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Applying Metaethical and Normative Claims of Moral Relativism to (Shareholder and Stakeholder) Models of Corporate Governance

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Abstract

There has, in recent decades, been considerable scholarship regarding the moral aspects of corporate governance, and differences in corporate governance practices around the world have been widely documented and investigated. In such a context, the claims associated with moral relativism are relevant. The purpose of this paper is to provide a detailed consideration of how the metaethical and normative claims of moral relativism in particular can be applied to corporate governance. This objective is achieved, firstly, by reviewing what is meant by metaethical moral relativism and identifying two ways in which the metaethical claim can be assessed. The possibility of a single, morally superior model of corporate governance is subsequently considered through an analysis of prominent works justifying the shareholder and stakeholder approaches, together with a consideration of academic agreement in this area. The paper then draws on the work of Wong (Moral relativity, University of California Press, Berkeley, CA, 1984, A companion to ethics, Blackwell, Malden, 1993, Natural moralities: A defense of pluralistic relativism, Oxford University Press, Oxford, 2006), firstly in providing an argument supporting metaethical moral relativism and secondly regarding values of tolerance and/or accommodation that can contribute to the normative claim. The paper concludes by proposing an argument that it is morally wrong to impose a model of corporate governance where there are differences in moral judgements relevant to corporate governance, or to interfere with a model in similar circumstances, and closes with consideration of the argument’s implications.

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Notes

  1. Donaldson and Dunfee (1999b, p. 46) describe ‘hypernorms’ as “principles so fundamental that, by definition, they serve to evaluate lower-order norms, reaching to the root of what is ethical for humanity. They represent norms by which all others are to be judged” and can thus be considered to reflect a ‘universal’, non-relative morality. In contrast, ‘moral free space’ refers to the “moral differences that mark a culture’s distinctiveness” (1999b, p. 50). Although Donaldson and Dunfee do not advocate a general moral relativism (preferring the term ‘pluralism’), their theory does reflect the distinction between universal and relative moral judgements.

  2. Forsyth et al. describe the relativism dimension in terms of “one’s emphasis on moral principles as guides for determining what is right and wrong” (2008, p. 815) and considers those who are highly relativistic to “base their appraisals on features of the particular situation and action they are evaluating” (2008, p. 815). This corresponds to Tsu’s description of moral particularists as those who “believe that the moral status of an action is not determined by moral principles; instead it always relies on the particular configuration of its contextual features” (2011, p. 388). See also Dancy (2009).

  3. See Clarke (2007), Rossouw and Sison (2006) and Solomon and Solomon (2004) for detailed descriptions of how these models of corporate governance differ, as well as various national and regional perspectives on these models. Consistent with the approach of these authors, this paper focuses on the corporate governance of public companies.

  4. This paper follows Brandt (1967), Gowans (2012), Moser and Carson (2001) and Wong (1993) in distinguishing between different claims that are associated with moral relativism or aspects thereof, specifically the ‘descriptive’, ‘metaethical’ and ‘normative’ claims/aspects, as making such distinctions allows for greater conceptual clarity. Throughout this paper, these are referred to as the descriptive/metaethical/normative claims of moral relativism, or simply as descriptive/metaethical/normative moral relativism.

  5. See MacIntyre (1985) for a more detailed discussion of the context of emotivism’s development and additional objections to emotivism as an adequate moral theory.

  6. Dewey’s pragmatism sought to apply the methods of inquiry that are prevalent in science to questions of morality, aesthetics, metaphysics and politics. Harrison describes Dewey’s position as requiring “the application of intelligent inquiry, the self-correcting method of experimentally testing hypotheses created and refined from our previous experience” (Harrison 1995a, p. 197).

  7. Falk (1953) analysed moral prescriptions and identified the reasoning implicit in moral imperatives such as those presented by emotivist accounts of morality. He concluded that these moral prescriptions are attempts “to teach someone to appreciate something” (1953, p. 171), and that, as such, they are both attempts at practical conversion and objective claims.

  8. This distinction remains where the shareholder model corresponds to an “Enlightened shareholder theory” (Tricker 2012, p. 74), in which stakeholder interests are considered insofar as they contribute to the ultimate goal of enhancing shareholder wealth, as the ultimate goal is itself a point of contention. (See also the distinction between ‘instrumental’ and ‘normative’ stakeholder theory identified by Donaldson and Preston 1995).

  9. A crude indication of the impact of these articles can also be obtained from the number of citations thereof (all figures obtained using Google Scholar, as at 23 September 2013): Evan and Freeman (1988): 942 citations (excluding reprints in later editions of Beauchamp and Bowie 1988) Freeman (1994): 1056 citations Friedman (1970): 6844 citations. Hansmann and Kraakman (2001): 1364 citations.

  10. Gowans (2012) defines descriptive moral relativism as the claim that “as a matter of empirical fact, there are deep and widespread moral disagreements across different societies, and these disagreements are much more significant than whatever agreements there may be”.

  11. Note that although this argument refers to claims associated with moral relativism and their application to corporate governance, it is not an argument for moral relativism, but an argument that tolerance and/or accommodation is applicable to this issue and, in this context, can be justified.

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Acknowledgments

I would like to thank Prof. Deon Rossouw, participants at the Australasian Business Ethics Network 2012 and three anonymous referees for their constructive comments and suggestions.

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    Andrew West

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West, A. Applying Metaethical and Normative Claims of Moral Relativism to (Shareholder and Stakeholder) Models of Corporate Governance. J Bus Ethics 135, 199–215 (2016). https://doi.org/10.1007/s10551-014-2453-8

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