The term corporation may be used in multiple, and not always mutually-compatible, senses. In the broadest sense, it may refer to any group of persons united in seeking a common goal or serving a common purpose. In perhaps its most ordinary sense, it refers to a legally recognized and constituted entity that is separate from the people who compose it. In perhaps its narrowest sense, it refers to a legally recognized and constituted, for-profit entity whose ownership shares are traded on public exchanges (like the New York Stock Exchange). In a very loose sense, it may be used as a synonym for “company” or “firm”—referring even to companies or firms that are not legally incorporated. All of these senses of corporation are used in some cases, some of the time, in business ethics.
In business ethics, controversial questions surround the legally recognized, for-profit corporation. One question is whether that corporation’s shareholders are in effect the owners of the corporation. Another question is whether anyone – shareholders or others – owns the corporation. An extremely controversial question surrounds corporate personhood: does the corporation’s separate legal identity mean that the corporation also has a moral identity separate from the people who compose it? In particular, can a corporation be morally responsible for actions for which none of the people who compose the corporation are responsible?
Part of what makes corporations controversial is the power they possess. Various corporations are created—that is, incorporated—precisely because they are a powerful way to combine resources (human talents, natural resources, etc.) to get things done. The general fact that corporations can be very powerful means that they have the ability both to do enormous good and to do enormous harm. This raises the question of whether corporations in general are, on net, a force for good in the world. Perspectives on that question vary.
See also in CEBE:
- John Micklethwait and Adrian Wooldridge. The Company: A Short History of a Revolutionary Idea. Modern Library, 2005.
- Henry Hansmann, The Ownership of Enterprise, 2000
- Corporation (Wikipedia)
- Why do firms exist? The Economist. December 16th 2010.