Ethics of Corporati...
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Ethics of Corporation considered as an entity

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Posts: 63
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We learned from this week that corporation can be considered as a moral entity so it receives the blame/praise instead of the people running the corporation. Should this be allowed? 

Currently, since corporations are considered as a legal entity, they bear the responsibilities of their actions(especially if they are immoral), so the people running them wouldn't be responsible. Sure, this framework limits the personal liability of the person that is running the corporation(meaning they wouldn't have to give up their "house, wife, and kids") but is it ethical to shift the moral responsibility to an entity that is not autonomous?

Posted : 08/10/2023 9:19 pm
Posts: 69
Trusted Member

I completely understand the point of view you are conveying. I too always thought it was a bit strange that whenever there is any type of legal issue or controversy in regards to a corporation's actions or outcome, it is always the company that receives the brunt of punishment and leaving those actually behind the decision to get away essentially scott-free. But on the other hand, after this week's slides, I have a renewed perspective of this issue that.

Besides the very extremes and outlier-type outcomes, most of the decisions made with any "moral inducing" factor are on behalf of the company rather than the individuals acting on their own for their own benefit. An example of this would be a manufacturer vehicle recall for faulty brakes that results in numerous deaths of its passengers/drivers. This is clearly a horrendous mistake that results in human lives lost, but the team who designed and implemented the brakes should not receive any fault of their own because they done so on behalf of the company and would not have done so under any other circumstances.

However, to address the point of shifting blame from the corporations to its management or individuals, a common example of this would be when individuals conspire to unethically make changes that would cause some type of significant harm (financial, physical, mental, etc.) to their target market. Like when Archer Daniels Midland (ADM) conspired to fix prices of lysine which is used as an additive in animal feed. The result of that was the corporation got hugely fined, but the individuals who were responsible for making the decision also received punishment in fines and jail sentences. So what this shows is that even though businesses can be considered a legal entity, that does not always shield those responsible for illegal or unethical outcomes under the company name.

Posted : 12/10/2023 12:49 pm
Posts: 75
Estimable Member

There are a lot of factors to consider when thinking about the morality of the "Corporate Veil." The importance of the corporate veil is that it separates the business' assets from the assets of the owners or shareholders. The corporate veil is vital because the business acts as its own entity and should be able to pay off it's own debt and liabilities. Anything bought for the business would likely not have been bought otherwise (for personal use), so it makes sense that a corporation's assets are separated from the owners'. In that same line of thinking, any debt or liabilities incurred by the business would likely not have been obtained otherwise. Therefore it makes sense that the business has to pay for the debt and/or liabilities.

On the other hand, gross negligence is possible and sometimes conducted so egregiously that the owner in the business must be held responsible and suitably punished (assets taken, jailed, etc.). Although the concept of the corporate veil is meant to protect the owners from paying off the debt of the business, sometimes malicious intent or greed can cause the piercing of the corporate veil, where they can be truly held responsible.

Although I don't think that the concept of the corporate veil is inherently wrong, it can protect owners with bad intentions in business. But that is the reason why in certain circumstances, it is allowed to be pierced and the owners' can be held responsible for their actions.

Posted : 13/10/2023 6:17 pm
Posts: 71
Estimable Member

As previous replies had stated, the corporate veil’s purpose is to separate the corporation and their shareholders; it essentially protects shareholders’ personal property. Initially, I would have been more inclined to say the corporate veil is not ethical as it shifts the moral responsibility to a non-autonomous entity. However after listening to the Business 101 lectures, I would say the veil’s intention is not meant to remove accountability from business owners. It is still possible to pierce the corporate veil. Although rare, certain red flags have been noted for allowing limited liability to be dissolved. Juries and judges look at the totality of circumstances: unity of interest and ownership, wrongful conduct, and proximate cause. Past cases have set precedents for such a situation. There are also state laws that establish instances that warrant suits against owners. For example, a 2007 Texas case defined 4 requirements that would establish fraud had occurred. Such past cases have been able to hold owners accountable for ethical violations, demonstrating the corporate veil is not invincible. However, I do admit the rarity of piercing the corporate veil implies it is possible owners had been able to make unethical company decisions. Therefore, I do believe there should be more scrutiny into these types of cases and more established legal guidelines to ensure accountability. 

Posted : 13/10/2023 10:49 pm
Posts: 72
Trusted Member

When it comes to corporations and considering them as moral entities, there are various points of view that should be taken into consideration. From a legal status point of view, corporations are viewed as moral entities for this specific reason: for liability reason. Corporations want to be protected under this "corporate veil", as mentioned in the previous replies, which is why the need for them to be seen as a moral entity is necessary. However, is this ethical? That's another perspective that should be taken into consideration. While some may argue that by being a moral entity corporations are not truly facing responsibility for any mistakes that the corporations may make, it does point out the fact that any major decisions made by corporations have consequences to them. For example, if a decision helps society as a whole, people would trust that corporation more and maybe even invest in their stocks and such. However, if the decision made negatively affects society, then people would stay away from that corporation and maybe not invest in stocks. In other words, being a moral entity does not make a corporation "punishment-free". Although specific individuals in the corporation may not be publicly blamed, it can be safely assumed that if a corporation takes a big hit after it makes a decision that affects society negatively, the corporation itself would take legal action against any individuals that caused this harm to occur. This way, there is accountability held within the corporation, just not publicly. 

Posted : 14/10/2023 5:10 pm
Posts: 19
Active Member

The question of whether corporations should be considered moral entities, thereby receiving blame or praise instead of the people running them, is a complex and debated ethical issue. It involves questions about the nature of legal entities, individual responsibility, and ethical accountability. Here are some perspectives to consider:

Arguments in Favor:

  1. Limited Liability: The concept of a corporation as a separate legal entity with limited liability is designed to protect individuals from bearing the full financial burden of business failures or legal liabilities. It encourages entrepreneurship and investment.

  2. Contractual Framework: Corporate structures are established based on a contractual framework. This framework allows people to invest in and manage businesses with clearly defined roles and responsibilities. It enables the efficient allocation of resources and the execution of complex business transactions.

  3. Fulfilling Legal Requirements: Corporations are subject to legal requirements and regulations, which provide a framework for accountability. These regulations are intended to ensure that corporations act within the bounds of the law.

Arguments Against:

  1. Moral Agency: Some argue that corporations are not moral agents and do not have personal intentions or conscience. Moral responsibility should rest with individuals who make decisions and take actions within the corporation.

  2. Limited Accountability: Shifting moral responsibility to a corporate entity can sometimes result in limited accountability for unethical behavior. Individuals may be shielded from consequences for their actions.

  3. Ethical Concerns: Critics argue that corporations should be held accountable for their actions in the same way that individuals are held accountable. When corporations engage in unethical behavior, it is often a result of decisions made by people, and those individuals should be held responsible.

  4. Corporate Culture: The culture within a corporation, which is often influenced by its leadership, plays a significant role in determining the ethical behavior of the organization. Holding individuals accountable for fostering ethical cultures is important.

In practice, the legal framework recognizes corporations as separate entities with their own legal standing. However, there is an ongoing debate about the ethical and social implications of this legal construct. Many believe that both individuals and corporations should be held accountable for their actions, especially when those actions are morally or ethically significant.

Ultimately, the ethical responsibility of individuals within corporations, including leaders and decision-makers, is a key consideration in determining accountability for corporate actions. This balance between individual and corporate responsibility is an ongoing ethical discussion in business and legal circles.

Posted : 15/10/2023 8:42 pm
Posts: 36
Eminent Member

The question of whether corporations should be considered moral entities, and if this shifts moral responsibility from individuals, is a complex ethical and legal issue. Treating corporations as moral entities can encourage ethical behavior within organizations but might also allow individuals to evade personal accountability for unethical actions. Striking a balance between corporate and individual responsibility is crucial, with the current legal framework seeking to hold both accountable depending on circumstances and involvement in unethical actions. The ethical stance varies, and ongoing debate and evaluation are necessary to determine the right approach.

Posted : 15/10/2023 10:32 pm