by Guest Authors*
This blog post is part 2 in our series about the Geopolitics of Sustainability, based on the Roble Living Laboratory for Sustainability at Stanford's Hard Earth Talks. For more info about ROLLSS visit their website or attend the upcoming Hard Talk on Wednesday November 7th from 7-7:50 pm, which will focus on US-Mexico Border Politics and sustainability.
We have a tendency to look at companies as monolithic machines, devoid of personality and coldly calculating their moves like a computer. They exist solely to maximize profit and outlast the competition, or at least that’s how we like to portray them. However, such a view can simplify a corporation down to a shell of what it really is, obscuring the nuance behind corporate decision making and creating undue cynicism of what we can pressure companies to do. Hajin Kim, a doctoral candidate at Stanford, recently gave a talk at Roble outlining how we might move towards a more holistic view of company decision making that takes into account the reputational risk to and personal beliefs of the people running a company. The first assumption we need to move past is the view that companies are an entity distinct from people.
Ultimately, corporations are composed of people; all of their decisions are a function of the executives, shareholders, and employees that make it up. Any representative model of a corporation that views it solely as a profit maximization machine is a limiting construct that either ignores the influence and behavior of the individuals within it, or wrongly assumes that such behavior can be condensed into that of rational actors optimizing for corporate gain. The expenditure of both social and reputational capital, either personal or collective, can factor into decisions with the same weight as monetary concerns. Executives can also factor in their own personal and political beliefs when making decisions that affect a company’s bottom line. One recent example was Colin Kaepernick’s ad campaign for Nike; while it was admittedly a shrewd and effective marketing ploy that capitalized on the public’s recognition and empathy for Kaepernick’s protest, it also created lasting reputational harm for Nike amongst the conservative political segment. While it’s likely the reputational gain amongst liberals was seen as being worth the alienation of conservatives, it also reflects an executive body comfortable with taking a decidedly liberal stance publicly. Profit maximization models of corporate governance might have recommended other marketing strategies, due to perceived risks in alienating one political group in order to make possibly temporary gains with another. Despite their flaws, such simplified profit maximization models are often the default when representing corporations in either economic literature or policy discussions.
While there are limits to eliminating the influence of people on corporations, the opposite model of corporate personhood can be equally problematic. Corporate personhood, wherein corporations are treated, and therefore given some of the same legal rights, as individual people is just as if not more of a simplification of actual company dynamics. We’ve seen the debate around corporate personhood flare up before, most notably during the Occupy Wall Street protests. The crux of the argument is that, because corporations have much more money and influence than individuals usually have, and because the incentives motivate them to seek profit at the expense of anything else, regulators should scrutinize them more than they do individuals. But there is another issue with corporate personhood: it treats a company as it would an individual. But a company is not just a product of the individuals that comprise it. It is a product of interpersonal relationships, group dynamics, and the interplay of personal beliefs of all of the people participating in its decisions. In some circumstances, groups can act as a collective to make better decisions than an individual could. However, they can also fall prey to mob mentality and groupthink.
Group decisions also allow for the distribution and dilution of blame for immoral behavior, as no one person is fully responsible. Corporate personhood, in allowing a further shift of responsibility away from the individual and onto an abstract legal entity, can exacerbate this issue further. People may be more comfortable making decisions that negatively impact the environment if the blame is shifted away from them and onto the corporation. For example, we all know that Volkswagen cheated emissions tests, and some of us may know the names of the executives who allowed the cheating to occur. But very few of us know the names of the engineers that took part in that effort. In keeping with Kim’s attempt at restructuring corporate models to account for non profit motivations, maybe policymakers should research legislation that allows individuals to be held reputationally liable for the actions they undertake in the name of a corporation.
*Authors of this blog post chose to remain anonymous.
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This is a forum for students to share their writing on intersectional environmental topics, curated by Students for a Sustainable Stanford. Writers of all backgrounds, abilities, and perspectives are welcome.