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This book uses Kant's idea of imperfect duty to extend the theory of the firm. Unlike perfect duty which is contractual or otherwise legally binding, imperfect duty consists of those commitments of choice that pursue some moral value, but that have practical limits to their pursuit. The author presents a broad view of the imperfect duties of management, defined as a nexus of all commitments to do good involving relations internal and external to the firm. This nexus consists of three overlapping categories of (i) building a virtuous managerial community, (ii) pursuing reasoned managerial discourse, and (iii) diligent and reasoned pursuit of the body of routine managerial duties such as capital budgeting and internal controls. Specific applications of the nexus theory for stakeholder relations via fair negotiation, and for analysis of the effects on the managerial team of perquisite consumption are presented.

This book has major implications for research in business ethics and allows critical insights into managerial decision making.



Chapter 1. Introduction: The Nexus of Imperfect Duty and the Ethical Norm

The role of the ethical norm, specifically as it applies to management, is reviewed. It presents direction for moral analysis and also for organizing empirical observations of practice. This is the purpose of the nexus-of-imperfect-duty model of the firm as presented in this monograph. It provides clarity concerning our aspirational notions of moral managerial behavior. As such, it also gives the basis for examining and judging management as an institution.
Richard M. Robinson

Chapter 2. Kant’s Categorical Imperative and Moral Duties

Kant offered his categorical imperative as the basis for a process that reflects common thinking about methods for deriving practical moral maxims and duties. This process is shown here as relevant for managerial leadership and firm efficiency. The role of reflective thought in establishing and maintaining these maxims is emphasized. The categorization of these maxims into associated perfect and imperfect duties is reviewed so that absolute prohibitions can be understood as distinctly different from those volitional duties with practical limitations.
Richard M. Robinson

Chapter 3. The Nexus of Managerial Imperfect Duty and Its Conceptual Advantages

The nexus of imperfect managerial duty is defined as management’s collection of volitional attitudes and actions in pursuit of a moral purpose, but that have practical limits. This describes business behavior toward building affable and virtuous relations, maintaining reasoned social discourse, and performing the due diligence necessary for making knowledgeable business decisions. A theory of the development and extent of the limits of these imperfect managerial duties is presented here, a theory that in part explains the activities and personnel included under the firm’s umbrella. As a result, the nexus of imperfect duty is shown to complement the perfect duty-based nexus-of-contracts theory of the firm. The existence of flexible trade-offs involving these duties, trade-offs not easily amenable in contractual arrangements whether explicit or implicit, is shown to be one of the advantages of imperfect duty for developing business relations. As a result, since the pursuit of shareholder wealth is not subject to contracting, i.e., it is not a perfect duty. Shareholder wealth pursuit emerges from the nexus of imperfect duty.
Richard M. Robinson

Chapter 4. Relations of Virtue

It is argued in this chapter that business firms can and do provide an incubator that enables the Aristotelian category of friendships of advantage to develop into friendships of virtue. This contradicts other literature that views acquaintances of utility as the business norm, and expresses pessimism concerning more advanced virtuous development of friendship within the business firm. It is argued here, however, that this virtuous development is integral to the Kantian social aim of pursuing a moral community, an aim which declares the appropriate moral motivation for business, and that certainly should incorporate a role for developing virtuous relations as a component of that pursuit. An atmosphere that encourages the development of relations of virtue is feasible, exists in real business, and is optimal for pursuit of moral business communities.
Richard M. Robinson

Chapter 5. Reasoned Managerial Discourse

O’Neill posed some broad Kantian-derived principles applicable to society’s discourse. They are reviewed and utilized here as especially relevant for reasoned managerial discourse. Applications to the politically sensitive issues of globalism, diversity (racism, sexism, and other problems), the company’s control system (responsibility assignment, performance evaluation, and rewards systems), and environmental degradation and restoration are provided. The latter is examined in detail as a significant issue capable of benefitting from these principles of social discourse.
Richard M. Robinson

Chapter 6. Due Diligence and the Profit Motive: Perfect or Imperfect Duty?

The pursuit of shareholder wealth is not a contractual obligation of management, and therefore not a perfect duty. It is an imperfect duty that has practical limits that result from its trade-offs with other imperfect duties of due diligence. These imperfect duties of managerial due diligence are illustrated here through explanations of basic financial decisions: capital budgeting (the selection of long-term projects of the firm), capital structure (the selection of finance sources), and liquidity management. The ethical foundations of these imperfect duties of due diligence are drawn from Rawls’ criteria for “competent moral judges” and “considered moral judgements.” These are shown to depend on the imperfect duties to gather and utilize relevant knowledge as explained in Chapters 2 and 3.
Richard M. Robinson

Chapter 7. Managers, Virtues, and Dispositions?

Modern interpretations of the ancient Stoic and Aristotelian views of virtues and their exercise in management are reviewed. These modern exegeses generally stem from viewing virtues as “dispositions towards duty” and may differ from the ancient view that virtues are to be natural inclinations and not burdensome obligations. The difference between the “dispositional view” and the “ancient virtue view” is explored in the context of the “unity theory” (the ancient view that virtues must all be developed and pursued simultaneously), the “onerous theory” (the perceived burdensome nature—or lack thereof—of these dispositions or virtues), and the teleological theory (the end-goal differences of these two approaches). It is argued here that these apparent differences are illusory.
Richard M. Robinson

Chapter 8. Fair Negotiations

Through compensation arrangements, corporate managers are typically bonded to the interests of shareholders. As a result, managers have a conflict of interest in judging and deciding dividend distributions and opportunities for other non-owner stakeholders. Appropriate ethical-normative stakeholder theory should therefore center on notions of fair negotiations where management openly acts as agents of the shareholders, but the other stakeholders have inputs to managerial decisions. An applicable set of Kantian derived rules for fair negotiations is posed here. Their appropriateness to both indirect market-based negotiation and direct negotiation with stakeholders are examined. These rules also indicate the conditions when fair negotiations cannot be conducted so that paternalistic managerial decrees must be utilized. This includes managing the trust issues associated with low-power stakeholders who might believe they are coerced. For these situations, management’s judgement as to what settlement would have occurred if the rules were not violated is deemed fair. Various compensation analyses might also be appropriately utilized for this fairness purpose.
Richard M. Robinson

Chapter 9. Management Perquisites and Imperfect Duty

Jensen and Meckling (1976) presented a seminal analysis of managerial perquisite consumption that used management utility maximization to show that shareholder wealth maximization need not be the economic goal of the firm. Notions of management duty were not incorporated into their analysis. When the management team and its pursuit of the nexus of imperfect duties is considered, then perquisite consumption has more dimensions than individual utility impacts. It affects the managerial pursuit of relations of virtue and the productivity of the managerial team. Management’s “pet projects,” overly risk-averse capital structures, associated excess liquidity levels, and other considerations are considered here as managerial perquisites with theoretically measurable impacts on equity value. Pursuit of the nexus of imperfect duty, however, transfers these into a pursuit of shareholder wealth (not a maximization) and other stakeholder impacts.
Richard M. Robinson


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