Disciplining the organization through moral personhood

If the organization is to retain legitimacy in a democratic society, the citizens must be assured that the actions that they attribute to organizations remain within the bounds of justice (Donaldson, 1982; Stone, 1975). Society’s primary venue to secure justice has consistently been the imposition of legal prescriptions. Unfortunately, as witnessed daily in media, legal constraint has it limits. It does not always succeed in keeping organizations within the bounds of justice (Maus, 1986; Stone, 1975; Yeager, 1991). ‘They have no soul to damn and no body to kick’, as judge Thurlow famously said in 1845, in order to explain why it is harder to discipline an organization than a human being through legal means (see Coffee, 1981).
In the case of human beings, morality has always been another practice restricting and disciplining conduct. It seemed therefore only natural for business ethicists to consider the possibility to discipline organizations through the authority of morality, next to legality, as another safeguard to attain justice (Donaldson, 1982; French, 1979 [1991], 1992). A fierce debate ensued on the issue; a debate that still has not ended (Arnold, 2006; Danley, 1999; De George, 1981; French, 1979 [1991], 1992, 1996; Goodpaster, 1983; Hasnas, 2012; Hess, 2013; Keeley, 1988; Ladd, 1970; Moore, 1999; Philips, 1995; Rönnegard, 2015; Sepinwall, 2016; Velasquez, 1983 [1991], 2003; Werhane, 1985; Wolf, 1985, 2015).
In this chapter we focus on business ethicists who turned to morality for instrumental reasons only: to discipline the organization and keep it from causing problems like environmental pollution, fraud, human rights violations and so forth. We refer to these business ethicists as ‘functionalists’ and regard French (1979 [1991], 1992) and Donaldson (1982) as primary examples of such a functionalist approach. Functionalists look at morality as applied to the organization as a mere means that must help to attain a goal that legal arrangements are not able to attain by themselves: justice for all citizens. A good reason why it makes sense for functionalists to be attracted to morality is that its modus operandi differs from the law (i.e., legality). Ultimately, legality disciplines human beings through the threat of external punishment. Morality disciplines human beings through – what we will later explain as – ‘voluntarily induced restraint’. Because of this different modus operandi, using morality can be seen as a real addition to legality, at least as regards human beings. The functionalists claim that it can also work in relation to organizations – but that remains to be seen.
We agree with the functionalists that society needs an additional mechanism to discipline the organization. We also agree that discipline through voluntary induced restraint is a good addition – if it would work. At the same time, the chapter acknowledges that the project of the functionalists has failed, at least partly. Considering what the functionalists aimed at, their suggestions should have launched: