, which incidentally can boast a
moral dimension of human rational persons who inform
organizational positions, make decisions, and implement
action plans, and thereby constitute the intentional and
moral factors of corporate responsibility.

In the following chapter, I examine the notion of
moral person and review French’s case for moral personhood

of the corporation.

 

37

N --

1Peter A. French. Q9lle2ti2s_and_§9rngrafe_8e§22nsi:
pilipy (New York: Columbia University Press, 1984), p.
vii.

21bid., p. viii.

3Ibid., p. x.

4Ibid., pp. xii, 31, 46.

5Ibid., p. ix.

6Reported in Forbes (May 1981); cited by Bill Shaw
and Art Wolfe, Ipe Strucpppe pf pne Legel Epvizopmepp
(Boston, Mass.: Kent Publishing, 1987), p. 195.

7French, Collective and Corporate Responsibility, p.
12.

8Ibid., pp. 22-23.
9Ibid., p. 12.
10Ibid., p. 13.
111bid., p. 14.
12Ibid., p. 17.
13Ibid., pp. 17-18.
14Ib1d., p. 2.
15Ibid., p. viii.
16Ibid., pp. 4-5.
17Ib1d., p. 5.
131b1d., p. 6.
19Ib1d., p. 7.
2°1bid., p. 19.

211bid., p. 12.

221bid.,
231bid.,
24Ibid.,
251bid.,
261bid.,

271bid.,

18.
13.
14.
16.
17.

38

CHAPTER III

FRENCH’S ARGUMENT FOR CORPORATION

AS A MORAL PERSON

Now {according' to French, the fact that corporate
conglomerates are blamed for social problems and are
frequently the subjects of nondistributive responsibility
ascriptions, and even indicted for criminal violations of
law, reveals an intuitive notion of the corporation as
a morally accountable entity, and maybe even a moral
person.1 After all, a corporation has an identity all its
own, separate from its membership, and it is an individual
entity that can be blamed, sued, indicted, and assigned
responsibility ascriptions. Furthermore, large corpora—
tions are treated as persons for constitutional purposes,
and also have the legal responsibility and duty to behave
in accordance with society's established laws. As a move
beyond corporate legal status, French recommends that
corporations should be treated as intentional actors or
moral persons, and be given full-fledged membership in the

moral community and be granted equal standing with

humans.

39

40

3-1 QQDQ§E&§_QI_£§I§QDDQQQ

However, in order to rationally determine moral
personhood of the corporation, French examines the
metaphysical notions of identity and agency, and then
tests the corporation against these moral person criteria.
So far, we have elaborated on the identity of the
corporation and found it to be an individual, independent
collective entity. Now the notion of moral agency needs
to be explored. Initially, French presents us with three
different notions of the term pegepp. The three concepts
of personhood are (a) metaphysical, (b) moral, and (c)
legal.2 The metaphysical notion of person involves the
idea of agency and intentional action. Whereas the moral
notion of person implies accountability, the legal notion
of person refers to a subject of rights and
responsibilities. From the outset, French disregards the
legal concept of person in the discussion on moral person-
hood of the corporation simply because a juristic person,
as a subject of rights, need not be an intentional
decision agent or "administrator of rights.“3 Thus, for
French, the legal notion of person is useless for moral
purposes.

However, French does admit that these abstract
personhood concepts are sometimes confused, and that
explanations regarding them can vary from philosopher to

philosopher. Nevertheless, amid the variability, he cites

41

two major schools of thought on the relationship between
the metaphysical and moral notions of pepepn.4 One is the
Lockean interdependency view, which claims that to
understand what it means to be accountable, one must
understand what it means to be an intentional or rational
agent and vice versa. In other words, to be a
metaphysical person is equivalent to being a moral person;
that is, an intentional agent is an accountable or moral
agent and vice versa. The second or traditional view on
the relationship between metaphysical and moral personhood
states that an intentional agent is a necessary, but not
sufficient, condition of being a moral person; that is, an
intentional agent along with intentional action makes for
a moral person. According to this view, a moral person is
an intentional, actional human agent who has a mind-body
unity of action and is accountable for intentional action

or inaction.

3.2 Ingenpippel Agent View Vepsus
e ' ct'o

As it happens, French adheres to the interdependency
view of metaphysical/moral personhood and discounts the
traditional or intentional human action view of what it
means to be a moral person. So, for French,
intentionality or intentional agency is sufficient to be a

moral person. Therefore, if French can show that a

42

corporation is an intentional agent, then he can declare
that a corporation is also a moral person. This endeavor
to demonstrate that corporations are intentional agents
meets with a formidable stumbling block, namely, the long-
time philosophical and legal understandings that only
rational human beings qualify as intentional actors. From
Aristotle to present-day social, moral, and legal thought,
the notion of rational, intentional agency has referred
exclusively to human beings. Two major contemporary
challengers to French’s view of the corporation as moral
person are the moralist philosophers, Manuel G. Velasquez
and Thomas Donaldson, who in essence adhere to the
classical intentional action persuasion and uphold the
idea of moral person as an intentional, rational human
being. In his discussion on the moral status of
corporations, Donaldson indicates that 1J1 order fer
corporations to be moral persons, they must be able to
perform intentional actions. He questions whether
corporations are capable of performing intentional
actions:
But can corporations really perform such actions?
Flesh and blood people clearly perform them when they
act on the basis of their beliefs and desires, yet
corporations do not appear to have beliefs, desires,
thoughts, or reasons.

The same classical notion of moral, intentional action is

referred to by Velasquez when he explains the Roman legal

43

concepts of w and m that comprise the

"legal rendition" of moral responsibility:
In its classical foam, . . . [moral] responsibility

requires both an ee;ge_1epe and mepe_;ee. That is,
the accused will be found . . . [morally] responsible

for a wrongful act only if (1) he personally brought

about the wrongful act (result of his own bodily

movements) or he personally helped to bring it about
or he failed to prevent the act when he could have
and should have, and (2) he did so intentionally

(i.e. . . . in voluntary control of his bodily

movements that resulted in the act . . . or

omission).

Of course, French rejects the implication that only
human persons can be moral persons, and that being human
is a necessary requisite for intentional action. He
adheres to an intentional agency persuasion that does not
require bodily movement or eetpe reps for moral inten-
tional action, largely due to his claim that the corporate
collective itself should be held as a morally responsible
agent. As a consequence, he endeavors to explain that the
corporation can be said to act intentionally since it
produces corporate acts, which can be described as
corporate-intentional because of the corporation's inter-
nal decision structure (CID Structure)--the corporation’s
intentionality device.‘7 French leads us to believe that
both the corporate entity and the corporate decision
members are the intentional actors in corporate settings,
and that both the corporation and its members can be held

morally responsible for wrongful acts. French wants us to

interpret the term coppepate egg as having two meanings:

44

(a) a corporate act brought about by human decision
members, and (b) a corporate act brought about by the

8 He arrives at these

intentional actor, the corporation.
two understandings from a description of a corporate act
as brought about by the corporation’s human members, and a
redescription of corporate act as an act brought about by
the corporation's intentional CID Structure.9

In defense of his position, French refers to the
Davidsonian conception of agency, in which the key for
intentional action lies in sentences and descriptions of
actions that connect an intended action with an

intentional agent.10

Davidson’s proposal for agency
states: "A person is the agent of an event if and only if
there is a description of what he did that makes true a

"11 French

sentence that says he did it intentionally.
refers to the Davidsonian notion of agency to explain that
he can redescribe a corporate act as intended by the
corporation itself and as corporate-intentional, because
it was done for corporate reasons via the cmrporate
internal decision structure. Thus, French can conclude
that the corporation is an intentional agent, since
corporate acts can be described as brought about for
reasons provided by the corporate internal decision
structure. 131 this way, French defends corporate

intentional agency over and beyond human intentional

agency.

45

Here, perhaps, French is confused because he does not
mention that Davidson opens the agency concept to agents

12 There is no evidence in

other than human persons.
Davidson's article and follow-up commentaries that
Davidson's agency concept refers to anything but human
persons.13 It appears that Davidsonian agency refers to
exclusively human persons.

In yet further defense of his position on corporate
intentional agency, French goes as far as to accuse John
Rawls. of an "anthropocentric bias" which prevents the
philosopher from pursuing his intuition that groups
(corporations, churches, and states), as well as
individuals, could be included among the intentional
persons of the "original position" described in Uhepzy
Wiggl“ Donaldson, likewise, observes that Rawls
mentions groups such as corporations and churches among
the parties capable of arriving at the two principles of
justice. Yet he notices elsewhere in "Justice as
Reciprocity" that Rawls admits to a "certain logical
priority" of human individuals in the original position.15
Donaldson interprets this vacillation as an indication of
the ambiguity of theoretical thought on the treatment of
corporations. How one can reach the responsibility

centers of corporations, if they exist at all, remains a

challenge, and one that motivates this work.

46

From what we have seen, French construes Rawls's
stance on moral personhood as an anthropocentric or human-
centered bias. It appears that Rawls cannot withstand the
powerful precedence of only individual, rational humans
qualifying as moral persons. Unwittingly, French himself
displays an anthropomorphic bias in his "corporation as
moral person" argument that attributes human rational
agency and intentionality to corporations, which are

obviously not humans but conglomerate collectivities.

3.3 Intentional Dimensions of Copporate Framework

In spite of the prevailing traditional moral person
view, French proceeds to examine the corporate structure
for evidence of corporate intentionality. For in order to
treat the corporation as a moral person, it must be shown
that a corporation’s actions are intended by the corpora-
tion itself, and not by the human persons who comprise its
membership. Now, French observes that a corporation has
reasons or rational intentional purposes for doing what it
does, and that these reasons for a corporation's business
practices are embodied essentially 11) its operating
policies. He also observes that corporate decision making
occurs according to procedural or hierarchical order and
the corporation’s policy rules. These decision-framing
elements of authoritarian hierarchy and company policy

rules form what French calls a corporate internal decision

 

47

structure or CID Structure.l6

Each corporation has an
internal decision structure that reflects its intentions,
that is, policies, rules, and procedures by which it can
be said that the corporation acts or performs intention-
ally. For French, then, the corporate internal decision
structure represents the intentional agency component,
which together with corporate identity constitutes a moral
person and subsequent moral responsibility. The CID
Structure becomes the crucial evidence of corporate
intentionality and consequential moral personhood.

The CID Structure is described as having essentially
three elements: (a) organizational or responsibility
flowchart, (b) procedural rules, and (c) policies.17
First, an organizational flowchart identifies the formal
organizational structure of power and position, and the
interrelationships among levels of authority. It
represents the power pyramid of responsible decision
makers, as well as the levels of reporting and
communication channeling. The valid corporate decision
action follows the formal pecking order of the

18 The second and

organization’s responsibility flowchart.
third elements of CID Structure are procedural rules and
policies, respectively. French refers to these elements
as the corporation’s decision recognition rules that
"determine and justify the corporate intentional character

"19

of corporate actions. Corporate recognition rules of

 

48

procedure and policy provide the formal guidelines for
decision making. Recognition rules are found in
operational documents and written corporate policies. The
procedural rules assure corporate collective decision
making at certain levels with ratification at higher
levels, whereas the policy rules assure a valid corporate
decision based on the values, ideals, and beliefs of the

particular corporation.20

Thus, for French, corporate
rules of procedure and policy are at the core of his
intentionality argument for corporate moral agency.
Interestingly enough, French alludes to H. L. A.
Hart’s explication of recognition rules as practiced in
the law system and generally in large—scale social

institutions.21

Hart attests to recognition rules as
providing legitimate authority and procedures for-
developing policies and valid criteria for legitimate
institutional decision making.22 But for French, the
corporation’s recognition rules consist of organizational
procedures and policies whereby corporate acts are brought
about intentionally, not only by the human decision
members but by the corporate entity itself. French, of
his own accord, gives added import to recognition rules to
suit his argument for corporate moral agency. As we learn
from Hart, recognition rules provide legitimacy for

institutional decision making; yet French interprets

 

49

corporation recognition rules as indicating not merely
legitimacy of decision making, but also intentionality of
the corporate entity. French perceives the CID Structure
as an intentionality device whereby the corporation acts
with deliberation, purpose, and intent. It must be noted
as well that Hart’s discussion of recognition rules in
Chapter VI of The Qoneepp pf Lew makes no reference to the
metaphysical issue of intentionality.

In French’s scheme of corporate intentionality, a
corporation is an intentional agent because of the
decisions arrived at by conjunctive deliberation of
corporate executives according to and consistent with
established corporate rules and policies and then
redescribed as corporate acts. These corporate acts are
corporate intentional because the acts reflect the
corporation’s particular purposes and intentions. Thus,
for French, if the corporate entity can be considered
intentional, it can also be held morally responsible for
its acts. It must be emphasized the French argues for
moral responsibility of the corporate entity in addition
to moral responsibility of corporate members. French
never denies that human corporate members can be held
morally responsible, but he argues that the corporate
entity as well as human decision members can be held
morally responsible for corporate acts. A corporation has

its own identity and its own particular purposes and

 

 

50

intentions for acting. The metaphysical components of
identity and intentionality constitute, for French, the
corporate entity’s moral personhood, whereby it can be
held morally responsible for its actions. As French
asserts, the corporate entity should be given full-fledged
membership in the human moral community. It should be
held. morally responsible for any and all corporate
decision actions that may have brought harm or injury to

others.

3.4 Summation of French’s Moral Person View

In summary, then, the crux of French’s argument for
corporate moral personhood rests on the CID Structure,
which for French reveals corporate intentionality. The
procedural rules and policies that reflect the particular
corporation’s purposes direct the human decision making
that brings about corporate acts. It is at this point of
redescription of corporate acts as corporate intentional
acts that French takes his metaphysical leap to claim that
the corporation itself is intentional as understood in

23 Asa

traditional morality of human intentional action.
consequence, French wants the corporation to be admitted
to full-fledged membership in the human moral community.
Thus, French holds fast to his line of reasoning that the

corporation’s identity as conglomerate collectivity plus

51

corporate intentionality add up to the corporation as an
accountable moral person.

In the next chapter, I review the significant
challengers of French’s moral person view for their
criticisms, arguments, and insights on the problem of

corporate responsibility.

 

52

N --

1Peter A. French. Q2lls2fixs_and_§2rpgrate_8e§ngn:
eipiiipy (New York: Columbia University Press, 1984),

pp. 31-32.
2Ibid., pp. 32-33.
31bid., pp. 34, 37.

4Ibid., pp. 32-33.

SThomas Donaldson. Qornoratigns_and_noralifx (Engle-
wood Cliffs, N.J.: Prentice-Hall, 1982), p. 21.

6Manuel G. Velasquez, S. J., "Why Corporations Are Not
Morally Responsible for Anything They Do," figsiness egg

Er2fe_signal_fifbiss_gsurnal 2 (Spring 1983). 2-3.

7French, Collective and poppegate Responsibility,
p. 39.

81bid., p. 40.
91bid., pp. 44-47.

10Peter A. French, "The Corporation as a Moral Per-
son," Ethicel issues in Bus'ness, 2d ed., ed. T. Donaldson
and P. Werhane (Englewood Cliffs, N.J.: Prentice-Hall,
1983), pp. 115, 119.

11Donald Davidson, "Agency," in Agent, Aepipp, and
Reespn, ed. R. Binkley, R. Bronaugh, and A. Marras

(Toronto: University Press, 1971), p. 7.

12French, Collective and Copppzape Responsipiiity,
p. 38.

 

 

13Davidson, "Agency," pp. 3-37.

14French, Collective and Corpopate Responsibility,
pp. 33-34.

15Donaldson. Qorpgrafigns_and_noralifx. p. 15.

16French. Q21lesfixe_and_Corporate_82s22nsibilitx.
p. 41.

 

 

 

53

171bid., pp. 48-51.

181bid., pp. 49, 51.

19151d., p. 53.

2°1bid., p. 43.

211bid., pp. 43, 52.

22H. L. A. Hart, The Cppeep; of Lew (Oxford: Oxford

University Press, 1961), chapter 6.

23French, Collective and Corporate Respepsibiiity,
p. 47.

CHAPTER IV

MORAL PERSON VIEW CHALLENGED

The corporate moral person argument, which French
defends, holds that a corporation is an individual entity
with intentionality, as evidenced in its CID Structure,
that uses rational rulers and policies in formulating
corporate decision actions. As French indicates,
intentionality remains a key factor in determining moral
personhood. However, the philosophical comprehension of
intentionality consists of essentially two variations:
one understanding involves merely purposive intentions,
and the other suggests intentional action. For French,
purposive intentional agency is sufficient to establish
intentionality and to determine whether something is a
moral person--the Lockean conception of moral person. On
the other hand, there is the traditional conception of
intentionality that requires both mental intentions and
bodily movement for an intentional act. A moral person,
then, according to classical moral thought, would, in all
probability, be a rational human being and not a
conglomerate collectivity. Thus, it happens that the

significant challenges to corporate moral personhood stem

54

55

mainly from the classical understanding of intentionality
as intentional actional agency, that is, human or personal
moral agency.

At this point, the ideas and writings of three
notable challengers to the moral person view of
corporation are examined and evaluated for possible
insights on the issue of corporate moral responsibility.
These challengers present arguments that oppose the notion
of corporate moral personhood and consequential corporate
moral responsibility. Thomas Donaldson points to the
distinction between corporate and human moral agency that
stems from the common, observable difference between a
corporation and a human being. He argues further that an
intentional agent is not necessarily a moral person, and
that the CID Structure does not indicate the intentions of
the corporation itself, but rather the intentions of human
agents. Next, Manuel G. Velasquez countervails with the
two requisite principles of moral responsibility, mens pea
and ctus reus, which require intentional action with
bodily movement. He also cites the notion of origination,
which requires a corporate action to originate in the
corporation itself, i.e., in its intentions and bodily
movements. And last, John Ladd presents the formal
structure notion of corporate organization, which
designates a business corporation as an amoral,

materialistic, and goal-directed enterprise. A business

56

corporation’s purposes are essentially economic and
financial. Morality and morals as such are not corporate
business goals. Corporate actions consist of economic
production and pecuniary gain. Thus, these theorists
challenge the notion of corporation as moral person and
point to alternative notions that deserve consideration in
forming a plausible conceptualization of corporate
responsibility. These theorists object to the notion of
corporation as moral person, and yet they are interested
in corporate responsibility. They offer alternative
notions that deserve consideration in forming a plausible

conceptualization of corporate responsibility.

4.1 one dson and Mo enc

Our first challenger is the contemporary philosopher,
Thomas Donaldson, who in his renowned work entitled
Corporations and Morality discusses the moral status of
corporations, and concludes with more certainty about what
the corporation is not than what it is for moral
evaluation. Initially, he admits that the corporation
defies subjugation to individual moral analysis and that
there is a need to develop a moral theory for
corporations. For this reason, a search is made for the
moral dimension of corporate enterprise. Donaldson
observes that, in ordinary conversation, corporations are
blamed for corrupt practices or held responsible of social

wrongdoings, all of which imply that corporations are

57

viewed as moral or accountable agents. Likewise, in the
legal sphere, corporations are treated as accountable
juristic agents: they can own property, enter into
contracts, sue and be sued, and be indicted, convicted,
and punished; they are also protected by the Fourteenth
Amendment and have right to free speech. In these many
ways, corporations are attributed with accountable agency.
However, Donaldson points to the difference between
corporate and human moral agency, in spite of the same
rights and responsibilities that corporations and humans
share. The distinction between corporate moral agency and
human moral agency arises not merely from other rights and
responsibilities that are not shared (e.g., voting, draft
registration, social security benefits, strict liability,
unlimited longevity, self-incrimination), but, more
important, from the logical and literal difference between
a corporation and a human being.1

Donaldson further addresses the distinction he wants
to make between corporate and moral agency when he
critiques French’s Moral Person view. In fact, it is the
matter of distinction between corporate and human agency
that prompts Donaldson’s objection to French’s conclusion
that corporations are moral persons just as humans are
moral persons. To begin with, Donaldson disagrees with
French’s understanding of moral agency or intentionality:

that an intentional or moral agent is necessarily a moral

58

person.2 This stance of Donaldson is undoubtedly due to

his adherence to the traditional notion of moral person as
a rational human being. Yet, more specifically, he
challenges French’s CID Structure rationale as proof of a
corporation’s intentionality.3 The corporate decision-
making process may, in fact, consist of authoritative
deliberation and policy reasons: however, according to
Donaldson, this type of intentionality does not clearly
indicate the intentions of the corporation itself, but
rather the intentions of human policy makers, directors,
stockholders, and the like. Just because corporations
seem to behave in an intentional manner does not warrant
the conclusion that they are moral agents or moral
persons. Thus, Donaldson suggests that French’s argument
is weak in establishing the corporate locus of intentions,
and also insufficient in demonstrating corporate moral
agency and personhood. He offers three major points of
challenge to the moral person view, and they pertain
essentially to corporate intentionality: (a) what
corporations g9 cannot be equated with what corporations
intend; (b) CID Structure reveals, for the most part,
intentions of human founders, directors, stockholders, and
so on; and (c) there is little resemblance between 50-
called corporate intentions and individual human
intentions. Donaldson summarizes his critique of the

moral person view as follows:

59

The Moral Person view of the corporation .
exaggerate[s] the similarity between corporations .and
people. Corporations are not, morally speaking,
"persons." Neither the fact that they behave inten-
tionally, nor the fact that they are granted certain
legal rights by the courts implies that they are
persons. Corporate "intentions" differ from
individual human intentions, and the mere existence
of intentions fails by itself to guarantef moral
agency (witness lower animals and computers).

In an explicit and emphatic way, Donaldson concludes that
corporations are not moral persons:

. . . Corporations fail to qualify as moral persons.

They may be juristic persons, granted legal rights by

courts and legislators; they may even be moral agents

of some other kind: but they do not appear to be

"moral persons" in any literal sense of that term.5

Front what Donaldson tell us, there is substantial
evidence that makes practically certain the claim that
corporations are not moral persons. However, corporations
may be juristic persons or what can be termed paramoral
persons, or they may even be moral agents of some special
kind. It is the idea of some special kind of moral agency
that Donaldson offers toward a comprehension of corporate
responsibility. Since corporations are not moral persons
who possess personal moral agency, then perhaps they may
have characteristics that would qualify them as corporate
moral agents. Donaldson proposes two minimum requirements
for corporations to qualify as moral agents:

1. The capacity to use moral reasons in decision-

making.
2. The capacity of the decision-making process to

control not only overt corporate ac s, but also
the structure of policies and rules.

60

These conditions comprise the bare essentials for
corporate moral agency. The first recommended condition
demands that a corporation ought to consider and integrate
socially approved moral reasons in the decision-making
process. Second, the corporation must include moral
values in corporate general policies and have them
reflected in procedural rules. These criteria would not
only determine corporate moral agency, but also provide
the grounding for corporate moral responsibility. With
built-in mechanisms for moral control, a corporation could
more readily correct and even prevent untoward activities.
Donaldson further suggests that the conditions for moral
agency be met as a requirement for moral status at the

time of incorporation.7

The feasibility of this latter
recommendation seems rather unlikely because it would
necessitate a rewrite of states’ incorporation laws that
would probably be preceded by political debate, if
considered at all. A similar, but more elaborate,
proposal for developing the moral character of
corporations has occurred on the national level with the
1980 Corporate Democracy Act, which has been placed on the
back burner in Congress’s kitchen because it was found to

8 As for Donaldson’s

be an extreme reform measure.
criteria for corporate moral agency, it appears that human

intentionality is being superimposed on a nonhuman entity.

 

61

Nevertheless, the most significant contribution Donaldson
offers to our search for corporate personhood and
responsibility is his argument that corporations are not
moral persons.
4.2 Ve as ‘ c' es 0 a
Responsibiligy

Our next philosopher-challenger to French’s Moral
Person view is Manuel G. Velasquez, who in his article,
"Why Corporations Are Not Morally Responsible for Anything
They Do," meets French’s argument head on with the two
requisite principles of moral responsibility--ectus reus

and mens rea.9

He mentions that these requirements of
human responsibility are constituent of both philosophical
and legal understandings of responsibility. An actus reus
requires that the wrongful act originate in the agent or
doer, and that the agent perform the act with his bodily
movements. ens ea requires that the agent who
originates the act with his bodily movements must also
perform the act according to his intentions. Thus, for an
agent to be morally responsible for an act, he must intend
to perform the act with his own bodily movements.10 In
the law that is stated as a wrongful intention carried out
in a wrongful deed, and together render the actor (agent)

criminally liable.11 For Velasquez, then, moral

responsibility is the kind of responsibility that is

62

ascribed to an individual human person for actions that
originate in the person, that is, both in his intentions
and bodily movements. The notion of origination is
pivotal to Velasquez’s argument that corporations are not
morally responsible for untoward corporate acts because
corporate acts do not originate in the corporation itself,
that is, either in its intentions (if policies and rules
can be considered as such) and bodily movements (of which
it is incapable). Velasquez explains:

This notion of "origination" is thus tied to a
concept of human beings as having a certain kind of
mental and bodily unity. An agent originates an
action in this sense when (l) he forms a pdan of
action or intention in his mind and (2) he executes
this intention thropgh bodily movements over which he
has direct control.

. . Corporate acts do not originate in the
corporation but in the corporation’ 5 members, . .
[because] corporations do not act except through
their members.

. . . Corporations do not originate acts in the
manner required by attributions of moral responsi-
bility--namely4 by directly moving one’s own body
(actus reus).

But an act is intentional only if it is the carrying
out of an intention formed in the mind of the agent
whose bodily movements bring about the act (mens
rea). The intentions French attributes to
corporations (CID Structure), then, do not mark out
corporate acts as intentional because the intentions
are attributed to one entity (the corporation)
whereas the acts arfscarried out by another entity
(corporate members).

From the foregoing passages, we see that Velasquez

asserts the concept of moral responsibility based on mind-

63

body unity or origination of intentional action, which is
constituent of human moral agency or moral personhood. As
he indicates, it is in virtue of this mind-body unity that
intentional actions can be said to originate and thereby
qualify as moral actions, which would then warrant moral
liability.16 Our Jesuit philosopher, unmistakably,
supports the concept of moral responsibility that has its
roots in the traditional notion of moral personhood,
whereby rational human intentions joined with human inten-
tional action constitute moral action and consequential
moral responsibility.

For French, on the other hand, moral responsibility
ascriptions can be assigned to merely intentional agents,
who are also moral persons according to the Lockean
interdependency view of moral personhood. Thus, French’s
argument for corporate moral responsibility focuses on
corporate intentionality, and this he does by pointing to
the corporation’s internal decision-making structure (CID
Structure) that consists of policies, rules, and
procedures. Now, Velasquez rejects the CID Structure as
evidence of corporate intentionality on the grounds that a
corporation does not have a mind of its own from whence
these policy rules or intentions originate, nor does the
corporation have a body of its own to carry out these

intentions. Corporate policies and rules are formulated

64

by' entities other than the corporation itself, namely,
corporate founders and/or members. Velasquez argues as
follows:

Because they [corporations] do not themselves

originate intentions and because they do not

themselves carry out intentions, corporate policies
and procedures cannot be said to originate
intentional actions. On the contrary, corporate
policies and procedures are themselves wholly the
products of the intentional actions of other agents
and are carried out only when other agents freely

choose to adhere to them. 7
Thus, Velasquez finds a corporation not to be a moral
agent nor a moral person, mainly because a corporation has
no perceivable intentionality, that is, no intentions of
its own; and it has neither a mind nor a body from whence
intentions and intentional actions, respectively,
originate.

In addition, Velasquez criticizes French for his
rationale on corporate moral personhood and moral
responsibility in order to justify the assignment of moral
ascriptions of blame and punishment to corporations for
untoward acts. He believes that the desire to impose
blame and punishment on corporations for wrongdoing has
motivated French and others to mistakenly fabricate

corporate moral personhood and responsibility.18

Now,
Velasquez understands that blame and punishment for
wrongdoing are justified in any of the following ways:

(a) the utilitarian notion that wrongdoing ought to be

65

deterred, (b) the deontological or duty-bound rationale of

mutual beneficence--mutua1 consent not to harm one

19

another, and (c) rectification of wrongdoing. These

principles have been traditionally connected to moral
responsibility or intentional action. Therefore, blame
and punishment are consequential to causal and intentional
wrongdoing. Velasquez explains the connection as follows:
I have only sketched these three kinds of moral
rationales for attaching blame and punishment to
moral. responsibility. All ‘three :rationales, I
believe, are present in our common understanding of
blame and punishment and in our understanding of the
way in which liability to blame and punishment are
conceptually connected to moral responsibility. What
is crucial to notice is that all rationales connect
moral responsibility to blame and punishment through
mediation of moral principles that require that blame
and punishment be inflicted only upon agents in whom
wrongful acts originate; that is, only upon agents
who intentionally carried out with their own bodies

the direct movements tflgt constituted or brought
about the wrongful acts.

Here again, Velasquez claims that corporations themselves
cannot be morally blamed and punished because they are not
morally responsible for their actions due to lack of

origination of intentional action.

4.3 W

Velasquez suggests that some reasons why French errs
in wanting to ascribe moral responsibility to a
corporation have to do with his failure to differentiate
the meanings of the term Mien and to distinguish

between the corporation and its members, between human

66

moral responsibility and corporate responsibility. As
regards the term Mien, Velasquez presents three
distinct usages.21 The first usage of the term
W refers to a legal entity that is recognized
and regulated by law. In this sense, the corporation is a
distinct entity, separate from its human membership. The
second and third usages of the term refer to a corporate
organization of human persons. In one sense, the
organization of human beings can mean a set of
relationships: that. is, ‘the «corporation refers to the
structured set of relationships that identify the
organizational group members in their roles. The other
sense of corporation organization refers simply to the
group of human beings that comprise the corporate
membership. Thus, there are three frames of reference for
the term peppexepipn: the legal entity, the organization
as a set of relationships, and the organization as a set
of human members.

Now, when moral responsibility, blame, and punishment
are ascribed to a corporation, it cannot refer to the
corporation as a legal entity because origination of
intentional moral action does not pertain to a corporate
legal entity. Moral responsibility can only be ascribed
to a rational, intentional agent or moral person who
originates intentional action, and a corporate legal

entity does not qualify as such. What remains, then, are

67

references to the corporation as an organization of
positional roles and as an organization of human members.
As Velasquez indicates, to attribute moral responsibility
to a corporation as a set of position relationships means
to assign blame and punishment to positions on the
corporation’s organizational chart. Now, positions or
roles in a corporate organization, in and of themselves,
cannot originate intentional action, nor feel shame or
punishment. Only the people who fill the positions can
have intentions and feel shame. It does not make sense,
then, to attribute moral responsibility to the corporation
as a set of relationships. Last, and most significant, to
attribute moral responsibility for wrongdoing to the
corporation as an organization of human persons means that
the group of human members are morally responsible for the
wrongdoing and should bear the blame and punishment. But
here, too, important distinctions must be made regarding
the distribution of responsibility to corporate members.
Velasquez offers three clarifications of what it might
mean to assign moral blame and punishment to a

corporation’s members.22

First, ascription could be
imposed on the corporate group as a whole and not
distributed among any of the members. This effects a
nondistributive collective blame. Second, moral

ascription could be distributed to each and every member

of the corporation, thus effecting distributive collective

68

blame. Third, moral responsibility could be distributed
only to certain members of the corporation.

On consideration of the first way to mete out moral
responsibility to corporate members by imposing moral
blame on the whole group with a collective nondistributive
attribution, we find that this is not feasible since moral
responsibility must pertain to individual intentional
agents who originate intentional action. Thus,
responsibility must be reduced or distributed to either
all or some of the corporate members. Velasquez
immediately and correctly discounts the collective
nondistributive moral ascription for corporate members.
Furthermore, distributed responsibility to either all or
some of the corporation’s members would be covered by the
second and third considerations. Now, to assign and
distribute moral responsibility to every member of the
corporation indiscriminately without some assurance of
each one’s intentional involvement or responsible
relationship to the wrongdoing would be inappropriate and
unjust, as well as a defeat of moral purposes. Therefore,
the collective and broadly distributive moral ascription
must also be rejected, in all fairness, for use in
assigning moral responsibility to corporate members.

The third and final consideration for group blame,
that of assigning moral responsibility to certain

intentionally involved corporate members for untoward

69

acts, seems to be the most acceptable, fair, and feasible
way of ascribing moral responsibility to a corporation.
Only those corporate members who originated the untoward
acts in their intentions and intentional actions should be
morally blamed and punished.

Now, Velasquez contends that when a corporation is
said to be morally responsible for some untoward act, this
is but an elliptical (or round-about) way of saying that
some members of the corporation are morally responsible
for the act. The elliptical ascription is used for want
of sufficient proof as to what person or persons
intentionally brought about the untoward acts. He
explains as follows:

We are often forced to adopt this elliptical way of

speaking because, as outsiders, we are usually

ignorant of the inner workings of a corporation.

Suspecting that some members of a corporation knew

that an act they were intentionally carrying out (or

helping to carry out, or failing to prevent) was
wrong, but not knowing who those members were, we
refer to them under the rubric of "the corporation"
and say that the corporation is morally responsible
for the act. Obviously when we say this we do not
mean to indict everyone in the corporation regardless

of their complicity. Nor do we mean to indict a

merely fictional entity, nor a set of relationships.

We are pointing, rather, to the presence within the

corporation of people who iggentionally brought about

the wrongful corporate act.
Thus, for Velasquez to say that a corporation is morally
responsible for an untoward occurrence is but to imply

that at least some member or members of the corporation

are intentionally or morally responsible for the act.

70

4.4 V s d ' t' n

Our philosopher makes it clear that the corporation
itself (as an entity separate from its members) cannot be
morally responsible for corporate acts. Moral
responsibility can only be had by the corporation’s
intentionally acting human members. In fact, Velasquez
warns against the elliptical ascription that assigns moral
responsibility to the corporation and not to particular
individuals, not only because the moral ascription
erroneously signifies that the corporation could be a
morally responsible agent, but, more important, because
the corporation’s human wrongdoers could escape moral
sanction and go unblamed and unpunished.24 He is
particularly concerned, and rightly so, about reaching
those human corporate members who knowingly and
intentionally bring about corporate acts. Since
intentional corporate acts originate in human corporate
members, moral responsibility for corporate untoward acts
must revert to the intentional corporate members. Thus,
from the foregoing rationale, we can readily understand
how Velasquez concludes that corporations are not morally
responsible for their untoward acts. This position,
however, does not exempt the corporate entity itself from
causal and legal responsibilities, the importance of which

ought never to be undermined. Furthermore, the corporate

 

71

nonmoral person view, which Velasquez upholds, attempts to
philosophically pierce the protective corporate veil of
moral immunity and get to the morally responsible human
members of corporate enterprise.

In summation, then, we find Velasquez to be an
effective challenger of the moral person view, especially
when he disproves French’s crucial premise regarding the
CID Structure as the intentionality factor of corporate
moral personhood, by pointing to the fact that corporate
policies and rules are human-formulated and reflect human
intentions for corporate enterprise. He offers elaborate
philosophical and legal explanations of what is entailed
in moral personhood and responsibility. The origination
principle, which is perhaps the most compelling aspect of
his counterargument, requires that moral action and
responsibility originate in an intentionally actional
agent. Furthermore, this principle suggests the twofold
character of moral intentionality: that of intentions
(mens pee) and intentional action or acting upon one’s own
intentions (actus reus). For a morally responsible act,
then, both the intention and the intentional action must
originate in one and the same agent. This concept of
moral action entails a mind-body correlated unity of
action. Now a corporation, as a conglomerate collectivity
or legal entity, has neither a mind nor a body of its own

with which to carry out a moral act. Only its human

72

members can claim the instruments for moral action: only
its human members can perform moral acts and be morally
responsible for their actions.

Even though Velasquez offers an elaborate explanation
of what comprises moral responsibility, he asserts a pzime
fieeie case for distinguishing between a human being and a
business corporation, between human action and corporate
action.25 A human person acts with his own mind and body,
whereas a corporation, which has no mind or body of its
own, can act only through the human corporate members who
act on its behalf. A human corporate member can be held
morally responsible for his untoward actions, while the
corporation can be only causally and/or legally
responsible for untoward corporate acts. Thus, the human
being is looked to for responsible, moral action.

An important insight to be derived from Velasquez is
that we are to look to the human dimension of corporate
enterprise for justification and rectification of
corporate action. Those responsible corporate members who
make corporate decisions must be sought out for
accountability of untoward corporate action. Corporate
moral responsibility, then, can be said to reside with
responsibly related corporate members. Therefore, moral

blame and punishment must be directed toward the

 

73

responsible: corporate :members, as .he indicates in the
following passage:

If we are to deter corporate wrongdoing and be
assured that corporate members will comply with our
moral and legal norms, our blame and punishment must
travel behind the corporate veil to lodge with those
who knowingly and intentionally bring about the

corporation's acts. Since corporate acts originate
in thfg, they must be blamed and punished for those
acts.

Velasquez makes us understand that to reach the moral
recesses of corporate enterprise for assignment of moral
ascriptions, we must look to the human beings who brought
about the untoward actions. Thus, to view the corporation
itself as a morally responsible agent, as French proposes,
would be erroneous because the corporate collective entity
cannot itself‘ act intentionally, but only' through the

intentional actions of its human members.

4.5 Lagg epg Ehe {oppai Serpepupe View

Another significant challenger to French’s Moral
Person view is the contemporary philosopher, John Ladd,
who opposes the notion of corporate moral agency and
personhood because he perceives the business corporation
as merely a formal organizational structure that is devoid
of any moral qualities. To begin with, Ladd tells us that
a formal organization is defined by its structural
framework of authoritative hierarchy and goal-oriented
activities which reveal the purposes of the

organization.27 Included in this notion of formal

74

organization is the large corporate business, university,
labor union, and government. Now, in a business
corporation, work tasks are ordered throughout the
organization to achieve the economic and financial goals
of the capitalistic enterprise. Thus, it is found that a
business corporation as a formal organizational unit has
its operational activities structured primarily for
productive and profitable goals. There may also be
secondary and/or unstated goals such as long-term
viability or greater market share, all of which may
comprise the corporate organization’s objectives.28
Clearly, then, the goals of large business corporations
that direct organizational decision making and provide
motivation for corporate activities are of a pecuniary
nature, and not of moral principles and obligations.

Now, since moral principles and obligations are not
the established goals of a business corporation, a
corporate organization cannot "rationally" pursue these
ends because the rationality of formal organizations
requires that organizational decision action must be goal
related.29 What Ladd purports is that formal
organizations are peculiarly characterized by goal-
directedness, which necessitates decision action plans
that aim to achieve the organization’s objectives. An

organization acts appropriately or "rationally" when its

75

decisions are in accordance with the organization’s
established goals. This means that those decision actions
that are in line with the achievement of organizational
goals are considered rational organizational decisions.
In formal organizations, then, rational decision action
aims to achieve the organization’s specific goals. It
would be unreasonable and improper for an organization’s
decision makers to consider alternative decisions that are
not in accord with established goals and organizational
purposes. Therefore, organizational decision makers are
"rational" if they select the most effective means to
achieve the organization’s objectives.

The formal or "rational" organization is exemplified
by the megacorporate business enterprise, in which can be
found the rational character of goal-directedness that
determines strategic action plans for achievement of
organizational goals. As already indicated, these
megacorporate organizations have essentially economic and
financial goals rather than moralistic goals.
Consequently, corporate business decision making involves
the selection of the most effective action plans to
accomplish goals such as low-cost productivity and
increased earnings. The rational concern, then, that
permeates mega-industrial and mega-service organizations
is to meet the respective organizational goals for

profitable production of goods and services.

 

76

One contemporary prototype of rational business
organization is the largest worldwide industrial, General

Motors Corporation, whose overriding organizational goal

as stated in its W is "to compete

profitably and maintain its world leadership position."30

Also indicated in the General Motors Report is its current
operational or secondary goal, "to become North America’s
lost-cost domestic automobile producer."31 Other evidence
of GM’s rational goal-directedness can be found in its
formulation of long-term objectives for the 19803 that
directed corporate strategic decision planning to achieve
objectives such as (a) improved product quality, (b)
reduced costs, (c) modernized plants and facilities, (d)
technological leadership, and (e) more effective

relationship with employees.32

Results of goal
achievement are reflected in GM’s increased earnings
record, which reached a historic high in 1988 with

$4,856.3 million in earnings.33

Daily operation
objectives such as cost reductions and new product
marketability were key factors in GM's record earnings for
1988.34 In the annual "Message to Stockholders," GM’s top
executive officers praise the ongoing pursuit of corporate
objectives of profit growth and product leadership:

We are very pleased with GM’s performance in 1988 as

our efforts to achieve a strong, consistent pattern

of profitable growth continued to take hold. Sales
and revenues reached a record $110.2 billion, and GM

77

earned a record $4.9 billion, up 37 percent from

1987. . . . GM is well positioned to achieve its

ultimate objective of strong profitabilitystoday and

industry leadership 1nto the let Century.
As leaders of a rational business organization, corporate
executives strive to steer the corporation effectively
toward its economic and financial goals.

Significantly enough, the GM Report consists almost
entirely of corporate goal reporting and financial
operating statements, all of which indicate that the
corporation’s concerns are materialistic rather than
moralistic. General Motors undoubtedly epitomizes Ladd’s
understanding of rational formal organization with its
peculiar mark of goal-directedness that is verbalized in
clearly stated objectives and action plans that, in the
case of business enterprise, aim at efficient economic
production and increased financial profitability. It is
quite evident from the GM literature that a formal
business organization is concerned, first and foremost,
with economic and financial matters, and not with morality
or moral pursuits. The achievement of economic and
financial goals has become, as it were, the rational
responsibility of the corporate entity and its leaders.
Thus, we find that goal-directed decision planning and
operational implementation are praised as responsible
actions in the accomplishment of organizational

objectives.

78

It is a noteworthy fact that corporate business
purposes are permitted and even underwritten by law in our
capitalistic democracy because business organizations
provide the society with material goods and services,
jobs, and financial wealth. Corporate business
organizations have a vital functional role as productive
instruments in a capitalist economy. .As a consequence,
the purposive ends of a business corporation become the
corporation’s obligations, which translate into
organizational goals to be achieved. Now, to reiterate,
these goals are essentially economic and materialistic,
and not moralistic or in pursuit of virtue as such. It
cannot be expected that business corporations pursue
anything but established organizational goals and that
corporate decision action be anything else than relevant
to prescribed corporate goals. Ladd even goes as far as
to say that it cannot be expected that corporations as
rational organizations will act according to moral
principles:

. . . For logical reasons it is improper to expect

organizational conduct to conform to the ordinary

principles of morality. We cannot and must not
expect formal organizations, or their representatives

acting in their official capacities, to be honest,
courageous, considerate, sympathetic, or to have any

kind of moral integrity. Such concepts are not in
the vocabulary, so to speak, of the organizational
language-game. Actions that are wrong by ordinary

moral standards are not so for organizations; indeed,
they may often be required. Secrecy, espionage and
deception do not make organizational action wrong;
rather they are right, proper and, indeed, rat'o a1,

79

if they serve the objectives of the organization.

. . . From the point of view of organizational

decision—making they are "ethically neutral." 6

Ladd’s appraisal of formal organizations portrays
them as goal-effective to the point that even immoral
means would be used to achieve organizational ends. The
implication for business corporations is that they would
resort to immoral decision action in order to accomplish
the organization’s economic and financial goals. Now,
according to moral philosophical thinking, the end does
not always justify the means. Nevertheless, formal
business organizations do not operate on such a premise
because their staunch goal-directedness promotes the
notion that the end or organizational goal must determine
the strategic means to achieve the desired organizational
goal. In other words, organizational goals practically
always justify the means; for according to the rationality
framework of formal organizational behavior, rational
organizations always select the pertinent alternative
means that lead to the accomplishment of stated
organizational goals.

In his discussion of formal organizations as
rationally goal-oriented entities, Ladd addresses the
matter of factual limiting conditions that a formal
organization and its decision makers must consider in
strategic decision planning and selection of means to

achieve organizational goals. These factual and empirical

80

conditions affect an organization by setting limits on its
operating activities. Ladd refers to these conditions as
"limiting' operating' conditions" and. identifies some. of
them as the following: scarcity of resources, equipment,
and trained personnel; legal restrictions and government
regulation: local citizenry or communities; and employee

morale.37

If, for example, an industrial corporation such
as General Motors should experience shortages in supplies
of certain material resources, it would have to consider
the condition as informational data in the decision-making
process to either modify current production strategies or
select alternative strategic means to achieve the
corporation's economic and financial goals. 'The factual
condition of a scarce material resource, which is relevant
to the corporation’s operating strategies, immediately
influences the corporate decision-making processes to
evaluate the contingency and to determine appropriate
action for the continued accomplishment of the
organization’s goals of profitable productivity. The
limiting Operating condition of a scarce material resource
does not effect a change in the corporation’s economic and
financial goals; it does, however, cause the corporation

to alter its strategic operating activities in the

accomplishment of the organization’s purposive goals.

81

Ladd leads us, at first, to think that it is possible
for moral issues to be introduced into corporate decision
making as limiting operating conditions, but then he
retracts his intuition with the unlikelihood of that
occurring because morality per se is not an organizational
goal: there could be no relevant moral limiting operating
condition that would affect the decision-making process to
modify the corporation’s nonmoral strategic activities.38
Furthermore, morality and morals are abstract notions, and
corporate business organizations deal with factual or
empirical data pertinent to materialistic matters of
economic productivity and financial profit. In order for
a moral issue to influence corporate decision processes,
it would have to be presented as a factual and empirical
condition or limiting operating condition such as a
government regulation or a corporate statutory law.39
Therefore, we cannot expect an industrial organization to
cease polluting the atmosphere or to discontinue the
manufacture of harmful weapons simply on moral grounds.
Ladd assures us that:

. . The only way to make the rights and interests
of individuals or of the people logically relevant to
organizational decision- -making is to convert them
into pressures of one sort or another, e.g. to bring
the pressure of the law or of public opinion to bear
on the organizations. Such pressures would then be

introduced into the rationa decision-making as
limiting operating conditions. 0

 

82

Ladd concludes that formal organizations, and large
business corporations specifically, have no overriding
moralistic character or purpose to direct their
activities. They generally are not moral-principled, nor
are they concerned with morality or morals as such. Their
responsibilities lie in the achievement of organizational
goals which, in the case of business corporations, are
essentially of a nonmoral nature, such as economic
productivity and/or monetary profit. Ladd challenges the
moral person view with his demonstration that formal
organizations, and business corporations specifically, are
not moral persons as understood by individual human
morality. The responsibilities that business corporations
have as formal organizations pertain to the achievement of
production and profit goals, which are of economics and
finance, and not of morality or moral pursuit. Ladd
summarizes his conclusion as follows:

. . . Formal organizations are not moral persons, and
have no moral responsibilities, they have no moral
rights. In particular, they have no moral right to
freedom or autonomy. There can be nothing wrong in
exercising coercion against a formal organization as
there would be in exercising it against an
individual. Hence, the other side of the coin is
that it would be irrational for us, as moral persons,
to feel any moral scruples about what we do to
organizations. (We should constantly bear in mind
that the officials themselves, as individuals, must
still be treated as moral persons with rights 21d
responsibilities attached to them as individuals.)

In the summation of his argument that corporate

formal organizations are not moral persons, Ladd

83

inadvertently hints at a twofold perspective of
responsibility’ that abides in corporate settings: the
legal organization’s responsibility for achieving its
purposive ends and the corporate decision makers’ moral
responsibility for their actions. It is toward a
compatible, two-dimensional notion of corporate
responsibility that the present work aims to direct
further discussion on contemporary corporate responsi-
bility.

As was earlier noted, the philosopher Velasquez
touches upon the dual aspect of responsibility in
corporate settings, but without suggesting any working
hypothesis to continue the discussion of this notion of
corporate responsibility. Donaldson, likewise, touches
upon the legal dimension of corporations as well as the
human leadership aspect, but without combining the two
understandings for a fuller conceptualization of contempo-
rary corporate responsibility. These philosophers tend to
look at a corporation as either a moral person or not a
moral person, or some kind of moral agent, or as merely an
economic organization. However, Velasquez comes the
closest to acknowledging, although tacitly, the dual
responsibility found in corporate settings. First, the
corporation as a legal entity is causally responsible for

its untoward activities or actions; second, the human

84

corporate members are morally responsible for their
untoward acts or omissions done on behalf of the corpora-
tion. This two-dimensional notion of contemporary
corporate responsibility will be proposed by this work as
a viable alternative conceptualization to the corporate
moral person notion.

As we have seen in this chapter, the challengers to
French’s moral person view very effectively disprove that
corporations are intentional moral persons that can be
held morally responsible for untoward acts.

In the following chapter, the moral projectionists--
quasi-challengers to the moral person view--are surveyed
for their ideas on how the large corporation can be
morally responsible for its actions without the

prerequisite of moral personhood.

85

1Thomas Donaldson. Qornorafions_and_noralitx (Engle-
wood Cliffs, N.J.: Prentice-Hall, 1982), p. 20.

21bid., pp. 20-21.

31bid., pp. 21-22.

4Ibid., p. 32.

51bid., p. 23.

61bid., p. 30.

7Ibid., p. 31.

8Mark Green, "The Case for Corporate Democracy," in
Busineee end Speiepy (Englewood Cliffs, N.J.: Prentice-
Hall, 1985), pp. 27-28.

9Manuel G. Velasquez, S. J., ”Why Corporations Are Not
Morally Responsible for Anything They Do," Beeineee_ene
Brofessional.£fhiss_lournal 2 (Spring 1983): 6.

1°Ibid., pp. 3-4.

11Henry Campbell Black. Blaokis_Lan_Diotionarr. 5th
ed. (St. Paul, Minn.: West Publishing, 1979), pp. 34,
889.

12Velasquez, "Why Corporations Are Not Morally Respon-
sible," p. 4.

13Ibid., p
14Ibid., p
151b1d., p. 8.
16Ibid., p
171bid.
18Ibid., p. 10.

19Ibid., pp. 4-5.

86

2°Ibid., p. 5.

lebid., pp. 10-11.

22Ibid., pp. 12-13.

23Ibid., p. 13.

24Ibid., p. 15.

25Ibid.

26Ibid.

27John Ladd, "Morality and the Idea of Rationality in

Formal Organizations," The Monist 54 (October 1970);
reprinted by permission of the author and The Monist in

Business Ethics: Corporate Values and Society, ed.
Snoeyenbos, Almeder, and Humber (New York: Prometheus

Books, 1983), p. 48.
281bid., p. 50.
291bid., pp. 51-52.

30General Motors 1988 Annual Report (Detroit, Mich.:

General Motors Corporation, 1988), p. 5.
311bid.
321bid.
33Ibid., p. 17.
341bid.
35Ibid., p. 2.
36Ladd, "Morality in Formal Organizations," p. 53.
37Ibid., p. 52.
381bid.
39Ibid., p. 53.
4°Ibid., p. 57.

4lIbid.

CHAPTER V

QUASI-CHALLENGERS--THE MORAL PROJECTIONISTS

Thus far, French’s moral person argument with its
affirmation of corporate moral responsibility has been
found faulty by major opponents, particularly in its
insistence that the corporate entity is an intentional
moral person because of the corporation’s internal
decision structure. In brief, the challengers argue that
since the corporate collective has neither a mind to
formulate intentions nor a body to actualize intentions,
the corporation cannot qualify as an individual moral
person. Furthermore, the corporation’s rules, policies,
and decision strategies are designed and implemented by
the corporation’s human members. Thus, the corporate
entity cannot think or act in and of itself, but only
through its human members who deliberate and act
intentionally on behalf of the corporate entity. Human
members of the corporate collective comprise the moral
dimension of corporate enterprise, and ultimately of
corporate responsibility. French’s challengers overall
conclude that the corporate entity itself cannot validly

be held morally responsible for its untoward acts. The

87

88

corporate veil has to be pierced; that is, moral responsi—
bility for wrongdoing has to be ascribed to the human
members whose intentional decision action or inaction
brought about the wrongdoing. The corporate entity can at
most be held legally responsible for corporate wrongdoing.
Corporate members can also be held legally responsible for
corporate wrongdoing if they are found responsibly related
to the violation of statutory law. (This point will be
discussed further in Chapter VII.) Even Donaldson, who
discusses a metaphysical social contract for business,
realizes that moral responsibility ultimately rests with
the corporation’s human members, particularly the corpora-

tion’s executive decision makers.1

He suggests that
internal, autonomous, moral control as exercised by
corporate decision members is preferred tn) external,
coercive government control.

We now turn our inquiry to the quasi-challengers of
French’s moral person view, the moral projectionists, who,
while they do not argue from the premise of corporate
moral personhood, expect. the corporation to engage in
moral deliberation by considering moral concerns in
decision making, and to take moral responsibility for
consequences of corporate action. Moral projectionists
may not support French’s notion that the corporation is a

moral person, a metaphysical intentional agent; but yet

they aim "to help corporations inform their decisions with

89

moral concerns" by application of moral criteria of
individual behavior to corporate decision making.2 Moral
projectionists readily acknowledge that the large business
corporation is a. legally chartered entity' which is
organized for economic and financial purposes of
production and profit. More important, they seek to
rectify corporate decision making that can and does cause
offense and harm to individual human persons, as well as
other groups. Moral projectionists promote the
development of conscience at the corporate organizational
level. As a consequence, they base their argument on the
notion of conscience and individual moral behavior,
whereby these understandings are applied to corporate
decision making to effect moral deliberation on
alternative decision actions and their outcomes. The
exponents of moral projection are discussed in the

following section.

5.1 Exponents oi Monal Projection
There are certain scholarly thinkers on the subject
of corporate responsibility who do not outrightly disagree
with French’s line of argument for moral personhood and
responsibility of the corporate entity, but neither do
they explicitly concur with French’s conclusion that the
corporation is a moral person. They seem to sidestep the

problems involved in rendering the corporate organization

90

the same metaphysical or intentional status as the
individual human person. Instead, these thinkers on
corporate responsibility examine closely what is
understood by individual intentional moral action and
responsibility, and then project this understanding onto
the corporation so as to provide guidelines for corporate
moral decision making.3 Hence, the term "moral
projection" is used to describe this sort of approach to
the meaning of responsibility in corporate organizations.
Moral projection provides a standard of moral expectation
for responsible corporate decision action. Corporate
groups are expected to engage in moral reasoning when
deliberating upon alternative corporate action plans. In
effect, then, moral projectionists promote the use of
moral criteria in corporate decision making, similar to
that used by individual human persons in moral
deliberation on responsible human behavior. Exponents of
moral projection make an attempt to superimpose morality
on corporate decision makimg so as to effect corporate
moral responsibility. Their focus is on getting the
corporate entity to be morally responsible for its
activities.

The major exponents of moral projection are
Kenneth E. Goodpaster and John B. Matthews, Jr.,

professors at Harvard Business School, and Christopher D.

 

 

91

Stone, professor of law at the University of Southern
California. Their ideas of moral projection are examined
so as to determine whether and how moral responsibility
can be brought to bear on corporate organizational
activity.

In the next section, Goodpaster and Matthews’s moral
projection criteria of rationality and respect are
examined closely, followed by a section on Stone’s version
of moral projection.

5.2 Goodpaster and Matthews on Monal
Rationality and Respeet

In their attempt to define the concept of corporate
responsibility, Goodpaster and Matthews look closely at
what is generally understood by moral responsibility in
terms of individual human action and intention, and then
project this knowledge onto the corporate collective
decision process. Our projectionists propose, in effect,
to apply the criteria of individual moral responsibility
to the corporate decision—making process to ensure
corporate moral decision action and responsibility. This
principle of projection offers an explanation as to how
the corporation could have a conscience and act
responsibly in its decision planning for corporate
activities.

Initially, the projectionist approach to corporate

responsibility asserts an analogy between the individual

 

 

92

person and the corporation, and that the concept of moral
responsibility as it applies to human individuals can be
projected onto the corporation as an agent of society.4
Goodpaster and Matthews believe that for practical social
purposes the corporate organization should be expected to
act morally. They hold that:

A corporation can and should have a conscience. . . .

Organizational agents such as corporations should be

no more and no lgss morally responsible . . . than

ordinary persons.

Now, concerning the responsibility of individuals,
our projectionists point out three comprehensions: (a)
causal responsibility, (b) rule following, and (c) moral
responsibility.6 First, causal responsibility means that
one is to blame for causing or bringing about an action or
event. The second meaning of individual responsibility
refers to the social expectation of rule-following and
normative behavior. Third, and most important, individual
responsibility refers to moral decision making, which
entails consideration of the effects of one’s acts on the
well-being of other persons. All three notions are
usually involved in individual, morally responsible
action.

Goodpaster and Matthews elaborate on what they
consider the two underlying characteristics of individual

moral responsibility: the qualities of rationality and

respect.7 Moral behavior first entails rational decision

93

making that considers possible alternatives and outcomes,
purposes and means of accomplishment. The second quality
that permeates morally responsible individual behavior is
respect, which involves a conscious awareness of and
concern for the effects of one’s actions on others, as to
whether the actions or inactions would help or harm them.
Our projectionists emphasize the importance of the quality
of moral respect by equating this attitude with Hume’s
concept of sympathetic moral judgment, and with Kant’s
categorical imperative of mutual moral respect.8
Obviously, the quality of respect is essential to the
reasoning processes of a morally responsible person.
Nevertheless, both qualities of rationality and respect
are necessary components of human moral responsibility,
according to our projectionists.

It is precisely these two qualities of individual
moral responsibility that our professors want to project
onto the business corporation as criteria or frameworks of
reasoning for the morally responsible corporation. They
argue that it is meaningful and even advisable to apply
such concepts of individual morality to the business
corporate entity.9 Since the corporation is an organ-
ized group of persons that functions as a legal group
entity, and has an internal decision structure with rules

and policies to determine its group action, it makes sense

94

to expect some moral reasoning from the corporate organi-
zation. Furthermore, since the invisible hand of the
market and the visible hand of government fail to
adequately provide moral restraint, it is advisable to
project moral responsibility criteria onto the corporate
decision-making process. Even though Goodpaster and
Matthews promote the idea of a corporate conscience as
based on the principle of moral projection, they readily
admit its wide unacceptability. They tell us:
Although the principle of moral projection, which
underwrites the idea of a corporate conscience and
patterns it on the thought and feeling processes of
the person, is in our view compelling, we must
acknowledge that it is neither part of the received
wisdom, nor is its advisability beyond question or
objection. Indeed, attributing the role of
conscience to the corporation seems to carry with it
new and disturbing implications for18ur usual ways of
thinking about ethics and business.
Nevertheless, the moral projection principle as a frame of
reference for discussion on corporate responsibility has
merit in that it encourages, if not demands, that the
corporation’s decision processes include moral
deliberation and concern for the effects of corporate
action on the lives of other members of society.
Several years before Goodpaster and Matthews’s 1982
writing of "Can a Corporation Have a Conscience," in which
they elaborate on the principle of moral projection,

Goodpaster himself presented a paper at Bentley College’ 5

Second National Conference on Business Ethics, entitled

95

"Morality and Organizations." In that 1977 presentation,
Goodpaster expounded on the need for traditional ethics to
shift individual moral notions onto corporate decision
makers, so that the kind of moral responsibility exacted
from the individual could also be expected from the
corporate group.11 The justification that Goodpaster
offers for the moral accommodation stems from society’s
concern about the powerfully pervasive influence of
corporate activities and the large-scale technological,
and. oftentimes. harmful, effect on society and the
environment. Thus, Goodpaster advocates projecting, i.e.,
imposing, moral norms of individual behavior on corporate
collective behavior.

In his presentation, Goodpaster discusses John Ladd’s
challenge to the intelligibility of corporate moral
responsibility and projection of individual morality to
corporate behavior.12 For Ladd, it is absurd to expect
the business corporation to be moral or conform to moral
principles, since the corporation is merely an
organizational machine with organizational goals, and its
decision makers consider merely organizational goals in
their decision planning. cuganizational decision making
is entirely different from moral decision making. Ladd
asserts that moral standards of behavior for individuals
are separate from corporate standards of behavior, and

that individual rational agency is different in kind from

96

organizational rational agency. Thus, individual rational
agency is concerned with moral responsibility, whereas
organizational rational agency is concerned with efficient
goal-fulfilling responsibility.

In the face of Ladd’s challenge, Goodpaster neverthe-
less claims that separateness between organizational
rationality and moral responsibility is exaggerated, and
he may very well be correct. According to Goodpaster,
Ladd demonstrates a narrow, restricted notion of
organizational rationality that is closed to the
possibility that organizational goals could include both

economic and moral concerns.1:3

Ladd’s line of argument
creates a conceptual incompatibility between the ideal of
rationality in formal organizations and the ideal of moral
responsibility in decision making. Goodpaster, on the
other hand, holds that organizational rationality and
morality need not be mutually exclusive or in conflict.14
He suggests that an accommodation of moral projection be
made in corporate decision-making processes, whereby moral
notions become integral criteria for responsible corporate
action. In conclusion, Goodpaster moves for a new task
for ethics, that of moral projection and the application

of moral notions of virtue and responsibility to the

corporate setting.

97

As a way of introducing Christopher D. Stone’s
version of moral projection, it must be mentioned that in
the presentation at the 1977 Business Ethics Conference,
Goodpaster refers to Stone’ 8 understanding of corporate
responsibility as derived from the projection of human
moral responsibility criteria to the corporation. The
next section examines Stone’s ideas on the meaning of

corporate responsibility.

5.3 o e- ' and

W

Several years before Goodpaster and Matthews advanced
their idea of moral projection for corporate responsibil-
ity, Christopher D. Stone published his classic work,
W, in which he develops the notion of
corporate responsibility from an understanding of
individual moral responsibility as applied to corporate
group decision action. He is brought to this endeavor by
the ambiguity that surrounds the concept of corporate
responsibility, as well as the need for a clearer
discernment of the meaning of responsibility in corporate
organizations.

Initially Stone proposes an examination of what is
meant by "being responsible" in terms of general social
expectations of ordinary human behavior. Only from
understanding the elements of human responsibility can a

notion of corporate responsibility be developed.15 A

98

parallel is established between human responsibility and
corporate behavior in order to discover a plausible notion
of corporate responsibility.

Stone begins with the observation that there are two
distinct connotations of the term zeeppneipilipy that are
employed in ascriptions of human responsibility.16 The
first comprehension of responsibility pertains to rule-
following or obedience to law and authoritative precepts,
whereas the second comprehension of responsibility refers
to one’s use of cognitive processes of reflection,
deliberation, and justification of decision action. Thus,
the two comprehensions of human responsibility can be
described, respectively, as legal responsibility and
autonomous moral responsibility. Now, the legal aspect of
human responsibility is based on society’s rules and
precepts, and usually enforced by threat of tangible
punishment and/or fine. The moral aspect of human
responsibility, on the other hand, is based on a sense of
goodness and justice, and enforced by conscience and at
times by other human beings in interpersonal relations.
Both kinds of responsibility are expected of human beings,
yet the latter of cognitive processes is the mature type
of responsibility that is greatly valued because it
fosters virtuous behavior far beyond what the law can

17 Stone gives detailed aspects of the cognitive

18

command.

processes of moral responsibility.

99

To begin with, the responsible person has control of
his temper; he can repress his desires, impulses, and
rage. Then, a first step toward responsible behavior
involves perception of one’s moral environment, that is,
other persons as well as other creatures, and the
appropriate treatment and concern for them. A responsible
person is fully aware of his freedom and knows that he is
accountable for the consequences of his actions or
inactions. Reflection and deliberation on alternative
choices of action are imperative to a rationally moral
person. Further yet, rational reflection and deliberation
must be conducted with attitudinal moral qualities such as
goodness and justice. Last but not least, a cognitively
responsible person has justifiable moral reasons for his
behavior in terms of such moral directives as the Judeo-
Christian precept of "Love God and love your neighbor,"
the Golden Rule, and Kant’s Categorical Imperative.

Now, most of the cognitive moral virtues cited above
cannot be explicitly legislated as directives for proper
behavior mainly because the usual format for laws forbids
wrong acts with "Thou shall not . . ." statements and the
like. Consequently, laws that stipulate the practice of
virtue are practically nonexistent. Thus, it is observed
that a mature person not only obeys laws, but, more
important, exercises his cognitive processes for

reflective moral decision making.

100

From what Stone learns of human responsibility with
its dual aspects of legal responsibility to obey laws and
moral responsibility to exercise cognitive processes, he
forms his notion of corporate responsibility, namely, that
corporate responsibility has both legal and moral

aspects.19

The formal corporate organization must obey
laws as well as exercise cognitive moral processes in
corporate decision making. Mere obedience to law does not
make for a mature, responsible corporation. Besides, the
law cannot command complete virtuous and proper social
behavior. As Stone warns throughout his work, the law is
inadequate to fully control the untoward behavior of
corporate organizations. in: cites several limitations
that are inherent in the making and implementing of law as
regards the regulation of large business corporations.

To begin with, since lawmakers usually are not
experts in an industry’s products or operations, they
refer to the industry’s research specialists, data,
standards, and other pertinent information, thereby
allowing corporations to participate in making the laws
that will regulate and control their behavior.20
Corporations also engage in legislative public opinion

21 Lawmakers

sessions that influence the content of law.
have difficulty in balancing various opinions, interests,

and values in the formation of passable law.22 It is also

101

difficult to frame laws that will be effective in reaching
the guilty and responsible parties; thus, laws tend to be

23 Furthermore, there

vague and have broad interpretation.
exists a distinction between morality as duty and morality
as aspiration. Duties stated as "Thou shall not . . ."
for' minimum standards of conduct are more feasible to
enforce than aspirations of "Thou shall or ought to . . ."

24 Aspirations are more difficult to

do good or justice.
write into law and communicate to corporations than the
minimum standards, which are already tough to enforce.

Regarding the implementation of law, Stone tells us
that when dealing with large corporations there is
difficulty in locating responsible parties, and the costs
of enforcing law are greater than the benefits.25
Ironically, the government agencies that are created to
regulate business and industry end up protecting business
corporations instead of the public, mainly because
agencies have inconsistent policies and are subject to
influence peddling.26 If the law and government agencies
were effective control mechanisms for corporate behavior,
there would be no need to discuss and theorize on notions
of corporate responsibility.

Stone asserts that the traditional control forces of
law and the market can no longer keep the megacorporations

27

within desirable social bounds. The marketplace

control, like the law, has become inadequate to curtail

102

the pervasive power and influence of large corporate
organizations. For example, the resource-allocation
function of the market assumes the existence of some
negotiating interface between a corporation and a person
dissatisfied with it; that is, it assumes a union or
group, not a powerless individual.28 The fact of the
matter is that there are many, many individuals in the
marketplace who must cope, although awkwardly, with
bigness and impersonal treatment. Stone informs us that
corporations‘have a strong tendency to protect their
established interests from environmental influences of the

market and the law.29

In conclusion, our legal theorist
affirms the shortcomings of external controls such as the
market and the law, which cannot make the large
corporation a moral entity. Only the corporate
organization itself can control its own behavior. Only
the corporation itself can ideally exercise both legal and
moral responsibility, if it opts to do so in its corporate
decision-making processes.

Although Stone never uses the term npnei_pzpjeepipn
for his approach to understanding corporate
responsibility, he does, however, look first to what
responsibility means for the ordinary human person before

he frames a notion of what responsibility might mean for

the corporation. From what he observes of mature human

 

103

responsibility with its two dimensions of rule-following
and cognitive processes, Stone then develops the same two—
dimensional notion for corporate responsibility; .As
cognitive processes are essential to mature, moral human
behavior, so too are the cognitive processes essential to
mature, moral corporate behavior. Stone parallels the
main elements of human cognitive processes--perception,
deliberation, and justification. according to moral
principles--with the corporate organization’s counterparts
of information gathering, analysis of consequences of
various alternatives, and rationale for decision actions,
all executed according to moral principles.30 Thus, Stone
affirms the necessary inclusion of moral cognitive

processes in the notion of corporate responsibility.

5.4 Snnnany 0; none; Epejeepipn Views

As we have seen, the moral projectionists Goodpaster,
Matthews, and. Stone iderive their notions of corporate
responsibility from the area of individual ethics and
moral responsibility. The content of their principles of
corporate responsibility is taken from the principles of
individual moral behavior and then set up as a model that
is applied to the corporate organization. The moral
criterion of individual responsibility becomes the
framework of moral expectation for responsible corporate

behavior.

104

Now, Goodpaster and Matthews point to major criteria
of individual responsibility as ”rationality" and
"respect,” which they designate as essential components of
corporate moral responsibilityu Conversely, Stone’s
interpretation of human responsibility consists of two
distinct connotations: (a) rule-following or obedience to
law, and (b) cognitive processes of moral deliberation and
justification of actions. These moral principles are then
projected as an accommodation to the level of corporate
organization to provide essential moral criteria for
corporate responsibility.

From an examination of the conceptual content of each
projected set of dual moral principles, we find
similarities between the two notions of corporate
responsibility. Theoretically, Goodpaster/Matthews’s
"rationality" factor can be matched with Stone’s rule-
following emphasis because both involve corporate rational
decision making with consideration of organizational
purposes, goals, and alternatives according to corporate
rules, policies, and government regulations. The
Goodpaster/Matthews "respect" component of corporate
responsibility can be matched with Stone’s "cognitive
processes" in that both require autonomous, moral percep-
tion and deliberation of concern for others and
alternative consequences of decision action, .Aside from

any validity to this interpreted congruence, it is

105

concluded that the moral projectionists, Goodpaster,
Matthews, and Stone, are accurate, if not justified, in
looking to notions of ordinary human responsibility to
derive the kind of moral responsibility criteria that
would comprise a plausible notion of expected
responsibility from the pervasively powerful business
corporation.

The moral projection approach tx: corporate
responsibility moves toward corporate self-regulation and
autonomous moral responsibility, while it affirms the
inadequacy of both external controls of law and the
marketplace. There is no evidence to suggest that the
projectionists would have corporate moral responsibility
replace or undermine the invisible hand of market and the
visible foot of government. Instead, the principle of
corporate responsibility would serve as a supplement to
the already existing controls of law and the market. As
the moral projectionists so boldly assert: "A corporation
can and should have a conscience."31

We discover, above all, that the moral projection
ideas of Goodpaster, Matthews, and Stone particularly,
suggest a two-dimensional, legal-moral comprehension of
corporate responsibility, the notion of which--a1though
not of the projected type--this dissertation defends. As

was indicated at the inception of this work, a plausible

 

106

comprehension of corporate responsibility is being sought,
one that would correspond with the corporation’s identity
and manner of acting through human agents. Thus far, we
have determined the identity of the corporation as a legal
conglomerate collectivity, and its member decision makers
as human moral persons. A defensible notion of corporate
responsibility is gradually being developed to match the
corporate identity and human agency. The notion will have
to include a legal dimension to correspond with the corpo-
ration’s legal identity, as well as a moral dimension to
match the human moral aspect of corporate organization.
From the examination of French’s moral person view and the
principle of moral projection, we find that neither
approach to corporate responsibility offers a satisfactory
comprehension of responsibility in corporate organiza-
tions--one that matches the dual responsibility aspects of
legal collective entity and human moral agency.

The following chapter contains the discussion to
refute the moral person view and the principle of moral

projection.

 

 

 

107

1Thomas Donaldson. Qornorations_and_noralitr (Endle-
wood Cliffs, N.J.: Prentice-Hall, 1982), p. 209.

2Kenneth E. Goodpaster and John 8. Matthews, Jr.,
"Can a Corporation Have a Conscience?" in thiss_in
Menegenene, ed. K. E. Goodpaster (Boston: Division of
Research, Harvard Business School, 1984), p. 145.

31bid.

4Ibid., p. 146.

51bid.

61bid.

7Ibid., p. 147.

81bid.

9Ibid., p. 148.

1°Ibid., p. 151.

11Kenneth E. Goodpaster, "Morality and Organizations, "
ed. T. Donaldson and

PatriCiavH. ”Werhanel(Englewood Cliffs, N. J.: Prentice-
Hall, 1979), p. 114.

 

121bid., pp. 115-16.
13Ibid., p. 118.
l4Ibid., pp. 120-21.

15Christopher D. Stone, Eneze the Lew Ends (New York:
Harper and Row, 1975), p. 111.

16Ibid., p. 113.
17Ibid., p. 116.
181bid., pp. 113-15.
19Ib1d., p. 115.

108

20Ibid., p. 94.

21Ibid., p. 95.

221bid., p. 97.

231bid., pp. 99-100.
241818., pp. 101-102.
251bid., pp. 103-104.
261bid., p 107.
271b1d., p 87.
28Ibid., p. 90.
29Ibid., p 92.
3°Ibid., p. 118.

31Goodpaster and Matthews, "Can a Corporation Have a
Conscience?" p. 146.

CHAPTER VI

REFUTATION OF THE MORAL PERSON VIEW AND

THE MORAL PROJECTION VIEW

Although both the moral person view and the moral
projection view are well-meaning attempts to provide a
conceptual framework of reference for corporate moral
responsibility, the essential line of each corporate
responsibility argument nevertheless emerges as skewed, if
not awkward, in that the corporate entity is treated as a
rational, deliberate, morally responsible agent--a
description that in traditional ethics pertains to human
persons exclusively. French and the projectionists may
well exhibit knowledge of human individual morality with
accurate understandings of virtue and appropriate criteria
for moral responsibility, but they err when they apply, or
rather impose, this sort of moral phenomenon onto the
corporate organizational entity and impute moral agency
and responsibility to the corporation.

Both French and the projectionists aim, ultimately,
to assign moral responsibility ascriptions to the
corporate entity itself. Yet, they differ in their

reasons for assignment of moral responsibility to the

109

110

corporation. French focuses on the corporation’s internal
decision-making structure with its policy rules,
procedures, and authoritative hierarchy. He claims that
the CID Structure demonstrates corporate intentionality or
moral agency, whereby the corporation can be considered a
moral person that can be held morally responsible for its
acts. French seems to base his claim of corporate moral
person on an equivocationl between human intentional
action and corporate intentional action, and makes an
assertive leap to equate the two processes as morally
responsible decision action. Thus, French imputes to
corporations the same moral reasoning and moral
responsibility as that of human persons. He, therefore,
wrongly concludes that corporations are moral persons.

The projectionists, on the other hand, establish
criteria of moral behavior for the corporate entity,
derived from individual moral behavior yet without the
prerequisite of moral personhood. In some vague way, they
expect corporate decision making to take heed of moral
criteria. The projectionists do not clearly explain how
moral criteria are brought into the decision-making
process, but yet they expect the corporation to be held
morally responsible for its harmful acts. They
ineffectively impose moral agency and responsibility on
the corporate entity. Admittedly, the moral

projectionists look in the right place for an

 

111

understanding of moral responsibility so as to formulate
accurate moral criteria for responsible action, but they
sidestep the authentic moral dimension of corporate
enterprise--the corporation’s human members--to
erroneously project moral criteria onto the corporate
organizational entity.

Goodpaster and Matthews claim that moral projection
serves as an "accommodation" of moral conscience and
principle to corporate group action, so as to establish a
corporate level of agency and responsibility. Yet it is
precisely this vague adaptation that makes moral
projection an awkward approach to corporate
responsibility because, while the projectionists seek to
have corporations behave in a morally responsible way,
they circumvent the obvious instruments of corporate moral
responsibility--the corporation’s human moral persons.
The corporation’s human members are the intentional actors
who make decisions in corporate settings, and comprise the
corporate moral conscience and moral dimension of
corporate enterprise. This human moral dimension of
corporate responsibility seems to be undermined, if not
circumvented, by the projectionists.

Thus, we find that French exaggerates the
corporation’s intentional character by extending the human

intentionality found in corporate organizations to the

112

corporate entity itself. French, himself, admits that he
forces the corporation ‘to take what could be called a
suicidal "leap" into the moral community. The
projectionists, on the other hand, mistakenly transfer the
criteria of individual morality onto the corporate entity,
rather than continue the moral expectation from the
corporation’s human decision members. Both these views
demonstrate erroneous notions of moral responsibility as
it exists in corporate settings. Only human persons can
have moral conscience or make moral decisions and be held
morally responsible for their actions.

French and the projectionists likewise err when they
underestimate corporate legal responsibility, which
represents a large part of corporate accountability that
includes compliance with the law generally, and
specifically corporate law as well as state and federal
regulations. The corporation as a collective legal entity
has definite legal responsibility. In fact, the best
proof of the corporate collective’s responsibility has to
do 'with fulfilling all legal obligations and complying
with society’s laws. Since the corporation is a
collective legal entity with no intentional faculties or
cognitive processes of its own, and thus not a moral
person, we cannot expect more than legal responsibility
from ‘the corporate entity. However, the corporation’s

human members, who formulate corporate policy and nmke

 

113

decisions for corporate operations, comprise the moral
dimension of corporate enterprise because they are morally
responsible human persons. Here again I unfold the two-
dimensional comprehension of corporate responsibility that
comprises both legal collective conformity and individual
moral processes. Any discussion on the accountability of
contemporary corporate organizations has to address the
dual aspect of responsibility in corporate settings that
stems from the corporate collective entity with legal
responsibility, and from the human corporate members who
are moral persons with moral conscience and responsi-
bility.

Richard DeGeorge, who has written extensively on
corporate collective responsibility, informs us that
"corporations are not moral agents with feelings,
emotions, or conscience as natural persons are."2
Instead, corporations are legal or juristic persons with
legal responsibility; they can be sued, fined, forced to
make reparation, to compensate, to desist from activities
or undertake others, and so on. DeGeorge observes that at
times humans make moral judgments about the untoward
actions of corporations because people want corporations
to be punished for wrongdoing and to compensate those who
were wronged or injured, particularly when outsiders

cannot ascribe blame to any one or other corporate

114

member.3

In these situations, the law and corporate legal
responsibility are looked to for desired justice and
compensation. If, however, certain corporate members can
be found responsible for the untoward corporate decision
action, then moral responsibility can be ascribed to the
human moral persons for their intentional action on behalf
of the corporation. They may also face legal charges and
punishment if the action was in violation of federal or
state laws. DeGeorge assures us that the corporate entity
itself is neither a moral person nor intentional. The
corporation can act only through the intentional decision
making of its human individual members--the moral
dimension of corporate organization.4 Thus, we find that
DeGeorge touches on the two-dimensional conceptualization
of corporate responsibility--the corporate legal entity
and the individual human members who make corporate
decisions constitute the responsibility dimensions in
corporate collectives. In fact, when DeGeorge presents
his five ways of assigning responsibility in corporate
collectives, he uses the dual notion of corporate
responsibility in that he distinguishes between the
responsibility of the corporate entity and the
responsibility of individual corporate members.5 The
corporation itself can be assigned legal/compensatory or
causal responsibility for an untoward corporate

occurrence, and the corporation’s members who make

 

115

decisions for' the corporate entity can be assigned
legal/compensatory and/or moral responsibility. DeGeorge
indicates that his understanding of responsibility in
collective settings is derived from the practice of law,
which assigns responsibility for wrongdoing to either or
both the corporate entity and the corporate members,
depending on the particular case of wrongdoing and the
best way to punish and compensate.6 The most significant
contribution of DeGeorge to the understanding of corporate
responsibility is his affirmation that the corporation is
a legal entity with legal responsibility and not a moral
person and that the corporation’s human decision makers
provide the moral dimension of corporate responsibility.7
While DeGeorge’s ideas are important in countering French
and the projectionists, they are even more valuable in
pointing the way to a two-dimensional conceptualization of
corporate responsibility.

Refutation of the moral person view and the moral
projection view will be continued in the following

section.

6.1 Refutation of French’s Mopai Person View
As a revisionist and critic of moral reductionism,
French assumes the precarious burden of proof to
demonstrate that the large business corporation is a moral

person that can be held morally responsible for its

116

actions. He begins by describing at length the
significant elements of a moral ascription, namely, the
identity of the cause of the wrongful act and the
intentional action of the cause or subject of the moral
ascription. Admittedly, bqth elements are essential to a
moral ascription, but it is imperative that intentionality
be first established. so as to justly assign moral
responsibility to the subject. Intentionality, for
French, indicates that the subject can intend its actions;
that is, it can act with deliberation and purpose. The
element of intentionality has traditionally been
attributed only to a human person, whereby he is said to
be intentional and/or able to perform acts intentionally.
Thus, in the individualist or reductionist framework of
moral reasoning, only individual human beings can qualify
as intentional, moral agents and hold membership in the
moral community. Consequently, the issue of intention-
ality and how it can be had by the large corporation
constitute a stumbling block for French’s moral person
argument. Central to the argument for moral personhood of
the corporation would be proof that the corporate entity
itself can act intentionally, and thereby be held morally
responsible for its actions.

From the analysis of French’s argument for corporate

moral personhood in Chapter III, we learn that he adheres

117

to the Lockean understanding of personhood in which an
intentional agent is also considered a morally accountable
agent. So if French can demonstrate that the corporate
entity is an intentional agent, he can also declare it a
morally accountable person. Yet, by his adherence to the
Lockean notion of moral person, French immediately
sidesteps the demonstration of proof required by the
traditional notion of moral accountability, which exacts
not only an intentional agent but also intentional action
carried out with bodily movements. Even though French’s
task seems diminished, he must still provide convincing
evidence that the corporate entity itself can qualify as
an intentional actor; i.e., it can make deliberate and
purposive decisions.

To begin with, French describes the large corporation
as a conglomerate collectivity with an identity all its
own, separate from its membership, which can change
without affecting the identity of the corporate collective
entity. The conglomerate collectivity has legal status as
a juristic entity that is subject to law with rights and
responsibilities. As a social organization of coordinated
human members, the corporate collective entity has
internal decision mechanisms that function to achieve its
socioeconomic and financial purpose goals. At this point,
French uses the concept of conglomerate collective entity

to establish a single, constant identity basis for moral

118

personhood of the corporation. His next and crucial step
involves the demonstration of the corporate collective’s
intentionality. French has to provide evidence that the
collective entity is an intentional agent. He must show
that the corporate entity itself acts with purpose and
brings about acts intentionally. To satisfy traditional
moralists, French would have to show that the corporate
entity is capable of performing intentional actions. As
previously indicated, French disregards the traditional
notion of moral person and merely searches out collective
intentional agency.

From his study of corporate collectives, French
discovers that each corporation has purposive reasons for
its particular operation and that these rational goals are
generally expressed in corporate policies. He also
observes in corporations a hierarchical process of
decision making in accordance with corporate policy rules.
Thus, each corporation has its own internal decision
framework that reflects its purposive policy reasons for
which the organization performs its tasks. French refers
to these decision-framing elements of authoritative
hierarchy and procedural rules and policies as the
corporate internal decision structure or CID Structure.
This internal decision structure represents, for French,

the intentional agency component that together with

119

corporate collective identity constitutes corporate moral
personhood.

Ironically, the CID Structure, which French points to
as proof of corporate intentional agency, also provides
the evidence for the demise of his corporate moral person
argument. To begin with, the very elements of CID
Structure, policy rules, procedures, and authoritative
decision control, are all traceable to decision making by
human intentional persons, whether in the capacity of
founders, managers, or other legitimate decision members.
The intentional character of so-called "corporate reasons"
derives from none other than the corporation’s human
intentional members. Although French never denies the
intentional human decision influence in corporate
structure, he presses on to say that it makes "sense" to
redescribe the human intentional decision action in
corporations as corporate intentional decision action.8
It is at this point that French goes off the deep end, so
to speak, to take that "mysterious leap" to interpret the
human intentional decision action as corporate intentional
action, and thereby conclude that the corporation itself
is an intentional moral person. At this juncture in his
argument, French does some wishful thinking by declaring
the corporation an intentional moral person that warrants

admission to the moral community of human persons.

120

In a critique of French’s corporate moral person
view, Professor" John R. Danley charges French with
arbitrary use of the term ingend, particularly in

reference to the corporation.9

French wants to assign
intentionality to the corporate entity, a moral character
or quality that in human moral tradition is found only in
human persons. French is also thought to equivocate on
the meaning of intentionality, since traditional moral
thinking finds human intentional action quite different

10

from what might be attributed to a corporation. Danley

states further that:

Whatever else we may say of them, collective entities
are surely not the kinds of things capable of
intending. Individuals within the corporation can
intend, lust, have malice aforethought, and so forth,
but the corporation cannot. Traditionalists, like
myself, maintain that only persons, i.e., entities
with particular physical and mental properties, can
be morally responsible. Corporations lack these.
For the traditionalists, to speak of corporations
being responsible is simply elliptical for speaking
of certain afidividuals within the corporation being
responsible.

We find that corporations do not intend as human
intentional persons intend, and thus are not intentional
persons who qualify as members of the moral person
community. Therefore, corporations are not moral persons
and cannot be given full-fledged membership in the moral
community.

Although French never denies the involvement of human

moral persons in corporate decision making, his argument

121

for corporate moral personhood promotes the corporate
entity as being capable of intentional decision action, in
addition to the human individual members of the
corporation. Now the most basic objection to French’s
corporate moral person view pertains to the idea that a
corporate conglomerate collectivity such as General Motors
can be said to "intend" in the same way as other members
of the moral community; that is, the corporate entity has
the wherewithal to deliberate, weigh alternatives, and
consider criteria of moral behavior in arriving at
decisions. Human persons of the moral community have been
the model intentional agents subject to moral
accountability. The corporate entity in no way exhibits
intentional or moral abilities and in no way qualifies for
admission into the moral community, as French so boldly
asserts.

The organizational framework of CID Structure that
French points to and interprets as the corporation’s
intentionality boasts human design and fabrication for the
accomplishment of human purposive tasks. The coordinated
efforts of intentional human persons bring about corporate
action. Even modern organization theory seems to
highlight the human-intensive dimension of organization
practice.12

Corporate action consists of coordinated human action

and demonstrates only human intentionality. In fact, any

122

morally intentional action that. may occur in corporate
organizations can be traced exclusively to moral persons-—
the human corporate members. Any intentional action that
occurs in corporate organizations derives from the human
corporate members who are moral persons. In some
corporations, human intentional actions are more readily
evident, as with General Motors and American Telephone and
Telegraph. In contrast, in other corporations such as
some holding companies and the like, the human intentional
actions of corporate members may not be so visible, but
they do occur behind what are referred to as corporate
veils. Behind the corporate veils are eventually found
the human persons who are also moral persons and members
of the human moral community. It is precisely these human
persons and only such decision members with decision power
who are to be held morally accountable for their decision
actions done for the corporate entity.

French misconstrues the CID Structure to the point of

ethical error when he attributes to it more than just

 

human intentional and purpose activities. He makes an
unsubstantiated claim that the CID Structure displays
intentions and purposes of the corporate entity itself as
if the entity could "intend" of its own accord without the
intervention of human intentional persons. French fails

to give convincing evidence in the CID Structure of moral

123

intention of the corporate entity itself, similar to the
kind of moral intention that other moral persons share as
members in the moral community.

This work upholds the CID Structure as humanly
devised, to direct, order, and control the human and
material resources in the accomplishment of socioeconomic
and financial activities. The corporate hierarchy was
developed by human beings in order to efficiently and
effectively direct human work efforts toward rational
intentions of purposive goals that are determined by
human decision makers. Corporate policies, rules, and
procedures are also formulated by human moral persons to
assure the legitimacy of organizational socioeconomic and
financial purposes. The CID Structure as designed and
operated by human moral persons reflects nothing more
(metaphysically) than the human intentional purposes for
organizational activities. Human intentional persons are
the creators, directors, and managers of corporate
collective entities, and they also function as the human
intentionality network of decision making in the CID
Structure. Only the human members of the corporation are
intentional moral persons; only they can think, reflect,
deliberate, and act intentionally for the corporate
organizational entity, which of itself cannot intend or

perform any intentional act. The corporate entity is not

124

intentional nor a moral person. Moral responsibility
cannot be legitimately ascribed to a corporate entity.

It must be acknowledged that French seems to offer an
accurate identity of the corporation as a conglomerate
collectivity whose identity cannot be modified with
varying membership, and whose identity is not equal to a
determinate set of individuals. French also identifies
the corporation as a legal collective entity with legal
responsibility. Given that French cannot show convincing
evidence of corporate intent, as understood by moral
intent in morality of intentional persons, at best the
corporation can be a juristic person--a legal entity with
legal responsibility.

Even though French accurately identifies the
corporation as a legal collective entity with legal status
and responsibility, he erroneously wants to augment the
collective’s legal responsibility with moral responsibil-
ity without the relevant evidence of deliberate
intentional decision making, that is, intentional action
done by the entity itself with its own powers of volition.

Thus far in French’s position on corporate
intentionality and responsibility, the evidence indicates
that intentionality in corporate organizations can be
traced to only the human intentional persons, who either

design, establish, manage, deliberate, weigh alternatives,

125

make decisions, and perform tasks of all sorts for the
corporate organization.

As we have seen in Chapter IV, the challengers of
French’s moral person view are consistent in their charge
that French exaggerates the intentionality status of a
corporation when he goes beyond the human intentional
members. French unjustifiably expands the corporate
entity’s legal responsibility to the realm of metaphysical
and moral accountability. He attempts a "mysterious leap"
for corporate status from that of mere legal person to
that of the class of moral persons with membership in the
community of human moral persons. French supports his
leap from the outset by arguing from a broader notion of
"person," so that an entity need not be homo sapiens (a
human being) in order to claim intentional action.l3

Our challengers offer their thoughts to refute French
in his adherence to the corporation as a nmral person.
Velasquez accuses French of treating the corporate
collective as a: science fiction "group mind"--something
unreal and out of this world. He tells us:

Science fiction narratives, in fact, often ask us to

imagine what such a collective agent would be like.

In science fiction stories, for example, we are

sometimes asked to imagine a situation in which

bodies are gradually taken over by a single group

mind. Here we are being asked to imagine a

collectivity that has acquired the proper kin? of
unity between mind and physical instrumentality. 4

 

126

Velasquez holds that to view the corporation as an
intentional collectivity, one must imagine the corporate
collectivity as exhibiting a unity of mind and body. Yet,
from common observation, we know that the corporate
collective has neither a mind nor a body of its own. Only
the human corporate members have minds and bodies, and can
act intentionally on behalf of the corporate collective.
Furthermore, Velasquez warns of the adverse implications
attendant to French’s inflated notion of the corporate

15 First, ascriptions of moral

entity’s intentionality.
responsibility for corporate wrongdoing would more readily
be directed toward the corporate entity, instead of the
assignment of blame and punishment to the human moral
persons who may have brought about untoward corporate
acts. Corporate decision makers are affirmed by Velasquez
as the proper subjects of moral responsibility ascriptions
for wrongdoing in corporate settings. The second drawback
to an intentional large-scale corporate personality
concerns the possible threat of organizational
totalitarianism that could inordinately dominate the
subordinate human members.16 This concern of Velasquez is
well-taken since most corporations display an
authoritarian organizational format by which purpose tasks
are ordered from the top decision makers downward, and
obedience, loyalty, and service are organizational

virtues. Regardless of the possible consequences of a

 

127

hypothetical, corporate group-mind, Velasquez effectively
disproves the concept of an intentional, purposive
corporate collectivity by his attestation to the
intentional human members who make the intentional
decisions for the corporate entity and thereby comprise
the moral dimension of corporate collective enterprise.

Donaldson also charges French with an exaggeration in
his argument for corporate intentionality and moral
personhood that overstates the similarity between a
corporation and a human person. Donaldson asserts that
corporations are not "persons," morally speaking. The
semblance of corporate intentionality is traceable to the
corporation’s human creators, members, managers, all those
who perform tasks in the name of the corporation. In
countering French’s fallacious notion of corporate agency,
Donaldson contributes the following thoughts:

The corporation is an artifact [a creature of

mankind], not a product of nature. Unlike persons,

it has no built-in "directedpess" toward morality, no
1nherent de51re to be moral.

Assured as to where intentionality and moral
responsibility reside in corporate settings, Donaldson is
even prompted to suggest some ways to improve the moral
dimension of a1 bureaucratized corporate collective.
First, individual responsibility must be encouraged and

18

reinforced throughout the corporate organization. For

example, individual members could be allowed greater

‘—

 

 

128

involvement in decision planning for task accomplishment
with commensurate accountability. Second, it is
recommended that top officials and technocrats
particularly should be educated in ethical skills and
trained in on-the-job moral behaviors.19 Last, decision
making at all levels of the organization should include

20 These

both legal and moral considerations.
recommendations are briefly cited to demonstrate, in
refutation of French’s argument, where in corporate
settings actually reside moral agency and moral
responsibility, namely, in the human persons who work and
act in the corporate organization. Donaldson attests to
the absurdity of French's perception of the corporation as
a moral person by his affirmation of human moral
personhood and responsibility that comprise the moral
dimension of corporate collective enterprise. In fact,
Donaldson clearly acknowledges both the corporate legal
and human moral aspects of collective organization in his
proposal of external legal controls and internal moral
controls for the advancement of corporate responsibil-
ity.21 Donaldson hints at the duo-dimensionality of
corporate responsibility--a principle of corporate respon-
sibility that this work aims to defend.

We turn now to John Ladd, who stands as not only a

formidable challenger of French’s moral person ‘view of

129

corporate entity, but as the initiator of the debate on

22 His classic work

the moral status of the corporations.
on formal organizations depicts the corporate organization
as an amoral, goal-oriented hierarchical structure. In
the case of a business organization, decision planning and
work tasks are geared toward the achievement of economic
and financial purposive goals. The formal business
organization has no overriding concern with morality or
morals as such; it is generally not moral-principled in
the sense of individual human morality. Instead, the
responsibilities of corporate enterprise pertain heavily
to legal compliance and accomplishment of organizational
goals of economic productivity and monetary profit. The
business corporation functions in our society as a
capitalistic instrument for economic production and
financial gain. Ladd explains clearly that a corporate
organizational entity cannot qualify as a moral person or
be held morally responsible for its activities.

Granted that this position stands in direct
opposition to French’s moral person view, the only
responsibilities a goal-directed corporate entity strives
to accomplish are its particular amoral organizational
goals. In formal corporate organizations, then, there
exist no moral-laden goals or moral-principled corporate
actions. Admittedly, Ladd’s perspective of the corporate

organizational entity appears extremely anti-moral person,

 

130

especially the impression he portrays of the organization
as amorally tyrannical.23 Yet, he concedes that the only
way moral concerns can be included in the corporate
decision-making process would be indirectly as limiting
conditions of law, custom, religious beliefs, and
practices of the external operating environment. Ladd
goes on to depict the organization scene as demoralizing
in that double standards of conduct are being generated by
the amoral formal organization model. The dual standards
are (a) the- rational or goal-oriented behavior of
organizational decision making, and (b) the moral behavior
of individual decision making.24 Both standards, he
assures us, are needed for a civilized, humane society;
neither one should be surrendered. Thus, he calls a
search for a way out of the dilemma, a way that is both
practical and moral.25 Now, this work may just point the
way to indulge both standards of conduct within a
corporate organizational setting by the proposed two-
dimensional notion of corporate responsibility that
acknowledges both the legal/organizational and individual/
moral aspects of corporate decision makimg as a legal/
moral interface of responsible corporate action.

From ‘the foregoing' survey of ideas to disprove
French’s moral person view, we find that French’s position

exaggerates the accountability status of the corporate

131

entity by attributing to corporations the kind of
intentional agency that derives from human mind-body unity
of action. The corporation has no mind or body of its
own. Its internal decision structure, which French offers
as major proof of corporate intentionality, actually
reveals the intentions and intentional actions of human
persons who are associated with the corporation, such as
founders, directors, managers, and other personnel. These
people comprise the morally responsible decision members
of corporate enterprise. The corporation’s members who
make decisions for the corporate enterprise constitute the
moral dimension of corporate organization. Consequently,
moral responsibility for wrongful acts in corporate
settings can be traced to the corporation’s human
intentional actors. Yet, French’s argument for corporate
moral personhood tries to trace intentionality and moral
responsibility to the corporate entity, which in itself
cannot claim to have a mind-body unity of action necessary
for intentional moral action. By his affirmation of the
corporate entity as a moral person, French undermines the
authentic moral dimension of corporate organization--the
human members; he also underrates the legal accountability
of corporate organization. French mistakenly discounts
what may be one of the most viable means to keep the large
corporation socially accountable. A large part of

corporate accountability derives from legal stipulations

 

132

and government regulatory controls, as GM’s top attorney
can attest:
We are a highly regulated business, and everything we
do has legal implications, from the way the plants
are run to haw we treat our people and how we sell
our products. 6
Much of the giant corporation’s responsibility consists of
compliance with laws. The legal staff of human,
professional corporate members are involved in decision
making to keep the corporation in compliance with all

regulations and responsible in its activities.27

Legal
accountability remains an important dimension of corporate
responsibility, along with moral accountability of
corporate decision members. Both types of accountability
exist in corporate settings because of the unique
combination of legal personhood of the corporate entity
and moral personhood of the corporation’s decision
members. The two types of personhood and consequential
accountability that operate in corporate organizations
comprise what this work defends as the duo-dimensionality
principle of corporate responsibility.

The counterevidence to French’s moral person view
shows that the corporate entity cannot qualify as an
intentional moral person, mainly because the corporation
lacks a mind-body unity of intentional agency whereby
intended action is carried out by bodily movements in one

and the same person. Velasquez cites two requirements for

 

133

origination of intentional action--mens pea and actus
pene--a ‘mind-body relationship that intends an act and
bodily carries it out. The corporation has neither a mind
nor a body of its own; it has no mental or physical
characteristics of its own. All corporate decision action
is performed by the corporation’s human members, who act
with their individual minds and bodies on behalf of the
corporate entity to bring about corporate acts. It is the
corporation’s human members who properly qualify as moral
persons and ‘who are the official members of the moral
community. In spite of French’s philosophical zeal, his
efforts to get the corporate entity admitted to the
community of moral persons seem to be futile.

One such effort was French’s reference to the
Davidsonian conception of intentional agency in which the
crux of intentional action lies in sentences and
descriptions of actions that connect an act with its
intentional agent. Now, French’s flaw was in his use of
Davidson’s idea for a nonhuman entity. Davidson in no way
suggests that his intentional agency idea refers to
anything but human persons. The commentaries that
accompany his article also indicate that the intentional
agency concept pertains to human persons. Another effort
was French’s allusion to H. L. A. Hart’s treatise on

recognition rules that govern large-scale social

134

institutions and establish legitimacy of authoritative
power and decision making. Now the function of
recognition rules in corporations do establish legitimate
organizational authority and decision making. However,
French of his own accord interprets the recognition rules
as having an added metaphysical character of
intentionality. In Hart’s discussion of recognition
rules, he makes no reference to the metaphysical issue of
intentionality. French obviously overstates the ideas of
some of his key sources of support for moral personhood of
the corporation. He illegitimately uses the Davidsonian
concept of agency' because he applies it to a nonhuman
entity. Then, French wrongly interprets cu' embellishes
Hart’s recognition rules to falsely impute intentionality
onto the corporate entity.

Thus, we find that French errs in his argument for
corporate moral person beyond that of legal person. Since
the corporation is not a moral person, it cannot be held
morally responsible for its acts. The corporation is no
more than a legal collective entity with legal
responsibilities. Only the corporation’s human members
are intentional moral persons, and they make the
intentional decisions for the corporate entity.
Consequently, the corporation’s human members can be held

morally responsible for corporate decision actions.

135

In summary, then, the corporation itself is a legal
entity with legal responsibilities, and the corporation’s
human members are the moral persons with moral
responsibility. These two understandings are hereupon
combined to form a plausible conceptualization of
responsibility in corporate settings--a two-dimensional
notion of corporate responsibility.

The next section continues the refutation of the

moral projectionists.

6.2 Pefupation of Mona; Projection

Moral projection as an approach to corporate
responsibility suggests that moral criteria derived from
individual human morality be used in corporate decision
making, so as to develop corporate conscience and
corporate responsible behavior. The corporation is
expected to engage in moral deliberation as an integral
part of the decision-making process and to accept moral
responsibility for the consequences of corporate decision
action. Ultimately, the moral-projection view promotes a
moral framework of reference for morally responsible
organizational decision making. Moral criteria such as
rationality, respect, and cognitive processes constitute
the moral expectation to be developed throughout the
decision structure for conscionable corporate behavior.

It is observed that the moral projectionists direct their

136

suggestions of moral criteria for responsible action to
the corporate entity itself, as the following passage
indicates:

By looking closely at the realm in which responsibil-

ity is usually understood--the individual’s action

and intention--and then projecting the light of this
understanding onto the company, they [Goodpaster and

Matthews] hope to help corpggations inform their

decisions with moral concerns.

Christopher Stone himself insists that the meaning of
"being responsible" must first be examined in the light of
general human responsibility, and then used to develop a
notion of responsibility pertinent to the corporation as a

29 From his own examination of individual

whole.
responsibility, stone tells us that "being responsible"
for a mature moral person involves obedience to laws and
reflective deliberation on moral principles and
consequences of decision actions. Stone’s moral
responsibility criteria are similar to Goodpaster and
Matthews’s rationality and respect components of moral
responsibility. Our projectionists want to apply these
moral criteria to the corporate entity in its decision-
making process. At this point, the projectionist argument
becomes awkward, if not ambiguous, in showing that the
corporate entity itself can behave in a mature and morally
responsible way.

To begin with, if the projectionists want the

corporation to act morally, they should direct their moral

 

137

criteria to the corporation’s human decision members who
make intentional decisions for the corporate entity,
rather than awkwardly project standards of moral behavior
onto the nonmoral conglomerate collectivity. It does not
make sense to expect moral behavior from a nonmoral
entity. The corporate entity in and of itself cannot act
intentionally, and therefore cannot be held morally
responsible for its wrongful acts. However, moral
behavior can be expected from the human persons who
create, develop, and direct the corporate organization.
The corporation’s human decision members can act with
purpose and intent on behalf of the corporate
organization, and thereby can be held morally responsible
for the consequences of their decision action. If
projectionists want the corporation to act morally, they
must look to the moral dimension of corporation, that is,
the human moral persons who are the intentional actors of
corporate enterprise. After' all, how can a corporate
collective entity be said to deliberate or consider
alternative, purposive goals except through its human
decision members who have rational and intentional
capabilities to consider alternative decisions for the
corporate entity?

Clearly, the projectionists err when they project
moral criteria of individual morality onto the corporate

entity itself, which cannot deliberate on moral

 

138

principles, let alone behave morally. Moral
projectionists fail to address the human corporate members
as moral persons, and to direct criteria of moral
expectations at those persons with power to make policy
decisions and to implement strategic actions. People who
form, direct, and manage the corporation should be
expected to behave morally, not some organizational
phantom behind which human decision makers can hide. The
projectionists’ approach to corporate responsibility seems
to undermine the human moral dimension of corporate
organization. If projectionists want to see moral delib-
eration and moral selection of alternatives occur at the
corporate decision-making level, it can happen only
through the instrumentality of intentional, purposive
human decision members. The corporation can be said to
act rationally and morally only through its human moral
agents, who deliberate and make decisions for the
corporate organizational entity. Since the corporate
entity does not qualify as a moral person with intentional
moral agency, the scheme of moral projection becomes a
senseless, if not impertinent, accommodation of human
moral criteria for responsible corporate behavior.
Furthermore, since human corporate members are already
subject to standards of individual morality, the
accommodation of moral projection is found redundant and

unnecessary for them.

 

V

 

139

In spite of the projectionists’ earnest endeavor to
have the corporate entity held morally responsible for
untoward acts, their device of moral accommodation proves
to be misdirected. The projectionists are not only
mistaken about corporate agency, they also fail to
acknowledge, for whatever reason, the corporation’s human
decision members as moral persons with moral obligations
to act according to moral criteria for responsible human
behavior, whether at home or at the job. Thus, we find
that the projectionists have a flawed understanding of how
moral criteria could be introduced into the corporate
decision process, so as to effect corporate moral decision
making.

Now, given the corporation’s origin of legal
incorporation and structural framework of human decision
power, there are essentially two ways by which moral
principles of action could enter into the corporate
decision-making process, namely, the law or regulatory
controls and the moral behavior or decision action of the
corporation’s human personnel. In these ways, moral
criteria of responsible behavior can find admission to
corporate decision making without the awkwardness of moral
projection. First, the laws that regulate corporate
activities, for the most part, embody rationality and

socio-moral values. The corporate entity has legal

 

140

responsibility to maintain compliance with laws in its
strategic decision planning. The second and perhaps the
most effective way to include moral criteria in corporate
organizational decision making is through the human
decision members who, as moral-intentional persons,
deliberate and act on behalf of the corporate entity.
Human members of corporate enterprise, whether founders,
directors, managers, staff, or other personnel, all
comprise the source of morality in corporate activities,
as well as the moral-intentional dimension of corporate
responsibility. As moral persons, the corporation’s
decision members can bring moral criteria of rationality,
respect, obedience to law, and cognitive processes
directly to organizational decision making for morally
responsible decision action at the corporate level.

The corporation’s human members, as moral persons,
are subject to the moral standards of responsible human
behavior. They are expected to behave morally in their
interpersonal and group relations, regardless of time and
place. These human decision makers in social
organizations, such as conglomerate collectivities, are
expected to exercise moral responsibility in their
purposive actions performed alone or in group settings.
When corporate members make decisions on behalf of the
organizational entity, they can be held morally

responsible for any untoward consequence of their

 

141

purposive, intentional action. There abides a single
standard of human morality, that of individual moral
responsibility for each and all whether at home, in a car,
or at the job/position in an organization. One of the
most prolific writers on corporate organizations, Peter F.
Drucker, affirms that the code of human morality is one
and the same for all moral persons regardless of status,
position, or power:

There is only one ethics, one set of rules of

morality, one code, that of individual behavior in

which the same rules apply to everyone alike. . . .

The reason for this insistence of a code that

considers only the individual, and not his status in

life or society, is precisely that otherwise the
mighty, the powerful, the successful will gain

exemption from the laws of ethics and morality. . . .

There is only one code of ethics, that of individual

behavior, for prince and pauper, for rich or poor,

for the mighty and the meek alike. Ethics, in the

Judaeo-Christian tradition, is the affirmation that

all men and women are alike creatures--w ether the

Creator be called God, Nature, or Society.

Thus, we find that criteria of individual morality
need not be accommodated as the projectionists propose,
since the code of human morality is the same for
individuals whether they are inside or outside of
corporate organizations. The criteria for moral decision
making remain the same for persons who make decisions at
their jobs in organizations on behalf of the corporate
collective entity. They are expected to be rational,

obedient to law, respectful of humanity, and considerate

of the consequences of their decision actions. The

142

individual corporate members are expected to behave
morally at their decision tasks performed on behalf of the
corporate organizational entity. Only the corporation’s
human members can be held morally responsible for untoward
decision actions of the corporate entity. The corporate
entity itself, of course, can be held legally responsible
for its untoward activities since it is a legal or
juristic person. Only the human corporate members can be
held intentionally responsible for untoward corporate acts
or violations of law. In these instances, the human
members can also be held legally responsible for corporate
wrongdoing in the courts of law.

From the foregoing discussion, we find that the
projectionists are mistaken about the corporation’s agency
as moral intentional, as well as in their belief that the
corporate conglomerate could assimilate moral criteria for
responsible decision action exclusive of the human
decision members--the de facto moral persons. The only
agency that the conglomerate collectivity can validly
claim is that of legal or juristic personhood. As a legal
entity, the corporate conglomerate has legal
responsibility to comply with all law pertinent to its
existence and operation in the society. The corporation’s
human members have moral agency because they are moral

persons with intentional, purposive faculties with which

143

they make decisions in corporate organizations;
consequently, they are morally responsible for their
decision actions performed on behalf of the organizational
entity. The projectionists fail to adequately address the
moral role of corporate decision members, who are in fact
morally responsible for their decision actions in
corporate organizations. Human decision members in
corporate settings are the only moral persons with moral
responsibility for corporate action. By moral projection
or accommodation of moral criteria to the corporate
entity, the projectionists wrongly shift moral
responsibility from the human decision makers to the
corporate entity itself. This shift of moral
responsibility from humans to conglomerate collectivities
undermines the actual source of moral responsibility in
corporate organizations--the human decision makers.

For these reasons, essentially, the projectionists
have been refuted and found wanting in their contribution
to an enlightened understanding of corporate responsi-
bility.

In the following chapter, I will make concluding
statements about the findings of this research and
refutation of corporate moral person and corporate moral

responsibility.

 

144

NQI§§--QDEEI§I MI

1John R. Danley, "Corporate Moral Agency: The Case
for Anthropological Bigotry," in Business Ennics, 2nd ed.,
ed. W. Michael Hoffman and Jennifer Mills Moore (New York:
McGraw-Hill, 1990), p. 204.

2Richard T. DeGeorge, "Can Corporations Have Moral
Responsibility," in t 'ca eo d us' ess, 2nd ed.,
ed. T. L. Beauchamp and N. E. Bowie (Englewood Cliffs,
N.J.: Prentice-Hall, 1983), p. 61.

31bid.
4 .
Ib1d., p. 62.

5Richard T. DeGeorge, ed., "Collective Responsibil-
ity," in Business Etnics, 2nd ed. (New York: Macmillan,
1986), pp. 98-99.

6DeGeorge, "Can Corporations Have Moral Responsibil-
ity," p. 66.

7Richard T. DeGeorge, ed., "The Moral Responsibility
of Corporations and Formal Organizations," in Pusiness
Ethics, 2nd ed. (New York: Macmillan, 1986), p. 96.

8Peter A. French, Collective and Corporate Responsi-
bility (New York: Columbia University Press, 1984), pp.

40, 47.
9Danley, "Corporate Moral Agency," p. 204.
loIbid., pp. 204-205.
111bid., p. 203.

12In their classic work, The Social Psychology of
Organizapions, 2nd ed. (New York: John Wiley and Sons,
1978), pp. 18-19, Daniel Katz and Robert L. Kahn, while
they analyze corporate organizations from an "open system"
approach, readily acknowledge the common-sense understand—
ing of functional human purpose and design of corporate
organizations.

Coordinated human endeavors are at the heart of cor-
porate organizations, as Chester I. Barnard expounds in

The Functions 0: fine Executive.

 

 

145

In Ihe_Human_Eafsre_2f_9rganizations (New York:
AMACOM, 1973), pp. 1-16, J. Douglas Brown elaborates on
the human character of corporate organizations with its
complexity of initiatives and responses found in indi-
vidual human members. He claims that human organizations
persist in being human on an individual level.

The behavioral scientist, Chris Argyris, observes the
corporate organization model as being a dominant human
strategy to coordinate human efforts toward achievement of
human goals; 5 ' a ’ vior (Home-
wood, Ill.: Dorsey Press, 1960), pp. 1-2, 10-11.

13French. 99llegfixe_and_gorporate_Besponsibilifx.
pp. 82-83.

l4Manuel G. Velasquez, S.J., "Why Corporations Are
Not Morally Responsible for Anything They Do," Pusiness
and Ppoiessipnal Etnies gounnei 2 (Spring 1983): 9.

lsIbid., p. 15.

l6Ibid., pp. 15-16.

l7Thomas Donaldson, Corporations and Moralitv
(Englewood Cliffs, N.J.: Prentice-Hall, 1982), p. 127.

l8Ibid., pp. 118-19.

191bid., pp. 121-22.

201bid., pp. 122-23.

21Ibid., p. 209.

22Richard T. DeGeorge, "The Status of Business
Ethics: Past and Future," ourn 1 0 Bus' ess Ethics 6
(1987): 206.

23John Ladd, "Morality and the Idea of Rationality in
Formal Organizations," The Monist 54 (October 1970);

reprinted by permission of the author and The Monist in
Business Ethics; Corporate Values and Society, ed.

Snoeyenbos, Almeder, and Humber (New York: Prometheus
Books, 1983), p. 48.

24Ibid., p. 58.

251bid.

26Wonking (June 1988): 12; from an interview with
General Motors attorney, Jim Cubbin.

146

27Ibid., pp. 12-13.

28Kenneth E. Goodpaster and John 8. Matthews, Jr.,
"Can a Corporation Have a Conscience?" in Ephies in
Managemeng, ed. K. E. Goodpaster (Boston: Division of
Research, Harvard Business School, 1984), p. 145.

29Christopher D. Stone, Eh§I£_£h§_L§H_EDQ§ (New York:
Harper and Row, 1975), p. 111.

30Peter F. Drucker, "What Is Business Ethics?" in

Business and Sgciepy, ed. Thomas G. Marx (Englewood
Cliffs, N. J.: Prentice-Hall, 1985), pp. 175— —76.

CHAPTER VII

CONCLUSIONS

From the findings of research on Peter A. French’s
corporate moral person view and the moral projectionists,
along with countervailing arguments of major challengers,
I conclude that the corporation is not a moral person, but
only a legal collective entity responsible to the dictates
of law. Corporations are found incapable of "intending"
in the sense that members of the moral community "intend,"
that is, with a mind-body unity of action. Thus,
corporations do not qualify as moral persons that can be
given full-fledged membership in the moral community, as
French argues. Consequently, corporations cannot be held
morally responsible for their actions beyond what is
designated by law for legal corporate entities.
Corporations are merely legal collective entities, and
they can only be held legally responsible for their
wrongdoing. Moral responsibility ascriptions cannot
validly be assigned to corporations. Only legal
responsibility ascriptions can properly be directed toward

corporations.

147

148

Interestingly enough, Milton Friedman’s classical
view of corporate responsibility is also based on the
corporation’s legal status as a legal collective entity
sanctioned and controlled by state and federal laws. For
Friedman, corporate responsibility is derived from the
particular corporation’s socioeconomic and financial
purposes for operating within the society and under the

society’s laws.1

Friedman views the corporation as merely
a legal business operation with its particular legal
responsibilities. In contrast, French views the
corporation as more than a legal business enterprise; the
corporation is also a moral person with moral
responsibilities for its activities. The moral
projectionists, too, view the corporation as having more
than legal responsibility, but without the requisite of
corporate moral personhood. Yet, the projectionists
remain unclear in their justification of assignment of
moral responsibility ascriptions in corporate settings.
This work, then, concludes that the corporation is
not an intentional, moral person with moral responsibility
for its acts, and therefore cannot be admitted to the
community of moral persons. The corporation is merely a
legal collective entity with only legal responsibilities.
The corporation itself cannot be held morally responsible

for its acts.

 

149

Another significant conclusion I reach from this
study is that only the corporation’s human members are the
intentional, moral persons who are associated with
corporate decision making, and thus can be held morally
responsible for corporate wrongdoing. The corporation’s
human ‘members provide the moral character of corporate
organization. Only the corporation’s human decision
members can be held morally responsible for their
decisions or indecisions made for the corporate entity.
They are morally responsible for their decisions or
indecisions in corporate settings.

Last, I conclude that the corporate organizational
setting sustains two identifiable modes of responsibility
—-1egal responsibility of the corporate entity itself, and
moral responsibility of the corporation’s human decision

members.

150

-- v

1Milton Friedman, "Social Responsibility of Busi-
ness," in Business eng Seciepy, ed. Thomas G. Marx (Engle—
wood Cliffs, N.J.: Prentice-Hall, 1985).

CHAPTER VI I I

RECOMMENDATIONS

From the findings and conclusions of this study, I
recommend that further discussion on corporate
responsibility consider the duo-dimensionality of
corporate responsibility in corporate organizational
settings. The conglomerate collectivity as a: corporate
legal entity can be held legally responsible for corporate
actions, while the corporation’s human decision members,
who are intentional moral persons, can be held morally
(and legally) responsible for their decisions made for the
corporate entity. Perhaps this understanding can move the
business ethics debate on corporate responsibility a
minuscule step forward to 23 better understanding of

responsibility in large corporate organizations.

151

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