Question

How is a corporation like a person? How are they different? Why might one argue that a corporation is a moral agent? That is to say, what moral obligations does a corporation have that are similar to those moral obligations a person has to himself and others? Finally, some argue that the only responsibility a company has is to increase its profits and nothing else. What are your thoughts on this statement and can you think of any instances where these two opposing viewpoints would clash (a company has only one responsibility {increase profits} or a company has a multitude of moral duties like a person/moral agent)? If you were the CEO of a company, which viewpoint would you favor and why?

Answer 1

Solution -

When a corporation is incorporated it is considered an artificial person. This is because it has a separate legal entity and has its rights and liabilities. It can enter into contracts - sale purchase assets. It can be sued and it can also sue. The differences between a person and the corporation would obviously be the human characteristics of a person that is feelings. A corporation is considered to act in a rational manner whereas a human has behavioral aspects attached. A corporation is conducted and governed by certain regulations and has its own set of vision, mission, and values similarly a person has its own morals and ethics. In a broader sense corporation is governed by many minds whereas human is governed by his or her own set of principles and laws.

A corporation can be considered a moral agent as it is a legal person and has powers to act and take decisions. Hence just as a person, an organization has visibility on the consequences of their actions and decisions. This gives them responsibility for whatever actions and decisions that the corporation has taken. A corporation just like a person has many stakeholders and there are certain legal aspects attached to the responsibility and accountability of the organization. There are certain regulations and norms under which the organization has to run. There are certain objectives that the organization has to fulfill and at the same time with the interaction of the organization with the society, it is also imperative that the organization acts in a responsible way towards the society. Thus a corporation is a moral agent just like a person and is governed by ethics.

The fact that the company has a responsibility only towards its profits is a highly misguided concept. A company has to run and thus profits are important but it is also essential to understand that the company runs in a society where there are certain norms and regulations and just like a person who lives in society follows certain ethics and values the same aspect is applied to the companies. If the company thinks only about profits then there would be scenarios where certain products can be produced in the market which will generate higher revenue for the company but are dangerous and disastrous for society. For instance, let us assume that Coca-Cola is running a plant in Africa and during production, they detect contamination which has neither changed the taste nor the color of the product but is harmful to health. So does the Coca-Cola Company go ahead with the production as there are certain profits attached to it or should they rectify the mistake which will cause at least $300,000 for rectification and they will also have to destroy the current inventory. In the whole scenario, Coca-Cola will act in the best interest of society and go ahead with the expenditure. Hence a company does not have the only goal of profits as it is the responsibility of the company to think and act in the best interest of its employees and the society. The aspect of Corporate Social Responsibility is also attached to the company, therefore, the company which is only guided by its profits is unethical.

As a CEO of the company I would go with the viewpoint that the company is a moral agent and it has a responsibility towards its employees and society because at the end of the business it is the people within the company and external to the company that supports the company in its objectives hence the company has accountability towards these stakeholders. The most profitable companies today are the ones that are aware and accountable to their stakeholders not just run on the basis of profits but also on the basis of ethical practices and their contribution towards their ecosystems.