Authority and Democracy in Corporate Governance?

Although McMahon offers a potentially valuable extension of Joseph Raz's conceptualization of authority by distinguishing three different kinds of authority, this paper argues, first, that his account of the conditions and considerations that would justify managerial authority is problematic because it relies on a conception of reasons for action that excludes precisely the kind of rationality that plays an important role in the␣explanation and justification of authority in economic␣organization. This paper explains, second, why McMahon's thesis of the justificatory similarity of authority in governments and nongovernmental organizations can also be seen to hold for corporate governance of publicly owned firms more specifically. Finally, this paper raises some critical objections against McMahon's presumption of democratic governance in governments and NGO's alike. The thrust of these objections is that democratic corporate governance does not make sense in the publicly owned firms because: (1) it will not produce results that are fair or welfare maximizing, and (2) it will undermine the legitimacy of managerial authority in such firms. J. (Hans) van Oosterhout holds an M.A. in political science from Leiden University and a PhD in organization theory from RSM Erasmus University, where he is currently an associate professor. His research involves the positive and normative theory of organizations and institutions, with a current emphasis on corporate governance and comparative economic and political organization. Earlier publications have appeared in: Academy of Management Review, Organization Studies, Journal of Business Ethics and Futures.     

McMahon on Workplace Democracy

This paper offers a sympathetic critique of Christopher McMahon’s Authority and Democracy: A General Theory of Government and Management. Although I find fault with some of his arguments, my goal is not to show that these arguments are irreparable, but to highlight issues that deserve further consideration. After defining some terms, first, I raise an objection to McMahon’s rejection of the moral unity of management (MUM) thesis. Second, I draw attention to his “moralization” of the workplace, and examine the role it plays in his arguments about the relative strengths of the different kinds of authority. Third, I raise questions about his reliance on an analogy between states and firms. I suggest that states and firms are in some ways more alike, but in other ways less alike, than he allows.     

Using Sartre’s Critique of Dialectical Reason for Managerial Decision-Making

This article will offer an alternative understanding of managerial decision-making drawing from Sartre’s Critique of Dialectical Reason rather than simply Being and Nothingness. I will begin with a brief explanation of Sartre’s account of freedom in Being and Nothingness. I will then show in the second section how Andrew West uses Sartre’s conception of radical freedom from Being and Nothingness for a managerial decision-making model. In the third section, I will explore a more robust account of freedom from Sartre’s Critique of Dialectical Reason. I will attempt to show that freedom is not simply a matter of choosing (or not choosing) to perform an action, but entails external constraints—including other people. Finally, I will provide the implications of this account of freedom for managerial decision-making. I will show that it’s unreasonable to place full responsibility and/or blame on managers given their constraints. This does not absolve them from responsibility, but better accounts for the way in which we ought to hold them responsible.     

Enough chit-chat,strike! Deliberation and agonism in corporate governance

This conceptual paper contributes to the critique of a body of literature that will be named ‘deliberative corporate governance’ by defending non-deliberative acts performed by stakeholders. It first argues that this literature introduces to the corporation a decision-making process where it does not belong, given the corporation's economic role. This leads to an ‘efficiency constraint’ on any attempt to justify deliberation – deliberative governance theorists must show that it is the most efficient and cost-effective way to address the issues that concern them. A real case example where deliberation would have been counter-productive in that regard will show that this is not the case. Building on this example, the paper uses the theory of democratic agonism to argue that non-deliberative acts should be part of governance. A sketch of managerial duties vis-à-vis such acts is attempted as well. The paper does not seek to reject deliberative corporate governance entirely, but rather to defend the importance of non-deliberative practices in addressing its theoretical concern. It makes a conceptual contribution to corporate governance theory, from which it draws practical implications for stakeholders-oriented management.     

Deadly Drugs and the Doctrine of Double Effect: A Reply to Tully

In a recent contribution to this journal, Patrick Tully criticizes my view that the doctrine of double effect does not prohibit a pharmaceutical company from selling a drug that has potentially fatal side-effects and that does not treat a life-threatening condition. Tully alleges my account is too permissive and makes the doctrine irrelevant to decisions about selling harmful products. In the following paper, I respond to Tully’s objections and show that he misinterprets my position and misstates some elements of the doctrine of double effect. I also show how the doctrine constrains some decisions about marketing drugs with potentially fatal side-effects.     

Technological advantage,alliances with customers,local knowledge and competitor identification

Research typically studies competitor identification in stable markets and seldom considers possible antecedents in a dynamic context. To address this situation, this study combines a relational view, a capability-based approach, and a managerial cognition view to predict competitor identification. The hypotheses concern how a firm's customer ties, technological advantage, their interaction, and top manager's local knowledge influence competitor identification. Using a sample of 1348 firms across manufacturing and servicing sectors in China, we find that strong customer ties have a positive impact on competitor identification, firm-specific technological advantage has a negative impact, and the interaction of the two positively relates to competitor identification as does having greater local knowledge. These results suggest that a relational view, a capability-based view and a managerial cognition view complement one another in determining competitor identification in a dynamic environment.     

Google,Human Rights,and Moral Compromise

International business faces a host of difficult moral conflicts. It is tempting to think that these conflicts can be morally resolved if we gained full knowledge of the situations, were rational enough, and were sufficiently objective. This paper explores the view that there are situations in which people in business must confront the possibility that they must compromise some of their important principles or values in order to protect other ones. One particularly interesting case that captures this kind of situation is that of Google and its operations in China. In this paper, I examine the situation Google faces as part of the larger issue of moral compromise and integrity in business. Though I look at Google, this paper is just as much about the underlying or background views Google faces that are at work in business ethics. In the process, I argue the following: First, the framework Google has used to respond to criticisms of its actions does not successfully or obviously address the important ethical issues it faces. Second, an alternative ethical account can be presented that better addresses these ethical and human rights questions. However, this different framework brings the issue of moral compromise to the fore. This is an approach filled with dangers, particularly since it is widely held that one ought never to compromise one’s moral principles. Nevertheless, I wish to propose that there may be a place for moral compromise in business under certain conditions, which I attempt to specify.     

Rethinking managership,leadership, followership,and partnership

Organizations underperform, or fail, when members avoid partnering with managers—whether through subtle resistance, disagreement, protest, or walkout—to achieve common purpose. Managers should boost partnering not by affecting a pretense of leadership but through a nuanced balance of managerial authority and understanding of members’ points of view. The objective of this article is to sharpen attention on the concept of partnership with organization members and how it relates to some of the important previous literature. We also argue that some of the previous scholarly work contributes to misconceptions related to these concepts. Our work is forward-looking in that it is motivated by the dangerous societal and cultural differences evident in the world, differences that surround management’s decisions and that may induce an overuse of authority to quash disquiet. Using our experiences in both industry and academia, we argue that the crucial link between managers and members is leadership—not leadership thought of as directional and inspirational, but leadership as building a relationship toward common purpose through partnership. “Lead” and “leader” are sorely misused terms, and worse, substituting “leader” for “manager” is just plain wrong. We believe that managers become leaders only when followers agree to follow, not when the managers simply step forward energetically with direction. Managers are cheated by mistaken definitions. Reviewing past perspectives about what makes good leaders and managers, we rethink ways to enhance organizational harmony through a clearer understanding of managership, leadership, followership, and partnership. Only by thinking and acting as partners in common purpose can managers and members form the core of success in organizational endeavors.     

Should Corporations Have the Right to Vote? A Paradox in the Theory of Corporate Moral Agency

In his 2007 Ethics article, “Responsibility Incorporated,” Philip Pettit argued that corporations qualify as morally responsible agents because they possess autonomy, normative judgment, and the capacity for self-control. Although there is ongoing debate over whether corporations have these capacities, both proponents and opponents of corporate moral agency appear to agree that Pettit correctly identified the requirements for moral agency. In this article, I do not take issue with either the claim that autonomy, normative judgment, and self-control are the requirements for moral agency or the claim that corporations possess them. I claim that if both of these claims are correct, then corporate moral agency entails that, in a liberal democracy, corporations should have the right to vote. I show that under the conception of democracy supported by most liberal political theorists, all parties subject to the law are entitled to the right to vote, and all parties that possess autonomy, normative judgment, and self-control are subject to the law. Therefore, if the proponents of corporate moral agency are correct, then corporations satisfy the requirements for the right to vote. I then consider potential objections to this argument. I show that the strongest objection to the corporate right to vote is undermined by Pettit’s own argument for corporate autonomy. I then show that objections derived from other arguments for limiting the rights of corporations are equally unavailing. I conclude with some observations about the implications of my argument for the question of corporate speech rights.     

Agents or Stewards? Linking Managerial Behavior and Moral Development

The goal of this paper is to connect managerial behavior on the “agent-steward” scale to managerial moral development and motivation. I introduce agent- and steward-like behavior: the former is self-serving while the latter is others-serving. I suggest that managerial moral development and motivation may be two of the factors that may predict the tendency of managers to behave in a self-serving way (like agents) or to serve the interests of the organization (like stewards). Managers at low levels of moral development are more likely to behave like agents, while managers at higher levels of moral development are more likely to behave like stewards. I also argue that managers at the highest level of moral development may serve the interests of people other than the firm’s owners and thereby transfer wealth from the firm’s owners to third parties. Moral motivation is likely to be a factor that moderates the proposed relationships. Finally, I develop propositions that address the role of material incentives in controlling behavior of managers at different levels of moral development.     

Number One Country,Number One Currency?1

This paper assesses the prospects for renminbi internationalisation, arguing that the process will encounter significant challenges. Some of these are familiar: the Chinese economy, while large, remains poor; China’s financial markets lack depth and liquidity; encouraging international use of the renminbi will require substantial capital account liberalisation, in the course of which things can go wrong. In addition, I highlight a less familiar challenge: China’s political system may be an obstacle to renminbi internationalisation. Since the early nineteenth century, the leading international currency or currencies have been those of countries with democratic political systems where there are constraints on the executive, which have built durable alliances, and where creditors are well represented. This is not a prediction that China must have a Democratic Spring before the renminbi becomes a leading international and reserve currency. But it does suggest that the country will have to contemplate significant political reform.     

An Absurd Tax on our Fellow Citizens: The Ethics of Rent Seeking in the Market Failures (or Self-Regulation) Approach

Joseph Heath lumps in quotas and protectionist measures with cartelization, taking advantage of information asymmetries, seeking a monopoly position, and so on, as all instances of behavior that can lead to market failures in his market failures approach to business ethics. The problem is that this kind of rent and rent seeking, when they fail to deliver desirable outcomes, are better described as government failure. I suggest that this means we will have to expand Heath’s framework to a market and government failures approach. I then try to defuse objections that as a government failure, rent seeking may not appear relevant to what managers ought to do. Solving this conceptual issue will also give us an excuse to revisit a separate conceptual issue: the normatively thick conception of “rent” and rent seeking behavior that some use. This normatively thick conception is problematic, I argue, and I offer the beginnings of a novel, normatively neutral conception that is useful for our purposes in making the ethics of rent and rent seeking behavior more than a merely trivial exercise.     

Governance and Globalisation

Unlike the large literature on ‘democracy and trade’, there is a much smaller literature on the effect of the level of democracy in a nation on the level of its foreign direct investment (FDI) inflow. These few studies reveal mixed empirical results, and surprisingly only one study has examined bilateral FDI flows. Moreover, few of these studies use multiple governance indicators separating the ‘pluralism’ effect of democratic institutions from the ‘good governance’ effect, there are no studies on democratic institutions’ various effects on the level of FDI relative to trade, and there are no studies of democratic institutions’ various effects on the selection of countries into FDI. We focus on three contributions. First, we examine the simultaneous effects of the World Bank's (six) Worldwide Governance Indicators (WGIs) – which allow separating the effects of pluralism from those of five other good governance measures – on bilateral trade, FDI and FDI relative to trade using state‐of‐the‐art gravity specifications. Second, we find strong evidence that – after accounting for host governments’ effectiveness in various roles of good governance – a higher level of pluralism as measured by the WGIs’ Voice and Accountability Index reduces trade levels, likely by increasing the ‘voice’ of more protectionist less‐skilled workers, but not FDI levels. Moreover, we find qualitatively different effects of other WGIs – such as political stability – on trade versus FDI flows. Third, we account for firm heterogeneity alongside a large number of zeros in bilateral FDI flows using recent advances in gravity modelling. We distinguish between the (country) intensive and extensive margins and show that pluralism affects FDI inflows negatively at the intensive margin, but positively at the extensive margin.     

论邓小平民主思想的辩证法

社会主义民主思想是邓小平理论中的一个重要内容。邓小平充分运用历史唯物主义与辩证唯物主义,从共性与个性、普遍联系与发展、从量变到质变等规律出发,坚持矛盾论和两点论的观点,思考和探索了什么是社会主义民主,怎样建设社会主义民主的实践命题,从而构建了社会主义民主理论体系,为中国的政治体制改革指明了方向,丰富和发展了马克思主义民主理论。     

Democratizing the workplace through professionalization of human resource development*

This article critically examines democratizing the workplace through the professionalization of HRD. The primary question the article seeks to explore is to what extent can a democratic profession potentially minimize undemocratic workplaces. Drawing from several conceptual and research bodies of literature, including democracy and democratic workplaces, globalization and sociology of professions, this article describes democracy and how professions can enhance its growth.     

Ambiguous framings of political consumerism: means or end,product or process orientation?

For dealing with various societal problems, ‘political’/‘ethical’/‘responsible’ consumerism is often discussed as an effective democratic and participatory tool. However, political consumerism – along with its tools, such as product labelling – is often conceived and discussed in oversimplified ways. Instead, the tension between scientific complexity, knowledge uncertainty and a codified, standardized label involves extensive political strategy, interest conflicts and simplified framings of the consumers’ roles as political decision makers. The purpose of this paper is to analyse how criteria for organic food labelling have been simplified, or framed, within various versions of political consumerism in policy debates. The more general purpose is to examine variations of what consumerism may entail theoretically and practically. Examples are chosen of organic food labelling in the US. The analysis is based on framing theory. The first distinction is made between framings surrounding the extrinsic and intrinsic values of consumerism (i.e. consumer empowerment towards an external goal, or as an overriding principle of democracy). The second distinction is between product‐ and process‐oriented consumerism (i.e. consumer empowerment with regard to the purchased goods or concerning the ‘invisible’ production and disposal processes). These distinctions may facilitate critical examinations of criteria, processes and communication of consumer‐related policies.     

对我国基层民主建设的思考

基层人民民主是我国人民民主制度发展过程中相当重要的一环．做好我国的基层民主工作对于维护基层稳定有着至关重要的作用。目前我国的基层人民民主制度仍存在出一些不完善的地方。胡锦涛同志在中共十八大开幕式上的报告．也指出了我国必须推进基层人民民主进程。从我国基层民主相关法律出发,对我国的基层人民民主法律制度提出相应的改进建议。     

Democracy,Cooperation and Business Success: The Case of Mondragón Corporación Cooperativa

Are democracy and success compatible in a business organization? In this work we show how Spain’s Mondragón Corporación Cooperativa (MCC) has made it possible. MCC can be considered a world leader in cooperativism. It is one of the few contemporary business organizations that can be viewed as a democracy, and it represents a unique experience in the use of democratic and participatory methods in management. MCC has developed its own Management Model based on its cooperative principles, on modern management practices and on the cutting edge experiences of the most advanced companies. In this work we analyze the key elements of MCC’s democratic management model, developed around aspects such as corporate culture, organizational structure or human resources. We also look at the case of Irizar, a component cooperative of MCC internationally known for its successful management model. Finally, we outline some practical implications of introducing democracy into organizations, drawn from the experiences of MCC and Irizar.     

Economic Democracy, Social Dialogue, and Ethical Analysis: Theory and Practice

The purpose of this article is to present in a summarized form a new approach to the ethical analysis of economic policies and to illustrate its importance with a reference to recent experiences of social dialogue in Costa Rica.A general view of the Latin American scenario is presented, with the belief that some of the main problems there observed call for a type of analysis like the one here proposed. In the second place, a brief characterization of this new ethical analysis is included.Democracy suffers from the existence of asymmetries in social and economic relationships, insofar as the success of political democracy cannot be neither understood nor built up independently from economic democracy. The strengthening of democratic processes in Latin America requires a better understanding and consolidation of the relationship between political democracy and economic democracy. On the other hand, present orientation of globalization makes of the international environment an obstacle to realize democracy at a national level. Hence, two focus of interest arise for the ethical analysis of economics at the macroeconomic level: the study of the ethical conditions of participation for each country in the globalization process, and the realization of an economic democracy within each particular country.After identifying both lines of reflection, this article summarizes the theoretical basis of a proposal for the ethical analysis of economic policy making. This approach attempts to answer the challenges of economic democratization. Centered on the ethical dimension of these processes, and from the point of view of a dialogical ethics, stress is given to those aspects of the process which will guarantee the ethical character of the consequences. This is a methodological approach which tries to discover the ethical values feasible within the economic policies and, at the same time, to go in greater depth in the construction of democratic practices. Rooted in the Latin American regional reality, this academic reflection is just in its beginning and must be considered as complementary to the business ethics analysis already developed in Latin America and Spain.A reference to recent experiences of social dialogue in Costa Rica gives the theoretical presentation a support for the acceptance of its realization in practice.     

Not for turning? Power,institutional ethos and the ethics of irreversibility

Adoption of an ‘ethics of reversibility’ can seem fashionably enlightened, even democratic, but appears less radical when issues of power are opened up. Adopting the motif of keeping, this paper sets its questioning of an on-going individuation of ethics within the context of an insidious reduction of institutional mores to business parlance. Keeping Derrida's ‘philosophy of reversals’ in view, the discussion resists the double bind of attempts to make higher-level decisions ever more ‘irreversible’ on the one hand, while devolving ethical responsibilities for outcomes downwards on the other. In criss-crossing, back and forth, on variations of these themes, the aim of the paper is to contest a division of moral labour in which the more powerful style themselves as ‘not for turning’, while those dispossessed of authority are left to vacillate within the market agendas of flexibility and transparency.