Responsibility, Accountability and Corporate Activity

The notion of corporate responsibility dominates business ethics, in education and in practice. The relationship between the moral responsibility of corporations and that of their individual and collective members is an ongoing philosophical issue, ultimately riding on theories of moral agency. Whether corporations possess moral agency or not, corporate activity undeniably has morally significant effects. In this paper I discuss moral responsibility and how it gives rise to accountability. I then outline the connection between responsibility and moral agency, and associated theoretical difficulties. I argue that we can detach accountability from responsibility in a way that avoids issues about agency. Although emphasising accountability doesn't resolve the theoretical problems surrounding the idea of corporate agency, with respect to practical issues this strategy is more fruitful than focussing on corporate moral responsibility.

The nature of responsibility
Assertions of responsibility can mean a number of different things. We might be making a judgement of someone’s character, implying that she can be trusted to act responsibly. We might refer to a person’s responsibilities, as expressed by “my responsibilities in my job are…” or “Mary has a lot of responsibilities”. We might mean that someone was responsible for bringing something about. But these responses don’t take us far towards a satisfactory answer to the question “What do we mean when we talk about responsibilities”. To advance our understanding of responsible action we need to know who is responsible, and for what.

The question “Who is responsible?” has both practical and theoretical aspects. As a practical question, it aims to identify the responsible party: causally, as in “Who is responsible for the stain on the carpet?”, and for roles, as in “Who is responsible for the web site?” When asked theoretically it aims to establish what sorts of entities are properly ascribed responsibilities. Can only individuals be properly ascribed responsibilities, or can organizations also be held responsible? If the latter, then what sorts of organizations, and under what conditions? The theoretical question hinges on issues about rationality and agency, but I will argue later that we are entitled to talk of corporate responsibility, and thus hold corporations to account, without first having to show that corporations satisfy some justified conception of agency.

Issues about what responsibilities fall into two categories: kinds of responsibility, such as legal, moral, or causal responsibility; and actual responsibilities, such as parental, employer, or employee responsibility. Responsibilities interact and overlap both within and across the categories: parents have legal and moral responsibilities for their children; moral responsibility often, but not always, depends on causal responsibility. Relations between responsibilities only underline the need to think about these differences when we make judgements on the basis of responsibilities. We also need to think about degrees of responsibility. A murderer has a greater responsibility for the act of killing than someone who commits manslaughter both legally (because courts typically impose harsher sentences) and morally (because murder is worse than manslaughter). A senior member of a corporation has greater causal, legal, and perhaps moral responsibility than a junior member, at least in theory.

Moral responsibility
Moral responsibility assumes a capacity for making rational decisions, which in turn justifies holding moral agents accountable for their actions. Morality gives reasons for action, and moral agents must in principle be capable of choosing to act morally, and of acting on the basis of a moral reason. People who lack a capacity for rational decision-making cannot be held morally responsible for their actions. In case this requirement strikes you as too stringent, ask yourself why adults are held responsible for the welfare (and sometimes the actions) of children. Adults have moral responsibility for children because children lack a developed capacity for rational decision-making, and adults, other things being equal, are taken to have such a capacity.

Given that moral agency entails responsibility, in that autonomous rational agents are in principle capable of responding to moral reasons, accountability is a necessary feature of morality. Moral agents have negative responsibilities at least, and can be held to account for violating these. A thicker sense of accountability derives from the roles we occupy. Responsibilities attach to roles, for example professional responsibilities, and roles sometimes are defined in terms of responsibilities. I can be held to account for my fulfilment of my role-given responsibilities.

My moral responsibilities make me an appropriate subject of praise or blame. To be accountable is to be properly subject to the demand that I justify my actions in terms of responsibilities, and am willing to acknowledge failure to fulfil my responsibilities.

The content of responsibility Agents can be morally, legally, or causally responsible. Our focus here is on moral responsibility, without denying the importance of the other two kinds of responsibility for morality. The sources of moral responsibility—the grounds on which moral responsibilities can be ascribed to agents—include our past actions, our roles, and our developed moral agency. The last of these—being capable of recognising the force of moral reasons, and of responding to them—is a pre-requisite for the other two sources of moral responsibility, and so of accountability.

Moral responsibilities change over time and between agents. They can be shared, and they can be contested. Given the sometimes-fluid nature of moral responsibility, identifying who is responsible for what can be difficult. Even though moral responsibility is not always fixed or explicit, and can be shared, the general point about responsibility and accountability remains. Where I have a responsibility either to commit an act or to refrain from acting, I can be held to account. Also amongst our responsibilities are those attached to our roles. Others are justified in expecting us to fulfil these, and in holding us to account.

Accountability and responsibility are distinct. I can be morally responsible for some purely self-regarding act without being accountable to anyone, except perhaps myself. I can be accountable without being morally responsible, say for some state of affairs that pre-existed my occupying a relevant role, or because I occupy the role of account-giver in an organisation. But the link between responsibility and accountability holds for other-regarding acts, and for role-related circumstances where I do have moral responsibility. In many circumstances, responsibility does imply accountability.

Corporate moral responsibility
Corporations are legal entities with legal rights and responsibilities. Are corporations the kind of entities that have moral responsibilities?

Two fundamental considerations count against claims that corporate activity only generates legal responsibilities, or that corporate moral responsibilities are restricted to those imposed by ownership rights. First, the roles of corporations as suppliers of goods and services and as employers, and the impact of corporate products and activities, make it reasonable to talk about their moral responsibility. Corporations exercise social and economic power, and can cause harm to individuals and social institutions. Second, corporations participate in the moral sphere just as much as individuals and organisations of other types, such as political parties and sports associations. In both their internal and external interactions they make commitments, have duties of care, depend on trust, and so on.

Philosophical theories of corporate moral responsibility often focus on the notion of agency. This involves related issues about individual, collective and corporate identity on the one hand and about moral agency on the other. It makes sense to think of corporations as having both individuals and collectives as their members, but its members don't by themselves constitute a corporation. A list of a corporation's members and their functions does not provide a full description of the corporation as constituted by its legal standing and its social and economic roles.

Philosophers who model corporate responsibility on individual responsibility appeal to conceptions of action and intention. Corporate acts and intentions embody the acts and intentions of members of the corporation. The main problem facing this account of corporate moral responsibility lies in the dependence of corporate moral identity on individual agency. Even if corporations embody the intentions of their members it does not necessarily follow that corporations rather than their members are morally responsible. It begs the question whether corporations perform acts, or only their members do, and leaves us with difficulties in ascribing moral responsibility.

The relationship between individual, collective and corporate agency is the subject of complex and ongoing philosophical investigation. I'm not convinced of its value in establishing what we are entitled to demand of corporations.

Accountability and corporate activity
Whether we are concerned with individual or collective members of corporations acting in their corporate roles, or with corporations understood as distinct entities, the idea that corporate activity generates moral responsibilities makes sense. Given that corporations have moral responsibilities, they are proper subjects for praise and blame. So corporate activity satisfies the grounds of accountability. Corporations can be held to account. They should meet demands that they justify their actions in terms of responsibilities, and be willing to acknowledge failure to fulfil their responsibilities.

Once we accept this, the demand for an account of corporate moral agency becomes less pressing. Considering that corporate roles and acts are in general not reducible to ones occupied and performed by individuals, and that corporations can be held to account, we can accept that corporate activities are morally assessable without being committed to corporations somehow having intentions or other mental states. Explicating corporate responsibility in terms of accountability rather than agency provides better grounds for corporate moral self-understanding and for justifying regulatory policy.

I argued earlier that accountability presupposes the capacity to recognise and to respond to moral reasons. Individuals who lack a capacity for rational decision-making cannot be held morally responsible for their actions. Supporters of the view that the idea of corporate responsibility has to derive from analysis of agency might want to challenge the approach I advocate. How can I argue that corporations are accountable without saying how corporations can make rational decisions?

First, and perhaps a little facetiously, I recommend you look at some corporate mission statements. They invariably mention the corporation’s aims, commitments, and activities. They talk as if the corporation has the properties required for rational decision-making. Second, we describe systems and processes as rational in cases where no individual or collective could have produced the outcome. Third, allowing that only the members of corporations have the required capacity, corporate accountability might emerge from individual capacity, without being reducible to it. The idea that corporations are accountable doesn’t require a theory of corporate agency, but rather a causal history. Fourth, corporations satisfy whatever is required to meet the demands of legal accountability, so we already have a sense of corporate accountability.

Fifth, and finally, a corporation can be morally accountable for some state of affairs without having the capacity for rational-decision making, as long as people who possess that capacity can meet the demands of accountability on behalf of the corporation. Those people may themselves not be morally responsible for the relevant state of affairs. Because accountability is detachable from responsibility, a corporation can fulfil its accountability duties without complex philosophical issues about responsibility being resolved, or even establishing just which of its members did what.

Will Barrett is a Research Fellow in the Centre for Applied Philosophy and Public Ethics (CAPPE) at the University of Melbourne. He has published a number of articles on gambling, on retrospective law, and on the responsibilities of the media. For a number of years Will taught business ethics to MBA students at Swinburne University of Technology.

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