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Professionalism, Agency, and Market Failures

Published online by Cambridge University Press:  15 September 2016

Hasko von Kriegstein
Hasko von Kriegstein*
Affiliation:
Ryerson University
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Abstract:

According to the market failures approach to business ethics, beyond-compliance duties can be derived by employing the same rationale and arguments that justify state regulation of economic conduct. Very roughly, the idea is that managers have a duty to behave as if they were complying with an ideal regulatory regime ensuring Pareto-optimal market outcomes. Proponents of the approach argue that managers have a professional duty not to undermine the institutional setting that defines their role, namely the competitive market. This answer is inadequate, however, for it is the hierarchical firm, rather than the competitive market, that defines the role of corporate managers and shapes their professional obligations. Thus, if the obligations that the market failures approach generates are to apply to managers, they must do so in an indirect way. I suggest that the obligations the market failures approach generates directly apply to shareholders. Managers, in turn, inherit these obligations as part of their duties as loyal agents.

Keywords

market failures approachprofessionalismprofessional ethicsagency ethicsJoseph HeathKenneth Goodpaster
Type
Article
Information
Business Ethics Quarterly , Volume 26 , Issue 4 , October 2016 , pp. 445 - 464
Copyright
Copyright © Society for Business Ethics 2016 

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