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Corporate Personhood

Corporate personhood is the ethical and legal concept according to which corporations may be treated — morally or legally — as entities independent of the human beings associated with them. In particular, this means that corporations have certain rights (such as the right to own property) and can be held accountable for their actions. It is a concept recognized within the legal systems of all advanced economies, because without corporate personhood, there simply can be no corporations.

The notion that corporations are persons has sometimes been controversial. Some critics have worried that thinking of corporations as persons gives them too much power, or accords them too much dignity. Such critics often take “persons” to mean the same as “people,” which then leads to the worry that corporations might be thought of as being owed the same moral respect human beings are owed. Others have worried the notion of corporate personhood obscures the responsibility of individual humans within the corporation. Such critics argue that when we say that a corporation “did” something, this is just a shorthand way of saying that certain people — real human beings — did certain things, and it is those human beings who deserve credit or blame.

From an ethical point of view, corporate personhood is grounded in the idea that corporations seem to have many of the fundamental characteristics that let us identify persons. Like human persons, corporations have goals, and take action—based on their beliefs—in pursuit of those goals. If corporations are the sorts of things that can take action, they can rightly be blamed or praised for those actions, just like any human being can.

Legally, personhood means that corporations are regarded by courts as being responsible for their own actions. They can make commitments, and can be held responsible for those commitments. They can thus, for example, sign contracts and own property. They can sue, and be sued. From a legal point of view, legal personhood is what makes it possible for a consumer to ask that a warranty be honoured, even if the person who made or sold the product to them no longer works there. It is also what makes it possible for a government to sue a corporation for damage caused by an oil spill. Personhood is often referred to as a “legal fiction.” This description is not meant as a criticism, or as a way of diminishing the importance of legal personhood. It is simply a reflection of the fact that personhood is a legal convention, a way for courts to behave with regard to corporations, rather than a description of their nature.

It is worth noting that while the term “corporations” is most often taken to refer to for-profit corporations, in reality it applies to all sorts of organizations that are legally incorporated, including nonprofits (such as Greenpeace), labour unions, churches, universities, and so on. This means that the notion of corporate personhood applies to them too.

See also in CEBE:

Further Reading 


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The Concise Encyclopedia of Business Ethics Copyright © 2023 by Chris MacDonald and Alexei Marcoux is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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