Society for Business Ethics 2024 Annual Meeting

Paper Abstracts: Session 4

Session 4A: Corporate Agency And Shareholders

• A Democratic Theory Of Corporate Rights
  • This paper appeals to contractualist moral thinking to present a democratic theory of corporate rights. Part I holds that corporations have abstract moral rights that are grounded in the generic interests of human persons, but that democratic societies have the prerogative to assign them concrete legal rights in a way which takes all these interests into account. Part II illustrates this theory by identifying human interests which underlie abstract political rights of corporations. Part III examines how various assignments of corporate political rights may constitute a reasonable balancing of these interests. It then raises awareness of how courts can interpret the legal rights of corporations in a way which undermines democratic regulations that have been placed upon them, and shows how industry interests can seek to get “pro-business” judges appointed who systematically interpret corporate legal rights in a way that lets them avoid reasonable democratic regulations. It argues that when these industry efforts are successful, it results in an undemocratic (and in a sense to be described, “authoritarian”) understanding both of corporate rights and of the kinds of regulations that can be democratically placed on corporations. The paper concludes by discussing how corporations should exercise their legal rights when they have been assigned in a way which fails to protect the interests of vulnerable stakeholders, including citizens’ interests in exercising democratic governance over the firm. It argues that they should engage in self-restraint with regard to how they exercise their legal rights for the sake of respecting these important stakeholder interests.
• Why Wide Duties Of Beneficence Carry Over From Shareholders To Managers
  • In a recent article, Santiago Mejia argues that agency theory is sufficient grounds to justify most duties of beneficence. More specifically, wide duties of beneficence must be seen within the agent and principal relationship founded upon a normative framework. Although I agree with these constraints, I disagree with his claim that wide duties should be the purview of shareholders, not managers, when investors make implicit or explicit requests. I will argue the following: First, not all shareholders have a voice or equal voice depending on what kinds of shares they hold. Second, implicit demands from individual and institutional investors, who own the bulk of shares in the US, pose a bigger problem for how philanthropic requests will be communicated to managers. Third, I propose using a ‘principle of charity’ to interpret these implicit requests but ultimately show managerial expertise in understanding market conditions is a better approach to fulfilling beneficence. Contrary to Mejia, giving to charity is the purview of managerial decisions and discretion and should not be offloaded to shareholders. Given the market of virtue, beneficence is well within the duties of managers. Managers have market knowledge and information that can address the needs of non-profits while meeting strategic business interests.

Session 4B: AI Ethics 2

• On Foundations And Foundation Models: What Lessons Can AI And Philanthropy Learn From One Another?
  • This paper focuses on the analogue ways in which Foundations and Foundation AI Models create tensions with democratic values. It draws on existing literature, which argues that large foundations can operate outside democratic institutions, with substantial societal impact, and minimal accountability, leading to considerable power concentration. These foundations tend to promote donors’ individual conception of social good. Due to a lack transparency and public accountability, they lead to large concentrations of power that is unresponsive to the individuals whose life is impacted by it their work. Corporations developing foundation AI models exhibit similar characteristics. These foundation models encode their creators’ values, which largely shape their societal impact. Design decisions reflect how developers balance conflicting values. Given the complexity of foundation models and inadequate regulatory frameworks, there is a lack of transparency and accountability to the public whose lives are impacted by these models. Moreover, the high costs of training and deploying these models make it the case that only a few companies can train and deploy them, leading to disproportionate power concentration, that stands in tension with democratic ideals. The final section discusses the method of Deliberative Alignment, a recent initiative tto democratize decision making regarding foundation models. This method could counteract the antidemocratic tendencies of foundation models, ensuring a broad spectrum of values and perspectives are considered in the model development and governance. The chapter finalizes by discussing some of the key drawbacks and advantages of deliberative alignment as a method for increasing democratic governance over foundation model
• Efficiency Versus Fairness Tradeoffs In Algorithm-Based Personnel Selection
  • Organizations increasingly rely on algorithms to increase the efficiency of their personnel selection practices. However, such algorithms can have an adverse impact on demographic subgroups (such as different genders, age groups, or ethnicities); yet, equalizing differences in test scores between these subgroups comes at the expense of sacrificing some efficiency of the algorithm for its group fairness. Drawing upon Folger and Cropanzano’s fairness theory, we test a conceptual model of antecedents of efficiency versus fairness choices in the context of algorithm-based personnel selection in a gender-based fairness scenario using a series of four experiments (Experiment 1: 283 MTurkers; Experiment 2: 276 MTurkers; Experiment 3: 277 MTurkers; Experiment 4: 239 managers and 247 graduate students). We find that the (a) extent of fairness violations, (b) individual differences in fairness perceptions, and (c) the baseline-efficiency of the algorithm affect the choice between a more efficient or a fairer algorithm, whereas (d) the stakeholder perspective receives mixed support and (e) the fairness concept applied (i.e., statistical parity versus equal opportunity) does not have an effect. Our research contributes to the literature on algorithm ethics.

Session 4C: Panel 2

• Is There Such A Thing As Corporate Character?

Session 4D: Workshop 2

• Ethical Leader Development Through Stand Up Comedy

Session 4E: Workshop 3

• ‘You Should Smile More’, Or, Why Female Physician-Leaders Are Not Your Mother