The Corporate Common Good: The Right and Obligation of Managers to Do Good to Others

Abstract

In this Article we articulate a model of managerial freedom - and even obligation - to engage in philanthropic activity differing in significant respects from that described by Germain Grisez in his influential work of Christian ethics "The Way of the Lord Jesus: Difficult Moral Questions."

We argue that Grisez's conception of a corporation as essentially ordered to the economic benefit of its stakeholders unnecessarily restricts a corporate manager's freedom of action. While Grisez denies that bald profit maximization is an appropriate standard for economic activity, it is difficult to avoid the conclusion that he eventually falls back into what we understand to be an enlightened commitment to profit maximization. We argue, however, that that conception conflicts with the inference about the nature of a corporation that a rational actor would draw from the actual behavioral conduct of modern public corporations, their public statements, and their representations to shareholders. Further, Grisez's account conflicts with fundamental statements of corporate law and seemingly, with Catholic social teaching. Based on these alternative theoretical and behavioral sources, it is difficult to accept Grisez's enlightened neo-classical model.

Instead, these sources support a different view of the nature of corporations. In this expanded view, a corporation, as a corporate legal person, is generally allowed an analogous moral and economic freedom, similar to that enjoyed by an individual person. In fact, if this were not the case, at least some of the charitable conduct and contributions of almost every public corporation would be put into question. Subject to the weak condition that Managers provide a fair long-term return to their stakeholders, and not a maximized return, no reason exists to deny corporate Managers the right, and even in certain cases the moral obligation, to employ corporate resources in philanthropic conduct, or more simply, to love one's neighbor.

Keywords: corporation, profit maximization, fair return, charity, managerial duty, Catholic social teaching, Germain Grisez