In the canonical view of the corporation, management is the agent of the owners of the corporation—the stockholders—and, as such, has a fiduciary duty to manage the corporation in their best interests. Most business ethicists condemn this arrangement as morally indefensible because it fails to respect the right of other corporate constituencies or “stakeholders” to self-determination. By contrast, the modern agency theory of the firm provides a defense of this arrangement on the grounds that it is the result of stakeholders’ right to self-determination. This paper uses the example of managers’ fiduciary duty to stockholders to argue that different normative judgments often mask empirical disagreements.
Ian Maitland is Associate Professor of Business, Government, and Society at the University of Minnesota, where he teaches Business Ethics and International Business. He is author of a study of workplace labor relations in England and Germany, The Causes of Industrial Disorder (Routledge, 1983), and articles on a variety of topics. He is a columnist for the Minneapolis Star Tribune and a former candidate for U.S. Congress. He is a Chartered Accountant and has a B.A. from Oxford and a Ph.D. from Columbia. He is currently working on a study of industrial policy toward the semiconductor industry in Japan and the United States.