Corporate social responsibility

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Title:
Corporate social responsibility an evolutionary synthesis
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ix, 336 leaves : ; 29 cm.
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Creator:
Vetica, Thomas M
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Subjects / Keywords:
Social responsibility of business -- United States   ( lcsh )
Corporations -- History -- United States   ( lcsh )
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bibliography   ( marcgt )
theses   ( marcgt )
non-fiction   ( marcgt )

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Thesis:
Thesis (Ph. D.)--University of Florida, 1993.
Bibliography:
Includes bibliographical references (leaves 321-335).
General Note:
Typescript.
General Note:
Vita.
Statement of Responsibility:
by Thomas M. Vetica.

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CORPORATE SOCIAL RESPONSIBILITY:
AN EVOLUTIONARY SYNTHESIS


THOMAS


VETICA


A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY












ACKNOWLEDGEMENTS


This


work


could


not


have


been


accomplished


without


the


constant


encouragement


and


support


of Professor


Ronald


Cohen.


also


thank


Professors


Art


Hansen,


Bert


Swanson,


Bill


Roering,


and


Otto


von


Mering


who


saw


value


this


project


and


supported


from


the


beginning.


Cris


Johnsrud


STAC


provided


invaluable


assistance


and


insight.


thank


Thomas


McConomoy,


Ron


Violi,


John


Connolly,


Margot


Barnes,


Jane


Riley,


. Lori


Schuff,


Jean


Grogan,


and


John


Vetica,


their


time


and


encouragement


during


the


pilot


study.


thank


the


executives


at Ben


and


Jerry's


Homemade,


Inc.,


the


CEOs


and


executives


the


other


companies


used


the


case


studies


who


were


granted


anonymity,


and


the


membership


the


Florida


Council


100.


The


field


work


could


not


have


been


completed


without


the


support


Margaret


Ellen


Curran,


Don


and


Carol


Lankiewicz,


Don


and


Stacey


Brown,


Terry


and


Sally


Ryan,


and


John


and


Phyllis


Savor.


Tom


Horak


provided


technical


expertise


which


greatly


needed.


For


many


years


Holly


Williams


been


a constant


critic


and


support


ideas


and


endeavors.






owe


a heavy


debt


gratitude


to Chip


Collins


and


his


staff,


especially


Hazel,


the


Florida


Council


100.


Without


their


assistance


the


survey


could


not


have


been


realized.


Finally,


this


project


would


not


have


come


successful


completion


without


the


constant


support,


encouragement


and


feedback


Alise


Moss.













TABLE


ACKNOWLEDGMENTS


OF CONTENTS


. . S S S ii


LIST


TABLES


vii


. . . . S .


ABSTRACT . . . . . v1ii

INTRODUCTION . . . . . 1


CHAPTERS


THE


HISTORY


OF THE


CORPORATION


IN AMERICA


. 11


Natural Selection
Evolution .
The Corporation i


to Limited Lia
Cultural Values:
Aristocracy an
Law and the Grad
Freedom of the
Berle and Means:
from Control
Coase and Willia


Reduction .
The Corporate
Framework for
Prnnrat i ni


and


Sociocultural


America:


S .
From


ability .
Controversies
d Monopoly .
ual Advancement


* S .
Franchis
* .
f Natural


t e
the


Board of Trustees .
Separation of Ownersh;


. s
mson


Efficiency


Revolution:
Change: The


Managerial Hierarchie
the Railroads .
The Multidivisional F
Conclusions . .


s

i:


e. o
1850
Rise


. 11


. 19


* . 28

*. . 34
ip 39
. . 39


Cost


to 1900s
of the


: The Impact


. . 43
. 50


. . 52


.* S S . 54
rm . 58
* S S 4 4 . 62


OF CORPORATE


Introduction
Company Towns
Corporate Soc
of the Deba
Philosophical
Social Scie
S1 a 4as


and Phil
ial Respo
te .
Problems
nces .


SOCIAL


RESPONSIBILITY


anthropy
nsibility


Sand
and


Sthe
the


* S . 67
* . 69


: Hi


story


. . . 80


* . . 85


HISTORY


Pace


*


. 67







REVIEW OF THE RESEARCH ON CORPORATE
SOCIAL RESPONSIBILITY AND DERIVATION
OF A SYNTHETIC APPROACH . .


Introduction .
On Business Ethics
Avenues of Inquiry
Responsibility


* a
into


Corporate


a a .
Social


Conceptualization and
the Terms . .
Conceptual Models .
Research Measurements


Operationali


and


zing


Variables


Evolutionary Trajectory of the
Business/Society Relationship


Avenues


E


First Propos
Market Val
Second Propo
the Market
Third Propos
Balance .


evolutionary Development
ition: Diffusion of


ues .
sition
Sition
ition:


: Humanization


Separation


a a
and


S. a


RESEARCH


DESIGN


. a a a a a


Introduction
Parameters of


. .
the


Interviews


. .
a a .


Dependent Variables .
Independent Variables


. . . .
. .


THE


CASE


STUDIES


a a a a a a a a .


Ben and Jerry's Homemade,
Habib Technologies, Inc.
Pride of the Sunshine, Inc
Conclusions . .


Inc. . .
. . . .
. . . .
. . . .


157
193
216
233


THE


SURVEY:


PRESENTATION


AND


ANALYSIS


Introduction .
The Survey Instrument
The Survey Sample .
The Survey .


. . . .
. . . .


236
237
246
251


Part
Part


The Independent Variables .
: Elements of Social Responsibility






Part
Part


: Internal


Role


Codes


and


Company


Activities


'Community


273


Conclusions


CONCLUSION


APPENDICES


VALDEZ


PRINCIPLES


BEN

BEN


BEN


AND

AND


AND


JERRY'

JERRY'


JERRY'


BENEFITS


SUMMARY


ENVIRONMENTAL


S JOY


PROGRAMS


GANG


HABIB


TECHNOLOGIES,


MISSION


HABIB


STATEMENT


TECHNOLOGIES,


CULTURAL


ASPIRATIONS


STATEMENT


HABIB


TECHNOLOGIES,


MEDICAL


SURVEY

WRITTEN


BENEFITS


INSTRUMENT

COMMENTS


a a . .

a a .


ON REWARDS


FOR


COMMUNITY


REFERENCES


BIOGRAPHICAL


SERVICE


. a a a a a a a a a


SKETCH









LIST


TABLES


Table


Page


Size


Income Di

Ownership
Firms


Codes


Codes


Employees


stribution


Contracting


of Ethics


of Ethics


to Minority


Ownership


Number


Employees


Private


Firms


: Codes


Ethics


Size


EAP


Ownership


EAP


Number


Employees


Private


Firms


: EAP


Size


Size


Ownership


Monetary C
of Pre-Tax


Ownsership


Ownership


Business


contributions
Income .


Rewarding


Matching


Tradition


Ethics


as Percentage


Managers


Contributions


Codes












Abstract


the


of Dissertation


University


Presented


Florida


the


Partial


Graduate


Fulfillment


School


the


Requirements


Degree


Doctor


Philosophy


SOCIAL


AN EVOLUTIONARY


Thomas


May


RESPONSIBILITY:


SYNTHESIS


Vetica


1993


Chairperson:


Major


Ronald


Department:


Cohen


Anthropology


Corporate


social


responsibility


a relatively


recent


expression


an older


theoretical


discussion


on the


roles


the


business


corporation


and


corporate


leaders


have


society.


approach


this


problem


uses


evolutionary


epistemology


to interpret


the


history


and


evolution


the


corporation


the


United


States.


uses


the


Darwinian


concept


natural


selection


as a heuristic


tool.


The


corporation


development.


a specific


was


history


selected


and


evolutionary


environmental


resources


well


as by


certain


cultural


and


social


values.


The


interplay


social


values


and


corporate


development,


the


intersection


of values


across


organizational


lines,


and


the


role


corporate


leaders


society


are


empirical


questions


for


research


and


concerns


macro


level


theory.


CORPORATE






The


first


two


chapters


present


the


history


the


corporation


America


and


the


ways


that


corporate


responsibility


have


been


discussed


Chapter


presents


more


recent st

regarding


udies,


investigation,


business'


role


and


in society.


:heoretical

Chapter


positions

4 explains


approach


the


problem


and


research


design.


undertook


an exploratory


research


project,


postulating


that


the


course


evolutionary


development


the


corporation


selected


for,


least


part,


the


intersection


of values


across


organizational


lines.


Either


the


profit-maximizing


ethic


the


marketplace


or a broader


humanitarian


ethic


that


the


underpinning


civil


society


will


influence


that


evolution.


test


the


hypothesis,


three


case


studies


were


investigated


and


from


them


appropriate


variables


were


generated


and


tested


a survey


prominent


Florida


CEOs.


The


results


suggested


that


an evolutionary


synthesis


corporation


development


deserves


further


study.













INTRODUCTION


Any


social


serious


investigation


responsibility


must


into


the


account


nature


the


two


corporate


predicates


under


question,


that


the


nature


the


corporation


and


the


nature


social


responsibility.


Some


would


advocate


that


the


joining


the


two,


"corporate


social


responsi-


ability,


" amounts


to a pernicious


contradiction


This


research


explores


the


nature


both


concepts


the


first


chapter,


I discuss


the


history


the


business


corporation


the


United


States


so doing,


argue


for


an interpretive


framework


that


evolutionary;


that


take


the


Darwinian


concept


biological


evolution


as an


analogy


for


understanding


the


development


the


corpor-


ation.


argue


that


social


and


cultural


forces,


not


only


infrastructural


resources,


accounted


for


the


rise


prominence


the


corporation.


In following


chapters,


explore


the


history


the


conflicts


and


debates


on the


social


responsibility


business.


argue


that


the


social


role


not


adequately


understood


because


the


terms


the


debate


have


been


set


too


narrowly.


Research


done


on corporate


social


res


ponsibility


1 _








statistical


analysis


financial


statements


and


avoided


dealing

human


with


actors


some

and


the


social


most s

forces.


significant


This


features,


reality


the


huge,


complex


and


dynamic


the


body


the


presentation


put


forth


approach


this


problem


and


research.


an evolutionary


approach


that


argues


that


three


possible


avenues


development


are


discernible.


The


one


that


most


reliable


needs


to be


further


investigated.


on to present


research


that


explored


the


three


avenues


evolutionary


development.


conducted


three


cases


studies


and


a survey


CEOs


The


survey


instrument


grew


out


interviews


carried


on with


the


executives


the


cases


studies,


as well


from


interviews


with


executives


from


other


firms.


Finally,


I analyze


the


result


and


draw


conclusions.


this


juncture


must


issue


a word


caution


the


reader


social


and


student


science.


economic


I have


chosen


anthropology


what


and


am calling


modern


"evolu-


tionary


epistemology"


because


the


only


epistemology


that


makes


sense


me.


have


deliberately


avoided


Marxist


interpretation


three


reasons.


first


reason


for


avoiding


Marxist


interpretations


that


Marxist


theory


basically


a vicious


circle


from


which


there


no exit.


am aware


the


volumes


written


,rLS


a a 1 a 4. 4. a a -a a a r a 4.


rl ~f rl Y I


t ~~n ~r CC


CI








driven


to understand


the


forces


and


mechanisms


history


and


society


that


account


social


institutions.


But


Marxist


thought


does


not


allow


an understanding


those


mechanisms


nor


an appreciation


social


processes.


Second,


as an economic


system


or market


system,


Marxism


been


shown


to be


totally


inadequate.


The


collapse


the


Soviet


Union


and


the


renewal


in Eastern


Europe


should


evidence


that


Perhaps


Marxism


itself,


and


not


capitalism,


been


the


historical


aberration.


research


have


traced


the


reality


private


property,


accumulation,


and


private


entrepreneurship


very


back


into


history.


sad


that


many


Marxist


social


theorists


will


not


give


the


ghost


as they


continue


to define


and


redefine


themselves


as new wave


Marxists.


But


perhaps


that


is understandable


the


context


third


objection.


Namely,


most


visceral


reaction


to Marxism


due


the


theory'


most


cruel


irony.


Marxism


begins


with


a moral


imperative:


just


distribution


wealth.


That


cry


for


justice


undoubtedly


the


clarion


call


many


social


thinkers,


as both


and


that


a social


to be


system


and


respected


a social


and


admired.


theory


turns


However,


out


being


morally


bankrupt.


Marxist


polities


have


robbed


individuals


and


groups


identity,


freedom,


and


responsibility,


and,


way


thinking,


they


violate


- -








evident


Greek


philosophy


as well


the


earliest


thinkers


the


Christian


era--Polycarp,


Iraneus,


Augustine--who


upheld


the


dignity


the


individual,


freedom


to choose,


and


freedom


think


and


to act


responsibly.


am not


saying


that


contemporary


American


society


exemplary


respecting


human


dignity


and


guaranteeing


the


individual's


full


range


responsibilities


and


freedoms.


ambition


undertaking


this


project


simply


try


understand


epistemology


a social


phenomenon.


because


helped


chose


an evolutionary


me understand


the


phenomenon.


did


not


out


prove,


once


and


for


all,


that


corporations


are


corrupt


or that


corporate


leaders


are


deliberately


and


consciously


exploitative,


as many


col-


leagues


thought


was


doing


or encouraged


me to do.


Rather,


I became


captivated


a problem,


and


the


issues


raises


still


seek


intrigue


answers


me.


those


continue


questions.


to raise


The


many


answers


questions


are


and


coming


from


a traditional,


holistic,


anthropological


approach


the


study


social


institutions.


To set


the


stage


the


main


body


this


work,


I put


forward


anthropological


perspective


on the


nature


the


corporation.


I relied


heavily


on two


sources


for


understanding


what


the


corporation


and


how


has


been


used


history.


These


are


the


scholar


and


philosopher


,I: S


- -_ A--- 4 a


. 4 fAr-


t tr


_ -1


J- *I ^


II








J.P


. Davis '


preeminent


work


on the


origin


and


develop-


ment


business


corporations


emphasized


the


importance


the


corporate


form


social


organization


and


the


rela-


tionship


between


form


and


function.


Prior


to establishing


economic


criteria


and


discussing


trade,


Davis


uncovered


the


kinds


viewed


of corporations


a corporation


particular


function.


that


emerged


as a social


As a form


history;


entity


social


that


that


exercises


organization,


the


corporation


cannot


divorced


from


the


broader


social


context


which


operates.


part


a greater


whole


and


must


be studied


in relation


the


broader


formal


and


functional


social


environment


(Davis,


1905a)


Davis


described


the


appearance


what


characterized


the


"corporate


form"


and


function


from


the


Middle


Ages


the


Modern


period.


The


Middle


Ages


were


charac-


terized

outlined


the


and


growth


described


of

in


imposing institutions,

detail ecclesiastical


which

organi-


nations,


municipalities,


guilds,


educational


and


eleemo-


synary


terms


institutions


their


(Davis,


influence


1905a: 90).

on local life


These

and


are

the


described

internal


organizations


social


groups.


Later,


the


corporation


took


the


characteristics


representative


broader


national

interests


expression,


the


that


emerging


is, a

power


the


nation


states.


The


principal


forms


organization


S ~r.1aaa


- 8- -- -


ct:,


1,,


L--l


_ _a


~ qmAA


- -- L-








regulated


companies,


regulated-exclusive


companies,


joint


stock


companies,


and


colonial


companies.


this


variety


corporate


expression


Davis


ascribed


several


key


characteristics


that


lead


to a definition


the


corporation:


function


will


a group


natural


delimited


persons


according


whose


the


identity


relation


and


between


attributes


and


the


relation


between


the


corporate


body


and


society


at large


(Davis,


1905a:


-28)


The


primary


characteristics


the


corporation


are


the


following.


the


first


place,


goal-oriented,


associative


activity.


Individuals


come


together


to join


resources


toward


a common


end.


The


activity


undertaken


thus


may


have


continuous


existence,


at least


until


the


achievement


the


goals.


Second,


the


corporation


created


the


state


and


subordinate


to state


authority.


the


minimum,


least


permitted


to exist


and


function;


the


maximum,


considered


an instrument


voluntary


inception:


state


function.


individual


Third,


initiative


and


can


not


state


coercion


relied


upon


and


individual


responsibility


the


expected


regulatory


force.


Fourth,


the


corporation


enjoys


autonomy,


self-sufficiency,


and


self-renovation.


The


corporate


group,


then,


acts


as a unit


and


acted


upon


as a


unit


relations


the


other


organs


society.


Finally,


since


is a voluntary


association


individuals


- .-


. 1








the


individuals


who


compose


a corporation


have


a private


or particular


interest


the


subject


matter


the


activity


whether


it be religious,


economic,


or political


Individual


interest


is permitted


to seek


own


sati


faction.


From


the


Medieval


Church


the


joint


stock


companies,


the


individual


interests


the


corporate


members


were


permitted


corporate


unit,


to be

and


pursued


this


through


underlies


the


the


mechanism


primary


the


tension


relating


the


function


all


kinds


corporations.


Namely,


the


corporation


functions


publicly


and,


because


created


the


state,


seen


to advance


public


welfare


through


the


pursuit


private


interest.


corporate


form


always


been


intended


and


used


to promote


public


welfare


through


private


interest


affording


to private


interest


a social


mechanism


through


which


adequately


and


effectually


express


itself


social


activity"


(Davis


1905a:


Thi


distinction


between


private


motive


and


public


interest


even


was

the


not


a basis


t-Feudal


for

joint


social

stock


nor


ideological


companies.


conflict


Indeed,


the


functioning


the


the


establishment


Church


or of


schools


and


any


charitable


hospitals,


the


institution,

enterprises


of merchan

chartered


guilds,


companies


and

were


the

all


commercial


seen


endeavors


as beneficial


the


to society


and as


ardvanr I nfl


the


wl1 fare


*I


r'i ti 7en -


Tha


ri i Rtnr1t knn


"The








public


interest


a false


distinction.


"The


'private


corporation


' is


a contradiction


in terms"


and


the


idea


the


private


corporation


simply


a product


social


and


political


conditions


peculiar


the


nineteenth


century


(Davis


1905a:


31).


Davis


(1905a:


defined


the


corporation


as:


A body
ferred


of p
such


maintained


others


that


self-renewing


their


common


interest
functions


welfare


may e
both


and


most


persons


upon


voluntarily


relations


whom


the


accepted


one


an autonomous


body
will,


they
and


xerc ise


may


state
but


another


has


con-


compulsorily


and


to -all


self-sufficient


determine


in pursuit


more


specially


and


th


efficiently


conducive


appropriately


and


enforce


eir private
social


to public


exercised


associated


persons.


worth


restating


that


this


definition


applies


all


the


corporate


groups


studied


Davis,


from


charitable


organizations


to joint


stock


companies.


a definition


gleaned


from


the


review


social


corporate


forms


the


history


the


West.


The


underlying


premise


the


definition


that


corporations


are


subsystems


larger


polities


and


are


permitted


pursue


their


objectives


because


private


initiative


beneficial


the


general


welfare.


Thus


human


agents


have


joined


together


care


for


the


sick,


to educate,


to establish


some


order


local


government,


to build


bridges,


and


trade.


The


fact


that


the


goals


and


functions


of corporations


differed,


that


some


were


ecclesial,


others


charitable,


and


others


economic,


did


*








Anthropologist


M.G.


Smith


(1975)


researched


the


presence


and


nature


human


corporate


groups


cross-


culturally


history


and

the


storically


West.


not


In analyzi


limiting

no all t


a,


himself


ypes


the


human


groups,


Smith


classified


discussed


them.


For


the


kinds


example,


of organizations


corporation


sole,


and


corporation


aggregate,


kinds


offices,


corporation


college

s that


, lineages,


function


churches


within


are


different


all

social


contexts.


Several


characteristics


defined


and


distinguish


hed


fully


corporate


groups


from


the


others.


These


defining


characteristics


are


identity,


closure


and


membership,


perpetuity,


autonomy


within


a given


sphere,


exclusive


common


affairs,


procedures


and


organization


(Smith,


1975


: 94)


The


similarities


between


anthropologist


Smith


and


historian-philosopher


Davis


are


striking


and


significant.


corporation


an associative


form


human


activity


that


enjoys


entitative


character,


that


own


identity,


can


take


succession,


survives


beyond


the


life


spans


members,


and


autonomy


affairs.


socially


constituted,


legitimized


within


social


context


whether


or not


the


particular


society


a codified


legal


system.


The


work


of Smith


and


Davis


is extremely


significant.


They


represent


a massive


amount


research


on human


social


organization,


from


different


theoretical


stances,


and


come


*.1,


A A *


* ,. a








variety


corporations


size,


purpose,


organization


and


across


time


and


space,


the


key


definitional


characteristics


are


established


The


corporation


part


a larger


social


and


cultural


matrix.


It really


cannot


studied


isolation


from


cultural


context.


This


fact


leads


me to


the


main


body


work.













THE H

Natural


CHAPTER


HISTORYY


OF THE


Selection


and


CORPORATION

Sociocultur


IN AMERICA

al Evolution


The


size,


influence,


and


power


of corporations


are


and


have


been


concerns


politicians,


social


critics,


and


social


scientists


alike.


Asian


conglomerates


compete


with


American


and


European


firms


and


vie


world


leadership


manufacturing


power.


Business


organizations


have


esta-


blished


trans


-national


networks


and


operate


collaborative


efforts


that


national


governments


have


not


been


capable


imitating.


Daily


the


Wall


Street


Journal


offer


enticing


investment


and


business


opportunities


in Poland,


Hungary,


and


the


newly


independent


countries


the


former


Soviet


Union.


In their


insightful


and


landmark


analysis


Berle


and


Means


(1932:


313)


presaged


current


events:


In still


larger


be regarded
potentially
institution


may


see


the


corporation,


state,


but


dominant


view,


as one


not


in the


economic


not


only


possibly


form


corporations,
considered as


the


new


economic


increasingly


the


form o
yet a
modern


modern
f social
actually)
world.


organism,


corporation may
organization but


now


on an equal


even


of social


accordingly,
Sa potential


state,


assuming


the


typified


plane


superseding


organization.


might


dominant
e future


by the
the


with


as the


The


law


well


constitutional


while


the


statesmanship.


siness


aspect


law


for


practice


economic


is not


tne power


the


individual


business


leader


. Th








economic


activity


that


has


become


the


focus


attention


economists,


torians


legal s

American


scholars, social

business. The


scientists,


task


and


coming


his-

to grips


with


the


actual


nature


the


corporation,


what


why


and


how


functions,


complex


and


times


opaque.


goal


to examine


how


the


great


business


corpor-


nations


the


United


States


have


emerged


and


developed


such


shall


a dominant


first


form


explain


the


social


organization.


interpretative


To do


framework


this


the


whole


body


research:


an evolutionary


epistemology.


shall


then


present


a history


the


corporation


America


an attempt


to extrapolate


the


criteria


that


have


enabled


birth


and


growth.


First,


analytical


framework


evolutionary


episte-


mology.


It is


a framework


that


views


the


corporation


as a


social


institution,


a form


associative


human


activity


within


a social


context,


with


own


history


and


develop-


ment.


The


interpretive


framework


evolutionary.


that


mean


that


take


the


Darwinian


model


biological


evolu-


tion


as an analogy


for


explaining


and


interpreting


the


evolution


human


cultural


patterns


and


organizations.


A Darwinian


approach


not


new


to anthropology


but


has,


admittedly,


been


down


played


within


the


discipline


Nevertheless,


significant


attempts


use


the


logics


the


* q


I


I


1


t '1


*k


I









1971).


relied


heavily,


but


not


exclusively,


on Ernst


Mayr


(1982,


1991)


understanding


the


Darwinian


theory


evolution


and


the


modern


synthes


evolutionary


thought.


Darwin,


according


to Mayr


(1991),


was


impressed


with


diversity


and


attempted


to explain


it against


an intellec-


tual a

Darwin


mbiance

was so


that


taken


was

Swit


convinced o

h diversity


f essentialist


that


categories.


attempted


explain


as biological


variation


that


seemed


to be.


inherited.


That


ambition


caused


him


to look


for


the


structures


and


mechanisms,


or processes,


that


explained


the


increased


frequency


variation


within


populations.


Not


only


the


occurrence


variation


but


also


the


retention


variants


seemed


extremely


significant


the


survival


organisms


and


species.


accept


that


the


level


analysis


quite


distinct


when


comparing


biological


organisms


and


human


cultural


patterns.


contend,


nonetheless,


that


same


logic


analysis


can


apply.


The


logics


are


simple


There


must


means


accounting


variation


within


a population


and


way


explaining


how


the


variation


passed


on.


Put


another


way,


there


are


forces


or processes


that


account


the


selection


variance


and


retention.


For


example,


Boyd


and


Richerson


(1985)


applied


evolutionary


analysis


to human


cultural


patterns.


They


examined


the


1


__


R





I











From


biology we


know


that


organisms


appear


to have


mechanisms


that


allow


phenotypic


variation


adaptive


response


the


environment


(Boyd


and


Richerson,


1985:


The


two


loci


activity


in a Darwinian


model


are


the


organism


itself


and


environment.


The


central


underlying


question


What


are


the


processes


that


account


vari-


ation?


Put


another


way


human


cultural


variation:


What


are


the


events,


processes,


information,


and


environmental


contingencies


that


explain


the


increase


some


culturally


transmitted


variants


and


the


decrease


frequency


others?

processes


The Darwinian

that affect


approach

variation,


calls


attention


retention,


and


the


survival.


One


the


most


concise


models


understanding


the


evolution


human


societies,


whole


societies


as well


their


parts,


was


outlined


Donald


Campbell


(1969:


73).


Campbell


described


three


basic


requirements


for


the


evolu-


tion


cultural


forms .


For


natural


selection


occur


there


must


the


occurrence


variation,


selection


criteria


or systems,


and


a retention


mechanism.


these


conditions


are


met,


an evolution


the


direction


better


becomes


inevitable.


This


model


consistent


with


contemporary


Darwinian


evolutionary


thinking


(Mayr,


1991).


The


environment


a most


crucial


variable.


Environ-


ment


composes


the


resources


and


information


available


S S S S S 4-


L


1


.









not


part


the


environment


(Boyd


and


Richerson,


1985:


20)


Causality


the


natural


selection


model


centers


the


environment


and


its constraints,


but


not


absolutely


so.


The


sociocultural


unit


that


achieves


also


achieves


survival


and


persistence.


That


much


true.


important


contrast


an adaptation


paradigm


that


puts


causality


the


internal


adaptive


mechanisms


the


organism


or organization,


but


causality


more


aptly


understood


the


interplay


between


the


environment


and


response


(Mayr,


1991)


The


combination


resources


and


their


availability


defines


the


range


"niches


" that


support


organizational


forms


(Aldrich,


1979:


27-29)


Organizational


forms


are


"specific


configurations


goals,


boundaries,


and


activ-


ities"


that


environmental


criteria


select.


"Environmental


niches


are


distinct


combinations


resources


and


other


constraints


that


are


sufficient


to support


an organization


form.


Organizational


forms,


then,


are


organized


activity


systems


oriented


toward


exploiting


the


resources


within


niche"


(Aldrich,


1979:


28).


Campbell


(1969:


defined


a niche


simply


"a viable


mode


living


While


admitting


that


generally


the


pro-


gression


in evolution


toward


increa


sing


complexity,


times


the


resources


available


within


the


niche


have


pointed


.t-t- a.--


_ l _


-1 ~ - -A-. -. -. __ S U ~... Ij -~ S


LA 1 _


-1 _.I


.*9


*I








Bigger


not


always


better.


Fit


simply


implies


exploiting


available


resources.


Therefore,


three


requirements


are


necessary


for


socio-


cultural


evolution.


The


first


variation.


Campbell


described


several


ways


variation


occurs.


There


can


variation


between


social


groups,


and


there


are


variations


between


internal


dimensions


groups


and


across


occasions


within


a social


unit,


that


over


time


the


performance


organizational


activities.


Selection


the


units


and


forms


occurs


through


any


various


selective


systems.


Campbell


discussed


six


possi-


abilities.


The


first


the


selective


survival


complete


social


organizations;


that


the


survival


parts


the


social


systems


can


attributed


the


survival


the


whole.


While


that


may


the


appropriate


model


for


socio-


cultural


evolution,


cannot


exhaust


all


possibilities.


Human


social


systems


differ


as preservation


systems


and


have


a great


variety


organizations


that


can


compatible


with


"effective


collective


action,


so that


human


cultural


organizations


can


modified


and


varied


systematically


(Campbell,


1969:


The

borrowing


second s

between


elective

groups.


system


This


selective d

differential


iffusion


selection;


successful


forms


would


borrowed


from


groups


who


are


I


_ I I


m








learn


through


trial


and


error.


Experiences


that


are


pleasurable


and/or


successful


group


survival


are


selected


as a result


a learning


process.


This


same


kind


reasoning


explains


the


next


type


of selective


system,


selective


imitation


interindividual


variations.


Many


the


most


successful


responses


are


innovations


individuals


or subgroups


so that


variation


within


the


group


provides


the


mechanism


several


selective


systems.


The


fifth


system


the


selective


promotion


leader-


ship


and


educational


roles.


Successful


patterns


behavior


and


organization


become


institutionalized


modes


group


activity.


They


are


taught.


A mechanism


retaining


them


the


selective


elevation


individuals


within


the


group


to roles


influence.


The


sixth


and


final


selection


system


rational


selection.


This


system


s attributes


change


to cognitive


and


rational


processing


information.


Campbell


cautioned,


however,


that


just


because


human


groups


attribute


change


rational


processes


does


not


mean


that


change,


fact,


transpires


according


those


processes


(Campbell,


1969


74-75).


Boyd


and


Richerson


maintained


that


human


groups


the


transmittal


of behavioral


patterns


through


rational


calculation


is extremely


important.


Trial


and


error


learning


can


very


costly,


even


deadly.


Calculated


risk,


based


on knowledge


of experience.


enhances


the


SIuceas


rate








Having


distinguished


six


types


selective


systems,


Campbell


then


explained


several


selection


criteria.


First


among


them


the


necessity


a high


rate


variation


and


a corresponding


high


rate


mortality.


The


greater


the


heterogeneity


forms,


the


greater


the


chances


survival


the


group.


Second,


distinguished


internal


and


external


criteria.


Here


noted


the


proclivity


random


processes


to form


into


orderly


and


stable


patterns.


There


are


internal


stability


requirements


evolution


even


though


external


pressures


often


negatively


affect


the


reproductive


success


an organism


or social


unit.


The


third


requirement


that


retention


mechanism.


There


an institutionalization


successful


organization


forms


that,


over


time,


takes


on the


aspect


tradition.


Culture


and


heritage


and


the


passing


on of


tradition


are


retention


mechanisms


writ


large.


This


model


serves


as a heuristic


device


under-


standing


the


emergence


the


great


business


combinations


the


United


States


and


their


becoming


one


the


dominant


modes


social


organization.


The


business


corporation


appeared


at a particular


time


and


own


history.


Key


social


and


cultural


forces,


as well


the


availability


resources


and


technology,


have


accounted


the


rise


prominence


the


corporation.


A review


that


history


t al 4- r r. aa an 1 n rr


,( 1 I


nvCr: ns+n


C khc~a


FhmnE


aa+akl








social


institution,


a form


social


organization


rich


with


sociocultural


contexts,


shaped


the


constraints


and


limitations


a variety


historical


and


sociocultural


circumstances.


The


business


corporation


appeared


particular


time


and


own


history.


Key


social


and


cultural


forces,


as well


the


availability


resources


and


technology,


have


accounted


the


rise


prominence


the corporation

those forces,


A review


establish


that


history will


an evolutionary


framewor


extricate

k. and


demonstrate


tution,

tural c


that


a form


contexts,


the


corporation


social


shaped


organization


the


indeed

n rich


constraints


a social


with

and 1


insti-


sociocul-


imitations


a variety


The


historical


and


Corporation


sociocultural


America:


From


circumstances.


Franchise


to Limited


Liability


argued


the


Introduction


that


the


concept


"corpor-


action"


wide


use


and


universal


human


societies.


The


use


"corporation"


for


economic


purpose


not


new,


and


the


way


that


"corporation"


general


been


defined


historically


a key


to understanding


use


America.


The


first


corporations


postcolonial


America


included


construction


companies,


churches,


and


universities.


Our


understanding


them


rests


on the


structure


the


colonies


and


what


the


colonies


inherited


from


England.


__







name


the


state.


The


Plymouth


Co.,


the


Virginia


Co.,


and


the


Massachusetts


Bay


. are


examples


the


use


the


corporate


system


secure


the


development


colonies


through


the


stimulation


private


interests


grants


from


the


state.


The


political


and


civil


life


the


colonies,


once


established,


evolved


from


the


form


and


functions


the


colonial


companies.


Massachusetts


Bay,


as a colony,


evolved


from


the


corporate


structure


granted


the


Massachusetts


Bay


Company


and


was


perpetuated


(Davis,


1905b;


Handlin


and


Handlin,


1945).


The


purposes


the


state


granting


charters


the


colonial


companies


were


several.


They


included


the


desire


to colonize,


the


establishing


commerce


and


the


extension


the


dominion


the


Crown.


The


propagation


Chris-


tianity


and


the


relief


the


distressed


classes


Britain


were


also


considerations.


But


once


established,


the


colonies


developed


a system


governance


similar


first


identical


with


but


later


separate


from)


the


colonial


company.


Therefore,


the


business


corporation


America


inherited


the


form


corporate


structure


from


the


colonial


companies


and


the


legal


concepts


that


accompanied


The


business


corporation


America


began


as a political


expression


performing


a public


function.


The


colonies


transplanted


a mercantili


European


society.


The


tenets


mercantilism


involved


theo


- -8


integration


the


social


and


.
.


L








the


state


people,


was


and


intended


that


to contribute


political


objective


the


affected


welfare

id the c


character


of the


state 's


instrumentalities


(Chamberlain,


1982).


'There


bus ines
company
economic
(1977)
groups
(1957)
in earl


s c
es
c a
pre
tha
in
y s


workings o
economic a
traders--s
Again, in
activity i
Very
stock comp
Gardner (1
companies


chall
joint
not o
expre
over
of In
state
state


enges
stoc]
nly c
ssion
time
dia.
, the
used


(1905b:


are


orpora
and th
ctivit
sented
t oper
a well
tate e
f Euro


gents,
ome of


s econ
impres
rmane
ies.
1), an
om dif
monol


important


tion in
e joint
y is as
the ki
ated in
known
umpires.


pe'


me


rou
whic
omi
siv
to
Cox
d H
fer
ith


companies


ommerc
and e
until,
This


i
x

i


socioc
these


al
pa
in
s
ul


s


ps
h


historical


antecedents


America, especial
stock companies.
old as the state
nds of corporate,
the Roman Empire.
anthropological wo
Braudel (1972,
dieval economic li
, family houses, a
trace their activi


c express
e, as is
my thesi
(1959),
unt (198
ent pers
ic inter
, such a
nterpris


nsion
the
signi
tural


. Po
end,
fican
and


si
i

D
7)


on the
ts rel
is the
avis (
analy


pecti
preta
s the
es bu
litic
it wa
t bec
socio


ves
tio
Ea
t a


enterprises


var


ly
A
it
or

rk
19
fe
nd
ty
ie


action
natur


n
s


905),
ed th
that,
of m
t Ind


lso
act
he
e i
iti


own


a


the


the colonial
ssociative
self. Limet
associative,
Polanyi et al.
discussed trade
79) detailed the
, the kinds of
Venetian
to Roman times.
ty of corporate
to the state.
e of the joint
Fisher (1954),
e nature of these
in some ways,
ercantilism. The
ia Company, were
means of national


ivity ac
colonial
t points
cal cont


crued to it
government
to the


ext


purposes


The


. As Davis


argued:


lack


foreign nat
government
necessary t
subjects pr
many powers


state


When


functions


the


closer
ions as
of Engl
o leave
ompted
that w


the


over


companies,


s


political


we
and
fo
by
ere
tat


the
they


fi


relations


11 as of tho
and its sub
r the exerci
the motive o
later to be
e became abl
eld of active


became


e t
ity


with


between the
ts made it
of groups o
elf-interes
sumed by th
o extend it


f
t
e
s


occupied


obsolete.


used
among
Engl


For
the
th
sh
n a


Davis,


or
p
at
C4


I-


pora
olit
e pr
1 -


it
te
ica
ovi


was


the


apparatus
1 represent
des the se
n anA S-


undeveloped


for
tati
lect
.__ ^


its
on a
ive
-* -


ow
nd
me


Englis


nmul
gove
chani
-. -* -


tip
rna
sm


state
le pur
nce.
as the
mt, ,,.


that
poses,
The


n.A a


The


e


P


fe


I








Yet


an interesting


trans formation


occurred


between


the


17th


and


20th


centuries.


the


1940s


the


business


corpor-


action


was


no longer


being


thought


as an instrumentality


the


state


Rather


was


defined


these


three


attri-


butes


: the


idea


fictitious


personality,


limited


lia-


ability,


and


freedom


from


state


interference


(Handlin


and


Handlin,


1945).


And


was


assumed


that


this


had


always


been


the


case.


Handlin


and


Handlin


reviewed


the


history


the


origins


business


corporations


America


to determine


indeed


these


three


attributes


had


always


defined


the


corporation


in America.


Two


often


implied,


uncritical


assumptions


are


present


this


history.


The


first


accepts


that


to the


economic


advantage


individuals


to incorporate.


The


second


has


been


that


the


quality


"fictive


personality"


has


enabled


a corporation


to operate


as an individual


person


exercising


ators


individual


a special


rights


dispensation


yet


granting


called


limited


the


incorpor-


liability.


Both


assumptions


deserve


some


attention.


The


notion


"fictive


personality"


as a legal


con-


struct


was


inherited


from


English


jurisprudence.


It granted


the


aggregate


individuals


a corporate


entity


under


the


aspect


"personality"


"personhood.


Davis


argued


that


-. -


In nflfl .


II


_B ~ -~ ^








corporations


as entities


have


been


parts


social


systems


dating


back


to Rome.


Yet


the


bestowal


artificial


person-


hood


never


clearly


emerged


until


16th


century


Engli


sh juris-


prudence


(Davis,


1905b:


211-247)


The


principle


significant


quality


derived


from


fictive


personality


the


ability


take


succession,


perpetuity.


Importantly,


as so construed,


a corporation'


dealings


with


society


at large,


especially


the


state,


could


more


readily


handled.


Blackstones'


Commentaries


1765


are


an important


source


legal


scholarship


regarding


the


solidification


the


concept


law.


Davis,


extrapolating


from


Blackstone


and


also


from


the


writings


Sir


Edward


Cook,


saw


that


even


though


the


corporation


could


esta-


blished


as a fictive


person,


was


still


to the


state


grant


the


corporate


identity


And


the


general


purpose


for


creating


them


was


subservee


the


'advantage


the


public'


'the


advancement


religion,


learning,


commerce


I US


The


specific


purpose


was


stipulated


the


body


of rights


and


obligations


conferred


the


corporation


law


charter


(Davis,


1905b:


211)


Several


scholars


support


this


contention


(Berle,


1959;


Berle


and


Means,


1932;


Bjork,


1969;


Handlin


and


Handlin,


1945;


and


Krooss


and


Gilbert,


1972)


When


the


corporation


emerged


in Englis


h history,


was


orimarilv a


form


of social


oraanizat ion -


(Maine'


s classic








reflected


the


presence


and


history


the


corporate


form


social


organization


and


attempted


to describe


and


understand


was


not


primarily


nor


necessarily


an organizational


form


commercial


activity.


When


the


form


was


used


initiate

already


and


advance


present


commercial


the


legal


progress,


repertoire.


the

Thus


concepts

Davis c


were


would


boldly


state


that


the


purpose


creating


them


was


"sub-


serve


'the


advantage


the


public.


When


the


notion


fictive


personality


became


more


broadly


accepted


and


recognized,


the


general


purpose


for


erecting


corporations


did


not


change.


Davis


suggested


that


developments


the


19th


century


were


responsible


for


changes


corporate


structure


and


identity.


Underlying


this


assumption


his


clearly


stated


premise


that


was


18th


and


19th


century


liberalism


with


emphasis


individual


rights


that


gradually


transformed


the


form


well


the


function


the


commercial


corporation.


Yet


would


seem


to be


major


consequence


underscore


what


the


corporation


was


originally


order


come


terms


with


the


changes


has


undergone.


Berle


and


Means

the H


(1932)


andlins


inherited


from


argued

The


a vein


corporation


English


law


similar


America


stood


that


evolved


the


Davis

over


end


and

time,


the


18th


century


that


time


a corporation


was


considered


N-l 4 Syt 1 r \ .


' Mfrrh nmnan._IPranh n ti a


S"


^ F r A-n^'h ea nr


*t-V


n


ty Tl








from


the


state"


(Berle


and


Means,


1932:


120).


But


that


privilege,


which


originally


accrued


the


public


advantage,


has


been


transformed


an advantage


the


corporate


entity


itself,


namely


that


the


limited


liability


stockholders


(Berle


and


Means,


1932


: 120)


How


to account


for


the


change


and


what


it ultimately


meant


corporations


and


society


alike


an essential


undertaking.


Handlin


and


Handlin


(1945:


have


shown


that


while


partnerships


and


unincorporated


joint


stock


companies


operated


England


during


the


18th


century


and


well


into


the


19th,


"the


corporation


was


used


extensively


only


the


organization


of canal


companies


The


legal


concepts


trusts


and


partnerships


were


used


most


other


commercial


activity.


But


the


full


growth


business


corporations


occurred


only


after


limited


liability


was


granted


after


1862


and


the


passage


the


Consolidated


Statute.


1862,


America


had


enjoyed


nearly


one


hundred


years


independence


and


the


great


corporate


revolution


was


already


underway,


spurred


sociopolitical


forces.


America


inherited


much


the


British


legal


repertoire.


1800


the


corporation


was


used


in America


mainly


for


undertakings


involving


a direct


public


interest.


1800


there


were


between


and


profit-s


seeking


corporations


(Berle


and


Means,


1932:


Krooss


and


Gilbert,


1972


: 88).








among


companies


that


provided


water


and


fire


protection,


banks,


insurance


companies,


and


only


six


incorporated


companies


that


were


the


manufacturing


field.


The


banks


and


insurance


tutions


companies


ensure


the


were


success


perceived


as necessary


agriculture.


Each


insti-


these


companies


received


charter


from


an act


the


state


legislature,


which


the


relationship


and


responsibilities


between


the


incorporators


and


the


purpose


the


incorpor-


action,


responsibilities


stockholders,


and


relation-


ship


the


state


were


specified


and


stipulated.


The


state


legitimized


and


sanctioned


corporations


and


corporate


activity


this


threefold


negotiation.


But


these


incorporators


did


not


enjoy


limited


lia-


ability.


the


contrary,


they


were


liable


their


creditors


and


could


only


renew


the


financial


resources


the


corporation


appealing


the


stockholders.


Therefore


they


entered


fields


endeavor


that


showed


low


or little


risk


failure.


The


fact


that


most


the


corporations


contracted


to public


works


activities


attests


the


reality


the


safeness


the


investment


and


security


return


shareholders


(Handlin


and


Handlin,


1945:


8-16)


Fraser


(1983)


has


argued


that


to suggest


that


the


corporation


was


thus


an economic


agent


the


state,


the


Handlins


imply


and


as the


legal


scholar


James


Willard


Hurst


1__


I _








influential


people


who


viewed


corporations


as a body


politic,


an association


individuals


imbued


with


the


civic


ethos


appropriate


the


genuine


republican


community


(Fraser,


1983:


It exi


sted


within


the


community


and


espoused


communitarian


ideals.


The


notion


franchi


of chartering,


challenges


any


assumption


the


freedom


from


government


interference.


Indeed,


the


origin


Handlins


concluded


Massachusetts


the


in a strong

corporation


statement, "At

was conceived


an agency

exclusive


the


government,


privileges,


and


endowed


political


with

power,


public

and d


attributes,


designed


serve


a social


function


the


state"


(Handlin


and


Handlin,


1945:


22).


Between


1807


and


1818


Massachusetts


incorporated


many


manufacturing


and


textile


companies


through


acts


the


legislature.


But


1811,


New


York


made


possible


to incorporate


without


special


legislative


action


passing


general


incorporation


laws.


Other


states


followed.


1875,


the


states


had


passed


similar


legislation


(Krooss


and


Gilbert,


1972:


160).


2In 1
important


laws


the


became


to attract
Jersey and
incorporate


desires


1870s


source
e less


and


thereafter,


state


restrictive


corporation
Delaware.
on market b


. The


return


revenues


chartering became an
State incorporation


as competition


s grew more
Currently,
y tailoring


the


state


* t


intense.
Delaware


laws


comes


between


Examples
dominates


to fit


states


are
the


New


managements'


in terms


fran-


_ -- _


-- I





*k








The


legal


structure


which


permitted


the


use


the


corporation


was


changing,


reflective


itself


broader


social


and


political


changes


the


country.


The


key


feature

It meant


the


that


change


the


was


state


the


was


notion


willing


limited


to enforce


liability.

voluntary


contractual


agreements


individuals


without


inquiring


into


their


equity.


The


concept


only


came


the


fore


the


middle


the


19th


century


as charters


were


granted


sky


enterprises


a key


enterprise.


explanato


Large


requiring

ry notion


amounts


large


the


capital


amounts


capital.


development


became


the


necess


This

modern


ary


the


undertakings


became


larger


and


the


financial


risk


increased,


holders


that


the


the


joint


"limited


stock


liability


corporation


for


made


the


stock-


possible


the


rise


the


modern


industrial


private


enterprise"


(Bjork,


1969:


112).


Several


key


legal


and


cultural


developments


established


the


framework


the


development


the


legal


concept


limited


liability.


Cultural


Values:


Controversies


Natural


Aristocracy


and


Monopolv


In the


sociopolitical


context


the


young


nation,


the


struggles


between


the


Jeffersonian


democrats


and


the


Feder-


alist


party


the


nature


and


future


the


new


republic


were


expressed


the


use


of incorporation.


According








Fraser


(1983)


the


device


of incorporation


was


available


the


Federal


press


their


case


forward,


the


case


the


necessity


a ruling,


natural


ari


stocracy.


Even

closely 1


after


inked


the


Revolution,


to civil


status.


possession

Property


property


or freehold


was

status


were


seen


as qualifications


suffrage.


While


the


Ameri-


cans


had


rejected


the


idea


of hereditary


aristocracy,


the


notion


a natural


aristocracy


was


central


the


thinking


and


action


the


Federalist


party


and


rejection


the


homogenizing


influences


Jeffersonian


democracy.


Fraser


argues


that


the


Federalists


did


not


object


to granting


governmental


powers


the


states;


they


objected


the


kind


men


who


would


run


those


governments.


Their


policy


espoused


the


Federalist


Papers


was


that


more


general


qualifications


talents


and


civic


achievement


would


stand


out


favorable


recommendation


men


to national


office.


They


feared


that


local


elections


would


not


bring


the


best


men


forward


and


hoped


that


the


new


constitution


would


ensure


that


the


best,


the


natural


aristocracy


the


country,


would


come


forward


govern


(Hamilton,


1961;


Wood,


1972).


Uni-


versal


suffrage


was


not


so easily


accepted


the


Founding


Fathers


(Bellah,


1985


: 253-256)


Fraser


(1983)


argued


that


the


device


incorporation


was


employed


as a means


advancing


the


Federalist


cause.


"The


widespread


use


the


tornnrIlt --


fnorm hv


4-1h


cnmmerra 1


L.


J I V^~


SJ








means


reasserting


the


civil


status


the


'natural


aristocracy'


that


was


no less


effective


and


much


more


direct,


than


the


new


Federalist


party


and


electioneering


press


which


were


similarly


deployed


against


the


levelling


influences


Jeffersonian


democracy"


(1983:


The


corporation,


according


to the


republican


ideal,


was


vested


with


public


interest;


was


not


conceived


as an instrument


alienation


and


class


struggle


any


Marxian


sense.


But


was


the


public


interest


as upheld


the


elite,


the


self-


proclaimed


natural


aristocracy,


the


citizen


body.


was


elitism


fashioned


after


the


ideal


Aristotelian


republi-


canism.


Aristotle,


and


Plato


before


him,


believed


that


the


state


should


run


those


who


had


the


natural


capacity


for


The


political


equality


free


men


does


not


mean

those


that

who


talents


were


and


endowed


skills

with


are

skill


equally


and


shared.


talent


For


to rule


Plato,

should


all


others


should


occupy


themselves


with


farming,


manufacturing,


and


other


activities.


Aristotle


taught


that


laborers


were


not


capable


leading


the


good


life


and


should


excluded


from


the


citizen


body.


Different


men


have


different


skills.


Different


jobs


require


different


skills.


Each


man


should


devote


himself


to work


according


skill.


Plato'


divi


sion


the


state


into


rulers,


war-in" rT _


nnrl


ion rlrivr


nn 1h-ac


i4rIaa.


k r4i c+-nI- 10 a '


rta ern


E









manual


labor


and


taking


orders,


and


the


citizen


elite,


those


who


are


capable


ruling


and


making


decisions,


also


based


the


same


notion


inegalitarianism


(Plato's


Republic


: 469


-471;


Aristotle'


Politics


: 1277


-1280;


Held,


1987:


These


were


the


ideas


that


undergird


the


Federalists'


natural


aristocracy--the


elite,


the


citizen


body,


invested


with


civic


ethos.


indeed,


as Fraser


argued,


incorpor-


ation


became


a device


to enhance


the


elitist


position


the


Federalists,


the


basic


argument


the


Handlins


taken


a new


dimension.


The


corporation


was


not


merely


"public


service"


agent


the


state,


but


rather


the


corporation


was


a body


politic,


the


law


granted


to private


property


civil


status.


Fraser


concludes


(1983:


10),


"Any


enterprise


endowed


with


a charter


was


lifted


above


the


crass


pursuit


a merely


private


interest


the


common


law


conception


the


corporation


as an association


persons


vested


policy


the


law


with


certain


powers


deemed


necessary


the


successful


promotion


some


design


general


utility


and


public


benefit.


The


increasingly


delineation


became


the


the


public


domain


interest


the


at stake


corporations


themselves


But


that


to be fully


recognized


several


3Fraser


dedicated


many


pages


to discussing


the


esta-


- -





1








events


occurred,


which


had


repercussions


the


conceptual


and


legal


development


corporations.


First,


whereas


the


Federalists


perceived


a commitment


save


the


new


republic


a government


the


many


the


enlightened


few


and


thus


supported


incorporation


as neces-


sary


the


survival


and


growth


the


country,


the


Jeffer-


sonian


democrats


were


suspicious


commercial


corporate


charters


as a monopolistic


privilege


for


the


few who


would


increase


their


wealth


the


expense


the


people.


This


controversy


came


the


fore


the


hotly


debated


chartering


the


First


Bank


the


United


States


Con-


gress.


It had


been


left


the


states


to charter


corpora-


tions.


But


the


Federalists


pushed


and


won


Congress


the


federal


chartering


a national


bank.


For


Jefferson


this


amounted


an official


sanction


monopoly.


Hamil-


ton,


on the


other


hand,


believed


that


the


national


bank


was


necessary


for


the


solvency


the


currency,


but


the


bank


was


also


a means


binding


the


interests


the


Federalist


Party


the


future


the


country.


When


Jefferson


became


president


without


simply


renewing


the


Another


charter


attempt


the


was


bank


made


expire


at esta-


blishing


a national


bank


during


the


presidency


Andrew


of religion
the monopoly
^^wFIII hW-1 1 .


the


status


progress
of the


s


and


welfare


Congregationalist


society.
Churches


But
was


nn a1i"c kr


AI\1 .- 1 1 A .- ..-


Jrr


,. -,-


'I








Jackson.


Jackson


would


have


nothing


to do with


believing


to be


unconstitutional


and


against


the


true


spirit


democracy


(Bjork,


1969:


108).


These


two


opposing


values


endured


the


American


tradition--an


appreciation


for


the


civic-mindedness


business


leaders


and


a suspicion


those


who


would


advance


their


own


wealth


the


expense


the


public.


Thi


latter


cultural


"value,


a suspicion


the


powerful,


cannot


understated.


It is


an expression


the


American


ideology


itself


which


espouses


individualism,


anti-


statism,


decentralism,


freedom,


and


meritocracy.


Monopolies


are


not


to be


tolerated.


As Lipset


(1990)


argued,


these


are


the


values


that


have


shaped


the


growth


organizations


and


the


very


society


the


United


States.


They


are


values


that


have


been


fixed


the


legal


system


that


not


only


purports


to protect


individual


rights


but


also


established


checks


the


use


power,


including


the


power


government.


a dynamic


system,


not


a static


code,


that


responds


current


interpretations


the


values


inherent


the


society


contend


that


these


values


have


played


an essential


role


the


way


the


corporate


revolution


America


advanced.


Great


Britain


favors


family


owned


and


operated


corporations


and


the


monopolies


that


sometimes


accompany


I*


I*


I


I









companies


from


the


monopoly


cartels


and


encourages


competition


the


good


the


country.


Law


and


the


Gradual


Board


Advance


the


Freedom


the


of Trustees


Other


key


developments


the


history


the


corpor-


action


involved


decisions


handed


down


the


courts,


the


first


these


the


Supreme


Judicial


Court


Massa-


chusetts.


In 1807,


the


Ellis


Marshall


decision


established


the


distinction


between


public


and


private


corporations.


Public


corporations


were


those


that


functioned


toward


the


public


good;


private


corporations


functioned


for


the


benefit


the


owners


(Fraser,


1983:


12).


was


free


an important


associations


step.


Corporations


individuals,


rather


could


than


now


act


as arms


the


state.


The


full


extent


this


change


was


not


wholly


felt


for


some


time.


The


second


decision


was


even


more


monumental.


came


from


the


United


States


Supreme


Court


1814.


The


legis-


lature


the


State


New


Hampshire


had


attempted


to alter


the


charter


trustees.


Dartmouth


The


Supreme


College


Court


without


the


the


State


consent


New


the


Hampshire


had


ruled


that


any


alteration


was


justifiable


since,


virtue


incorporation,


the


college


served


a public


pur-


w








not


rest


on the


pursuit


profit


nor


the


general


purpose


of each


corporation


but


rather


the


interests


at stake


each.


The


charter


did


give


college


a monopolistic


privilege


on education


in the


state.


gave


the


college


the


right


to exist


an educational


institution


and


negotiate


with


students


saw


(Bjork,


1969:


110)


"Public


corporations


included


only


those


corporations


'founded


the


government


public


purposes,


where


the


whole


interests


belong


also


the


government


on the


other


hand,


'the


foundation


be private,


though


under


the


charter


the


government,


the


corporation


is private,


however


extensive


the


uses


may


to which


devoted,


either


the


bounty


the


founder


or the


nature


and


objects


Dartmouth


the


institution'"


College


Woodard,


(Fraser,

1819: 6


1983:


;63-672).


Trustees

The right


the


board


trustees


to freely


decide


on any


course


action


was


determined


this


crucial


decision.


Fraser's


interpretation


the


decision,


however,


maintained


that


Federalist


tendencies


inhere


the


notion


granting


the


the


legislature;


governing


that


board


authority


internal


independent


governing


board


constituted


as a public


sphere


within


the


corporation


and


*


r


II 11








aristocracy


or civic


elite


within


the


corporation


who


would


ensure


the


survival


the


corporation


and


safeguard


the


primary


purpose


to seek


the


good


the


people.


Indeed,


Fraser


maintained


that


Chief


Justice


Hornblower


New


Jersey,


the


in a subsequent


shareholders


decision


a corporation


another


the


case,


voting


likened


public


our


republican


polity.


The


equal


rights


all


the


share-


holders


are


to be


respected


and


the


right


to vote


upheld.


But


governance


the


hand


the


elected


few.


"The


survival


the


corporate


public


sphere


was


possible


therefore


only


so long


retained


the


form


Aristotelian


polity,


that


say,


association


persons


formed


with


a view


some


good


purpose'"


(Fraser,


1983:


13).


The


"good


purpose"


involved


more


than


the


profit


taking


the


incorporators.


involved


a commitment


advancing


the


public


welfare.


The


third


case


special


significance


also


came


before


the


United


States


Supreme


Court


1839.


the


Charles


River


Bridge


Warren


Bridge


case


the


court


ruled


that


the


charter


the


Charles


River


Bridge


Company


could not


considered


a permanent


monopoly


for


the


provision


crossing


over


the


Charles


River.


The


company


had


argued


that


had


exclusive


privilege


that


effect


virtue









group,


even


though


the


company


performed


a valuable


public


function


(Bjork,


1969:


111).


These


cases


point


to cultural


values


and


changing


legal


viewpoints


regarding


the


corporation.


Monopolies


would


not


tolerated.


Government


had


the


right


and


obligation


oversee


corporations


the


public


interest.


On the


other


hand,


the


right


the


directors


to decide


the


corporate


entity


independent


the


state


was


establi


shed.


Government


and


private


corporations


had


their


own


authoritative


domains


The


notion


limited


liability


the


share-


holders


also


gained


a foothold,


and


was


this


notion


the


limited


liability


shareholders,


discussed


below,


that


came


to be


the


most


central


definitional


characteristic


the


corporation


America.


Limited


liability


led


the


dispersion


ownership


corporations


and


the


eventual


concentration


wealth


and


power


the


huge


commercial


enterprises.


Limited


liability


made


possible


the


corporate


revolution


America


which


really


only


began


the


second


half


the


19th


century


(Berle


and


Means,


1932


: xxv-xxx)


4This ]
assumptions


in
and


America,


John


property,
a comment


stood
*- .- .


that


presentation


common
namely


Locke


the


thus


skirted


discussion


a theoretical


on the


individuals
is in order


Adam


Smith
* t


question
m, and "
at this


advocated


a.


dialogue


the


economic


the


economic
with A


rights


man.


point


underlying
development


dam


Smith


f individuals,
Nevertheless,


commonly


free


F


enterprise


under-


system


and


-% S


r


^








The


notion


chartering


remains


part


the


legal


structure,


but


quite


unlike


earlier


applications.


The


issue


which


underlies


the


question


chartering


really


the


idea


the


social


legitimacy


the


corporation.


Hurst


(1970)


argues


that


during


the


1800s


the


corporation


was


conceived


"utility.


As such,


was


chartered


serve


the


public


good,


and


indeed,


some


industries


are


still


considered


utilities


because


the


basic


services


they


provide


society.


However,


the


social


and


legal


norms


have


changed


and


the


notion


limited


liability


has


facilitated


the


growth


corporations,


the


expression


the concepts of private property, private enterprise,
individual initiative, profit motive and competition to
argue that the self-interest of each individual, given free
reign, would provide the optimum satisfaction of society's
wants. "Very emphatically he repudiated the stock corpora-
tion as a business mechanism, holding that dispersed owner-
ship made efficient operation impossible" (Berle and Means,
1932: 304).


Berle
panies .
money than
they should
with which
watch over
are apt to
their maste
dispensatio
therefore,
agement of


and Means cite Smith,
. being the managers


of
wa
the
the
con
r's
n f
mus
the


account that jo
seldom been abl
adventurers. T
without an excl


their
tch o


partn
r own
ider
honou
om ha
alwa
affai
int s
e to
'hey h
usive


own,
ver i


e

a
r
yV
Ly


"The
rather


cannot


with


the


wel
sam


direc
of o
1 be
eL anx


rs in a private copart
Like the stewards of
attention to small matt
, and very easily give


i
'S


ng it. Ne
prevail,


rs or sucn a c
stock companies
maintain the c
,ave, according
Sorivilece, an


- U


gence and
re or les
company.
for fore
ompetitio
ly, very
d frequent


tors of such com
their people's
expected that
ious vigilance
nery frequently
a rich man, they
ers as not for
themselves a
profusion,
s, in the man-
It is on this


ign trade
n against
seldom su
tly have


have
private
cceeded
not


h
I

I


-


I








the


need


legitimacy


correspondingly


changed.


That


our


traditions


demand


that


forms


power


legitimate


criteria


utility


or of


responsibility.


The


regulation


corporations,


once


the


utility


inherent


chartering


changed,


became


a right


government.


The


relation


between


the


corporation


and


the


state


and


the


concern


the s

since


the


ociocultural


the


public


system


corporation


good


been


(Hurst,


part


a constant


1970: 5

culture


9-111).

as well


dimension


Indeed,

as part


the


market,


the


notion


that


government


and


society


have


role


regarding


commerce


at best,


dubious.


Berle


and


Means:


Separation


Ownership


from


Control


the


recognition


the


independence


the


board


trustees,


the


whatever


notion


the


limited


political


liability


motive,


became


and


the


part


acceptance


the


legal


structure


such


that


these


two


characteristics


came


to define


the


corporation,


at least


legally,


then


remains


to be


shown


that


the


prospect


limited


liability


was


itself


sufficient


motive


individuals


to incorporate.


But


this


statement


poorly


posed.


For


the


emergent


acceptance


the


private


character


corporations


and


limited


liability


were


reflective


deeper


sociopolitical


processes,


and








attributes


changed


the


nature


the


free


enterprise


system


dramatically.


The


celebrated


thesis


Berle


and


Means


(1932)


main-


tainted


that


the


corporate


revolution


America


separated


ownership


from


control


over


the


means


production.


further


stipulated


that


this


development


can


only


understood


terms


five


driving


forces


which


shaped


These


were


an unprecedented


increase


productivity,


the


massive


collectivization


property


devoted


to production


coupled


with


the


decline


individual


decision-making,


mas-


sive


dissociation


wealth


from


active


management,


growing


pressure


for


a greater


distribution


that


wealth,


and


the


assertion


individualism


and


the


individual's


right


choose


and


consume


(Berle


and


Means,


1932:


xxv).


The


dispersion


ownership


through


shares


stock


and


the


control


the


enterprise


passed


into


the


hands


hired


managers


meant


the


turning


traditional


economics


on its


head.


Property


and


wealth


became


passive,


expressed


terms


shares


which


have


a market


value.


The


owners


abdi-


cated


individual


initiative


the


managers


and


directors


and


thereby


the


ancient


and


central


position


the


profit-


motive


came


into


question.


The


corporation


now


embodied








varied


and


sometimes


complex


sets


of relationships


which


management


sought


to satisfy


(1932:


304-309).


The


theoretical-epistemological


importance


this


thesis


that


presented


an evolutionary


framework


for


understanding


how


the


business


corporation


grew


so rapidly


to unprecedented


levels


power


and


influence.


Berle


and


Means


described


five


driving


forces


that


explained,


them,


this


rapid


development.


Some


are


internal


the


organization


the


corporate


structure,


such


the


hiring


salaried


managers.


Others


are


external


and


societal


nature,


such


the


continued


assertion


individualism


and


the


individual's


right


to choose


and


consume.


The


five


factors


are,


then,


a mix


factors


both


internal


and


external


the


corporation.


One


the


implications


the


thesis


the


notion


causality.


The


central


piece


the


theory


the


separa-


tion


ownership


from


control


through


the


issuance


stock.


then


argues


that


five


forces


shaped


that


his-


torical


development


as well


as the


continued


trajectory


the


corporation.


argue,


however,


that


the


notion


limited


liability


the


shareholders


gained


legal


ground


fact


further


that


led


significance


many


this


studied


a -


which


analysis liei
:h challenged


the


the


l


c_








due


the


cultural


values


that


shaped


the


law.


Indivi-


dualism


and


the


right


individuals


to choose


was


a given.


The


massive


collectivization


wealth,


dispersion


ownership,


and


pressure


a greater


distribution


that


wealth


were


consequent


the


original,


key,


historical


event


The


the


recognition,


consequences


the


law,


1 limited


development


liability


the


corporate


form


America


became,


time,


the


gradual


transfer


control


managers,


dispersion


ownership,


and


the


need


to attend


to myriad


sets


relationships.


I nevertheless


agree


that


these


forces


are


part


the


selective


system


that


served


as positive


feedback


gener-


eating


the


motors


the


corporate


revolution.


There


were


other


factors


that


meet


the


selection


criteria


outlined


the


beginning


this


chapter,


factors


that


met


the


need


for


internal


stability


and


environmental


resources


that


explain,


even


more


fully,


the


corporation


revolution.


"Berle
management
completely


control by


and
and


Means


the


document


five


controlled


owners,


the


forms


their e
n legal


the


gradual


it assumed.
enterprises,


shift
First,


then


can


devices--such


in
owners
ie majority


trusts--


w








Coase


and


Williamson:


Efficiency


Cost


Reduction


One


underlying


question


about


corporate


activity


whether


or not


corporate


action


more


adaptive


than


the


isolated


action


an individual


agent.


R.H.


Coase's


"The


Nature


the


Firm"


(1937)


considered


a classic


treatment


that


directly


addressed


this


issue.


we shall


see,


once


this


approach


was


taken


allowed


more


detailed


elaboration


O.E.


Williamson


(1980,


1981,


1986).


Aiming


the


heart


issue,


Coase


asked


what,


precisely,


leads


the


emergence


the


firm?


There


are


two


basic


assumptions


made


neoclassical


economists


regarding


the


free


market


and


resource


allo-


cation.


These


are


that


the


price


mechanism


regulates


resource


allocation


and


that


this


allocation


depends


the


private


entrepreneur.


Coase


argued


that


the


firm


emerges


because


there


a cost


the


price


mechanism.


The


most


relevant


cost


lies


discovering


what


the


prices


are


and


being


able


to reduce


them.


Coase


made


the


the


focus


analysis,


not


the


social


form.


The


firm's


ability


to internally


control


the


allocation


resources


and


the


distribution


products


was


advantageous.


The


nature


the


price


mechanisms


and


the


assumptions


implicit


to free


market


theories


are


"transaction"








Outside
duction,


exchange


firm,


the


firm,


price


which


transactions


these


in place
exchange


market


the


movements


coordinated


on the


transactions


complicated


transactions


preneur-co-ordinator,


clear


ordinating


that


these


is
who


are


direct


through


market.


are


market


substitute
directs


alternative


pro-


a series


Within


eliminated
structure w


the


entre-


production.


means


and


ith


It
CO-


production.


But


internal


organization


costs.


So a balance


achieved


and


the


firm


expands


the


point


that


the


costs


organizing


transactions


within


the


firm


become


equal


the


costs


carrying


out


the


transactions


on the


open


market.


Williamson


(1986)


taken


Coase's


argument


further.


Transaction


cost


approach


means


that


the


corporation


first


and


foremost


an efficiency


instrument.


Transaction


cost


economics


has


come


terms


with


two


important


human


behavioral

opportunism


assumptions.

Economic


These

actors


are

act


bounded r

rationally


ationality

toward fu


and


1-


fillment


goals,


experience


an intended


limited


rationality,


formulating


and


but


solving


human

complex


problems,


receiving


and


processing


information,


transmitting


information,


etc.


Rational


decision


making


thus


bounded


these


common


sense,


experiential


limitations.


Oppor-


tunism


merely


extends


the


usual


assumption


self


interest


entrepreneurial


activity.


The


simultaneous


presence


bounded


rationality


and


opportunism


have


affected


the


nature


- a a


I*


L


1


A A


L








real


functioning


of economic


organization


"assess


alternative


cities


governance


to economize


structures


on bounded


terms


rationality


their


while


capa-


simulta-


neously


safeguarding


transactions


against


opportunism.


According


explanations


transaction


the


cost


emergence


analysis


the


one


firm--and


the


a correla-


tive


answer


to the


question


"why


incorporate?"


--is


generated


from


the


context


the


free


market


economy


which


once


shapes


and


changed


the


firm.


The


firm


emerges


because


under


environmental


conditions


economic


development


more


economically


efficient


and


advantageous


to do


than


previous


organizational


responses


transactions


and


production.


Transaction


and


contractual


costs


are


more


effectively


handled


within


the


firm


than


between


the


firm


and


outside


providers.


Williamson


(1981)


noted


that,


ceteris


paribus,


the


great


corporate


revolution


America


did


not


begin


until


the


mid


19th


century


when


the


enabling


conditions


were


place.


That


not


only


was


the


legal


system


place


permit

were c


the


growth


hanging


such


"private"


as to favor


corporations


the


but


integration


demographics

of business


enterprises


into


corporate


endeavors.


The


country


began


change


from


an agrarian


one


which


agriculture


predomi-


nated


one


with


a growing


urban


population


and


a growing


i ITJ4 1 1 4m anmenn 10


Snrlri Q + c +


y~lna l+~


1 Q01


S1 C.C LA CCC \








I want


factors


pause


evolutionary


a moment


logics


to highlight


presented


so far


the


principle


the


discussion.


Three


separate


areas


inquiry


have


contri-


buted


an understanding


the


corporation


and


evolution


as a social


and


economic


organization.


First,


propose


that


the


corporate


form


associational


activity


has


been


part


the


history


and


evolutions


the


West,


society,


economics


and


politics.


The


form


and


function


any


given


time


was


determined


the


constraints


imposed


upon


the


political


system


and


the


resources


available


each


environment:


financial


resources,


transportation


technology,


and


the


composition


markets.


Although


beyond


the


scope


this


present


work


(Davis,


1905;


Vetica,


1991)


variety


enabling


and


necessary


functions


and


variations


had


been


established


within


the


forms


Western


economic


organization


most


from


the


significant


Middle


these


for


Ages

the


onwards.

development


Possibly,


the


the

busi-


ness


corporation


America


were


the


chartered


and


joint


stock


companies


16th


19th


century


England.


In effect,


these


forms


laid


the


historical


basis


out


which


grew


the


modern


corporation


(Vetica,


1991).


Two


essential


selective


mechanisms


throughout


this


history


have


been


the


extent


the


development


the


state,


limitations


and


capabilities,


and


the


pre


assures








lated


and


developed


investors


the


joint


stock


companies


because


the


nature


the


enterprises


to be


undertaken


called


for


much


greater


commitments


finances


and


other


resources


than


had


hitherto


been


the


case


(Davis,


1905)


the


size


of endeavors


increased


the


need


increased


coor-


dination


became


a most


critical


internal


selector


leading


the


direction


the


modern


corporation.


Secondly,


argue


that


the


legal


structure


with


accompanying


cultural


values


contributed


the


development


the


business


corporation.


In America,


England


during


the


18th


and


19th


century,


business


corpora-


tions


were


chartered


legis


lative


act


order


tie


the


functions


the


group


the


state


and


the


perceived


good


the


public.


Commerce


was


not


the


sole


express ion


corporate


activity,


nor


was


commercial


activity


the


exclu-


sive


domain


corporations


Individual


enterprise


and


partnerships


dominated


America


until


well


into


the


19th


century.


But


changes


the


legal


structure


which


per-


mitted


the


"private"


corporation


to be


distinguished


from


the


"public"


corporation


and,


above


all,


which


granted


limited


liability


to stockholders


provided


the


enabling


conditions


for


the


rapid


evolution


the


modern


business


corporation.


Adding


these


conditions,


the


cultural


values


which


-1 L.- A -_ _


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S. .. .


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modifications


the


legal


system.


Pressuring


the


specific


response,


demographic


expansion


and


the


availability


financing


enhanced


the


survival


capacity


companies.


that


cultural


norms


and


values,


the


legal


structure,


the


financial

selected


market,


and


a specific


emographics

direction


were


factors


change


that


as the


corpor-


ation


adapted


and


evolved


to exploit


these


resources.


Thirdly,


maintain


that,


given


the


availability


these


resources


a free


market


system,


the


firm


adapted


quickly


to become


a more


efficient


instrument


and


a safe


investment


that


returned


profit


investors.


In effect,


the


firm's


absorption


these


market


dynamics


created


pressures

relating


that re

internal


suited


structure


positive


and


feedback


functions


mechanisms,


to external


conditions.


Microeconomics


explains


the


appearance


the


firm


terms


the


economic


advantage


offers


within


the


free


market.


At a macrostructural


level,


the


firm


very


quickly


became


transaction


an efficiency


costs,


and


instrument


so doing


for


minimizing


literally


revolu-


tionized


the


nature


free


market


enterprise.


This


led,


opinion,


to a dynamic


growth


and


expansion


which


Berle


and


Means,


as stated


earlier,


posited


as driving


firm. I


forces


n fitness


that


terms,


accounted


perceive


- -


the


these


emergence


forces


a m -


.IS


the


as one
-








feedback


process


established


and


then


reinforced


the


specific ev

enterprise.


rolutionary


direction


Operationally


this


American


meant


business


unprecedented


increases

corporate


productivity,


management


a massive


property


collectivization


devoted


under


to production,


dissociation


wealth


from


active


management,


unquenchably


democratic


pressure


greater


distribution


wealth,


and


the


continued


assertion


competition,


individualism


and


the


individual's


right


to choose


and


consume.


Historically,


the


latter


half


the


19th


century


saw


great


proliferation


new


corporations


that


emerged


rather


suddenly


They


were


to have


great


impact


on society.


All


the


aforementioned


factors


are


elements


that


explain


this


new


phenomenon.


But


the


conditions


the


19th


century


contain


a number


new


features


that


need


to be


taken


into


account


order


to fully


explicate


the


appearance


and


growth


the


specifically


American


style


corporate


enterprise.


The


Corporate


Revolution:


1850s


to 1900s


One


who


the


most


documented


preeminent


the


emergence


scholars


and


business


trans formation


history


Amer-


ican


corporations


Alfred


Chandler,


Chandler'


thesis


developed


over


the


last


years


culminating








his


major


opus


1990


For


Chandler,


the


coming


big


business


the


West


happened


suddenly.


Before


the


1870s


very


few


large


industrial


enterprises


existed.


Shortly


after


the


First


World


War


big


business


had


become


the


single-most


dominant


non-governmental


institution.


The


big


business


enterprise


developed


industries


and


sectors


industry


where


technological


progress


allowed


for


the


provisioning


goods


and


services


high


volumes


large,


geographically


dispersed


areas.


Managers


came


control


the


flow


and


allocation


resources,


scheduling,


and


supervision


operating


units,


and


overall


coordination,


so that


what


Adam


Smith


had


called


the


invisible


hand


market


regulation


was


substituted


the


"visible


hand


management"


(Chandler,


1977).


The


modern


business


enterprise


ushered


the


age


managerial


capitalism,

challenged


a modified


the


and


assumptions


transformed


capitalism


neoclassical


which


economics


and


18th


century


liberalism.


Specifically,


Adam


Smith


did


not


envision


a free


market


dominated


the


corporate


apparatus.


Rather,


perceived


the


free


market


as composed


of individual


entrepreneurs.


The


market


itself


exi


sted


within


a clearly


delineated


social


context,


framed


cultural


values


and


communitarian


ethics.


The


managerial


capitalism


the


American


corporate








revolution


removed


the


entrepreneur


from


active


control


and


thereby


changed


market


dynamics,


and


managers


were


further


removed


from


community


values


as organizational


ethics


dominated


over


communitarian


ones.


The


corporation


shaped


and


shapes


the


dynamics


the


free


market.


The


two


enterprise


salient


are


characteristics


supplied


these


the


modern


observations.


business


First,


the


modern


enterprise


a multi-unit


organization


It contains


many


operating


units,


each


with


own


administrative


apparatus,


function,


product


or service,


and


even


perhaps


geographical


independent,


area.


Each


business


could


unit.


operate


This


as a distinct,


contrasted


to the


traditional


firm


which


was


a single


economic


unit


owned


and


operated


an individual


or small


group


operating


out


the


same


office.


Second,


the


modern


business


enterprise


supervised


a hierarchy


salaried


managers


who


control


the


operating


units


and


who


represent


a new


kind


busi-


nessman.


The


number


operating


units


determines


the


size


the


managerial


staff.


Once


entrepreneurs


established


organizations


considerable


size


they


had


take


advantage

gies. In


the


order


cost

to do


benefit

this, s


new


successful


production


technolo-


entrepreneurs


made


three


part i


investment:


investment


in production


r


facilities


C








marketing


and


distribution;


and


investment


managerial


staffs


(Chandler,


1990:


But


Chandler


goes


further


and


argued


that


particular


modern


corporations


have


not


survived


over


the


long


haul


unless


the


addition


new


units


cost-effective,


per-


emitting


management


to reduce


costs


and


to improve


overall


efficiency,


including


efficiency


the


allocation


resources.


a selection


The


efficiency


criterion.


The


internal


modern


operations


business


clearly


enterprise


efficiency


instrument,


maximizing


the


benefits


control


the

the


flow

flow


goods

goods


and

and


services.

services


When

suffers


the


maximization


through


lack


internal


control


or through


inefficiency,


the


organization


suffers.


Framework


for


Chance:


The


Rise


the


Corporation


The


process


which


business


enterprises


expanded


occurred


within


a historical


framework.


It happened


quickly.


From


the


1850s,


when


very


few


large


industrial


enterprises


existed


1900


when


several


large


corporations


rivaled


government


scope


operations,


business


America


had


been


dramatically


changed.


Important


socio-


cultural


values


such


as a particular


brand


American


individualism,


and


a legal


structure


which


had


come








American


environment.


Preferring


not


to offer


a causal


explanation


but


rather


presenting


distinctive


dimensions


an interpretative


framework,


Chandler


suggested


that


five


factors


American


needed


to be


business


considered


(1959:


1-4;


the


1990:


trans formation


89).


Demographic


changes


involving


the


westward


expansion


population


and


the


growth


the


urban


centers


the


East


Coast


form


the


background


this


framework.


The


coming


the


railroads


and


the


establishment


national


rail


networks


the


single


most


important


factor


the


analysis.

of the ti


York,


The


railroad


additionall


Cleveland,


urban


and


networks

centers


contributed


such


Baltimore.


the


growth


as Philadelphia,


the


railroads


New


followed


the


population


west,


they


helped


create


new


urban


centers


such


as Kansas


City,


Dallas,


Indianapolis


and


even .Chicago.


This


unusually


rapid


urbanization


increased


the


demand


for


consumer


products.


particularly


the


The


internal


application

1 combustion


new


engine


sources


and


power,


electricity,


and


the


systematic


application


science


and


technology


industrial


processes


contributed


the


major


restructuring


industry


8These


refined


1-hoe


. -


int


five fac
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rownn 4 cno


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publication of


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c tr yn r TuI


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maintain


that


these


are


factors


that


were


exploited


the


emergence


and


rapid


proliferation


corporate


enterprises.


Chandler


explained


some


detail


how


these


factors


influenced


the


growth


business


enterprises.


Except


for


the


railroads


most


major


industries


the


1870s


served


an agrarian


agricultural


produce


economy

ts and


The


provide


leading

d goods


firms


processed


farmers.


The


firms


tended


to be


small


and


bought


raw materials


locally


Prior


the


dominance


rail


transportation


most


sectors


the


iron


and


nonferrous


metals


industry


concentrated


providing


metals


and


simple


tools


to merchants


and


farmers.


Some


production


was


intended


for


textile


and


other


manu-


facturers.


The


enterprises


tended


to be


small


size


and


structure


and


locally


operated.


Then


the


railroads


became


the


major


market


iron


and


metals


and


they


turn


opened


a national


market


which


became


increasingly


urban.


Managerial


Hierarchies:


The


Impact


the


Railroads


The


greater


significance


the


rail


companies


lies


not


only


the


creation


the


transportation


infrastructure,


which


dramatically


reduced


travel


and


transport


time


and


costs,


but


also


the


fact


that


the


railroads


became


the


first


great


managerial


enterprise,


the


first


modern


industrial


enterprise


(Chandler,


1977)


The


expense








involved


the


creation


rail


companies


required


financing.


The


coordination


scheduling,


pricing,


meeting


arrival


dates,


accounting,


and


the


details


transporting


passengers


required


two


and


three


levels


middle


management.


What


Chandler


calls


managerial


hierarchies,


one


the


hallmarks


modern


corporations,


first


appeared


when


the


railroads


began


to operate


more


miles


track


than


could


operated


a single


manager.


The


operating


unit


the


railroads


was


a geographic


unit


that


controlled


between


and


miles


track.


These


geographic


units


were


divided


into


functional


offices,


each


office


being


responsible


for


single


function


such


as maintenance


track,


movement


trains


and


scheduling,


passenger


traffic,


freight,


and


even


construction.


With


expansion


and


once


two


or more


such


geographic


units


had


been


established


and


operational,


the


role


managerial


coordination


became


more


crucial.


With


continued


growth,


the


work


the


on-line


managers


began


monitored


centralized


offices.


The


innovation


rail


management


became


the


line


and


staff


organization.


On-line


supervisors


took


charge


the


daily,


functional


operations


their


units


responsi-


ability


They


turn


were


monitored


and


supervised


higher


level


managers


the


central


offices.


was


the


central


offices


that


policy


and


decisions


were


debated


and








For


the


most


part,


the


railroads


were


originally


smaller,


local


companies


Transporting


across


company


lines


demanded


a high


level


cooperation


and


coordination


between

heavily


firms.


Well


traffic


into


but


the


yet


1880s,


had


rail


managed


companies


to cooperate


competed

suffi-


ciently


order


assure


the


efficient


transport


freight


over


two


or more


companies


lines.


Standardization


gauge,


some


basic


equipment


such


as signals,


and


accounting


billing,


procedures


were


which


allowed


consequences


for


new


intercompany


forms


organi-


national


innovation.


Cooperation


the


movement


freight


and


passengers


across


company


lines


did


not


lead


to universal


cooperation


reducing


competitive


cost-cutting,


although


significant


attempts


were


made


to reduce


costs


and


share


profits.


the


1870s


railroads


formed


federations


which


functioned


like


cartels.


They


attempted


to allocate


traffic


and


pool


profits


which


were


distributed


on a ratio


basis,


but


fear


monopolistic


arrangements


on the


part


the


public


and


cheating


on the


agreements


rail


executives


saw


the


short-lived


exi


stence


the


federations.


The


next


step


the


transition


the


railroads


came


with


the


backing


the


financiers.


In order


secure


1OThe


Interstate


Commerce


Act


1887


made


the


cartels


~~1 lannl mba~~~ nrnan a a. lt n1..a. nI at 9Ib


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continuous


flow


consolidation


traffic


through


the


at reduced


buy-out


rates,


a movement


or construction


new


lines


was


undertaken


the


1870s


and


1880s


the


early


1890s,


large


self-sustaining


systems


had


been


built.


They


owned


and


operated


two


thirds


the


rail


mileage


the


United


States


(Chandler,


1977,


table


The


financing


these


efforts


came


from


Eastern


banks


and


European


investors


Financing


had


been


removed


from


local


individual


investors


who


were


also


replaced


on the


boards


the


new


corporations.


The


railroad


companies


thus


became


the


first


modern


corporate


enterprise


and


they


evolved


a very


short


time.


They


have


all


the


elements


the


modern


corporate


structure


The


sheer


size


these


systems


required


several


layers


management.


Several


on-line


divisions,


each


with


own


function


and


supervisor,


were


grouped


together


geographical


units.


A general


manager


held


responsibility


for


each


these


units


and


each


manager


turn


reported


the


central


office


where


vice


presidents


had


oversight


responsibility


the


functional


units.


Top-level


management


decided


on company


strategy


and


goals


and


the


allocation


resources


to achieve


the


goals.


Because


the


railroads


relied


on unparalleled


amounts


investment


from


outside


sources


finances--a


new


feature


commercial





__


I








The


Multidivisional


Firm


With


the


coming


the


railroads


and


the


advent


new


communication


networks


with


the


telegraph,


the


way was


set


the


expansion


business


enterprise.


In a most


detailed,


comprehensive


fashion,


Chandler


(1990)


chronicled


the


history


and


development


the


major


industries


the


United


States,


the


birth


and


death


hundreds


companies,


and


compares


the


rise


industrial


capitalism


the


United


States


to the


same


process


Great


Britain


and


Germany.


so doing


demonstrated


how


the


growth


corporations


had


and


been


driven


development,


salaried


and


the


managers,


systematic


investment


application


research


science


and


technology.


He described


the


tactics


growth


through


acquisition


and


details


the


great


merger


movements


U.S.


history.


He described


the


reasons


for


the


vertical


inte-


gration


businesses--forward


into


distribution,


backward


into


processing


raw materials,


and


the


industries


which


first


occurred.


He also


presented


a description


the


effects


these


factors


on changes


organizational


form.


Tradi-


tionally


the


most


common


form


corporate


organization


the


unitary


form,


which


integrated


within


a single


business


organization


the


major


processes


production,


distri-


bution,


purchasing,


and


financing.


The


unitary


form









marketing


and


distribution


when


the


products


were


new,


second,


through


the


horizontal


combination


small


manu-


facturers


that


produced


the


same


or similar


goods


into


single


organizations


(Chandler,


1959:


11 As


firms


expanded


geographically


or took


on new


product


lines,


the


unitary


form


was


replaced


the


multidivisional


form


exemplified


the


railroads


and


most


solidly


typified


the


DuPont


The


DuPont


Co. provides


an excellent


example


of how


these


processes


shaped


the


emergent


organizational


form


a corporation.


Towards


the


end


the


19th


century,


the


E.I.


DuPont


Nemurs


and


dominated


the


explosives


industry


the


United


States.


And


even


though


a federation


companies


that


industry


existed,


the


DuPont


controlled


most


the


market.


In 1902,


the


DuPont


initiated


a plan


buying


out


competitors


through


exchanges


stock.


Instead


"Williamson


cation
form (
Chandl
devise
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in whi
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Simply
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than adm
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Th
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incorpo


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1986)


also


offers


arge corporate
he traditional
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ucture that
put, it sepa
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The mu


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operating


as a holding


company,


the


businesses


were


consol-


idated


and


centralized,


and


then


followed


the


purchasing


mines


and


the


creation


a national


distribution


organi-


nation.


The


company's


motive


buying


competing


firms


was


not


defensive.


It already


controlled


the


market.


Rather


seems


to have


been


an expectation


even


lower


costs


through


centralized


manufacturing


units


control;


and


that


activities


and


DuPont


had


created


diverse


a national


distribution


network.


A sales


division


operated


indepen-


dently


the


other


units.


DuPont


extracted


raw materials


and


shipped


them


to manufacturing


units


without


the


need


contract


third


parties.


Thus


centralization


meant


the


coordination


a national


distribution


network,


consoli-


dation


diverse


manufacturing


activities


as well


extractive


activities,


and


coordination


different


indus-


trial


processes


and


the


management


the


national


sales


force.


Centralization


and


consolidation


were


undertaken


the


expectation


lower


costs


and


economic


efficiency.


the


1920s,


DuPont


undertook


a renewed


effort


growth


through


diversification.


This


plan


relied


heavily


upon


the


application


science


to research


and


development


as a means


taking


advantage


the


capabilities


the


industrial
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huge


corporations


such


as DuPont,


became


the


dominant


form


corporate


organization


throughout


the


20th


century,


firmly


establishing


itself


during


the


inter


war


period.


It emerged


as business


enterprises


exploited


the


demo-


graphic,


technological,


legal,


financial,


and


informational


resources


available


the


growth


corporations.


12General
especially si.
familiar with
Motors is not
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The case
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chairman of C
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and Pittsburc


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Motors
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DuPont


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liamson
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arnegie


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Os
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Carnegie


General
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Steel Corporation was
Henry C. Frick, the
, had consolidated
ts and established a
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Chandler's


analysis


explains


the


emergence


and


survival


the


explain


large

the


industrial

persistence


enterprises.


smaller


It does


and


not


traditional


attempt to

types of


business


arrangements.


Many


firms


opted


to remain


local


firms


and


did


not


the


way


national


or international


expansion.


However,


the


environment


was


such


that


smaller


and


simpler


organizations


could


survive


smaller


niches.


Evolutionary


thinking


does


explain


that


persistence


smaller


firms


and


the


current


downsizing


and


restructuring


large,


organizationally


cumbersome


corporations


There-


fore,


even


today


there


variation


between


size,


form,


and


structure


legally


established


corporations.


Thousands


smaller

tions,


corporations,


continue


single


to operate


units


and


or unitary


survive


type


smaller


organiza-

niches.


Conclusions


I have


presented


a perspective


on the


evolution


the


corporation


according


the


model


natural


selection.


The t

tion,


.hree

and


requirements

retention.


the


Those


model


three


are


variation,


requirements


selec-


depend


on the


resources


available


the


environment


that


make


"niche,


"viable


mode


living.


The


first


requirement


is a high


rate


variation


either


synchronically


or across


time.


Both


types


vari-


* ~ -rrr a -r


A


A -


-YI~L A n


Sa 1 an a A--


- a I._ a -


-a


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ft S


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'9








interrelatedness


between


organisms,


or social


units,


and


their


environments.


have


argued


that


infrastructural


factors,


such


as raw materials,


transportation,


and


finances


are


but


parts


the


resources


provided


the


environment


fully


explain


the


evolution


and


specific


direction


development


the


corporation


America


the


unique


package


American


cultural


values


must


also


considered,


and


indeed,

values


as will

continue


shown


influence


following


the


chapters,


evolutionary


cultural


trajectory


the


corporation.


In America,


developed


the


according


colonies'


the


first


pattern


political


the


systems


colonial


companies.


The


business


corporations


that


were


formed


during


the


18th


and


early


19th


centuries


were


also


modeled


on the


colonial


companies.


They


were


chartered


the


states


and


they


functioned


the


public


good.


In general,


they


were


small


enterprises


whose


activities


directly


related


to public


welfare--building


bridges,


canals,


turnpikes.


the


sociopolitical


environment


changed


the


notion


chartering


also


changed.


This


change


affected


the


develop-


ment


the


corporation.


Americans


espoused


the


values


individualism


and


competition.


Social


values


and


legal


norms


did


not


tolerate


monopoly.


Most


importantly,


a legal


-IA A _* *


A


S- .- - --k.


1- .9


lI _


* ^-


_ -








for


the


corporate


entity


independent


the


state


was


established


on one


hand,


while


government


retained


right


and


obligation


oversee


corporations


the


public


interest


on the


other.


Government


and


private


corporations


have


their


own


authoritative


domains.


Subsequently,


and


less


importantly,


the


concept


the


limited


liability


stockholders


gained


a foothold


the


legal


structure.


These


developments


made


available


to entrepreneurs


legal


resource


that


they


eventually


called


upon


when


the


corporate


revolution


gained


momentum


with


the


coming


the


railroads.


The


westward


migration


people


and


expanding


urban


population


created


regional


and


local


markets


which


the


need


for


consumer


goods


rose.


Trans-


portation


and


communications


technologies


as well


as an


advanced


financial


sector


made


possible


the


rapid


emergence


and


development


commercial


enterprises.


Once


that


took


place,


internal


growth


and


expansion


became


a means


to enhance


survival


capability.


Taking


advantage


the


cost


benefit


to expansion


was


critical.


Investment


distribution


and


marketing,


product


diversi-


fiction,


horizontal


and


vertical


integration,


were


feed-


backs


that


intensified


growth.


The


corporation


survives


because


it has


evolved


into


an efficient


instrument


for


the


minimizing


transaction


costs.


Internal


coordination


S
~ 1 an


mana nanT


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repeated

overgrown


all


successful


bureaucracy


can


firms.


lead


the


other


to disbalance


and


hand,


disrupt


growth,


becoming


"black


hole"


resources


and


assets.


There


still


a variety


corporate


forms


(Wil-


liamson,


1986).


Not


businesses


went


the


way


the


largest


enterprises.


Partnerships


and


family-controlled


enterprises


are


alive


and


well.


The


unitary


form


corporate


organization


still


a viable


one


simpler


organizations


that


occupy


a smaller


niche.


Indeed,


some


the


country's


largest


corporations


are


reorganizing


into


independent,


small


business


organizations


to achieve


better


the


current


environment.


the


same


time,


the


holding


company


becoming


more


common


for


larger,


corporate,


multinational


enterprises.


That


these


forms


corporate


organization


have


been


retained


society


cannot


doubted.


They


have


become


institutionalized


ways


doing


business.


In sociocultural


evolution,


institutionalization


a primary


retention


mechanism.


Finally,


the


modern


corporation,


just


as earlier


forms


corporate


organization,


made


possible


and


legitimized


the


state


The


act


chartering


previous


centuries


guaranteed


the


legitimacy


the


corporation.


The


con-


temporary


state


still


claims


right


to legitimize








the


corporation,


voluntarily


accepted,


are


ratified


the


state.


In fine,


argue


from


an anthropological


perspective


that


the


corporation


part


culture,


not


merely


an agent


the


market.


As such,


cultural


forces


and


social


dynamics,


including


values,


act


upon


the


corporation.


The


availability


resources


and


information


and


the


capability


to exploit


them


certainly


made


the


corporate


revolution


possible.


But


so did


cultural


and


social


forces,


forces


that


continue


to shape


corporations


and


influence


change,


even


corporate


structure.












CHAPTER


THE


HISTORY


OF CORPORATE


SOCIAL


RESPONSIBILITY


Introduction


The


relationship


between


corporations


and


social,


political,


and


economic


forces


an ongoing,


changing,


dynamic


process.


In the


first


chapter,


argued


that


social


values


were


factors


that,


part,


selected


the


specific


direction


the


evolution


the


corporation


America.


Cultural


values


are


often


reflected


law.


Once


the


right


the


board


independent


directors


the


state


to decide


was


the


established,


corporate


corporate


entity


"person-


hood "


was


protected


and


defended


with


the


same


vigor


as the


rights


and


retained


personhood


right


individuals


oversee


and


society.


legitimize


Government


corporations.


Interestingly,


present


this


chapter,


government


was


slow


to permit


corporations


to commit


assets


any


endeavor


other


than


the


primary


economic


activity


the


business.


The


courts'


defense


the


unitary


purpose


business


corporations


was


taken


and


defended


economic


such


Milton


Friedman


during


the


1940s


and


1950s.


Organizational


response


to social


need


the


focus


this


research


and


approach


will


explained


subse-


- ~ ~ ~ ,, -- --A --a a-A


-1- -11


L


I IIh








the


early


industrialists


responded


the


social


ills


that


industrialization


was


seen


to have


caused.


then


argue


that


later


efforts


at responding


to social


need


met


strong


opposition


from


the


courts


the


age


managerial


capi-


talism.


show


that


economists


and


philosophers


refashioned


the


terms


the


legal


developments


that


defended


the


fic-


tive

role


personhood


business


the


corporation


in society


and


and


what


began


obligation


argue


the


business


has


to society.


Later,


social


theorists,


such


as Bell


(1976),


Bellah


(1985),


and


Wolfe


(1989),


took


the


arguments


the


econo-


mists


to a higher


level


abstraction.


They


were


not


only


concerned


about


the


role


the


corporation


as a social


institution


but


even


more


concerned


about


how


the


great


American


corporate


revolution


has


transformed


social


life


and


the


very


values


that,


part,


selected


the


rapid


emergence


the


business


corporation


the


first


place.


The


station


two


are,


key d

first,


developments


the


that


recognition


undergird


law


this

the


presen-

private


corporation


and


the


right


the


board


of directors


decide


from


for


the


the


first.


corporation

Fictive


The


second


personhood


development


granted


the


follows

corpor-


ation


the


full


body


rights


that


were


protected,


defended,


and


guaranteed


the


language


individual


rights.


The


*, :


~~~2 ...al .~ja~t1 b Is. .4-Lb AC a -I .arr'l a n 4


_ 1 J *


LLArrn








the


ever


emerging


dynamic


American


life,


expression


Civil


Society.


Comoanv


Towns


and


Philanthroov


Concern


the


well-being


employees


and


the


communities


very


which


beginnings


companies


the


operated


manufacturing


can


industry


seen


the


the


United


States.


important


to keep


in mind


that


a very


*rich


history


social


conflict,


the


rise


and


struggles


organ-


ized


labor,


the


emergence


a regulatory


apparatus,


the


"Social


Gospel


Movement,


" and


media


tirades


against


the


abuses


the


so-called


"Robber


Barons"


and


the


"Captains


Industry"


are


part


the


American


sociocultural


and


poli-


tical


scene.


Massive


immigration,


urbanization,


and


the


shift


from


an agrarian


economy


were


dynamic


forces,


discussed


Chapter


not


present


the


force


and


impact


organized


labor


and


other


political


movements,


although


they


are


part


the


story.


The


goal,


rather,


to explain


how


the


corporations


responded


and


how


the


response


been


conceptualized


economists


and


social


thinkers.


A model


corporate


social


response


before


the


1950s


would


include


the


notion


trusteeship


and


how


that


notion


been


expressed


through


the


construction


company


mill


A- -


- a -. ... ....


. a -I -


a -


A








England


were


among


the


first


to apply


new


technology


manufacturing


processes.


Krooss


and


Gilbert


(1972


: 90-100;


Cochran


and


Miller,


1961


: 3-27)


discussed


the


rise


the


textile


industry


the


northeast


the


first


concentration


manufacturing


power


America.


group


New


England


businessmen,


the


Boston


Associates,


began


the


industry


after


the


War


1812.


One


the


pioneers


the


textile


industry


New


England


was


Francis


Cabot


Lowell.


He borrowed


the


tech-


nology


for


a fully


integrated


textile


operation


from


successful


mills


England.


One


convictions


was


that


providing


good


wages


and


healthy


living


conditions


the


employees


would


beneficial


the


company.


The


way


to meet


the


needs


the


employees


was


to integrate


work


and


living


a kind


unified


whole,


the


mill


town.


During


the


1820s


and


1830s


Massachusetts


mill


towns


became


showplaces


industry.


They


supposedly


demonstrated


how


business


interests


and


society's


concerns


should


and


could


harmoniously


merged


Actually,


the


mills


sought


out


young


women


from


the


rural


areas


and


provided


them


with


living


quarters


and


resources


to meet


their


social,


religious


and


intellectual


needs.


The


city


Lowell


a landmark


this


policy.


Many


these


mills


were


family-owned


enterprises









partnerships


which


thrived


some


time


but


eventually


gave


way


the


pressure


competition.


The


competition


came


due


to cheap


labor.


The


arrival


of Irish


immigrants


who


would


work


cheaper


wages


ultimately


the


demise


these


mill


towns


(Heald,


1970:


The


vide


kind


the


paternalism


needs


in which


employees


a company


spread


would


towns


pro-


in other


parts


the


country


and


became


a basis


the


philanthropy


early


large-scale


industrialists.


George


Pullman


the


Pullman


community


Palace


near


Car


attempted


Chicago


to establi


employees.


a utopian


Meeting


the


requirements


of work


and


satisfying


the


recreational,


reli-


gious,


social


and


intellectual


needs


all


employees


were


the


goals


and


purposes


the


grand


design


the


community


at Pullman.


But


utopias


are


hard


come


Bad


management


and


the


overwhelming


paternalism


Pullman


himself


stifled


individual


freedoms


and


led


the


failure


the


community


As Heald


(1970:


business,


and


observed,


"The


particularly


hierarchical


the


structures


single-company


town,


encouraged


employers


assume


that


the


wealth


and


power


their


command


made


them


the


best


judges


the


entire


com-


munity'


welfare


needs.


Andrew


Carnegie


was


a believer


the


idea


"trus-





Lm


m








the

the


progress

social D


society


'arwinism


(Heald,


preached


1957).


Herbert


Carnegie

Spencer


believed


Social


Darwinism


oblige


offered


to justify


philanthropy.


the


Carnegie


an American


business


successful


practices


survived


theory


as well


the


noblesse


as his


competi-


tiveness


the


industrial


age,


was


incumbent


for


these


early


"barons"


to be


trustees


the


welfare


society


large.


The


duty


the


man


wealth


was


to administer


that


wealth


the


public


interest


(Heald,


1970:


17) .


Julius


Rosenwald


took


over


a nearly


bankrupt


Sears,


Roebuck,


and


and


turned


into


the


most


successful


retailer


the


rural


populations


the


United


States.


His


views


were


launched


similar


the


4-H


those


programs


Carnegie.


as a means


For


example,


assisting


the


American


farmers'


technological


advance


and


subsequent


profitability


(Drucker,


1984).


No matter


that


they


were


also


self-interested,


philanthropic


as well.


considered


Sears'


these


outreach


efforts


the


to be


rural


community


returned


ultimately


the


company


many


times


over


'"In his
philanthropy:
trust funds,


manner
produce


man
tp*-~


The G
"to
which


in which,


the


wealth


most


thus


r -- _


Wealth,


Gospel of
consider


called


in his judgement,
beneficial results


becomes


the


mere


Carnegie


surplus


described


revenues


to administer


best


the


trustee


calcu.


* as
. in the
lated to


community--the


and


agent


----.. -- --.. .


- U. Z


.


IlIII. L AM


L _-- _.





I 8


_ __


A








The


philanthropy


early


industrialists,


many


whom


owned


and


controlled


their


enterpri


ses


responsible


the


sustained


growth


several


charitable


institutions


such


the


YMCA


and


the


Community


Chest


The


railroad


companies


were


the


first


to contribute


the


, whose


rail


divi


sion


directly


served


the


recreational,


soc


ial,


and


educational


needs


railroad


employees


The


directors


both


the


YMCA


and


the


Community


Chest


pushed


strongly


and


heatedly


corporate


support


They


argued


and


cajoled


that


support


because


the


needs


and


the


workers


were


attributed


a direct


result


poor


wages


and


working


conditions


The


companies,


they


argued,


had


some


responsibility


to address


those


needs


Even


the


Red


Cross


began


obtaining


a solid


footing


from


business


contributions.


Therefore,


the


end


the


19th


century,


bus


iness


leaders


were


expressing


a concern


the


needs


social


groups,


often


times


the


urgent


pleas


social


activists


Their


involvement


led


the


support


such


institutions


the


Red


Cross,


the


erection


libraries,


museums,


and


"For


Pierce W
Community
Economic
ciation'


more


illiams
y Welfa.
Resear


s Manual


Washington,


detailed br
, Corporate
re Services


1930,


:eakdown


corporate


Contributions


and


Corporate


D.C


New
The


York


National


Giving


Ruml


: National


giving


see


zed


Bureau


Planning


Asso-


Beardsley


Carnegie


examples


among


- -.- ~A


s philanthropy


the


r -


indu


strialis


one


of
See


the
The


most


outs


Manual


standing
f Public


-U


to Organic


ch,


I _








hospitals.

themselves


Business


trustees


leaders,

society.


such


as Carnegie,


Their


considered


philanthropies


gave


rather


broad


definition


and


scope


to their


perceived


respon-


sibility


to society


(Heald,


1970:


They,


effect,


developed


a culture


philanthropy


those


elites


society


who


achieved


a high


level


success.


Paternalism,


philanthropy,


trusteeship,


all


converged


the


1920s


as corporate


support


the


Community


Chest


movement,


became


one


the


primary


channels


expression


social


concerns.


But


these


developments


were


not


without


controversy,

perspective,


and

both


the


controversy


legal


and


came


economic.


from


an interesting


As corporations


grew


size


neurial


prises.


and


complexity,


owners


was


the


one


salaried


day-to-day


thing


managers

executive


individual,


replaced


the


wealthy


entrepre-

enter-


men


industry


to contribute


their


own


or their


company's


profit


toward


social


goals;


became


quite


another


issue


for


salaried


managers


to spend


corporate


profits


on community


endeavors.


Indeed,


was


even


against


the


law


for


them


so.


Two


legal


issues


revolving


around


the


notion


property


rights


inherent


fictive


personality


and


the


notion


limited


liability


stood


the


way


corporate


gift-giving


the


1920s


and


1930s.


The


first


dealt


with


4-'-- a n -flab- a~srfl S a S *nnukn4 nfl1 it


Y:4L


ak IF


-t-b /-


fr.^ r^& t


a a rf" Crfl ^









belonging


the


shareholders.


The


second


dealt


with


income


tax


deductions


and


the


nature


corporate


affairs.


One


the


consequences


the


rise


salaried


managers


and


the


dispersal


ownership


through


stock


offerings


was


a restriction


on management'


range


activities.


Heald


(1970:


157)


clearly


affirmed


that


"the


fundament

property


principle


technically


management'


belonging


right


to corporate


to give


away


shareholders


had


never


been


fully


clarified


legislation.


Interestingly


enough,


the


development


the


legal


concept


limited


liability,


while


solidified


managerial


control


enterprise,


restricted


the


use


the


assets


which


were


considered


property


the


stockholders.


Indeed,


the


Internal


Revenue


Service


continued


to rule


for


years


after


the


enactment


the


Internal


Revenue


Act


1917


that


corporate


contributions


to charity


could


not


considered


legitimate


business


expenses


unless


some


benefit


returned


the


corporation


as a result,


some


benefit


other


than


good


will.


This


very


significant.


The


effects


fictive


personality


corporations


law,


allowing


that


them


the


granting


to function


entitivity


individuals


with


all


the


rights


that


this


implies


our


social


system


was


"1An


example


the


kinds


arguments


presented
T^T- -E -nf"


to the





I


--








and


still


very


protected.


The


Internal


Revenue


Service


and


the


courts


recognized


and


defended


the


rights


the


corporations


pursue


their


economic


functions,


unhampered


extraneous


Service


concerns.


changed


Even


decision,


though


the


the


rights


Internal


Revenue


corporations


are


still


strongly


defended


the


same


language


rights.


The


injunction


the


Internal


Revenue


Service


not


withstanding,


corporate


executives


contributed


heavily


the


Community


Chest


and


the


welfare


agencies


that


sup-


ported.


Business


leaders


such


as Gerard


Swope


General


Electric


pushed


the


public


agenda


Since


the


federal


tax


structure


had


not


yet


permitted


deductions


for


corporate


charity,


managers


found


ways


to make


contributions.


They


included


them


as miscellaneous


expense


or paid


the


money


a company


employee


who


donated


the


money


to the


charity


and


then


made


the


appropriate,


personal


tax


deduction.


Many


executives


and


directors


welfare


agencies


solicited


change


in the


Internal


Revenue


Act


to make


possible


for


corporations


to deduct


charitable


donations.


But


even


the


United


States


Supreme


Court


threatened


the


status


corporate


giving.


In a 1934


case


the


Court


held


that


use


corporate


assets


must


advantage


the


stockholder


and


there fore


must


show


some


direct


benefit


the


company


(Heald,
41f -


1970:


162).


Nonetheless,


* -L


after


_ r~


lengthy
- nt rf


debates


II-


and


S~


___ %- __ -


_ -


m


--A--


_








permitted


to a 5%


deduction


corporate


income


charity.


Notably,


the


Social


Security


Act


was


legislated


the


same


year.


These


enactments


did


not


receive


the


full


support


the


business


community.


The


Social


Security


Act


tapped


corporate


surpluses


social


welfare.


The


amendment


opened


another


channel


the


use


corporate


resources


charity


There


were


those


who


felt


that


the


New


Deal


had


treated


important


siness


legal


unfairly.


development


had


Whatever


occurred.


one'


opinion,


Managers


could


speak


on behalf


the


corporate


entity


and


even


allocate


corporate


resources


for


activities


other


than


those


purely


economic


nature.


way


of summation,


from


the


rise


the


railroads


the


beginning


porate


giving


the


had


Second


become


World


part


War,


the


a pattern


American


cor-


scene.


Company


mill


towns,


company


hospitals


and


schools,


the


libraries,


museums,


and


hospitals


the


philanthropi


stS,


and


the


Community


Chest


movement


bespoke


a belief,


more


or less a

resource,


Articulated,


business


that


had


as a major


societal,


a responsibility


the


economic,

less


fortunate.


The


final


major


mechanism


the


disbursement


company


funds


for


social


welfare


came


with


the


company


C a a- a. a.


5,,f j-^ kJ* k ^ik


_y __ _^ CL *1r :


ml^


A E AA rrrr A u rr L A








some


felt-need


or obligation


to meet


social


needs.


Tax


avoidance


conversely,


government


incentives


the


form


tax


breaks,


certainly


were


stimuli


the


establishment


foundations.


course,


foundations


were


not


universally


instituted


Heald


(1970:


247-251)


reported


that


what


the


foundation


did


offer


was


"scientific"


or rational


systematic


approach


the


eleemosynary


function,


a device


and


process


which


was


congruent


with


the


energies


scientific


management.


Heald


and


later


Drucker


(1984)


expressed


the


contention


that


corporate


giving


was


necessary


for


the


maintenance


civil


society.


Foundations


are


critical,


autonomous


sources


wealth


that


support


charity,


public


welfare,


and


research


They


provide


employment


as well


as a means


for


expressing


the


social


concern


the


founding


families


and


corporate


executives


who


manage


them.


As a private


sector,


autonomous


source


wealth,


foundations


preserve


other


private


breaks


portion


areas


health
gious
porate
Giving


Association


I1Oon\ h


no


(1970


the


contributions


support


benefits,
institution


: 260


-264)


between


Trend


reported
1936 and


remained


included


education,


see Gi
and T
Fund
1 .n-ae


For


vin
he


Raising


T


around


social


and


civic


updated


s They Sh
Councils,


^sa4-+ c?4-ISnc e?


that
1960
d 1%


IOW.


New


even
the
of ne


T


York


an V. l r% ar nt


with
level


et


welfare, me
, cultural
Statistics


, 1986.
rr4 wi nr


the
of


tax
cor-


income and


dicine


and


and


reli-


on cor-


Duffy
a nrI


"Heald


the


years


giving
in 1985


more
USA:


of
4-ba


Estimates


Philanthropic
he American








institutions


and


reinforce


the


premises


upon


which


civil


society


is built.


The


company


foundation


was


the


last


major


institutional


response


a new


to social


dimension


responsibility.


discussion


Talking


(Drucker,


about


1984)


it brings


Namely,


a concern


for


the


preservation


civil


society,


not


only


response


to particular


philanthropy.


talk


social

about


issues,

civil sc


underlies


iciety


the


talk


basis


about


non-governmental


power


centers


and


the


very


fabric


American


society,


si nce


birth


the


civil


society


par


excellence


(Tocqueville


1948)


one


way


thinking,


to talk


about


civil


society


talk


about


power


and


the


use,


abuse,


and


balance


power


within


society


under


the


aegis


the


protection


and


defense


individual


rights.


The


concern


the


use


power


corporations


has


been


consistently


expressed


our


society


"The


corporations
of the priva


political
Building a
Raising Ma
"America's


Speeches,


pends


Most


New


Era


56
for


for


the


traditional


in safeguarding


te


sector


are


not


See


20(2),
Sector: I


(12), A
What?"


april


values


the


1990;


the


and


and


the


private


the


independence


uncommon


James


themes


Joseph,


Philanthropy,


sector
of


and survival
in current
"Foundations,


" in


Fund


Levy,


Supporters,
"Corporate


Board,


27(5)


" in
Giving:
May,


been a
Tilson,


Bottom-Line,


t a Y.


4-


about


fln..---J..--i -


the


hypothesis


altruism
Timothy


Philanthropy:


corporate


. Mescon


A Strategic


Management


n 21- ---& ..... n


Review


- -


giving


and


Donn


Approac
29(2):
-A .ta


the


49-61;
n a- S


the


concern


storehouse


vitality


discussions


role


nagement,
Third Se


Organized


Vital
Who S
1990.


1989: 42-48;
's Corporate


Reynold


Skepticism


studied


Across


"Corporate


" in


California


L


i








The


regulation


business


(and


labor)


has


been


part


the


American


political


process


since


the


advent


the


rail-


roads.


More


recently


the


proliferation


governmental


regulatory


agencies


and


private


sector


watch-dog


groups


express


that


same


concern.


Civil


society


not


only


defends


the


interests


discrete


sectors


society


but


also


defends


"society's"


right


to call


for


the


accountability


the


powerful,


including


government.


Society'


right


to ask,


not


require,


that


business


assume


some


responsibility


for


healing


social


ills


a constant,


underlying


assumption


the


evolution


and


history


the


corporation


America,


even


as organizations


resisted


this


encroachment


on their


perceived


freedom.


When


the


courts


permitted


corporations


to deduct


contributions


made


to charity,


the


"debate"


on the


social


responsibility


began.


The


"Five


Percent


Amendment"


and


the


Social


Security


Act


had,


the


mind


some,


exacted


too


high


a cost


from


corporations.


In defense


the


corporate


economic


role,


several


economists


argued


against


further


infringement


corporate


boundaries


framing


this


issue


terms


business'


role


society.


Corporate


Social


Responsibility:


History


the


Debate


fair


say


that


there


has


been


a debate


about


tha


nn4irraa


jU jS flln r~ n "9f


T,,crn n T 1 i 1 4 fr


cnr, i al


n rPf


rIli


1.


r T









poles


the


discussion.


really


proper


for


a corpor-


action

more


to commit

exclusively


assets


to meet


to provide


social


jobs,


nee


return


ds? Is

profit,


its

and


role

main-


tain


productivity?


But


this


inquiry


rather


broad


implications


about


the


nature


and


goals


capitalism


itself.


Even


the


corporation


to its


considered


specifically


to be


economic


limited


achievements,


scope


then


activity


what,


anything,


are


the


broader


moral


benefits


those


economic


goals?


society


members,


Adam


ultimately


Smith


served


the


postulated?


self-interest


the


economic


goals


capitalism


are


beneficial,


what


are


the


moral


implications


questions

H.R.


that

Bowen


civil


I shall

(1953:


society?


address


started


These

this

the


are

work


essential

progresses.


contemporary


debate


with


the


proposition


that


businessmen


have


an obligation


society,

those de


an obligation


icisions,


pursue


or to follow


those


those p

e lines


policies,


action


o make

which


are


desirable


society


in terms


Richard


Eells


the

(1960


objectives

) argued t


and


hat


values

business


our


cannot


considered


in isolation


from


the


broader


social


context


which


operates.


He advanced


the


notion


the


well


tempered


corporation,


one


which


pursues


economic


goals


while


responding


values


and


needs


of society


any








The


philosophical/ethical


tenets


this


position


affirm,


first,


the


existence


a social


contract


and


second,


a moral


character


inherent


corporations


whose


range


obligations


are


continually


debated.


The


social


contract


with


language


rights


attributes


the


corporation


an identity


and


grants


jural


status.


The


corporation


"fictive


person"


and


so construed


acts


an individual


the


exercise


rights.


Less


easily


understood


yet


widely


accepted


Western


society


moral


character,


can


act


as a moral


agent


and


bear


responsibility


action


and


inaction


(Donaldson,


1982)


The


debate


on corporate


social


responsibility


has


not


been


joined


against


a corporation's


identity,


that


"fictive


personhood,


" and


concomitant


rights.


Rather


has


been


joined


against


moral


nature


which


extends


the


notion


the


responsibility


the


business


enterprise


beyond


what


are


said


to be


the


sole


concerns


business


Milton


Friedman


has


been


considered


the


most


outspoken


advocate

extension


a narrow,


or limited,


of responsibility


The


interpretation


primary


the


responsibility


business


to do


business


, to produce


and


be a productive


enterprise.


Society


benefits


from


productivity.


Friedman


(1962:


133)


argued


very


strong


terms,


"Few


4- ..-. - ~ I - a - L. - -


..1


S
- -- A a a a a


a---.. -I a


LL,


--








a social


responsibility


other


than


to make


as much


money


their


stockholders


as possible.


Morality


the


obliga-


tion


to make


the


corporation


profitable.


Thus


profit


making


becomes


the


over


-riding


ethic.


In seeking


profitability


market


forces


will


see


to it


that


society


benefits.


There-


fore,


the


market


(transactions)


defines


welfare


and


public


good,


and


will


enforce


morality


affects


transaction


decisions--at


least


that


the


theory.


During


the


1950s


three


other


outspoken


positions


defended


this


type


thinking.


Theodore


Levitt


(1958)


was


concerned


that


"responsibility


syndrome"


was


being


used


a stock


pile


against


capitalist


ideology.


He maintained


(Levitt,


1958:


that


businessmen


had


two


responsibil-


ities--to


civil


and


to seek


material


gain.


Anything


else


was


a detraction


from


the


goals


profit-making.


The


responsibility


syndrome


(Levitt,


1958:


held


the


prospect


a new


feudalism


that


would


limit


the


freedom


everyone


the


corporation


assumes


"all


embracing


duties,


obliga-


tions,


and


finally


powers--ministering


the


whole


man


and


molding


him


and


society


the


image


the


corporation's


narrow


ambitions


and


essentially


anti-social


needs


Kelso


and


Adler


(1958)


defended


the


corporation


the


language


property


rights


and


the


restrictive


notions


previous


decades.


The


corporation


an instrument


nrnrtrtv


ri nhtR


ani


mul it


1,s n'rntcirter


A1 -


A n ~ npr


cnrr">








goal


other


than


to return


profits


to the


owners.


They


argued


(Kelso


and


Adler,


1958:


211),


"For


the


management


a corporate


enterprise


to dispose


what


rightfully


belongs


to its


stockholders


without


their


free,


present


and


affir-


matively

despotism


expressed

no matter


consent


how


despotism


benevolent


and


or wise


remains


management


acting


for


what


thinks


to be


the


'best


interests'


stockholders.


Similarly,


J.A


. Livingston


(1958)


argued


that


execu-


tives


had


developed


a two-sided


morality,


one


face


toward


the


public,


the


other


the


stockholders.


He argued


that


as employees

stockholders'


their prime

wealth and


concern s

property.


shouldd


managing


Corporate


the


managers


are


employees


and


respond


the


owners,


the


stockholders.


not


their


prerogative


to spend


the


money


the


owners


without


consent


nor


to embark


upon


courses


action


which


reduce


return


them.


These

maintained

furthering


upon


are

that

its


managers.


ideas

being

causes


echoed

active


Peter


on behalf


a burden


As employees


and


Drucker


the


should

s they


that

leader


(1974)


who


community


not


should


and


placed

act


morally


and


guided


their


decisions


deliberately


seeking


no harm.


Their


prime


obligation


to keep


their


companies


productive


and


fortiori


profitable.


These


arguments


are


even


more


interesting


when


one


w








prospering.


Labor


strife


and


conflict


led


to organized


labor's


most


stunning


successes.


In most


major


industries,


salaried


managers


made


unprecedented


concessions


to labor.


Those


arrangements


had


major


impact


on business,


society,


and


the


life


style


Americans.


Small


wonder


that


econo-


mists


argued


that


corporate


America


slow


granting


concessions


benefits.


The


more


restrictive


notion


Friedman


and


the


expansive


position


Eells


(1960)


and


Bowen


(1953)


have


become


the


two


opposing


poles


the


argument


Yet,


find


this


argument


to be


very


unsatis factory


and


altogether


limited.


social


continue


institution


argue


and


that


part


the


corporation


a larger


sociopolitical


reality.


Therefore,


the


restrictive


notion,


still


common


among


business


people


and


scholars,


that


a business


corpor-


ation


more


an instrument


the


market


than


a part


and


product


social


processes


unsettling.


Philosophical


Problems


and


the


Social


Sciences


Macro


level


theories


have


expanded


the


scope


these


arguments


and


attempted


to explain


the


relationship


between


business


and


society


terms


the


influence


that


each


exerts


on the


other.


The


concern


understanding


the


ills


of society,


values


and


the


transformation


values


has


been


stated


verv


stronalv


in recent


ears. I


n Darti-


k








explicate


the


interrelation


between


business,


or the


economic


sector,


and


society


and


the


organizational


impact


the


economic


sector


on society


as a whole


have


raised


the


level


abstraction.


These


are,


first,


Daniel


Bell's


work


on capitalism's


eloquent


loss


exposition


legitimacy;

a deep-rooted


second,

cultural


Bellah's

1 debate


et al.

cur-


rently


underway;


and


Wolfe's


disturbing


questioning


personal


res


ponsibility.


Daniel


Bell


(1976)


argued


that


American


capitalism


has


lost


legitimacy.


Early


U.S.


history


commercial


enterprise


was


bolstered


embeddednes s


local


communities


and


the


community


values


expressed


the


Protestant


Ethic.


Concern


one's


neighbor


and


reward


for


one's


labor


were


vital


aspects


community


life.


Work


was


holy,


was


a means


to personal


sanctification.


That


ethic


been


replaced


hedonism


which


promises


a life


ease


and


luxury


and


exonerates


the


unrestrained


quest


personal


greed.


As a result,


Bell


(1976:


argued,


"the


social


order


lacks


either


a culture


that


a symbolic


expression


any


vitality


or a moral


impulse


that


a motivational


binding


force.


Greed


and


hedonism


had


so infiltrated


the


social


order


that


the


values


the


economic


sector


had


corrupted


social


values.


One


Bell


(1976


: 278)


solutions


the


reaffir-


.. _a 4 41* 4a


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I:~Allle~l


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freedom f

economic,


Srom


government


religious,


and


interference


private


those


sectors.


realms--


He maintained


that


a reaffirmation


legitimacy


those


"the


public


institutions


tha


household"

t actually


would

shape


provide

the


continuity


per


sonal


relations


and


values.


Robert


. Bellah


et al.


(1985)


expressed


the


same


concerns


but


a more


thorough


way


These


authors


argued


that


a cultural


debate


always


a debate


about


the


history


and


the


future


a people.


They


show


how


the


founding


traditions


republicanism,


American


life,


expressive


and


biblical

utilitar


communitarianism,

ian individualism,


have


been


changed


the


course


American


history.


They


explained


how


the


force


justice


and


individual


freedom


have


led


to ambiguity


society,


an ambiguity


expressed


even


the


strongest


myths


produced


this


culture.


They


analyzed


the


influence


of what


they


call


"managerial


ethos"


and


"therapeutic


ethos"


on society


and


the


values


individuals.


According


American


to them


life


(Bellah


occurred


et al.,


during


1985:


this


50),


century.


a change


It is


'"This


Dumont.
societie


relations.
questioned
talism was


thF


position


Polanyi
s the e


(1957)
economic


Dumont


the


very


a drastic


*r lati onnh i n


reminiscent
demonstrated


realm


(1977) el
morality
c change


hcl-rtnn


was


th


how


embedded


aborated


iat of Polanyi and
in pre-industrial


sets


a position


of capitalism


nronnl a


events
QrLyn


and
in


i itself
values


t-ho


of social


in which


. Capi-
in which


dpnnnmr r^Y r


ran~ 1 i


t








change


from


a society


which


economic


and


interpersonal


relationships


were


perceived


as pertaining


to a context


broader


and


common


integrated


life


"society


economically,


vastly more


technically,


and


interrelated

functionally.


Yet


thi


a society


which


the


individual


can


rarely


and


with


difficulty


understand


himself


and


activities


interrelated


in morally


meaningful


ways


with


those


others


They


advocated


a return


the


values


civil


society


which


an individual


would


able


to define


oneself


terms


relations


to community


members


and


not


terms


one's


isolated,


individual


self


alone.


Wolfe


(1989)


claimed


that


the


values


capitalism


have


thoroughly


whitewashed


traditional


values


He raised


question


which


became


the


central


theme


book


and


litmus


test


for


moral


action--Who


will


tell


me how


treat


the


stranger?


Our


society


no longer


has


recourse


traditional


sources


moral


authority which


guided


action


and


reasoning.


no longer


turn


to religion


as a moral


guide


and


giver


universal


values.


Nor


turn


philosophy


which


bankrupted


itself


the


turn


toward


the


subject


and


efforts


at establishing


universal


rules


reason.


Nor


turn


to literature


which


embodies


the


values


and


myths


our


culture.


Finally,


politics


longer


speaks


a language


compelling


moral


obligation,


not


r


a "*


'I


* a


A


_ M








Wolfe


argued


that


Western


society's


evolution


restricted


contemporary


members


to only


three


sources


for


moral


reasoning,


economics


, politics,


and


civil


society.


These


are


overlapping


but


stinct


social


systems.


The


agency


each


system


respectively,


the


market,


the


state,


and


civil


society


Using


the


example


the


United


States


as a country


which


the


market


and


values


have


dominated,


Wolfe


argued


a way


similar


to Bell


and


Bellah.


The


values


the


market


system


and


dynamics


a vast


mass


society


have


been


thoroughly


integrated


into


our


lives


transform


our


traditional


institutions.


The


family,


the


local


com-


munity,


the


school


have


been


so changed


the


market


based


morality


of consumerism,


greed,


and


individualism,


that


none


can


help


answer


the


key,


critical


question--how


care


for


the


stranger


when


our


social


world


the


"stranger"


category


Clearly


individualism


and


profit


seeking


the


Chicago


economic


modeling


sense


(Becker,


1976)


lead


to extraordinarily


repugnant


moral


outcomes;


e.g.

that


a market


sees


for


schools


child


adoptions,


as shopping


malls


an educational


, students


system


as buyers,


teachers


as sellers,


and


an over-riding


sense


that


the


public


good


the


automatic


summation


of private


individual


structural,


stic


and


greed.


This


individual,


the


that


our


dilemma,


modern


moral,


world








evolved


for


the


sake


our


economic


well-being


and


our


hedonistic


comfort.


The


problem


not


simply


solved


swinging


socialist


pole


from


a free


market


ideology


and


measure


morality.


In a detailed


and


sophisticated


analysis


societies


demonstrated


which


how


the


the


state


welfare


come


state


to dominate,


the


Wolfe


Scandinavian


societies


also


failed


answer


the


question


satis-


factorily


The


welfare


states


have


effectively


removed


the


individual


from


the


possibility


making


moral


decisions


the


care


others.


Instead,


the


state


assumed


responsibility


moral


obligations


thereby


relieving


individuals


from


those


concerns.


What


at stake


the


necessity


preserve


the


individual's


commitment


to society


as a rational


decision


maker


and


as a rational


moral


agent.


both


the


market


model


and


the


welfare


state


are


failures,


the


task


assigning


moral


obligation


should


assigned


neither


the


marketplace


nor


the


state.


Wolfe


(1989:


advocated


a rediscovery


civil


society


as a safeguard


moral


choice


and


commitment:


revive


the


notions


moral


agency


associated


with


civil


society


to begin


the


development


a language


appro-


private


to addressing


the


paradox


modernity


and


move


away


from


techniques


that


seek


to displace


moral


obligations


S
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science


to quest


moral


guidance


the


rediscovery


values


and


obligations.


Whether


or not


social


science


can


accomplish


this


task,


or indeed,


whether


or not


should


so remains


to be


seen.


Neverthel


ess


, there


a need


for


a more


vital


com-


munity


life


and


a rediscovery


face-to-face


interpersonal


relations


responsibility


order

y for


to revive

social co


a sense


ncerns


morality.


exclusively


To place


on the


shoulders


of either


business


or government


to displace


moral


agency.


Yet,


modern


society


seems


to have


strong


predilections


this


direction.


These


concerns


bring


the


argument


back


the


notion


civil


society.


Civil


society


not


only


addresses


the


freedom


sectors


society


from


government


interference


but


also


directly


addresses


the


nature


moral


agency


and


the


degree


to which


social


relations


as well


as economic


and


political


negotiations


are


governed


a sense


humani-


tarian


ethic


and


concern


other.


This


one


the


most


critical


concepts


the


debates


the


social


responsibility


business


because


assumes


some


constant


degree


freedom


the


non-


governmental


parts


and


sectors


society


from


government


interference.


It offers


the


most


concise


and


critical


perspective


on the


displacement


moral


responsibility


a a 1s,,. a --


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