CORPORATE MORAL PERSONHOOD AND
THREE CONCEPTIONS OF THE CORPORATION
Michael J. Phillips
A6stract: Despite some exceptions, the business ethics literature on
the moral responsibility of corporations does not emphasize a subject
critical to that inquiry: the general nature of corporations. This article
attempts to lessen the imbalance by describing three conceptions of
the corporation that have been prominent in twentieth century legal
theorizing, and by sketching their implications for the moral responsi-
bility of corporations. These three conceptions, at least two of which
have counterparts in the philosophical and organizational theory liter-
ature, are the concession, aggreyate, and real entity theories. The article
concludes that the real entity theory is the most plausible of the lot.
At least under prevailing tests of moral responsibility, it then con-
tends, corporations-as-real-entities are morally responsible for most
of their members' actions.
"Discussions of corporate responsibility," Virginia Held has observed,
"often begin with analyses of what it means to say that a person is respon-
sible, and then consider whether corporations can or cannot meet the criteria
set forth for personal responsibility.''l In such discussions, corporations
satisfying person-centered criteria qualify as "moral persons": entities that
are subject to moral duties (and perhaps are bearers of moral rights as well).
Tc determine whether corporations are moral persons, one would think, it is
necessary to have some conception of their nature. Yet despite such conspic-
uous exceptions as Peter French, Larry May, and Patricia Werhane,2 such
inquiries hardly have dominated the business ethics literature on corporate
moral personhood.3 Although some participants in the debate characterize
corporations in various ways, only infrequently are those characterizations
accompanied by supporting arguments and the consideration of alternative
conceptions.
The main theme of this article, then, is that it is difficult to decide whether
corporations have moral responsibilities without first determining what cor-
porations are. In developing this theme, I sketch three conceptions of the
corporation that have dominated twentieth century American legal commen-
tary, along with their implications for the debate about corporate moral
responsibility. Legal writers mainly have used these conceptions as weapons
in legal controversies. But with one possible exception, they are not legal
concepts in themselves. In fact, they have counterparts in philosophy4 and
(C)1992. Business Ethics Quarterly, Volume 2, Issue 4. ISSN 1052-1SOX. 0435-0459.

436 BUSINESS ETHICS QUARTERLY
organizational theory,S and no doubt appear elsewhere as well. After devel-
oping these three conceptions and their implications, I attempt to determine
which is superior. This last discussion, although ultimately somewhat incon-
clusive, nonetheless points strongly in a certain direction.
Background and Assumptions
As the preceding remarks suggest, the presence or absence of corporate
moral personhood determines whether corporations are subject to moral
obligations and to blame for their failure to meet those obligations.6 Con-
tributors to the debate on this question invariably seem to assume its signif-
icance. But to those with consequentialist tendencies, this assumption is not
clearly justified at first glance. If business ethics instruction and research
exist mainly to affect business conduct and thus to advance some conception
of the social good, it apparently does not matter whether corporations are
moral persons and have moral obligations. Because natural persons obvi-
ously have such obligations, getting business people to respect them would
do the job and would render specifically corporate moral responsibility
unnecessary. In some cases, however, the harm produced by corporate activ-
ity may not be attributable to the fault of any specific person or persons.7
This phenomenon, which should be familiar to lawyers, is not merely the
commonplace that organizational complexities make it difficult to deter-
mine who is responsible for a particular corporate misdeed. Rather, in some
cases no one may be at fault in any strict sense. For example, harm might
result from the cumulation of many individual actions, each of them rela-
tively blameless in itself. Or, as Michael B. Metzger has observed, "the
source of the wrong [could be] internal bureaucratic failures rather than the
deliberate act of any particular corporate employee or employees."8 If the
law does not forbid such actions and if no specifically corporate moral
obligations forbid them either, they might remain subject to no sanction.
Because it would further complicate an already lengthy article, I will not
consider whether or when corporate moral responsibility implies personal
moral responsibility for the corporation's members. Some other questions
that are central to the debate over corporate moral personhood get short
shrift here as well. I do not consider whether, if corporations are moral
persons, they have rights as well as duties. I also am somewhat arbitrary in
my choice of standards for determining whether an entity is a moral person.
Frequently those standards are intentionality and the ability to act.9 But as
Larry May has observed, "[n]egligent fault is the fault condition most ap-
propriate to the majority of cases with which a theory of corporate respon-
sibility must deal.''l° Much irresponsible corporate behavior, that is,
involves the careless failure to avoid reasonably foreseeable risks of harm
rather than a conscious purpose to cause such harm. In addition, some
corporate misbehavior involves recklessness: conscious indifference to
known likely harms.
In this article, therefore, I require that, to be morally responsible for an