Needless to say, this does not mean that it is easy to judge how well he is performing his task.

But at least the criterion of performance is straight-forward, and the persons among whom a voluntary contractual arrangement exists are clearly defined. Of course, the corporate executive is also a person in his own right. As a person, he may have many other responsibilities that he recognizes or assumes voluntarily–to his family, his conscience, his … Continue reading “Needless to say, this does not mean that it is easy to judge how well he is performing his task.”

But at least the criterion of performance is straight-forward, and the persons among whom a voluntary contractual arrangement exists are clearly defined.

Of course, the corporate executive is also a person in his own right. As a person, he may have many other responsibilities that he recognizes or assumes voluntarily–to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country. He may feel impelled by these responsibilities to devote part of his income to causes he regards as worthy, to refuse to work for particular corporations, even to leave his job, for example, to join his country’s armed forces. If we wish, we may refer to some of these responsibilities as “social responsibilities.” But in these respects he is acting as a principal, not an agent; he is spending his own money or time or energy, not the money of his employers or the time or energy he has contracted to devote to their purposes. If these are “social responsibilities,” they are the social responsibilities of individuals, not business.

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers.

That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose–for example, a hospital or a school. The manager of such a corporation will not have money profit as his objectives but the rendering of certain services.

In either case, the key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation or establish the eleemosynary institution, and his primary responsibility is to them.

“business” has responsibilities? Only people have responsibilities. A corporation is an artificial person and in this sense may have artificial

The discussions of the “social responsibilities of business” are notable for their analytical looseness and lack of rigor. What does it mean to say that “business” has responsibilities? Only people have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but “business” as a whole cannot be said to have responsibilities, even in this vague sense. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom.

Presumably, the individuals who are to be responsible are businessmen, which means individual proprietors or corporate executives. Most of the discussion of social responsibility is directed at corporations, so in what follows I shall mostly neglect the individual proprietors and speak of corporate executives.

When I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system

,” I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously–preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.

Evans, Robert Thomas, Chitnomrath, Thanida and Christopher, Theo

Source: Journal of Accounting in Emerging Economies; 2013, Vol. 3, Issue 2. EarlyCite article. Abstract: Purpose – This research seeks to determine the success of turnaround strategies adopted by corporations in Thailand following post-bankruptcy reorganization plans approved by the Thai Central Bankruptcy Court.
Design/methodology/approach – The study uses a sample of 101 companies whose reorganization plans have been confirmed by the Thai Central Bankruptcy Court in the period 1999 – 2002, with performance measures to 2005.
Findings – The results indicate that over a three year reorganization period successful companies were found to be most likely to adopt cost and expense reduction, company size reduction and disposal of non-core assets while operational strategies aimed at reconfiguring internal operations and systems were not likely to be associated with successful companies.
Practical implications – The data suggests, subject to limitations, the selection of restructuring methods may differ between those companies which successfully reform and those which do not. Companies pursuing successful turnaround strategies where found most likely to adopt cost and expense reduction, company size reduction and disposal of non-core assets as significant operational strategy.
Originality/value – Prior research in Thailand has not investigated turnaround strategy of successful and unsuccessful companies. The result of the study has practical significance as it provides information of use to regulators, management, lenders, creditors, practitioners, and investors. The prevailing economic conditions worldwide suggest the need for replication and continual refinement of research in this area not only in Thailand but elsewhere.
Database: Emerald Management

Discourses on corporate social ir/responsibility in the financial sector Authors: Herzig, Christian and Moon, Jeremy

Source: Journal of Business Research, In Press, Corrected Proof, Available online 5 March 2013 Abstract: The financial crisis has brought about dramatic consequences for economies and societies. Questions emerge about responsibility for the crisis and, implicitly or explicitly irresponsibility; the obligations to take responsibility for the costs and other adverse effects of the recession; and the nature of responsibility for social welfare and business probity in future national and global governance. This paper explores how UK financial and ethical media construct i) the financial sector’s social ir/responsibility in the context of the financial crisis and resultant recession, and ii) the motivation and means of the sector and other actors to respond to their adverse social impacts. Four discourses emerge from our analysis providing insights into distinct types of corporate social responsibility (CSR) and their relationship with corporate social irresponsibility (CSI), attitudinal change and expectations of the change required to ensure a more responsible financial sector. Findings reveal tension in the discourses concerning the sector’s ability to “heal itself”. Questions of accountability and of the capacity and reliability of CSR are common to all discourses. The discourses identified provide clear insights into distinctive diagnoses and prescriptio

Oxford Economic Papers; During and After the Crisis, Abstract: Monetary Policy Before,

Title: The ECB’s separation principle: does it ‘rule OK’? From policy rule to stop-and-go Authors: Bordes, Christian and Clerc, Laurent

Pp. i66-i91

April 2013, Vol. 65, Special Issue:

Prior to and during the first stage of the crisis, the ECB’s conduct of monetary policy

was consistent with the ‘separation principle’, which refers to the division between monetary and liquidity management policies. However, it became increasingly difficult to apply as interest rates approached their lower-bound. While it was supposed to guide the ECB’s exit strategy, the ECB finally resorted to a ‘stop-and-go policy’. The separation principle strongly depends upon the institutional setup in which the central bank operates. We show that the difficulties faced by the ECB are due to an important feature of the monetary union, which economic governance is essentially rule-based. The success of a monetary union crucially depends on the strict compliance to the rules. The breach of the rules forced the ECB to stabilize euro area sovereign debt markets,

stretching its mandate and altering the efficacy of the separation principle.

Note: Special Issue: Monetary Policy Before, During and After the Crisis Database: Oxford Journals Online

The causes of financial crises are multiple but the models of financial

crises revolve around four generational models. In this paper, the authors analyzed these models and highlighted the fact that each model was adapted to specific situations to explain the financial crises faced rather than being visionary or systematic in approach. These models suggest crises may develop without significant change in economic fundamentals, since policies usually respond to changes in economy and agents consider these when forming expectations. Therefore, any set of indicators together may not provide an over-all picture but interactions among indicators should be pursued. Common sense and guesswork is used but is not sufficient for representing real behavior. Modeling suggests that stressed or fraudulent companies should be removed to avoid further crises. While the new models handle a wider range of nonlinear behavior, little new work is in fact evident. Apart from a patchwork-like approach of the past, financial or currency crises modeling has not been dealt with systematically. A new way thinking is not emerging suggesting a visionary and dynamic robust mathematical modeling approach is needed with attention to the many possible risks. [ABSTRACT FROM AUTHOR]

Database: Business Source Complete

This paper tries to identify the causes of and solutions to the debt crisis, by moving

Cambridge Journal of Economics; 2013, Advance Access.

First published online:

April 9,

This paper tries to identify the causes of and solutions to the debt crisis, by moving

from the content of a previous debate on policy coordination in the euro area and from the available evidence on the existence of conflicting national interests within the governing bodies of the European Central Bank (ECB). It argues that before 2007 the flaws in the institutional organisation of the process of coordination between monetary and fiscal policy affected the cyclical and growth operation of the economies. After then, they have contributed to intensifying the conflicts among national and European authorities. The conflicts have curbed policy reactions, held back the interventions of the ECB, as occurred to the Federal Reserve during the crisis of 1929, and favoured the speculative attacks. The conclusion is that the organisation of the area must be reformed to allow its institutions to effectively pursue the objectives for which they were

created, i.e. to protect the citizens from the instability of the international financial markets. As has been done in monetary policy, the reforms must reduce the uncertainty on the actual conduct of national policies and transform the defensive attitudes of the different actors of the process into

a positive search for the most effective policy for the whole area

Database: Oxford Journals Online

Prospects for the European Monetary Union are inevitably affected by the theoretical

 

presuppositions of the observer. The most common approach, the theory of optimal currency areas, postulates that traded goods are produced by labour and the exchange rate between ‘national’ currencies is the ratio of commodity wages, expressed in monetary units, in different countries. In this analysis the exchange rate and wages are substitutes for obtaining international ‘competitiveness’. Such a view is the basis for current reflections about the future of the euro and the reduction of its difficulties to relative wages rates in different countries of the eurozone. The theory has two important limitations. First, it takes no account of the import intensity of exports, which would require wage adjustments to reinforce exchange rate adjustments, so that wages and exchange rates are necessarily complementary parameters, rather than being substitutes for each other. Hence, exit from the eurozone as a means of closing trade deficits would require additional austerity. Even more importantly, it is a commodity money theory, in which imbalances are accommodated by accumulations of specie or fiat money. However, in a credit economy, banking systems absorb trade imbalances into their balance sheets. Moreover, financial integration means that banking systems throughout Europe are vulnerable to balance sheet risks

from exchange rate depreciation in any country in Europe.

Database: Oxford Journals Online