Readings

Recommened reading —

1. The Social Media Manifesto – Integrating Social Media into Marketing Communications :

http://www.briansolis.com/2007/06/future-of-communications-manifesto-for.html

2.  http://labcast.media.mit.edu/?p=22

3. Let’s see what we can find on this site about the history of computers — http://www.youtube.com/user/ComputerHistory

WHAT IS A CORPORATION?
Adapted from “How Corporate Law
Inhibits Social Responsibility”
by Robert Hinkley, Jan./Feb. 2002
http://www.business-ethics.com
If you pick up a dictionary or encyclopedia, a corpora-
tion is a “specific legal form of organization of per-
sons and material resources, chartered by the state, for
the purpose of conducting business.”  The corporate
design contained in hundreds of corporate laws
throughout the world is nearly identical. That design
creates a governing body to manage the
corporation–usually a board of directors–and dictates
the duties of those directors. In short, the law creates
corporate purpose. That purpose is to operate in the
interests of shareholders. In Maine, for example, this
duty of directors is in Section 716 of the business cor-
poration act, which reads:
the directors and officers of a corporation shall
exercise their powers and discharge their duties
with a view to the interests of the corporation
and of the shareholders.

Although the wording of this provision differs from
jurisdiction to jurisdiction, its legal effect does not.
Distilled to its essence, the provision says that the
people who run corporations have a legal duty to
shareholders, and that duty is to make money.
Failing
this duty can leave directors and officers open to
being sued by shareholders.
Section 716 dedicates the
corporation to the pursuit of its own self-interest (and
equates corporate self-interest with shareholder self-
interest
).
No mention is made of responsibility to the pub-
lic interest
. Section 716 and its counterparts explain
two things. First, they explain why corporations find
social issues like human rights irrelevant—because
they fall outside the corporation’s legal mandate
.
Second, these provisions explain why executives
behave differently than they might as individual citi-
zens, because the law says their only obligation in
business is to make money.
This design has the unfortunate side effect of
largely eliminating personal responsibility. Because
corporate law generally regulates corporations but not
executives, it leads executives to become inattentive
to justice. They demand their subordinates “make the
numbers,” and pay little attention to how they do so.

Directors and officers know their jobs, salaries, bonus-
es, and stock options depend on delivering profits for
shareholders.
Companies believe their duty to the public inter-
est consists of complying with the law
. Obeying the
law is simply a cost. Since it interferes with making
money, it must be minimized–using devices like lob-
bying, legal hairsplitting, and jurisdiction shopping.
Directors and officers give little thought to the fact
that these activities may damage the public interest.
Lower-level employees know their livelihoods
depend upon satisfying superiors’demands to make
money. They have no incentive to offer ideas that
would advance the public interest unless they increase
profits. Projects that would serve the public interest—
but at a financial cost to the corporation—are consid-
ered naive.
Corporate law thus casts ethical and social con-
cerns as irrelevant, or as stumbling blocks to the cor-
poration’s fundamental mandate.
That’s the effect the
law has inside the corporation. Outside the corpora-
tion the effect is more devastating. It is the law that
leads corporations to actively disregard harm to all
interests other than those of shareholders.
When toxic
chemicals are spilled, forests destroyed, employees
left in poverty, or communities devastated through
plant shutdowns, corporations view these as unimpor-
tant side effects outside their area of concern. But
when the company’s stock price dips, that’s a disaster.
The reason is that, in our legal framework, a low stock
price leaves a company vulnerable to takeover or
means the CEO’s job could be at risk.
—————————————————————————————-

2 Responses

  1. I could not create a blog my computer had trouble bring it up something kept on popping up instead of the website.

    • I suggest that you go to the Media Center and speak with Ms. Maynor or Ms. Montgomery and ask them for help. Tell them you are a member of my class, and that it is a requirement that you set up a blog. Explain your problem. Tell them that all mass comm students will be expected to blog weekly as part of the class. Ask them if they will help you set up a blog using wordpress.com on a library computer. Have them contact me if there are any problems. They are my friends and will be happy to assist you.

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