A Role for Law and Lawyers in Educating (Christian) Business Managers about Corporate Purpose
Washington and Lee University - School of Law; University of St. Thomas, St. Paul/Minneapolis, MN - School of Law
August 29, 2008
U of St. Thomas Legal Studies Research Paper No. 08-22
Business managers may believe that the companies they lead must exclusively pursue the goal of stockholder wealth maximization because they think it is legally mandated. They may also think the companies they manage are precluded from pursuing other laudable objectives because those objectives are legally foreclosed. Neither belief is accurate and this article offers additional arguments on the question of corporate purpose, but does so by broadening the discussion beyond lawyers and law professors to include those who educate business managers. The ends of corporate conduct, it is argued, are only loosely regulated by law. Competitive markets play a more meaningful role in constraining business conduct, but markets too leave managers with significant discretion. Ultimately, the chosen aims for business conduct in the U.S. reflect the influence of business lore and social norms - which may be shifting and can vary across cultures - not the tight constraints of law or markets.
Business managers absorb social and business norms from many sources but their business school training undoubtedly plays a formative role in shaping beliefs about appropriate conduct, even if (maybe especially if) done implicitly, just as professional training of business lawyers can indelibly shape their thinking about corporate purpose. This article argues that those who educate business managers, like those who train lawyers, have a responsibility to teach managers that the law does not require only share price maximization and that it provides significant latitude in the pursuit of morally responsible conduct, including that grounded in religious conviction. Only when business persons accurately understand what does and does not constrain them are we likely to see a more pluralistic, rather than monistic, approach to corporate purpose. Relatedly, the current dichotomy between "for profit" and "not for profit" organizations may be too stark; companies in the former category may more properly fall along a continuum, rather than occupy a single point, in the degree to which they zealously maximize profits. Business schools also have a responsibility to educate future business managers to insist that corporate lawyers provide proper counsel on these matters and also on how a right understanding of legally-imposed fiduciary duties can guide managers in making morally and spiritually-informed decisions. Finally, the paper argues that the language of fiduciary duties can be a mediating discourse that permits business managers to introduce moral and spiritual insights into business settings, once free of the mistaken belief they must maximize share price.
Number of Pages in PDF File: 35
Keywords: Corporate law, Corporations, Business Ethics, Faith and Values, Morality and Business, Fiduciary Dutiesworking papers series
Date posted: August 31, 2008
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