Hostname: page-component-5c6d5d7d68-xq9c7 Total loading time: 0 Render date: 2024-08-29T09:40:17.474Z Has data issue: false hasContentIssue false
  • English
  • Français

Corporate Rules, Distributive Justice, and Efficiency

Published online by Cambridge University Press:  23 January 2015

Amos Witztum
Get access Rights & Permissions [Opens in a new window]

Abstract

The question whether corporations should be used as a means for administering distributive justice is crucial. There are two fundamental issues associated with this. Firstly, would the introduction of rules have any distributional effect? Secondly, what would be the efficiency cost? In this paper, we explore both questions with reference to a job-security corporate rule. We show that the job-security rule will always produce distributional consequences which are consistent with its objectives. However, whether or not it is a socially desirable policy depends on whether the economy is at an efficient allocation and what motivated the policy. It can be shown that under some conditions, even if the initial allocation is efficient, yet not the socially desirable one, a corporate rule—like the job security one—may produce socially desirable gains. The same can be said in the case where the initial allocation is inefficient even in the presence of competitive markets (due to incompleteness problems). However, these social gains would come at the expense of competitiveness. In an internationally open environment this may offset the initial social gains from this policy. Whether or not this happens would then depend on whether agents have a social dimension to their preferences or not. If they do, their response to the initiative may offset the initial loss of competitiveness. Alternatively, society may face the dilemma whether to remain open to uphold local conceptions of distributive justice

Type
Articles
Information
Business Ethics Quarterly , Volume 18 , Issue 1 , January 2008 , pp. 85 - 116
Copyright
Copyright © Society for Business Ethics 2008

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Beck, John H. 2005. “Distributive Justice and the Rules of the Corporation: Partial versus General Equilibrium Analysis,” Business Ethics Quarterly 15(3): 355–62.Google Scholar
Bem, Daryl J. 1967. “Self- Perception: An Alternative Interpretation of Cognitive Dissonance,” Psychological Review 74: 183–200.Google Scholar
Bem, Daryl J.. 1972. “Self-Perception Theory,” in Advances in Experimental Social Psychology, vol. 6, ed. Leonard, Berkowitz. New York: Academic Press, 1–62.Google Scholar
Blanchard, Olivier. 2004. “The Economic Future of Europe,” Journal of Economic Perspectives 18(4): 3–26.Google Scholar
Boatright, John R. 2004. “Employee Governance and the Ownership of the Firm,” Business Ethics Quarterly 14(1): 1–21.CrossRefGoogle Scholar
Condry, John. 1977. “Enemies of Explorations: Self-Initiated versus Other-Initiated Learning,” Journal of Personality and Social Psychology 35: 459–77.CrossRefGoogle Scholar
Deci, Edward L. and Richard, M. Ryan. 1985. Intrinsic Motivation and Self-Determination in Human Behaviour. New York: Plenum.Google Scholar
Dunfee, Thomas W. 2000. “Corporate Governance in a Market with Morality,” Law and Contemporary Problems 62(3): 129–57.Google Scholar
Fehr, Ernst and Klaus, M. Schmidt. 1999. “A Theory of Fairness, Competition, and Cooperation,” Quarterly Journal of Economics 114: 769–816.Google Scholar
Frey, Bruno S. and Lorenz, Goette. 1999. “Does Pay Motivate Volunteers?” Institute for Empirical Research in Economics, Working Paper No 7.Google Scholar
Frey, Bruno S., and Reto, Jegen. 2001. “Motivation Crowding Theory,” Journal of Economic Survey 15: 589–611.Google Scholar
Frey, Bruno S. and Alois, Stutzer. 2000. “Happiness, Economy and Institutions, Economic Journal 110: 918–38.Google Scholar
Harberger, Arnold C. 1962. “The Incidence of the Corporation Income Tax,” Journal of Political Economy 70: 215–40.Google Scholar
Jansson, Eva. 2005. “The Stakeholder Model: The Influence of the Ownership and Governance Structures,” Journal of Business Ethics 56: 1–13.Google Scholar
Knox, Simon, Stan, Maklan and Paul, French. 2005. “Corporate Social Responsibility: Exploring Stakeholder Relationship and Programme Reporting across Leading FTSE Companies,” Journal of Business Ethics 61(1): 7–28.Google Scholar
Kreader, N., Gray, H. R., Power, D. M. and Sinclair, C. D. 2005. “Evaluating the Performance of Ethical and Non-Ethical Funds: A Matched Pair Analysis,” Journal of Business, Finance and Accounting 32(7/8): 1465–93.CrossRefGoogle Scholar
Lee, Dwight R. 1996. “Why Workers Should Want Mandated Benefits to Lower Their Wages,” Economic Inquiry 34: 401–07.CrossRefGoogle Scholar
Maitland, Ian. 2001. “Distributive Justice in Firms: Do the Rules of Corporate Governance Matter?” Business Ethics Quarterly 11(1): 129–43.Google Scholar
Mitchell, Lawrence E., ed. 1995. Progressive Corporate Law. Boulder, Colo.: Westview Press.Google Scholar
OECD. 2004. Employment Outlook. Paris: OECD.Google Scholar
Sen, Amartya. 1974. “The Impossibility of the Paretian Liberal,” Journal of Political Economy 78: 152–57.Google Scholar
Sirgy, M. and Su, C. 2000. “The Ethics of Consumer Sovereignty in an Age of High Tech,” Journal of Business Ethics 28(1): 1–14.Google Scholar
Vogel, David. 2005. The Marketfor Virtue: The Potential and Limits of Corporate Social Responsibility. Washington, D.C.: Brookings Institution Press.Google Scholar
Webley, Simon and Elise, More. 2005. Does Business Ethics Pay? Ethics and Financial Performance. London: Institute of Business Ethics.Google Scholar
Witztum, Amos. 2005. “Economic Methodology and the Conception of Economic Justice.” Mimeo, LondonMetropolitan University.Google Scholar