Corporations and their legal status are a mixed blessing and hard to discuss. Nevertheless I will try to point out my opinion. Especially interesting for the topic is the movie shown in class, called "The Corporation". I'll show some important extracts in this article. The rest is available on Youtube.
To structure my thoughts clearly I will change the order of the questions given in class a little bit. Let's start with an interesting definition of what a corporation is:
[I wanted to include the video, but it seems to big for the blog, so just click here:
1. What are the benefits of the corporate form?
One of the benefits this model offers is that the people founding or working in this corporation are not liable with their private property. This means, that people are more likely to start a business because the risks are minimized. It also means that the business might be more dynamic because managers are more likely to take risks (which can have good and bad impacts on the organization itself). It also regulates heritage issues and also provides that contracts etc. are not dependent on a single person (if a person quits or dies, the contract is still in action between the corporation and a second party). It also simplifies conclusions of contracts itself, because they are made between two direct parties, giving some security by the property of the two business entities and are signed in the name of the business. It also regulates taxation issues, although here corporation are not really treated as individuals.
In terms of legal issues, customers know who to press charges on (because sometimes things might also happen unintentionally which is the risk of any firm and cannot be covered by single persons in the top-management) and on the other hand corporation can accuse each other as a whole.
As stated in the movie “The Corporation”: “People make mistakes.” We are not machines. Managers have a great responsibility and are usually under a lot of pressure. They have to make decisions and the decision might be wrong once in a while. They are also just human beings. Therefore, I think, it is ok to take some of the pressure away from them. But I also think, we are in big trouble, if the fortune and well-being of a manager is not at all related to the business he is working for. We also have to take into account, that at least the managers with some morality try to do the best for their employees and that they also feel responsible for their well-being and the future of the company. It’s a shame that not all of the managers are thinking like that.
2. Should corporations be entitled to the same legal rights as individuals?
In my opinion Corporations cannot be completely treated as individual persons! Why not?! Because they are not a real person! They are just an entity of different individual persons and driven by those. And how should it even be possible to treat an organization as one single person? In case of violation of human rights for example, how could you possibly condemn such an agglomerate of people to prison? Well, the answer is you cannot. Judges mostly don’t have other opportunities than to impose a fine on the corporation and even though this might be a huge one, the people guilty of the case can just leave the firm and start over somewhere else, most of the time!
I have already covered some of the advantages of this legal form under question 1 and will therefore concentrate in this point on the boundaries of this concept. The line should be drawn where it comes to serious crime of a handful of leaders that can be definitely named. I should probably give some examples: If companies are bought with the purpose to destroy them, if corruption is part of day to day business, if human rights are violated (for example in plants in developing countries, but also in our hemisphere etc.), if products are knowingly a thread to health or environment, if the pollution of ecosystems is intentionally or not prevented and so on. This list might be endless. The problem is that we might not have the chance to find out who exactly is responsible for this or that decision in the management. Well, I would like to solve that problem by making the whole management sphere responsible because they should enforce close communication between each other, knowing that they are all responsible for the action of their company. I am talking about knowingly criminal decision made by the management here. I know that it is very hard to sue this but I am lacking the juridical background to really develop a concept for this.
As stated in the movie, the problem with “corporate citizens” is that they are only created to serve the interests of their shareholders. They are considered to be bodies without morality, consciousness or social awareness. That is a huge problem by judging them as normal human beings. But there are people who are responsible for the actions of a corporation and we have to find ways to press charges on them if they are harming the community.
3. Where should the line be drawn? How can we ensure corporations are held accountable for their actions? Could an alternative model offer these as well?
As already mentioned above I neither have the juridical background to develop such a system, nor do I think this could be developed in an hour or two. It is a very complex problem we are facing here and we are not the first thinking about it. What can be seen in the recent past is that more and more corporations care about what they call Corporate Social Responsibility. This is becoming more and more an issue because the media and the society are putting more and more pressure on the corporations. Even though many of those campaigns might be driven by populist interests it gives us a clue how to deal with the new reality: Put public pressure on companies! If consumers for example start to link their buying decisions on whether a company is doing something for the environment or for the community, companies who are doing that would have a competitive advantage: THE MAGIC WORD in business! Another new key word in marketing is SUSTAINABILITY! which mostly goes along with the concept of CSR. We could at least make every company write CSR and sustainability records, but the guidelines and controls should be more concrete and precise as they are right now. And the possibility of sanctions or penalties should be included if companies do not reach the before established goals.
It is also the duty of the media to investigate what goes wrong and show it to the public. So, in order to make our world more fair we should all change our behavior and try to point out what is going wrong and how we want our world to be. We are all living on the same planet and hence share the responsibility to make it worth living at.
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| Concept of Corporate Social Responsibility (CSR) [click for more information] |
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